<PAGE>
As filed with the Securities and Exchange Commission on April 16, 1999
REGISTRATION NO. 333-______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
REGISTRATION STATEMENT
ON
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>
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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 $1,000,000 100% $1,000,000 $278.00
- -----------------------------------------------------------------------------------------------------------------------------
TMCC Demand Notes (2) (2) (2) (2)
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</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
-----------------------
THIS REGISTRATION STATEMENT SHALL HEREAFTER BECOME EFFECTIVE IN
ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933, AS AMENDED.
<PAGE>
PROSPECTUS
TOYOTA AUTO RECEIVABLES TRUSTS
ASSET BACKED NOTES
ASSET BACKED CERTIFICATES
TOYOTA MOTOR CREDIT RECEIVABLES CORPORATION,
SELLER
TOYOTA MOTOR CREDIT CORPORATION,
SERVICER
- --------------------------------------------------------------------------------
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 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.
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.
- --------------------------------------------------------------------------------
THE TRUSTS -
o A new trust will be formed to issue each series of securities.
o 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 -
o will be asset-backed securities sold periodically in one or more
series;
o will be paid only from the assets of the related trust;
o will be issued in one or more classes; and
o 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.
<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:
o this prospectus, which provides general information, some of which
may not apply to a particular series of securities including your
series; and
o 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 the 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 Issuer
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 Servicer 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. 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:
o stated principal amount (notes) and stated
certificate balance (certificates); and
o 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:
o timing and priority of payments;
o seniority;
o allocations of losses;
o interest rate or formula;
o amount of principal or interest payments;
o whether interest or principal will be payable to
holders of the class if certain events occur; and
o 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 Cedel
Bank, societe anonyme 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 "RISK
FACTORS - BOOK-ENTRY REGISTRATION" AND "CERTAIN
INFORMATION REGARDING THE SECURITIES -- BOOK-ENTRY
REGISTRATION" IN THIS PROSPECTUS
DENOMINATION - Securities will be issued only in amounts
of $1,000 or more. Certificates will be issued in
multiples of $1 for amounts in excess of $1,000.
THE TRUST PROPERTY The assets of each trust:
o will be described in the prospectus supplement;
o 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
o 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.
2
<PAGE>
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 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:
o a sale and servicing agreement among the seller,
the servicer and the trust (if the trust will be
treated as an owner trust for federal income tax
purposes); or
o 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).
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:
o collections received each month will be passed
through to holders of securities on a monthly
basis; or
o 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.
3
<PAGE>
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:
o subordination of one or more other classes of
securities;
o reserve fund;
o over-collateralization;
o letters of credit or other credit facilities;
o surety bonds;
o guaranteed investment contracts;
o repurchase obligations;
o cash deposits; or
o 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:
o yield maintenance agreements;
o swap transactions;
o liquidity facilities;
o cash deposits; or
o 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
4
<PAGE>
similar charges received by the servicer during such
month.
The servicer will also be obligated to advance to the
trust interest or principal on the receivables that is
due but unpaid from the obligors. If the servicer
determines that it will not be able to recover an
advance from an obligor, the servicer may be reimbursed
from collections on other receivables.
OPTION 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:
o the trust will be treated as a grantor trust for
federal income tax purposes; and
o 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:
o as to the characterization as debt of the notes
issued by the trust;
o 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:
o by purchasing a note you will be agreeing to treat
the note as indebtedness for tax purposes; and
o 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.
Alternative tax characterizations of the trust and the
certificates could be made by applicable taxing
authorities. 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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<PAGE>
"CERTAIN STATE TAX CONSEQUENCES" IN THIS PROSPECTUS.
ERISA CONSIDERATIONS NOTES - Notes will generally be eligible for purchase by
employee benefit ERISA Considerations 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.
6
<PAGE>
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, both the certificates
of title and the 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:
o 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;
o 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
o 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.
7
<PAGE>
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 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 the swap will be described in
more detail in the applicable prospectus supplement.
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<PAGE>
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:
o The proceeds from the sale of assets under such circumstances may
not be sufficient to pay all amounts owed to you.
o Amounts available to pay you will be further reduced if the trust is
required to make a termination payment to the swap counterparty.
o The termination of the swap agreement may expose the trust to
currency or interest rate risk, further reducing amounts available
to pay you.
o The sale may result in payments to you significantly earlier than
expected.
o 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. 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.
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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:
o assign the swap agreement to another party;
o obtain a replacement swap agreement on substantially the same terms
as the swap agreement; or
o 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. The trust will be
exposed to this risk should it use either of these mechanisims. 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.
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 the 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
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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 the 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 these securities. You are strongly urged
to consult with your financial advisors before deciding to invest in the
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 as an owner 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 (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.
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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.
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 December 31, 1998, 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. In addition to the Seller, 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
and a wholly-owned subsidiary through which TMCC securitizes lease contracts.
TMCC and its subsidiaries are collectively referred to as "TMCC".
TMCC's primary business is providing retail leasing, retail and wholesale
financing and certain other financial services to authorized Toyota and Lexus
vehicle and Toyota industrial equipment dealers and their customers in the
United States (excluding Hawaii) and the Commonwealth of Puerto Rico. TMCC is a
wholly-owned subsidiary of Toyota Motor Sales, U.S.A., Inc. ("TMS"), which is
primarily engaged in the wholesale distribution of automobiles, light duty
trucks, industrial equipment and related replacement parts and accessories
throughout the United States (excluding Hawaii). Substantially all of TMS's
products are either manufactured by its affiliates or are purchased from Toyota
Motor Corporation, the parent of TMS, or its affiliates.
UNDERWRITING OF MOTOR VEHICLE LOANS
TMCC purchases automobile and/or light duty 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. The Receivables will be originated by Dealers in accordance with
TMCC's requirements under existing agreements with such Dealers and will be
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. Upon receipt of the above information, TMCC obtains a
credit report from an independent credit bureau.
The credit decision is influenced by the applicant's credit score as
obtained from a statistically derived credit scoring process and other
considerations. The credit scoring process considers credit bureau, application
and contract information. Other considerations include ratios such as car
payment to income and total debt payments to total income. The final credit
decision is made based upon the degree of credit risk perceived and the amount
of credit requested.
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.
SERVICING OF MOTOR VEHICLE LOANS
Each branch services the loans it originates using the same servicing
system and procedures. TMCC considers an obligor to be past due if less than 90%
of a regularly scheduled payment is received by the due date. At 12 days past
due a notice is sent to the obligor and at 26 days past due TMCC attempts to
contact the obligor by
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telephone. TMCC utilizes an on-line collection system in support of its
collection efforts. TMCC generally begins repossession efforts no later than 60
days past due. Repossessed vehicles are held in inventory to comply with
statutory requirements and then sold. 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.
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 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.
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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 is in the process of
completing the inventory of its technical infrastructure which is expected
to be completed by the first quarter of calendar year 1999 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 is currently following up with non-responding and
non-compliant at-risk critical business partners and expects to complete
the assessment phase by the first quarter of calendar year 1999. 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 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
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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 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 -______ ______, as 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 the Luxembourg Stock Exchange or The Stock Exchange
of Hong Kong Limited are outstanding, each such report (including a statement of
the outstanding principal balance of each Class of Certificate) also shall be
delivered to the Luxembourg Stock Exchange and The Stock Exchange of Hong Kong
Limited 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-1 (the "Registration Statement") under the
Securities Act of 1933 (the "Securities Act"). 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 60661,
and Seven World Trade Center, Suite 1300, New
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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 a registration
statement on Form S-3 under the United States Securities Act. 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.
o Annual Report on Form 10-K for the year ended September 30, 1998;
and
o Quarterly Report on Form 10-Q for the quarter ended December 31,
1998.
If Securities are listed on the Luxembourg Stock Exchange or The Stock
Exchange of Hong Kong Limited, the applicable prospectus supplement will include
the address of an office in Luxembourg and Hong Kong, as applicable, 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. Copies of those documents will
also be filed with the Luxembourg Stock Exchange and the Stock Exchange of Hong
Kong Limited, as applicable, for so long as those Securities are outstanding.
Copies of the operative agreements relating to the Securities will also be filed
with the SEC, the Luxembourg Stock Exchange and The Stock Exchange of Hong Kong
Limited following the issuance of the certificates.
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 Obligors of 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.
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 level
monthly payments (except for the first and last payments, which may be minimally
different from the level
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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.
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 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 a
stated annual percentage rate ("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 Sale and Servicing
Agreement or Pooling 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
Certificateholders will not be affected by such rebates under the Rule of 78s
Receivables because pursuant to the 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
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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.
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 life of the Notes, if any, and the Certificates 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 or, if
applicable, upon termination of the Trust due to a swap termination, if
applicable. 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 Certificateholders will be borne entirely by the
Certificateholders. In addition, early retirement of the Certificates
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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 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 Notes, if any, or the
Certificates 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 Noteholders, if any, and the Certificateholders 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 Certificates. 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 Noteholders, if any, and the Certificateholders 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
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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 that portion
of such net proceeds paid to it with respect to any such Trust 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.
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.
Unless otherwise specified in the related Prospectus Supplement, the Notes will
be available for purchase in denominations of $1,000 and integral multiples
thereof in book-entry form only. 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 payment 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.
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
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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 a majority 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 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
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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.
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 a
majority in 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 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.
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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 (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 Notes or
the Certificates 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) 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.
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.
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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, 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 minimum denominations of $1,000
and integral multiples of $1 in excess thereof in book-entry form only. 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").
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 --
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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.
"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.
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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
Pricing 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 Los Angeles, 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 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.
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,
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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
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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 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.
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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:
(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
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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 Current 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.
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
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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
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 Cedel Bank, societe anonyme ("Cedel") 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.
Cedel and Euroclear will hold omnibus positions on behalf of their
participants through customers' securities accounts in their respective names on
the books of their respective Depositaries which in turn will hold such
positions in customers' securities accounts in the Depositaries' names on the
books of DTC.
Transfers between DTC Participants will occur in accordance with DTC
rules. Transfers between Cedel Participants and Euroclear Participants will
occur in accordance with their applicable rules and operating procedures.
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Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedel 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. Cedel Participants and Euroclear Participants may
not deliver instructions directly to the Depositaries.
Because of time-zone differences, credits of securities received in Cedel
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 Cedel participant on such business day. Cash received in Cedel or
Euroclear as a result of sales of Securities by or through a Cedel Participant
or a Euroclear Participant to a DTC Participant will be received with value on
the DTC settlement date but will be available in the relevant Cedel 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 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.
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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.
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).
Cedel is incorporated under the laws of Luxembourg as a professional
depository. Cedel holds securities for its participating organizations ("Cedel
Participants") and facilitates the clearance and settlement of securities
transactions between Cedel Participants through electronic book entry changes in
accounts of Cedel Participants, thereby eliminating the need for physical
movement of certificates. Transactions may be settled in Cedel in any of 28
currencies, including United States dollars. Cedel provides to Cedel
Participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. Cedel interfaces with domestic markets in several
countries. As a professional depository, Cedel is subject to regulation by the
Luxembourg Monetary Institute. Cedel 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 Cedel is
also available to others, such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a Cedel
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
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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 Cedel or Euroclear will
be credited to the cash accounts of Cedel 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 Considerations". Cedel 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 Cedel Participant or Euroclear Participant only in accordance with
its relevant rules and procedures and subject to its Depositary's ability to
effect such actions on its behalf through DTC.
Although DTC, Cedel and Euroclear have agreed to the foregoing procedures
in order to facilitate transfers of Securities among participants of DTC, Cedel
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)
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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 a majority 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
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.
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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 to 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;
(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
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(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. 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, TMCC will sell and assign to the
Seller, without recourse, pursuant to a 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, among other things, that: (i) the
information provided in the related Schedule of Receivables is true and correct
in all material respects; (ii) at the time of origination of each Receivable,
the related Obligor was required under the related Receivable 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 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.
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,
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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, (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 Vehicles". 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 and Certificates, 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 Indenture Trustee or 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 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.
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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 Seller 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, 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 purchase the Receivable (an "Administrative Receivable")
from the Trustee at a price equal to the Administrative
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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, (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. See "Description of the Transfer and Sale Arrangements --
Collections".
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
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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.
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 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.
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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.
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
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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 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. Each "Yield Maintenance Account" will be
designed to hold funds to be applied by the related Trustee or Indenture
Trustee, as the case may be, 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
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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.
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 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) 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.
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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.
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
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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 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
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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 may (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,
as the case may be, of such series.
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 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.
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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 either 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 more fully described in the related Prospectus Supplement, any
outstanding Notes of the related series will be redeemed concurrently with
either 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,
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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. 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.
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
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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 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.
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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.
REGARDING THE DEMAND NOTES INDENTURE TRUSTEE
The Demand Notes Indenture Trustee is the Trustee under the Agreement. 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
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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.
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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.
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. In any such event, the ability of the Trust to pay
interest on each Class of Certificates 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
Certificates and for the Trust to meet its obligations, if any, in respect of
the termination of the Swap Agreement, then such amounts will be allocated and
applied in accordance with the priority of payments described 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
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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 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
A description of the Swap Counterparty is provided under "The Servicer"
herein. Information regarding the Swap Counterparty 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 TMCC as Swap Counterparty as described above
under "-- Assignment".
GOVERNING LAW
The Swap Agreement will be governed by and construed in accordance with
the laws of the State of New York.
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,
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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 the automobiles and/or light
duty trucks financed by the Seller 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, 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 Administration
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
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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 in Financed Vehicles".
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 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 financed vehicle is voluntarily surrendered,
self-help repossession is the method employed by TMCC in most states and is
accomplished simply by retaking possession of the financed vehicle. In cases
where the 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 the financed vehicle must then be recovered in
accordance with that order. In some jurisdictions, the secured party is required
to notify the obligor of the default and the intent to repossess the collateral
and to give the obligor a time period within which to cure the default prior to
repossession. In most states,
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under certain circumstances after the financed vehicle has been repossessed, the
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 the
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, the obligor has the right to redeem the collateral prior to actual
sale by paying the secured party the unpaid principal balance of the obligation
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, the 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 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
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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.
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.
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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, the 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 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.
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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 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
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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 Trust Agreement and 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 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.
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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 Owner 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 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.
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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 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
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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
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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 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
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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 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."
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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 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
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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 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
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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 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
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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 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).
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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.
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.
73
<PAGE>
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 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
74
<PAGE>
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.
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.
75
<PAGE>
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 incorported 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.
76
<PAGE>
INDEX OF TERMS
<TABLE>
<CAPTION>
PAGE
<S> <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
Cedel....................................................................32
Cedel 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
</TABLE>
77
<PAGE>
<TABLE>
<S> <C>
embedded systems.........................................................13
ERISA.....................................................................9
Euroclear................................................................32
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
</TABLE>
78
<PAGE>
<TABLE>
<S> <C>
Prospectus Supplement....................................................12
Receivables..............................................................12
Receivables Pool.........................................................12
Receivables Purchase Agreement...........................................17
Registration Statement...................................................16
Related Documents........................................................22
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
TMCC Demand Notes........................................................49
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>
79
<PAGE>
Subject to completion, dated ______________
Prospectus Supplement To Prospectus Dated __________, 1999
TOYOTA AUTO RECEIVABLES 1999-A 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 7 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
<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 Note (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 ____________, 1999.
(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 _________, 1999.
<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:
o the accompanying prospectus, which provides general information, some of
which may not apply to a particular class of securities, including your
class; and
o 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 ___ in this prospectus supplement and under the caption "Index of Terms"
beginning on page ___ 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 1999-__. 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 servicer
AGREEMENT 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 The administration agreement between Toyota Motor
AGREEMENT 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 The receivables purchase agreement between Toyota
PURCHASE Motor Credit Corporation and the seller. The
AGREEMENT receivables purchase agreement governs the sale of
the receivables from Toyota Motor Credit Corporation
to the seller.
RELEVANT DATES
CLOSING DATE On or about [__________], 1999.
CUTOFF DATE [__________], 1999
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 __________, 1999.
A "business day" is any day except:
o a Saturday or Sunday;
o a day on which banks in New York or
Los Angeles are closed; or
o [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 securities is scheduled to be made on the final
DATES 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 In general, securityholders are entitled to receive
PRINCIPAL payments of interest and principal from the trust
PAYMENTS 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:
o 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
o 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:
o 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
o 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 INCOME" IN THIS
PROSPECTUS SUPPLEMENT.
PRINCIPAL. Principal on the securities will be paid
from collections on the receivables from:
o the portion of all scheduled
monthly payments on receivables
allocable to principal during the
preceding calendar month;
o the portion of all prepayments on
receivables allocable to principal
received by the servicer during the
preceding calendar month;
o 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
o 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
____________, 199__, 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
CERTIFICATEHOLDERS--PAYMENTS OF PRINCIPAL", "PAYMENTS
TO NOTEHOLDERS AND CERTIFICATEHOLDERS" AND
"DESCRIPTION OF THE TRANSFER AND SERVICING
AGREEMENTS--PAYMENTS".
[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
_______________, 1999.]
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 You will generally hold your interests in the
THE SECURITIES securities through The Depository Trust Company in
the United States, or Cedel Bank, societe anonyme 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 "RISK FACTORS - BOOK-ENTRY
REGISTRATION" 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:
o the notes will be characterized as
debt; and
o 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 The notes are generally eligible for purchase by
CONSIDERATIONS 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 The Class A-1 Notes will be eligible securities for
PURCHASE BY MONEY purchase by money market funds under Rule 2a-7 under
MARKET FUNDS the Investment Company Act of 1940, as amended.]
S-8
<PAGE>
Ratings It is a condition to the issuance of the securities
that:
o 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
o 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 ______, 1999, 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.]
ASSETS OF The assets of the trust will primarily consist of the
THE TRUST receivables. In addition, the assets of the trust
will also include:
o certain monies due or received
under the receivables on and after
the cutoff date;
o security interests in the vehicles
financed under the contracts;
o certain bank accounts and the
proceeds of those
S-9
<PAGE>
accounts; and
o 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".
THE RECEIVABLES On the closing date, the trust will purchase
receivables having the following characteristics as
of the cutoff date:
o Total Cutoff Date Principal Balance.........
o Number of Receivables.......................
o Average Cutoff Date Principal Balance.......
o Average Original Amount Financed............
Range of Original Amounts Financed..........
o Weighted Average APR(1) Range of APRs.......
o Weighted Average Original Number of
Scheduled Payments(1).....................
Range of Original Number of Scheduled
Payments..................................
o 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.
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.
For each distribution date, the servicer will be
obligated to advance to the trust interest or
principal on the receivables that is due but unpaid
by the obligors. If the servicer determines that it
will not be able to recover an advance from an
obligor, the servicer may be reimbursed from
collections on other receivables.
FOR MORE DETAILED INFORMATION, YOU SHOULD REFER TO
"DESCRIPTION OF THE 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.
S-10
<PAGE>
OPTIONAL The servicer or the seller may redeem any outstanding
REDEMPTION 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 "DESCRIPTION OF THE
SECURITIES"--OPTIONAL PURCHASE" IN THIS PROSPECTUS
SUPPLEMENT.
PAYMENTS ON TMCC will identify collections on the receivables as
DISTRIBUTION either interest or principal depending on the terms
DATES 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. The servicer will be reimbursed from
interest collections for interest advances before
those collections are used to pay noteholders and
certificateholders. Similarly, the servicer will be
reimbursed from principal collections for principal
advances 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 in the following
order of priority:
o 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;
o 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
o 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 ____, 1999 or the
distribution date on which the Class A-1
Notes have been paid in full.
S-11
<PAGE>
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:
o 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
o CERTIFICATES - first, from interest
collections remaining after payment of
the servicing fee, interest and principal
owed to the noteholders and interest owed
to the certificateholders and, second,
if there is still a shortfall, from amounts
on deposit in the reserve fund described
below.
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 in the following
order of priority:
o SERVICING FEE - the monthly servicing fee
payable to the servicer;
o INTEREST ON THE NOTES - interest due on the
notes, including any unpaid interest from
prior distribution dates, payable ratably to
each class of notes;
o 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;
o INTEREST ON THE CERTIFICATES - interest due
on the certificates, including any unpaid
interest from prior distribution dates; and
o 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.
S-12
<PAGE>
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:
o 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
o 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.
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
o subordination of the certificates, as
described below; and
o the reserve fund.
CERTIFICATES
o the reserve fund.
S-13
<PAGE>
SUBORDINATION OF INTEREST AND PRINCIPAL
o CLASS A-2 NOTES - Principal payments on the
Class A-2 Notes will be subordinated to
principal payments on the Class A-1 Notes.
o 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.
o CERTIFICATES -Interest and principal
payments on the certificates for any
distribution date will be subordinated to
interest and principal payments on the notes
for that distribution date.
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
collections payable to the notes.
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:
o any remaining amounts will be
deposited into the reserve fund to
the extent necessary to maintain
the specified reserve fund balance;
or
o 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.
S-14
<PAGE>
FOR MORE DETAILED INFORMATION CONCERNING THE CREDIT
ENHANCEMENT PROVISIONS, YOU SHOULD REFER TO
"DESCRIPTION OF THE SECURITIES--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:
o make early payments, since receivables will generally be prepayable
at any time without penalty;
o default, resulting in the repossession and sale of the financed
vehicle; or
o 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 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:
o you will not receive any principal payments on a distribution date
until all principal payable on the Class A-1 Notes has been paid.
S-16
<PAGE>
If you buy Class A-3 Notes:
o you will not receive any principal payments until all principal
payable on the Class A-1 Notes and Class A-2 Notes has been paid.
If you buy certificates:
o you will not receive any interest payments until all principal and
interest payable on each class of notes on that date has been paid;
o you will not receive any principal payments until the earlier of the
distribution date on __________, 1999 or the distribution date after
all principal on the Class A-1 Notes has been paid; and
o 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 each class of notes on any distribution date
will be paid before interest and principal on the certificates is paid, 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 of the Certificates; 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 of the Certificates; 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:
<TABLE>
<CAPTION>
PERCENTAGE OF TOTAL PRINCIPAL BALANCE
<S> <C>
.................................. %
.................................. %
</TABLE>
S-17
<PAGE>
<TABLE>
<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
Events 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
"Description of the Transfer and Servicing Agreement - 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 Cedel Bank, societe anonyme or the Euroclear
System in Europe. Transfers of interests in the securities within DTC, Cedel 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 "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
S-18
<PAGE>
through DTC (if in the United States) and its participating organizations, or
Cedel 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, Cedel 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.
S-19
<PAGE>
THE TRUST
GENERAL
The Toyota Auto Receivables 1999-A 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 "Description of the Transfer and Servicing Agreements--Servicing
Compensation" in this Prospectus Supplement and "Description of the 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 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".
S-20
<PAGE>
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 Luxembourg and Hong Kong. For so long as any Securities are listed on
the Luxembourg Stock Exchange or The Stock Exchange of Hong Kong Limited, the
Owner Trustee will maintain paying agents in Luxembourg and Hong Kong. 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 Luxembourg at ___________, Luxembourg, at the
offices of the paying agent in Hong Kong at _____________, Hong Kong 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.
The Receivables in the Receivables Pool are required to met 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 level 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 [__________], 1999; (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 subject to force-placed insurance as of the Cutoff
Date. TMCC does not originate retail
S-21
<PAGE>
installment sales contracts in Hawaii, and retail installment sales contracts
originated in Texas 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.
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.
S-22
<PAGE>
DISTRIBUTION OF THE RECEIVABLES BY APR
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
NUMBER OF TOTAL NUMBER CUTOFF DATE CUTOFF DATE
RANGE OF APRS RECEIVABLES OF 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 TOTAL NUMBER PRINCIPAL CUTOFF DATE
STATE RECEIVABLES OF 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-24
<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/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. This is because the contracts serviced
by that company will not be included in the Trust.
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 DECEMBER 31, ---------- ---------- ---------------- ---------- ----------
1998 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 THREE AT OR FOR THE FISCAL YEAR ENDED SEPTEMBER 30,
MONTHS ENDED ----------------------------------------------------------
DECEMBER 31, 1998 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, 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 __________,
199__ Distribution Date. 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 information pertaining to
the Trust. Securityholders during each calendar year will be furnished
information for tax
S-27
<PAGE>
reporting purposes not later than the latest date permitted by law. See "Certain
Information Regarding the Securities--Statements 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
under the headings "Description of the Notes" and "Certain Information Regarding
the Securities" 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 ______________, 1999. A "Business
Day" is any day except a Saturday or Sunday, a day on which banks in New York or
Los Angeles 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
"Description of the Transfer and Servicing Agreements -Payments" and
"--Reserve Fund" 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 ___________, 1999 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 _______,
199_, 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. 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
S-28
<PAGE>
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,
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 "Description of the Transfer and Servicing
Agreements--Distributions" and "--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 "Description of the 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.
DESCRIPTION OF THE CERTIFICATES
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.
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 [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.
PAYMENTS OF INTEREST
On each Distribution Date, commencing ___________, 199__, 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 "Description of the Transfer and
Servicing Agreements--Payments" and "--Reserve Fund" in the Prospectus.
PAYMENTS OF PRINCIPAL
On each Distribution Date, commencing with the earlier of (i) the
_____________ Distribution Date and (ii) the Distribution Date next succeeding
the Distribution Date on which the Class A-1 Notes were paid in full,
Certificateholders will be entitled to principal payments in an amount generally
equal to the Certificateholders'
S-29
<PAGE>
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 "Description of the Transfer and Servicing
Agreements--Distributions" and "--Reserve Fund" in the Prospectus.
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 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 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) 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");
(iii) all Advances made by the Servicer; and
(iv) 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).
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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 (iii) recoveries from
collections with respect to certain 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.
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.
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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 _________, 199_,
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 less any Noteholders'
Principal Distributable Amount distributed to the Class A-1
Noteholders on that Distribution Date together with any unpaid
Noteholders' Principal Carryover Shortfall, 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 less any Noteholders'
Principal Distributable Amount distributed to the Class A-1
Noteholders and Class A-2 Noteholders on that Distribution Date
together with any unpaid Noteholders' Principal Carryover
Shortfall, such amount to be paid from Available Principal (after
giving effect to any reduction 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
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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
Certificateholder 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) _________, 199_. Beginning on such date, the
Certificateholders' Principal Carryover Shortfall with respect to any
Distribution Date will equal the excess, if any, of (x) the Certificateholder'
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.
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 "-- Servicing Compensation" and any reimbursement of
unreimbursed 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
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principal payments on a Distribution Date before interest and principal payments
are made to Certificateholders on that Distribution Date and by the
establishment of the Reserve Fund. This subordination 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 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. In addition, the 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 Notes relating to 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.
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, 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 and would result in a decrease in the Specified Reserve Fund
Balance 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 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.
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.
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 under the heading "Description of the
Transfer and Servicing Agreements" in the Prospectus, to which description
reference is hereby made.
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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 "Description of the Transfer and
Servicing Agreements--Sale and Assignment of Receivables" in the Prospectus.
ACCOUNTS
In addition to the accounts referred to under "Description of the
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 "Collections" in this Prospectus Supplement and
"Description of the 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 "Description of the Transfer and Sale
Agreements--Collections" in the Prospectus.
"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
"Description of the Transfer and Sale Agreements--Collections" in the
Prospectus.
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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 "Description of the Transfer and Sale 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 "Description of the
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 "Description of the 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 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.
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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, 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
S-38
<PAGE>
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 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
S-39
<PAGE>
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 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
S-40
<PAGE>
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.
S-41
<PAGE>
INDEX OF TERMS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Aggregate Net Losses........................................................S-34
Available Amount............................................................S-35
Available Interest..........................................................S-30
Available Principal.........................................................S-30
Certificate Balance.........................................................S-32
Certificate Underwriters....................................................S-40
Certificate Underwriting Agreement..........................................S-40
Certificateholders Interest Carryover Shortfall.............................S-33
Certificateholders' Distributable Amount....................................S-31
Certificateholders' Interest Distributable Amount...........................S-31
Certificateholders' Percentage..............................................S-31
Certificateholders' Principal Carryover Shortfall...........................S-33
Certificateholders' Principal Distributable Amount..........................S-31
Charge-off Rate.............................................................S-34
Class A-1 Final Scheduled Distribution Date.................................S-29
Class A-1 Interest Carryover Shortfall......................................S-33
Class A-1 Interest Distributable Amount.....................................S-31
Class A-2 Final Scheduled Distribution Date.................................S-29
Class A-2 Interest Carryover Shortfall......................................S-33
Class A-2 Interest Distributable Amount.....................................S-31
Class A-3 Final Scheduled Distribution Date.................................S-29
Class A-3 Interest Carryover Shortfall......................................S-33
Class A-3 Interest Distributable Amount.....................................S-31
Closing Date................................................................S-21
Code .......................................................................S-39
Collection Period...........................................................S-36
Current Receivable..........................................................S-34
Cutoff Date.................................................................S-21
Dealer Recourse.............................................................S-20
Defaulted Receivable........................................................S-31
Delinquency Percentage......................................................S-34
Determination Date..........................................................S-29
Eligible Investments........................................................S-36
Excess Amounts..............................................................S-33
Excess Payment..............................................................S-37
Financed Vehicles...........................................................S-21
Initial Certificate Balance.................................................S-32
Interest Carryover Shortfall................................................S-33
Interest Distributable Amount...............................................S-31
Interest Period.............................................................S-28
Liquidated Receivable.......................................................S-35
Net Liquidation Proceeds....................................................S-30
Note Underwriters...........................................................S-40
Note Underwriting Agreement.................................................S-40
Noteholders Interest Distributable Amount...................................S-31
Noteholders' Distributable Amount...........................................S-31
Noteholders' Percentage.....................................................S-31
Noteholders' Principal Carryover Shortfall..................................S-33
Owner Trustee...............................................................S-20
penalty bid.................................................................S-41
Plan........................................................................S-39
Pool Factor.................................................................S-27
Prepayment..................................................................S-36
Receivables Pool............................................................S-21
Receivables Purchase Agreement..............................................S-21
Seller......................................................................S-20
Servicing Fee Rate..........................................................S-36
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Specified Reserve Fund Balance..............................................S-34
stabilizing bid.............................................................S-41
syndicate covering transaction..............................................S-41
Total Distribution Amount...................................................S-31
Transfer and Servicing Agreements...........................................S-35
Trust ......................................................................S-20
Trust Agreement.............................................................S-20
Underwriters................................................................S-40
</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, Cedel 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 Cedel 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 Cedel or Euroclear and DTC
Participants holding securities will be effected on a delivery-against-payment
basis through the Relevant Depositaries of Cedel and Euroclear (in such
capacity) and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be subject
to U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing organizations
or their participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the name
of Cede & Co. as nominee of DTC. Investors' interests in the Global Securities
will be represented through financial institutions acting on their behalf as
direct and indirect Participants in DTC. As a result, Cedel and Euroclear will
hold positions on behalf of their participants through their Relevant
Depositaries, which in turn will hold such positions in accounts as DTC
Participants.
Investors electing to hold their Global Securities through DTC will follow DTC
settlement practice. Investor securities custody accounts will be credited with
their holdings against payment in same-day funds on the settlement date.
Investors electing to hold their Global Securities through Cedel 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 Cedel and/or Euroclear Participants. Secondary market
trading between Cedel Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
Trading between DTC Seller and Cedel or Euroclear Participants. When
Global Securities are to be transferred from the account of a DTC Participant to
the account of a Cedel Participant or a Euroclear Participant, the purchaser
will send instructions to Cedel or Euroclear through a Cedel Participant or
Euroclear Participant at least one business day prior to settlement. Cedel or
Euroclear will instruct the respective Depositary, as the case may be, to
receive the Global Securities against payment. Payment will include interest
accrued on the Global Securities from and including the last coupon payment date
to and excluding the settlement date, on the basis of the actual number of days
in such accrual period and a year assumed to consist of 360 days. For
transactions settling on the 31st of the month, payment will include interest
accrued to and excluding the first day of the following month. Payment will then
be made by the respective Depositary to the DTC Participant's account against
delivery of the Global Securities. After settlement has been completed, the
Global Securities will be credited to the respective clearing system and by the
clearing system, in accordance with its usual procedures, to the Cedel
Participant's or Euroclear Participant's account. The securities credit will
appear the next day (European time) and the cash debt will be back-valued to,
and the interest on the Global Securities will accrue from, the value date
(which would be the preceding day when settlement occurred in New York). If
settlement is not completed on the intended value date (i.e., the trade fails),
the Cedel or Euroclear cash debt will be valued instead as of the actual
settlement date.
Cedel Participants and Euroclear Participants will need to make available
to the respective clearing systems the funds necessary to process same-day funds
settlement. The most direct means of doing so is to preposition funds for
settlement, either from cash on hand or existing lines of credit, as they would
for any settlement occurring within Cedel or Euroclear. Under this approach,
they may take on credit exposure to Cedel or Euroclear until the Global
Securities are credited to their accounts one day later.
As an alternative, if Cedel or Euroclear has extended a line of credit to
them, Cedel Participants or Euroclear Participants can elect not to preposition
funds and allow that credit line to be drawn upon to finance settlement. Under
this procedure, Cedel Participants or Euroclear Participants purchasing Global
Securities would incur overdraft charges for one day, assuming they clear the
overdraft when the Global Securities are credited to their accounts. However,
interest on the Global Securities would accrue from the value date. Therefore,
in many cases the investment income on the Global Securities earned during that
one-day period may substantially reduce or offset the amount of such overdraft
charges, although this result will depend on each Cedel Participant's or
Euroclear Participant's particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Global Securities to
the respective European Depositary for the benefit of Cedel Participants or
Euroclear Participants. The sale proceeds will be available to the DTC seller on
the settlement date. Thus, to the DTC Participants a cross-market transaction
will settle no differently than a trade between two DTC Participants.
TRADING BETWEEN CEDEL OR EUROCLEAR SELLER AND DTC PURCHASER. Due to time
zone differences in their favor, Cedel Participants and Euroclear Participants
may employ their customary procedures for transactions in which Global
Securities are to be transferred by the respective clearing system, through the
respective Depositary, to a DTC Participant. The seller will send instructions
to Cedel or Euroclear through a Cedel Participant or Euroclear Participant at
least one business day prior to settlement. In these cases, Cedel or Euroclear
will instruct the Relevant Depositary, as appropriate, to deliver the Global
Securities to the DTC Participant's account against payment. Payment will
include interest accrued on the Global Securities from and including the last
coupon payment to and excluding the settlement date on the basis of the actual
number of days in such accrual period and a year assumed to consist of 360 days.
For transactions settling on the 31st of the month, payment will include
interest accrued to and excluding the first day of the following month. The
payment will then be reflected in the account of the Cedel Participant or
Euroclear Participant the following day, and receipt of the cash proceeds in the
Cedel Participant's or Euroclear Participant's account would be back-valued to
the value date (which would be the preceding day, when settlement occurred in
New York). Should the Cedel Participant or Euroclear Participant have a line of
credit with
<PAGE>
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 Cedel Participant's or Euroclear Participant's account would instead be
valued as of the actual settlement date.
Finally, day traders that use Cedel or Euroclear and that purchase Global
Securities from DTC Participants for delivery to Cedel 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 Cedel or Euroclear for one day (until the
purchase side of the day trade is reflected in their Cedel or Euroclear
accounts) in accordance with the clearing system's customary procedures;
(b) borrowing the Global Securities in the U.S. from a DTC
Participant no later than one day prior to settlement, which would give
the Global Securities sufficient time to be reflected in their Cedel or
Euroclear account in order to settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the
trade so that the value date for the purchase from the DTC Participant is
at least one day prior to the value date for the sale to the Cedel
Participant or Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities holding securities through Cedel
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
<PAGE>
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 or 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
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
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
1999-A 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 __________, 1999
TOYOTA AUTO RECEIVABLES 1999-A 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)...
</TABLE>
(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.
- --------------------------------------------------------------------------------
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
Certificate........... $_____________ _______% $_____________
Per Class B
Certificate........... $_____________ _______% $_____________
Per Class C
Certificate........... $_____________ _______% $_____________
Total................. $_____________ _______% $_____________
</TABLE>
(1) Plus accrued interest from ____________, 1999.
(2) Before deducting expenses payable by TMCRC, as the seller, estimated to be
$__________.
- --------------------------------------------------------------------------------
[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 __________, 1999
<PAGE>
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:
o the accompanying prospectus, which provides general information,
some of which may not apply to a particular class of certificates,
including your class; and
o 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 ___ in this prospectus supplement and under the caption "Index of Terms"
beginning on page ___ 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
1999-A. 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 [____________], 1999.
CUTOFF DATE [________________ ____, 1999]
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 __________, 1999.
A "business day" is any day except:
o a Saturday or Sunday;
o a day on which banks in New York
or Los Angeles are closed; or
o [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 The final principal payment for each class
DISTRIBUTION DATES 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 In general, certificateholders are entitled
PRINCIPAL PAYMENTS 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:
o 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
o 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:
o the portion of all scheduled
monthly payments on receivables
allocable to principal during
the preceding calendar month;
o the portion of all prepayments
on receivables allocable to
principal received by the
servicer during the preceding
calendar month;
o 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
o 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".
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
_______________, 1999.]
S-6
<PAGE>
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 You will generally hold your interests in
THE CERTIFICATES the securities through The Depository Trust
Company in the United States, or Cedel Bank,
societe anonyme 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 "RISK
FACTORS -- BOOK-ENTRY REGISTRATION" 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:
o the trust will be treated as a
grantor trust for United States
federal income tax purposes; and
o 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.
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.
S-7
<PAGE>
RATINGS OF THE CERTIFICATES It is a condition to the issuance of the
certificates that:
o 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.;
o the Class B Certificates be
rated at least "___" by Standard
& Poor's and at least "___" by
Moody's; and
o 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.
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 ______, 1999, 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.]
S-8
<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:
o certain monies due or received
under the receivables on and
after the cutoff date;
o security interests in the
vehicles financed under the
contracts;
o certain bank accounts and the
proceeds of those accounts; and
o 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".
THE RECEIVABLES On the closing date, the trust will purchase
receivables having the following
characteristics as of the cutoff date:
o Total Cutoff Date Principal Balance...
o Number of Receivables.................
o Average Cutoff Date Principal Balance.
o Average Original Amount Financed......
Range of Original Amounts Financed..
o Weighted Average APR(1)...............
Range of APRs.......................
o Weighted Average Original Number of
Scheduled Payments(1).................
Range of Original Number of
Scheduled Payments..................
o 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-9
<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.
For each distribution date, the servicer
will be obligated to advance to the trust
interest or principal on the receivables
that is due but unpaid by the obligors. If
the servicer determines that it will not be
able to recover an advance from an obligor,
the servicer may be reimbursed from
collections on other receivables.
FOR MORE DETAILED INFORMATION, YOU SHOULD
REFER TO "DESCRIPTION OF THE 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 allocate 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". Collection 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. The
servicer will be reimbursed from interest
collections for interest advances before
those collections are used to pay
noteholders and certificateholders. The
servicer will be reimbursed from principal
collections for principal advances before
those collections are used to pay
noteholders and cetificateholders.
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:
S-10
<PAGE>
o SERVICING FEE--the monthly
servicing fee payable to the
servicer;
o INTEREST ON THE CLASS A
CERTIFICATES--interest due on
the Class A Certificates,
including any unpaid interest
from prior distribution dates;
o INTEREST ON THE CLASS B
CERTIFICATES--interest due on
the Class B Certificates,
including any unpaid interest
from prior distribution dates;
and
o INTEREST ON THE CLASS C
CERTIFICATES--interest due on
the Class C Certificates,
including any unpaid interest
from prior distribution dates.
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:
o 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.
o CLASS B CERTIFICATES - from
collections otherwise allocable
to pay principal on the Class C
Certificates and from amounts on
deposit in the reserve fund
described below.
o 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.
S-11
<PAGE>
PAYMENTS FROM PRINCIPAL COLLECTIONS. Each
month, the trust will distribute principal
collections received during the prior
calendar month in the following order of
priority:
o PRINCIPAL ON THE CLASS A
CERTIFICATES -- principal due on
the Class A Certificates,
including any unpaid principal
from prior distribution dates;
o PRINCIPAL ON THE CLASS B
CERTIFICATES -- principal due on
the Class B Certificates,
including any unpaid principal
from prior distribution dates;
and
o PRINCIPAL ON THE CLASS C
CERTIFICATES -- principal due on
the Class C Certificates,
including any unpaid principal
from prior distribution dates.
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.
FOR MORE DETAILED INFORMATION CONCERNING
PAYMENTS ON THE CERTIFICATES AND PAYMENT
PRIORITIES, YOU SHOULD REFER TO "DESCRIPTION
OF THE CERTIFICATES--PAYMENTS" IN THIS
PROSPECTUS SUPPLEMENT.
Excess collections remaining in 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.
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
o subordination of the Class B and
C Certificates, as described
below; and
o the reserve fund.
S-12
<PAGE>
CLASS B CERTIFICATES
o subordination of the Class C
Certificates, as described
below; and
o the reserve fund.
CLASS C CERTIFICATES
o the reserve fund.
SUBORDINATION OF INTEREST AND PRINCIPAL
o 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, interest payments
on the Class A Certificates.
o 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.
S-13
<PAGE>
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:
o any remaining amounts will be
deposited into the reserve fund
to the extent necessary to
maintain the specified reserve
fund balance; or
o 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 "DESCRIPTION OF THE
CERTIFICATES--SUBORDINATION; RESERVE FUND"
IN THIS PROSPECTUS SUPPLEMENT.
S-14
<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:
o make early payments, since receivables will generally be
prepayable at any time without penalty;
o default, resulting in the repossession and sale of the
financed vehicle; or
o 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 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.
SUBORDINATION FEATURES INCREASE RISK OF LOSS OR DELAY IN PAYMENT TO CLASS
B AND CLASS C CERTIFICATES.
If you buy Class B Certificates:
o you will not receive any interest payments on a distribution date
until all interest owed on the Class A
S-15
<PAGE>
Certificates on that date has been paid; and
o 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:
o you will not receive any interest payments until all interest owed
on the Class A Certificates and Class B Certificates has been paid;
and
o 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 "Description of the Certificates -- 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 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 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 "Description of the Certificates -- 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:
<TABLE>
<CAPTION>
PERCENTAGE OF TOTAL PRINCIPAL BALANCE
<S> <C>
.................................. %
.................................. %
.................................. %
</TABLE>
S-16
<PAGE>
.................................. %
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 Cedel Bank, societe anonyme or the Euroclear
System in Europe. Transfers of interests in the certificates within DTC, Cedel
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 "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 Cedel 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, Cedel 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.
S-17
<PAGE>
THE TRUST
GENERAL
The Toyota Auto Receivables 1999-A 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 _____________,
1999 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".
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 rights 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; and
(vii) 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, the Trustee will appoint paying agents in Luxembourg
and Hong Kong. For so long as the Class A Certificates are listed on the
Luxembourg Stock Exchange or The Stock Exchange of Hong Kong Limited, the
Trustee will maintain paying agents in Luxembourg and Hong Kong. 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 Luxembourg at ___________, Luxembourg, at the offices of the
paying agent in Hong Kong at ___________, Hong Kong or such other paying agents
as may be specified in a written notice to the holders of Certificates described
below.]
S-18
<PAGE>
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 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 level
monthly 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 [__________], 1999; (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 which was subject
to force-placed insurance as of the Cutoff Date. TMCC does not originate retail
installment sales contracts in Hawaii, and retail installment sales contracts
originated in Texas 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-19
<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 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>
S-20
<PAGE>
<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-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. This is because the contracts serviced
by that company will not be included in the Trust.
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.
S-23
<PAGE>
HISTORICAL DELINQUENCY EXPERIENCE
<TABLE>
<CAPTION>
AT OR FOR THE FISCAL YEAR ENDED SEPTEMBER 30,
AT DECEMBER 31, ------------------------------------------------------------------------------------
1998 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>
- ----------
NET LOSS AND REPOSSESSION EXPERIENCE
<TABLE>
<CAPTION>
AT OR FOR THE THREE AT SEPTEMBER 30,
MONTHS ENDED ------------------------------------------------------------------------------------
DECEMBER 31, 1998 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 .........
</TABLE>
S-24
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Recoveries ..........
Net Losses ..........
Net Losses
as a
Percentage
of Net
Receivables
Outstanding
Net Losses
as a
Percentage
of Average
Net
Receivables
Outstanding
</TABLE>
- ------------------------
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 Class
Pool Factor 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
S-25
<PAGE>
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 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 [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 "Description of the Transfer and Servicing Agreements -- Sale and
Assignment of Receivables" in the Prospectus.
ACCOUNTS
In addition to the Accounts referred to under "Description of the 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" in this Prospectus Supplement and "Description of
the Transfer and Servicing Agreements -- Servicing Compensation and Payment of
Expenses" in the Prospectus.
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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
"Description of the Transfer and Sale 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
"Description of the Transfer and Sale 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 "Description of the Transfer and Sale 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 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 "Description of the
Transfer and Servicing Agreements -- Net Deposits" in the Prospectus.
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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 "Description of the 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.
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).
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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.
[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
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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 _______________, 1999. A "Business Day" is any day
except a Saturday or Sunday, a day on which banks in New York or Los Angeles 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 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.
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 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) 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");
(iii) all Advances made by the Servicer; and
(iv) 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.
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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) recovered from collections with respect
to certain 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 "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 Distributable Amount", "Class B
Distributable Amount" and "Class C 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.
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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.
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 _________,
1999, 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, the reimbursal of any Advances
and payment of the Interest Distributable Amount for any senior Class of
Certificates. See "Description of the Transfer and Servicing
Agreement--Payments" and "--Reserve Fund" in the Prospectus.
PAYMENTS OF PRINCIPAL. On each Distribution Date, commencing _____,
1999, 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;
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(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 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 Carryover Shortfall", Class B Principal
Carryover Shortfall" and "Class C Interest Carryover Shortfall", as applicable).
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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 "-- Servicing Compensation" and any 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.
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)
S-34
<PAGE>
% 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, 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 and
would result in a decrease in the Specified Reserve Fund Balance 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.
S-35
<PAGE>
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.
No Certificateholder, and neither the Seller nor the Servicer, will be
required to refund any amounts properly paid to them, whether or not there are
sufficient funds on any subsequent Distribution Date to make full payments to
Certificateholders of any Class.
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.
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).
S-36
<PAGE>
(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.
(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.
S-37
<PAGE>
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 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-38
<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
S-39
<PAGE>
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 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-40
<PAGE>
INDEX OF TERMS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Aggregate Net Losses......................................................S-35
Available Interest........................................................S-31
Available Principal.......................................................S-31
Benefit Plan..............................................................S-36
Business Day..............................................................S-30
Charge-off Rate...........................................................S-35
Class.....................................................................S-21
Class A Certificate Balance...............................................S-31
Class A Interest Carryover Shortfall......................................S-33
Class A Interest Distributable Amount.....................................S-31
Class A Principal Distributable Amount....................................S-31
Class B Certificate Balance...............................................S-32
Class B Interest Carryover Shortfall......................................S-33
Class B Interest Distributable Amount.....................................S-31
Class B Principal Distributable Amount....................................S-31
Class C Certificate Balance...............................................S-32
Class C Interest Carryover Shortfall......................................S-33
Class C Interest Distributable Amount.....................................S-31
Class C Principal Distributable Amount....................................S-31
Class Distributable Amount................................................S-31
Collection Period.........................................................S-26
Current Receivable........................................................S-35
Cutoff Date...............................................................S-19
Dealer Recourse...........................................................S-18
Defaulted Receivable......................................................S-31
Delinquency Percentage....................................................S-35
Determination Date........................................................S-28
DOL.......................................................................S-36
Eligible Investments......................................................S-27
Excess Amounts............................................................S-34
Excess Payment............................................................S-27
Exemptions................................................................S-36
Interest Carryover Shortfall..............................................S-33
Interest Distributable Amount.............................................S-31
Liquidated Receivable.....................................................S-35
Net Liquidation Proceeds..................................................S-30
Pool Factor...............................................................S-25
Prepayment................................................................S-27
Principal Carryover Shortfall.............................................S-33
Principal Distributable Amount............................................S-31
Receivables Pool..........................................................S-19
Receivables Purchase Agreement............................................S-19
Redemption Price..........................................................S-28
Restricted Group..........................................................S-37
</TABLE>
S-41
<PAGE>
<TABLE>
<S> <C>
Servicing Fee Rate........................................................S-26
Seller....................................................................S-18
Servicer..................................................................S-18
Specified Reserve Fund Balance............................................S-34
Trust.....................................................................S-18
TMCC......................................................................S-18
Underwriting Agreement....................................................S-38
</TABLE>
S-42
<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, Cedel or Euroclear. The Global Securities will be tradeable as home market
instruments in both the European and U.S. domestic markets. Initial settlement
and all secondary trades will settle in same-day funds.
Secondary market trading between investors holding Global Securities
through Cedel 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 Cedel or Euroclear and DTC Participants holding securities will
be effected on a delivery-against-payment basis through the Relevant
Depositaries of Cedel and Euroclear (in such capacity) and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be subject
to U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing organizations
or their participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the name
of Cede & Co. as nominee of DTC. Investors' interests in the Global Securities
will be represented through financial institutions acting on their behalf as
direct and indirect Participants in DTC. As a result, Cedel and Euroclear will
hold positions on behalf of their participants through their Relevant
Depositaries, which in turn will hold such positions in accounts as DTC
Participants.
Investors electing to hold their Global Securities through DTC will follow
DTC settlement practice. Investor securities custody accounts will be credited
with their holdings against payment in same-day funds on the settlement date.
Investors electing to hold their Global Securities through Cedel or Euroclear
accounts will follow the settlement procedures applicable to conventional
eurobonds, except that there will be no temporary global security and no
"lock-up" or restricted period. Global Securities will be credited to securities
custody accounts on the settlement date against payment in same-day funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled using the procedures applicable to prior
asset-backed securities issues in same-day funds.
Trading between Cedel and/or Euroclear Participants. Secondary market
trading between Cedel Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
TRADING BETWEEN DTC SELLER AND CEDEL OR EUROCLEAR PARTICIPANTS. When
Global Securities are to be transferred from the account of a DTC Participant to
the account of a Cedel Participant or a Euroclear Participant, the purchaser
will send instructions to Cedel or Euroclear through a Cedel Participant or
Euroclear Participant at least one business day prior to settlement. Cedel 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
A-1
<PAGE>
Securities from and including the last coupon payment date to and excluding the
settlement date, on the basis of the actual number of days in such accrual
period and a year assumed to consist of 360 days. For transactions settling on
the 31st of the month, payment will include interest accrued to and excluding
the first day of the following month. Payment will then be made by the
respective Depositary to the DTC Participant's account against delivery of the
Global Securities. After settlement has been completed, the Global Securities
will be credited to the respective clearing system and by the clearing system,
in accordance with its usual procedures, to the Cedel Participant's or Euroclear
Participant's account. The securities credit will appear the next day (European
time) and the cash debt will be back-valued to, and the interest on the Global
Securities will accrue from, the value date (which would be the preceding day
when settlement occurred in New York). If settlement is not completed on the
intended value date (i.e., the trade fails), the Cedel or Euroclear cash debt
will be valued instead as of the actual settlement date.
Cedel Participants and Euroclear Participants will need to make available
to the respective clearing systems the funds necessary to process same-day funds
settlement. The most direct means of doing so is to preposition funds for
settlement, either from cash on hand or existing lines of credit, as they would
for any settlement occurring within Cedel or Euroclear. Under this approach,
they may take on credit exposure to Cedel or Euroclear until the Global
Securities are credited to their accounts one day later.
As an alternative, if Cedel or Euroclear has extended a line of credit to
them, Cedel Participants or Euroclear Participants can elect not to preposition
funds and allow that credit line to be drawn upon to finance settlement. Under
this procedure, Cedel Participants or Euroclear Participants purchasing Global
Securities would incur overdraft charges for one day, assuming they clear the
overdraft when the Global Securities are credited to their accounts. However,
interest on the Global Securities would accrue from the value date. Therefore,
in many cases the investment income on the Global Securities earned during that
one-day period may substantially reduce or offset the amount of such overdraft
charges, although this result will depend on each Cedel Participant's or
Euroclear Participant's particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Global Securities to
the respective European Depositary for the benefit of Cedel Participants or
Euroclear Participants. The sale proceeds will be available to the DTC seller on
the settlement date. Thus, to the DTC Participants a cross-market transaction
will settle no differently than a trade between two DTC Participants.
TRADING BETWEEN CEDEL OR EUROCLEAR SELLER AND DTC PURCHASER. Due to time
zone differences in their favor, Cedel Participants and Euroclear Participants
may employ their customary procedures for transactions in which Global
Securities are to be transferred by the respective clearing system, through the
respective Depositary, to a DTC Participant. The seller will send instructions
to Cedel or Euroclear through a Cedel Participant or Euroclear Participant at
least one business day prior to settlement. In these cases, Cedel or Euroclear
will instruct the Relevant Depositary, as appropriate, to deliver the Global
Securities to the DTC Participant's account against payment. Payment will
include interest accrued on the Global Securities from and including the last
coupon payment to and excluding the settlement date on the basis of the actual
number of days in such accrual period and a year assumed to consist of 360 days.
For transactions settling on the 31st of the month, payment will include
interest accrued to and excluding the first day of the following month. The
payment will then be reflected in the account of the Cedel Participant or
Euroclear Participant the following day, and receipt of the cash proceeds in the
Cedel Participant's or Euroclear Participant's account would be back-valued to
the value date (which would be the preceding day, when settlement occurred in
New York). Should the Cedel 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 Cedel Participant's or Euroclear Participant's account
would instead be valued as of the actual settlement date.
Finally, day traders that use Cedel or Euroclear and that purchase Global
Securities from DTC Participants for delivery to Cedel 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-2
<PAGE>
(a) borrowing through Cedel or Euroclear for one day (until the
purchase side of the day trade is reflected in their Cedel or Euroclear
accounts) in accordance with the clearing system's customary procedures;
(b) borrowing the Global Securities in the U.S. from a DTC
Participant no later than one day prior to settlement, which would give
the Global Securities sufficient time to be reflected in their Cedel or
Euroclear account in order to settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the
trade so that the value date for the purchase from the DTC Participant is
at least one day prior to the value date for the sale to the Cedel
Participant or Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities holding securities through Cedel
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 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
A-3
<PAGE>
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 or specific tax advice
concerning their holding and disposing of Global Securities.
A-4
<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-34
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 . . . . . . . . . . . . . . . . . . . . . . . . $ 278.00
Blue Sky Fees and Expenses . . . . . . . . . . . . . . . . . . . **
Printing Expenses. . . . . . . . . . . . . . . . . . . . . . . . **
Trustee Fees and Expenses. . . . . . . . . . . . . . . . . . . . **
Legal Fees and Expenses. . . . . . . . . . . . . . . . . . . . . **
Accounting Fees and Expenses . . . . . . . . . . . . . . . . . . **
Rating Agencies' Fees. . . . . . . . . . . . . . . . . . . . . . **
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . **
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ **
* All amounts except registration fee are estimates.
** Amounts to be filed by amendment.
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
a. Exhibits:
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. *
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 Exhibit
5.1 (a) (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 Statement of Eligibility on Form T-1 of Trustee *
- ----------------
* To be filed by amendment.
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 April 16, 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
Know all men by these presents, that each person whose signature appears
below constitutes and appoints Gregory Willis, Jerome Lienhard and Dian Ogilvie
as his true and lawful attorney-in-fact and agent, with full powers of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign and to file any and all amendments, including post-effective
amendments to this Registration Statement, with the Securities and Exchange
Commission granting to said attorney-in-fact power and authority to perform any
other act on behalf of the undersigned required to be done in connection
therewith.
Pursuant to the requirements of the Securities Act of 1933, this
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 April 16, 1999
- --------------------
Lloyd Mistele
/s/ Nobukazu Tsurumi Director and Principal Financial Officer April 16, 1999
- -------------------- and Principal Accounting Officer
Nobukazu Tsurumi
/s/ Donald J. Puglisi Director April 16, 1999
- --------------------
Donald J. Puglisi
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 April 16, 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
Know all men by these presents, that each person whose signature appears
below constitutes and appoints Gregory Willis, Jerome Lienhard and Dian Ogilvie
as his true and lawful attorney-in-fact and agent, with full powers of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign and to file any and all amendments, including post-effective
amendments to this Registration Statement, with the Securities and Exchange
Commission granting to said attorney-in-fact power and authority to perform any
other act on behalf of the undersigned required to be done in connection
therewith.
Pursuant to the requirements of the Securities Act of 1933, this
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 April 16, 1999
- -------------------- General Manager of TMCC
George E. Borst (principal executive officer)
/s/ Robert Pitts Director and Secretary of TMCC April 16, 1999
- --------------------
Robert Pitts
/s/ Nobukazu Tsurumi Director, Group Vice President and April 16, 1999
- -------------------- Treasurer of TMCC (principal financial
Nobukazu Tsurumi officer)
/s/ Douglas West Director of TMCC April 16, 1999
- --------------------
Douglas West
/s/ Yale Gieszl Director of TMCC April 16, 1999
- --------------------
Yale Gieszl
/s/ Gregory Willis Vice President of Finance and April 16, 1999
- -------------------- Administration of TMCC (principal
Gregory Willis accounting officer)
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 April 16, 1999
TOYOTA MOTOR CREDIT RECEIVABLES CORPORATION
By: /s/ Lloyd Mistele
-----------------------------------------------
Lloyd Mistele,
DIRECTOR AND PRESIDENT
Know all men by these presents, that each person whose signature appears
below constitutes and appoints Gregory Willis, Jerome Lienhard and Dian Ogilvie
as his true and lawful attorney-in-fact and agent, with full powers of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign and to file any and all amendments, including post-effective
amendments to this Registration Statement, with the Securities and Exchange
Commission granting to said attorney-in-fact power and authority to perform any
other act on behalf of the undersigned required to be done in connection
therewith.
Pursuant to the requirements of the Securities Act of 1933, this
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 April 16, 1999
- --------------------
Lloyd Mistele
/s/ Nobukazu Tsurumi Director and Principal Financial Officer April 16, 1999
- -------------------- and Principal Accounting Officer
Nobukazu Tsurumi
/s/ Donald J. Puglisi Director April 16, 1999
- --------------------
Donald J. Puglisi
II-6
<PAGE>
EXHIBIT INDEX
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. *
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 Exhibit
5.1 (a) (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 Statement of Eligibility on Form T-1 of Trustee *
- ----------------
* To be filed by amendment.
<PAGE>
TRUST AGREEMENT
between
TOYOTA MOTOR CREDIT RECEIVABLES CORPORATION,
as Depositor,
and
-,
as Owner Trustee
Dated as of _
TOYOTA AUTO RECEIVABLES 199 - OWNER TRUST
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions...................................................1
SECTION 1.02 Usage of Terms................................................4
ARTICLE II
CREATION OF TRUST
SECTION 2.01 Creation of Trust.............................................4
SECTION 2.02 Office........................................................4
SECTION 2.03 Purposes and Powers...........................................4
SECTION 2.04 Appointment of Owner Trustee..................................5
SECTION 2.05 Initial Capital Contribution of Owner Trust Estate............5
SECTION 2.06 Declaration of Trust..........................................5
SECTION 2.07 Liability of the Certificateholders, Depositor and TMCC.......6
SECTION 2.08 Title to Trust Property.......................................6
SECTION 2.09 Situs of Trust................................................6
SECTION 2.10 Representations and Warranties of the Depositor...............7
SECTION 2.11 Federal Income Tax Allocations................................8
ARTICLE III
CERTIFICATES AND TRANSFER OF INTERESTS
SECTION 3.01 Initial Ownership.............................................8
SECTION 3.02 The Certificates..............................................8
SECTION 3.03 Authentication of Certificates................................9
SECTION 3.04 Registration of Transfer and Exchange of Certificates.........9
SECTION 3.05 Mutilated, Destroyed, Lost or Stolen Certificates............11
SECTION 3.06 Persons Deemed Owners........................................11
SECTION 3.07 Access to List of Certificateholders' Names and Addresses....11
SECTION 3.08 Maintenance of Office or Agency..............................12
SECTION 3.09 Appointment of Paying Agent..................................12
SECTION 3.10 Ownership by the Depositor of Certificates...................13
SECTION 3.11 Book-Entry Certificates......................................13
-i-
<PAGE>
TABLE OF CONTENTS
(continued)
Page
SECTION 3.12 Notices to Clearing Agency...................................14
SECTION 3.13 Definitive Certificates......................................14
SECTION 3.14 Temporary Certificates.......................................14
ARTICLE IV
ACTIONS BY OWNER TRUSTEE OR OWNERS
SECTION 4.01 Prior Notice to Owners with Respect to Certain Matters.......15
SECTION 4.02 Action by Owners with Respect to Certain Matters.............15
SECTION 4.03 Action with Respect to Bankruptcy............................16
SECTION 4.04 Restrictions on Owners' Power................................16
SECTION 4.05 Majority Control.............................................16
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
SECTION 5.01 Establishment of Collection Account..........................16
SECTION 5.02 Application of Amounts in Trust Accounts.....................17
SECTION 5.03 Method of Payment............................................18
SECTION 5.04 Accounting and Reports to the Noteholders, Owners, the
Internal Revenue Service and Others..........................18
SECTION 5.05 Signature on Returns; Tax Matter Partner.....................18
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.01 General Authority............................................19
SECTION 6.02 General Duties...............................................19
SECTION 6.03 Action Upon Instruction......................................19
SECTION 6.04 No Duties Except as Specified in this Agreement or in
Instructions.................................................20
SECTION 6.05 No Action Except Under Specified Documents or Instructions...21
SECTION 6.06 Restrictions.................................................21
-ii-
<PAGE>
TABLE OF CONTENTS
(continued)
Page
ARTICLE VII
CONCERNING THE OWNER TRUSTEE
SECTION 7.01 Acceptance of Trusts and Duties..............................21
SECTION 7.02 Furnishing of Documents......................................22
SECTION 7.03 Representations and Warranties...............................22
SECTION 7.04 Reliance; Advice of Counsel..................................23
SECTION 7.05 Not Actingin Individual Capacity.............................23
SECTION 7.06 Owner Trustee Not Liable for Certificates or Receivables.....24
SECTION 7.07 Owner Trustee May Own Certificates and Notes.................24
SECTION 7.08 [Pennsylvania Motor Vehicle Sales Finance Act Licenses.......24
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
SECTION 8.01 Owner Trustee's Fees and Expenses............................24
SECTION 8.02 Indemnification..............................................25
SECTION 8.03 Payments to the Owner Trustee................................25
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
SECTION 9.01 Termination of Trust Agreement...............................25
SECTION 9.02 Dissolution upon Bankruptcy of the Depositor.................26
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.01 Eligibility Requirements for Owner Trustee...................27
SECTION 10.02 Resignation or Removal of Owner Trustee......................27
SECTION 10.03 Successor Owner Trustee......................................28
SECTION 10.04 Merger or Consolidation of Owner Trustee.....................28
SECTION 10.05 Appointment of Co-Trustee or Separate Trustee................28
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TABLE OF CONTENTS
(continued)
Page
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 Supplements and Amendments...................................30
SECTION 11.02 No Legal Title to Owner Trust Estate in Owners...............31
SECTION 11.03 Limitations on Rights of Others..............................31
SECTION 11.04 Notices......................................................31
SECTION 11.05 Severability.................................................31
SECTION 11.06 Counterparts.................................................32
SECTION 11.07 Successors and Assigns.......................................32
SECTION 11.08 No Petition..................................................32
SECTION 11.09 No Recourse..................................................32
SECTION 11.10 Headings.....................................................32
SECTION 11.11 GOVERNING LAW................................................32
SECTION 11.12 TMCC Payment Obligation......................................32
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ARTICLE I
Definitions
1.01 Definitions. Except as otherwise specified herein or in the context
may otherwise require, capitalized terms used but not otherwise defined herein
have the meanings ascribed thereto in the Sale and Servicing Agreement for all
purposes of this Trust Agreement. Except as otherwise provided in this
Agreement, whenever used herein the following words and phrases, unless the
context otherwise requires, shall have the following meanings:
"Administration Agreement" means any agreement executed on or before the
Closing Date among the Trust, the Indenture Trustee and a third party that
undertakes to perform certain of the duties and obligations of the Trust and the
Owner Trustee hereunder, under the Sale and Servicing Agreement and under the
Indenture.
"Agreement" means this Trust Agreement, as the same may be amended and
supplemented from time to time.
"Basic Documents" means the Receivables Purchase Agreement, the Agreement,
the Certificate of Trust, the Sale and Servicing Agreement, the Indenture, the
Yield Maintenance Agreement, the Administration Agreement, the Depository
Agreements and the other documents and certificates delivered in connection
herewith and therewith.
"Benefit Plan" shall have the meaning assigned to such term in Section
11.13.
"Book-Entry Certificate" and "Book-Entry Note" means, respectively, a
beneficial interest in the Certificates, or in Notes of any Class, as the case
may be, ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in Section 3.12 and Section 2.11 of the Indenture.
"Business Trust Statute" means Chapter 38 of Title 12 of I the Delaware
Code, 12 Del. Code ss.3801 et seq., as the same may be amended from time to
time.
"Certificate" means a certificate evidencing a beneficial ownership
interest in the Trust, substantially in the form attached hereto as Exhibit A.
"Certificate Depository Agreement" means the agreement entitled "Letter of
Representations" dated on or before the Closing Date among the Clearing Agency,
the Trust and the Owner Trustee with respect to certain matters relating to the
duties thereof with respect to the Book-Entry Certificates, substantially in the
form attached hereto as Exhibit C.
"Certificate of Trust" means the Certificate of Trust to be filed with
respect to the formation of the Company pursuant to Section 3810(a) of the
Business Trust Statute, substantially in the form attached hereto as Exhibit B.
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"Certificate Owner" means, with respect to a Book-Entry Certificate, the
Person who is the beneficial owner of such Book-Entry Certificate, as reflected
on the books and records of the Clearing Agency, or on the books and records of
a Person maintaining an account with such Clearing Agency (directly as a
Clearing Agency Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency) and shall mean, with respect
to a Definitive Certificate, the related Certificateholder.
"Certificate Register" means the register maintained pursuant to
Section 3.04.
"Certificateholder" or "Holder" means a Person in whose name a Certificate
is registered in the Certificate Register, except that, solely for the purposes
of giving certain consents, waivers, requests or demands pursuant to this
Agreement, the interest evidenced by any Certificate registered in the name of
TMCRC or TMCC, or any Person actually known to a Responsible Officer of the
Trustee to be controlling, controlled by or under common control with TMCRC or
TMCC, shall not be taken into account in determining whether the requisite
percentage necessary to effect any such consent, waiver, request or demand shall
have been obtained.
"Certificate Registrar" means the Owner Trustee unless and until a
successor thereto is appointed pursuant to Section 3.04. The Certificate
Registrar initially designates its offices at -, as its offices for purposes of
Section 3.04.
"Clearing Agency" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Code" means the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations promulgated thereunder.
"Corporate Trust Office" means, with respect to the Owner Trustee, the
principal corporate trust office of the Owner Trustee located at o; or at such
other address as the Owner Trustee may designate by notice to the Owners, or the
principal corporate trust office of any successor Owner Trustee (the address of
which the successor owner trustee will notify the Owners).
"Definitive Certificates" shall have the meaning set forth in Section
3.12.
"Depositor" means TMCRC in its capacity as Depositor hereunder.
"Depository Agreements" means the agreement or agreements dated on or
before the Closing Date among the Trust, as issuer of the Certificates and the
Notes, the Owner Trustee, the Indenture Trustee and the Clearing Agency through
which interests in Book-Entry Certificates or Book-Entry Notes are transferred.
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"Expenses" shall have the meaning assigned to such term in Section 8.02.
"Indenture" means any indenture entered into between the Trust and the
Indenture Trustee named therein pursuant to which a series of Notes is issued.
"Initial Certificate Balance" means $-.
"Notes" means the notes issued by the Trust pursuant to an Indenture
between the Trust and an Indenture Trustee, dated on or after the date hereof,
having the payment and other terms set forth in such Indenture.
"Owner Trust Estate" means all right, title and interest of the Trust in
and to the property and rights assigned to the Trust pursuant to Article II of
the Sale and servicing Agreement, all funds on deposit from time to time in the
Trust Accounts and all other property of the Trust from time to time, including
any rights of the Owner Trustee and the Trust pursuant to the Sale and Servicing
Agreement and the Administration Agreement.
"Owner Trustee" means -, a [Delaware banking corporation], not in its
individual capacity but solely as owner trustee under this Agreement, and any
successor Owner Trustee hereunder.
"Pass Through Rate" means -% per annum.
"Paying Agent" means any paying agent or co-paying agent appointed
pursuant to Section 3.09, and shall initially be -.
"Receivables Purchase Agreement" means that certain Receivables Purchase
Agreement, dated as of the Cutoff Date, between TMCC, as Seller, and TMCRC, as
Purchaser of the Receivables.
"Record Date" means, with respect to any Distribution Date, the calendar
day immediately preceding such Distribution Date or, if Definitive Certificates
have been issued, the last day of the month immediately preceding the month in
which such Distribution Date occurs. Any amount stated "as of a Record Date" or
"on a Record Date" shall give effect to (i) all applications of collections, and
(ii) all distributions to any party under this Agreement, the Sale and Servicing
Agreement or the Indenture, or to the related Obligor, as the case may be, in
each case as determined as of the opening of business on the related Record
Date.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement
dated as of the date hereof, among the Trust, TMCRC, as seller, and TMCC, as
servicer.
"Secretary of State" means the Secretary of State of the State of
[Delaware].
"TMCC" means Toyota Motor Credit Corporation, a California corporation,
its successors and assigns.
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"TMCRC" means Toyota Motor Credit Receivables Corporation, a California
corporation, its successors and assigns.
"Treasury Regulations" means regulations, including proposed or temporary
regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust" means the Toyota Auto Receivables 199_-_ Owner Trust, formed as a
[Delaware] business trust pursuant to this Agreement and the filing of the
Certificate of Trust.
["Yield Maintenance Agreement" means the Yield Maintenance Agreement
dated as of - among [third party,][TMCC,] the Depositor and the Trust.]
1.02 Usage of Terms. With respect to all terms in this Agreement, the
singular includes the plural and the plural the singular; words importing any
gender include the other genders; references to "writing" include printing,
typing, lithography and other means of reproducing words in a visible form;
references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement; references to
Persons include their permitted successors and assigns; and the term "including"
means "including without limitation."
ARTICLE II
Creation of Trust
2.01 Creation of Trust. Upon the execution of this Agreement by the
parties hereto and the prompt filing thereafter of the Certificate of Trust,
there is hereby created the "Toyota Auto Receivables 199_-_ Owner Trust", in
which name the Owner Trustee may conduct the business of the Trust, make and
execute contracts and other instruments on behalf of the Trust and sue and be
sued.
2.02 Office. The office of the Trust shall be in care of the Owner Trustee
at the Corporate Trust Office or at such other address in [Delaware] as the
Owner Trustee may designate by written notice to the Certificateholders and the
Depositor.
2.03 Purposes and Powers.
(a) The purpose of the Trust is to engage in the following activities:
(i) to issue Notes pursuant to an Indenture and Certificates
pursuant to this Agreement and to sell such Notes and Certificates;
(ii) with the proceeds of the sale of Notes and Certificates, to
make the Reserve Fund Initial Deposit and the Yield Maintenance Account
Initial Deposit (each as defined
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in the Sale and Servicing Agreement), to pay the organizational, start-up
and transactional expenses of the Trust and to pay the balance to the
Depositor pursuant to the Sale and Servicing Agreement;
(iii) to assign, grant, transfer, pledge, mortgage and convey the
Trust Estate pursuant to, and on the terms and conditions set forth in,
the Indenture and to hold, manage and distribute to the Certificateholders
pursuant to the terms of the Sale and Servicing Agreement any portion of
the Trust Estate released from the Lien of, and remitted to the Trust
pursuant to, the Indenture as set forth herein;
(iv) to enter into and perform its obligations under the Basic
Documents to which it is to be a party;
(v) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith; and
(vi) subject to compliance with the Basic Documents, to engage in
such other activities as may be required in connection with conservation
of the Owner Trust Estate and the making of distributions to the Owners
and the Noteholders and in respect of amounts to be released to the
Depositor, the Servicer, the Administrator or [and third party, if any].
The Trust is hereby authorized to engage in the foregoing activities. The
Trust shall not engage in any activity other than in connection with the
foregoing and as required or authorized by the terms of the Basic Documents.
2.04 Appointment of Owner Trustee. The Depositor hereby appoints the Owner
Trustee as trustee of the Trust effective as of the date hereof, to have all the
rights, powers and duties set forth herein.
2.05 Initial Capital Contribution of Owner Trust Estate. The Depositor
hereby sells, assigns, transfers, conveys and sets over to the Owner Trustee, as
of the date hereof, the sum of $1. The Owner Trustee hereby acknowledges receipt
in trust from the Depositor, as of the date hereof, of the foregoing
contribution, which shall constitute the initial Owner Trust Estate and shall be
deposited in the Collection Account. The Depositor shall pay organizational
expenses of the Trust as they may arise or shall, upon the request of the Owner
Trustee, promptly reimburse the Owner Trustee for any such expenses paid by the
Owner Trustee.
2.06 Declaration of Trust. The Owner Trustee hereby declares that it will
hold the Owner Trust Estate in trust upon and subject to the conditions set
forth herein for the use and benefit of the Owners, subject to the obligations
of the Trust under the Basic Documents. It is the intention of the parties
hereto that the Trust constitute a business trust under the Business Trust
Statute and that this Agreement constitute the governing instrument of such
business trust. It is the intention of the parties hereto that, solely for
income and franchise tax purposes, the Trust shall be treated as a partnership,
with the assets of the partnership being the Receivables and other assets held
by
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the Trust, the partners of the partnership being the Certificateholders and the
Depositor (as recipient of distributions from the Reserve Fund and the Yield
Maintenance Account without regard to whether the Depositor is also a
Certificateholder), and the Notes being debt of the partnership. The parties
agree that, unless otherwise required by appropriate tax authorities, the Trust
will file or cause to be filed annual or other necessary returns, reports and
other forms consistent with the characterization of the Trust as a partnership
for such tax purposes. Effective as of the date hereof, the Owner Trustee shall
have all rights, powers and duties set forth herein and in the Business Trust
Statute with respect to accomplishing the purposes of the Trust.
2.07 Liability of the Certificateholders, Depositor and TMCC.
(a) The Depositor and TMCC shall be liable directly to and will indemnify
and hold harmless the Trustee and the Indenture Trustee for any loss, liability
or expense of the Trust (including Expenses, to the extent not paid out of the
owner Trust Estate) to the extent that the Company would be liable if the Trust
were a partnership under the [Delaware] Revised Uniform Limited Partnership Act
in which the Company were a general partner; provided, however, that the
Depositor and TMCC shall not be liable for any losses incurred by a
Certificateholder in the capacity of an investor in the Certificates or a
Noteholder in the capacity of an investor in the Notes and will not and shall
not be deemed hereby to have indemnified the Trustee or Indenture Trustee
against any loss liability or expense resulting from such Trustee's own willful
misfeasance, bad faith or negligence or by reason of a breach of representation
or warranty thereof contained herein or in the Indenture, as the case may be. In
addition, any third party creditors of the Trust (other than in connection with
the obligations described in the provisions in the preceding sentence for which
the Company shall not be liable) shall be deemed to be third party beneficiaries
of this paragraph. The obligations of the Depositor and TMCC under this
paragraph shall be evidenced by the Certificates described in Section 3.10,
which for purposes of the Business Trust Statute shall be deemed to be a
separate class of Certificates from all other Certificates issued by the Trust;
provided, that the rights and obligations evidenced by all Certificates,
regardless of class, shall, except as provided in this Section, and except with
respect to the release to the Depositor of certain amount from the Reserve Fund
and the Yield Maintenance Account, be identical.
(b) Except to the extent set forth in paragraph (a), no Certificateholder
shall have any personal liability for any liability or obligation of the Trust.
2.08 Title to Trust Property. Legal title to all the Owner Trust Estate
shall be vested at all times in the Trust as a separate legal entity except
where applicable law in any jurisdiction requires title to any part of the Owner
Trust Estate to be vested in a trustee or trustees, in which case title shall be
deemed to be vested in the Owner Trustee, a co-trustee and/or a separate
trustee, as the case may be.
2.09 Situs of Trust. The Trust will be located and administered in the
state of [Delaware]. All bank accounts maintained by the Owner Trustee on behalf
of the Trust shall be located in the State of [Delaware] or the State of New
York. The Trust shall not have any employees in any state other than [Delaware];
provided, however, that nothing herein shall restrict or prohibit the
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Owner Trustee from having employees within or without the State of [Delaware].
Payments will be received by the Trust only in [Delaware] or New York, and
payments will be made by the Trust only from [Delaware] or [New York]. The only
office of the Trust will be at the Corporate Trust Office in [Delaware].
2.10 Representations and Warranties of the Depositor.
(a) The Depositor hereby represents and warrants to the Owner Trustee
that:
(i) The Depositor is duly organized and validly existing as a
corporation in good standing under the laws of the State of California,
with corporate power and authority to own its properties and to conduct
its business as such properties are currently owned and such business is
presently conducted, and has corporate power, authority and legal right to
acquire, own and sell property including the Receivables.
(ii) The Depositor is duly qualified to do business as a foreign
corporation in good standing, and has obtained all necessary licenses and
approvals in all jurisdictions in which the ownership or lease of property
or the conduct of its business shall require such qualifications.
(iii) The Depositor has the corporate power and authority to execute
and deliver this Agreement and to carry out its terms; the Depositor has
full corporate power and authority to sell and assign the property to be
sold and assigned to and deposited with the Trust and the Depositor has
duly authorized such sale and assignment and deposit to the Trust by all
necessary corporate action; and the execution, delivery and performance of
this Agreement has been duly authorized by the Depositor by all necessary
corporate action.
(iv) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict with,
result in any breach of any of the terms and provisions of, or constitute
(with or without notice or lapse of time) a default under, the articles of
incorporation or bylaws of the Depositor, or any indenture, agreement or
other instrument to which the Depositor is a party or by which it is
bound, nor result in the creation or imposition of any Lien upon any of
its properties pursuant to the terms of any such indenture agreement or
other instrument (other than pursuant to the Basic Documents); nor violate
any law or, to the best of the Depositor's knowledge, any order, rule or
regulation applicable to the Depositor of any court or of any federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Depositor or its properties
which breach, default, conflict, lien or violation would have a material
adverse effect on the earnings, business affairs or business prospects of
the Depositor.
(v) There is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending, or to the
Depositor's knowledge, threatened, against or affecting the Depositor: (i)
asserting the invalidity of this Agreement, (ii) seeking to prevent the
consummation of any of the transactions
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contemplated by this Agreement, (iii) seeking any determination or ruling
that might materially and adversely affect the performance by the
Depositor of its obligations under, or the validity or enforceability of,
this Agreement or (iv) relating to the Depositor and which might adversely
affect the federal income tax attributes of the Trust or the Certificates
or Notes.
2.11 Federal Income Tax Allocations. Net income of the Trust for any month
as determined tor Federal income tax purposes (and each item of income, gain,
loss and deduction entering into the computation thereof) shall be allocated:
(a) among the Certificate Owners as of the first Distribution Date
following the end of such month, in proportion to their ownership of principal
amount of Certificates on such date, an amount of net income up to the sum of
(i) the Certificateholders, Interest Distributable Amount for such month, (ii)
interest on the Certificateholders' Interest Carryover Shortfall for such
Distribution Date, to the extent permitted by law, at the Pass Through Rate from
the preceding Distribution Date through the current Distribution Date, and (iii)
any amount expected to be distributed to the Certificateholders pursuant to
Section 5.07(g) of the Sale and Servicing Agreement (to the extent not
previously allocated pursuant to this clause); and
(b) to the Depositor, to the extent of any remaining net income.
If the net income of the Trust for any month is insufficient for the allocations
described in clause (a) above, subsequent net income shall first be allocated to
make up such shortfall before being allocated as provided in the preceding
sentence. Net losses of the Trust, if any, for any month as determined for
Federal income tax purposes (and each item of income, gain, loss and deduction
entering into the computation thereof) shall be allocated to the Depositor to
the extent the Depositor has agreed hereunder and under the Sale and Servicing
Agreement and the Indenture to bear the economic burden of such net losses, and
any remaining net losses shall be allocated among the Certificate Owners as of
the first Distribution Date following the end of such month in proportion to
their ownership of principal amount of Certificates as of the close of business
on such Distribution Date. The Depositor is authorized to modify the allocations
in this paragraph if necessary or appropriate, in its sole discretion, for the
allocations to fairly reflect the economic income, gain or loss to the Depositor
or to the Certificate Owners, or as otherwise required by the Code.
ARTICLE III
Certificates and Transfer of Interests
3.01 Initial Ownership. Upon the formation of the Trust by the transfer by
the Depositor of the initial capital contribution pursuant to Section 2.05, and
until the issuance of the Certificates, the Depositor shall be the sole Owner of
the Trust.
3.02 The Certificates. The Certificates shall be issued in minimum
denominations of $_____ and in integral multiples of $______ in excess thereof;
provided, however, one
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Certificate issued to the Depositor pursuant to Section 3.10 may be issued in an
irregular denomination that includes any residual amount. The Certificates shall
be executed on behalf of the Trust by manual or facsimile signature of a
Responsible Officer of the Owner Trustee and authenticated on behalf of the
Owner Trustee by the manual or facsimile signature of a Responsible Officer.
Certificates bearing the manual or facsimile signatures of individuals who were,
at the time when such signatures shall have been affixed, authorized to sign on
behalf of the Trust, shall be valid and binding obligations of the Trust,
notwithstanding that such individuals or any of them shall have ceased to be so
authorized prior to the authentication and delivery of such Certificates or did
not hold such offices at the date of authentication and delivery of such
Certificates. All Certificates shall be dated the date of their authentication.
A transferee of a Certificate shall become a Certificateholder, and shall
be entitled to the rights and subject to the obligations of a Certificateholder
hereunder, upon such transferee's acceptance of a Certificate duly registered in
such transferee's name pursuant to Section 3.04.
3.03 Authentication of Certificates. Concurrently with the initial sale of
the Receivables to the Trust pursuant to the Sale and Servicing Agreement, the
Owner Trustee shall cause to be executed, authenticated and delivered on behalf
of the Trust to or upon the written order of the Depositor Certificates in an
aggregate principal amount equal to the Initial Certificate Balance and
evidencing the entire ownership of the Trust. No Certificate shall entitle its
holder to any benefit under this Agreement or be valid for any purpose, unless
there shall appear on such Certificate a certificate of authentication
substantially in the form set forth in Exhibit A, executed by the Owner Trustee
or -, as the Owner Trustee's authenticating agent, by manual or facsimile
signature of a Responsible Officer, and such authentication shall constitute
conclusive evidence, and the only evidence, that such Certificate shall have
been duly authenticated and delivered hereunder. All Certificates shall be dated
the date of their authentication.
3.04 Registration of Transfer and Exchange of Certificates.
(a) The Certificate Registrar shall keep or cause to be kept, at the
office or agency maintained pursuant to Section 3.08, a Certificate Register in
which, subject to such reasonable regulations as it may prescribe, the Owner
Trustee shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided. [The Owner Trustee] [o] shall be
the initial Certificate Registrar. In the event that the Certificate Registrar
shall for any reason become unable to act as Certificate Registrar, the
Certificate Registrar shall promptly give written notice to such effect to the
Depositor, the Owner Trustee and the Servicer. Upon receipt of such notice, the
Servicer shall appoint another bank or trust company, having an office or agency
located in the [Borough of Manhattan], The City of New York, and that shall
agree to act in accordance with the provisions of this Agreement applicable to
it, and otherwise acceptable to the Owner Trustee, to act as successor
Certificate Registrar under this Agreement.
(b) Upon surrender for registration of transfer of any Certificate at the
office or agency maintained pursuant to Section 3.08, the Owner Trustee shall
execute, authenticate and deliver (or shall cause - as its authenticating agent
to authenticate and deliver), in the name of the designated transferee or
transferees, one or more new Certificates in authorized denominations of
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a like aggregate amount dated the date of authentication by the Owner Trustee or
any authenticating agent. At the option of a Holder, Certificates may be
exchanged for other Certificates of authorized denominations of a like aggregate
amount upon surrender of the Certificates to be exchanged at the office or
agency maintained pursuant to Section 3.08. The preceding provisions of this
Section notwithstanding, the Owner Trustee shall not make and the Certificate
Registrar shall not register transfer or exchanges of Certificates for a period
of 15 days preceding the due date for any payment with respect to the
Certificates.
(c) Every Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer in
form satisfactory to the Owner Trustee and the Certificate Registrar duly
executed by the Holder or his attorney duly authorized in writing. Each
Certificate surrendered for registration of transfer or exchange shall be
cancelled disposed of by the Owner Trustee in accordance with its customary
practice.
No transfer of a Certificate shall be made unless the Owner Trustee shall
have received a representation from the transferee of such Certificate
acceptable to and in form and substance satisfactory to the Owner Trustee (in
the event such Certificate is a Definitive Certificate, such requirement will be
satisfied only by the Owner Trustee's receipt of a representation letter from
the transferee substantially in the form of Exhibit C) to the effect that:
(i) such transferee (A) is not an employee benefit plan or
arrangement subject to Section 406 of ERISA or a plan subject to Section
4975 of the Code (a "Plan"), nor a person acting on behalf of a Plan nor
using the assets of a Plan to effect such transfer, and (B) is not an
insurance company purchasing a Certificate with funds contained in an
"insurance company general account" (as defined in Section V(e) of
Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60")) as to which
there is a Plan with respect to which the amount of such general account's
reserves and liabilities for the contracts held by or on behalf of such
Plan and all other Plans maintained by the same employer (or affiliate
thereof as defined in Section V(a)(1) of PTCE 95-60) of by the same
employee organization exceed 10% of the total of all reserves and
liabilities of such general account (as such amounts are determined under
Section I(a) of PTCE 95-60) at the date of acquisition; or
(ii) is a Plan or is an insurance company purchasing a Certificate
with funds contained in an insurance company general account, having
attached thereto an opinion of counsel satisfactory to the Owner Trustee,
which opinion shall not be an expense of either the Owner Trustee or the
Trust, addressed to the Owner Trustee, to the effect that the purchase or
holding of such Certificate will not result in the assets of the Owner
Trust Estate being deemed to be "plan assets" and subject to the
prohibited transaction provisions of ERISA and the Code and will not
subject the Owner Trustee to any obligation in addition to those expressly
undertaken in this Agreement or to any liability.
For purposes of the preceding sentence, with respect to a Certificate that is a
Book-Entry Certificate, in the event the Transferee Certificate is not
furnished, the representations contained in clause (i) above shall be deemed to
have been made to the Owner Trustee by the transferee's
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(including an initial acquiror's) acceptance of such Certificate.
Notwithstanding anything else to the contrary herein, any purported transfer of
a Certificate to or on behalf of an employee benefit plan subject to ERISA or to
the Code or to an insurance company purchasing with funds from a general account
not exempt pursuant to PTCE 95-60 without the delivery to the Owner Trustee of
an opinion of counsel satisfactory to the Owner Trustee as described in clause
(ii) above shall be void and of no effect.
To the extent permitted under applicable law (including, but not limited
to, ERISA), the Owner Trustee shall be under no liability to any Person for any
registration of transfer of any Certificate that is in fact not permitted by
this Section 3.04(c) or for making any payments due on such Certificate to the
Holder thereof or taking any other action with respect to such Holder under the
provisions of this Trust Agreement or the Sale and Servicing Agreement so long
as the transfer was registered by the Certificate Registrar or the Owner Trustee
in accordance with the foregoing requirements.
(d) No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Owner Trustee or the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
3.05 Mutilated, Destroyed, Lost or Stolen Certificates. If (a) any
mutilated Certificate shall be surrendered to the Certificate Registrar, or if
the Certificate Registrar shall receive evidence to its satisfaction of the
destruction, loss or theft of any Certificate and (b) there shall be delivered
to the Certificate Registrar and the Owner Trustee such security or indemnity as
may be required by them to save each of them harmless, then in the absence of
notice that such Certificate shall have been acquired by a bona fide purchaser,
the Owner Trustee on behalf of the Trust shall execute and the Owner Trustee, or
- -, as the Owner Trustee's authenticating agent, shall authenticate and deliver,
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like tenor and denomination. in connection
with the issuance of any new Certificate under this Section, the Owner Trustee
or the Certificate Registrar may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
therewith. Any duplicate Certificate issued pursuant to this Section shall
constitute conclusive evidence of ownership in the Trust, as if originally
issued, whether or not the lost, stolen or destroyed Certificate shall be found
at any time.
3.06 Persons Deemed Owners. Prior to due presentation of a Certificate for
registration of transfer, the Owner Trustee or the Certificate Registrar may
treat the Person in whose name any Certificate shall be registered in the
Certificate Register as the owner of such Certificate for the purpose of
receiving distributions pursuant to Section 5.02 and for all other purposes
whatsoever, and neither the Owner Trustee nor the Certificate Registrar shall be
bound by any notice to the contrary.
3.07 Access to List of Certificateholders' Names and Addresses. The
Certificate Registrar Trustee shall furnish or cause to be furnished to the
Owner Trustee, the Servicer or the Depositor, as the case may be, within 15 days
after its receipt of a request therefor from the Owner Trustee,
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the Servicer or the Depositor in writing, a list, in such form as the Owner
Trustee, the Servicer or the Depositor may reasonably require, of the names and
addresses of the Certificateholders as of the most recent Record Date. If three
or more Certificateholders or one or more Holders of Certificates evidencing, in
the aggregate, not less than 25% of the Certificate Balance apply in writing to
the Owner Trustee, and such application states that the applicants desire to
communicate with other Certificateholders with respect to their rights under
this Agreement or under the Certificates and such application is accompanied by
a copy of the communication that such applicants propose to transmit, then the
Owner Trustee shall, within five Business Days after the receipt of such
application, afford such applicants access during normal business hours to the
current list of Certificateholders. Each Holder, by receiving and holding a
Certificate, shall be deemed to have agreed not to hold any of the Depositor,
the Servicer, the Certificate Registrar or the Owner Trustee accountable by
reason of the disclosure of its name and address, regardless of the source from
which such information was derived.
3.08 Maintenance of Office or Agency. The Owner Trustee shall maintain in
the [Borough of Manhattan, The City of New York], an office or offices or agency
or agencies where Certificates may be surrendered for registration of transfer
or exchange and where notices and demands to or upon the Owner Trustee in
respect of the Certificates and the Basic Documents may be served. The Owner
Trustee initially designates -, [Address], as its principal corporate trust
office for such purposes. The Owner Trustee shall give prompt written notice to
the Depositor and to the Certificateholders of any change in the location of the
Certificate Register or any such office or agency.
3.09 Appointment of Paying Agent. The Paying Agent shall make
distributions to Certificateholders from the Collection Account pursuant to
Section 5.02 and shall report the amounts of such distributions to the Owner
Trustee. Any Paying Agent shall have the revocable power to withdraw funds from
the Collection Account for the purpose of making the distributions referred to
above. The Owner Trustee may revoke such power and remove the Paying Agent if
the Owner Trustee determines in its sole discretion that the Paying Agent shall
have failed to perform its obligations under this Agreement in any material
respect. The Paying Agent shall initially be -, and any co-paying agent chosen
by -, and acceptable to the Owner Trustee. - shall be permitted to resign as
Paying Agent upon 30 days' written notice to the Owner Trustee. In the event
that - shall no longer be the Paying Agent, the Owner Trustee shall appoint a
successor to act as Paying Agent (which shall be a bank or trust company). The
Owner Trustee shall cause such successor Paying Agent or any additional Paying
Agent appointed by the Owner Trustee to execute and deliver to the Owner Trustee
an instrument in which such successor Paying Agent or additional Paying Agent
shall agree with the Owner Trustee that as Paying Agent, such successor Paying
Agent additional Paying Agent will hold all sums, if any, held by it for payment
to the Certificateholders in trust for the benefit of the Certificateholders
entitled thereto until such sums shall be paid to such Certificateholders. The
Paying Agent shall return all unclaimed funds to the Owner Trustee and upon
removal of a Paying Agent such Paying Agent shall also return all funds in its
possession to the Owner Trustee. The provisions of Sections 7.01, 7.03, 7.04 and
8.01 shall apply to the Owner Trustee also in its role as Paying Agent, for so
long as the Owner Trustee shall act as Paying Agent and, to the extent
applicable,
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to any other paying agent appointed hereunder. Any reference in this Agreement
to the Paying Agent shall include any co-paying agent unless the context
requires otherwise.
3.10 Ownership by the Depositor of Certificates. The Depositor shall on
the Closing Date purchase, and shall thereafter retain beneficial and record
ownership of, Certificates representing at least 1% of the Certificate Balance.
Any attempted transfer of any Certificate that would reduce such interest of the
Depositor below 1% of the Certificate Balance shall be void. The Owner Trustee
shall cause at least one Certificate issued to the Depositor (representing at
least 1% of the Certificate Balance) to bear a legend stating "THIS CERTIFICATE
IS NON-TRANSFERABLE".
3.11 Book-Entry Certificates. The Certificates, upon original issuance,
will be issued in the form of a typewritten Certificate or Certificates
representing Book-Entry Certificates, to be delivered to The Depository Trust
Company, the initial Clearing Agency, by, or on behalf of, the Trust; provided,
however, that one Definitive Certificate may be issued to the Depositor pursuant
to Section 3.10. Such Certificate or Certificates shall initially be registered
on the Certificate Register in the name of Cede & Co., the nominee of the
initial Clearing Agency, and no Certificate Owner will receive a Definitive
Certificate representing such Certificate Owner's interest in such Certificate,
except as provided in Section 3.13. Unless and until definitive, fully
registered Certificates (the "Definitive Certificates") have been issued to
Certificate Owners pursuant Section 3.13:
(a) the provisions of this Section shall be in full force and effect;
(b) the Depositor, the Servicer, the Administrator, Certificate Registrar
and the Owner Trustee shall be entitled to deal with the Clearing Agency for all
purposes of this Agreement (including the payment of principal of and interest
on the Certificates and the giving of instructions or directions hereunder) as
the authorized representative of the Certificate Owners;
(c) to the extent that the provisions of this section conflict with any
other provisions of this Agreement, the provisions of this Section shall
control;
(d) the rights of Certificate Owners shall be exercised only through the
Clearing Agency (or through procedures established by the Clearing Agency) and
shall be limited to those established by law and the agreements between the
Depositor, the Owner Trustee or such Certificate Owners and the Clearing Agency
and/or the Clearing Agency Participants. Unless and until Definitive
Certificates are issued pursuant to Section 3.13, the initial Clearing Agency
will make book-entry transfers among the Clearing Agency Participants and
receive and transmit payments of principal of and interest on the Certificates
to such Clearing Agency Participants; and
(e) whenever this Agreement requires or permits actions to be taken based
upon instructions or directions of Holders of Certificates evidencing a
specified percentage of the Certificate Balance, the Clearing Agency shall be
deemed to represent such percentage only to the extent that it has received
instructions to such effect from Certificate owners and/or Clearing
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Agency Participants owning or representing, respectively, such required
percentage of the beneficial interest in the Certificates and has delivered such
instructions to the Owner Trustee.
3.12 Notices to Clearing Agency. Whenever a notice or other communication
to the Certificateholders is required under this Agreement, unless and until
Definitive Certificates shall have been issued to Certificate owners pursuant to
Section 3.13, the Owner Trustee shall give all such notices and communications
specified herein to be given to Certificateholders to the Clearing Agency, and
shall have no obligations to the Certificate Owners.
3.13 Definitive Certificates. If (i) the Depositor or the Administrator
advises the Owner Trustee in writing that the Clearing Agency is no longer
willing or able to properly discharge its responsibilities with respect to the
Certificates, and the Depository or the Administrator is unable to locate a
qualified successor, (ii) the Depositor or the Administrator at its option
advises the Owner Trustee in writing that it elects to terminate the book-entry
system through the Clearing Agency or (iii) after the occurrence of an Event of
Default or a Servicer Default, Certificate Owners representing beneficial
interests aggregating at least 51% of the Certificate Balance advise the
Clearing Agency and the Owner Trustee through the Clearing Agency in writing
that the continuation of a book-entry system through the Clearing Agency is no
longer in the best interest of the Certificate Owners, then the Clearing Agency
shall notify all Certificate Owners and the Owner Trustee of the occurrence of
any such event and of the availability of the Definitive Certificates to
Certificate Owners requesting the same. Upon surrender to the Owner Trustee of
the typewritten Certificate or Certificates representing the Book-Entry
Certificates by the Clearing Agency accompanied by registration instructions,
the Owner Trustee shall execute and authenticate the related temporary
Certificates or Definitive Certificates in accordance with the instructions of
the Clearing Agency. Neither the Certificate Registrar nor the Owner Trustee
shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Certificates, Depositor, the Servicer, the
Administrator and the Owner Trustee shall recognize the Holders of the
Definitive Certificates as Certificateholders. The Definitive Certificates shall
be printed, lithographed or engraved or may be produced in any other manner as
is reasonably acceptable to the Owner Trustee, as evidenced by its execution
thereof. The Owner Trustee and Administrator shall have no liability if they are
unable to locate a qualified successor Clearing Agency.
3.14 Temporary Certificates. Pending the preparation of Definitive
Certificates, the Owner Trustee, on behalf of the Trust, may execute,
authenticate and deliver, temporary Certificates, printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the Definitive Certificates in lieu of which they
are issued. If temporary Certificates are issued, the Depositor will cause
Definitive Certificates to be prepared without unreasonable delay. After the
preparation of Definitive Certificates, the temporary Certificates shall be
exchangeable for Definitive Certificates upon surrender thereof at the office or
agency to be maintained as provided in Section 3.08, without charge to the
Holder. Upon surrender for cancellation of any one or more temporary
Certificates, the Owner Trustee on behalf of the Trust shall execute,
authenticate and deliver in exchange therefor a like principal amount of
Definitive Certificates in authorized denominations. Until so
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exchanged, the temporary Certificates shall in all respects be entitled to the
same benefits under this Agreement as the related Definitive Certificates.
ARTICLE IV
Actions By Owner Trustee or Owners
4.01 Prior Notice to Owners with Respect to Certain Matters. With respect
to the following matters, the Owner Trustee shall not take action unless at
least 30 days before the taking of such action, the Owner Trustee shall have
notified the Certificateholders in writing of the proposed action and the Owners
shall not have notified the Owner Trustee in writing prior to the 30th day after
such notice is given that such Owners have withheld consent or provided
alternative direction:
(a) the initiation of any claim or lawsuit by the Trust (except claims or
lawsuits brought in connection with the collection of the Receivables) and the
compromise of any action, claim or lawsuit brought by or against the Trust
(except with respect to the aforementioned claims or lawsuits for collection of
the Receivables);
(b) the election by the Trust to file an amendment, to the Certificate of
Trust (unless such amendment is required to be filed under the Business Trust
Statute);
(c) the amendment of the Indenture, whether or not by a Supplemental
Indenture, in circumstances where the consent of any Noteholder is required;
(d) the amendment of the Indenture, whether or not by a Supplemental
Indenture, in circumstances where the consent of any Noteholder is not required
but such amendment materially adversely affects the interest of the Owners;
(e) the amendment, change or modification of the Administration Agreement,
other than to cure any ambiguity or to amend or supplement any provision in a
manner or add any provision that would not materially adversely affect the
interests of the Owners; or
(f) the appointment (i) pursuant to the Indenture of a successor Note
Registrar, Paying Agent or Indenture Trustee, (ii) pursuant to this Agreement of
a successor Certificate Registrar or (iii) any consent by the Note Registrar,
Paying Agent or Indenture Trustee or Certificate Registrar to the assignment of
its respective obligations under the Indenture or this Agreement, as applicable.
4.02 Action by Owners with Respect to Certain Matters. The Owner Trustee
shall not have the power, except upon the direction of the Owners, to (a) remove
the Administrator pursuant to Section 8 of the Administration Agreement, (b)
appoint a successor Administrator pursuant to Section 8 of the Administration
Agreement, (c) remove the Servicer pursuant to Section 8.01 of the Sale and
Servicing Agreement or (d) except as expressly provided in the Basic Documents,
sell the Receivables after the termination of the Indenture. The Owner Trustee
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shall take the actions referred to in the preceding sentence only upon written
instructions signed by the authorized representative of 100% of the Owners
(excluding for such purposes Certificates owned by TMCRC, TMCC or any of their
affiliates).
4.03 Action with Respect to Bankruptcy. The Owner Trustee shall not have
the power to commence a voluntary proceeding in bankruptcy relating to the Trust
without the unanimous prior approval of all Owners and the delivery to the Owner
Trustee by each such Owner of a certificate certifying that such Owner
reasonably believes that the Trust is insolvent.
4.04 Restrictions on Owners' Power. The Owners shall not direct the Owner
Trustee to take or refrain from taking any action if such action or inaction
would be contrary to any obligations of the Trust or of the Owner Trustee under
any of the Basic Documents or would be contrary to Section 2.03 nor shall the
Owner Trustee be obligated to follow any such direction, if given.
4.05 Majority Control. Except as otherwise expressly provided herein, any
action that may be taken by the Owners under this Agreement may be taken by the
Holders of Certificates evidencing not less than 51% of the Certificate Balance.
Except as expressly provided herein, any written notice of the Owners delivered
pursuant to this Agreement shall be effective if signed by Holders of
Certificates evidencing not less than 51% of the Certificate Balance at the time
of the delivery of such notice.
ARTICLE V
Application of Trust Funds; Certain Duties
5.01 Establishment of Collection Account.
(a) The Owner Trustee, for the benefit of the Certificateholders, shall
establish and maintain, or shall cause to be established and maintained, in the
name of the Trust Eligible Deposit Accounts (the "Trust Accounts"), bearing a
designation clearly indicating that the funds deposited therein are held by the
Trust for the benefit of the Certificateholders, in each case in accordance with
Section 4.01 in the Sale and Servicing Agreement.
Subject to Section 5.01(b), the Owner Trustee shall possess all right,
title and interest in all funds on deposit from time to time in the Trust
Accounts and in all proceeds thereof. Except as otherwise expressly provided
herein, each Trust Account shall be under the sole dominion and control of the
Owner Trustee for the benefit of the Certificateholders. If, at any time, a
Trust Account ceases to be an Eligible Deposit Account, the Owner Trustee (or
the Administrator on behalf of the Owner Trustee, if the Collection Account is
not then held by the Owner Trustee or an affiliate thereof) shall within 10
Business Days (or such longer period, not to exceed 30 calendar days, as to
which each Rating Agency may consent) establish a new equivalent Trust Account
as an Eligible Deposit Account and shall transfer any cash and/or any
investments to such new Trust Account.
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(b) Concurrently with, the execution and delivery of any Indenture
pursuant to which a series of Notes is issued, the Owner Trustee shall establish
and maintain, or shall cause to be established and maintained, at the direction
of the Depositor, new Trust Accounts in the name of and under the control of the
related Indenture Trustee for the benefit of the Securityholders, in each case
in accordance with Section 4.01 of the Sale and Servicing Agreement. The Owner
Trustee shall thereupon promptly transfer any cash and/or investments then on
deposit in the equivalent Trust Accounts maintained by it pursuant to Section
5.01(a) to the newly established Trust Accounts on the terms and conditions set
forth in such Indenture. The Indenture Trustee will be obligated to transfer
back to the equivalent Trust Accounts established pursuant to Section 5.01(a)
all funds or investments held or to be held in the Trust Accounts established
pursuant to this Section 5.01(b) on the Distribution Date on which the Notes of
all Classes have been paid in full or the Indenture is otherwise terminated
(excluding any amounts to be retained for distribution in respect of Notes that
are not promptly delivered for payment on such Distribution Date), and to take
all necessary or appropriate actions to transfer all right, title and interest
of the Indenture Trustee in such funds or investments and all proceeds thereof,,
to the Owner Trustee for the benefit of the Certificateholders.
5.02 Application of Amounts in Trust Accounts.
(a) For so long as any Notes are outstanding, on each Distribution Date,
the Owner Trustee will take reasonable steps to determine that the Servicer has
properly delivered the Servicer's Certificate identifying how amounts on deposit
in the Trust Accounts are to be allocated and distributed and will instruct the
Indenture Trustee, or cause the Indenture Trustee to be instructed, to
distribute to Certificateholders, on a pro rata basis, the amounts distributable
thereto pursuant to Sections 5.06 and 5.07 of the Sale and Servicing Agreement
and Section 3.01 of the Indenture. From and after the date on which the Notes of
all Classes have been paid in full, on each Distribution Date the Owner Trustee
shall distribute to Certificateholders, on a pro rata basis, amounts on deposit
in the Collection Account that are distributable in respect of interest or
principal on the Certificates in accordance with the instructions of the
Servicer pursuant to Sections 5.06 and 5.07 of the Sale and Servicing Agreement.
Upon the release from the Lien of the Indenture of amounts on deposit in any of
the Trust Accounts or any other portion of the Owner Trust Estate, the Owner
Trustee will cause such property to be properly deposited into Trust Accounts
under the control of the Owner Trustee or distributed to the Certificate Owners
on a pro rata basis in accordance with the provisions of this Agreement, as the
case may be; provided, however, that the Owner Trustee will distribute amounts
released from the Reserve Fund or Yield Maintenance Account as amounts in excess
of the Required Reserve Fund Balance or the Yield Maintenance Required Amount,
as the case may be, solely to the Depositor, and thereafter neither the Trust,
the Owner Trustee, the Indenture Trustee, the Servicer, the Administrator or any
Securityholder will have any right, title, interest or claim in or to such
property.
(b) On each Distribution Date, the Owner Trustee shall send to each
Certificateholder the statement provided to the Owner Trustee by the Servicer
pursuant to Section 5.09(a) of the Sale and Servicing Agreement with respect to
such Distribution Date.
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(c) In the event that any withholding tax is imposed on the Trust's
payment (or allocations of income) to an owner, such tax shall reduce the amount
otherwise distributable to the Owner in accordance with this Section. The Owner
Trustee is hereby authorized and directed to retain from amounts otherwise
distributable to the Owners sufficient funds for the payment of any tax that is
legally owed by the Trust (but such authorization shall not prevent the Owner
Trustee from contesting any such tax in appropriate proceedings, and withholding
payment of such tax, if permitted by law, pending the outcome of such
proceedings). The amount of any withholding tax imposed with respect to an Owner
shall be treated as cash distributed to such Owner at the time it is withheld by
the Trust and remitted to the appropriate taxing authority. If there is a
possibility that withholding tax is payable with respect to any distribution
(such as any distribution to a non-U.S. Owner), the Owner Trustee may in its
sole discretion withhold such amounts in accordance with this paragraph (c). In
the event that an Owner wishes to apply for a refund of any such withholding
tax, the Owner Trustee shall reasonably cooperate with such owner in making such
claim so long as such Owner agrees to reimburse the Owner Trustee for any
out-of-pocket expenses incurred.
5.03 Method of Payment. Subject to Section 9.01(c), distributions required
to be made to Certificateholders on any Distribution Date shall be made to each
Certificateholder of record on the related Record Date either by check mailed to
such Certificateholder at the address of such holder appearing in the
Certificate Register or by wire transfer, in immediately available funds, to the
account of any Certificateholder at a bank or other entity having appropriate
facilities therefor, if such Certificateholder shall have provided to the
Certificate Registrar appropriate written instructions at least five Business
Days prior to such Distribution Date and such Holder's Certificates in the
aggregate evidence a denomination of not less than $1,000,000.
5.04 Accounting and Reports to the Noteholders, Owners, the Internal
Revenue Service and Others. The Owner Trustee shall (a) maintain (or cause to be
maintained) the books of the Trust on a calendar year basis on the accrual
method of accounting, (b) deliver to each Owner, as may be required by the Code
and applicable Treasury Regulations, such information as may be required
(including Schedule K-1) to enable each Owner to prepare its federal and state
income tax returns, (c) file such tax relating to the Trust (including a
partnership information return, IRS Form 1065), and make such elections as may
from time to time be required or appropriate under any applicable state or
federal statute or rule or regulation thereunder so as to maintain the Trust's
characterization as a partnership for federal income tax purposes, (d) cause
such tax returns to be signed in the manner required by law and (e) collect or
cause to be collected any withholding tax as described in and in accordance with
Section 5.02(c) with respect to income or distributions to Owners. The Owner
Trustee shall elect under Section 1278 of the Code to include in income
currently any market discount that accrues with respect to the Receivables. The
Owner Trustee shall not make the election provided under Section 754 of the
Code.
5.05 Signature on Returns; Tax Matter Partner.
(a) The Owner Trustee shall sign on behalf of the Trust the tax returns of
the Trust, unless applicable law requires an Owner to sign such documents, in
which case such documents shall be signed by the Company.
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(b) The Company shall be designated the "tax matters partner" of the Trust
pursuant to Section 6231(a)(7)(A) of the Code and applicable Treasury
Regulations.
ARTICLE VI
Authority and Duties of Owner Trustee
6.01 General Authority. The Owner Trustee is authorized and directed to
execute and deliver the Basic Documents to which the Trust is to be a party and
each certificate or other document attached as an exhibit to or contemplated by
the Basic Documents to which the Trust is to be a party and any amendment or
other agreement or instrument described in Sections 3.11, 3.13, 3.15, 4.01 and
4.02 and, on behalf of the Trust, to direct the Indenture Trustee to
authenticate and deliver Class A-1 Notes in the aggregate principal amount of $-
, Class A-2 Notes in the aggregate principal amount of $-, and Class A-3 Notes
in the aggregate principal amount of $- having the terms and conditions set
forth in Exhibits A-1, A-2 and A-3 to the Indenture in the form executed on the
Closing Date. In addition to the foregoing, the Owner Trustee is authorized, but
shall not be obligated, to take all actions required of the Trust, pursuant to
the Basic Documents. The Owner Trustee is further authorized from time to time
to take such action as the Administrator recommends with respect to the Basic
Documents.
6.02 General Duties. It shall be the duty of the Owner Trustee to
discharge (or cause to be discharged) all of its responsibilities pursuant to
the terms of this Agreement and the Basic Documents to which the Trust is a
party and to administer the Trust in the interest of the Owners, subject to the
Basic Documents and in accordance with the provisions of this Agreement.
Notwithstanding the foregoing, the Owner Trustee shall be deemed to have
discharged its duties and responsibilities hereunder and under the Basic
Documents to the extent the Administrator has agreed in the Administration
Agreement to perform any act or to discharge any duty of the Owner Trustee
hereunder or under any Basic Document, and the Owner Trustee shall not be held
liable for the default or failure of the Administrator to carry out such
obligations or fulfill such duties under the Administration Agreement.
6.03 Action Upon Instruction.
(a) Subject to Article IV and in accordance with the terms of the Basic
Documents, the Owners may by written instruction direct the Owner Trustee in the
management of the Trust. Such direction may be exercised at any time by written
instruction of the Owners pursuant to Article IV.
(b) The Owner Trustee shall not be required to take any action hereunder
or under any Basic Document if the Owner Trustee reasonably shall have
determined, or shall have been advised by counsel, that such action is likely to
result in liability on the part of the Owner Trustee or is contrary to the terms
hereof or of any Basic Document or is otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement or under
any Basic Document, the
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Owner Trustee shall promptly give notice (in such form as shall be appropriate
under the circumstances) to the owners requesting instruction as to the course
of action to be adopted, and to the extent the Owner Trustee acts in good faith
in accordance with any written instruction received from Owners representing the
plurality based on outstanding denominations of Certificates held by Owners
responding (but excluding in any case where inconsistent instructions are
forwarded by different Owners, the denominations of Certificates held by TMCC,
TMCRC or any of their Affiliates), the Owner Trustee shall not be liable on
account of such action to any Person. If the Owner Trustee shall not have
received appropriate instruction within 10 days of such notice (or within such
shorter period of time as reasonably may be specified in such notice or may be
necessary under the circumstances) it may, but shall be under no duty to, take
or refrain from taking such action, not inconsistent with the Basic Documents,
as it shall deem to be in the best interests of the Owners, and shall have no
liability to any Person for such action or inaction.
(d) In the event that the Owner Trustee is unsure as to the application of
any provision of this Agreement or any Basic Document or any such provision is
ambiguous as to its application, or is, or appears to be in conflict with any
other applicable provision, or in the event that this Agreement permits any
determination by the Owner Trustee or is silent or is incomplete as to the
course of action that the Owner Trustee is required to take with respect to a
particular set of facts, the Owner Trustee may give notice (in such form as
shall be appropriate under the circumstances) to the Owners requesting
instruction and, to the extent that the Owner Trustee acts or refrains from
acting in good faith in accordance with any written instruction received from
Owners representing the plurality based on outstanding denominations of
Certificates held by Owners responding (but excluding in any case where
inconsistent instructions are forwarded by different Owners, the denominations
of Certificates held by TMCC, TMCRC or any of their Affiliates), the Owner
Trustee shall not be liable, on account of such action or inaction, to any
Person. If the Owner Trustee shall not have received appropriate instruction
within 10 days of such notice (or within such shorter period of time as
reasonably may be specified in such notice or may be necessary under the
circumstances) it may, but shall be under no duty to, take or refrain from
taking such action, not inconsistent with the Basic Documents, as it shall deem
to be in the best interests of the Owners, and shall have no liability to any
Person for such action or inaction.
6.04 No Duties Except as Specified in this Agreement or in Instructions.
The Owner Trustee shall not have any duty or obligation to manage, make any
payment with respect to, register, record, sell, dispose of, or otherwise deal
with the Owner Trust Estate, or to otherwise take or refrain from taking any
action under, or in connection with, any Basic Document or otherwise
contemplated hereby to which the Owner Trustee is a party, except as expressly
provided by the terms of this Agreement or in any document or written
instruction received by the Owner Trustee pursuant to section 6.03. No implied
duties or obligations shall be read into this Agreement or any Basic Document
against the Owner Trustee. The Owner Trustee shall have no responsibility for
filing any financing or continuation statement in any public office at any time
or otherwise to perfect or maintain the perfection of any security interest or
lien granted to it hereunder or to prepare or file any Securities and Exchange
Commission filing for the Trust or to record this Agreement or any Basic
Document. The Owner Trustee nevertheless agrees that
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it will, at its own cost and expense, promptly take all action as may be
necessary to discharge any liens on any part of the Owner Trust Estate that
result from actions by, or claims against, the Owner Trustee that are not
related to the ownership or the administration of the Owner Trust Estate.
6.05 No Action Except Under Specified Documents or Instructions. The Owner
Trustee shall not manage, control, use, sell, dispose of or otherwise deal with
any part of the Owner Trust Estate except (i) in accordance with the powers
granted to and the authority conferred upon the Owner Trustee pursuant to this
Agreement, (ii) in accordance with the Basic Documents and (iii) in accordance
with any document or instruction delivered to the Owner Trustee pursuant to
Section 6.03.
6.06 Restrictions. The Owner Trustee shall not take any action (a) that is
inconsistent with the purposes of the Trust set forth in Section 2.03 or (b)
that, to the actual knowledge of the Owner Trustee, would result in the Trust's
becoming taxable as a corporation for Federal income tax purposes. The owners
shall not have the authority to and, by acceptance of an ownership interest in
any Certificate shall thereby be deemed to have covenanted not to, direct the
Owner Trustee to take action that would violate the provisions of this Section.
ARTICLE VII
Concerning the Owner Trustee
7.01 Acceptance of Trusts and Duties. The Owner Trustee accepts the trusts
hereby created and agrees to perform its duties hereunder with respect to such
trusts but only upon the terms of this Agreement. The Owner Trustee also agrees
to disburse all moneys actually received by it or under its control constituting
part of the Owner Trust Estate upon the terms of the Basic Documents and this
Agreement. The Owner Trustee shall not be answerable or accountable hereunder or
under any Basic Document under any circumstances, except (i) for its own willful
misconduct or negligence or (ii) in the case of the inaccuracy of any
representation or warranty of the Owner Trustee contained in Section 7.03 or
made by the Owner Trustee in any other agreement, document or certificate made
or delivered in connection with this Agreement or any Basic Document. In
particular, but not by way of limitation (and subject to the exceptions set
forth in the preceding sentence):
(a) the Owner Trustee shall not be liable for any reasonable error of
judgment made by a Responsible Officer of the Owner Trustee;
(b) the Owner Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in accordance with the instructions of the
Administrator, as provided in the Administration Agreement, or the Owners, as
provided herein;
(c) no provision of this Agreement or any Basic Document shall require the
Owner Trustee to expend or risk funds or otherwise incur any financial liability
in the performance of any of its rights or powers hereunder or under any Basic
Document if the Owner Trustee shall
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have reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured or provided
to it;
(d) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents, including
the principal of and interest on the Notes;
(e) the Owner Trustee shall not be responsible for or in respect of (i)
the validity or sufficiency of this Agreement, (ii) the due execution hereof by
the Depositor, (iii) the form, character, genuineness, sufficiency, value or
validity of any portion of the Owner Trust Estate or (iv) the validity or
sufficiency of the Basic Documents, other than the certificate of authentication
on the Certificates, and the Owner Trustee shall in no event assume or incur any
liability, duty, or obligation to any Noteholder or to any Owner, other than as
expressly provided for herein and in the Basic Documents;
(f) the Owner Trustee shall not be liable for the default or misconduct of
the Administrator, the Servicer, the Depositor or the Indenture Trustee under
any of the Basic Documents or otherwise, and the Owner Trustee shall have no
obligation or liability to perform the obligations of the Trust under the Basic
Documents that are required to be performed by the Administrator under the
Administration Agreement, the Indenture Trustee under the Indenture or the
Servicer under the Sale and Servicing Agreement; and
(g) the Owner Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement, or to institute, conduct or
defend any litigation under or in relation to this Agreement or any Basic
Document or otherwise, at the request, order or direction of any of the Owners,
unless such Owners have offered to the Owner Trustee security or indemnity
satisfactory to it against the costs, expenses and liabilities that may be
incurred by the Owner Trustee therein or thereby. The right of the Owner Trustee
to perform any discretionary act enumerated in this Agreement or in any Basic
Document shall not be construed as a duty, and the Owner Trustee shall not be
answerable therefor other than for its negligence or willful misconduct in the
performance thereof.
7.02 Furnishing of Documents. The Owner Trustee shall furnish (a) to the
Owners promptly upon receipt of a written request therefor, duplicates or copies
of all reports, notices, requests, demands, certificates, financial statements
and any other instruments furnished to the Owner Trustee under the Basic
Documents and (b) to Noteholders promptly upon written request therefor, copies
of the Sale and Servicing Agreement, the Administration Agreement and the Trust
Agreement.
7.03 Representations and Warranties. The Owner Trustee hereby represents
and warrants to the Depositor and for the benefit of the Owners, that:
(a) It is a [banking corporation] duly organized and validly existing in
good standing under the laws of [the State of Delaware]. It has all requisite
corporate power and authority to execute, deliver and perform its obligations
under this Agreement and each other Basic Document.
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(b) It has taken all corporate action necessary to authorize the execution
and delivery of this Agreement and each other Basic Document, and this Agreement
and each other Basic Document will be executed and delivered by one of its
officers duly authorized to execute and deliver this Agreement and each other
Basic Document on its behalf.
(c) Neither the execution nor the delivery by it of this Agreement nor the
consummation by the Owner Trustee of the transactions contemplated hereby or
thereby nor compliance by it with any of the terms or provisions hereof or
thereof will contravene any federal or [Delaware] law, governmental rule or
regulation governing the [banking or trust] powers of the Owner Trustee or any
judgment or order binding on it, or constitute any default under its charter
documents or by-laws or any indenture, mortgage, contract, agreement or
instrument to which it is a party or by which any of its properties may be
bound.
7.04 Reliance; Advice of Counsel.
(a) The Owner Trustee shall incur no liability to anyone in acting upon
any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond, or other document or paper believed by it to
be genuine and believed by it to be signed by the proper party or parties. The
Owner Trustee may accept a certified copy of a resolution of the board of
directors or other governing body of any corporate party as conclusive evidence
that such resolution has been duly adopted by such body and that the same is in
full force and effect. As to any fact or matter the method of the determination
of which is not specifically prescribed herein, the Owner Trustee may for all
purposes hereof rely on a Certificate, signed by the president or any vice
president or by the treasurer or other authorized officers of the relevant
party, as to such fact or matter and such certificate shall constitute full
protection to the Owner Trustee for any action taken or omitted to be taken by
it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in the
performance of its duties and obligations under the Basic Documents, the Owner
Trustee (i) may act directly or through its agents or attorneys pursuant to
agreements entered into with any of them, and the Owner Trustee shall not be
liable for the conduct or misconduct of such agents or attorneys if such agents
or attorneys shall have been selected by the Owner Trustee with reasonable care,
and (ii) may consult with counsel, accountants and other skilled persons to be
selected with reasonable care and employed by it. The Owner Trustee shall not be
liable for anything done, suffered or omitted in good faith by it in accordance
with the written opinion or advice of any such counsel, accountants or other
such persons and not contrary to this Agreement or any Basic Document.
7.05 Not Acting in Individual Capacity. Except as provided in this Article
VII, in accepting the trusts hereby created, - acts solely as Owner Trustee
hereunder and not in its individual capacity. All Persons having any claim
against the Owner Trustee by reason of the transactions contemplated by this
Agreement or any Basic Document shall look only to the Owner Trust Estate for
payment or satisfaction thereof.
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7.06 Owner Trustee Not Liable for Certificates or Receivables. The
recitals contained herein and in the Certificates (other than the signature of
the Owner Trustee and the certificate of authentication on the Certificates)
shall be taken as the statements of the Depositor and the Company, and the Owner
Trustee assumes no responsibility for the correctness thereof. The Owner Trustee
makes no representations as to the validity or sufficiency of any Basic Document
or of the Certificates (other than the signature of the Owner Trustee and the
certificate of authentication on the Certificates) or the Notes (other than the
signature of the Owner Trustee on the Notes), or of any Receivable or related
document. The Owner Trustee shall at no time have any responsibility or
liability for or with respect to the legality, validity and enforceability of
any Receivable, or the perfection and priority of any security interest created
by any Receivable in any Financed vehicle or the maintenance of any such
perfection and priority, or for or with respect to the sufficiency of the Owner
Trust Estate or the sufficiency to generate the payments to be distributed to
Certificateholders under this Agreement or the Noteholders under the Indenture,
including, without limitation: the existence, condition and ownership of any
Financed Vehicle; the existence and enforceability of any insurance thereon; the
existence and contents of any Receivable on any computer or other record
thereof; the validity of the assignment of any Receivable to the Trust or of any
intervening assignment; the completeness of any Receivable; the performance or
enforcement of any Receivable; the compliance by the Depositor, the Company or
the Servicer with any warranty or representation made under any Basic Document
or in any related document or the accuracy of any such warranty or
representation or any action of the Administrator, the Indenture Trustee or the
Servicer or any subservicer taken in the name of the Owner Trustee.
7.07 Owner Trustee May Own Certificates and Notes. The Owner Trustee in
its individual or any other capacity may become the owner or pledgee of
Certificates or Notes and may deal with the Depositor, the Company, the
Administrator, the Indenture Trustee and the Servicer in banking transactions
with the same rights as it would have if it were not Owner Trustee.
7.08 [Pennsylvania Motor Vehicle Sales Finance Act Licenses. The Owner
Trustee, in its individual capacity, shall use its best efforts to maintain, and
the Owner Trustee, as Owner Trustee, shall cause the Trust to use its best
efforts to maintain, the effectiveness of all licenses required under the
Pennsylvania Motor vehicle Sales Finance Act in connection with this Agreement
and the Basic Documents and the transactions contemplated hereby and thereby
until such time as the Trust shall terminate in accordance with the terms
hereof.]
ARTICLE VIII
Compensation of Owner Trustee
8.01 Owner Trustee's Fees and Expenses. The Owner Trustee shall receive as
compensation for its services hereunder such fees as have been separately agreed
upon before the date hereof between the Company and the Owner Trustee, and the
Owner Trustee shall be entitled to be reimbursed by the Company for its other
reasonable expenses hereunder, including the reasonable compensation, expenses
and disbursements of such agents, representatives,
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experts and counsel as the Owner Trustee may employ in connection with the
exercise and performance of its rights and its duties hereunder.
8.02 Indemnification. The Depositor shall be liable as primary obligor
for, and shall indemnify the Owner Trustee and its successors, assigns, agents
and servants (collectively, the "Indemnified Parties") from and against, any and
all liabilities, obligations, losses, damages, taxes, claims, actions and suits,
and any and all reasonable costs, expenses and disbursements (including the
reasonable fees and expenses of counsel) of any kind and nature whatsoever
(collectively, "Expenses") which may at any time be imposed on, incurred by, or
asserted against the Owner Trustee or any Indemnified Party in any way relating
to or arising out of the Basic Documents, the Owner Trust Estate, the
administration of the Owner Trust Estate or the action or inaction of the Owner
Trustee hereunder, except only that the Depositor shall not be liable for or
required to indemnify an Indemnified Party from and against Expenses arising or
resulting from any of the matters described in the third sentence of Section
7.01. The indemnities contained in this Section 8.03 shall survive the
resignation or termination of the Owner Trustee or the termination of this
Agreement. In the event of any claim, action or proceeding for which indemnity
is sought pursuant to this Section, the Owner Trustee's choice of legal counsel
shall be subject to the approval of the Depositor, which approval shall not be
unreasonably withheld.
8.03 Payments to the Owner Trustee. Any amounts paid to the Owner Trustee
pursuant to this Article VIII shall be deemed not to be a part of the Owner
Trust Estate immediately after such payment.
ARTICLE IX
Termination of Trust Agreement
9.01 Termination of Trust Agreement.
(a) This Agreement (other than Article VIII) and the Trust shall terminate
and be of no further force or effect, (i) upon the final distribution by the
Owner Trustee of all moneys or other property or proceeds of the Owner Trust
Estate in accordance with the terms, Article V of the Indenture and the Sale and
Servicing Agreement (including, but not limited to, any property and proceeds to
be deposited in the Collection Account pursuant to Sections 3.02, 4.07, 5.02,
5.04, 5.05 or 9.01 of the Sale and Servicing Agreement or to be released by the
Indenture Trustee from the Lien of the Indenture pursuant to Sections 3.01, 5.04
or 10.02 of the Indenture) or (ii) at the time provided in Section 9.02. The
bankruptcy, liquidation, dissolution, death or incapacity of any Owner, other
than the Company as described in Section 9.02, shall not (x) operate to
terminate this Agreement or the Trust, nor (y) entitle such Owner's legal
representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of all or any part of the
Trust or Owner Trust Estate nor (z) otherwise affect the rights, obligations and
liabilities of the parties hereto.
(b) Except as provided in Section 9.01(a), neither the Depositor nor any
Owner shall be entitled to revoke or terminate the Trust.
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(c) Notice of any termination of the Trust, specifying the Distribution
Date upon which the Certificateholders shall surrender their Certificates to the
Paying Agent for payment of the final distributions and cancellation, shall be
given by the Owner Trustee by to Certificateholders mailed within five Business
Days of receipt of notice of such termination from the Servicer given pursuant
to Section 9.01(c) of the Sale and Servicing Agreement, stating (i) the
Distribution Date upon or with respect to which final payment of the
Certificates shall be made upon presentation and surrender of the Certificates
at the office of the Paying Agent therein designated, (ii) the amount of any
such final payment and (iii) that payment to be made on such Distribution Date
will be made only upon presentation and surrender of the Certificates at the
office of the Paying Agent therein specified. The Owner Trustee shall give such
notice to the Certificate Registrar (if other than the Owner Trustee) and the
Paying Agent at the time such notice is given to Certificateholders. Upon
presentation and surrender of the Certificates, the Paying Agent shall cause to
be distributed to Certificateholders amounts distributable on such Distribution
Date pursuant to Section 5.02.
In the event that one or more of the Certificateholders shall not
surrender their Certificates for cancellation within six months after the date
specified in the above mentioned written notice, the Owner Trustee shall give a
second written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within one year after the second notice all the Certificates shall
not have been surrendered for cancellation, the Owner 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 shall
remain subject to this Agreement. Any funds remaining in the Trust after
exhaustion of such remedies shall be distributed by the Owner Trustee to the
Depositor.
(d) Upon the winding up of the Trust and its termination, the Owner
Trustee shall cause the Certificate of Trust to be cancelled by filing a
certificate of cancellation with the Secretary of State in accordance with the
provisions of Section 3820 of the Business Trust Statute.
9.02 Dissolution upon Bankruptcy of the Depositor. In the event that an
Insolvency shall occur with respect to the Depositor, this Agreement shall be
terminated in accordance with Section 9.01 90 days after the date of such
Insolvency Event, unless, before the end of such 90-day period, the Owner
Trustee shall have received written instructions from Certificateholders
representing at least 51% of the Certificate Balance (excluding for such
purposes the Certificate Balance of any Certificates beneficially owned by TMCC,
TMCRC or any of their affiliates), to the effect that each such party
disapproves of the liquidation of the Receivables and termination of the Trust.
Promptly after the occurrence of any Insolvency Event with respect to the
Depositor, (A) the Depositor shall give the Indenture Trustee and the Owner
Trustee written notice of such Insolvency Event, (B) the Owner Trustee shall,
upon the receipt of such written notice from the Depositor, give prompt written
notice to the Certificateholders and the Indenture Trustee, of the occurrence of
such event and (C) the Indenture Trustee shall, upon receipt of written notice
of such Insolvency Event from the Owner Trustee or the Depositor, give prompt
written notice to the Noteholders of the occurrence of such event; provided,
however, that any failure to give a notice required by this sentence shall not
prevent or delay, in any manner, a
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termination of the Trust pursuant to the first sentence of this Section 9.02.
Upon a termination pursuant to this Section 9.02, the Owner Trustee shall direct
the Indenture Trustee promptly to sell the assets of the Trust (other than the
Trust Accounts and the Collection Account) in a commercially reasonable manner
and on commercially reasonable terms. The proceeds of such a sale of the assets
of the Trust shall be treated as collections under the Sale and Servicing
Agreement and deposited in the Collection Account and distributed pursuant to
the terms thereof.
ARTICLE X
Successor Owner Trustees and Additional Owner Trustees
10.01 Eligibility Requirements for Owner Trustee. The Owner Trustee shall
at all times be an entity satisfying the provisions of Section 3807(a) of the
Business Trust Statute authorized to exercise corporate powers, having a
combined capital and surplus of at least $50,000,000 and subject to supervision
or examination by federal or state authorities, and having (or having a parent
which has) a rating of at least Baa3 by Moody's. If such entity shall publish
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purpose of
this Section 10.01, the combined capital and surplus of such corporation shall
be deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Owner Trustee shall
cease to be eligible in accordance with the provisions of this Section, the
Owner Trustee shall resign immediately in the manner and with the effect
specified in Section 10.02.
10.02 Resignation or Removal of Owner Trustee. The Owner Trustee may at
any time resign and be discharged from the trusts hereby created by giving
written notice thereof to the Depositor, the Administrator and the Indenture
Trustee. Upon receiving such notice of resignation, the Administrator shall
promptly appoint a successor Owner Trustee by written instrument, in duplicate,
one copy of which shall be delivered to each of the resigning Owner Trustee and
the successor Owner Trustee. If no successor Owner Trustee shall have been so
appointed or shall not have accepted such appointment within 30 days after the
giving of such notice of resignation, the resigning Owner Trustee may petition
any court of competent jurisdiction for the appointment of a successor Owner
Trustee.
If at any time the Owner Trustee shall cease to be eligible in accordance
with the provisions of Section 10.01 and shall fail to resign promptly, or if at
any time the Owner Trustee shall be legally unable to act, or shall be adjudged
bankrupt or insolvent, or a receiver of the Owner Trustee or of its property
shall be appointed, or any public officer shall take charge or control of the
Owner Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Administrator may remove the Owner Trustee
by written instrument to such effect delivered to the Owner Trustee, the
Depositor and the Indenture Trustee. If the Administrator shall remove the Owner
Trustee under the authority of the immediately preceding sentence, the
Administrator shall promptly appoint a successor Owner Trustee by written
instrument in duplicate, one copy of which instrument shall be delivered to
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each of the outgoing Owner Trustee so removed the successor Owner Trustee and
payment of all fees, expenses and other compensation owed to the outgoing Owner
Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section shall
not become effective until acceptance of appointment by the successor Owner
Trustee pursuant to Section 10.03 and payment of all fees and expenses owed to
the outgoing Owner Trustee. The Administrator shall provide notice of such
resignation or removal of the Owner Trustee to each of the Rating Agencies.
10.03 Successor Owner Trustee. Any successor Owner Trustee appointed
pursuant to Section 10.02 shall execute, acknowledge and deliver to the
Administrator and to its predecessor Owner Trustee an instrument accepting such
appointment under this Agreement, and thereupon the resignation or removal of
the predecessor Owner Trustee shall become effective and such successor Owner
Trustee, without any further act, deed or conveyance, shall become fully vested
with all the rights, powers, duties, and obligations of its predecessor under
this Agreement, with like effect as if originally named as Owner Trustee. The
predecessor Owner Trustee shall upon payment of its fees and expenses deliver to
the successor Owner Trustee all documents and statements and monies held by it
under this Agreement; and the Administrator and the predecessor Owner Trustee
shall execute and deliver such instruments and do such other things as may
reasonably be required for fully and certainly vesting and confirming in the
successor Owner Trustee all such rights, powers, duties, and obligations.
No successor Owner Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Owner Trustee shall
meet the criteria for eligibility set forth in Section 10.01.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section, the Administrator shall mail notice of the successor of such Owner
Trustee to all Certificateholders, the Indenture Trustee, the Noteholders and
the Rating Agencies. If the Administrator fails to mail such notice within 10
days after acceptance of appointment by the successor Owner Trustee, the
successor Owner Trustee shall cause such notice to be mailed at the expense of
the Administrator.
10.04 Merger or Consolidation of Owner Trustee. Any corporation into which
the Owner Trustee may be merged or converted or with which it may be
consolidated or any corporation resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee, shall be the successor of the Owner Trustee hereunder, provided
such corporation shall be eligible pursuant to Section 10.01, without the
execution or filing of any instrument or any further act on the part of any of
the parties hereto, anything herein to the contrary notwithstanding; provided,
further, that the Owner Trustee shall mail notice of such merger or
consolidation to the Rating Agencies.
10.05 Appointment of Co-Trustee or Separate Trustee. Notwithstanding any
other provisions of this Agreement, at any time, for the purpose of meeting any
legal requirements of
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any jurisdiction in which any part of the Owner Trust Estate or any Financed
Vehicle may at the time be located, the Administrator and the Owner Trustee
acting jointly shall have the power and shall execute and deliver all
instruments to appoint one or more Persons approved by the Owner Trustee to act
as co-trustee, jointly with the Owner Trustee, or separate trustee or separate
trustees, of all or any part of the Owner Trust Estate, and to vest in such
Person, in such capacity, such title to the Trust, or any part thereof, and,
subject to the other provisions of this Section, such powers, duties,
obligations, rights and trusts as the Administrator and the Owner Trustee may
consider necessary or desirable. If the Administrator shall not have joined in
such appointment within 25 days after the receipt by it of a request so to do,
the Owner Trustee alone shall have the power to make such appointment. No
co-trustee or separate trustee under this Agreement shall be required to meet
the terms of eligibility as a successor trustee pursuant to Section 10.01 and no
notice of the appointment of any co-trustee or separate trustee shall be
required pursuant to Section 10.03.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provision and conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Owner Trustee shall be conferred upon and exercised or performed
by the Owner Trustee and such separate trustee or co-trustee jointly (it
being understood that such separate trustee or co-trustee is not
authorized to act separately without the Owner Trustee joining in such
act), except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed, the Owner Trustee shall be
incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties, and obligations (including the holding of
title to the Trust or any portion thereof in any such jurisdiction) shall
be exercised and performed singly by such separate trustee or co-trustee,
but solely at the direction of the Owner Trustee;
(ii) no trustee under this Agreement shall be personally liable by
reason of any act or omission of any other trustee under this Agreement;
and
(iii) the Administrator and the Owner Trustee acting jointly may at
any time accept the resignation of or remove any separate trustee or
co-trustee.
Any notice, request or other writing given to the Owner Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as if given to each of them. Every instrument any separate trustee or co-trustee
shall refer Agreement and the conditions of this Article. Each separate trustee
and co-trustee, upon its acceptance of conferred, shall be vested with the
estates or specified in its instrument of appointment, either jointly with the
Owner Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Owner Trustee. Each such instrument shall be filed with the
Owner Trustee and a copy thereof given to the Administrator.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee as its agent or attorney-in-fact with full power and authority, to the
extent not prohibited. by law, to do any
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lawful act under or in respect, of this Agreement on its behalf and in its name.
If any separate trustee or co-trustee shall die, become incapable of acting,
resign or be removed, all of its estates, properties, rights, remedies and
trusts shall vest in and be exercised by the Owner Trustee, to the extent
permitted by law, without the appointment of a new or successor trustee.
ARTICLE XI
Miscellaneous
11.01 Supplements and Amendments. This Agreement may be amended by the
Depositor, the Company and the Owner Trustee, with prior written notice to the
Rating Agencies, without the consent of any of the Noteholders or the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions in this Agreement or for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions in this Agreement or
of modifying in any manner the rights of the Noteholders or the
Certificateholders provided, however, that such action shall not, as evidenced
by an Opinion of Counsel, adversely affect in any material respect the interests
of any Noteholder or Certificateholder.
This Agreement may also be amended from time to time by the Depositor and
the Owner Trustee, with prior written notice to the Rating Agencies, with the
consent of the Holders of Notes evidencing not less than 51% of the Outstanding
Amount of the Notes and the consent of the Holders of Certificates evidencing
not less than a majority of the Certificate Balance, for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of this Agreement or of modifying in any manner the rights of the Noteholders or
the Certificateholders; provided, however, that no such amendment shall (a)
increase or reduce in any manner the amount of, or accelerate or delay the
timing of, collections of payments on Receivables or distributions that shall be
required to be made for the benefit of the Noteholders or the Certificateholders
or (b) reduce the aforesaid percentage of the Outstanding Amount of the Notes
and the Certificate Balance required to consent to any such amendment, without
the consent of the holders of all the outstanding Notes and Certificates.
Promptly after the execution of any such amendment or consent, the Owner
Trustee shall furnish written notification of the substance of such amendment or
consent to each Certificateholder, the Indenture Trustee and each of the Rating
Agencies.
It shall not be necessary for the consent of Certificateholders, the
Noteholders or the Indenture Trustee pursuant to this Section to approve the
particular form of any proposed amendment or consent, but it shall be sufficient
if such consent shall approve the substance thereof. The manner of obtaining
such consents (and any other consents of Certificateholders provided for in this
Agreement or in any other Basic Document) and of evidencing the authorization of
the execution thereof by Certificateholders shall be subject to such reasonable
requirements as the Owner Trustee may prescribe.
Promptly after the execution of any amendment to the Certificate of Trust,
the Owner Trustee shall cause the filing of such amendment with the Secretary of
State.
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Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement. The Owner Trustee may, but shall not
be obligated to, enter into any such amendment which affects the Owner Trustee's
own rights, duties or immunities under this Agreement or otherwise.
11.02 No Legal Title to Owner Trust Estate in Owners. The Owners shall not
have legal title to any part of the Owner Trust Estate. The Owners shall be
entitled to receive distributions with respect to their undivided ownership
interest therein only in accordance with Articles V and IX. No transfer, by
operation of law or otherwise, of any right, title, or interest of the Owners to
and in their ownership interest in the Owner Trust Estate shall operate to
terminate this Agreement or the trusts hereunder or entitle any transferee to an
accounting or to the transfer to it of legal title to any part of the Owner
Trust Estate.
11.03 Limitations on Rights of Others. Except for Section 2.07, the
provisions of this Agreement are solely for the benefit of the Owner Trustee,
the Depositor, the Company, the Owners, the Administrator and to the extent
expressly provided herein the Indenture Trustee and the Noteholders, and nothing
in this Agreement, (other than Section 2.07), whether express or implied, shall
be construed to give to any other Person any legal or equitable right, remedy or
claim in the Owner Trust Estate or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein.
11.04 Notices.
(a) Unless otherwise expressly specified or permitted by the terms hereof,
all notices shall be in writing and shall be deemed given upon receipt by the
intended recipient or three Business Days after mailing if mailed by certified
mail, postage prepaid (except that notice to the Owner Trustee shall be deemed
given only upon actual receipt by the Owner Trustee), if to the Owner Trustee,
addressed to the Corporate Trust Office; if to the Depositor, addressed to
Toyota Motor Credit Receivables Corporation, 19300 Gramercy Place, North
Building, Torrance, California 90509, Attention: Secretary; if, to the Trust,
addressed to Toyota Auto Receivables Owner Trust 199_-_, 19001 South Western
Avenue, Torrance, California 90509, Attention: Secretary; or, as to each party,
at such other address as shall be designated by such party in a written notice
to each other party.
(b) Any notice required or permitted to be given a Certificateholder shall
be given by first-class mail, postage prepaid, at the address of such Holder as
shown in the Certificate Register. Any notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given, whether or not the Certificateholder receives such notice.
11.05 Severability. If any one or more of the covenants, agreements,
provisions or terms of this Agreement shall be for any reason whatsoever held
invalid or unenforceable in any jurisdiction, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Agreement and shall in no
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way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
11.06 Counterparts. This Agreement may be executed simultaneously in any
number of counterparts, each of which shall be deemed to be an original, and all
of which shall constitute but one and the same instrument.
11.07 Successors and Assigns. All covenants and agreements contained
herein shall be binding upon, and inure to the benefit of, the Depositor, the
Company, the Owner Trustee and its successors and each Owner and its successors
and permitted assigns, all as herein provided. Any request, notice, direction,
consent, waiver or other instrument or action by an Owner shall bind the
successors and assigns of such owner.
11.08 No Petition. The Owner Trustee (not in its individual capacity but
solely as Owner Trustee), by entering into this Agreement hereby covenants and
agrees, each Certificateholder, by accepting a Certificate, and the Indenture
Trustee and any Noteholder by accepting the benefits of this Agreement, are
thereby deemed to covenant and agree that they will not at any time institute
against the Depositor or the Trust, or join in any institution against the
Depositor or the Trust of, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any federal or
state bankruptcy or similar law. This Section 11.09 shall survive the
termination of this Agreement or the termination of the Owner Trustee under this
Agreement.
11.09 No Recourse. Each Certificateholder by accepting an interest in a
Certificate acknowledges that such Certificates represent beneficial interests
in the Trust only and do not represent interests in or obligations of the
Depositor (in any capacity), TMCC, the Administrator, the Owner Trustee, the
Indenture Trustee or any Affiliate thereof and no recourse may be had against
such parties or their assets, except as may be expressly set forth or
contemplated in the Certificates or the Basic Documents.
11.10 Headings. The headings of the various Articles and Sections herein
are for convenience of reference only and shall not define or limit any of the
terms or provisions hereof.
11.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF [DELAWARE], WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
11.12 TMCC Payment Obligation. The parties hereto acknowledge and agree
that TMCC shall be responsible for payment of the Administrator's fees under the
Administration Agreement and shall reimburse the Administrator for all expenses
and liabilities of the Administrator incurred thereunder. [In addition, the
parties hereto acknowledge and agree that TMCC shall be responsible for the
payment of all fees and expenses of the Trust, the Owner Trustee and the
Indenture Trustee paid by any of them in connection with any of their
obligations under the Basic Documents to obtain or maintain any required license
under the Pennsylvania Motor Vehicle
32
<PAGE>
Sales Finance Act.] The parties hereto covenant and agree that neither of them
shall look to the other for payment of any such fees or expenses.
33
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers hereunto duly
authorized, as of the day and year first above written.
TOYOTA MOTOR CREDIT RECEIVABLES
CORPORATION,
Depositor
By: ________________________________________
Name:
Title:
-,
not in its individual capacity but
solely as Owner Trustee
By: ________________________________________
Name:
Title:
34
<PAGE>
------------
EXHIBIT A
------------
(FORM OF CERTIFICATE)
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE CO. HAS AN INTEREST HEREIN.
NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE OWNER TRUSTEE
SHALL HAVE RECEIVED A REPRESENTATION FROM THE TRANSFEREE HEREOF IN FORM AND
SUBSTANCE SATISFACTORY TO THE OWNER TRUSTEE TO THE EFFECT THAT: (1) SUCH
TRANSFEREE (A) IS NOT AN EMPLOYEE BENEFIT PLAN OR ARRANGEMENT SUBJECT TO SECTION
406 OF ERISA OR A PLAN SUBJECT TO SECTION 4975 OF THE CODE (A "PLAN"), NOR A
PERSON ACTING ON BEHALF OF A PLAN NOR USING THE ASSETS OF A PLAN TO EFFECT SUCH
TRANSFER, AND (B) IS NOT AN INSURANCE COMPANY PURCHASING THIS CERTIFICATE WITH
FUNDS CONTAINED IN AN "INSURANCE COMPANY GENERAL ACCOUNT" (AS DEFINED IN SECTION
V(E) OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ("PTCE 95-60")) AS TO WHICH
THERE IS A PLAN WITH RESPECT TO WHICH THE AMOUNT OF SUCH GENERAL ACCOUNT'S
RESERVES AND LIABILITIES FOR THE CONTRACTS HELD BY OR ON BEHALF OF SUCH PLAN AND
ALL OTHER PLANS MAINTAINED BY THE SAME EMPLOYER (OR AFFILIATE THEREOF AS DEFINED
IN SECTION V(A)(1) OF PTCE 95-60) OF BY THE SAME EMPLOYEE ORGANIZATION EXCEED
10% OF THE TOTAL OF ALL RESERVES AND LIABILITIES OF SUCH GENERAL ACCOUNT (AS
SUCH AMOUNTS ARE DETERMINED UNDER SECTION I(A) OF PTCE 95-60) AT THE DATE OF
ACQUISITION; OR (2) SUCH TRANSFEREE IS A PLAN OR IS AN INSURANCE COMPANY
PURCHASING THIS CERTIFICATE WITH FUNDS CONTAINED IN AN INSURANCE COMPANY GENERAL
ACCOUNT, BUT HAVING ATTACHED THERETO AN OPINION OF COUNSEL SATISFACTORY TO THE
TRUSTEE, WHICH OPINION SHALL NOT BE AN EXPENSE OF EITHER THE OWNER TRUSTEE OR
THE TRUST, ADDRESSED TO THE OWNER TRUSTEE, TO THE EFFECT THAT THE PURCHASE OR
HOLDING OF SUCH CERTIFICATE WILL NOT RESULT IN THE ASSETS OF THE OWNER TRUST
A-1
<PAGE>
ESTATE BEING DEEMED TO BE "PLAN ASSETS" AND SUBJECT TO THE PROHIBITED
TRANSACTION PROVISIONS OF ERISA AND THE CODE AND WILL NOT SUBJECT THE OWNER
TRUSTEE TO ANY OBLIGATION IN ADDITION TO THOSE EXPRESSLY UNDERTAKEN IN THIS
AGREEMENT OR TO ANY LIABILITY. IF THIS CERTIFICATE IS A BOOK-ENTRY CERTIFICATE,
THE REPRESENTATIONS CONTAINED IN CLAUSE (1) ABOVE SHALL BE DEEMED TO HAVE BEEN
MADE TO THE OWNER TRUSTEE BY THE TRANSFEREE'S (INCLUDING AN INITIAL ACQUIROR'S)
ACCEPTANCE OF THIS CERTIFICATE.
NUMBER $____________
R-_____ CUSIP NO. _________
TOYOTA AUTO RECEIVABLES 199_-_ OWNER TRUST
-% ASSET BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined below, the
property of which includes a pool of retail installment sale contracts secured
by new and used automobiles and light duty trucks and sold to the Trust by
Toyota Motor Credit Receivables Corporation ("TMCRC").
(This Certificate does not represent an interest in or obligation of TMCRC,
Toyota Motor Credit Corporation ("TMCC"), Toyota Motor Sales, U.S.A., Inc. or
any of their respective affiliates, except to the extent described below.)
THIS CERTIFIES THAT ________________________________________ is the
registered owner of _________________________ DOLLARS nonassessable, fully-paid,
fractional undivided interest in Toyota Auto Receivables 199_-_ Owner Trust (the
"Trust") formed by TMCRC.
The Trust was created pursuant to a Trust Agreement dated as of -, (as
amended and supplemented from time to time, the "Trust Agreement"), between
TMCRC, as depositor (the "Depositor") and -, as owner trustee (the "Owner
Trustee"), a summary of certain of the pertinent provisions of which is set
forth below. Capitalized terms used herein and not otherwise defined have the
meanings ascribed thereto in the Trust Agreement or in the Sale and Servicing
Agreement dated as of - (the "Sale and Servicing Agreement"), among the Trust,
the Depositor and TMCC, as servicer (the "Servicer"), as applicable.
This Certificate is one of the duly authorized Certificates designated as
"-% Asset Backed Certificates" (the "Certificates") issued pursuant to the Trust
Agreement. Certain debt instruments evidencing obligations of the Trust have
been issued under an Indenture dated as of -, between the Trust and -, as
indenture trustee (the "Indenture Trustee"), consisting of three classes of
Notes designated as "Class A-1-% Asset Backed Notes", "Class A-2 -% Asset Backed
Notes" and "Class A-3 -% Asset Backed Notes" (collectively, the "Notes"). This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Trust Agreement to
A-2
<PAGE>
which Trust Agreement the holder of this Certificate by virtue of the acceptance
hereof assents and by which such holder is bound. The property of the Trust
includes a pool of retail installment sale contracts secured by new and used
automobiles and light duty trucks (the "Receivables", all monies due thereunder
on or after -, in the case of Precomputed Receivables or received after such
date in the case of Simple Interest Receivables, security interests in the
vehicles financed thereby, certain bank accounts and the proceeds thereof,
proceeds from claims on certain insurance policies and certain other rights
under the Trust Agreement and the Sale and Servicing Agreement and all proceeds
of the foregoing.
Under the Trust Agreement, there will be distributed on the - day of each
month or, if such - day is not a Business Day, the next Business Day, (each, a
"Distribution Date"), commencing on -, to the person in whose name this
Certificate is registered at the close of business on the related Record Date,
such Certificateholder's pro rata portion of the amounts to be distributed to
Certificateholders on such Distribution Date in respect of interest on and
principal of the Certificates; provided, however, that principal will be
distributed to the Certificateholders on each Distribution Date commencing on
the later of (i) the ________, 199__ Distribution Date and (ii) the Distribution
Date next succeeding the Distribution Date on which the Class A-1 Notes were
paid in full, principal of the Certificates will be payable in an amount
generally equal to the Certificateholders' Principal Distributable Amount for
the Collection Period preceding such Distribution Date, to the extent of funds
available therefor following payment of the Servicing Fee and payments of
interest and principal in respect of the Notes and the distribution of interest
in respect of the Certificates.
The holder of this Certificate acknowledges and agrees that its rights to
receive distributions in respect of this Certificate are subordinated to the
rights of the Noteholders as described in the Sale and Servicing Agreement and
the Indenture.
It is the intent of the Depositor, TMCC and the Certificateholders that,
for purposes of federal income tax, state and local income tax, any state single
business tax and any other income taxes, the Trust will be treated as a
partnership and the Certificateholders (including the Depositor) will be treated
as partners in that partnership. The Depositor and each Certificateholder or
Certificate Owner, by acceptance of a Certificate or any beneficial interest on
a Certificate, agree to treat, and to take no action inconsistent with the
treatment of, the Certificates as partnership interests in the Trust for such
tax purposes.
Each Certificateholder or Certificate Owner, by its acceptance of a
Certificate or any beneficial interest in a Certificate, covenants and agrees
that such Certificateholder or Certificate Owner, as the case may be, will not
at any time institute against the Depositor or the Trust, or join in any
institution against the Depositor or the Trust of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States Federal or state bankruptcy or similar law
in connection with any obligations relating to the Certificates, the Notes, the
Trust Agreement or any of the Basic Documents.
Distributions on this Certificate will be made as provided in the Trust
Agreement by the Owner Trustee by wire transfer or check mailed to each
Certificateholder of record without the
A-3
<PAGE>
presentation or surrender of this Certificate or the making of any notation
hereon, except that with respect to Certificates registered on the Record Date
in the name of the nominee of the Clearing Agency (initially, such nominee to be
Cede & Co.), payments will be made by wire transfer in immediately available
funds to the account designated by such nominee. Except as otherwise provided in
the Trust Agreement and notwithstanding the above, the final distribution on
this Certificate will be made after due notice by the Owner Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency maintained for the purpose by the Owner
Trustee in the Borough of [Manhattan], The City of New York.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been executed
by an authorized officer of the Owner Trustee, by manual signature, this
Certificate shall not entitle the holder hereof to any benefit under the Trust
Agreement or the Sale and Servicing Agreement or be valid for any purpose.
THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF [DELAWARE], WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not in
its individual capacity, has caused this Certificate to be duly executed.
TOYOTA AUTO RECEIVABLES 199_-_
OWNER TRUST
By: ________________________________________
-,
not in its individual capacity but solely
an Owner Trustee
Dated: By: ________________________________________
Authorized Signatory
A-4
<PAGE>
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned Trust
Agreement.
- - -,
as Owner Trustee or as Owner Trustee
By: ____________________________ By: -,
Authorized Signatory as Authenticating Agent
By: ____________________________________
Authorized Signatory
A-5
<PAGE>
(REVERSE OF CERTIFICATE)
The Certificates do not represent an obligation of, or an interest in,
TMCC, TMCRC, Toyota Motor Sales, U.S.A., Inc. or any of their Affiliates and no
recourse may be had against such parties or their assets, except as may be
expressly set forth or contemplated herein or in the Trust Agreement or the
Basic Documents. In addition, this Certificate is not guaranteed by any
governmental agency or instrumentality and to limited in right of payment to
certain collections with respect to the Receivables (and certain other amounts),
all as more specifically set forth herein and in the Sale and Servicing
Agreement. A copy of each of the Sale and Servicing Agreement and the Trust
Agreement may be examined during normal business hours at the principal office
of the Depositor, and at such other places, if any, designated by the Depositor,
by any Certificateholder upon written request.
The Trust Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor and the rights of the Certificateholders under the Trust Agreement at
any time by the Depositor and the Owner Trustee with the consent of the holders
of the Notes or, with respect to certain matters not affecting the interests of
the Noteholders, at least 51% of the Certificates each voting together as a
single class (excluding Securities held by TMCRC, TMCC or any of their
Affiliates). Any such consent by the holder of this Certificate shall be
conclusive and binding on such holder and on all future holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefore or in lieu hereof whether or not notation of such consent is
made upon this Certificate or such replacement certificate. The Trust Agreement
also permits the amendment thereof, in certain limited circumstances, without
the consent of the Holders of the Certificates.
As provided in the Trust Agreement, and subject to certain limitations
therein set forth, the transfer of this Certificate is registerable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies of the Certificate Registrar maintained by
the Owner Trustee in the Borough of [Manhattan] in The City of New York,
accompanied by a written instrument of transfer in form satisfactory to the
Owner Trustee and the Certificate Registrar duly executed by the holder hereof
or such holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of authorized denominations evidencing the same aggregate
interest in the Trust will be issued to the designated transferee or
transferees. The initial Certificate Registrar appointed under the Trust
Agreement is -, [City, State].
The Certificates are issuable only as registered Certificates without
coupons in denominations of $1,000 and in integral multiples of $1,000 in excess
thereof. As provided in the Trust Agreement and subject to certain limitations
therein set forth, Certificates are exchangeable for new Certificates of
authorized denominations evidencing the same aggregate denomination, as
requested by the holder surrendering the same. No service charge will be made
for any such registration of transfer or exchange, but the Owner Trustee or the
Certificate Registrar may require payment of a sum sufficient to cover any tax
or governmental charge payable in connection therewith.
A-6
<PAGE>
The Owner Trustee, the Certificate Registrar and any agent of the Owner
Trustee or the Certificate Registrar may treat the person in whose name this
Certificate is registered as the owner hereof for all purposes and none of the
Owner Trustee, the Certificate Registrar or any such agent shall be affected by
any notice to the contrary.
The obligations and responsibilities created by the Trust Agreement and
the Trust created thereby shall terminate upon the payment to Certificateholders
of all amounts required to be paid to them pursuant to the Trust Agreement and
the Sale and Servicing Agreement and the disposition of all property held as
part of the Owner Trust Estate. TMCC, as servicer of the Receivables under the
Sale and Servicing Agreement, or any successor servicer, may at its option
purchase the corpus of the Trust at a price specified in the Sale and Servicing
Agreement, and any such purchase of the Receivables and other property of the
Trust will effect early retirement of the Certificates; however, such right of
purchase is exercisable only after the last day of the Collection Period as of
which the Pool Balance is less than or equal to 10% of the Original Pool
Balance.
A-7
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
________________________________________________________________________________
(Please print or type name and address, including postal zip code, of
assignee)
________________________________________________________________________________
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
_______________________________________________________________________ Attorney
to transfer said Certificate on the books of the Certificate Registrar, with
full power of substitution in the premises.
Dated:_______________
_______________________________________*/
Signature Guaranteed:
_______________________________________*/
- ----------
*/ NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member firm of the Now York Stock Exchange or a commercial bank
or trust company.
A-8
<PAGE>
EXHIBIT B
CERTIFICATE OF TRUST OF
TOYOTA AUTO RECEIVABLES 199 - OWNER TRUST
THIS Certificate of Trust of TOYOTA AUTO RECEIVABLES OWNER TRUST 199_-_
(the "Trust"), dated as of -, is being duly executed and filed by -, a [Delaware
banking corporation], as trustee, to form a business trust under the [Delaware
Business Trust Act (12 Del. Code, ss.3801 et seq.)].
1. Name. The name of the business trust formed hereby is TOYOTA AUTO
RECEIVABLES 199_-_ OWNER TRUST.
2. [Delaware] Trustee. The name and business address of the trustee of the
Trust in the State of [Delaware] is -, [Address], Attention: -.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the Trust,
has executed this Certificate of Trust as of the date first above written.
-,
not in its individual capacity but
solely as owner trustee under a
Trust Agreement dated as of -,
By: __________________________________
Name:
Title:
B-1
<PAGE>
An extra section break has been inserted above this paragraph. Do
not delete this section break if you plan to add text after the Table of
Contents/Authorities. Deleting this break will cause Table of
Contents/Authorities headers and footers to appear on any pages following the
Table of Contents/Authorities.
B-2
<PAGE>
INDENTURE
TOYOTA AUTO RECEIVABLES 199_-_ OWNER TRUST
as Issuer
and
-,
as Indenture Trustee
Dated as of -
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 Definitions..................................................2
SECTION 1.02 Usage of Terms...............................................7
SECTION 1.03 Incorporation by Reference of Trust Indenture Act............7
ARTICLE II
THE NOTES
SECTION 2.01 Form.........................................................8
SECTION 2.02 Execution, Authentication and Delivery.......................8
SECTION 2.03 Temporary Notes..............................................8
SECTION 2.04 Registration; Registration of Transfer and Exchange..........9
SECTION 2.05 Mutilated, Destroyed, Lost or Stolen Notes..................10
SECTION 2.06 Persons Deemed Owners.......................................11
SECTION 2.07 Payments of Principal and Interest..........................11
SECTION 2.08 Cancellation................................................12
SECTION 2.09 Release of Collateral.......................................12
SECTION 2.10 Book-Entry Notes............................................12
SECTION 2.11 Notices to Clearing Agency..................................12
SECTION 2.12 Definitive Notes............................................13
SECTION 2.13 Tax Treatment...............................................13
ARTICLE III
COVENANTS
SECTION 3.01 Payment of Principal and Interest...........................14
SECTION 3.02 Maintenance of Office or Agency.............................14
SECTION 3.03 Money for Payments To Be Held in Trust......................14
SECTION 3.04 Existence...................................................16
SECTION 3.05 Protection of Trust Estate..................................16
SECTION 3.06 Opinions as to Trust Estate.................................16
SECTION 3.07 Performance of Obligations; Servicing of Receivables........17
SECTION 3.08 Negative Covenants..........................................19
SECTION 3.09 Annual Statement as to Compliance...........................20
SECTION 3.10 Issuer May Consolidate, etc., Only on Certain Terms.........20
SECTION 3.11 Successor or Transferee.....................................22
SECTION 3.12 No Other Business...........................................22
SECTION 3.13 No Borrowing................................................22
SECTION 3.14 Servicer's Notice Obligations...............................22
-i-
<PAGE>
TABLE OF CONTENTS
(continued)
PAGE
SECTION 3.15 Guarantees, Loans, Advances and Other Liabilities...........23
SECTION 3.16 Capital Expenditures........................................23
SECTION 3.17 Removal of Administrator....................................23
SECTION 3.18 Restricted Payments.........................................23
SECTION 3.19 Notice of Events of Default.................................23
SECTION 3.20 Further Instruments and Actions.............................23
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.01 Satisfaction and Discharge of Indenture.....................24
SECTION 4.02 Application of Trust Money..................................24
SECTION 4.03 Repayment of Moneys Held by Paying Agent....................25
ARTICLE V
REMEDIES
SECTION 5.01 Events of Default...........................................25
SECTION 5.02 Acceleration of Maturity; Rescission and Annulment..........26
SECTION 5.03 Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee...........................................27
SECTION 5.04 Remedies; Priorities........................................29
SECTION 5.05 Optional Preservation of the Receivables....................30
SECTION 5.06 Limitation of Suits.........................................31
SECTION 5.07 Unconditional Rights of Noteholders To Receive Principal
and Interest................................................31
SECTION 5.08 Restoration of Rights and Remedies..........................32
SECTION 5.09 Rights and Remedies Cumulative..............................32
SECTION 5.10 Delay or Omission Not a Waiver..............................32
SECTION 5.11 Control by Noteholders......................................32
SECTION 5.12 Waiver of Past Defaults.....................................33
SECTION 5.13 Undertaking for Costs.......................................33
SECTION 5.14 Waiver of Stay or Extension Laws............................34
SECTION 5.15 Action on Notes.............................................34
SECTION 5.16 Performance and Enforcement of Certain Obligations..........34
ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.01 Duties of Indenture Trustee.................................35
SECTION 6.02 Rights of Indenture Trustee.................................36
SECTION 6.03 Individual Rights of Indenture Trustee......................36
-ii-
<PAGE>
TABLE OF CONTENTS
(continued)
PAGE
SECTION 6.04 Indenture Trustee's Disclaimer..............................37
SECTION 6.05 Notice of Defaults..........................................37
SECTION 6.06 Reports by Indenture Trustee to Holders.....................37
SECTION 6.07 Compensation and Indemnity..................................37
SECTION 6.08 Replacement of Indenture Trustee............................38
SECTION 6.09 Successor Indenture Trustee by Merger.......................38
SECTION 6.10 Appointment of Co-Indenture Trustee or Separate Indenture
Trustee.....................................................39
SECTION 6.11 Eligibility; Disqualification...............................40
SECTION 6.12 Preferential Collection of Claims Against Issuer............40
SECTION 6.13 Pennsylvania Motor Vehicle Sales Finance Act Licenses.......40
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.01 Note Registrar To Furnish Names and Addresses of
Noteholders ................................................41
SECTION 7.02 Preservation of Information; Communications to Noteholders..41
SECTION 7.03 Reports by Issuer...........................................41
SECTION 7.04 Reports by Indenture Trustee................................42
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.01 Collection of Money.........................................42
SECTION 8.02 Trust Accounts..............................................43
SECTION 8.03 General Provisions Regarding Accounts.......................44
SECTION 8.04 Release of Trust Estate.....................................46
SECTION 8.05 Opinion of Counsel..........................................46
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01 Supplemental Indentures Without Consent of Noteholders......47
SECTION 9.02 Supplemental Indentures with Consent of Noteholders.........48
SECTION 9.03 Execution of Supplemental Indentures........................49
SECTION 9.04 Effect of Supplemental Indenture............................49
SECTION 9.05 Conformity with Trust Indenture Act.........................50
SECTION 9.06 Reference in Notes to Supplemental Indentures...............50
-iii-
<PAGE>
TABLE OF CONTENTS
(continued)
PAGE
ARTICLE X
TERMINATION OF THE TRUST
SECTION 10.01 Termination of the Trusts Created by Indenture..............50
SECTION 10.02 Optional Purchase of All Receivables........................51
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 Compliance Certificates and Opinions, etc...................52
SECTION 11.02 Form of Documents Delivered to Indenture Trustee............53
SECTION 11.03 Acts of Noteholders.........................................54
SECTION 11.04 Notices, etc., to Indenture Trustee, Issuer and Rating
Agencies....................................................55
SECTION 11.05 Notices to Noteholders; Waiver..............................55
SECTION 11.06 Alternate Payment and Notice Provisions.....................56
SECTION 11.07 Conflict with Trust Indenture Act...........................56
SECTION 11.08 Effect of Headings and Table of Contents....................56
SECTION 11.09 Successors and Assigns......................................56
SECTION 11.10 Severability................................................57
SECTION 11.11 Benefits of Indenture.......................................57
SECTION 11.12 Governing Law...............................................57
SECTION 11.13 Counterparts................................................57
SECTION 11.14 Recording of Indenture......................................57
SECTION 11.15 Trust Obligation............................................57
SECTION 11.16 No Petition.................................................58
SECTION 11.17 Inspection..................................................58
EXHIBIT A - Form of Class A-1 Note, Class A-2 Note and Class A-3 Note
EXHIBIT B - Form of Letter of Representations
-iv-
<PAGE>
INDENTURE dated as of -, between TOYOTA AUTO RECEIVABLES 199_-_ OWNER
TRUST, a [Delaware] business trust (the "Issuer"), and -, a [Delaware banking
corporation], as trustee and not in its individual capacity (the "Indenture
Trustee").
Each party agrees as follows for the benefit of the other party and for
the equal and ratable benefit of the Holders of the Issuer's Class A-1 -% Asset
Backed Notes (the "Class A-1 Notes"), Class A-2 -% Asset Backed Notes (the
"Class A-2 Notes") and Class A-3 -% Asset Backed Notes (the "Class A-3 Notes"
and, together with the Class A-1 Notes and the Class A-2 Notes, the "Notes"):
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee at the Closing Date, as
Indenture Trustee for the benefit of the Holders of the Notes and Certificates,
all of the Issuer's right, title and interest in and to: (i) all right, title
and interest of the Issuer in and to the Receivables and all monies due thereon
or paid thereunder or in respect thereof (including proceeds of the repurchase
of Receivables by the Seller pursuant to Section 3.02 or 9.01 or the purchase of
Receivables by the Servicer pursuant to Section 4.07 or 9.01) on or after the
Cutoff Date; (ii) the interest of the Issuer in the security interests in the
Financed Vehicles granted by the Obligors pursuant to the Receivables and any
accessions thereto; (iii) the interest of the Issuer in any proceeds of any
physical damage insurance policies covering Financed Vehicles and in any
proceeds of any credit life or credit disability insurance policies relating to
the Receivables or the Obligors; (iv) the interest of the Issuer in any Dealer
Recourse; (v) the interest of the Issuer under the Receivables Purchase
Agreement [, the Collateral Security Agreement] [, the Yield Maintenance
Agreement] and the Sale and Servicing Agreement; (vi) the right of the Issuer to
realize upon any property (including the right to receive future Liquidation
Proceeds) that shall have secured a Receivable and have been repossessed by or
on behalf of the Issuer, the Servicer, the Depositor or the Owner Trustee; (vii)
all other assets comprising the Owner Trust Estate; and (viii) all present and
future claims, demands, causes of action and chooses in action in respect of any
or all of the foregoing and all payments on or under and all proceeds of every
kind and nature whatsoever in respect of any or all of the foregoing, including
all proceeds of the conversion thereof, voluntary or involuntary, into cash or
other liquid property, all cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, insurance
proceeds, condemnation awards, rights to payment of any and every kind and other
forms of obligations and receivables, instruments and other property which at
any time constitute all or part of or are included in the proceeds of any of the
foregoing (collectively, the "Collateral").
The foregoing Grant is made in trust to secure the payment of principal of
and interest on, and any other amounts owing in respect of, the Notes, equally
and ratably without prejudice, priority or distinction, and to secure compliance
with the provisions of this Indenture, and subject to the subordinate claims
thereon of the Holders of the Certificates, all as provided in this Indenture.
The Indenture Trustee, as Indenture Trustee on behalf of the Holders of
the Notes and for the benefit of the Certificateholders, acknowledges such
Grant, accepts the trusts under this
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Indenture in accordance with the provisions of this Indenture and agrees to
perform its duties required in this Indenture to the best of its ability to the
end that the interests of the Holders of the Notes may be adequately and
effectively protected and the rights of the Certificateholders secured.
ARTICLE I
Definitions and Incorporation by Reference
1.01 Definitions. Except as otherwise specified herein or in the context
may otherwise require, capitalized terms used but not otherwise defined herein
have the meanings ascribed thereto in the Trust Agreement and the Sale and
Servicing Agreement, as the case may be, for all purposes of this Indenture.
Except as otherwise provided in this Agreement, whenever used herein the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
"Action" has the meaning specified in Section 11.03(a).
"Authorized Officer" means (i) with respect to the Issuer, any officer of
the Owner Trustee who is authorized to act for the Owner Trustee in matters
relating to the Issuer identified as such on any list of Authorized Officers
delivered by the Owner Trustee to the Indenture Trustee and (ii) with respect to
the Administrator, any Vice President or more senior officer of the
Administrator who is authorized to act for the Administrator in matters relating
to the Issuer and identified as such on any list of Authorized Officers
delivered by the Administrator to the Indenture Trustee.
"Book-Entry Notes" means a beneficial interest in the Class A-2 Notes and
Class A-3 Notes, ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 2.11.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which banking institutions or trust companies in [The City of New York] [The
City of Los Angeles} are authorized or obligated by law, regulation or executive
order to remain closed.
"Class A-1 Rate" means ____% per annum (computed on the basis of a 360-day
year consisting of twelve 30-day months).
"Class A-1 Notes" means the Class A-1 ____% Asset Backed Notes,
substantially in the form attached hereto as Exhibit A.
"Class A-2 Rate" means ____% per annum (computed on the basis of a 360-day
year consisting of twelve 30-day months).
"Class A-2 Notes" means the Class A-2 ____% Asset Backed Notes,
substantially in the form attached hereto as Exhibit A.
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"Class A-3 Rate" means ____% per annum (computed on the basis of a 360-day
year consisting of twelve 30-day months).
"Class A-3 Notes" means the Class A-3 ____% Asset Backed Notes,
substantially in the form attached hereto as Exhibit A.
"Clearing Agency" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means __________, 199__.
"Code" means the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations promulgated thereunder.
"Collateral" has the meaning specified in the Granting Clause of this
Indenture.
"Corporate Trust Office" means the principal office of the Indenture
Trustee at which at any particular time its corporate trust business shall be
administered, which office at date of execution of this Agreement is located at
o; Attention:o, or at such other address as the Indenture Trustee may designate
from time to time by notice to the Noteholders, the Issuer and the
Administrator, or the principal corporate trust office of any successor
Indenture Trustee at the address designated by such successor Indenture Trustee
by notice to the Noteholders and the Issuer.
"Default" means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.
"Definitive Notes" has the meaning specified in Section 2.13.
"Event of Default" has the meaning specified in Section 5.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Executive Officer" means, with respect to any corporation, the Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer, President,
Executive Vice President, any Vice President, the Secretary or the Treasurer of
such corporation; and with respect to any partnership, any general partner
thereof.
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate, remise,
release, convey, assign, transfer, create, and grant a lien upon and a security
interest in and right of set-off against, deposit, set over and confirm pursuant
to this Indenture. A Grant of the Collateral or of any other agreement or
instrument shall include all rights, powers and options (but none of the
obligations) of the granting party thereunder, including the immediate and
continuing right to claim for,
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collect, receive and give receipt for principal and interest payments in respect
of the Collateral and all other moneys payable thereunder, to give and receive
notices and other communications, to make waivers or other agreements, to
exercise all rights and options, to bring Proceedings in the name of the
granting party or otherwise, and generally to do and receive anything that the
granting party is or may be entitled to do or receive thereunder or with respect
thereto.
"Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Note Register.
"Indenture Trustee" means -, a [Delaware banking corporation], as
Indenture Trustee under this Indenture, or any successor Indenture Trustee under
this Indenture.
"Independent" means, when used with respect to any specified Person, that
the Person is in fact independent of the Seller, the Servicer, the
Administrator, the Issuer or any other obligor on the Notes or any Affiliate of
any of the foregoing Persons because, among other things, such Person (a) is not
an employee, officer or director or otherwise controlled thereby or under common
control therewith, (b) does not have any direct financial interest or any
material indirect financial interest therein (whether as holder of securities
thereof or party to contract therewith or otherwise) and (c) is not and has not
within the preceding twelve months been a promoter, underwriter, trustee,
partner, director or person performing similar functions therefor or otherwise
had legal, contractual or fiduciary or other duties to act on behalf of or for
the benefit thereof.
"Independent Certificate" means a certificate or opinion to be delivered
to the Indenture Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01, made by an
Independent appraiser or other expert appointed by an Issuer Order and approved
by the Indenture Trustee in the exercise of reasonable care, and such opinion or
certificate shall state that the signer has read the definition of "Independent"
in this Indenture and that the signer is Independent within the meaning thereof.
"Interest Period" means, with respect to any Distribution Date and any
class of Notes, the period from and including the second day of the month
preceding the month of such Distribution Date (or, in the case of the first
Distribution Date, the Closing Date) to and including the first day of the month
of such Distribution Date.
"Interest Rate" means the Class A-1 Rate, the Class A-2 Rate or the Class
A-3 Rate.
"Issuer" means Toyota Auto Receivables 199_-_ Owner Trust unless and until
a successor replaces it and, thereafter, means the successor and, for purposes
of any provision contained herein and required by the TIA, each other obligor on
the Notes.
"Issuer Order" and "Issuer Request" mean a written order or request signed
in the name of the Issuer by any one of its Authorized Officers and delivered to
the Indenture Trustee.
"Note" means a Class A-1 Note, a Class A-2 Note or a Class A-3 Note.
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"Note Depository Agreement" means the agreement entitled "Letter of
Representations" dated on or before the Closing Date among the Clearing Agency,
the Issuer and the Indenture Trustee with respect to certain matters relating to
the duties thereof with respect to the Book-Entry Notes, substantially in the
form attached hereto as Exhibit B.
"Note Owner" means, with respect to a Book-Entry Note, the Person who is
the beneficial owner of such Book-Entry Note, as reflected on the books of the
Clearing Agency or on the books of a Person maintaining an account with such
Clearing Agency (directly as a Clearing Agency Participant or as an indirect
participant, in each case in accordance with the rules of such Clearing Agency).
"Note Register" means the Register of Noteholders' information maintained
by the Note Registrar pursuant to Section 2.04.
"Note Registrar" means the Indenture Trustee unless and until a successor
Note Registrar shall have been appointed pursuant to Section 2.04.
"Officer's Certificate" means a certificate signed by any Authorized
Officer of the Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01, and delivered to
the Indenture Trustee. Unless otherwise specified, any reference in this
Indenture to an Officer's Certificate shall be to an Officer's Certificate of
any Authorized Officer of the Issuer.
"Opinion of Counsel" means one or more written opinions of counsel who
may, except as otherwise expressly provided in this Indenture, be an employee of
or counsel to the Issuer, the Seller or the Servicer and which counsel shall be
satisfactory to the Owner Trustee, the Indenture Trustee or the Rating Agencies,
as the case may be.
"Outstanding" means, as of the date of determination, all Notes
theretofore authenticated and delivered under this Indenture except:
(a) Notes theretofore canceled by the Note Registrar or delivered to
the Note Registrar for cancellation;
(b) Notes or portions thereof the payment for which money in the
necessary amount has been theretofore deposited with the Indenture Trustee
or any Paying Agent in trust for the Holders of such Notes; and
(c) Notes in exchange for or in lieu of which other Notes have been
authenticated and delivered pursuant to this Indenture unless proof
satisfactory to the Indenture Trustee is presented that any such Notes are
held by a bona fide purchaser; provided, that in determining whether the
Holders of the requisite percentage of the Outstanding Amount of the
Notes, or any Class of Notes, have given any request, demand,
authorization, direction, notice, consent, or waiver hereunder or under
any Basic Document, Notes owned by the Issuer, any other obligor upon the
Notes, the Seller or any Affiliate of any of the foregoing Persons shall
be disregarded and deemed not to be Outstanding, except
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that, in determining whether the Indenture Trustee shall be protected in
relying upon any such request, demand, authorization, direction, notice,
consent, or waiver, only Notes that the Indenture Trustee knows to be so
owned shall be so disregarded. Notes so owned that have been pledged in
good faith may be regarded as Outstanding if the pledgee establishes to
the satisfaction of the Indenture Trustee the pledgee's right so to act
with respect to such Notes and that the pledgee is not the Issuer, any
other obligor upon the Notes, the Seller or any Affiliate of any of the
foregoing Persons.
"Outstanding Amount" means the aggregate principal amount of all Notes,
or, if indicated by the context, all Notes of any Class, outstanding at the date
of determination.
"Owner Trustee" means -, not in its individual capacity but solely as
Owner Trustee under the Trust Agreement, or any successor Owner Trustee under
the Trust Agreement.
"Paying Agent" means the Indenture Trustee or any other Person that meets
the eligibility standards for the Indenture Trustee specified in Section 6.11
That has been authorized by the Issuer to make payments to and distributions
from the Collection Account and the Collection Account, including payment of
principal of or interest on the Notes on behalf of the Issuer.
"Predecessor Note" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.06 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"Proceeding" means any suit in equity, action at law or other judicial or
administrative proceeding.
"Registered Holder" means the Person in whose name a Note is registered on
the Note Register on the applicable Record Date.
"Responsible Officer" means, with respect to the Indenture Trustee, any
officer within the Corporate Trust Office of the Indenture Trustee, including
any Vice President, Assistant Vice President, Assistant Treasurer, Assistant
Secretary or any other officer of the Indenture Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also, with respect to a particular matter, any other officer to whom such matter
is referred because of such officer's knowledge of and familiarity with the
particular subject.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement
dated as of -, among the Issuer, Toyota Motor Credit Receivables Corporation, as
Seller, and Toyota Motor Credit Corporation, as Servicer.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" shall mean Toyota Motor Credit Receivables Corporation, in its
capacity as seller under the Sale and Servicing Agreement, and its successor in
interest.
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"Servicer" shall mean Toyota Motor Credit Corporation in its capacity as
servicer under the Sale and Servicing Agreement, and any Successor Servicer
thereunder.
"Successor Servicer" has the meaning specified in Section 3.07(e).
"Trust Estate" means all money, instruments, rights and other property
that are subject or intended to be subject to the lien and security interest of
this Indenture for the benefit of the Noteholders (including, without
limitation, all property and interests Granted to the Indenture Trustee pursuant
to the Granting Clause), including all proceeds thereof.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 as in
force on the date hereof, unless otherwise specifically provided.
"UCC" means, unless the context otherwise requires, the Uniform Commercial
Code, as in effect in the relevant jurisdiction, as amended from time to time.
1.02 Usage of Terms. With respect to all terms in this Agreement, the
singular includes the plural and the plural the singular; words importing any
gender include the other genders; references to "writing" include printing,
typing, lithography and other means of reproducing words in a visible form;
references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement; references to
Persons include their permitted successors and assigns; and the term "including"
means "including without limitation."
1.03 Incorporation by Reference of Trust Indenture Act. Whenever this
Indenture refers to a provision of the TIA, the 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 Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Indenture
Trustee.
"obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined in the TIA,
defined in the TIA by reference to another statute or defined by Commission rule
have the meanings so assigned to them.
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ARTICLE II
The Notes
2.01 Form. The Class A-1 Notes, the Class A-2 Notes and the Class A-3
Notes, in each case together with the Indenture Trustee's certificate of
authentication, shall be in substantially the form set forth in Exhibit A, with
such appropriate insertions, omissions, substitutions and other variations as
are required or permitted by this Indenture, and may have such letters, numbers
or other marks of identification and such legends or endorsements placed thereon
as may, consistently herewith, be determined by the officers executing such
Notes, as evidenced by their execution thereof. Any portion of the text of any
Note may be set forth on the reverse thereof, with an appropriate reference
thereto on the face of the Note.
The Definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods (with or without steel
engraved borders), all as determined by the officers executing such Notes, as
evidenced by their execution of such Notes.
Each Note shall be dated the date of its authentication. The terms of the
Notes set forth in Exhibit A are part of the terms of this Indenture.
2.02 Execution, Authentication and Delivery. The Notes shall be executed
on behalf of the Issuer by any of its Authorized Officers. The signature of any
such Authorized Officer on the Notes may be manual or facsimile. Notes bearing
the manual or facsimile signature of individuals who were at any time Authorized
Officers of the Issuer shall bind the Issuer, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Notes or did not hold such offices at the
date of such Notes. The Indenture Trustee shall upon Issuer Order authenticate
and deliver Class A-1 Notes for original issue in an aggregate principal amount
of $-, Class A-2 Notes for original issue in an aggregate principal amount of $-
and Class A-3 Notes for original issue in an aggregate principal amount of $-.
The aggregate principal amount of Class A-1 Notes, Class A-2 Notes and Class A-3
Notes outstanding at any time may not exceed such respective amounts except as
provided in Section 2.06. The Notes shall be issuable as registered Notes in the
minimum denomination $1,000. Each Note shall be dated the date of its
authentication.
No Note shall be entitled to any benefit under this Indenture or be valid
or obligatory for any purpose, unless there appears on such Note a certificate
of authentication substantially in the form included in Exhibit A, executed by
the Indenture Trustee by the manual or facsimile signature of one of its
authorized signatories, and such certificate upon any Note shall be conclusive
evidence, and the only evidence, that such Note has been duly authenticated and
delivered hereunder.
2.03 Temporary Notes. Pending the preparation of definitive Notes, the
Issuer may execute, and upon receipt of an Issuer Order the Indenture Trustee
shall authenticate and deliver, temporary Notes that are printed, lithographed,
typewritten, mimeographed or otherwise produced, of the tenor of the definitive
Notes in lieu of which they are issued and with such
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variations not inconsistent with the terms of this Indenture as the officers
executing such Notes may determine, as evidenced by their execution of such
Notes. If temporary Notes are issued, the Issuer will cause definitive Notes to
be prepared without unreasonable delay. After the preparation of definitive
Notes, the temporary Notes shall be exchangeable for definitive Notes upon
surrender of the temporary Notes at the office or agency of the Issuer to be
maintained as provided in Section 3.02, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Notes, the Issuer shall
execute, and the Indenture Trustee shall authenticate and deliver in exchange
therefor, a like principal amount of definitive Notes of authorized
denominations. Until so exchanged, the temporary Notes shall in all respects be
entitled to the same benefits under this Indenture as definitive Notes.
2.04 Registration; Registration of Transfer and Exchange.
(a) The Note Registrar shall maintain a Note Register in which,
subject to such reasonable regulations as it may prescribe, the Note
Registrar shall provide for the registration of Notes and transfers and
exchanges of Notes as provided in this Indenture. The Indenture Trustee is
hereby initially appointed Note Registrar for the purpose of registering
Notes and transfers and exchanges of Notes as provided in this Indenture.
In the event that, subsequent to the Closing Date, the Indenture Trustee
notifies the Issuer that it is unable to act as Note Registrar, the Issuer
shall appoint another bank or trust company, having an office or agency
located in the [Borough of Manhattan], The City of New York, agreeing to
act in accordance with the provisions of this Indenture applicable to it,
and otherwise acceptable to the Indenture Trustee, to act as successor
Note Registrar under this Indenture.
If a Person other than the Indenture Trustee is appointed by the
Issuer as Note Registrar, the Issuer will give the Indenture Trustee
prompt written notice of the appointment of such Note Registrar and of the
location, and any change in the location, of the Note Register, and the
Indenture Trustee shall have the right to inspect the Note Register at all
reasonable times and to obtain copies thereof, and the Indenture Trustee
shall have the right to rely upon a certificate executed on behalf of the
Note Registrar by an Executive Officer thereof as to the names and
addresses of the Holders of the Notes and the principal amounts and number
of such Notes.
(b) Upon the proper surrender for registration of transfer of any
Note at the office or agency of the Issuer to be maintained as provided in
Section 3.02, the Issuer shall execute, and the Indenture Trustee shall
authenticate in the name of the designated transferee or transferees, one
or more new Notes of the same Class in authorized denominations of a like
aggregate principal amount.
(c) At the option of the Holder, Notes may be exchanged for other
Notes of the same Class in any authorized denominations, of a like
aggregate principal amount, upon surrender of the Notes to be exchanged at
such office or agency. Whenever any Notes are so surrendered for exchange,
the Issuer shall execute, and the Indenture Trustee shall authenticate and
the Noteholder shall obtain from the Indenture Trustee, the Notes which
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the Noteholder making the exchange is entitled to receive. Every Note
presented or surrendered for registration of transfer or exchange shall be
accompanied by a written instrument of transfer in form satisfactory to
the Indenture Trustee and the Note Registrar duly executed by the Holder
thereof or his attorney duly authorized in writing.
(d) No service charge shall be made for any registration of transfer
or exchange of Notes, but the Indenture Trustee may require payment of a
sum sufficient to cover any tax or governmental charge that may be imposed
in connection with any transfer or exchange of Notes.
(e) All Notes surrendered for registration of transfer or exchange
shall be canceled and subsequently destroyed by the Indenture Trustee.
2.05 Mutilated, Destroyed, Lost or Stolen Notes. If (i) any mutilated
Note is surrendered to the Indenture Trustee, or the Indenture Trustee receives
evidence to its satisfaction of the destruction, loss or theft of any Note, and
(ii) there is delivered to the Indenture Trustee such security or indemnity as
may be required by it to hold the Issuer and the Indenture Trustee harmless,
then, in the absence of notice to the Issuer, the Note Registrar or the
Indenture Trustee that such Note has been acquired by a bona fide purchaser, the
Issuer shall execute, and upon its request the Indenture Trustee shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Note, a replacement Note of the same Class. In
connection with the issuance of any new Note under this Section, the Issuer may
require payment by the Holder of such Note of a sum sufficient to cover any tax
or other governmental charge that may be imposed in relation thereto.
If, after the delivery of such replacement Note or payment of a destroyed,
lost or stolen Note, a bona fide purchaser of the original Note in lieu of which
such replacement Note was issued presents for payment such original Note, the
Issuer and the Indenture Trustee shall be entitled to recover such replacement
Note (or such payment) from the Person to whom it was delivered or any Person
taking such replacement Note from such Person to whom such replacement Note was
delivered or any assignee of such Person, except a bona fide purchaser, and
shall be entitled to recover upon the security or indemnity provided therefor to
the extent of any loss, damage, cost or expense incurred by the Issuer or the
Indenture Trustee in connection therewith.
Every replacement Note issued pursuant to this Section in replacement of
any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes of the same Class duly issued
hereunder.
The provisions of this Section are 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 Notes.
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2.06 Persons Deemed Owners. Prior to due presentment for registration of
transfer of any Note, the Issuer, the Indenture Trustee and any agent of the
Issuer or the Indenture Trustee may treat the Person in whose name any Note is
registered (as of the day of determination) as the owner of such Note for the
purpose of receiving payments of principal of and interest, if any, on such Note
and for all other purposes whatsoever, and none of the Issuer, the Indenture
Trustee or any agent of the Issuer or the Indenture Trustee shall be affected by
notice to the contrary.
2.07 Payments of Principal and Interest.
(i) The Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes
shall accrue interest at the Class A-1 Rate, the Class A-2 Rate and the
Class A-3 Rate, respectively, and such interest shall be payable on each
Distribution Date as specified therein, pursuant to Section 5.05 of the
Sale and Servicing Agreement and subject to the availability of funds
therefor and to Section 3.01. Any installment of interest or principal
payable on any Note that is punctually paid or duly provided for by the
Issuer on the applicable Distribution Date shall be paid to the Person in
whose name such Note (or one or more Predecessor Notes) is registered on
the Record Date by check mailed first-class postage prepaid to such
Person's address as it appears on the Note Register on such Record Date,
except that, unless Definitive Notes have been issued pursuant to Section
2.12, with respect to Notes registered on the Record Date in the name of
the nominee of the Clearing Agency (initially, such nominee to be Cede &
Co.), payment will be made by wire transfer in immediately available funds
to the account designated by such nominee and except for the final
installment of principal payable with respect to such Note on a
Distribution Date or on the applicable Final Scheduled Distribution Date,
which shall be payable as provided below. The funds represented by any
such checks returned undelivered shall be held in accordance with Section
3.03.
(ii) The principal of each Note shall be payable in installments on
each Distribution Date pursuant to Section 5.05 of the Sale and Servicing
Agreement. Notwithstanding the foregoing, the entire unpaid principal
amount of the Notes shall be due and payable, if not previously paid, on
the date on which an Event of Default shall have occurred and be
continuing, if the Indenture Trustee or the Holders of Notes representing
not less than a majority of the Outstanding Amount of the Notes have
declared the Notes to be immediately due and payable in the manner
provided in Section 5.02. All principal payments on each Class of Notes
shall be made pro rata to the Noteholders of such Class entitled thereto.
In accordance with Section 10.01, the Indenture Trustee shall notify the
Person in whose name a Note is registered at the close of business on the
Record Date preceding the Distribution Date on which the final installment
of principal of and interest on such Note will be paid. Such notice shall
be mailed or transmitted by facsimile prior to such final Distribution
Date and shall specify that such final installment will be payable only
upon presentation and surrender of such Note and shall specify the place
where such Note may be presented and surrendered for payment of such
installment.
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2.08 Cancellation. All Notes surrendered for payment, registration of
transfer or exchange shall, if surrendered to any Person other than the
Indenture Trustee, be delivered to the Indenture Trustee and shall be promptly
canceled by the Indenture Trustee. The Issuer may at any time deliver to the
Indenture Trustee for cancellation any Notes previously authenticated and
delivered hereunder which the Issuer may have acquired in any manner whatsoever,
and all Notes so delivered shall be promptly canceled by the Indenture Trustee.
No Notes shall be authenticated in lieu of or in exchange for any Notes canceled
as provided in this Section, except as expressly permitted by this Indenture.
All canceled Notes may be held or disposed of by the Indenture Trustee in
accordance with its standard retention or disposal policy as in effect at the
time unless the Issuer shall direct by an Issuer Order that they be destroyed or
returned to it; provided, that such Issuer Order is timely and the Notes have
not been previously disposed of by the Indenture Trustee.
2.09 Release of Collateral. Subject to Sections 10.01 and 11.01 and the
terms of the Basic Documents, the Indenture Trustee shall release property from
the lien of this Indenture only upon receipt of an Issuer Request accompanied by
an Officer's Certificate, an Opinion of Counsel and Independent Certificates in
accordance with TIA Sections 314(c) and 314(d)(l) or an Opinion of Counsel in
lieu of such Independent Certificates to the effect that the TIA does not
require any such Independent Certificates.
2.10 Book-Entry Notes. The Notes, upon original issuance, will be issued
in the form of typewritten Notes representing the Book-Entry Notes, to be
delivered to The Depository Trust Company, the initial Clearing Agency, by, or
on behalf of, the Issuer. The Book-Entry Notes shall be registered initially on
the Note Register in the name of Cede & Co., the nominee of the initial Clearing
Agency, and no Owner thereof will receive a definitive Note representing such
Note Owner's interest in such Note, except as provided in Section 2.12. Unless
and until definitive, fully registered Notes (the "Definitive Notes") have been
issued to such Note Owners pursuant to Section 2.12:
(a) the provisions of this Section shall be in full force and
effect;
(b) the Note Registrar and the Indenture Trustee shall be entitled
to deal with the Clearing Agency for all purposes of this Indenture
(including the payment of principal of and interest on the Notes and the
giving of instructions or directions hereunder) as the authorized
representative of the Note Owners;
(c) to the extent that the provisions of this Section conflict with
any other provisions of this Indenture, the provisions of this Section
shall control;
(d) the rights of Note Owners shall be exercised only through the
Clearing Agency and shall be limited to those established by law and
agreements between such Note Owners and the Clearing Agency and/or the
Clearing Agency Participants pursuant to the Note Depository Agreement.
Unless and until Definitive Notes are issued pursuant to Section 2.12, the
initial Clearing Agency will make book-entry transfers among the Clearing
Agency Participants and receive and transmit payments of principal of and
interest on the Notes to such Clearing Agency Participants; and
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(e) whenever this Indenture requires or permits actions to be taken
based upon instructions or directions of Holders of Notes evidencing a
specified percentage of the Outstanding Amount of the Notes, the Clearing
Agency shall be deemed to represent such percentage only to the extent
that it has received instructions to such effect from Note Owners and/or
Clearing Agency Participants owning or representing, respectively, such
required percentage of the beneficial interest in the Notes and has
delivered such instructions to the Indenture Trustee.
2.11 Notices to Clearing Agency. Whenever a notice or other communication
to the Noteholders is required under this Indenture, unless and until Definitive
Notes shall have been issued to such Note Owners pursuant to Section 2.12, the
Indenture Trustee shall give all such notices and communications specified
herein to be given to Holders of the Notes to the Clearing Agency.
2.12 Definitive Notes. If (i) the Owner Trustee or the Administrator
advises the Indenture Trustee in writing that the Clearing Agency is no longer
willing or able to properly discharge its responsibilities with respect to the
Book-Entry Notes and the Owner trustee and the Administrator are unable to
locate a qualified successor, (ii) the Seller, at its option advises the
Indenture Trustee in writing that it elects to terminate the book-entry system
through the Clearing Agency or (iii) after the occurrence of an Event of Default
or a Servicer Default, Owners of the Book-Entry Notes representing beneficial
interests aggregating at least 51% of the Outstanding Amount of the Notes of all
Classes, advise the Indenture Trustee and the Clearing Agency in writing that
the continuation of a book-entry system through the Clearing Agency is no longer
in the best interests of the Note Owners, then the Clearing Agency shall notify
all Note Owners and the Indenture Trustee of the occurrence of such event and of
the availability of Definitive Notes to Note Owners requesting the same. Upon
surrender to the Indenture Trustee of the typewritten Notes representing the
Book-Entry Notes by the Clearing Agency, accompanied by registration
instructions, the Issuer shall execute and the Indenture Trustee shall
authenticate the Definitive Notes in accordance with the instructions of the
Clearing Agency. None of the Issuer, the Note Registrar or the Indenture Trustee
shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Notes, the Indenture Trustee shall recognize the
Holders of the Definitive Notes as Noteholders. The Indenture Trustee, Issuer
and Administrator shall not be liable for any inability to locate a qualified
successor Clearing Agency.
2.13 Tax Treatment. The Issuer has entered into this Indenture, and the
Notes will be issued, with the intention that, for federal, state and local
income, single business and franchise tax purposes, the Notes will qualify as
indebtedness of the Issuer secured by the Trust Estate. The Issuer, by entering
into this Indenture, and each Noteholder, by its acceptance of a Note (and each
Note Owner by its acceptance of an interest in the applicable Book-Entry Note),
agree to treat the Notes for federal, state and local income, single business
and franchise tax purposes as indebtedness of the Issuer.
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ARTICLE III
Covenants
3.01 Payment of Principal and Interest. In accordance with the terms of
this Indenture, the Issuer will duly and punctually (i) pay the principal of and
interest, if any, on the Notes in accordance with the terms of the Notes and
(ii) release from the Trust Accounts all other amounts distributable or payable
under the Trust Agreement, Sale and Servicing Agreement and Administration
Agreement. Without limiting the foregoing, subject to Section 8.02(c), the
Issuer will cause to be distributed all amounts on deposit in the Collection
Account on a Distribution Date deposited therein pursuant to the Sale and
Servicing Agreement (i) (a) for the benefit of the Class A-1 Notes, to the Class
A-1 Noteholders, (b) for the benefit of the Class A-2 Notes, to the Class A-2
Noteholders and (c) for the benefit of the Class A-3 Notes, to the Class A-3
Noteholders and (ii) for the benefit of the Certificateholders, to or as
directed by the Owner Trustee or the Administrator. Amounts properly withheld
under the Code by any Person from a payment to any Noteholder or
Certificateholder of interest and/or principal shall be considered as having
been paid by the Issuer to such Noteholder or Certificateholder for all purposes
of this Indenture.
3.02 Maintenance of Office or Agency. The Issuer will maintain in the
[Borough of Manhattan], The City of New York, an office or agency where Notes
may be surrendered for registration of transfer or exchange, and where notices
and demands to or upon the Issuer in respect of the Notes and this Indenture may
be served. The Issuer hereby initially appoints the Indenture Trustee to serve
as its agent for the foregoing purposes. The Issuer will give prompt written
notice to the Indenture Trustee of the location, and of any change in the
location, of any such office or agency. If at any time the Issuer shall fail to
maintain any such office or agency or shall fail to furnish the Indenture
Trustee with the address thereof, such surrenders, notices and demands may be
made or served at the Corporate Trust Office, and the Issuer hereby appoints the
Indenture Trustee as its agent to receive all such surrenders, notices and
demands.
3.03 Money for Payments To Be Held in Trust. As provided in Sections
8.02(a) and (b), all payments of amounts due and payable with respect to any
Notes that are to be made from amounts withdrawn from the Collection Account
pursuant to Section 8.02(c) shall be made on behalf of the Issuer by the
Indenture Trustee or by another Paying Agent, and no amounts so withdrawn from
the Collection Account for payments of Notes shall be paid over to the Issuer,
the Owner Trustee or the Administrator except as provided in this Section.
On or before each Distribution Date, the Issuer shall deposit in the
Collection Account or, in accordance with the Sale and Servicing Agreement,
cause to be deposited (including the provision of instructions to the Indenture
Trustee to make any required withdrawals from the Reserve Fund or the Yield
Maintenance Account and to deposit such amounts in the Collection Account), an
aggregate sum sufficient to pay the amounts then becoming due under the Notes
and Certificates, such sum to be held in trust for the benefit of the Persons
entitled thereto, and (unless the Paying Agent is the Indenture Trustee) shall
promptly notify the Indenture Trustee of its action or failure so to act.
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The Indenture Trustee, as Paying Agent, hereby agrees with the Issuer that
it will, and the Issuer will cause each Paying Agent other than the Indenture
Trustee, as a condition to its acceptance of its appointment as Paying Agent, to
execute and deliver to the Indenture Trustee an instrument in which such Paying
Agent shall agree with the Indenture Trustee, subject to the provisions of this
Section, that such Paying Agent will:
(a) hold all sums held by it for the payment of amounts due with
respect to the Notes or for release to the Issuer for payment to the
Certificates in trust for the benefit of the Persons entitled thereto
until such sums shall be paid to such Persons or otherwise disposed of as
herein provided and pay or release such sums to such Persons as herein
provided;
(b) give the Indenture Trustee notice of any default by the Issuer
(or any other obligor upon the Notes) of which it has actual knowledge in
the making of any payment required to be made with respect to the Notes or
the release of any amounts to the Issuer to be paid to the
Certificateholders;
(c) at any time during the continuance of any such default, upon the
written request of the Indenture Trustee, forthwith pay to the Indenture
Trustee all sums so held in trust by such Paying Agent;
(d) immediately resign as a Paying Agent and forthwith pay to the
Indenture Trustee all sums held by it in trust for the payment of Notes
(or for release to the Issuer) if at any time it ceases to meet the
standards required to be met by a Paying Agent at the time of its
appointment; and
(e) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes (or assisting the
Issuer to withhold from payment to the Certificateholders) of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, by Issuer Order direct
any Paying Agent to pay to the Indenture Trustee all sums held in trust by such
Paying Agent, such sums to be held by the Indenture Trustee upon the same trusts
as those upon which the sums were held by such Paying Agent; and upon such
payment by any Paying Agent to the Indenture Trustee, such Paying Agent shall be
released from all further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds, any money
held by the Indenture Trustee or any Paying Agent in trust for the payment of
any amount due with respect to any Note and remaining unclaimed for two years
after such amount has become due and payable shall be discharged from such trust
and be paid to the Issuer on presentation thereto of an Issuer Request; and the
Holder of such Note shall thereafter, as an unsecured general creditor, look
only to the Issuer for payment thereof (but only to the extent of the amounts so
paid to the Issuer), and all liability of the Indenture Trustee or such Paying
Agent with respect to such trust money shall thereupon cease; provided, however,
that the Indenture Trustee or such Paying
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Agent, before being required to make any such repayment, shall at the expense
and direction of the Issuer cause to be published once, in a newspaper published
in the English language, customarily published on each Business Day and of
general circulation in The City of New York, notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less than
30 days from the date of such publication, any unclaimed balance of such money
then remaining will be repaid to the Issuer. The Indenture Trustee shall also
adopt and employ, at the expense and direction of the Issuer, any other
reasonable means of notification of such repayment (including, but not limited
to, mailing notice of such repayment to Holders whose Notes have not been
surrendered for final payment or whose right to or interest in moneys due and
payable but not claimed is determinable from the records of the Indenture
Trustee or of any Paying Agent, at the last address of record for each such
Holder).
3.04 Existence. The Issuer will keep in full effect its existence, rights
and franchises as a business trust under the laws of the [State of Delaware]
(unless it becomes, or any successor Issuer hereunder is or becomes, organized
under the laws of any other State or of the United States of America, in which
case the Issuer will keep in full effect its existence, rights and franchises
under the laws of such other jurisdiction) and will obtain and preserve its
qualification to do business in each jurisdiction in which such qualification is
or shall be necessary to protect the validity and enforceability of this
Indenture, the Notes, the Collateral and each other instrument or agreement
included in the Trust Estate or the Owner Trust Estate.
3.05 Protection of Trust Estate. The Issuer will from time to time
execute and deliver all such supplements and amendments hereto and all such
financing statements, continuation statements, instruments of further assurance
and other instruments, and will take such other action necessary or advisable
to:
(a) maintain or preserve the lien and security interest (and the
priority thereof) of this Indenture or carry out more effectively the
purposes hereof;
(b) perfect, publish notice of or protect the validity of any Grant
made or to be made by this Indenture;
(c) enforce any of the Collateral; or
(d) preserve and defend title to the Trust Estate and the rights of
the Indenture Trustee and the Noteholders in such Trust Estate against the
claims of all persons and parties.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required to be executed pursuant to this Section 3.05.
3.06 Opinions as to Trust Estate.
(i) On the Closing Date, the Issuer shall furnish to the Indenture
Trustee an Opinion of Counsel either stating that, in the opinion of such
counsel, such action has
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been taken with respect to the execution, recording and filing of this
Indenture, any indentures supplemental hereto, any requisite financing
statements and continuation statements and any other requisite documents
necessary to perfect and make effective the lien and security interest of
this Indenture or stating that, in the opinion of such counsel, no such
action is necessary to make such lien and security interest effective.
(ii) On or before - in each calendar year, beginning in 199_, the
Issuer shall furnish to the Indenture Trustee an Opinion of Counsel either
stating that, in the opinion of such counsel, such action has been taken
with respect to the execution, recording, filing or re-recording and
refiling of this Indenture, any indentures supplemental hereto, any
financing statements and continuation statements and any other requisite
documents necessary to maintain the lien and security interest created by
this Indenture or stating that in the opinion of such counsel no such
action is necessary to maintain such lien and security interest. Such
Opinion of Counsel shall also describe the execution, recording, filing or
re-recording and refiling of this Indenture, any indentures supplemental
hereto, any financing statements and continuation statements and any other
documents that will, in the opinion of such counsel, be required to
maintain the lien and security interest of this Indenture until - in the
following calendar year.
3.07 Performance of Obligations; Servicing of Receivables.
(i) The Issuer will not take any action and will use its best
efforts not to permit any action to be taken by others that would release
any Person from any of such Person's material covenants or obligations
under any instrument or agreement included in the Trust Estate or that
would result in the amendment, hypothecation, subordination, termination
or discharge of, or impair the validity or effectiveness of, any such
instrument or agreement, except as expressly provided in the Basic
Documents.
(ii) The Issuer may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such
duties by a Person identified to the Indenture Trustee in an Officer's
Certificate of the Issuer shall be deemed to be action taken by the
Issuer. Initially, the Issuer has contracted with the Servicer and the
Administrator to assist the Issuer in performing its duties under this
Indenture.
(iii) The Issuer will punctually perform and observe all of its
obligations and agreements contained in the Basic Documents and in the
instruments and agreements included in the Trust Estate, including but not
limited to filing or causing to be filed all UCC financing statements and
continuation statements required to be filed by the terms of the Trust
Agreement, this Indenture and the Sale and Servicing Agreement in
accordance with and within the time periods provided for herein and
therein. Except as otherwise expressly provided therein, the Issuer shall
not waive, amend, modify, supplement or terminate any Basic Document or
any provision thereof without the consent of the Indenture Trustee or the
Holders of at least 51% of the Outstanding Amount of the Notes (excluding
for such purposes the outstanding principal amount of
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any Notes held of record or beneficially owned by TMCC, TMCRC or any of
their Affiliates).
(iv) If the Issuer shall have knowledge of the occurrence of a
Servicer Default under the Sale and Servicing Agreement, the Issuer shall
promptly notify the Indenture Trustee and the Rating Agencies thereof, and
shall specify in such notice the action, if any, the Issuer is taking with
respect of such default. If a Servicer Default shall arise from the
failure of the Servicer to perform any of its duties or obligations under
the Sale and Servicing Agreement with respect to the Receivables, the
Issuer shall take all reasonable steps available to it to remedy such
failure.
(v) As promptly as possible after the giving of notice of
termination to the Servicer of the Servicer's rights and powers pursuant
to Section 8.01 of the Sale and Servicing Agreement, the Issuer shall
appoint a successor servicer (the "Successor Servicer"), and such
Successor Servicer shall accept its appointment by a written assumption in
a form acceptable to the Indenture Trustee. In the event that a Successor
Servicer has not been appointed and accepted its appointment as set forth
in the Sale and Servicing Agreement, the Indenture Trustee without further
action shall automatically be appointed the Successor Servicer and shall
thereafter be entitled to the Servicing Fee, unless the Indenture Trustee
is then legally unable so to act and promptly notifies the Owner Trustee
of such fact. Upon delivery of any such notice to the Issuer, the Issuer
shall identify and appoint a new servicer as the Successor Servicer under
the Sale and Servicing Agreement. The Indenture Trustee may resign as the
Servicer by appointing or petitioning a court of competent jurisdiction to
appoint as Successor Servicer any established institution having a net
worth of not less than $50,000,000 and whose regular business includes the
servicing of automobile sales contract receivables and that will enter
into a servicing agreement with the Issuer having substantially the same
provisions as the provisions of the Sale and Servicing Agreement
applicable to the Servicer, and then giving written notice of such
resignation to the Issuer. Upon such appointment, the Indenture Trustee
will be released from the duties and obligations of acting as Successor
Servicer, such release effective upon the effective date of the servicing
agreement entered into between the Successor Servicer and the Issuer.
In connection with any such appointment, the Indenture Trustee may make
such arrangements for the compensation of such successor as it and such
Successor Servicer shall agree, subject to the limitations set forth below and
in the Sale and Servicing Agreement, and in accordance with Section 8.02 of the
Sale and Servicing Agreement, the Issuer shall enter into an agreement with such
successor for the servicing of the Receivables (such agreement to be in form and
substance satisfactory to the Indenture Trustee). If the Indenture Trustee shall
succeed to the Servicer's duties as servicer of the Receivables as provided
herein, it shall do so in its individual capacity and not in its capacity as
Indenture Trustee and, accordingly, the provisions of Article VI hereof shall be
inapplicable to the Indenture Trustee in its duties as Successor Servicer and
the servicing of the Receivables. In case the Indenture Trustee shall become the
Successor Servicer, the Indenture Trustee shall be entitled to appoint as a
subservicer any one of its
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affiliates, provided that the Indenture Trustee, in its capacity as Successor
Servicer, shall remain fully liable for the actions and omissions of such
Affiliate.
(vi) Upon any termination of the Servicer's rights and powers
pursuant to the Sale and Servicing Agreement, the Issuer shall promptly
notify the Indenture Trustee. As soon as a Successor Servicer is
appointed, the Issuer shall notify the Indenture Trustee of such
appointment, specifying in such notice the name and address of such
Successor Servicer.
(vii) Without derogating from the absolute nature of the assignment
granted to the Indenture Trustee under this Indenture or the rights of the
Indenture Trustee hereunder, the Issuer agrees (i) that it will not,
without the prior written consent of the Indenture Trustee or the Holders
of at least 51% in Outstanding Amount of the Notes (excluding for such
purposes the outstanding principal amount of any Notes held of record or
beneficially owned by TMCC, TMCRC or any of their Affiliates), amend,
modify, waive, supplement, terminate or surrender, or agree to any
amendment, modification, supplement, termination, waiver or surrender of,
the terms of any Collateral (except to the extent otherwise provided in
the Sale and Servicing Agreement) or the Basic Documents, or waive timely
performance or observance by the Servicer or the Seller under the Sale and
Servicing Agreement; and (ii) that any such amendment shall not (A)
increase or reduce in any manner the amount of, or accelerate or delay the
timing of, distributions that are required to be made for the benefit of
the Noteholders or (B) reduce the aforesaid percentage of the Notes that
is required to consent to any such amendment, without the consent of the
Holders of all the outstanding Notes. If any such amendment, modification,
supplement or waiver shall be so consented to by the Indenture Trustee or
such Holders, the Issuer agrees, promptly following a request by the
Indenture Trustee to do so, to execute and deliver, in its own name and at
its own expense, such agreements, instruments, consents and other
documents as the Indenture Trustee may deem necessary or appropriate in
the circumstances.
3.08 Negative Covenants. So long as any Notes are Outstanding, the Issuer
shall not:
(a) except as expressly permitted by Basic Documents, sell,
transfer, exchange or otherwise dispose of any of the properties or assets
of the Issuer, including those included in the Trust Estate, unless
directed to do so by the Indenture Trustee;
(b) claim any credit on, or make any deduction from the principal or
interest payable in respect of, the Notes (other than amounts properly
withheld from such payments under the Code) or assert any claim against
any present or former Noteholder by reason of the payment of the taxes
levied or assessed upon any part of the Trust Estate; or
(c) (A) except as may be expressly permitted hereby, permit the
validity or effectiveness of this Indenture to be impaired, or permit the
lien of this Indenture to be amended, hypothecated, subordinated,
terminated or discharged, or permit any Person to be released from any
covenants or obligations with respect to the Notes under this
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Indenture, (B) permit any lien, charge, excise, claim, security interest,
mortgage or other encumbrance (other than the lien of this Indenture) to
be created on or extend to or otherwise arise upon or burden the Trust
Estate or any part thereof or any interest therein or the proceeds thereof
(other than tax liens, mechanics' liens and other liens that arise by
operation of law, in each case on any of the Financed Vehicles and arising
solely as a result of an action or omission of the related Obligor) or (C)
permit the lien of this Indenture not to constitute a valid first priority
(other than with respect to any such tax, mechanics' or other lien)
security interest in the Trust Estate.
3.09 Annual Statement as to Compliance. The Issuer will cause the
Servicer to deliver to the Indenture Trustee concurrently with its delivery
thereof to the Issuer the annual statement of compliance described in Section
4.10 of the Sale and Servicing Agreement. In addition, on the same date annually
upon which such annual statement of compliance is to be delivered by the
Servicer, the Issuer shall deliver to the Indenture Trustee an Officer's
Certificate stating, as to the Authorized Officer signing such Officer's
Certificate, that:
(a) a review of the activities of the Issuer during such year and of
its performance under this Indenture has been made under such Authorized
Officer's supervision; and
(b) to the best of such Authorized Officer's knowledge, based on
such review, the Issuer has complied with all conditions and covenants
under this Indenture throughout such year, or, if there has been a default
in its compliance with any such condition or covenant, specifying each
such default known to such Authorized Officer and the nature and status
thereof.
3.10 Issuer May Consolidate, etc., Only on Certain Terms.
(a) The Issuer shall not consolidate or merge with or into any other
Person, unless:
(i) the Person (if other than the Issuer) formed by or surviving
such consolidation or merger shall be a Person organized and existing
under the laws of the United States of America or any State and shall
expressly assume, by an indenture supplemental hereto, executed and
delivered to the Indenture Trustee, in form satisfactory to the Indenture
Trustee, the due and punctual payment of the principal of and interest on
all Notes and the performance or observance of every agreement and
covenant of this Indenture on the part of the Issuer to be performed or
observed, all as provided herein;
(ii) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing;
(iii) each Rating Agency shall have received 10 days' written notice
thereof and shall not have notified the Indenture Trustee, the
Administrator or the Owner Trustee that such transaction might or would
result in the removal or reduction of the rating then assigned thereby to
any Class of Notes or the Certificates;
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(iv) the Issuer shall have received an Opinion of Counsel (and shall
have delivered copies thereof to the Indenture Trustee) to the effect that
such transaction will not have any material adverse tax consequence to the
Issuer, any Noteholder or any Certificateholder;
(v) any action that is necessary to maintain each lien and security
interest created by the Trust Agreement, the Sale and Servicing Agreement
or by this Indenture shall have been taken; and
(vi) The Issuer shall have delivered to the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
consolidation or merger and any related supplemental indenture complies
with this Article III and that all conditions precedent provided in this
Indenture relating to such transaction have been complied with (including
any filing required by the Exchange Act).
(vii) The Issuer shall not convey or transfer any of its properties
or assets, including those included in the Trust Estate, to any Person,
unless:
(A) the Person that acquires by conveyance or transfer such
properties and assets of the Issuer shall (A) be a United States
citizen or a Person organized and existing under the laws of the
United States of America or any State, (B) expressly assume, by an
indenture supplemental hereto, executed and delivered to the
Indenture Trustee, in form satisfactory to the Indenture Trustee,
the due and punctual payment of the principal of and interest on all
Notes and the performance or observance of every agreement and
covenant of this Indenture on the part of the Issuer to be performed
or observed, all as provided herein, (C) expressly agrees by means
of such supplemental indenture that all right, title and interest so
conveyed or transferred shall be subject and subordinate to the
rights of Holders of the Notes, (D) unless otherwise provided in
such supplemental indenture, expressly agrees to indemnify, defend
and hold harmless the Issuer, the Owner Trustee and the Indenture
Trustee against and from any loss, liability or expense arising
under or related to this Indenture and the Notes, and (E) expressly
agrees by means of such supplemental indenture that such Person (or
if a group of Persons, then one specified Person) shall make all
filings that counsel satisfactory to such purchaser or transferee
and the Indenture Trustee determines must be made with (1) the
Commission (and any other appropriate Person) required by the
Exchange Act or the appropriate authorities in any State in which
the Notes have been sold pursuant to any qualification or exemption
under the securities or "blue sky" laws of such State, in connection
with the Notes or (2) the Internal Revenue Service or the relevant
state or local taxing authorities of any jurisdiction;
(B) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(C) each Rating Agency shall have received 10 days' written
notice thereof and shall not have notified the Indenture Trustee,
the Administrator or the
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Owner Trustee that such transaction might or would result in the
removal or reduction of the rating then assigned thereby to any
Class of Notes or the Certificates;
(D) the Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to the Indenture Trustee) to the
effect that such transaction will not have any material adverse tax
consequence to the Issuer, any Noteholder or any Certificateholder;
(b) any action that is necessary to maintain the lien and security
interest created by this Indenture shall have been taken; and
(c) the Issuer shall have delivered to the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
conveyance or transfer and such supplemental indenture comply with this
Article III and that all conditions precedent herein provided for relating
to such transaction have been complied with (including any filing required
by the Exchange Act).
3.11 Successor or Transferee.
(a) Upon any consolidation or merger of the Issuer in accordance
with Section 3.10(a), the Person formed by or surviving such consolidation
or merger (if other than the Issuer) shall succeed to, and be substituted
for, and may exercise every right and power of, the Issuer under this
Indenture with the same effect as if such Person had been named as the
Issuer herein.
(b) Upon a conveyance or transfer of all the assets and properties
of the Issuer pursuant to Section 3.10(b), Toyota Auto Receivables 199_-_
Owner Trust will be released from every covenant and agreement of this
Indenture to be observed or performed on the part of the Issuer with
respect to the Notes immediately upon the delivery of written notice to
the Indenture Trustee stating that Toyota Auto Receivables 199_-_ Owner
Trust is to be so released.
3.12 No Other Business. Unless and until the Issuer shall have been
released from its duties and obligations hereunder, the Issuer shall not engage
in any business other than financing, purchasing, owning, selling and managing
the Receivables in the manner contemplated by the Basic Documents and activities
incidental thereto
3.13 No Borrowing. Unless and until the Issuer shall have been released
from its duties and obligations hereunder, the Issuer shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the Notes.
3.14 Servicer's Notice Obligations. The Issuer shall cause the Servicer
to comply with all of its duties and obligations with respect to the preparation
of reports, the delivery of Officer's Certificates and Opinions of Counsel and
the giving of instructions and notices under the Sale
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and Servicing Agreement (including, but not limited to, under Sections 4.09,
4.10, 4.11 and 5.09(b) and Article IX thereof).
3.15 Guarantees, Loans, Advances and Other Liabilities. Unless and until
the Issuer shall have been released from its duties and obligations hereunder,
except as contemplated by the Sale and Servicing Agreement or this Indenture,
the Issuer shall not make any loan or advance or credit to, or guarantee
(directly or indirectly or by an instrument having the effect of assuring
another's payment or performance on any obligation or capability of so doing or
otherwise), endorse or otherwise become contingently liable, directly or
indirectly, in connection with the obligations, stocks or dividends of, or own,
purchase, repurchase or acquire (or agree contingently to do so) any stock,
obligations, assets or securities of, or any other interest in, or make any
capital contribution to, any other Person.
3.16 Capital Expenditures. Unless and until the Issuer shall have been
released from its duties and obligations hereunder, the Issuer shall not make
any expenditure (by long-term or operating lease or otherwise) for capital
assets (either realty or personalty).
3.17 Removal of Administrator. So long as any Notes are Outstanding, the
Issuer shall not remove the Administrator without cause unless each Rating
Agency shall have received 10 days' written notice thereof and shall not have
notified the Indenture Trustee, the Administrator or the Owner Trustee that such
removal might or would result in the removal or reduction of the rating then
assigned thereby to any Class of Notes or the Certificates.
3.18 Restricted Payments. The Issuer shall not, directly or indirectly,
(i) pay any dividend or make any distribution (by reduction of capital or
otherwise), whether in cash, property, securities or a combination thereof, to
the Servicer, the Owner Trustee or any Owner or otherwise with respect to any
ownership or equity interest or security in or of the Issuer, (ii) redeem,
purchase, retire or otherwise acquire for value any such ownership or equity
interest or security or (iii) set aside or otherwise segregate any amounts for
any such purpose; provided, however, that the Issuer may make, or cause to be
made, (x) distributions to the Servicer, the Owner Trustee and the
Certificateholders as contemplated by, and to the extent funds are available for
such purpose under, the Sale and Servicing Agreement or the Trust Agreement and
(y) payments to the Indenture Trustee pursuant to the Administration Agreement.
The Issuer will not, directly or indirectly, make payments to or distributions
from the Collection Account except in accordance with the Basic Documents.
3.19 Notice of Events of Default. The Issuer shall give the Indenture
Trustee and the Rating Agencies prompt written notice of each Event of Default
hereunder, each default on the part of the Servicer or the Seller of its
obligations under the Sale and Servicing Agreement and each default on the part
of TMCC of its obligations under the Receivables Purchase Agreement.
3.20 Further Instruments and Actions. Upon request of the Indenture
Trustee, the Issuer will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
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ARTICLE IV
Satisfaction and Discharge
4.01 Satisfaction and Discharge of Indenture. This Indenture shall cease
to be of further effect with respect to the Notes except as to (i) rights of
registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal thereof and interest thereon, (iv) Sections 3.03, 3.04, 3.05, 3.08,
3.10, 3.12 and 3.13, (v) the rights, obligations and immunities of the Indenture
Trustee hereunder (including the rights of the Indenture Trustee under Section
6.07 and the obligations of the Indenture Trustee under Section 4.02), and (vi)
the rights of Noteholders and Certificateholders as beneficiaries hereof with
respect to the property so deposited with the Indenture Trustee payable to all
or any of them, and the Indenture Trustee, on demand of and at the expense of
the Issuer, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture with respect to the Notes, when:
(a) either (1) all Notes theretofore authenticated and delivered
(other than Notes that have been destroyed, lost or stolen and that have
been replaced or paid as provided in Section 2.05 and Notes for whose
payment money has theretofore been deposited in trust or segregated and
held in trust by the Issuer and thereafter repaid to the Issuer or
discharged from such trust, as provided in Section 3.03) have been
delivered to the Indenture Trustee for cancellation or (2) all Notes not
theretofore delivered to the Indenture Trustee for cancellation have
become due and payable or will become due and payable within one year
(either because the Class A-3 Final Scheduled Distribution Date is within
one year or because the Indenture Trustee has received notice of the
exercise of the option granted pursuant to Section 9.01 of the Sale and
Servicing Agreement) and the Issuer has irrevocably deposited or caused to
be irrevocably deposited with the Indenture Trustee cash or direct
obligations of or obligations guaranteed by the United States of America
(which will mature prior to the date such amounts are payable), in trust
for such purpose, in an amount sufficient to pay and discharge the entire
indebtedness on such Notes not theretofore delivered to the Indenture
Trustee for cancellation when due;
(b) the Issuer has paid or caused to be paid all other sums payable
hereunder by the Issuer; and
(c) the Issuer has delivered to the Indenture Trustee an Officer's
Certificate, an Opinion of Counsel and (if required by the TIA or the
Indenture Trustee) an Independent Certificate from a firm of certified
public accountants, each meeting the applicable requirements of Section
11.01(a) and, subject to Section 11.02, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge
of this Indenture have been complied with.
4.02 Application of Trust Money. All moneys deposited with the Indenture
Trustee pursuant to Section 4.01 hereof shall be held in trust and (a) applied
by it in accordance with the provisions of the Notes and this Indenture to the
payment, either directly or through any Paying
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Agent, as the Indenture Trustee may determine, to the Holders of the particular
Notes for the payment of which such moneys have been deposited with the
Indenture Trustee, of all sums due and to become due thereon for principal and
interest or (b) released to the Owner Trustee for distribution to the
Certificateholders or application pursuant to the Trust Agreement or Sale and
Servicing Agreement; but such moneys need not be segregated from other funds
except to the extent required herein or in the Sale and Servicing Agreement or
required by law.
4.03 Repayment of Moneys Held by Paying Agent. In connection with the
satisfaction and discharge of this Indenture with respect to the Notes, all
moneys then held by any Paying Agent other than the Indenture Trustee under the
provisions of this Indenture with respect to such Notes shall, upon demand of
the Issuer, be paid to the Indenture Trustee to be held and applied according to
Section 3.03 and thereupon such Paying Agent shall be released from all further
liability with respect to such moneys.
ARTICLE V
Remedies
5.01 Events of Default. "Event of Default," wherever used herein, means
any one of the following events (whatever the reason for such Event of Default
and whether it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):
(a) default in the payment of any interest on any Note when the same
becomes due and payable, and such default shall continue for a period of
five days; or
(b) default in the payment of the principal of or any installment of
the principal of any Note when the same becomes due and payable; or
(c) default in the observance or performance of any covenant or
agreement of the Issuer made in this Indenture (other than a covenant or
agreement, a default in the observance or performance of which is
elsewhere in this Section specifically dealt with) which shall continue or
not be cured for a period of 90 days after there shall have been given, by
registered or certified mail, to the Issuer by the Indenture Trustee or to
the Issuer and the Indenture Trustee by the Holders of at least 25% of the
Outstanding Amount of the Notes, a written notice specifying such default
or incorrect representation or warranty and requiring it to be remedied
and stating that such notice is a notice of Default hereunder;
(d) any representation or warranty of the Issuer made in this
Indenture or in any certificate or other writing delivered pursuant hereto
or in connection herewith shall prove to have been incorrect in any
material respect as of the time when the same shall have been made, and
such default shall continue or not be cured, or the circumstance or
condition in respect of which such misrepresentation or warranty was
incorrect shall not have been eliminated or otherwise cured, for a period
of 30 days after there shall have been given, by registered or certified
mail, to the Issuer by the Indenture Trustee or to the
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Issuer and the Indenture Trustee by the Holders of at least 25% of the
Outstanding Amount of the Notes, a written notice specifying such default
or incorrect representation or warranty and requiring it to be remedied
and stating that such notice is a notice of Default hereunder; or
(e) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer or any substantial
part of the Trust Estate in an involuntary case under any applicable
federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Issuer or for
any substantial part of the Trust Estate, or ordering the winding-up or
liquidation of the Issuer's affairs, and such decree or order shall remain
unstayed and in effect for a period of 90 consecutive days; or
(f) the commencement by the Issuer of a voluntary case under any
applicable federal or state bankruptcy, insolvency or other similar law
now or hereafter in effect, or the consent by the Issuer to the entry of
an order for relief in an involuntary case under any such law, or the
consent by the Issuer to the appointment or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of the Issuer or for any substantial part of the Trust
Estate, or the making by the Issuer of any general assignment for the
benefit of creditors, or the failure by the Issuer generally to pay its
debts as such debts become due, or the taking of any action by the Issuer
in furtherance of any of the foregoing.
The Issuer shall deliver to the Indenture Trustee, within five days after
the occurrence thereof, written notice in the form of an Officer's Certificate
of any event which with the giving of notice and the lapse of time would become
an Event of Default under clause (iii), its status and what action the Issuer is
taking or proposes to take with respect thereto.
5.02 Acceleration of Maturity; Rescission and Annulment. If an Event of
Default should occur and be continuing, then and in every such case the
Indenture Trustee or the Holders of Notes representing not less than a majority
of the Outstanding Amount of the Notes may declare all the Notes to be
immediately due and payable, by a notice in writing to the Issuer (and to the
Indenture Trustee if given by Noteholders), and upon any such declaration the
unpaid principal amount of such Notes, together with accrued and unpaid interest
thereon through the date of acceleration, shall become immediately due and
payable.
At any time after such declaration of acceleration of maturity has been
made and before a judgment or decree for payment of the money due has been
obtained by the Indenture Trustee as hereinafter in this Article V provided, the
Holders of Notes representing a majority of the Outstanding Amount of the Notes,
by written notice to the Issuer and the Indenture Trustee, may rescind and annul
such declaration and its consequences if:
(a) the Issuer has paid or deposited with the Indenture Trustee a
sum sufficient to pay:
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(i) all payments of principal of and interest on all Notes and all
other amounts that would then be due hereunder or upon such Notes if the
Event of Default giving rise to such acceleration had not occurred; and
(ii) all sums paid or advanced by the Indenture Trustee hereunder
and the reasonable compensation, expenses, disbursements and advances of
the Indenture Trustee and its agents and counsel; and
(b) all Events of Default, other than the nonpayment of the
principal of the Notes that has become due solely by such acceleration,
have been cured or waived as provided in Section 5.12.
No such rescission shall affect any subsequent default or impair any right
consequent thereto.
5.03 Collection of Indebtedness and Suits for Enforcement by Indenture
Trustee.
(a) The Issuer covenants that if (i) default is made in the payment
of any interest on any Note when the same becomes due and payable, and
such default continues for a period of five days, or (ii) default is made
in the payment of the principal of or any installment of the principal of
any Note when the same becomes due and payable, the Issuer will, upon
demand of the Indenture Trustee, pay to the Indenture Trustee, for the
benefit of the Holders of the Notes, the whole amount then due and payable
on such Notes for principal and interest, with interest upon the overdue
principal and, to the extent payment at such rate of interest shall be
legally enforceable, upon overdue installments of interest at the rate
borne by the Notes and in addition thereto such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the
Indenture Trustee and its agents and counsel.
(b) In case the Issuer shall fail forthwith to pay such amounts upon
such demand, the Indenture Trustee, in its own name and as trustee of an
express trust, may institute a Proceeding for the collection of the sums
so due and unpaid, and may prosecute such Proceeding to judgment or final
decree, and may enforce the same against the Issuer or other obligor upon
such Notes and collect in the manner provided by law out of the property
of the Issuer or other obligor upon such Notes, wherever situated, the
moneys adjudged or decreed to be payable.
(c) If an Event of Default occurs and is continuing, the Indenture
Trustee may, as more particularly provided in Section 5.04, in its
discretion, proceed to protect and enforce its rights and the rights of
the Noteholders and, incidentally thereto, the Certificateholders, by such
appropriate Proceedings as the Indenture Trustee shall deem most effective
to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of
the exercise of any power granted herein, or to enforce any other proper
remedy or legal or equitable right vested in the Indenture Trustee by this
Indenture or by law.
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(d) In case there shall be pending, relative to the Issuer or any
other obligor upon the Notes or any Person having or claiming an ownership
interest in the Trust Estate, Proceedings under Title 11 of the United
States Code or any other applicable federal or state bankruptcy,
insolvency or other similar law, or in case a receiver, assignee or
trustee in bankruptcy or reorganization, liquidator, sequestrator or
similar official shall have been appointed for or taken possession of the
Issuer or its property or such other obligor or Person, or in case of any
other comparable judicial Proceedings relative to the Issuer or other
obligor upon the Notes, or to the creditors or property of the Issuer or
such other obligor, then, irrespective of whether the principal of any
Notes shall then be due and payable as therein expressed or by declaration
or otherwise and irrespective of whether the Indenture Trustee shall have
made any demand pursuant to the provisions of this Section, the Indenture
Trustee shall be entitled and empowered, by intervention in such
Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Notes and to
file such other papers or documents as may be necessary or advisable in
order to have the claims of the Indenture Trustee (including any claim for
reasonable compensation to the Indenture Trustee and each predecessor
Indenture Trustee, and their respective agents, attorneys and counsel, and
for reimbursement of all expenses and liabilities incurred, and all
advances made, by the Indenture Trustee and each predecessor Indenture
Trustee, except as a result of negligence or bad faith) and of the
Noteholders allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to vote on
behalf of the Holders of Notes in any election of a trustee, a standby
trustee or Person performing similar functions in any such Proceedings;
(iii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute all amounts received with
respect to the claims of the Noteholders and of the Indenture Trustee on
their behalf; and
(iv) to file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Indenture
Trustee or the Holders of Notes allowed in any judicial proceedings
relative to the Issuer, its creditors and its property; and any trustee,
receiver, liquidator, custodian or other similar official in any such
Proceeding is hereby authorized by each of such Noteholders to make
payments to the Indenture Trustee and, in the event that the Indenture
Trustee shall consent to the making of payments directly to such
Noteholders, to pay to the Indenture Trustee such amounts as shall be
sufficient to cover reasonable compensation to the Indenture Trustee, each
predecessor Indenture Trustee and their respective agents, attorneys and
counsel, and all other expenses and liabilities incurred, and all advances
made, by the Indenture Trustee and each predecessor Indenture Trustee
except as a result of negligence or bad faith.
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(e) Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or vote for or accept or
adopt on behalf of any Noteholder any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of any Holder
thereof or to authorize the Indenture Trustee to vote in respect of the
claim of any Noteholder in any such proceeding except, as aforesaid, to
vote for the election of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this
Indenture, or under any of the Notes, may be enforced by the Indenture
Trustee without the possession of any of the Notes or the production
thereof in any trial or other Proceedings relative thereto, and any such
action or Proceedings instituted by the Indenture Trustee shall be brought
in its own name as trustee of an express trust, and any recovery of
judgment, subject to the payment of the expenses, disbursements and
compensation of the Indenture Trustee, each predecessor Indenture Trustee
and their respective agents and attorneys, shall be for the ratable
benefit of the Holders of the Notes and, incidentally thereto, for the
benefit of the Certificateholders.
(g) In any Proceedings brought by the Indenture Trustee (and also
any Proceedings involving the interpretation of any provision of this
Indenture to which the Indenture Trustee shall be a party), the Indenture
Trustee shall be held to represent all the Noteholders, and it shall not
be necessary to make any Noteholder a party to any such Proceedings.
5.04 Remedies; Priorities.
(a) If an Event of Default shall have occurred and be continuing,
the Indenture Trustee may do one or more of the following (subject to
Section 5.05):
(i) institute Proceedings in its own name and as trustee of an
express trust for the collection of all amounts then payable on the Notes
or under this Indenture with respect thereto, whether by declaration or
otherwise, enforce any judgment obtained, and collect from the Issuer and
any other obligor upon such Notes moneys adjudged due;
(ii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Trust Estate;
(iii) exercise any remedies of a secured party under the UCC and
take any other appropriate action to protect and enforce the rights and
remedies of the Indenture Trustee and the Noteholders; and
(iv) sell the Trust Estate or any portion thereof or rights or
interest therein, at one or more public or private sales called and
conducted in any manner permitted by law; provided, however, that the
Indenture Trustee may not sell or otherwise liquidate the Trust Estate
following an Event of Default, other than an Event of Default described in
Section 5.01(i) or (ii), unless (A) the Holders of 100% of the Outstanding
Amount of the Notes consent thereto, (B) the proceeds of such sale or
liquidation distributable to the
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Noteholders are sufficient to discharge in full all amounts then due and
unpaid upon such Notes for principal and interest or (C) the Indenture
Trustee determines that the Trust Estate will not continue to provide
sufficient funds for the payment of principal of and interest on the Notes
as they would have become due if the Notes had not been declared due and
payable, and the Indenture Trustee obtains the consent of Holders of
66-2/3% of the Outstanding Amount of the Notes. In determining such
sufficiency or insufficiency with respect to clause (B) and (C), the
Indenture Trustee may, but need not, obtain and rely upon an opinion of an
Independent investment banking or accounting firm of national reputation
as to the feasibility of such proposed action and as to the sufficiency of
the Trust Estate for such purpose.
(v) If the Indenture Trustee collects any money or property pursuant
to this Article V, it shall pay out the money or property in the following
order:
FIRST: to the Indenture Trustee for amounts due under Section 6.07;
SECOND: to Noteholders for amounts due and unpaid on the Notes for
interest (including any premium), ratably, without preference or priority
of any kind, according to the amounts due and payable on the Notes for
interest (including any premium);
THIRD: to Holders of the Class A-1 Notes for amounts due and unpaid
on the Class A-1 Notes for principal, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Class A-1 Notes for principal, until the Outstanding Amount of the Class
A-1 Notes is reduced to zero;
FOURTH: to Holders of the Class A-2 Notes for amounts due and unpaid
on the Class A-2 Notes for principal, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Class A-2 Notes for principal, until the Outstanding Amount of the Class
A-2 Notes is reduced to zero;
FIFTH: to Holders of the Class A-3 Notes for amounts due and unpaid
on the Class A-3 Notes for principal, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Class A-3 Notes for principal, until the Outstanding Amount of the Class
A-3 Notes is reduced to zero; and
SIXTH: to or to the order of the Issuer for amounts required to be
distributed to the Certificateholders pursuant to the Trust Agreement.
The Indenture Trustee may fix a record date and payment date for any
payment to Noteholders pursuant to this Section. At least 15 days before such
record date, the Issuer shall mail to each Noteholder and the Indenture Trustee
a notice that states the related record date, payment date and amount to be
paid.
5.05 Optional Preservation of the Receivables. If the Notes have been
declared to be due and payable under Section 5.02 following an Event of Default
and such declaration and its consequences have not been rescinded and annulled,
the Indenture Trustee may, but need not,
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elect to maintain possession of the Trust Estate and direct the Issuer, Servicer
and Administrator not to take steps to liquidate the Receivables. It is the
desire of the parties hereto and the Noteholders that there be at all times
sufficient funds for the payment of principal of and interest on the Notes, and
the Indenture Trustee shall take such desire into account when determining
whether or not to maintain possession of the Trust Estate. In determining
whether to maintain possession of the Trust Estate, the Indenture Trustee may,
but need not, obtain and rely upon an opinion of an Independent investment
banking or accounting firm of national reputation as to the feasibility of such
proposed action and as to the sufficiency of the Trust Estate for such purpose.
5.06 Limitation of Suits. No Holder of any Note 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:
(a) such Holder has previously given written notice to the
Indenture Trustee of a continuing Event of Default;
(b) the Holders of not less than 25% of the Outstanding Amount
of the Notes have made written request to the Indenture Trustee to
institute such Proceeding in respect of such Event of Default in its
own name as Indenture Trustee hereunder;
(c) such Holder or Holders have offered to the Indenture
Trustee reasonable indemnity against the costs, expenses and
liabilities to be incurred in complying with such request;
(d) the Indenture Trustee for 60 days after its receipt of
such notice, request and offer of indemnity has failed to institute
such Proceedings; and
(e) no direction inconsistent with such written request has
been given to the Indenture Trustee during such 60-day period by the
Holders of a majority of the Outstanding Amount of the Notes.
It is understood and intended that no one or more Holders of Notes shall
have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Notes 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.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of Notes,
each representing less than a majority of the Outstanding Amount of the Notes,
the Indenture Trustee in its sole discretion may determine what action, if any,
shall be taken, notwithstanding any other provisions of this Indenture.
5.07 Unconditional Rights of Noteholders To Receive Principal and
Interest. Notwithstanding any other provisions in this Indenture, the Holder of
any Note shall have the
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right, which is absolute and unconditional, to receive payment of the principal
of and interest, if any, on such Note on or after the respective due dates
thereof expressed in such Note and in this Indenture (in each case with
reference to the calculations to be made pursuant to the Sale and Servicing
Agreement) and to institute suit for the enforcement of any such payment, and
such right shall not be impaired without the consent of such Holder.
5.08 Restoration of Rights and Remedies. If the Indenture Trustee or any
Noteholder 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 Indenture Trustee or to such
Noteholder, then and in every such case the Issuer, the Indenture Trustee and
the Noteholders 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 Indenture Trustee and the Noteholders
shall continue as though no such Proceeding had been instituted.
5.09 Rights and Remedies Cumulative. No right or remedy herein conferred
upon or reserved to the Indenture Trustee or to the Noteholders is intended to
be exclusive of any other right or remedy, and every right and remedy shall, to
the extent permitted by law, 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.
5.10 Delay or Omission Not a Waiver. No delay or omission of the
Indenture Trustee or any Holder of any Note to exercise any right or remedy
accruing upon any Default or Event of Default shall impair any such right or
remedy or constitute a waiver of any such Default or Event of Default or an
acquiescence therein. Every right and remedy given by this Article V or by law
to the Indenture Trustee or to the Noteholders may be exercised from time to
time, and as often as may be deemed expedient, by the Indenture Trustee or by
the Noteholders, as the case may be.
5.11 Control by Noteholders. The Holders of a majority of the Outstanding
Amount of the Notes shall have the right to direct the time, method and place of
conducting any Proceeding for any remedy available to the Indenture Trustee with
respect to the Notes or exercising any trust or power conferred on the Indenture
Trustee; provided that:
(a) such direction shall not be in conflict with any rule of
law or with this Indenture;
(b) any direction to the Indenture Trustee to sell or
liquidate the Trust Estate shall be by Holders of Notes representing
not less than percentages of the Outstanding Amount of the Notes set
forth in Section 5.04;
(c) if the conditions set forth in Section 5.05 have been
satisfied and the Indenture Trustee elects to retain the Trust
Estate pursuant to such Section, then any direction to the Indenture
Trustee by Holders of Notes representing less than
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100% of the Outstanding Amount of the Notes to sell or liquidate the
Trust Estate shall be of no force and effect; and
(d) the Indenture Trustee may take any other action deemed
proper by the Indenture Trustee that is not inconsistent with such
direction.
Notwithstanding the rights of Noteholders set forth in this Section,
subject to Section 6.01, the Indenture Trustee need not take any action that it
determines might involve it in liability or might materially adversely affect
the rights of any Noteholders not consenting to such action.
5.12 Waiver of Past Defaults. Prior to the declaration of the
acceleration of the maturity of the Notes as provided in Section 5.02, the
Holders of Notes representing not less than 51% of the Outstanding Amount of the
Notes (excluding for such purposes the outstanding principal amount of any Notes
held of record or beneficially owned by TMCC, TMCRC or any of their Affiliates)
may waive any past Default, Event of Default or Servicer Default and its
consequences except a Default (a) in the deposit of collections or other
required amounts into any Trust Account, (b) any required payment from any Trust
Account i respect of amounts due on the Notes or (b) in respect of a covenant or
provision hereof that cannot be modified or amended without the consent of the
Holder of each Note. In the case of any such waiver, the Issuer, the Indenture
Trustee and the Holders of the Notes shall be restored to their former positions
and rights hereunder, respectively; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereto.
Upon any such waiver, such Default shall cease to exist and be deemed to
have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereto.
5.13 Undertaking for Costs. All parties to this Indenture agree, and each
Holder of any Note or Note Owner by such Holder's acceptance of such Note or
beneficial interest therein, as the case may be, 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 Indenture
Trustee for any action taken, suffered or omitted by it as Indenture 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 (a)
any suit instituted by the Indenture Trustee, (b) any suit instituted by any
Noteholder, or group of Noteholders, in each case holding in the aggregate more
than 10% of the Outstanding Amount of the Notes or (c) any suit instituted by
any Noteholder for the enforcement of the payment of principal of or interest on
any Note on or after the respective due dates expressed in such Note and in this
Indenture.
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5.14 Waiver of Stay or Extension Laws. The Issuer covenants (to the
extent that it may lawfully do so) that it will not at any time insist upon, or
plead or in any manner whatsoever, claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, that may affect the covenants or the performance of this Indenture; and
the Issuer (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Indenture
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
5.15 Action on Notes. The Indenture Trustee's right to seek and recover
judgment on the Notes or under this Indenture shall not be affected by the
seeking, obtaining or application of any other relief under or with respect to
this Indenture. Neither the lien of this Indenture nor any rights or remedies of
the Indenture Trustee or the Noteholders shall be impaired by the recovery of
any judgment by the Indenture Trustee against the Issuer or by the levy of any
execution under such judgment upon any portion of the Trust Estate or upon any
of the assets of the Issuer. Any money or property collected by the Indenture
Trustee shall be applied in accordance with Section 5.04(b).
5.16 Performance and Enforcement of Certain Obligations.
(a) Promptly following a request from the Indenture Trustee to do so
and at the Administrator's expense, the Issuer shall take all such lawful
action as the Indenture Trustee may request to compel or secure the
performance and observance by the Seller and the Servicer, as applicable,
of each of their obligations to the Issuer under or in connection with the
Sale and Servicing Agreement or by the Seller of its obligations under or
in connection with the Receivables Purchase Agreement, and to exercise any
and all rights, remedies, powers and privileges lawfully available to the
Issuer under or in connection with the Sale and Servicing Agreement to the
extent and in the manner directed by the Indenture Trustee, including the
transmission of notices of default on the part of the Seller or the
Servicer thereunder and the institution of legal or administrative actions
or proceedings to compel or secure performance by the Seller or the
Servicer of each of their respective obligations under the Sale and
Servicing Agreement.
(b) If an Event of Default has occurred and is continuing, the
Indenture Trustee may, and at the direction (which direction shall be in
writing or by telephone, confirmed in writing promptly thereafter) of the
Holders of 66-2/3% of the Outstanding Amount of the Notes (excluding for
such purposes the outstanding principal amount of any Notes held of record
or beneficially owned by TMCC, TMCRC or any of their Affiliates) shall,
exercise all rights, remedies, powers, privileges and claims of the Issuer
against the Seller or the Servicer under or in connection with the Sale
and Servicing Agreement, against the Seller under or in connection with
the Receivables Purchase Agreement, or against the Administrator under the
Administration Agreement, including the right or power to take any action
to compel or secure performance or observance by the Seller, the Servicer
or the Administrator, of each of their obligations to the Issuer
thereunder and to give any
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consent, request, notice, direction, approval, extension, or waiver
thereunder and any right of the Issuer to take such action shall be
suspended.
ARTICLE VI
The Indenture Trustee
6.01 Duties of Indenture Trustee.
(a) If an Event of Default has occurred and is continuing, the
Indenture Trustee shall exercise 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 such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Indenture Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture 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 Indenture Trustee and conforming to the
requirements of this Indenture; provided, however, that the Indenture
Trustee shall examine the certificates and opinions to be delivered
hereunder to determine whether or not they conform to the requirements of
this Indenture.
(c) Subject to Section 6.01(b), the Indenture Trustee may not be
relieved from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct, except that:
(i) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer unless it is proved
that the Indenture Trustee was negligent in ascertaining the pertinent
facts; and
(ii) the Indenture 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 5.11.
(d) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to paragraphs (a), (b), (c) and (g) of this
Section.
(e) The Indenture Trustee shall not be liable for interest on any
money received by it except as the Indenture Trustee may agree in writing
with the Issuer.
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(f) Money held in trust by the Indenture Trustee need not be
segregated from other funds except to the extent expressly required by law
or the terms of this Indenture or the Sale and Servicing Agreement.
(g) No provision of this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur financial
liability in the performance of any of its duties hereunder or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds to believe that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Indenture
Trustee shall be subject to the provisions of this Section and to the
provisions of the TIA.
6.02 Rights of Indenture Trustee.
(a) The Indenture Trustee may rely on any document reasonably
believed by it to be genuine and to have been signed or presented by the
proper person. The Indenture Trustee need not independently investigate
any fact or matter stated in any such document.
(b) Before the Indenture Trustee acts or refrains from acting
hereunder on any matter as to which it is required to exercise discretion,
it may require delivery to it of an Officer's Certificate or an Opinion of
Counsel as to any subject matter appropriate to its making any relevant
determination in the course of such exercise of discretion. The Indenture
Trustee shall not be liable for any action it takes or omits to take in
good faith in reliance on any such Officer's Certificate or Opinion of
Counsel.
(c) The Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian or nominee, and the Indenture Trustee
shall not be responsible for any misconduct or negligence on the part of,
or for the supervision of, any such agent, attorney, custodian or nominee
appointed with due care by it hereunder.
(d) The Indenture Trustee shall not be liable for any action it
takes or omits to take in good faith which it reasonably believes to be
authorized or within its rights or powers hereunder and that is not taken
in willful misconduct, negligence or bad faith.
6.03 Individual Rights of Indenture Trustee. The Indenture Trustee in its
individual or any other capacity may become the Holder, beneficial owner or
pledgee of Notes and may otherwise deal with the Issuer or its Affiliates with
the same rights it would have if it were not Indenture Trustee. Any Paying
Agent, Note Registrar, co-registrar or co-paying agent may do the same with like
rights. However, in so doing the Indenture Trustee must comply with Sections
6.11 and 6.12.
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6.04 Indenture Trustee's Disclaimer. The Indenture Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Notes, shall not be accountable for the Issuer's use of
the proceeds from the Notes, or responsible for any statement of the Issuer in
the Indenture or in any document issued in connection with the sale of the Notes
or in the Notes other than the Indenture Trustee's signature and certificate of
authentication thereon.
6.05 Notice of Defaults. If a Responsible Officer of the Indenture
Trustee knows that a Default has occurred and is continuing, the Indenture
Trustee shall mail to each Noteholder notice of such Default within 90 days of
the occurrence thereof. Except in the case of a Default in payment of principal
of or interest on any Note, the Indenture Trustee may withhold such notice if
and so long as a committee of its Responsible Officers in good faith determines
that withholding the notice is in the interests of Noteholders.
6.06 Reports by Indenture Trustee to Holders. The Indenture Trustee shall
deliver or cause to be delivered annually to each Noteholder of record such
information as may be required to enable such holder to prepare its federal and
state income tax returns.
6.07 Compensation and Indemnity. The Issuer shall pay or shall cause the
Servicer to pay to the Indenture Trustee from time to time reasonable
compensation for its services. The Indenture Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Issuer
shall reimburse or shall cause the Servicer to reimburse the Indenture Trustee
for all reasonable out-of-pocket expenses incurred or made by it, including
costs of collection, in addition to the compensation for its services. Such
expenses shall include the reasonable compensation and expenses, disbursements
and advances of the Indenture Trustee's agents, counsel, accountants and
experts. The Issuer shall indemnify or shall cause the Servicer to indemnify the
Indenture Trustee against any and all loss, liability or expense (including
attorneys' fees) incurred by it in connection with the administration of this
trust and the performance of its duties hereunder. The Indenture Trustee shall
notify the Issuer and the Servicer promptly of any claim for which it may seek
indemnity. Failure by the Indenture Trustee to so notify the Issuer and the
Administrator shall not relieve the Issuer or the Administrator of its
obligations hereunder. The Issuer shall defend or shall cause the Servicer to
defend any such claim, and the Indenture Trustee may have separate counsel and
the Issuer shall pay or shall cause the Servicer to pay the fees and expenses of
such counsel. Neither the Issuer nor the Servicer need reimburse any expense or
indemnify against any loss, liability or expense incurred by the Indenture
Trustee through the Indenture Trustee's own willful misconduct, negligence or
bad faith.
The Issuer's payment obligations to the Indenture Trustee pursuant to this
Section shall survive the discharge of this Indenture. When the Indenture
Trustee incurs expenses after the occurrence of a Default specified in Section
5.01(iv) or (v) with respect to the Issuer, the expenses are intended to
constitute expenses of administration under Title 11 of the United States Code
or any other applicable federal or state bankruptcy, insolvency or similar law.
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6.08 Replacement of Indenture Trustee. No resignation or removal of the
Indenture Trustee and no appointment of a successor Indenture Trustee shall
become effective until the acceptance of appointment by the successor Indenture
Trustee pursuant to this Section 6.08. The Indenture Trustee may resign at any
time by providing written notice of its resignation to the Issuer. The Holders
of a majority in Outstanding Amount of the Notes may remove the Indenture
Trustee by written notice of termination provided to the Indenture Trustee, the
Servicer and the Issuer and may appoint a successor Indenture Trustee. The
Issuer shall remove the Indenture Trustee if:
(a) the Indenture Trustee fails to comply with Section 6.11;
(b) the Indenture Trustee is adjudged a bankrupt or insolvent;
(c) a receiver or other public officer takes charge of the Indenture
Trustee or its property; or
(d) the Indenture Trustee otherwise becomes legally or practically
incapable of fulfilling its duties hereunder.
If the Indenture Trustee resigns or is removed or if a vacancy exists in
the office of Indenture Trustee for any reason (the Indenture Trustee in such
event being referred to herein as the retiring Indenture Trustee), the Issuer
shall promptly appoint a successor Indenture Trustee.
A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee, to the Servicer and to the
Issuer. Thereupon the resignation or removal of the retiring Indenture Trustee
shall become effective, and the successor Indenture Trustee shall have all the
rights, powers and duties of the Indenture Trustee under this Indenture. The
successor Indenture Trustee shall mail a notice of its succession to
Noteholders. The retiring Indenture Trustee shall promptly transfer all property
held by it as Indenture Trustee to the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within 30 days after
the retiring Indenture Trustee resigns or is removed, the retiring Indenture
Trustee, the Issuer or the Holders of a majority in Outstanding Amount of the
Notes may petition any court of competent jurisdiction for the appointment of a
successor Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11, any Noteholder
may at any time thereafter petition any court of competent jurisdiction for the
removal of the Indenture Trustee and the appointment of a successor Indenture
Trustee.
Notwithstanding the replacement of the Indenture Trustee pursuant to this
Section, the Issuer's and the Administrator's obligations under Section 6.07
shall continue for the benefit of the retiring Indenture Trustee.
6.09 Successor Indenture Trustee by Merger. If the Indenture Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets
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to, another Person, the resulting, surviving or transferee corporation without
any further act shall be the successor Indenture Trustee if such surviving
Person or transferee corporation or banking shall be otherwise qualified and
eligible under Section 6.11. The Indenture Trustee shall provide the Issuer, the
Servicer and the Rating Agencies reasonable prior written notice of any such
transaction.
In case at the time such successor or successors by merger, conversion or
consolidation to the Indenture Trustee shall succeed to the trusts created by
this Indenture any of the Notes shall have been authenticated but not delivered,
any such successor to the Indenture Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee; and in all such cases such certificates
shall have the full force which it is anywhere in the Notes or in this Indenture
provided that the certificate of the Indenture Trustee shall have.
6.10 Appointment of Co-Indenture Trustee or Separate Indenture Trustee.
(a) Notwithstanding any other provisions of this Indenture, at any
time, for the purpose of meeting any legal requirement of any jurisdiction
in which any part of the Trust Estate may at the time be located, the
Indenture Trustee shall have the power and may execute and deliver all
instruments to appoint one or more Persons to act as a co-trustee or
co-trustees, or separate trustee or separate trustees, of all or any part
of the Trust, and to vest in such Person or Persons, in such capacity and
for the benefit of the Noteholders, such title to the Trust Estate, or any
part hereof, and, subject to the other provisions of this Section, such
powers, duties, obligations, rights and trusts as the Indenture Trustee
may consider necessary or desirable. No co-trustee or separate trustee
hereunder shall be required to meet the terms of eligibility as a
successor trustee under Section 6.11 and no notice to Noteholders of the
appointment of any co-trustee or separate trustee shall be required under
Section 6.08 hereof.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions
and conditions:
(c) all rights, powers, duties and obligations conferred or imposed
upon the Indenture Trustee shall be conferred or imposed upon and
exercised or performed by the Indenture Trustee and such separate trustee
or co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Indenture
Trustee joining in and/or directing such act), except to the extent that
under any law of any jurisdiction in which any particular act or acts are
to be performed the Indenture Trustee shall be incompetent or unqualified
to perform such act or acts, in which event such rights, powers, duties
and obligations (including the holding of title to the Trust Estate or any
portion thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at the direction
of the Indenture Trustee;
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(i) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder; and
(ii) the Indenture Trustee may at any time accept the resignation of
or remove any separate trustee or co-trustee.
(d) Any notice, request or other writing given to the Indenture
Trustee shall be deemed to have been given to each of the then separate
trustees and co-trustees as effectively as if given to each of them. Every
instrument appointing any separate trustee or co-trustee shall refer to
this Agreement and the conditions of this Article VI. Each separate
trustee and co-trustee, upon its acceptance of the trusts thereupon
conferred, shall be vested with the estates or property specified in its
instrument of appointment, either jointly with the Indenture Trustee or
separately, as may be provided therein, subject to all the provisions of
this Indenture, including every provision of this Indenture relating to
the conduct of, affecting the liability of, or affording protection to,
the Indenture Trustee. Every such instrument shall be filed with the
Indenture Trustee.
(e) Any separate trustee or co-trustee may at any time constitute
the Indenture Trustee its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under
or in respect of this Agreement on its behalf and in its name. If any
separate trustee or co-trustee shall die, become incapable of acting,
resign or be removed, all of its estates, properties, rights, remedies and
trusts shall vest in and be exercised by the Indenture Trustee, to the
extent permitted by law, without the appointment of a new or successor
trustee.
6.11 Eligibility; Disqualification. The Indenture Trustee shall at all
times satisfy the requirements of TIA Section 310(a). The Indenture Trustee
shall have a combined capital and surplus of at least $50,000,000 as set forth
in its most recent published annual report of condition and it or its parent
shall have a long-term debt rating of Baa3 or better by Moody's or shall
otherwise be acceptable to Moody's. The Indenture Trustee shall comply with TIA
Section 310(b), including the optional provision permitted by the second
sentence of TIA Section 310(b)(9); provided, however, that there shall be
excluded from the operation of TIA Section 310(b)(1) any indenture or indentures
under which other securities of the Issuer are outstanding if the requirements
for such exclusion set forth in TIA Section 310(b)(1) are met.
6.12 Preferential Collection of Claims Against Issuer. The Indenture
Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). An Indenture Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated.
[Section 6.13. Pennsylvania Motor Vehicle Sales Finance Act Licenses. The
Indenture Trustee shall use its best efforts to maintain the effectiveness of
all licenses required under the Pennsylvania Motor Vehicle Sales Finance Act in
connection with this Indenture and the transactions contemplated hereby until
the lien and security interest of this Indenture shall no longer be in effect in
accordance with the terms hereof.]
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ARTICLE VII
Noteholders' Lists and Reports
7.01 Note Registrar To Furnish Names and Addresses of Noteholders. The
Note Registrar shall furnish or cause to be furnished to the Indenture Trustee,
Owner Trustee, Servicer or Administrator, within 15 days after receipt by the
Note Registrar of a written request therefrom, a list of the names and addresses
of the Noteholders as of the most recent Record Date. If three or more
Noteholders, or one or more Holders of Class A-1, Class A-2 or Class A-3 Notes
evidencing not less than 25% of the Outstanding Amount thereof (hereinafter
referred to as "Applicants"), apply in writing to the Indenture Trustee, and
such application states that the Applicants desire to communicate with other
Noteholders with respect to their rights under this Indenture or under the Notes
and such application is accompanied by a copy of the communication that such
Applicants propose to transmit, then the Indenture Trustee shall, within five
Business Days after the receipt of such application, afford such Applicants
access, during normal business hours, to the current list of Noteholders. Every
Noteholder, by receiving and holding a Note, agrees with the Indenture Trustee
and the Issuer that none of the Indenture Trustee, the Owner Trustee, the
Issuer, the Servicer or the Administrator shall be held accountable by reason of
the disclosure of any such information as to the names and addresses of the
Noteholders under this Indenture, regardless of the source from which such
information was derived.
If the Indenture Trustee shall cease to be the Note Registrar, then
thereafter the Issuer will furnish or cause to be furnished to the Indenture
Trustee not more than five days after the most recent Record Date or at such
other times as the Indenture Trustee reasonably may request in writing, a list,
in such form as the Indenture Trustee reasonably may require, of the names and
addresses of the Holders of Notes as of such Record Date.
7.02 Preservation of Information; Communications to Noteholders.
(a) The Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders of Notes
contained in the most recent list furnished to the Indenture Trustee as
provided in Section 7.01 and the names and addresses of Holders of Notes
received by the Indenture Trustee in its capacity as Note Registrar. The
Indenture Trustee may destroy any list furnished to it as provided in such
Section 7.01 upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b) with
other Noteholders with respect to their rights under this Indenture or
under the Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall
have the protection of TIA Section 3.12(c).
7.03 Reports by Issuer.
(a) The Issuer shall:
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(i) file with the Indenture Trustee, within 15 days after the Issuer
is required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the Commission may from time to
time by rules and regulations prescribe) that the Issuer may be required
to file with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act;
(ii) file with the Indenture Trustee and the Commission in
accordance with the rules and regulations prescribed from time to time by
the Commission such additional information, documents and reports with
respect to compliance by the Issuer with the conditions and covenants of
this Indenture as may be required from time to time by such rules and
regulations; and
(iii) supply to the Indenture Trustee (and the Indenture Trustee
shall transmit by mail to all Noteholders described in TIA Section 313(c))
such summaries of any information, documents and reports required to be
filed by the Issuer pursuant to clauses (i) and (ii) of this Section
7.03(a) and by rules and regulations prescribed from time to time by the
Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on September 30 of each year.
7.04 Reports by Indenture Trustee. If required by TIA Section 313(a),
within 60 days after each - beginning with -, the Indenture Trustee shall mail
to each Noteholder as required by TIA Section 313(c) a brief report dated as of
such date that complies with TIA Section 313(a). The Indenture Trustee also
shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to Noteholders shall be
filed by the Indenture Trustee with the Commission and each stock exchange, if
any, on which the Notes are listed. The Issuer shall notify the Indenture
Trustee if and when the Notes are listed on any stock exchange.
ARTICLE VIII
Accounts, Disbursements and Releases
8.01 Collection of Money. Except as otherwise expressly provided herein,
the Indenture Trustee may demand payment or delivery of, and shall receive and
collect, directly and without intervention or assistance of any fiscal agent or
other intermediary, all money and other property payable to or receivable by the
Indenture Trustee pursuant to this Indenture. The Indenture Trustee shall apply
all such money received by it as provided in this Indenture. Except as otherwise
expressly provided in this Indenture, if any default occurs in the making of any
payment or performance under any agreement or instrument that is part of the
Trust Estate, the Indenture Trustee may take such action as may be appropriate
to enforce such payment or performance, including the institution and
prosecution of appropriate Proceedings. Any such
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action shall be without prejudice to any right to claim a Default or Event of
Default under this Indenture and any right to proceed thereafter as provided in
Article V.
8.02 Trust Accounts.
(a) On or prior to the Closing Date, the Issuer shall cause the
Servicer to establish and maintain, in the name of the Indenture Trustee,
for the benefit of the Noteholders and, to the extent set forth herein,
the Certificateholders, the Trust Accounts as provided in Section 5.01 of
the Sale and Servicing Agreement.
(b) On or before each Distribution Date, the Total Distribution
Amount with respect to the related Collection Period will be deposited in
the Collection Account as provided in Section 5.02 of the Sale and
Servicing Agreement. On or before each Distribution Date, all amounts
required to be withdrawn from the Reserve Fund or the Yield Maintenance
Account and deposited in the Collection Account with respect to the
related Collection Period pursuant to Sections 5.06 and 5.07 of the Sale
and Servicing Agreement will be so withdrawn and deposited.
(c) On each Distribution Date, the Indenture Trustee shall
distribute all amounts on deposit in the Collection Account to Noteholders
in respect of the Notes to the extent of amounts due and unpaid on the
Notes in respect of principal and interest (including any premium), in
each case to be determined by the Indenture Trustee by reference to the
relevant amounts set forth in the Servicer's Certificate and Section 5.06
of the Sale and Servicing Agreement, in the following amounts and in the
following order of priority (except as otherwise provided in Section
5.04(b)):
(i) 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 (as Available Interest has been
reduced by reimbursing the Servicer for any outstanding Advances and
paying the Servicer the Servicing Fee, including any unpaid Servicing Fees
with respect to one or more prior Collection Periods); and if such
Available Interest is insufficient, the Noteholders will be entitled to
receive such amount first, from the Certificateholders' Percentage of
Available Principal and second, if such amounts are insufficient, from
monies transferred from the Reserve Fund to the Collection Account;
(ii) 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 _________, 199_, the
Certificateholders' Principal Distributable Amount and any unpaid Class
A-1 Principal Carryover Shortfall, such amount to be paid from Available
Principal (as Available Principal has been reduced by reimbursing the
Servicer for the principal component of any outstanding Advances and any
reduction in Available Principal described in clause (i) above); and if
such Available Principal is insufficient, the Class A-
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1 Noteholders will be entitled to receive such amount first, from
Available Interest (after giving effect to the reduction in Available
Interest described in clause (i) 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;
(iii) to the Class A-2 Noteholders, an amount equal to the
Noteholders' Principal Distributable Amount and any unpaid Class A-2
Principal Carryover Shortfall, and, if the Distribution Date on which the
principal amount of the Class A-1 Notes is reduced to zero occurs prior to
__________, 199_, then on such Distribution Date only, the
Certificateholders' Principal Distribution Amount, such amount to be paid
from Available Principal (as Available Principal has been reduced by
reimbursing the Servicer for the principal component of any outstanding
Advances and any reduction in Available Principal described in clauses (i)
and (ii) 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 the reduction in Available
Interest described in clause (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-2 Notes
is reduced to zero;
(iv) to the Class A-3 Noteholders, an amount equal to the
Noteholders' Principal Distributable Amount and any unpaid Class A-3
Principal Carryover Shortfall, such amount to be paid from Available
Principal (as Available Principal has been reduced by reimbursing the
Servicer for the principal component of any outstanding Advances and any
reduction in Available Principal described in clauses (i), (ii) and (iii)
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 the reduction in Available Interest
described in clause (i), (ii) and (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-3 Notes is
reduced to zero.
(d) On each Distribution Date, the Indenture Trustee shall
distribute all amounts on deposit in the Collection Account to or to the
order of the Issuer in respect of distributions on the Certificates under
the Trust Agreement to the extent of amounts due and unpaid on the
Certificates in respect of principal and interest (including any premium),
in each case to be determined by the Indenture Trustee by reference to the
relevant amounts set forth in the Servicer's Certificate and Section 5.06
of the Sale and Servicing Agreement, in the following amounts and in the
following order of priority (except as otherwise provided in Section
5.04(b)):
(i) 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 the reduction in Available
Interest described in Section 8.02(c)(i)); and if such Available Interest
is
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insufficient, the Certificateholders will be entitled to receive such
amount from monies transferred from the Reserve Fund to the Collection
Account; and
(ii) to the Certificateholders, an amount equal to the
Certificateholders' Principal Distributable Amount and any unpaid
Certificateholder Principal Carryover Shortfall, such amount to be paid
from Available Principal (after giving effect to the reduction in
Available Principal described in Sections 8.02(c) (ii) through (iv) and
Section 8.02(d)(i)); and if such Available Principal is insufficient, the
Certificateholders will be entitled to receive such amount first, from
Available Interest (after giving effect to the reductions in Available
Interest described in Sections 8.02(c) (ii) through (iv) and Section
8.02(d)(i)) and second, if such amounts are insufficient, from monies
transferred from the Reserve Fund to the Collection Account.
(e) On each Distribution Date, the Indenture Trustee will deposit
any amounts remaining in the Collection Account with respect to such
Distribution Date after giving effect to the distributions described in
Sections 8.02(c)(ii) through (iv) and Sections 8.02(d)(i) and (ii) in the
Reserve Fund until the amount on deposit therein equals the Specified
Reserve Fund Balance and will distribute the remainder, if any, to the
Seller and shall for all purposes thereupon be deemed to have released the
amounts released to the Seller from the lien of this Indenture.
8.03 General Provisions Regarding Accounts.
(a) So long as no Default or Event of Default shall have occurred
and be continuing, all or a portion of the funds in the Trust Accounts
shall be invested in Eligible Investments and reinvested by the Indenture
Trustee upon Issuer Order, subject to the provisions of Section 5.01(b) of
the Sale and Servicing Agreement. All income or other gain from
investments of moneys deposited in the Trust Accounts shall be deposited
by the Indenture Trustee in the Collection Account, and any loss resulting
from such investments shall be charged to such account. The Issuer will
not direct the Indenture Trustee to make any investment of any funds or to
sell any investment held in any of the Trust Accounts unless the security
interest Granted and perfected in such account will continue to be
perfected in such investment or the proceeds of such sale, in either case
without any further action by any Person, and, in connection with any
direction to the Indenture Trustee to make any such investment or sale, if
requested by the Indenture Trustee, the Issuer shall deliver to the
Indenture Trustee an Opinion of Counsel, acceptable to the Indenture
Trustee, to such effect.
(b) Subject to Section 6.01(c), the Indenture Trustee shall not in
any way be held liable by reason of any insufficiency in any of the Trust
Accounts resulting from any loss on any Eligible Investment included
therein except for losses attributable to the Indenture Trustee's failure
to make payments on such Eligible Investments issued by the Indenture
Trustee, in its commercial capacity as principal obligor and not as
trustee, in accordance with the terms thereof.
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(c) If (i) the Issuer shall have failed to give investment
directions for any funds on deposit in the Trust Accounts to the Indenture
Trustee by 11:00 a.m. Eastern Time (or such other time as may be agreed by
the Issuer and Indenture Trustee) on any Business Day or (ii) a Default or
Event of Default shall have occurred and be continuing with respect to the
Notes but the Notes shall not have been declared due and payable pursuant
to Section 5.02 or (iii) if such Notes shall have been declared due and
payable following an Event of Default, amounts collected or receivable
from the Trust Estate are being applied in accordance with Section 5.05 as
if there had not been such a declaration, then the Indenture Trustee
shall, to the fullest extent practicable, invest and reinvest funds in the
Trust Accounts in one or more Eligible Investments.
8.04 Release of Trust Estate.
(a) Subject to the payment of its fees and expenses pursuant to
Section 6.07, the Indenture Trustee may, and when required by the
provisions of this Indenture shall, execute instruments to release
property from the lien of this Indenture, or convey the Indenture
Trustee's interest in the same, in a manner and under circumstances that
are not inconsistent with the provisions of this Indenture. No party
relying upon an instrument executed by the Indenture Trustee as provided
in this Article VIII shall be bound to ascertain the Indenture Trustee's
authority, inquire into the satisfaction of any conditions precedent or
see to the application of any moneys.
(b) The Indenture Trustee shall, at such time as there are no Notes
outstanding and all sums due the Indenture Trustee pursuant to Section
6.07 have been paid, release any remaining portion of the Trust Estate
that secured the Notes from the lien of this Indenture and release to or
to the order of the Issuer or any other Person entitled thereto any funds
then on deposit in the Trust Accounts. The Indenture Trustee shall release
property from the lien of this Indenture pursuant to this Section 8.04(b)
only upon receipt of an Issuer Request accompanied by an Officer's
Certificate, an Opinion of Counsel and (if required by the TIA)
Independent Certificates in accordance with TIA Sections 314(c) and
314(d)(1) meeting the applicable requirements of Section 11.01.
8.05 Opinion of Counsel. The Indenture Trustee shall receive at least
seven days notice when requested by the Issuer to take any action pursuant to
Section 8.04(a), accompanied by copies of any instruments involved, and the
Indenture Trustee shall also require, except in connection with any action
contemplated by Section 8.04(c), as a condition to such action, an Opinion of
Counsel, in form and substance satisfactory to the Indenture Trustee, stating
the legal effect of any such action, outlining the steps required to complete
the same, and concluding that all conditions precedent to the taking of such
action have been complied with and such action will not materially and adversely
impair the security for the Notes or the rights of the Noteholders in
contravention of the provisions of this Indenture; provided, however, that such
Opinion of Counsel shall not be required to express an opinion as to the fair
value of the Trust Estate. Counsel rendering any such opinion may rely, without
independent investigation, on the accuracy and validity of any certificate or
other instrument delivered to the Indenture Trustee in connection with any such
action.
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ARTICLE IX
Supplemental Indentures
9.01 Supplemental Indentures Without Consent of Noteholders.
(a) Without the consent of the Holders of any Notes but with prior
notice to the Rating Agencies, the Issuer and the Indenture Trustee, when
authorized by an Issuer Order, at any time and from time to time, may
enter into one or more indentures supplemental hereto (which shall conform
to the provisions of the Trust Indenture Act as in force at the date of
the execution thereof), in form satisfactory to the Indenture Trustee, for
any of the following purposes:
(i) to correct or amplify the description of any property at any
time subject to the lien of this Indenture, or better to assure, convey
and confirm unto the Indenture Trustee any property subject or required to
be subjected to the lien of this Indenture, or to subject to the lien of
this Indenture additional property;
(ii) to evidence the succession, in compliance with the applicable
provisions hereof, of another person to the Issuer, and the assumption by
any such successor of the covenants of the Issuer herein and in the Notes
contained;
(iii) to add to the covenants of the Issuer, for the benefit of the
Holders of the Notes, or to surrender any right or power herein conferred
upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any property to
or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any provision
herein or in any supplemental indenture that may be inconsistent with any
other provision herein or in any supplemental indenture or to make any
other provisions with respect to matters or questions arising under this
Indenture or in any supplemental indenture to the extent such action shall
not adversely affect the interests of the Holders of the Notes or the
Certificates;
(vi) to evidence and provide for the acceptance of the appointment
hereunder by a successor trustee with respect to the Notes and to add to
or change any of the provisions of this Indenture as shall be necessary to
facilitate the administration of the trusts hereunder by more than one
trustee, pursuant to the requirements of Article VI; or
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the qualification
of this Indenture under the TIA or under any similar federal statute
hereafter enacted and to add to this Indenture such other provisions as
may be expressly required by the TIA.
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The Indenture Trustee is hereby authorized to join in the execution
of any such supplemental indenture and to make any further appropriate
agreements and stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by an
Issuer Order, may, also without the consent of any of the Holders of the
Notes, enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to, or changing in any manner or
eliminating any of the provisions of, this Indenture or of modifying in
any manner the rights of the Holders of the Notes or Certificates under
this Indenture; provided, however, that such action shall not, as
evidenced by an Opinion of Counsel, adversely affect in any material
respect the interests of any Noteholder or Certificateholder.
9.02 Supplemental Indentures with Consent of Noteholders. The Issuer and
the Indenture Trustee, when authorized by an Issuer Order, also may, with prior
notice to the Rating Agencies and with the consent of the Holders of not less
than 51% of the Outstanding Amount of the Notes, by Action of such Holders
delivered to the Issuer and the Indenture Trustee, enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to, or
changing in any manner or eliminating any of the provisions of, this Indenture
or of modifying in any manner the rights of the Holders of the Notes under this
Indenture; provided, however, that no such supplemental indenture shall, without
the consent of the Holder of each Outstanding Note affected thereby:
(a) change the date of payment of any installment of principal of or
interest on any Note, or reduce the principal amount thereof, the Interest
Rate thereon, change the provisions of this Indenture relating to the
application of collections on, or the proceeds of the sale of, the Trust
Estate to payment of principal of or interest on the Notes, or change any
place of payment where, or the coin or currency in which, any Note or the
interest thereon is payable, or impair the right to institute suit for the
enforcement of the provisions of this Indenture requiring the application
of funds available therefor, as provided in Article V, to the payment of
any such amount due on the Notes on or after the respective due dates
thereof;
(b) reduce the percentage of the Outstanding Amount of the Notes,
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 this Indenture or certain
defaults hereunder and their consequences provided for in this Indenture;
(c) modify or alter the provisions of the proviso to the definition
of the term "Outstanding";
(d) reduce the percentage of the Outstanding Amount of the Notes
required to direct the Indenture Trustee to direct the Issuer to sell or
liquidate the Trust Estate pursuant to Section 5.04;
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(e) modify any provision of this Section except to increase any
percentage specified herein or to provide that certain additional
provisions of this Indenture or the Basic Documents cannot be modified or
waived without the consent of the Holder of each Outstanding Note affected
thereby;
(f) modify any of the provisions of this Indenture in such manner as
to affect the calculation of the amount of any payment of interest or
principal due on any Note on any Distribution Date (including the
calculation of any of the individual components of such calculation); or
(g) permit the creation of any lien ranking prior to or on a parity
with the lien of this Indenture with respect to any part of the Trust
Estate or, except as otherwise permitted or contemplated herein, terminate
the lien of this Indenture on any property at any time subject hereto or
deprive the Holder of any Note of the security provided by the lien of
this Indenture.
The Indenture Trustee may in its discretion determine whether or not any
Notes would be adversely affected by any supplemental indenture and any such
determination shall be conclusive upon the Holders of all Notes, whether
theretofore or thereafter authenticated and delivered hereunder. The Indenture
Trustee shall not be liable for any such determination made in good faith.
It shall not be necessary for any Action of Noteholders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Action shall approve the substance thereof.
Promptly after the execution by the Issuer and the Indenture Trustee of
any supplemental indenture pursuant to this Section, the Indenture Trustee shall
mail to the Holders of the Notes to which such amendment or supplemental
indenture relates a notice setting forth in general terms the substance of such
supplemental indenture. Any failure of the Indenture Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
9.03 Execution of Supplemental Indentures. In executing, or permitting
the additional trusts created by, any supplemental indenture permitted by this
Article IX or the modification thereby of the trusts created by this Indenture,
the Indenture Trustee shall be entitled to receive, and subject to Sections 6.01
and 6.02, shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of such supplemental indenture is authorized or
permitted by this Indenture. The Indenture Trustee may, but shall not be
obligated to, enter into any such supplemental indenture that affects the
Indenture Trustee's own rights, duties, liabilities or immunities under this
Indenture or otherwise.
9.04 Effect of Supplemental Indenture. Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be and shall be deemed to be modified and amended in accordance therewith with
respect to the Notes affected thereby, and the respective rights, limitations of
rights, obligations, duties, liabilities and immunities under this Indenture of
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the Indenture Trustee, the Issuer and the Holders of the Notes shall thereafter
be determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
9.05 Conformity with Trust Indenture Act. Every amendment of this
Indenture and every supplemental indenture executed pursuant to this Article IX
shall conform to the requirements of the Trust Indenture Act as then in effect
so long as this Indenture shall then be qualified under the Trust Indenture Act.
9.06 Reference in Notes to Supplemental Indentures. Notes authenticated
and delivered after the execution of any supplemental indenture pursuant to this
Article IX may, and if required by the Indenture Trustee shall, bear a notation
in form approved by the Indenture Trustee as to any matter provided for in such
supplemental indenture. If the Issuer or the Indenture Trustee shall so
determine, new Notes so modified as to conform, in the opinion of the Indenture
Trustee and the Issuer, to any such supplemental indenture may be prepared and
executed by the Issuer and authenticated and delivered by the Indenture Trustee
in exchange for Outstanding Notes.
ARTICLE X
Termination of the Trust
10.01 Termination of the Trusts Created by Indenture.
(a) The trusts created hereby and the respective obligations and
responsibilities of the Issuer, the Administrator and the Indenture
Trustee shall terminate upon (i) the purchase as of any Distribution Date
by the Seller or Servicer, or any successor to the Servicer, at its option
of the Receivables primarily comprising corpus of the Owner Trust Estate
as described in Section 10.02, (ii) the payment to the Noteholders of all
amounts required to be paid to them pursuant to this Agreement and the
release to the Owner Trustee of all remaining amounts or investments on
deposit in the Trust Accounts or (iii) the maturity or liquidation of the
last Receivable and the disposition of all property held as part of the
Owner Trust Estate; provided, however, that in no event shall the trust
created by this Indenture continue beyond the expiration of 21 years from
the death of the last survivor of the descendants of William Jefferson
Clinton of the State of Arkansas, living on the date of this Indenture.
The Owner Trustee shall promptly notify the Indenture Trustee and each
Rating Agency of any prospective termination pursuant to this Section.
(b) Notice of any termination, specifying the Distribution Date upon
which the Noteholders must surrender their Notes to the Indenture Trustee
for payment of the final distribution and retirement of the Notes, shall
be given promptly by the Indenture Trustee (at the written direction of
the Administrator) by letter to Noteholders mailed not later than the o
day and not earlier than the - day prior to the date on which such final
distribution is expected to occur specifying (i) the Distribution Date
upon which final
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payment of the Notes shall be made upon presentation and surrender of
Notes at the office of the Indenture Trustee therein specified, (ii) the
amount of any such final payment and (iii) if applicable, that the Record
Date otherwise applicable to such Distribution Date is not applicable,
payments being made only upon presentation and surrender of the Notes at
the office of the Indenture Trustee therein specified. The Indenture
Trustee shall give such notice to the Note Registrar (if other than the
Indenture Trustee) at the time such notice is given to Noteholders. In the
event such notice is given, the Seller, the Servicer, or any successor to
the Servicer, or the Trustee, as the case may be, shall make deposits into
the Collection Account in accordance with Section 5.02 of the Sale and
Servicing Agreement, or, in the case of an optional purchase of
Receivables pursuant to Section 10.02, shall deposit the amount specified
in Section 10.02. Upon presentation and surrender of the Notes, the
Indenture Trustee shall cause to be distributed to Noteholders amounts
distributable on such Distribution Date pursuant to Section 5.05 of the
Sale and Servicing Agreement.
(c) In the event that all of the Noteholders shall not surrender
their Notes for retirement within six months after the date specified in
the above-mentioned written notice, the Trustee shall give a second
written notice to the remaining Noteholders to surrender their Notes for
retirement and receive the final distribution with respect thereto. If
within one year after the second notice all the Notes shall not have been
surrendered for retirement, the Indenture 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 this Agreement. Any funds remaining in the Trust after
exhaustion of such remedies shall be distributed by the Indenture Trustee
to the California Special Olympics.
10.02 Optional Purchase of All Receivables. If the Seller or the
Servicer, or any successor to the Servicer, as the case may be, shall notify the
Owner Trustee of its intention to exercise the option granted to it in the Trust
Agreement or the Sale and Servicing Agreement, as the case may be, to repurchase
the outstanding Receivables primarily comprising the Owner Trust Estate, then
the Owner Trustee shall give written notice thereof to the Indenture Trustee and
the Rating Agencies not later than the - day of the month preceding the month in
which the Distribution Date as of which such purchase is to be effected. Upon
deposit by the Seller, Servicer or successor to the Servicer of the amount
necessary to effect such purchase the corpus of the Owner Trust Estate, the
Indenture Trustee shall make the final distributions to the Noteholders and
Certificateholders as set forth in Section 5.05 of the Sale and Servicing
Agreement and Section 10.01 and shall promptly transfer all of its right, title
and interest in and to any amounts or investments remaining on deposit in the
Trust Accounts (excluding any portion thereof necessary to make distributions to
Noteholders described in Section 10.01(c)) to the Owner Trustee for the benefit
of the Certificateholders and release from the lien of this Indenture all of the
remaining Collateral. The Indenture Trustee shall execute, deliver and file all
agreements, certificates, instruments or other documents necessary or reasonably
requested by the Owner Trustee in order to effect such release and the transfer
to the Owner Trustee of the Collateral.
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ARTICLE XI
Miscellaneous.
11.01 Compliance Certificates and Opinions, etc.
(a) Upon any application or request by the Issuer to the Indenture
Trustee to take any action under any provision of this Indenture, the
Issuer shall, upon written request therefor from the Indenture trustee,
furnish to the Indenture Trustee (i) an Officer's Certificate stating that
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with, (ii) an Opinion of Counsel
stating that in the opinion of such counsel all such conditions precedent,
if any, have been complied with and (iii) (if required by the TIA) an
Independent Certificate from a firm of certified public accountants
meeting the applicable requirements of this Section, except that, in the
case of any such application or request as to which the furnishing of such
documents is specifically required by any provision of this Indenture, no
such written request from the Indenture Trustee need be furnished (and
only such expressly required documents need be delivered in connection
therewith).
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or opinion
has read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(ii) 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;
(iii) a statement that, in the opinion of each such signatory, such
signatory has made such examination or investigation as is necessary to
enable such signatory to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any Collateral or other property or
securities with the Indenture Trustee that is to be made the basis for the
release of any property or securities subject to the lien of this
Indenture, the Issuer shall, in addition to any obligation imposed in
Section 11.01(a) or elsewhere in this Indenture, furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of each
person signing such certificate as to the fair value (within 90 days of
such deposit) to the Issuer of the Collateral or other property or
securities to be so deposited.
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(ii) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of any
signatory thereof as to the matters described in clause (i) above, the
Issuer shall also deliver to the Indenture Trustee an Independent
Certificate as to the same matters, if the fair value to the Issuer of the
securities to be so deposited and of all other such securities made the
basis of any such withdrawal or release since the commencement of the
then-current fiscal year of the Issuer, as set forth in the certificates
delivered pursuant to clause (i) above and this clause (ii), is 10% or
more of the Outstanding Amount of the Notes, but such a certificate need
not be furnished with respect to any securities so deposited, if the fair
value thereof to the Issuer as set forth in the related Officer's
Certificate is less than $25,000 or less than one percent of the
Outstanding Amount of the Notes.
(iii) Whenever any property or securities are to be released from
the lien of this Indenture, the Issuer shall also furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of each
person signing such certificate as to the fair value (within 90 days of
such release) of the property or securities proposed to be released and
stating that in the opinion of such person the proposed release will not
impair the security under this Indenture in contravention of the
provisions hereof.
(iv) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of any
signatory thereof as to the matters described in clause (iii) above, the
Issuer shall also furnish to the Indenture Trustee an Independent
Certificate as to the same matters if the fair value of the property or
securities and of all other property, other than property as contemplated
by clause (v) below or securities released from the lien of this Indenture
since the commencement of the then-current calendar year, as set forth in
the certificates required by clause (iii) above and this clause (iv),
equals 10% or more of the Outstanding Amount of the Notes, but such
certificate need not be furnished in the case of any release of property
or securities if the fair value thereof as set forth in the related
Officer's Certificate is less than $25,000 or less than one percent of the
then Outstanding Amount of the Notes.
(v) Notwithstanding Section 2.09 or any other provision of this
Section, the Issuer may, without compliance with the requirements of the
other provisions of this Section, (A) collect, liquidate, sell or
otherwise dispose of Receivables and Financed Vehicles as and to the
extent permitted or required by the Basic Documents and (B) make cash
payments out of the Trust Accounts as and to the extent permitted or
required by the Basic Documents so long as the Issuer shall deliver to the
Indenture Trustee every six months, commencing -, an Officer's Certificate
of the Issuer stating that all such dispositions of Collateral that
occurred during the preceding six calendar months were in the ordinary
course of the Issuer's business and that the proceeds thereof were applied
in accordance with the Basic Documents.
11.02 Form of Documents Delivered to Indenture Trustee. In any case where
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such matters be certified by,
or covered by the opinion of, only one such
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Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which such officer's certificate or opinion is
based are erroneous. Any such certificate of an Authorized Officer or Opinion of
Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of the
Servicer, the Seller, the Issuer or the Administrator, stating that the
information with respect to such factual matters is in the possession of the
Servicer, the Seller, the Issuer or the Administrator, unless such counsel
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article VI.
11.03 Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by
agents duly appointed in writing; and except as herein otherwise expressly
provided such action shall become effective when such instrument or
instruments are delivered to the Indenture Trustee, and, where it is
hereby expressly required, to the Issuer. Such instrument or instruments
(and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Action" of the Noteholders signing such
instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of
this Indenture and (subject to Section 6.01) conclusive in favor of the
Indenture Trustee and the Issuer, if made in the manner provided in this
Section.
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(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Indenture
Trustee deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of
every Note issued upon the registration thereof or in exchange therefor or
in lieu thereof, in respect of anything done, omitted or suffered to be
done by the Indenture Trustee or the Issuer in reliance thereon, whether
or not notation of such action is made upon such Note.
11.04 Notices, etc., to Indenture Trustee, Issuer and Rating Agencies.
Any request, demand, authorization, direction, notice, consent, waiver or Action
of Noteholders or other documents provided or permitted by this Indenture shall
be in writing and if such request, demand, authorization, direction, notice,
consent, waiver or Action of Noteholders is to be made upon, given or furnished
to or filed with:
(a) the Indenture Trustee by any Noteholder or by the Issuer shall
be sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Indenture Trustee at its Corporate Trust
Office, or
(b) the Issuer by the Indenture Trustee or by any Noteholder shall
be sufficient for every purpose hereunder if in writing and mailed
first-class, postage prepaid to the Issuer addressed to: Toyota Auto
Receivables 199_-_ Owner Trust, 19001 South Western Avenue, Torrance,
California 90509, Attention: Secretary, or at any other address previously
furnished in writing to the Indenture Trustee by the Issuer or the
Administrator. The Issuer shall promptly transmit any notice received by
it from the Noteholders to the Indenture Trustee.
Notices required to be given to the Rating Agencies by the Issuer, the
Indenture Trustee or the Owner Trustee shall be in writing, personally delivered
or mailed by certified mail, return receipt requested, to (i) in the case of
Moody's, at the following address: Moody's Investors Service, Inc., ABS
Monitoring Department, 99 Church Street, New York, New York 10007, (ii) in the
case of Standard & Poor's, at the following address: Standard & Poor's Ratings
Group, 26 Broadway (15th Floor), New York, New York 10004, Attention of Asset
Backed Surveillance Department, (iii) in the case of Fitch's Investors Service,
Inc., at the following address: One State Street Plaza, New York, N.Y. 10004,
and (iv) in the case of Duff & Phelps Credit Rating Company at the following
address: 55 E. Monroe Street (35th Floor), Chicago, Illinois 60603; or as to
each of the foregoing, at such other address as shall be designated by written
notice to the other parties.
11.05 Notices to Noteholders; Waiver. Where this Indenture provides for
notice to Noteholders of any event, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed,
first-class, postage prepaid to each Noteholder affected by such event, at his
address as it appears on the Note Register, not later than the latest date, and
not earlier than the earliest date, prescribed for the giving of such notice. In
any case
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where notice to Noteholders is given by mail, neither the failure to mail such
notice nor any defect in any notice so mailed to any particular Noteholder shall
affect the sufficiency of such notice with respect to other Noteholders, and any
notice that is mailed in the manner herein provided shall conclusively be
presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by any Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Noteholders shall be filed with the Indenture Trustee but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a result
of a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Noteholders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies, failure
to give such notice shall not affect any other rights or obligations created
hereunder, and shall not under any circumstance constitute a Default or Event of
Default.
11.06 Alternate Payment and Notice Provisions. Notwithstanding any
provision of this Indenture or any of the Notes to the contrary, the Issuer may
enter into any agreement with any Holder of a Note providing for a method of
payment, or notice by the Indenture Trustee or any Paying Agent to such Holder,
that is different from the methods provided for in this Indenture for such
payments or notices. The Issuer will furnish to the Indenture Trustee a copy of
each such agreement and the Indenture Trustee will cause payments to be made and
notices to be given in accordance with such agreements.
11.07 Conflict with Trust Indenture Act. If any provision hereof limits,
qualifies or conflicts with another provision hereof that is required to be
included in this Indenture by any of the provisions of the Trust Indenture Act,
such required provision shall control.
The provisions of TIA Sections 310 through 317 that impose duties on any
person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
11.08 Effect of Headings and Table of Contents. The Article and Section
headings herein and the Table of Contents are for convenience only and shall not
affect the construction hereof.
11.09 Successors and Assigns. All covenants and agreements in this
Indenture and the Notes by the Issuer shall bind its successors and assigns,
whether so expressed or not. All agreements of the Indenture Trustee in this
Indenture shall bind its successors, co-trustees and agents.
56
<PAGE>
11.10 Severability. If any one or more of the covenants, agreements,
provisions or terms of this Indenture shall be for any reason whatsoever held
invalid or unenforceable in any jurisdiction, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Indenture and shall in no way affect the
validity or enforceability of the other provisions of this Indenture or of the
Notes or the Certificates or the rights of the Holders thereof.
11.11 Benefits of Indenture. Nothing in this Indenture or in the Notes,
express or implied, shall give to any Person, other than the parties hereto and
their successors hereunder, and the Noteholders, and any other party secured
hereunder, and any other Person with an ownership interest in any part of the
Trust Estate, any benefit or any legal or equitable right, remedy or claim under
this Indenture.
11.12 Governing Law. This indenture shall be governed by and construed in
accordance with the laws of the state of [New York], without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
11.13 Counterparts. This Indenture may be executed simultaneously in any
number of counterparts, each of which shall be deemed to be an original, and all
of which shall constitute but one and the same instrument.
11.14 Recording of Indenture. If this Indenture is subject to recording
in any appropriate public recording offices, such recording is to be effected by
the Issuer and at its expense accompanied by an Opinion of Counsel (which may be
counsel to the Indenture Trustee or any other counsel reasonably acceptable to
the Indenture Trustee) to the effect that such recording is necessary either for
the protection of the Noteholders or any other Person secured hereunder or for
the enforcement of any right or remedy granted to the Indenture Trustee under
this Indenture.
11.15 Trust Obligation. No recourse may be taken, directly or indirectly,
with respect to the obligations of the Issuer, the Owner Trustee or the
Indenture Trustee on the Notes or Certificates or under this Indenture or any
certificate or other writing delivered in connection herewith or therewith,
against (i) the Indenture Trustee or the Owner Trustee in its individual
capacity, (ii) any owner of a beneficial interest in the Issuer or (iii) any
partner, owner, beneficiary, agent, officer, director, employee or agent of the
Indenture Trustee or the Owner Trustee in its individual capacity, any holder of
a beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee
or of any successor or assign of the Indenture Trustee or the Owner Trustee in
its individual capacity, except as any such Person may have expressly agreed (it
being understood that the Indenture Trustee and the Owner Trustee have no such
obligations in their individual capacity) and except that any such partner,
owner or beneficiary shall be fully liable, to the extent provided by applicable
law, for any unpaid consideration for stock, unpaid capital contribution or
failure to pay any installment or call owing to such entity. For all purposes of
this Indenture, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Article VI, VII and VIII of the Trust Agreement.
57
<PAGE>
11.16 No Petition. The Indenture Trustee, by entering into this
Indenture, and each Noteholder, by accepting a Note, hereby covenant and agree
that they will not at any time institute against the Issuer, or join in any
institution against the Seller or the Issuer of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States federal or state bankruptcy or similar law in connection with
any obligations relating to the Notes, the Certificates or any of the Basic
Documents.
11.17 Inspection. The Issuer agrees that, on reasonable prior notice, it
will permit any representative of the Indenture Trustee, during the Issuer's
normal business hours, to examine all the books of account, records, reports and
other papers of the Issuer, to make copies and extracts therefrom, to cause (at
the expense of the requesting party) such books to be audited by Independent
certified public accountants, and to discuss the Issuer's affairs, finances and
accounts with the Issuer's officers, employees, and Independent certified public
accountants, all at such reasonable times and as often as may be reasonably
requested. The Indenture Trustee shall and shall cause its representatives to
hold in confidence all such information except to the extent disclosure may be
required by law (and all reasonable applications for confidential treatment are
unavailing) and except to the extent that the Indenture Trustee may reasonably
determine that such disclosure is consistent with its obligations hereunder.
58
<PAGE>
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused this
Indenture to be duly executed by their respective officers, thereunto duly
authorized and duly attested, all as of the day and year first above written.
TOYOTA AUTO RECEIVABLES 199_-_ OWNER TRUST
By: -,
not in its individual capacity but
solely as Owner Trustee
By: ___________________________________________
Name:
Title:
-,
not in its individual capacity but
solely as Indenture Trustee
By: ___________________________________________
Name:
Title:
59
<PAGE>
STATE OF CALIFORNIA
COUNTY OF __________
BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared , known to me to be the person
and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said TOYOTA AUTO RECEIVABLES
199_-_ OWNER TRUST, a [Delaware] business trust, and that such person executed
the same as the act of said business trust for the purpose and consideration
therein expressed, and in the capacities therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this ____ day of __________,
199__.
--------------------------------------------------
Notary Public in and for the State of [California]
(Seal)
My commission expires:
- ------------------------
60
<PAGE>
STATE OF CALIFORNIA
COUNTY OF___________
BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared __________, known to me to be
the person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of __________, a banking
corporation, and that such person executed the same as the act of said
corporation for the purpose and consideration therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this ____ day of __________,
199__.
--------------------------------------------------
Notary Public in and for the State of [California]
(Seal)
My commission expires:
- ------------------------
61
<PAGE>
EXHIBIT A
(Form of Class A-1 Note, Class A-2 Note and Class A-3 Note)
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
No._____ $__________
TOYOTA AUTO RECEIVABLES OWNER TRUST 199__
CLASS [A-1][A-2][A-3] ____% ASSET BACKED NOTES
Toyota Auto Receivables Owner Trust 199__, a business trust organized and
existing under the laws of the State of [Delaware] (herein referred to as the
"Issuer"), for value received, hereby promises to pay to ____________________,
or registered assigns, the principal sum of _______________ DOLLARS
($__________) payable on each Distribution Date in an amount equal to the result
obtained by multiplying (i) a fraction the numerator of which is $[INSERT
INITIAL PRINCIPAL AMOUNT OF NOTE] and the denominator of which is $__________ by
(ii) the aggregate amount, if any, payable from the Collection Account in
respect of principal on the Class [A-1][A-2][A-3] Notes pursuant to Section 3.01
of the Indenture dated as of __________, 199__, between the Issuer and , a
banking corporation, as Indenture Trustee (the "Indenture Trustee"); provided,
however, that the entire unpaid principal amount of this Note shall be due and
payable on the earlier of the Distribution Date occurring in - (the "Class
[A-1][A-2][A-3] Final Scheduled Distribution Date") and the Distribution Date
described in Section 10.01 of the Indenture. Capitalized terms used but not
defined herein have the meanings ascribed thereto in the Indenture and the Sale
and Servicing Agreement, as the case may be.
A-1
<PAGE>
The Issuer will pay interest on this Note at the rate per annum shown
above on each Distribution Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Distribution Date (after giving effect to all payments of principal
made on the preceding Distribution Date), subject to certain limitations
contained in Section 3.01 of the Indenture. Interest on this Note will accrue
for each Distribution Date during the calendar month preceding such Distribution
Date (in the case of the first Distribution Date, from the Closing Date).
Interest will be computed on the basis of a 360-day year of twelve 30-day
months. Such principal of and interest on this Note shall be paid in the manner
specified on the reverse hereof.
The principal of and interest on this Note are payable 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. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, which shall have the same effect as though fully set forth on
the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee whose name appears below by manual signature, this Note shall
not be entitled to any benefit under the Indenture referred to on the reverse
hereof, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer, as of the date set forth
below.
Date:__________________
TOYOTA AUTO RECEIVABLES 199_-_
OWNER TRUST
By: ________________________________________
not in its individual capacity but
solely as Owner Trustee under the
Trust Agreement,
By: ________________________________________
Authorized Signatory
A-2
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date:__________________
(_______________________________________),
not in its individual capacity but
solely as Indenture Trustee,
By: ______________________________________
Authorized Signatory
A-3
<PAGE>
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class [A-1][A-2][A-3] ____% Asset Backed Notes (herein called
the "Class [A-1][A-2][A-3] Notes"), all issued under the Indenture, to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights and obligations thereunder of the Issuer, the
Indenture Trustee and the Holders of the Notes. The Class [A-1][A-2][A-3] Notes
are subject to all terms of the Indenture.
The Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes
(collectively, the "Notes") are and will be equally and ratably secured by the
collateral pledged as security therefor as provided in the Indenture.
Principal of the Class [A-1][A-2][A-3] Notes will be payable on each
Distribution Date in an amount described on the face hereof. "Distribution Date"
means the - day of each month, or, if any such date is not a Business Day, the
next succeeding Business Day, commencing -.
Notwithstanding the foregoing, the entire unpaid principal amount of the
Notes shall be due and payable on the date on which an Event of Default shall
have occurred and be continuing and the Indenture Trustee or the Holders of the
Notes representing not less than a 51% of the Outstanding Amount of the Notes
have declared the Notes to be immediately due and payable in the manner provided
in Section 5.02 of the Indenture. All principal payments on the Class
[A-1][A-2][A-3] Notes shall be made pro rata to the Class [A-1][A-2][A-3]
Noteholders entitled thereto.
Payments of interest on this Note due and payable on each Distribution
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Registered Holder of this Note (or one or more Predecessor
Notes) on the Note Register as of the close of business on each Record Date,
except that with respect to Notes registered on the Record Date in the name of
the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Such checks shall be mailed to the Person
entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment. Any reduction in the principal amount of this
Note (or any one or more Predecessor Notes) effected by any payments made on any
Distribution Date shall be binding upon all future Holders of this Note and of
any Note issued upon the registration of transfer hereof or in exchange hereof
or in lieu hereof, whether or not noted hereon. If funds are expected to be
available, as provided in the Indenture, for payment in full of the then
remaining unpaid principal amount of this Note on a Distribution Date, then the
Indenture Trustee, in the name of and on behalf of the Issuer, will notify the
Person who was the Registered Holder hereof as of the Record Date preceding such
Distribution Date by notice mailed or transmitted by facsimile prior to such
Distribution Date, and the amount then due and payable shall be payable only
upon presentation and surrender of this Note at the Indenture Trustee's
principal Corporate Trust Office or at the office of the Indenture Trustee's
agent appointed for such purposes located in The City of New York.
A-4
<PAGE>
The Issuer shall pay interest on overdue installments of interest at the
Class [A-1][A-2][A-3] Rate to the extent lawful.
As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or such Holder's attorney
duly authorized in writing, with such signature guaranteed by an "eligible
guarantor institution" meeting the requirements of the Note Registrar, which
requirements include membership or participation in the Securities Transfer
Agent's Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Note Registrar in addition to, or in substitution
for, STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended, and thereupon one or more new Notes of authorized denominations and in
the same aggregate principal amount will be issued to the designated transferee
or transferees. No service charge will be charged for any registration of
transfer or exchange of this Note, but the transferor may be required to pay a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any such registration of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of
a Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under
the Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Indenture Trustee or the Owner Trustee in its
individual capacity, (ii) any owner of a beneficial interest in the Issuer or
(iii) any partner, owner, beneficiary, agent, officer, director or employee of
the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed and except that any such partner, owner or beneficiary shall be
fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of
a Note Owner, a beneficial interest in a Note, covenants and agrees by accepting
the benefits of the Indenture that such Noteholder or Note Owner will not at any
time institute against the Seller or the Issuer, or join in any institution
against the Seller or the Issuer of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under any United States
federal or state bankruptcy or similar law in connection with any obligations
relating to the Notes, the Indenture or the Basic Documents.
The Issuer has entered into the Indenture and this Note is issued with the
intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Trust Estate. Each Noteholder, by acceptance of a Note (and each
Note Owner by acceptance of a beneficial interest in a Note),
A-5
<PAGE>
agrees to treat the Notes for federal, state and local income, single business
and franchise tax purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee or any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing a
majority of the Outstanding Amount of all Notes at the time Outstanding. The
Indenture also contains provisions permitting the Holders of Notes representing
specified percentages of the Outstanding Amount of the Notes, on behalf of the
Holders of all the Notes, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Note (or
any one or more Predecessor Notes) shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Note. The Indenture
also permits the Indenture Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of Holders of the
Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances, to
merge or consolidate, subject to the rights of the Indenture Trustee and the
Holders of Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the laws
of the State of New York, without reference to its conflict of law provisions,
and the obligations, rights and remedies of the parties hereunder and thereunder
shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
A-6
<PAGE>
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of in its individual capacity, in its
individual capacity, any owner of a beneficial interest in the Issuer, or any of
their respective partners, beneficiaries, agents, officers, directors, employees
or successors or assigns shall be personally liable for, nor shall recourse be
had to any of them for, the payment of principal of or interest on this Note or
performance of, or omission to perform, any of the covenants, obligations or
indemnifications contained in the Indenture. The Holder of this Note by its
acceptance hereof agrees that, except as expressly provided in the Basic
Documents, in the case of an Event of Default under the Indenture, the Holder
shall have no claim against any of the foregoing for any deficiency, loss or
claim therefrom; provided, however, that nothing contained herein shall be taken
to prevent recourse to, and enforcement against, the assets of the Issuer for
any and all liabilities, obligations and undertakings contained in the Indenture
or in this Note.
A-7
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
___________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto:
________________________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints , attorney, to transfer said Note on the books kept for
registration thereof, with full power of substitution in the premises.
Dated:__________________*/
Signature Guaranteed:
________________________*/
*/ NOTICE: The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
A-8
<PAGE>
EXHIBIT B
(Form of Letter of Representations)
B-1
<PAGE>
SALE AND SERVICING AGREEMENT
among
TOYOTA AUTO RECEIVABLES 199_-_ OWNER TRUST
as Issuer,
TOYOTA MOTOR CREDIT RECEIVABLES CORPORATION,
as Seller,
and
TOYOTA MOTOR CREDIT CORPORATION,
as Servicer
Dated as of [_______]
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions ....................................................5
ARTICLE II
CONVEYANCE OF RECEIVABLES
SECTION 2.01 Conveyance of Receivables .....................................27
SECTION 2.02 Custody of Receivables Files ..................................29
SECTION 2.03 Acceptance by Owner Trustee ...................................29
ARTICLE III
THE RECEIVABLES
SECTION 3.01 Representations and Warranties of the Seller
with Respect to the Receivables .............................29
SECTION 3.02 Repurchase upon Breach ........................................33
SECTION 3.03 Duties of Servicer as Custodian ...............................33
SECTION 3.04 Instructions; Authority To Act ................................34
SECTION 3.05 Custodian's Indemnification ...................................34
SECTION 3.06 Effective Period and Termination ..............................35
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 4.01 Duties of Servicer ............................................35
SECTION 4.02 Collection and Allocation of Receivable Payments...............36
SECTION 4.03 Rebates on Full Prepayments ...................................36
SECTION 4.04 Realization upon Receivables ..................................37
SECTION 4.05 Physical Damage Insurance .....................................37
SECTION 4.06 Maintenance of Security Interests in Financed Vehicles.........37
SECTION 4.07 Covenants of Servicer .........................................37
SECTION 4.08 Purchase of Receivables upon Breach............................38
SECTION 4.09 Servicing Fee and Expenses ....................................38
SECTION 4.10 Servicer's Certificate ........................................39
SECTION 4.11 Annual Statement as to Compliance; Notice of Default...........39
SECTION 4.12 Annual Accountants' Report ....................................39
SECTION 4.13 Access to Certain Documentation and Information
Regarding Receivables........................................40
SECTION 4.14 Appointment of Subservicer ....................................40
SECTION 4.15 Amendments to Schedule of Receivables..........................40
2
<PAGE>
ARTICLE V
DISTRIBUTIONS; RESERVE FUND;
STATEMENTS TO CERTIFICATEHOLDERS AND NOTEHOLDERS
SECTION 5.01 Establishment of Trust Accounts ...............................41
SECTION 5.02 Collections ...................................................43
SECTION 5.03 Application of Collections ....................................44
SECTION 5.04 Advances ......................................................44
SECTION 5.05 Additional Deposits ...........................................46
SECTION 5.06 Distributions .................................................46
SECTION 5.07 Reserve Fund ..................................................49
SECTION 5.08 Yield Maintenance Account .....................................51
SECTION 5.09 Statements to Certificateholders and Noteholders...............53
SECTION 5.10 Net Deposits ..................................................54
ARTICLE VI
THE SELLER
SECTION 6.01 Representations of Seller .....................................54
SECTION 6.02 Corporate Existence ...........................................55
SECTION 6.03 Liability of Seller; Indemnities ..............................55
SECTION 6.04 Merger or Consolidation of, or Assumption of
the Obligations of, Seller...................................57
SECTION 6.05 Limitation on Liability of Seller and Others...................57
SECTION 6.06 Seller May Own Certificates or Notes...........................57
ARTICLE VII
THE SERVICER
SECTION 7.01 Representations of Servicer ...................................58
SECTION 7.02 Indemnities of Servicer .......................................59
SECTION 7.03 Merger or Consolidation of, or Assumption of
the Obligations of, Servicer.................................60
SECTION 7.04 Limitation on Liability of Servicer and Others.................60
SECTION 7.05 TMCC Not To Resign as Servicer ................................61
ARTICLE VIII
DEFAULT
SECTION 8.01 Servicer Default ..............................................61
SECTION 8.02 Appointment of Successor ......................................62
SECTION 8.03 Repayment of Advances .........................................63
SECTION 8.04 Notification to Noteholders and Certificateholders.............63
SECTION 8.05 Waiver of Past Defaults .......................................63
ARTICLE IX
TERMINATION
SECTION 9.01 Optional Purchase of All Receivables...........................63
3
<PAGE>
ARTICLE X
MISCELLANEOUS
SECTION 10.01 Amendment .....................................................65
SECTION 10.02 Protection of Title to Trust ..................................66
SECTION 10.03 Notices .......................................................68
SECTION 10.04 Assignment by the Seller or the Servicer.......................68
SECTION 10.05 Limitations on Rights of Others ...............................68
SECTION 10.06 Severability ..................................................68
SECTION 10.07 Separate Counterparts .........................................69
SECTION 10.08 Headings ......................................................69
SECTION 10.09 Governing Law .................................................69
SECTION 10.10 Assignment by Issuer ..........................................69
SECTION 10.11 Nonpetition Covenants .........................................69
SECTION 10.12 Limitation of Liability of Owner Trustee
and Indenture Trustee........................................69
SCHEDULE A Schedule of Receivables
EXHIBIT A Form of Servicer's Certificate
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SALE AND SERVICING AGREEMENT dated as of [_______], among TOYOTA AUTO
RECEIVABLES 199_-_ OWNER TRUST, a [Delaware] business trust (the "Issuer"),
TOYOTA MOTOR CREDIT RECEIVABLES CORPORATION, a California corporation ("TMCRC"
or the "Seller"), and TOYOTA MOTOR CREDIT CORPORATION, a California corporation
("TMCC" or the "Servicer").
WHEREAS the Issuer desires to purchase a portfolio of receivables arising
in connection with retail installment sales contracts secured by new or used
automobiles and light duty trucks generated by Toyota Motor Credit Corporation
in the ordinary course of business and sold to the Seller;
WHEREAS the Seller is willing to sell such receivables to the Issuer; and
WHEREAS the Servicer is willing to service such receivables;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01 Definitions. Except as otherwise provided in this Agreement,
whenever used herein, the following words and phrases, unless the context
otherwise requires, shall have the following meanings:
"Actual Payment" means, with respect to a Receivable and a Collection
Period, all payments received by the Servicer from or for the account of the
related Obligor on such Receivable during such Collection Period (and, in the
case of the first Collection Period, all payments received by the Servicer from
or for the account of such Obligor since the Cutoff Date through the last day of
such Collection Period), net of any Supplemental Servicing Fees attributable to
such Receivable. Actual Payments do not include Applied Payments Ahead.
"Actuarial Receivable" means any Receivable which provides for the
allocation of payments according to the "actuarial" method.
"Additional Yield Maintenance Amount" means, with respect to any
Distribution Date, the amount by which the Required Yield Maintenance Amount
exceeds the Yield Maintenance Amount.
"Administrative Purchase Payment" means, with respect to a Distribution
Date and to (1) an Administrative Receivable which is a Precomputed Receivable
purchased by the Seller or the Servicer as of the end of the related Collection
Period, (a) the sum of (i) all Scheduled Payments on such Receivable due after
the last day of such Collection Period (plus the portion of the Yield
Maintenance Amount attributable to such Receivable, if any), (ii) an amount
equal to any reimbursement of Outstanding Advances made pursuant to Section
5.04(b) with respect to such Receivable (plus all Outstanding Advances made in
respect of such Receivable, in the case of an
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Administrative Purchase Payment made by the Seller) and (iii) all past due
Scheduled Payments for which an Advance has not been made, minus (b) any Rebate
and (2) an Administrative Receivable which is a Simple Interest Receivable
purchased by the Seller or the Servicer during the related Collection Period,
the sum of (a) the unpaid principal balance owed by the Obligor in respect of
such Receivable plus (b) interest on such unpaid principal balance at a rate
equal to the sum of the [Class B Pass Through Rate] [or specify other rate] and
the Servicing Fee Rate to the last day in the related Collection Period.
"Administration Agreement" means the Administration Agreement dated as of
[_______], among the Administrator, the Issuer and the Indenture Trustee.
"Administrative Receivable" means a Receivable which the Servicer is
required to purchase pursuant to Section 3.02 or 4.08 or which the Seller or the
Servicer has elected to purchase pursuant to Section 9.01.
"Administrator" means TMCC, or any successor Administrator under the
Administration Agreement.
"Advance" means a Precomputed Advance or Simple Interest Advance.
"Affiliate" means, with respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified 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 term "controlling" and
"controlled" have meanings correlative to the foregoing.
"Aggregate Net Losses" means, with respect to a Collection Period, an
amount equal to the aggregate Principal Balance of all Receivables that became
Defaulted Receivables during such Collection Period minus all Net Liquidation
Proceeds collected during such Collection Period with respect to Defaulted
Receivables.
"Affiliate" means, with respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified 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 term "controlling" and
"controlled" have meanings correlative to the foregoing.
"Aggregate Net Losses" means, with respect to a Collection Period, an
amount equal to the aggregate Principal Balance of all Receivables that became
Defaulted Receivables during such Collection Period minus all Net Liquidation
Proceeds collected during such Collection Period with respect to Defaulted
Receivables.
"Agreement" means this Sale and Servicing Agreement among the Toyota Auto
Receivables 199_-_ Owner Trust, as Issuer, TMCRC, as seller, and TMCC, as
servicer, as the same may be amended or supplemented from time to time.
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"Amount Financed" in respect of a Receivable means the aggregate amount
advanced under such Receivable toward the purchase price of the related Financed
Vehicle and any related costs, including but not limited to accessories,
insurance premiums, service and warranty contracts and other items customarily
financed as part of retail automobile and light duty truck installment sale
contracts.
"Annual Percentage Rate" or "APR" of a Receivable means the annual rate of
finance charges specified in such Receivable.
"Applied Payment Ahead" means, with respect to a Precomputed Receivable
and a Collection Period as to which (a) the Actual Payment is less than the
Scheduled Payment and (b) a Deferred Prepayment is on deposit in the Payahead
Account, an amount equal to the lesser of (i) such Deferred Prepayment and (ii)
the amount by which the Scheduled Payment exceeds the Actual Payment.
"Available Interest" means, with respect to any Distribution Date, the
total of the following amounts allocable to interest received by the Servicer on
or in respect of the Receivables during the related Collection Period (in the
case of the Precomputed Receivables, computed in accordance with the actuarial
method and in the case of the Simple Interest Receivables, computed in
accordance with the simple interest method): (a) the sum of the interest
component of (i) all collections on or in respect of all Receivables other than
Defaulted Receivables (including Scheduled Surplus, Prepayment Surplus and the
interest portion of Applied Payments Ahead, but otherwise excluding Payments
Ahead), (ii) the Yield Maintenance Deposit, (iii) all Net Liquidation Proceeds,
(iv) all Advances made by the Servicer, (v) all Warranty Purchase Payments and
(vi) all Administrative Purchase Payments, less (b) the sum of all (i) amounts
received on or in respect of a particular Receivable (other than a Defaulted
Receivable) to the extent of the aggregate Outstanding Interest Advances in
respect of such Receivable and (ii) Net Liquidation Proceeds with respect to a
particular Receivable to the extent of the aggregate Outstanding Interest
Advances in respect of such Receivable.
"Available Principal" means, with respect to any Distribution Date, the
total of the following amounts allocable to principal received by the Servicer
on or in respect of the Receivables during the related Collection Period (in the
case of the Precomputed Receivables, computed in accordance with the actuarial
method and in the case of the Simple Interest Receivables, computed in
accordance with the simple interest method): (a) the sum of the principal
component of all (i) collections on or in respect of all Receivables other than
Defaulted Receivables (including the principal portion of Applied Payments Ahead
but otherwise excluding Payments Ahead), (ii) Net Liquidation Proceeds, (iii)
Advances made by the Servicer, (iv) Warranty Purchase Payments, and (v)
Administrative Purchase Payments, less (b) an amount equal to all (i) amounts
received on or in respect of a particular Receivable (other than a Defaulted
Receivable) to the extent of the aggregate Outstanding Principal Advances in
respect of such Receivable, and (ii) Net Liquidation Proceeds with respect to a
particular Receivable to the extent of the aggregate Outstanding Principal
Advances in respect of such Receivable.
"Basic Documents" means the Receivables Purchase Agreement, the Trust
Agreement, the Certificate of Trust, this Sale and Servicing Agreement, the
Indenture, the Administration Agreement, the Note Depository Agreement, the
Certificate Depository Agreement [, the
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Collateral Security Agreement] and the other documents and certificates
delivered in connection herewith and therewith.
"Basic Servicing Fee" means the fee payable to the Servicer on each
Distribution Date, calculated pursuant to Section 4.09, for services rendered
during the related Collection Period, which shall be equal to one-twelfth of the
Servicing Fee Rate multiplied by the Pool Balance as of the first day of the
related Collection Period or, with respect to the first Distribution Date, the
Original Pool Balance.
"Book-Entry Certificates" and "Book-Entry Notes" mean, respectively,
beneficial interests in Certificates or Notes, as the case may be, ownership and
transfers of which shall be made through book entries by a Clearing Agency as
described in the Trust Agreement and the Indenture, respectively.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which banking institutions in New York, New York or Los Angeles, California are
authorized or obligated by law, executive order or governmental decree to be
closed.
"Certificates" has the meaning assigned in the Trust Agreement.
"Certificate Balance" means the Initial Certificate Balance, reduced by
all amounts allocable to principal previously distributed to Certificateholders.
"Certificateholders" has the meaning assigned to such term in the Trust
Agreement.
"Certificateholders' Distributable Amount" means, with respect to a
Distribution Date, the sum of the Certificateholders' Principal Distributable
Amount and the Certificateholders' Interest Distributable Amount with respect to
such Distribution Date.
"Certificateholder Interest Carryover Shortfall" means, with respect to
any Distribution Date, 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 Certificateholder 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.
"Certificateholders' Interest Distributable Amount", consisting of one
month's interest 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.
"Certificateholders' Principal Distributable Amount" means, with respect
to any Distribution Date, the Certificateholders' 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
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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).
"Certificateholder Principal Carryover Shortfall" means, with respect to
any Distribution Date occurring (i) after the Distribution Date on which the
principal amount of the Class A-1 Notes is reduced to zero or (ii) in [_______],
the excess of the Certificateholder' Principal Distributable Amount plus any
outstanding Certificateholder Principal Carryover Shortfall with respect to one
or more prior Distribution Dates over the amount of principal that the holders
of the Certificateholders actually received on such Distribution Date and, with
respect to any other Distribution Date, zero.
"Certificateholders' Percentage" means, with respect to any Distribution
Date, the percentage equivalent of a fraction, (a) the numerator of which is the
Certificate Balance, and (b) the denominator of which is the sum of the
Outstanding Amount plus the Certificate Balance, in each case prior to the
making of any deposits, withdrawals or distributions on such Distribution Date.
"Certificateholders' Principal Distributable Amount" means, with respect
to any Distribution Date, the Certificateholders' 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).
"Certificate Pool Factor" means, as of the close of business on the last
day of a Collection Period, a seven-digit decimal figure equal to the
Certificate Balance (after giving effect to any reductions therein to be made on
the immediately following Distribution Date) divided by the Initial Certificate
Balance. The Certificate Pool Factor will be 1.0000000 as of the Closing Date;
thereafter, the Certificate Pool Factor will decline to reflect reductions in
the Certificate Balance.
"Charge-off Rate" means, with respect to a Collection Period, the
percentage equivalent of a fraction, the numerator of which is the Aggregate Net
Losses for such Collection Period, and the denominator of which is the average
of (i) the aggregate Principal Balance on the last day of the Collection Period
immediately preceding such Collection Period and (ii) the aggregate Principal
Balance on the last day of such Collection Period; such quotient is then
multiplied by twelve to arrive at an annualized percentage.
"Class" means any one of the classes of Notes.
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"Class A-1 Final Scheduled Distribution Date" means the Distribution Date
in [_______].
"Class A-1 Interest Carryover Shortfall" means, with respect to any
Distribution Date, the excess, if any, of (x) the Class A-1 Interest
Distributable Amount for such Distribution Date and any outstanding Class A-1
Interest Carryover Shortfall from the immediately preceding Distribution Date
plus interest on such outstanding Class A-1 Interest Carryover Shortfall, to the
extent permitted by law, at the Class A-1 Rate from such immediately preceding
Distribution Date through the current Distribution Date, over (y) the amount of
interest distributed to the Class A-1 Noteholders on such Distribution Date.
"Class A-1 Interest Distributable Amount" means the amount of interest
accrued during the related Collection Period on the outstanding principal amount
of the Class A-1 Notes at the Class A-1 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 Class A-1 Notes as of
the Closing Date.
"Class A-1 Noteholder" means the Person in whose name a Class A-1 Note is
registered in the Note Register.
"Class A-1 Principal Carryover Shortfall" means, with respect to any
Distribution Date on which the Class A-1 Notes are outstanding, the excess of
the Noteholders' Principal Distributable Amount plus any outstanding Class A-1
Principal Carryover Shortfall with respect to one or more prior Distribution
Dates over the amount of principal that the holders of the Class A-1 Notes
actually received on such Distribution Date.
"Class A-2 Final Scheduled Distribution Date" means the Distribution Date
in [_______].
"Class A-2 Interest Carryover Shortfall" means, with respect to any
Distribution Date, the excess, if any, of (x) the Class A-2 Interest
Distributable Amount for such Distribution Date and any outstanding Class A-2
Interest Carryover Shortfall from the immediately preceding Distribution Date
plus interest on such outstanding Class A-2 Interest Carryover Shortfall, to the
extent permitted by law, at the Class A-2 Rate from such immediately preceding
Distribution Date through the current Distribution Date, over (y) the amount of
interest distributed to the Class A-2 Noteholders on such Distribution Date.
"Class A-2 Interest Distributable Amount" means the amount of interest
accrued during the related Collection Period on the outstanding principal amount
of the Class A-2 Notes at the Class A-2 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 Class A-2 Notes as of
the Closing Date.
"Class A-2 Noteholder" means the Person in whose name a Class A-2 Note is
registered in the Note Register.
"Class A-2 Principal Carryover Shortfall" means, with respect to any
Distribution Date on which the Class A-2 Notes are outstanding, the excess of
the Noteholders' Principal
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Distributable Amount plus any outstanding Class A-2 Principal Carryover
Shortfall with respect to one or more prior Distribution Dates over the amount
of principal that the holders of the Class A-2 Notes actually received on such
Distribution Date.
"Class A-3 Final Scheduled Distribution Date" means the Distribution Date
in [_______].
"Class A-3 Interest Carryover Shortfall" means, with respect to any
Distribution Date, the excess, if any, of (x) the Class A-3 Interest
Distributable Amount for such Distribution Date and any outstanding Class A-3
Interest Carryover Shortfall from the immediately preceding Distribution Date
plus interest on such outstanding Class A-3 Interest Carryover Shortfall, to the
extent permitted by law, at the Class A-3 Rate from such immediately preceding
Distribution Date through the current Distribution Date, over (y) the amount of
interest distributed to the Class A-3 Noteholders on such Distribution Date.
"Class A-3 Interest Distributable Amount" means the amount of interest
accrued during the related Collection Period on the outstanding principal amount
of the Class A-3 Notes at the Class A-3 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 Class A-3 Notes as of
the Closing Date.
"Class A-3 Noteholder" means the Person in whose name a Class A-3 Note is
registered in the Note Register.
"Class A-3 Principal Carryover Shortfall" means, with respect to any
Distribution Date on which the Class A-3 Notes are outstanding, the excess of
the Noteholders' Principal Distributable Amount plus any outstanding Class A-3
Principal Carryover Shortfall with respect to one or more prior Distribution
Dates over the amount of principal that the holders of the Class A-3 Notes
actually received on such Distribution Date.
"Clearing Agency" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means [_______].
"Code" means the Internal Revenue Code of 1986, as amended and the
Treasury Regulations promulgated thereunder.
["Collateral Security Agreement" means the Collateral Security Agreement
dated [_______], by and among the Seller, the Servicer, [third party] and the
Owner Trustee, as collateral agent, pursuant to which [third party] has conveyed
the property and proceeds of the
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Yield Maintenance Account to the Owner Trustee in trust for the benefit of the
Certificateholders as described in Section 5.01(a).]
"Collection Account" has the meaning assigned to such term in the Trust
Agreement.
"Collection Period" means, with respect to any Distribution Date, the
calendar month immediately preceding the month in which such Distribution Date
occurs (or, in the case of the first Distribution Date, the period of time since
the Cutoff Date through the end of the calendar month immediately preceding the
month in which such first Distribution Date occurs).
"Commission" means the Securities and Exchange Commission, and any
successor thereto.
"Current Receivable" means each Receivable that is not a Defaulted
Receivable or a Liquidated Receivable.
"Cutoff Date" means [_______].
"Dealer" means the dealer of automobile and/or light duty trucks who sold
a Financed Vehicle and who originated and assigned the Receivable relating to
such Financed Vehicle to TMCC under an existing agreement between such dealer
and TMCC.
"Dealer Recourse" means, with respect to a Receivable, all recourse rights
against the Dealer which originated the Receivable, and any successor Dealer.
"Defaulted Receivable" means a Receivable (other than an Administrative
Receivable or a Warranty Receivable) as to which (i) all or any part of a
Scheduled Payment is [_______] or more days past due and the Servicer has not
repossessed the related Financed Vehicle, or (ii) the Servicer has, in
accordance with its customary servicing procedures, determined that eventual
payment in full is unlikely and 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.
"Definitive Certificates" and "Definitive Notes" shall have the meanings
ascribed thereto in the Trust Agreement and the Indenture, respectively.
"Deferred Prepayment" means, with respect to a Precomputed Receivable and
a Collection Period, the aggregate amount, if any, of Payments Ahead remitted to
the Servicer in respect of such Receivable during one or more prior Collection
Periods and currently held by the Servicer or in the Payahead Account.
"Delinquency Percentage" means, with respect to a Collection Period, the
percentage equivalent of a fraction, the numerator of which is the number of (i)
all outstanding Receivables 61 days or more delinquent (after taking into
account permitted extensions) as of the last day of such Collection Period,
determined in accordance with the Servicer's normal practices, plus (ii) all
repossessed Financed Vehicles that have not been liquidated (to the extent the
related Receivable is not otherwise reflected in clause (i) above), and the
denominator of which is the aggregate number of Current Receivables on the last
day of such Collection Period.
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"Delivery" means, when used with respect to the Reserve Fund:
(i) with respect to certificated securities, bankers' acceptances,
commercial paper, negotiable certificates of deposit and other obligations
that constitute "instruments" within the meaning of Section 9-105(1)(i) of
the UCC and are susceptible of physical delivery (collectively, "Physical
Property"), transfer thereof to the Relevant Trustee or its financial
intermediary as defined in Section 8-313(4) of the UCC (a "Financial
Intermediary") in accordance with Sections 8-313(1)(a), 8-313(1)(d)(i) or
8-313(1)(g) of the UCC, and evidence that any such Physical Property that
is in registrable form has been registered in the name of the Relevant
Trustee, its Financial Intermediary, its custodian or its nominee;
(ii) with respect to any Reserve Fund property that is a book-entry
security held through the Federal Reserve System pursuant to federal
book-entry regulations, the following procedures, all in accordance with
applicable law, including applicable federal regulations and Articles 8
and 9 of the UCC: (A) book-entry registration of such property to an
appropriate book-entry account maintained with a Federal Reserve Bank by
the Relevant Trustee or by a custodian and issuance to the Relevant
Trustee or to such custodian, as the case may be, of a deposit advice or
other written confirmation of such book-entry registration, (B) the making
by any such custodian of entries in its books and records identifying such
book-entry security held through the Federal Reserve System pursuant to
federal book-entry regulations as belonging to the Relevant Trustee and
indicating that such custodian holds such Reserve Fund property solely as
agent for the Relevant Trustee, and the making by the Relevant Trustee of
entries in its books and records establishing that it holds such Reserve
Fund property solely as Relevant Trustee pursuant to Section 5.01, and (C)
such additional or alternative procedures as may hereafter become
necessary to effect complete transfer of ownership of any such Reserve
Fund property to the Relevant Trustee, consistent with changes in
applicable law or regulations or the interpretation thereof; and
(iii) with respect to any Reserve Fund property that is an
uncertificated security under Article 8 of the UCC and that is not
governed by clause (ii) above, registration of the transfer to, and
ownership of such Reserve Fund property by, the Relevant Trustee, its
Financial Intermediary, its custodian or its nominee by the issuer of such
Reserve Fund.
"Depositor" means the Seller in its capacity as Depositor under the Trust
Agreement.
"Determination Date" means, with respect to any Distribution Date, the
[_______] calendar day of the month in which such Distribution Date occurs or,
if such day is not a Business Day, the next succeeding Business Day.
"Distribution Date" means, with respect to a Collection Period, the
[_______] calendar day of the following calendar month, or if such day is not a
Business Day, the next succeeding Business Day, commencing [________].
"DTC" means The Depository Trust Company, and its successors.
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"Duff & Phelps" means Duff & Phelps Inc., and its successors.
"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 shall have a credit rating from each
Rating Agency in one of its generic rating categories that signifies investment
grade.
"Eligible Institution" means (a) the corporate trust department of the
Indenture Trustee, the Owner Trustee or [_______] so long as it shall be Paying
Agent under the Trust Agreement 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), which (i) has
either (A) a long-term unsecured debt rating of ___ or better by Standard &
Poor's and ___ or better by Moody's or (B) a certificate of deposit rating of
___ by Standard & Poor's and ___ or better by Moody's, or any other long-term,
short-term or certificate of deposit rating acceptable to the Rating Agencies
and (ii) whose deposits are insured by the FDIC. If so qualified, the Indenture
Trustee, the Owner Trustee or [_______] may be considered an Eligible
Institution for the purposes of clause (b) of this definition.
"Eligible Investments" means, at any time, any one or more of the
following obligations and securities:
(i) obligations of, and obligations fully guaranteed as to timely
payment of principal and interest by, the United States or any agency
thereof, provided such obligations are backed by the full faith and credit
of the United States;
(ii) general obligations of or obligations guaranteed by FNMA or any
state of the United States, the District of Columbia or the Commonwealth
of Puerto Rico then rated the highest available credit rating of each
Rating Agency for such obligations;
(iii) securities bearing interest or sold at a discount issued by
any corporation incorporated under the laws of the United States, any
state thereof, the District of Columbia or the Commonwealth of Puerto
Rico, so long as at the time of such investment or contractual commitment
providing for such investment either the long-term unsecured debt of such
corporation has the highest available rating from each Rating Agency for
such obligations or the commercial paper or other short-term debt which is
then rated has the highest available credit rating of each Rating Agency
for such obligations;
(iv) certificates of deposit issued by any depository institution or
trust company (including the Relevant Trustee) incorporated under the laws
of the United States or of any state thereof, the District of Columbia or
the Commonwealth of Puerto Rico and subject to supervision and examination
by banking authorities of one or more of such jurisdictions, provided that
the short-term unsecured debt obligations of such depository institution
or trust company is then rated the highest available rating of each Rating
Agency for such obligations;
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(v) certificates of deposit issued by any bank, trust company,
savings bank or other savings institution and fully insured by the FDIC;
(vi) repurchase obligations held by the Relevant Trustee that are
acceptable to such trustee with respect to any security described in
clauses (i), (ii) or (vii) hereof or any other security issued or
guaranteed by any other agency or instrumentality of the United States, in
either case entered into with a federal agency or a depository institution
or trust company (acting as principal) described in clause (iv) above;
(vii) interests in any closed-end management type investment company
or investment trust (a) registered under the Investment Company Act, the
portfolio of which is limited to the obligations of, or guaranteed by, the
United States and to agreements to repurchase such obligations, which
agreements, with respect to principal and interest, are at least 100%
collateralized by such obligations marked to market on a daily basis and
the investment company or investment trust shall take delivery of such
obligations either directly or through an independent custodian designated
in accordance with the Investment Company Act and (b) acceptable to each
Rating Agency (as approved in writing by each Rating Agency) as collateral
for securities having ratings equivalent to the rating of the Rated
Certificates on the Closing Date;
(viii) money market funds, including, without limitation, [the
VISTA-SM- Money Market Funds, so long as such funds are rated ___ by
Moody's (so long as Moody's is a Rating Agency) and ___ by Standard &
Poor's (so long as Standard & Poor's is a Rating Agency)], and any other
fund for which the Relevant Trustee or an Affiliate of the Relevant
Trustee serves as an investment advisor, administrator, shareholder
servicing agent and/or custodian or subcustodian, provided that any shares
of such funds have a credit rating of at least ___ by Moody's (so long as
Moody's is a Rating Agency) and ___ by Standard & Poor's (so long as
Standard & Poor's is a Rating Agency) and notwithstanding that (i) the
Relevant Trustee or an Affiliate of the Relevant Trustee charges and
collects fees and expenses from such funds for services rendered, (ii) the
Relevant Trustee charges and collects fees and expenses for services
rendered pursuant to this Agreement, and (iii) services performed for such
funds and pursuant to this Agreement may converge at any time. Each of the
Seller and the Servicer hereby specifically authorizes the Relevant
Trustee or an Affiliate of the Relevant Trustee to charge and collect all
fees and expenses from such funds for services rendered to such funds, in
addition to any fees and expenses the Trustee may charge and collect for
services rendered pursuant to this Agreement and the Relevant Trustee may
charge and collect pursuant to the Indenture; and
(ix) such other investments acceptable to each Rating Agency (as
approved in writing by each Rating Agency) as will not result in the
qualification, downgrading or withdrawal of the rating then assigned to
the Rated Certificates by such Rating Agency.
provided that each of the foregoing investments shall mature no later than the
Business Day prior to the Distribution Date immediately following the date of
purchase (other than in the case of the investment of monies in instruments of
which the entity at which the related Account is located
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is the obligor, which may mature on the related Distribution Date), and shall be
required to be held to such maturity.
Notwithstanding anything to the contrary contained in this definition, (a)
no Eligible Investment may be purchased at a premium, (b) any of the foregoing
which constitutes a certificated security shall not be considered a Eligible
Investment unless it is registered in the name of the Relevant Trustee in its
capacity as Owner Trustee or Indenture Trustee, as the case may be, and (c) any
of the foregoing which constitutes an uncertificated security shall not be
considered a Eligible Investment unless (i) it is registered in the name of the
Relevant Trustee in its capacity as Owner Trustee or Indenture Trustee, as the
case may be, or in the name of its Financial Intermediary; (ii) no notation of
the right of the issuer thereof to a Lien thereon is contained in the initial
transaction statement therefor sent to the Relevant Trustee; (iii) a Responsible
Officer of the Relevant Trustee does not have notice or actual knowledge of (A)
any restriction on the transfer thereof imposed by the issuer thereof, or (B)
any adverse claim, and no notation of any such restriction or of any specific
adverse claim as to which the issuer has a duty under the law of the state in
which the Corporate Trust Office (or equivalent office) of the Relevant Trustee
is located at the time of registration is contained in the initial transaction
statement therefor sent to the Relevant Trustee; and (iv) to a Responsible
Officer of the Relevant Trustee's actual knowledge, no creditor has served legal
process upon the issuer thereof at its chief executive office in the United
States which legal process attempts to place a Lien thereon prior to the
registration thereof in the name of the Relevant Trustee.
For purposes of this definition, any reference to the highest available
credit rating of an obligation shall mean the highest available credit rating
for such obligation, or such lower credit rating (as approved in writing by each
Rating Agency) as will not result in the qualification, downgrading or
withdrawal of the rating then assigned to the Rated Certificates by such Rating
Agency.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default" shall have the meaning specified in the Indenture.
"Excess Amounts" means, with respect to any Distribution Date, any excess
amounts in the Collection Account with respect to such Distribution Date, after
giving effect to the distributions to Noteholders and Certificateholders
described Section 5.06(c). Excess Amounts shall include all amounts received
upon prepayment in full of Rule of 78s Receivables in excess of the then
outstanding principal balances thereof and accrued interest thereon (calculated
pursuant to the actuarial method).
"Excess Payment" means, with respect to a Receivable and a Collection
Period, the amount, if any, by which the Actual Payment exceeds the sum of (i)
the Scheduled Payment, and (ii) any Overdue Payment.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"FDIC" means the Federal Deposit Insurance Corporation, and its
successors.
"FNMA" means the Federal National Mortgage Association, and its
successors.
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"Final Scheduled Maturity Date" means the Distribution Date in [_______].
"Financed Vehicle" means, with respect to a Receivable, the related
automobile or light duty truck, as the case may be, together with all accessions
thereto, securing the related Obligor's indebtedness under such Receivable.
"Financial Intermediary" shall have the meaning specified in the
definition of the term "Delivery."
"Holder" or "Securityholder" means the registered holder of any
Certificate or Note as evidenced by the Certificate Register or Note Register
except that, solely for the purposes of giving certain consents, waivers,
requests or demands pursuant to the Trust Agreement or the Indenture, the
interest evidenced by any Certificate or Note registered in the name of TMCRC or
TMCC, or any Person actually known to a Responsible Officer of the Owner Trustee
or the Indenture Trustee to be controlling, controlled by or under common
control with TMCRC or TMCC, shall not be taken into account in determining
whether the requisite percentage necessary to effect any such consent, waiver,
request or demand shall have been obtained.
"Indenture" means the Indenture dated as of [_______], between the Issuer
and the Indenture Trustee.
"Indenture Trustee" means the Person acting as Indenture Trustee under the
Indenture, its successors in interest and any successor trustee under the
Indenture.
"Independent Director" means a director of the Seller who is not (i) a
director, officer or employee of any affiliate of the Seller, (ii) a natural
person related to any director or officer of any affiliate of the Seller, (iii)
a holder (directly or indirectly) of more than 10% of any voting securities of
any affiliate of the Seller, or (iv) a natural person related to a holder
(directly or indirectly) of more than 10% of any voting securities of any
affiliate of the Seller.
"Initial Certificate Balance" shall have the meaning set forth in the
Trust Agreement.
"Insolvency Event" means, with respect to a specified Person, (a) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
such Person or for any substantial part of its property, or ordering the
winding-up or liquidation of such Person's affairs, and such decree or order
shall remain unstayed and in effect for a period of 60 consecutive days; or (b)
the commencement by such Person of a voluntary case under any applicable federal
or state bankruptcy, insolvency or other similar law now or hereafter in effect,
or the consent by such Person to the entry of an order for relief in an
involuntary case under any such law, or the consent by such Person to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its property, or the making by such Person of any general
assignment for the benefit of creditors, or the failure by such Person generally
to pay its debts as such debts become due, or the taking of action by such
Person in furtherance of any of the foregoing.
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"Insurance Policy" means, with respect to a Receivable, an insurance
policy covering physical damage, credit life, credit disability, theft,
mechanical breakdown or similar event relating to the related Financed Vehicle
or Obligor.
"Investment Company Act" means the Investment Company Act of 1940, as
amended.
"Issuer" means Toyota Auto Receivables 199_-_ Owner Trust.
"Lien" means any security interest, lien, charge, pledge, equity or
encumbrance of any kind other than tax liens, mechanics' liens and any liens
that attach to a Receivable or any property, as the context may require, by
operation of law.
"Liquidated Receivable" means a Receivable that (i) has been the subject
of a Prepayment in full, or (ii) has been paid in full or the final amounts in
respect of such payment have been paid with respect to a Defaulted Receivable,
regardless of whether all or any part of such payment has been made by the
Obligor under such Receivable, the Seller pursuant to this Agreement, the
Servicer pursuant to this Agreement or pursuant to the Receivables Purchase
Agreement, an insurer pursuant to an Insurance Policy or otherwise.
"Liquidation Expenses" means, with respect to a Defaulted Receivable, the
amount charged by the Servicer, in accordance with its customary servicing
procedures, to or for its account for repossessing, refurbishing and disposing
of the related Financed Vehicle and other out-of-pocket costs related to such
liquidation.
"Liquidation Proceeds" means, with respect to a Defaulted Receivable, all
amounts realized with respect to such Receivable from whatever sources
(including, without limitation, proceeds of any Insurance Policy), net of
amounts that are required by law or such Receivable to be refunded to the
related Obligor.
"Monthly Payment" means, with respect to any Receivable, the amount of
each fixed monthly payment payable to the obligee under such Receivable in
accordance with the terms thereof, net of any portion of such monthly payment
that represents late payment charges, extension fees or collections allocable to
payments to be made by Obligors for payment of insurance premiums, extended
service contracts or similar items.
"Monthly Remittance Conditions" means, collectively, (i) TMCC is the
Servicer, (ii) either (a) TMCC's short-term unsecured debt is rated ___ by
Moody's and ___ by Standard & Poor's (so long as Moody's and Standard & Poor's
are Rating Agencies), or (b) certain arrangements are made that are acceptable
to the Rating Agencies and (iii) an Event of Default shall not have occurred and
be continuing.
"Moody's" means Moody's Investors Service, Inc., or its successor.
"Net Liquidation Proceeds" means, with respect to a Defaulted Receivable,
Liquidation Proceeds less Liquidation Expenses.
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"Nonrecoverable Advance" means any Outstanding Advance as to which the
Servicer determines that any recovery from payments made on or with respect to
such Receivable is unlikely.
"Noteholders Distributable Amount" means, with respect to any Distribution
Date, the sum of the Noteholders' Principal Distributable Amount and the
Noteholders' Interest Distributable Amount with respect to such Distribution
Date.
"Noteholders' Interest Distributable Amount" means, with respect to any
Distribution Date, the sum of the Class A-1 Interest Distributable Amount, the
Class A-2 Interest Distributable Amount and the Class A-3 Interest Distributable
Amount.
"Noteholders' Percentage" means, with respect to any Distribution Date,
the percentage equivalent of a fraction, (a) the numerator of which is the
Outstanding Amount, and (b) the denominator of which is the sum of the
Outstanding Amount plus the Certificate Balance, in each case prior to the
making of any deposits, withdrawals or distributions on such Distribution Date.
"Noteholders' Principal Distributable Amount" means, with respect to any
Distribution Date, 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).
"Note Pool Factor" means, with respect to each Class of Notes as of the
close of business on the last day of a Collection Period, a seven-digit decimal
figure equal to the outstanding principal balance of such Class of Notes (after
giving effect to any reductions thereof to be made on the immediately following
Distribution Date) divided by the original outstanding principal balance of such
Class of Notes. The Note Pool Factor will be 1.0000000 as of the Closing Date;
thereafter, the Note Pool Factor will decline to reflect reductions in the
outstanding principal balance of such Class of Notes.
"Obligor" on a Receivable means the purchaser or co-purchasers of the
related Financed Vehicle purchased in part or in whole by the execution and
delivery of such Receivable or any other Person who owes or may be liable for
payments under such Receivable.
"Officers' Certificate" means a certificate signed by (a) the chairman of
the board, the president, any executive vice president or any vice president and
(b) a treasurer, assistant treasurer, secretary or assistant secretary of the
Issuer, the Seller or the Servicer, as the case may be.
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"Opinion of Counsel" means one or more written opinions of counsel who
may, except as otherwise provided herein, be an employee of or counsel to the
Issuer, the Seller or the Servicer, which counsel shall be acceptable to the
Indenture Trustee, the Owner Trustee or the Rating Agencies, as the case may be.
"Optional Purchase Percentage" means 10.00%.
"Outstanding Advances" means, with respect to a Receivable and the last
day of a Collection Period, the sum of all Advances made as of or prior to such
date, minus all payments or collections as of or prior to such date which are
specified in Section 5.04(b) as applied to reimburse all unpaid Advances with
respect to such Receivable.
"Outstanding Amount" means the aggregate principal amount of all Notes,
or, if indicated by the context, all Notes of any Class, outstanding at the date
of determination.
"Outstanding Interest Advances" means, as of the last day of a Collection
Period with respect to a Receivable, the portion of Outstanding Advances
allocable to interest.
"Outstanding Principal Advances" means, as of the last day of a Collection
Period with respect to a Receivable, the portion of Outstanding Advances
allocable to principal.
"Overdue Payment" means, with respect to any Receivable (other than an
Administrative Receivable or a Warranty Receivable), payments made by or on
behalf of the Obligor which are not Supplemental Servicing Fees and therefor
shall be applied first to reimburse the Servicer for Outstanding Advances made
with respect to such Receivable pursuant to Section 5.03(a).
"Owner Trust Estate" has the meaning assigned to such term in the Trust
Agreement.
"Owner Trustee" means the Person acting as Owner Trustee under the Trust
Agreement, its successors in interest and any successor owner trustee under the
Trust Agreement.
"Pass Through Rate" means [_______]% per annum.
"Payahead" on a Receivable that is a Precomputed Receivable means the
amount, as of the close of business on the last day of a Collection Period,
computed in accordance with Section 5.03 with respect to such Receivable.
"Payahead Account" means the account or accounts designated as such and
established and maintained pursuant to Section 5.01.
"Payment Ahead" means, with respect to a Precomputed Receivable and a
Collection Period, any Excess Payment (not representing prepayment in full of
such Precomputed Receivable) which the Servicer, in accordance with its
customary servicing practices, will apply towards the payment of Scheduled
Payments in one or more future Collection Periods.
"Person" means any legal person, including any individual, corporation,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
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"Physical Property" shall have the meaning specified in the definition of
the term "Delivery."
"Pool Balance" means, as of any date, the aggregate Principal Balance of
the Receivables (exclusive of all Administrative Receivables for which the
Servicer has paid the Administrative Purchase Payment, Warranty Receivables for
which the Seller has paid the Warranty Purchase Payment and Defaulted
Receivables) as of the close of business on such date.
"Pool Factor" as of any Distribution Date, means a seven-digit decimal
figure equal to the Pool Balance as of such Distribution Date divided by the
Original Pool Balance.
"Precomputed Advance" means an advance in respect of principal or interest
on a Precomputed Receivable in the amount determined as set forth in Section
[_______].
"Precomputed Receivable" means any Actuarial Receivable or Rule of 78s
Receivable.
"Prepayment" means (i) with respect to any Precomputed Receivable, any
Excess Payment other than a Payment Ahead or (ii) with respect to any Simple
Interest Receivable, any prepayment, whether in part or in full, in respect of
such Simple Interest Receivable.
"Prepayment Surplus" means, with respect to any Distribution Date on which
a Prepayment is to be applied with respect to a Precomputed Receivable, that
portion of such Prepayment which is not attributable to principal in accordance
with the actuarial method, net of one month's interest at the [Class A-3
Rate][Pass Through Rate][specify other rate] on the Principal Balance of such
Receivable as of the first day of the related Collection Period.
"Principal Balance" means, with respect to any Receivable as of any date,
the Amount Financed minus the sum of the following amounts: (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, and (iv) any
Prepayments or other payments applied to reduce the unpaid principal balance of
such Receivable.
"Purchase Price" means $[_______].
"Rating Agency" means each of Moody's and Standard & Poor's.
"Rebate" means, with respect to a Precomputed Receivable and any date, the
rebate, calculated on an actuarial basis, under such Precomputed Receivable that
is or would be payable to the related Obligor for unearned finance charges or
any other charges subject to rebate if such Obligor were to prepay such
Receivable in full on such date.
"Receivable" means any retail installment sale contract executed by an
Obligor in respect of a Financed Vehicle, and all proceeds thereof and payments
thereunder, which Receivable shall be identified in the Schedule of Receivables.
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"Receivable File" means the documents specified in Section 2.02 pertaining
to a particular Receivable.
"Receivables Purchase Agreement" means that certain Receivables Purchase
Agreement, dated as of the Cutoff Date, between the Seller and TMCC.
"Record Date" means, with respect to the Notes of any Class or the
Certificates and each Distribution Date, the calendar day immediately preceding
such Distribution Date or, if Definitive Notes representing any Class of Notes
or Definitive Certificates representing the Certificates have been issued, the
last day of the month immediately preceding the month in which such Distribution
Date occurs. Any amount stated "as of a Record Date" or "on a Record Date" shall
give effect to (i) all applications of collections, and (ii) all distributions
to any party under this Agreement, the Indenture and the Trust Agreement or to
the related Obligor, as the case may be, in each case as determined as of the
opening of business on the related Record Date.
"Recoveries" means, with respect to any Receivable that becomes a
Liquidated Receivable, monies collected in respect thereof, from whatever
source, during any Collection Period following the Collection Period in which
such Receivable became a Liquidated Receivable, net of the sum of any amounts
expended by the Servicer for the account of the Obligor and any amounts required
by law to be remitted to the Obligor.
"Released Administrative Amount" means, with respect to a Distribution
Date and to an Administrative Receivable, the Deferred Prepayment, if any, for
such Administrative Receivable.
"Released Warranty Amount" means, with respect to a Distribution Date and
to a Warranty Receivable, the Deferred Prepayment, if any, for such Warranty
Receivable.
"Relevant Trustee" means (i) with respect to the control over or
appropriate designation denoting ownership or control over any property
comprising a portion of the Owner Trust Estate (as defined in the Trust
Agreement) that either is not conveyed or pledged to the Indenture Trustee for
the benefit of the Noteholders and Certificateholders pursuant to the Granting
Clause of the Indenture or that has been released from the lien of the
Indenture, the Owner Trustee, and (ii) with respect to any property comprising a
portion of the Trust Estate (as defined in the Indenture) that has not been
released from the lien of the Indenture, the Indenture Trustee; provided,
however, that with respect to any property that is under the joint or separate
control of a co-trustee or separate trustee under the Trust Agreement or the
Indenture, respectively, "Relevant Trustee" shall refer to either or both of the
Owner Trustee and such co-trustee or separate trustee or to either or both of
the Indenture Trustee and such co-trustee or separate trustee, as the case may
be.
"Required Rate" means, with respect to each Collection Period, [the sum of
the Servicing Fee Rate and the [Class A-3 Rate][B Pass Through Rate][other
rate]][or specify other rate].
"Required Rating" means a rating of ___ by Moody's and ___ by Standard &
Poor's.
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"Required Yield Maintenance Amount" means, with respect to any
Distribution Date, an amount equal to [the aggregate amount by which (i) the
aggregate amount of interest that would accrue on the Principal Balance of each
Receivable that is an asset of the Trust Estate (as defined in the Indenture) or
the Owner Trust Estate (as defined in the Trust Agreement), as the case may be,
for the period commencing on the last day of the related Collection Period and
ending on the last day of the Collection Period during which such Receivable is
scheduled to mature if such Receivable bore interest at the Required Rate
(assuming that all subsequent payments on such Receivable are made as scheduled
and no prepayments are made in respect thereof) exceeds (ii) the aggregate
amount of interest that would accrue thereon for the same period at the related
APR][or specify other formula][specify discounting factors].
"Reserve Fund" means the account designated as such, established and
maintained pursuant to Section 5.01.
"Reserve Fund Initial Deposit" means $[_______].
"Responsible Officer" means, when used with respect to the Owner Trustee
or the Indenture Trustee, any officer within the Corporate Trust Office (or
equivalent office) of such trustee, including any Vice President, Assistant Vice
President, Assistant Treasurer, Assistant Secretary or any other officer of such
trustee customarily performing functions similar to those performed by any of
the above designated officers and also, with respect to a particular matter, any
other officer to whom such matter is referred because of such officer's
knowledge of and familiarity with such particular subject.
"Rule of 78s Receivable" means any Receivable which provides for the
allocation of payments according to the "sum of periodic balances" or "sum of
monthly payments" method.
"Schedule of Receivables" means the schedule of receivables attached as
Schedule A to this Agreement, as it may be amended from time to time.
"Scheduled Payment" means, with respect to any Distribution Date and to a
Receivable, the payment set forth in such Receivable as due from the Obligor in
the related Collection Period; provided, however, that in the case of the first
Collection Period, the Scheduled Payment shall include all such payments due
from the Obligor on or after the Cutoff Date.
"Scheduled Surplus" means, with respect to any Distribution Date for any
Receivable having an APR which exceeds the sum of the [Required Rate][Class A-3
Rate][Pass Through Rate][specify other rate], the product of (i) the interest
portion of the related Scheduled Payment (in the case of any Precomputed
Receivable, determined in accordance with the actuarial method), and (ii) the
remainder of (a) one minus (b) a fraction, the numerator of which equals the sum
of the [Required Rate][Class A-3 Rate][Pass Through Rate][specify other rate]
and the denominator of which equals such APR.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" means TMCRC, and its successors in interest to the extent
permitted hereunder.
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"Servicer" means TMCC, as the servicer of the Receivables, and each
successor to TMCC (in the same capacity) pursuant to Section 7.03 or 8.02.
"Servicer's Certificate" means an Officers' Certificate of the Servicer
delivered pursuant to Section 4.10, substantially in the form attached hereto as
Exhibit A.
"Servicer Default" means an event specified in Section 8.01.
"Servicing Fee Rate" means [_______]% per annum.
"Simple Interest Advance" means an advance in respect of interest on any
Simple Interest Receivable in the amount determined as set forth in Section
[_______].
"Simple Interest Method" means the method of allocating a fixed level
payment to principal and interest, pursuant to which the portion of such payment
that is allocated to interest is equal to the product of the fixed rate of
interest multiplied by the unpaid principal balance multiplied by the period of
time elapsed since the preceding payment of interest was made and the remainder
of such payment is allocable to principal.
"Simple Interest Receivable" means any Receivable which provides for the
allocation of payments according to the simple interest method.
"Specified Reserve Fund Balance" means with respect to any Distribution
Date, an amount equal to [[_______]% of the sum of the Outstanding Amount and
the Certificate Balance (in each case, after giving effect to distributions of
principal to be made on such Distribution Date), except that, if on any
Distribution Date (i) the average of the Charge-off Rates for the preceding
three Collection Periods exceeds [_______]% or (ii) the average of the
Delinquency Percentages for the preceding three Collection Periods exceeds
[_______]%, then the Specified Reserve Fund Balance for such Distribution Date
will be an amount equal to [_______]% of such sum (after giving effect to such
principal distributions). Finally, on any Distribution Date on which the sum of
the Outstanding Amount and the Certificate Balance is $[_______] or less (in
each case, after giving effect to distributions of principal on such
Distribution Date), the Specified Reserve Fund Balance for the immediately
succeeding Distribution Date will be the greater of the applicable amount
determined as set forth above or $[_______]; provided, however, that the
Specified Reserve Fund Balance shall in no event be greater than the sum of the
Outstanding Amount and the Certificate Balance as of such Distribution Date (in
each case, after giving effect to distributions of principal on such
Distribution Date)][or specify other formula].
"Standard & Poor's" means Standard & Poor's Ratings Services, and its
successors.
"Successor Servicer" means any entity appointed as a successor to the
Servicer pursuant to Section 8.03.
"Supplemental Servicing Fee" means, with respect to any Distribution Date,
all late fees, prepayment charges, extension fees and other administrative fees
and expenses or similar charges allowed by applicable law with respect to the
Receivables received by the Servicer during the related Collection Period.
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"TMCC" means Toyota Motor Credit Corporation, and its successors and
assigns.
"TMCRC" means Toyota Motor Credit Receivables Corporation, a California
corporation, or its successors.
"Total Distribution Amount" means, for each Distribution Date and the
related Reconciliation Determination Date, the sum of the applicable Interest
Distribution Amount and the applicable Regular Principal Distribution Amount
(other than the portion thereof attributable to Realized Losses).
"Total Servicing Fee" means the sum of the Basic Servicing Fee and the
Supplemental Servicing Fee.
"Trust" means the Issuer.
"Trust Account Property" means the Trust Accounts, all amounts and
investments held from time to time in any Trust Account (whether in the form of
deposit accounts, Physical Property, book-entry securities, uncertificated
securities or otherwise), including the Reserve Fund Initial Deposit, and all
proceeds of the foregoing.
"Trust Accounts" means the Collection Account, the Payahead Account, the
Yield Maintenance Account and the Reserve Fund.
"Trust Agreement" means the Trust Agreement dated as of [_______], among
the Seller and the Owner Trustee.
"Trust Officer" means, in the case of the Indenture Trustee, any officer
within the Corporate Trust Office of the Indenture Trustee, including any Vice
President, Assistant Vice President, Secretary, Assistant Secretary or any other
officer of the Indenture Trustee customarily performing functions similar to
those performed by any of the above designated officers and also, with respect
to a particular matter, any other officer to whom such matter is referred
because of such officer's knowledge of and familiarity with the particular
subject and, with respect to the Owner Trustee, any officer in the Corporate
Trust Administration Department of the Owner Trustee with direct responsibility
for the administration of the Trust Agreement and the Basic Documents on behalf
of the Owner Trustee.
"Trustee's Certificate" means a certificate completed and executed by a
Responsible Officer pursuant to Section 9.02 or 9.03, substantially in the form
attached hereto as Exhibit B.
"UCC" means the Uniform Commercial Code as in effect in the respective
jurisdiction.
"United States" means the United States of America.
"Vice President" of any Person means any vice president of such Person,
whether or not designated by a number or words before or after the title "Vice
President", who is a duly elected officer of such Person.
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"Voting Interests" means the aggregate voting strength evidenced by the
Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes (or the Notes
collectively, as the case may be) or the Certificates, as the case may be;
provided, however, that where the Voting Interests are relevant in determining
whether the vote of the requisite percentage of Noteholders and/or
Certificateholders necessary to effect any consent, waiver, request or demand
shall have been obtained, the Voting Interests shall be deemed to be reduced by
the amount equal to the Voting Interests (without giving effect to this
provision) represented by the interests evidenced by any Note or Certificate
registered in the name of the Seller, the Servicer or any Person actually known
to a Responsible Officer of the Owner Trustee or Indenture Trustee, as the case
may be, to be controlling, controlled by or under common control with the Seller
or the Servicer or any of their Affiliates.
"Warranty Purchase Payment" means, with respect to a Distribution Date and
to (1) a Warranty Receivable which is a Precomputed Receivable repurchased by
the Seller as of the end of the related Collection Period, (a) the sum of (i)
all Scheduled Payments on such Receivable due after the last day of such
Collection Period (plus the portion of the Yield Maintenance Amount attributable
to such Receivable, if any), (ii) all past due Scheduled Payments for which an
Advance has not been made, (iii) an amount equal to any reimbursement of
Outstanding Advances made pursuant to Section 5.04(b) with respect to such
Receivable and (iv) all Outstanding Advances made in respect of such Receivable,
minus (b) the sum of (i) any Rebate and (ii) any other proceeds in respect of
such Receivable previously received (to the extent applied to reduce the
Principal Balance of such Receivable on such Distribution Date), and (2) a
Warranty Receivable which is a Simple Interest Receivable repurchased by the
Seller as of the end of the related Collection Period, the sum of (a) the unpaid
principal balance owed by the Obligor in respect of such Receivable plus (b)
interest on such unpaid principal balance at a rate equal to the sum of [the
Class B Pass Through Rate][or specify other rate] and the Servicing Fee Rate to
the last day in the related Collection Period.
"Warranty Receivable" means a Receivable which the Seller is required to
repurchase pursuant to Section 4.08.
"Yield Maintenance Account" means the segregated trust account established
and maintained for the benefit of the Certificateholders as a reserve fund
pursuant to Section 5.01(a).
"Yield Maintenance Agreement" means the Yield Maintenance Agreement dated
[_______], among the Servicer, the Seller [, third party] and the Issuer,
pursuant to which Additional Yield Maintenance Amounts are to be deposited in
the Yield Maintenance Account on each Distribution Date.
"Yield Maintenance Amount" means, with respect to any Distribution Date,
the aggregate amount on Deposit in the Yield Maintenance Account after giving
effect to the withdrawal therefrom of the related Yield Maintenance Deposit and
without regard to any amounts on deposit therein in respect of interest or
investment earnings earned on the investment of amounts on deposit therein in
Eligible Investments for any period.
"Yield Maintenance Account Initial Deposit" means an amount equal to [the
aggregate amount by which (i) the aggregate amount of interest that would accrue
on the Principal Balance
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of each Receivable that is an asset of the Trust Estate (as defined in the
Indenture) or, following the termination of the Indenture or other release of
the Trust Estate from the lien thereof, the Owner Trust Estate (as defined in
the Trust Agreement), for the period commencing on the last day of the first
Collection Period and ending on the last day of the Collection Period during
which such Receivable is scheduled to mature if such Receivable bore interest at
the Required Rate (assuming that all subsequent payments on such Receivable are
made as scheduled and no prepayments are made in respect thereof) exceeds (ii)
the aggregate amount of interest that would accrue thereon for the same period
at the related APR][or specify other formula][specify discounting factors].
"Yield Maintenance Deposit" means, with respect to any Distribution Date,
the amount by which (i) the aggregate amount of interest that would have been
due during the related Collection Period on all Receivables that have APRs less
than the Required Rate if such Receivables bore interest at the Required Rate
exceeds (ii) the amount of interest accrued on such receivables at their
respective APRs and due during such Collection Period.
SECTION 1.02 Usage of Terms. With respect to all terms in this Agreement,
the singular includes the plural and the plural the singular; words importing
any gender include the other genders; references to "writing" include printing,
typing, lithography and other means of reproducing words in a visible form;
references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement; references to
Persons include their permitted successors and assigns; and the term "including"
means "including without limitation."
ARTICLE II
Conveyance of Receivables
SECTION 2.01 Conveyance of Receivables. (a) Upon the execution of this
Agreement by the parties hereto, the Seller, pursuant to the mutually agreed
upon terms contained in this Agreement, shall sell, transfer, assign and
otherwise convey to the Owner Trustee on behalf of the Issuer, without recourse
(but subject to the Seller's obligations in this Agreement), all of its right,
title and interest in and to the Receivables and any proceeds related thereto,
including any Dealer Recourse and such other items as shall be specified in this
Agreement. Concurrently therewith and in exchange therefor, the Issuer shall pay
to, or to the order of, the Seller the Purchase Price.
(b) In consideration of the Purchase Price and other good and valuable
consideration to be deliver to the Seller hereunder, on behalf of the Issuer,
the Seller does hereby sell, transfer, assign and otherwise convey to the
Trustee, in trust for the benefit of the Certificateholders, without recourse
(subject to the Seller's obligations herein):
(i) all right, title and interest of the Seller in and to the
Receivables and all monies due thereon or paid thereunder or in respect
thereof (including proceeds of the repurchase of Receivables by the Seller
pursuant to Section 2.05 or 10.02 or the purchase of Receivables by the
Servicer pursuant to Section 3.08 or 10.02) on or after the Cutoff Date;
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(ii) the interest of the Seller in the security interests in the
Financed Vehicles granted by the Obligors pursuant to the Receivables and
any accessions thereto;
(iii) the interest of the Seller in any proceeds of any physical
damage insurance policies covering Financed Vehicles and in any proceeds
of any credit life or credit disability insurance policies relating to the
Receivables or the Obligors;
(iv) the interest of the Seller in any Dealer Recourse;
(v) the interest of the Seller under the Receivables Purchase
Agreement;
(vi) the right of the Seller to realize upon any property (including
the right to receive future Liquidation Proceeds) that shall have secured
a Receivable and have been repossessed by or on behalf of the Trustee;
(vii) all other assets comprising the Trust; and
(viii) all proceeds of the foregoing.
(c) It is the intention of the Seller that the transfer and assignment
contemplated by this Agreement shall constitute a sale of the Receivables from
the Seller to the Issuer and the beneficial interest in and title to the
Receivables shall not be part of the Seller's estate in the event of the filing
of a bankruptcy petition by or against the Seller under any bankruptcy law. The
Seller agrees to execute and file all filings (including filings under the UCC)
necessary in any jurisdiction to provide third parties with notice of the sale
of the Receivables pursuant to this Agreement and to perfect such sale under the
UCC.
(d) Although the parties hereto intend that the transfer and assignment
contemplated by this Agreement be a sale, in the event such transfer and
assignment is deemed to be other than a sale, the parties intend that all
filings described in the foregoing paragraph shall give the Owner Trustee on
behalf of the Issuer a first priority perfected security interest in, to and
under the Receivables, and other property conveyed hereunder and all proceeds of
any of the foregoing. This Agreement shall be deemed to be the grant of a
security interest from the Seller to the Owner Trustee on behalf of the Issuer,
and the Owner Trustee on behalf of the Issuer shall have all the rights, powers
and privileges of a secured party under the UCC.
(e) In connection with the foregoing conveyance, the Servicer shall
maintain its computer system so that, from and after the time of sale of the
Receivables to the Owner Trustee on behalf of the Issuer under this Agreement,
the Servicer's master computer records (including any back-up archives) that
refer to any Receivable indicate clearly the interest of the Issuer in such
Receivables and that the Receivable is owned by the Issuer and controlled by the
Owner Trustee on behalf of the Issuer. Indication of the Issuer's ownership of a
Receivable shall be deleted from or modified on the Servicer's computer systems
when, and only when, the Receivable has been paid in full, repurchased or
assigned pursuant to this Agreement.
(f) Ownership and control of the receivables, as between the Issuer, the
Owner Trustee and the Indenture Trustee (on behalf of the Noteholders and
Certificateholders) shall be governed by the Indenture.
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SECTION 2.02 Custody of Receivables Files. To assure uniform quality in
servicing the Receivables and to reduce administrative costs, the Owner Trustee
on behalf of the Issuer, upon the execution and delivery of this Agreement,
revocably appoints the Servicer, and the Servicer accepts such appointment, to
act as the agent of the Issuer as custodian of the following documents or
instruments which are hereby constructively delivered to the Owner Trustee with
respect to each Receivable:
(a) the fully executed original of the Receivable;
(b) documents evidencing or related to any Insurance Policy;
(c) the original credit application of each Obligor, fully executed
by such Obligor on TMCC's customary form, or on a form approved by TMCC,
for such application;
(d) the original certificate of title (or evidence that such
certificate of title has been applied for) or such documents that the
Servicer shall keep on file, in accordance with TMCC's customary
procedures, evidencing the security interest in the related Financed
Vehicle; and
(e) any and all other documents that the Seller or the Servicer, as
the case may be, shall keep on file, in accordance with its customary
procedures, relating to such Receivable or the related Obligor or Financed
Vehicle.
SECTION 2.03 Acceptance by Owner Trustee. The Owner Trustee hereby
acknowledges its acceptance, on behalf of the Issuer, pursuant to this
Agreement, of all right, title and interest in and to the Receivables conveyed
by the Seller pursuant to this Agreement and declares and shall declare from and
after the date hereof that the Trustee holds and shall hold such right, title
and interest, upon the terms and conditions set forth in this Agreement.
ARTICLE III
The Receivables
SECTION 3.01 Representations and Warranties of the Seller with Respect to
the Receivables. The Seller makes the following representations and warranties
as to the Receivables on which the Issuer is deemed to have relied in acquiring
the Receivables. Such representations and warranties speak as of the execution
and delivery of this Agreement and as of the Closing Date, but shall survive the
sale, transfer and assignment of the Receivables, if any, and the pledge thereof
to the Indenture Trustee pursuant to the Indenture.
(a) Characteristics of Receivables. Each Receivable (i) shall have
been originated in the United States by a Dealer for the retail sale of
the related Financed Vehicle in the ordinary course of such Dealer's
business, shall have been fully and properly executed by the parties
thereto, shall have been purchased by TMCC from such Dealer under an
existing agreement with TMCC and shall have been validly assigned by such
Dealer to TMCC in accordance with the terms of such agreement and shall
have
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been subsequently sold by TMCC to the Seller pursuant to the Receivables
Purchase Agreement, (ii) shall have created or shall create a valid,
subsisting and enforceable first priority security interest in favor of
TMCC in the related Financed Vehicle, which security interest has been
assigned by TMCC to the Seller and shall be assignable, and shall be so
assigned, by the Seller to the Owner Trustee hereby, (iii) shall, except
as otherwise provided in this Agreement, provide for level Monthly
Payments (provided that the payment in the first or last month in the life
of the Receivable may be minimally different from the level payment) that
fully amortize the Amount Financed by maturity and provide for a finance
charge or yield interest at its APR, in either case calculated based on
the Rule of 78s, the simple interest method or the actuarial method, (iv)
shall contain customary and enforceable provisions, such that the rights
and remedies of the holder thereof shall be adequate for realization
against the collateral of the benefits of the security and (v) shall
provide for, in the event that such Receivable is prepaid, a prepayment
that fully pays the Principal Balance and includes accrued but unpaid
interest in an amount calculated by using an interest rate at least equal
to its APR.
(b) Schedule of Receivables. The information set forth in the
Schedule of Receivables shall be true and correct in all material respects
as of the opening of business on the Cutoff Date, and no selection
procedures adverse to the Securityholders shall have been utilized in
selecting the Receivables from those automobile and light duty truck
receivables of TMCC which met the selection criteria set forth in this
Section and this Agreement.
(c) Compliance with Law. Each Receivable and each sale of the
related Financed Vehicle shall have complied at the time it was originated
or made, and shall comply at the time of execution of this Agreement, in
all material respects with all requirements of applicable federal, state
and local laws, and regulations thereunder, including usury laws, the
Federal Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair
Credit Billing Act, the Fair Credit Reporting Act, the Fair Debt
Collection Practices Act, the Federal Trade Commission Act, the
Magnuson-Moss Warranty Act, Federal Reserve Board Regulations B, M and Z
(to the extent applicable), state adaptations of the National Consumer Act
and of the Uniform Consumer Credit Code and other consumer credit, equal
credit opportunity and disclosure laws.
(d) Binding Obligation. Each Receivable shall constitute the legal,
valid and binding payment obligation in writing of the related Obligor,
enforceable by the holder thereof in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting the enforcement of creditors'
rights in general and by general principles of equity, regardless of
whether such enforceability shall be considered in a proceeding in equity
or at law.
(e) No Bankrupt Obligors. None of the Receivables shall be due, to
the best knowledge of the Seller, from any Obligor who is presently the
subject of a bankruptcy proceeding or is bankrupt or is insolvent.
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(f) No Government Obligors. None of the Receivables shall be due
from the United States or any state, or from any agency, department or
instrumentality of the United States or any state or local government.
(g) Employee Obligors. None of the Receivables shall be due from any
employee of the Seller, TMCC or any of their respective affiliates.
(h) Security Interest in Financed Vehicles. Immediately prior to the
sale, assignment and transfer thereof, each Receivable shall be secured by
a validly perfected first priority security interest in the related
Financed Vehicle in favor of TMCC as secured party or all necessary and
appropriate action with respect to such Receivable shall have been taken
to perfect a first priority security interest in such Financed Vehicle in
favor of TMCC as secured party.
(i) Receivables in Force. No Receivable shall have been satisfied,
subordinated or rescinded, nor shall any Financed Vehicle have been
released in whole or in part from the lien granted by the related
Receivable.
(j) No Waivers. No provision of a Receivable shall have been waived
in such a manner that such Receivable fails to meet all of the other
representations and warranties made by the Seller herein with respect
thereto.
(k) No Amendments. No Receivable shall have been amended or modified
in such a manner that the total number of Scheduled Payments has been
increased or that the related Amount Financed has been increased or that
such Receivable fails to meet all of the other representations and
warranties made by the Seller herein with respect thereto.
(l) No Defenses. No facts shall be known to the Seller which would
give rise to any right of rescission, setoff, counterclaim or defense, nor
shall the same have been asserted or threatened, with respect to any
Receivable.
(m) No Liens. To the knowledge of the Seller, no liens or claims
shall have been filed, including liens for work, labor or materials
relating to a Financed Vehicle, that shall be liens prior to, or equal or
coordinate with, the security interest in such Financed Vehicle granted by
the related Receivable.
(n) No Default; No Repossession. Except for payment defaults that,
as of the Cutoff Date, have been continuing for a period of not more than
[_______] days, no default, breach, violation or event permitting
acceleration under the terms of any Receivable shall have occurred as of
the Cutoff Date; no continuing condition that with notice or the lapse of
time would constitute a default, breach, violation or event permitting
acceleration under the terms of any Receivable shall have arisen; the
Seller shall not have waived any of the foregoing; and no Financed Vehicle
has been repossessed without reinstatement as of the Cutoff Date.
(o) Insurance. At the time of origination of each Receivable, each
Obligor was required under the terms of such Receivable to obtain and
maintain physical damage insurance covering the related Financed Vehicle.
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(p) Good Title. It is the intention of the Seller that the transfer and
assignment herein contemplated, taken as a whole, constitute a sale of the
Receivables from the Seller to the Issuer and that the beneficial interest
in and title to the Receivables not be part of the debtor's estate in the
event of the filing of a bankruptcy petition by or against the Seller
under any bankruptcy law. No Receivable has been sold, transferred,
assigned or pledged by the Seller to any Person other than the Issuer, and
no provision of a Receivable shall have been waived, except as provided in
clause (j) above; immediately prior to the transfer and assignment herein
contemplated, the Seller had good and marketable title to each Receivable
free and clear of all Liens and rights of others; immediately upon the
transfer and assignment thereof, the Issuer shall have good and marketable
title to each Receivable, free and clear of all Liens and rights of
others; and the transfer and assignment herein contemplated has been
perfected under the UCC.
(q) Lawful Assignment. No Receivable shall have been originated in,
or shall be subject to the laws of, any jurisdiction under which the sale,
transfer and assignment of such Receivable under this Agreement or
pursuant to a transfer of the related certificate of title shall be
unlawful, void or voidable.
(r) All Filings Made. All filings (including UCC filings) necessary
in any jurisdiction to provide third parties with notice of the transfer
and assignment herein contemplated, to perfect the sale of the Receivables
from the Seller to the Owner Trustee and to give the Owner Trustee on
behalf of the Issuer a first priority perfected security interest in the
Receivables shall have been made.
(s) One Original. There shall be only one original executed copy of
each Receivable.
(t) Chattel Paper. Each Receivable constitutes "chattel paper" as
defined in the UCC.
(u) Maturity of Receivables. Each Receivable shall have an original
maturity of not less than [_______] months nor greater than [_______]
months and, as of the Cutoff Date, a remaining maturity of not less than
[_______] months nor greater than [_______] months.
(v) Finance Charge. Each Receivable provides for an APR equal to or
greater than [_______]% and equal to or less than [_______]%.
(w) Principal Balance. Each Receivable had an original principal
balance of not less than $[_______] nor more than $[_______] and an unpaid
principal balance, as of the Cutoff Date, of not less than $[_______] nor
more than $[_______].
(x) No Overdue Payments. No Receivable shall have a Scheduled
Payment that is more than [_______] days past due as of the Cutoff Date.
(y) Location of Receivable Files. Each Receivable File shall be kept
at one of the locations listed in the Schedule of Receivables or at such
other office as shall be specified to the Owner Trustee by 30 days' prior
written notice.
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(z) Payments on the Receivables. Each Receivable shall provide for
level monthly payments that fully amortize the Amount Financed by
maturity, except that the payment in the first or last month in the life
of the Receivable may be minimally different from the level payment.
(aa) Origination Date. Each Receivable was originated on or before
[_______].
(bb) No Special Financing. No Receivable was originated under a
special financing program.
(cc) No Force-Placed Insurance. No Financed Vehicle was subject to
force-placed insurance as of the Cutoff Date.
SECTION 3.02 Repurchase upon Breach. The Seller, the Servicer or the Owner
Trustee, as the case may be, shall inform the other parties to this Agreement
and the Indenture Trustee promptly, in writing, upon the discovery of any breach
of the Seller's representations and warranties made pursuant to Section 3.01 or
6.01 that materially and adversely affects the interests of any Securityholders
in any Receivable. As of the last day of the second Collection Period following
the Collection Period in which it discovers or receives notice of such breach
(or, at the Seller's election, the last day of the first Collection Period
following the Collection Period in which it discovers or receives notice of such
breach), the Seller shall, unless such breach shall have been cured in all
material respects, repurchase such Receivable and, if necessary, the Seller
shall enforce the obligation of TMCC under the Receivables Purchase Agreement to
repurchase such Receivable from the Seller. This repurchase obligation shall
obtain for all representations and warranties of the Seller contained in this
Agreement whether or not the Seller has knowledge of the breach at the time of
the breach or at the time the representations and warranties were made. In
consideration of the repurchase of any such Receivable, on the Business Day
immediately preceding the related Distribution Date, the Seller shall remit the
Warranty Purchase Payment of such Receivable to the Collection Account in the
manner specified in Section 5.05 and shall be entitled to receive the Released
Warranty Amount. In the event that any Liens or claims shall have been filed,
including Liens for work, labor or materials relating to a Financed Vehicle,
that shall be prior to, or equal or coordinate with, the lien granted by the
related Receivable, which Liens or claims shall not have been satisfied or
otherwise released in full as of the Closing Date, and such breach materially
and adversely affects the interests of the Issuer in such Receivable, the Seller
shall repurchase such Receivable on the terms and in the manner specified above.
The sole remedy of the Owner Trustee, the Issuer, the Indenture Trustee (by
operation of the assignment of the Owner Trustee's rights hereunder pursuant to
the Indenture) or any Securityholder with respect to a breach of the Seller's
representations and warranties pursuant to this Agreement or with respect to the
existence of any such Liens or claims shall be to require the Seller to
repurchase the related Receivable pursuant to this Section and to enforce TMCC's
obligation to the Seller to repurchase such Receivables pursuant to the
Receivables Purchase Agreement. The Owner Trustee shall have no duty to conduct
any affirmative investigation as to the occurrence of any condition requiring
the repurchase of any Receivable pursuant to this Section.
SECTION 3.03 Duties of Servicer as Custodian.
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(a) Safekeeping. The Servicer shall hold the Receivable Files as
custodian for the benefit of the Issuer and maintain such accurate and
complete accounts, records and computer systems pertaining to each
Receivable File as shall enable the Issuer to comply with this Agreement.
In performing its duties as custodian the Servicer shall act with
reasonable care, using that degree of skill and attention that the
Servicer exercises with respect to the receivable files relating to all
comparable automotive receivables that the Servicer services for itself or
others. The Servicer shall conduct, or cause to be conducted, periodic
audits of the Receivable Files held by it under this Agreement and of the
related accounts, records and computer systems, in such a manner as shall
enable the Issuer, the Owner Trustee or the Indenture Trustee to verify
the accuracy of the Servicer's record keeping. The Servicer shall promptly
report to the Issuer and the Indenture Trustee any failure on its part to
hold the Receivable Files and maintain its accounts, records and computer
systems as herein provided and shall promptly take appropriate action to
remedy any such failure. Nothing herein shall be deemed to require an
initial review or any periodic review by the Issuer, the Owner Trustee or
the Indenture Trustee of the Receivable Files.
(b) Maintenance of and Access to Records. The Servicer shall
maintain each Receivable File at one of its offices specified in Schedule
B or at such other office as shall be specified to the Issuer and the
Indenture Trustee by written notice not later than 90 days after any
change in location. The Servicer shall make available to the Issuer and
the Indenture Trustee or their respective duly authorized representatives,
attorneys or auditors a list of locations of the Receivable Files and the
related accounts, records and computer systems maintained by the Servicer
at such times during normal business hours as the Issuer or the Indenture
Trustee shall instruct.
(c) Release of Documents. Upon instruction from the Indenture
Trustee, the Servicer shall release any Receivable File to the Indenture
Trustee, the Indenture Trustee's agent or the Indenture Trustee's
designee, as the case may be, at such place or places as the Indenture
Trustee may designate, as soon as practicable.
SECTION 3.04 Instructions; Authority To Act. The Servicer shall be deemed
to have received proper instructions with respect to the Receivable Files upon
its receipt of written instructions signed by a Trust Officer of the Owner
Trustee or Indenture Trustee.
SECTION 3.05 Custodian's Indemnification. The Servicer as custodian shall
indemnify the Issuer, the Owner Trustee and the Indenture Trustee and each of
their respective officers, directors, employees and agents for any and all
liabilities, obligations, losses, compensatory damages, payments, costs or
expenses of any kind whatsoever that may be imposed on, incurred by or asserted
against any of them as the result of any improper act or omission in any way
relating to the maintenance and custody by the Servicer as custodian of the
Receivable Files; provided, however, that the Servicer shall not be liable to
the Owner Trustee for any portion of any such amount resulting from the willful
misfeasance, bad faith or negligence of the Owner Trustee and the Servicer shall
not be liable to the Indenture Trustee for any portion of any such amount
resulting from the willful misfeasance, bad faith or negligence of the Indenture
Trustee.
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SECTION 3.06 Effective Period and Termination. The Servicer's appointment
as custodian shall become effective as of the date hereof, and shall continue in
full force and effect until terminated pursuant to this Section. If TMCC shall
resign as Servicer in accordance with the provisions of this Agreement or if all
of the rights and obligations of any Servicer shall have been terminated under
Section 8.01, the appointment of such Servicer as custodian shall be terminated
by the Indenture Trustee or by the Holders of Notes evidencing not less than 25%
of the Outstanding Amount of the Notes (but excluding for purposes of such
calculation and action all Securities held or beneficially owned by TMCC, TMCRC
or any of their affiliates) or, with the consent of Holders of the Notes
evidencing not less than 25% of the Outstanding Amount of the Notes, by the
Owner Trustee or by Certificateholders evidencing not less than 25% of the
Certificate Balance (but excluding for purposes of such calculation and action
all Securities held or beneficially owned by TMCC, TMCRC or any of their
affiliates), in the same manner as the Indenture Trustee or such Holders may
terminate the rights and obligations of the Servicer under Section 8.01. The
Indenture Trustee or, with the consent of the Indenture Trustee, the Owner
Trustee may terminate the Servicer's appointment as custodian, with cause, at
any time upon written notification to the Servicer, and without cause upon 30
days' prior written notification to the Servicer. As soon as practicable after
any termination of such appointment, the Servicer shall deliver the Receivable
Files to the Relevant Trustee or the agent thereof at such place or places as
the Relevant Trustee may reasonably designate.
ARTICLE IV
Administration and Servicing of Receivables
SECTION 4.01 Duties of Servicer. The Servicer, for the benefit of the
Issuer and the Securityholders (to the extent provided herein), shall manage,
service, administer and make collections on the Receivables with reasonable
care, using that degree of skill and attention that the Servicer exercises with
respect to all comparable automotive receivables that it services for itself or
others. The Servicer's duties shall include collection and posting of all
payments, responding to inquiries of Obligors or by federal, state or local
government authorities with respect to the Receivables, investigating
delinquencies, sending payment information to Obligors, reporting tax
information to Obligors in accordance with its customary practices, accounting
for collections, furnishing monthly and annual statements to the Owner Trustee
and the Indenture Trustee with respect to distributions and making Advances and
performing the other duties specified herein. The Servicer shall follow its
standards, policies and procedures and shall have full power and authority,
acting alone, to do any and all things in connection with such managing,
servicing, administration and collection that it may deem necessary or
desirable.
Without limiting the generality of the foregoing, the Servicer is
authorized and empowered to execute and deliver, on behalf of itself, the
Issuer, the Owner Trustee, the Indenture Trustee, the Certificateholders and the
Noteholders or any of them, any and all instruments of satisfaction or
cancellation, or partial or full release or discharge, and all other comparable
instruments, with respect to such Receivables or to the Financed Vehicles
securing such Receivables. The Servicer is hereby authorized to commence, in its
own name or in the name of the Trust, a legal proceeding to enforce a Defaulted
Receivable or to commence or participate in a legal proceeding (including
without limitation a bankruptcy proceeding) relating
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to or involving a Receivable, including a Defaulted Receivable. If the Servicer
shall commence a legal proceeding to enforce a Receivable, the Issuer shall
thereupon be deemed to have automatically assigned to the Servicer, solely for
the purpose of collection on behalf of the party retaining an interest in such
Receivable, such Receivable and the other property conveyed to the Issuer hereby
with respect to such Receivable to the Servicer for purposes of commencing or
participating in any such proceeding as a party or claimant and the Servicer is
authorized and empowered by the Trustee to execute and deliver in the Servicer's
name any notices, demands, claims, complaints, responses, affidavits or other
documents or instruments in connection with any such proceeding. If in any
enforcement suit or legal proceeding it shall be held that the Servicer may not
enforce a Receivable on the ground that it shall not be a real party in interest
or a holder entitled to enforce such Receivable the Owner Trustee shall, at the
Servicer's expense and direction, take steps to enforce such Receivable,
including bringing suit in its name or the name of the Owner Trustee, the
Indenture Trustee, the Certificateholders or the Noteholders. The Owner Trustee
shall furnish the Servicer with any powers of attorney and other documents
reasonably necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties hereunder.
SECTION 4.02 Collection and Allocation of Receivable Payments. The
Servicer shall make reasonable efforts to collect all payments called for under
the terms and provisions of the Receivables as and when the same shall become
due and shall follow such collection procedures as it follows with respect to
all comparable automotive receivables that it services for itself or others. The
Servicer shall allocate collections between principal and interest in accordance
with the customary servicing procedures it follows with respect to all
comparable automotive receivables that it services for itself or others. The
Servicer shall be authorized to grant extensions, rebates or adjustments on a
Receivable in accordance with the customary servicing standards of the Servicer
without the prior consent of the Owner Trustee, Indenture Trustee or any
Securityholder; provided, however, that if, as a result of any change in the
related APR, increase in the total number of Scheduled Payments, extension of
payments such that the Receivable will be outstanding later than the Final
Scheduled Maturity Date, or other modification of the terms of a Receivable, the
amount of any Scheduled Payment due in a subsequent Collection Period is
reduced, the Servicer shall be obligated to either repurchase such Receivable
pursuant to Section 4.08 or to make an Advance in respect of such Receivable in
each subsequent Collection period equal to the amount by which such Scheduled
Payment has been reduced. In addition, in the event that any such rescheduling
or extension of a Receivable modifies the terms of such Receivable in such a
manner as to release the security interest in the related Financed Vehicle or
constitute a cancellation of such Receivable and the creation of a new
automobile or light duty truck receivable, the Servicer shall purchase such
Receivable pursuant to Section 4.08, and the receivable created shall not be
included in the Issuer. The Servicer may, in accordance with its customary
servicing procedures, waive any prepayment charge, late payment charge or any
other fees that may be collected in the ordinary course of servicing the
Receivables.
SECTION 4.03 Rebates on Full Prepayments. In the event that the amount of
a full Prepayment by an Obligor under a Precomputed Receivable, after adjustment
for the applicable Rebate, is less than the amount that would be payable under
the actuarial method if a full Prepayment were made at the end of the billing
month under such Precomputed Receivable, either because the Rebate calculated
under the terms of such Precomputed Receivable is greater
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than the amount calculable under the actuarial method or because the Servicer's
customary servicing procedure is to credit a greater Rebate, the Servicer, as
part of its servicing duties, shall remit such difference by deposit into the
Collection Account pursuant to Section 5.05.
SECTION 4.04 Realization upon Receivables. On behalf of the Issuer, the
Servicer shall use its best efforts, consistent with its customary servicing
procedures, to repossess to repossess or otherwise comparably convert the
ownership of any Financed Vehicle that it has reasonably determined should be
repossessed or otherwise converted following a default under the Receivable
secured by the Financed Vehicle (and shall specify such Receivables to the
Relevant Trustee no later than the Determination Date following the end of the
Collection Period in which the Servicer shall have made such determination). The
Servicer shall follow such practices and procedures as it shall deem necessary
or advisable and as shall be customary and usual in its servicing of automobile
and light duty truck receivables, which practices and procedures may include
reasonable efforts to realize upon any Dealer Recourse, selling the related
Financed Vehicle at public or private sale and other actions by the Servicer in
order to realize upon such a Receivable. The Servicer shall be entitled to
recover its reasonable Liquidation Expenses with respect to each Defaulted
Receivable. All Net Liquidation Proceeds realized in connection with any such
action with respect to a Receivable shall be deposited by the Servicer in the
Collection Account in the manner specified in Section 5.02. The foregoing is
subject to the proviso that, in any case in which the Financed Vehicle shall
have suffered damage, the Servicer shall not expend funds in connection with any
repair or towards the repossession of such Financed Vehicle unless it shall
determine in its discretion that such repair and/or repossession shall increase
the Liquidation Proceeds of the related Receivable by an amount greater than the
amount of such expenses.
SECTION 4.05 Physical Damage Insurance. The Servicer shall, in accordance
with its customary servicing procedures, require that each Obligor shall have
obtained physical damage insurance covering the Financed Vehicle as of the
execution of the Standard Receivable or the Fixed Value Receivable.
SECTION 4.06 Maintenance of Security Interests in Financed Vehicles. The
Servicer shall, in accordance with its customary servicing procedures, take such
steps as are necessary to maintain perfection of the security interest created
by each Receivable in the related Financed Vehicle. The Servicer is hereby
authorized to take such steps as are necessary to re-perfect such security
interest on behalf of the Issuer and the Indenture Trustee in the event of the
relocation of a Financed Vehicle or for any other reason. In the event that the
assignment of a Receivable to the Issuer is insufficient, without a notation on
the related Financed Vehicle's certificate of title, to grant to the Issuer a
first priority perfected security interest in the related Financed Vehicle, the
Servicer hereby agrees to serve as the agent of the Issuer for the purpose of
perfecting the security interest of the Issuer in such Financed Vehicle and
agrees that the Servicer's listing as the secured party on the certificate of
title is in this capacity as agent of the Issuer.
SECTION 4.07 Covenants of Servicer. The Servicer hereby agrees with and
makes the following covenants to the Issuer on which the Issuer has relied in
purchasing the Receivables and on which the Indenture Trustee will rely in
undertaking the trusts set forth in the Indenture.
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(a) Liens in Force. Except as contemplated by this Agreement, the
Servicer shall not release in whole or in part any Financed Vehicle from
the security interest securing the related Receivable.
(b) No Impairment. The Servicer shall do nothing to impair the
rights of the Securityholders in the Receivables.
(c) No Amendments. Except as provided in Section 4.02, the Servicer
shall not amend or otherwise modify any Receivable such that the total
number of Scheduled Payments, the Amount Financed or the APR is altered or
extends the maturity of such Receivable beyond the Final Scheduled
Maturity Date.
SECTION 4.08 Purchase of Receivables upon Breach. The Servicer or the
Owner Trustee shall inform the other party and the Indenture Trustee promptly,
in writing, upon the discovery of any breach pursuant to Section 4.02, 4.06 or
4.07 that materially and adversely affects the interests of the
Certificateholders in a Receivable, or if an improper extension, rescheduling or
modification of a Receivable is made by the Servicer as described in Section
4.02, the party discovering such breach shall give prompt written notice to the
others. As of the last day of the second Collection Period following the
Collection Period in which it discovers or receives notice of such breach (or,
at the Servicer's election, the last day of the first Collection Period
following the Collection Period in which it discovers or receives notice of such
breach), the Servicer shall, unless such breach or impropriety shall have been
cured in all material respects, purchase from the Trust such Receivable. In
consideration of the purchase of any such Receivable, on the Business Day
immediately preceding the related Distribution Date the Servicer shall remit the
Administrative Purchase Payment to the Collection Account in the manner
specified in Section 5.05, and shall be entitled to receive the Released
Administrative Amount. Upon such deposit of the Administrative Purchase Payment,
the Servicer shall for all purposes of this Agreement be deemed to have released
all claims for reimbursement of Outstanding Advances made in respect of such
Receivable. The sole remedy of the Trustee, the Trust or the Certificateholders
against the Servicer with respect to a breach pursuant to Section 4.02 or 4.07
shall be to require the Servicer to purchase the related Receivables pursuant to
this Section, except as otherwise provided in Section 7.02. The Trustee shall
have no duty to conduct any affirmative investigation as to the occurrence of
any condition requiring the repurchase of any Receivable pursuant to this
Section except as otherwise provided in Section 7.02. In connection with such
repurchase, the Owner Trustee and Indenture Trustee shall take all steps
necessary to effect a transfer of such Receivable to the Servicer as set forth
in Section 9.01(d).
SECTION 4.09 Servicing Fee and Expenses. As compensation for the
performance of its obligations hereunder, the Servicer shall be entitled to
receive on each Distribution Date, out of Available Interest, the Total
Servicing Fee. The Basic Servicing Fee in respect of a Collection Period shall
be calculated based on a 360 day year comprised of twelve 30-day months. Except
to the extent otherwise provided herein, the Servicer shall be required to pay
all expenses incurred by it in connection with its activities under this
Agreement (including fees and disbursements of the Trustee and independent
accountants, taxes imposed on the Servicer, expenses incurred in connection with
distributions and reports to Certificateholders and all other fees and expenses
not expressly stated under this Agreement to be for the account of the
Certificateholders).
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SECTION 4.10 Servicer's Certificate. On or before each Determination Date,
the Servicer shall deliver to the Owner Trustee, each Paying Agent, the
Indenture Trustee and the Seller, with a copy to each Rating Agencies, a
Servicer's Certificate containing all information necessary to make the
distributions to be made on the related Distribution Date pursuant to Sections
5.06 and 5.07 for the related Collection Period executed by the President or any
Vice President or principal accounting officer of the Servicer substantially in
the form attached hereto as Exhibit A (and setting forth such additional
information as requested by the Trustee or any Rating Agency from time to time
which information the Servicer is able to reasonably provide) and all
information necessary for the Owner Trustee to send statements to
Certificateholders and the Indenture Trustee to send statements to the
Noteholders pursuant to the Trust Agreement or Indenture, as the case may be.
The Servicer shall also specify therein, the identity of any Receivable that the
Servicer or the Seller became obligated to repurchase or that the Servicer has
determined to be a Defaulted Receivable during the related Collection Period.
Receivables purchased or to be purchased by the Servicer or the Seller and
Receivables that the Servicer has determined during such Collection Period to be
Defaulted Receivables and with respect to which payment of the Administrative
Purchase Payment or Warranty Purchase Payment has been provided from whatever
source as of last day of such Collection Period shall be identified by the
Seller's account number with respect to such Receivable (as specified in the
Schedule of Receivables).
SECTION 4.11 Annual Statement as to Compliance; Notice of Default. (a) The
Servicer shall deliver to the Owner Trustee and the Indenture Trustee, on or
before December 31 of each year beginning with the December 31 that is at least
six months after the Closing Date, an Officers' Certificate of the Servicer
stating that (i) a review of the activities of the Servicer during the preceding
12-month period ended September 30 (or, if applicable, such shorter period in
the case of the first such Officer's Certificate) and of its performance under
this Agreement has been made under such officers' supervision and (ii) to the
best of such officers' knowledge, based on such review, the Servicer has
fulfilled all its obligations under this Agreement throughout such period or, if
there has been a default in the fulfillment of any such obligation, specifying
each such default known to such officers and the nature and status thereof. The
Indenture Trustee shall send a copy of such Officer's Certificate and the report
referred to in Section 4.12 to the Rating Agencies. A copy of such Officer's
Certificate and the report referred to in Section 4.12 may be obtained by any
Certificateholder, Certificate Owner, Noteholder or Note Owner by a request in
writing to the Owner Trustee addressed to the Corporate Trust Office. Upon the
telephone request of the Owner Trustee, the Indenture Trustee will promptly
furnish the Owner Trustee a list of Noteholders as of the date specified by the
Owner Trustee.
(b) The Servicer shall deliver to the Owner Trustee, the Indenture Trustee
and the Rating Agencies, promptly after having obtained knowledge thereof, but
in no event later than five Business Days thereafter, written notice in an
Officer's Certificate of any event which with the giving of notice or lapse of
time, or both, would become a Servicer Default under Section 8.01(a) or (b).
SECTION 4.12 Annual Accountants' Report. The Servicer shall cause a firm
of independent certified public accountants (who may also render other services
to the Servicer, the Seller or their Affiliates) to deliver to the Owner Trustee
and the Indenture Trustee on or before December 31 of each year beginning with
the December 31 that is at least six months after the
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Closing Date, a report or letter with respect to the preceding 12-month period
ended September 30 (or, if applicable, such longer period in the case of the
first such report or letter) to the effect that such accountants have reviewed
certain records and documents relating to the servicing of the Receivables under
this Agreement (using procedures specified in such report or letter) and as a
result of such review, and in connection with such procedures, they are
reporting such exceptions, if any, as shall be set forth therein. Such report or
letter shall also indicate that the firm is independent with respect to the
Issuer, the Seller and the Servicer within the meaning of the Code of
Professional Ethics of the American Institute of Certified Public Accountants.
SECTION 4.13 Access to Certain Documentation and Information Regarding
Receivables. The Servicer shall provide to the Certificateholders and
Noteholders reasonable access to the documentation regarding the Receivables.
The Servicer will provide such access to any Securityholder only in such cases
where the Certificateholders or Noteholders shall be required by applicable
statutes or regulations to review such documentation. In each case, such access
shall be afforded without charge, but only upon reasonable request and during
the normal business hours at the respective offices of the Servicer. Nothing in
this Section shall derogate from the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information regarding the Obligors and
the failure of the Servicer to provide access to information as a result of such
obligation shall not constitute a breach of this Section.
SECTION 4.14 Appointment of Subservicer. The Servicer may at any time
appoint a subservicer to perform all or any portion of its obligations as
Servicer hereunder if each Rating Agency has received reasonable advance notice
of the Servicer's intention to do so and has not notified the Servicer that such
an appointment would or might result in the qualification, reduction or
withdrawal of a rating then assigned by such rating Agency to any Class of Notes
or to the Certificates; provided, however, that the Servicer shall remain
obligated and be liable to the Issuer, the Owner Trustee, the Indenture Trustee,
the Certificateholders and the Noteholders for the servicing and administering
of the Receivables in accordance with the provisions hereof without diminution
of such obligation and liability by virtue of the appointment of such
subservicer and to the same extent and under the same terms and conditions as if
the Servicer alone were servicing and administering the Receivables. The fees
and expenses of the subservicer shall be as agreed between the Servicer and its
subservicer from time to time, and none of the Issuer, the Owner Trustee, the
Indenture Trustee, the Certificateholders or the Noteholders shall have any
responsibility therefor.
SECTION 4.15 Amendments to Schedule of Receivables. If the Servicer,
during a Collection Period, assigns to a Receivable an account number that
differs from the original account number identifying such Receivable on the
Schedule of Receivables, the Servicer shall deliver to the Issuer, the Owner
Trustee and the Indenture Trustee, on or before the Distribution Date relating
to such Collection Period, an amendment to the Schedule of Receivables reporting
the newly assigned account number, together with the old account number of each
such Receivable. The first such delivery of amendments to the Schedule of
Receivables shall include monthly amendments reporting account numbers appearing
on the Schedule of Receivables with the new account numbers assigned to such
Receivables during any prior Collection Period.
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ARTICLE V
Distributions; Reserve Fund;
Statements to Certificateholders and Noteholders
SECTION 5.01 Establishment of Trust Accounts.
(a) The Servicer on behalf of the Owner Trustee and the Indenture Trustee,
shall establish the Accounts in the name of the Indenture Trustee for the
benefit of the Securityholders. Except as otherwise provided in this Agreement,
each Account shall be an account initially established with the Indenture
Trustee and maintained with the Indenture Trustee so long as (i) the commercial
paper or other short-term unsecured debt obligations of the Indenture Trustee
have the Required Rating, or (ii) such Account is a segregated trust account
located in the corporate trust department of the Indenture Trustee bearing a
designation clearly indicating that the funds deposited therein (other than
interest or investment earnings thereon) are held in trust for the benefit of
the Securityholders, and the Indenture Trustee has a long-term deposit rating
from Moody's (so long as Moody's is a Rating Agency) of at least ___ (or such
lower rating as Moody's shall approve in writing) and corporate trust powers
under applicable federal and state laws and is organized under the laws of the
United States or any state thereof, the District of Columbia or the Commonwealth
of Puerto Rico. Except as otherwise provided in this Agreement, in the event
that the Indenture Trustee no longer meets either of the foregoing requirements,
then the Servicer shall, with the Indenture Trustee's assistance as necessary,
cause the Accounts to be moved to a bank or trust company that satisfies either
of such requirements.
(b) For so long as the depository institution or trust company then
maintaining the Accounts meets the requirements of Section 5.01(a)(i) or
(a)(ii), all amounts held in the Accounts shall, to the extent permitted by
applicable laws, rules and regulations, be invested, as directed in writing by
the Servicer, in Eligible Investments; otherwise such amounts shall be
maintained in cash. Earnings on investment of funds in the Accounts (net of
losses and investment expenses) shall be paid to the Servicer and any losses and
investment expenses shall be charged against the funds on deposit in the related
Account.
(c) For so long as [_______] is the Indenture Trustee and the Indenture
Trustee is the Relevant Trustee, or [_______] is the Owner Trustee and the Owner
Trustee is the Relevant Trustee, the Accounts shall be maintained with the
Relevant Trustee as described in clause (ii) of the second sentence of Section
5.01(a). In the event that (i) the long-term debt rating of the Relevant Trustee
does not satisfy clause (ii) of the second sentence of Section 5.01(a) and
clause (B) of the second sentence of Section 5.07(a)(i) or (ii) Moody's informs
the parties hereto that the first sentence of this Section shall no longer be
operative, the Servicer shall, with the assistance of the Relevant Trustee as
necessary, cause (1) the Collection Account and the Payahead Account to be moved
to an institution or an account otherwise satisfying the requirements of Section
4.01(a), and (2) the Yield Maintenance Account and the Reserve Fund to be moved
to an institution or accounts otherwise satisfying the requirements of Section
5.07(a)(i).
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(d) Subject to the foregoing, the Servicer, on behalf of the Owner Trustee
and the Indenture Trustee, shall establish and maintain as the Collection
Account an Eligible Deposit Account in the name of and under the exclusive
control of the Indenture Trustee, bearing a designation clearly indicating that
the funds deposited therein are held for the benefit of the Noteholders and the
Certificateholders. On the Closing Date, the Owner Trustee will transfer, or
cause to be transferred, to such Collection Account all funds or investments on
deposit in the Collection Account established pursuant to the Trust Agreement
for the benefit of the Certificateholders, and all of the proceeds thereof, and
will transfer all of its right, title and interest in the Collection Account,
all funds or investments held or to be held therein and all proceeds thereof,
whether or not on behalf of the Certificateholders, to the Indenture Trustee for
the benefit of the Noteholders and Certificateholders. The Indenture Trustee
will be obligated to transfer all amounts remaining on deposit in the Collection
Account on the Distribution Date on which the Notes of all Classes have been
paid in full (or substantially all of the Trust Estate is otherwise released
from the lien of the Indenture) to the Collection Account established pursuant
to the Trust Agreement for the benefit of the Certificateholders, and to take
all necessary or appropriate actions to transfer all of its right, title and
interest in the Collection Account, all funds or investments held or to be held
therein and all proceeds thereof, whether or not on behalf of the Noteholders
and Certificateholders, to the Owner Trustee for the benefit of the
Certificateholders, subject to the limitations set forth in the Indenture with
respect to amounts held for distribution to Noteholders that do not promptly
deliver Note for payment on such Distribution Date.
(e) With respect to the Trust Account Property, the Owner Trustee agrees,
by its acceptance hereof that, on the terms and conditions set forth in the
Indenture, for so long as Notes of any Class remain outstanding, the Indenture
Trustee shall possess all right, title and interest in all funds on deposit from
time to time in the Trust Accounts and in all proceeds thereof (excluding
interest or investment income thereon payable to the Servicer), that all such
funds and proceeds shall comprise part of the Trust Estate and that the Trust
Accounts shall be under the sole dominion and control of the Indenture Trustee
for the benefit of the Noteholders and the Certificateholders, as the case may
be and:
(i) any Trust Account Property that is held in deposit
accounts shall be held solely in the Eligible Deposit Accounts,
subject to the last sentence of Section 5.01(c)(i); and each such
Eligible Deposit Account shall be subject to the exclusive custody
and control of the Indenture Trustee, and the Indenture Trustee
shall have sole signature authority with respect thereto;
(ii) any Trust Account Property that constitutes Physical
Property shall be delivered to the Indenture Trustee in accordance
with paragraph (a) of the definition of "Delivery" and shall be
held, pending maturity or disposition, solely by the Indenture
Trustee or a financial intermediary (as such term is defined in
Section 8-313(4) of the UCC) acting solely for the Indenture
Trustee;
(iii) any Trust Account Property that is a book-entry security
held through the Federal Reserve System pursuant to federal
book-entry regulations shall be delivered in accordance with
paragraph (b) of the definition of "Delivery"
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and shall be maintained by the Indenture Trustee, pending maturity
or disposition, through continued book-entry registration of such
Trust Account Property as described in such paragraph; and
(iv) any Trust Account Property that is an "uncertificated
security" under Article VIII of the UCC and that is not governed by
clause (C) above shall be delivered to the Indenture Trustee in
accordance with paragraph (c) of the definition of "Delivery" and
shall be maintained by the Indenture Trustee, pending maturity or
disposition, through continued registration of the Indenture
Trustee's (or its nominee's) ownership of such security.
(v) The Servicer shall have the power, revocable by the
Indenture Trustee or by the Owner Trustee with the consent of the
Indenture Trustee, to instruct the Indenture Trustee to make
withdrawals and payments from the Trust Accounts for the purpose of
permitting the Servicer, Indenture Trustee or the Owner Trustee to
carry out its respective duties hereunder or under the Indenture or
the Trust Agreement, as the case may be.
SECTION 5.02 Collections. (a) Except as otherwise provided in this
Agreement, the Servicer shall remit daily to the Collection Account all payments
received by or on behalf of the Obligors on or in respect of the Receivables
(other than, in the case of Precomputed Receivables, payments constituting
Payments Ahead) and all Net Liquidation Proceeds within two Business Days after
receipt thereof. Notwithstanding the foregoing, for so long as (i) TMCC is the
Servicer, (ii) either (a) TMCC's short-term unsecured debt is rated ___ by
Moody's ___ by Standard & Poor's (so long as Moody's and Standard & Poor's are
Rating Agencies), or (b) certain arrangements are made that are acceptable to
the Rating Agencies and (iii) no Servicing Default or Event of Default shall
have occurred and be continuing (collectively, the "Monthly Remittance
Conditions"), the Servicer shall not be required to remit such collections to
the Collection Account on the foregoing daily basis but shall be entitled to
retain such collections, without segregation from its other funds, until the
Business Day before each Distribution Date at which time the Servicer shall
remit all such collections in respect of the related Collection Period to the
Collection Account in immediately available funds. Commencing with the first day
of the first Collection Period that begins at least two Business Days after the
day on which any Monthly Remittance Condition ceases to be satisfied and for so
long as any Monthly Remittance Conditions is not satisfied, all collections then
held by the Servicer shall be immediately deposited into the Collection Account
and all future collections on or in respect of the Receivables and all Net
Liquidation Proceeds shall be remitted by the Servicer to the Collection Account
on a daily basis within two Business Days after receipt thereof.
(b) Except as otherwise provided in this Agreement, the Servicer shall
deposit all Payments Ahead in the Collection Account within two Business Days
after receipt thereof, which Payments Ahead shall be transferred to the Payahead
Account pursuant to Section 5.06(a)(ii). Notwithstanding the foregoing, so long
as all Monthly Remittance Conditions are satisfied, the Servicer will not be
required to deposit Payments Ahead in the Payahead Account within two Business
Days after receipt thereof but shall be entitled to retain such Payments Ahead,
without segregation from its other funds, until such time as the Servicer shall
be required
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to remit Applied Payments Ahead to the Collection Account pursuant to Section
5.06(a)(ii). Commencing with the first day of the first Collection Period that
begins at least two Business Days after the day on which any Monthly Remittance
Condition ceases to be satisfied and for so long as all Monthly Remittance
Conditions are not satisfied, all Payments Ahead then held by the Servicer shall
be immediately deposited into the Payahead Account and all future Payments Ahead
shall be remitted by the Servicer to the Payahead Account within two Business
Days after receipt thereof.
(c) The Servicer shall give the Owner Trustee, the Indenture Trustee and
each Rating Agency written notice of the failure of any Monthly Remittance
Condition (and any subsequent curing of a failed Monthly Remittance Condition)
as soon as practical after the occurrence thereof. Notwithstanding the failure
of any Monthly Remittance Condition, the Servicer may utilize an alternative
collection or Payment Ahead remittance schedule (which may be the remittance
schedule previously utilized prior to the failure of such Monthly Remittance
Condition), if the Servicer provides to the Owner Trustee and Indenture Trustee
written confirmation from each Rating Agency that such alternative remittance
schedule will not result in the qualification, reduction or withdrawal of the
rating then assigned to any Class of Notes or the Certificates.
SECTION 5.03 Application of Collections. As of the Business Day
immediately preceding the related Distribution Date, all collections for the
related Collection Period shall be applied by the Servicer as follows:
(a) With respect to each Receivable (other than an Administrative
Receivable or a Warranty Receivable), payments made by or on behalf of the
Obligor which are not Supplemental Servicing Fees shall be applied first to
reimburse the Servicer for Outstanding Advances made with respect to such
Receivable (each such payment, an "Overdue Payment"). Next, the amount of any
payment in excess of Supplemental Servicing Fees and Outstanding Advances with
respect to such Receivable shall be applied to the Scheduled Payment with
respect to such Receivable. If the amount of such payment remaining after the
applications described in the two preceding sentences (i) equals (together with
any Deferred Prepayment) the unpaid principal balance of such Receivable, it
shall be applied to prepay the principal balance of such Receivable, or (ii) is
less than the unpaid principal balance of such Receivable, it shall constitute
an Excess Payment with respect to such Receivable.
(b) With respect to each Administrative Receivable and Warranty
Receivable, payments made by or on behalf of the Obligor shall be applied in the
same manner, except that any Released Administrative Amount or Released Warranty
Amount shall be remitted to the Servicer or the Seller, as applicable. A
Warranty Purchase Payment or an Administrative Purchase Payment shall be applied
to reduce Outstanding Advances and such Warranty Purchase Payment or
Administrative Purchase Payment, as applicable, shall be applied to the
Scheduled Payment, in each case to the extent that the payments by the Obligor
shall be insufficient, and then to prepay the unpaid principal balance of such
Receivable in full.
SECTION 5.04 Advances.
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(a) As of the close of business on the last day of each Collection Period,
if the payments by or on behalf of the Obligor on a Precomputed Receivable
(other than an Administrative Receivable or a Warranty Receivable) after
application under Section 5.03(a) shall be less than the Scheduled Payment
(determined as of the Closing Date), whether as a result of any modification or
extension granted to the Obligor or otherwise, then the Deferred Prepayment, if
any, with respect to such Precomputed Receivable shall be applied by the
Servicer to the extent of the shortfall, and such Deferred Prepayment shall be
reduced accordingly. Subject to the provisions of the last sentence of this
paragraph, the Servicer shall deposit an amount equal to such shortfall (each, a
"Precomputed Advance") in the Collection Account on the Business Day immediately
preceding the related Distribution Date. In addition, as of last day of a
Collection Period, if the payments during such Collection Period by or on behalf
of the Obligor on or in respect of a Simple Interest Receivable (other than an
Administrative Receivable or a Warranty Receivable) after application under
Section 5.03(a) shall be less than the Scheduled Payment (determined as of the
Closing Date), whether as a result of any modification or extension granted to
the Obligor or otherwise, then an amount equal to the product of the principal
balance of such Receivable as of the first day of the related Collection Period
and one-twelfth of its Annual Percentage Rate minus the amount of interest
actually received on such Receivable during the Collection Period (each, a
"Simple Interest Advance") shall be deposited by the Servicer into the
Collection Account on the Business Day immediately preceding the related
Distribution Date. If such a calculation in respect of a Simple Interest
Receivable results in a negative number, an amount equal to such negative amount
shall be paid to the Servicer in reimbursement of any Outstanding Advances in
respect of Simple Interest Receivables. 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 Outstanding Advances in respect of Simple
Interest Receivables in respect thereof, be withdrawn from the Collection
Account and paid to the Servicer in reimbursement of such Outstanding Advances.
No Advances will be made with respect to the Principal Balance of Simple
Interest Receivables. The Servicer shall not be required to make an Advance
(other than a Simple Interest Advance in respect of an interest shortfall
arising from the Prepayment of a Simple Interest Receivable) to the extent that
the Servicer, in its sole discretion, shall determine that such Advance is
unlikely to be recovered from subsequent payments made by or on behalf of the
related Obligor, Liquidation Proceeds, by the Administrative Purchase Payment or
by the Warranty Purchase Payment with respect to such Receivable or otherwise.
(b) The Servicer shall be entitled to reimbursement for Outstanding
Advances, without interest, with respect to a Receivable from the following
sources with respect to such Receivable: (i) subsequent payments made by or on
behalf of the related Obligor, (ii) Liquidation Proceeds, (iii) the
Administrative Purchase Payment, and (iv) the Warranty Purchase Payment;
provided, however, that in the case of Advances made pursuant to Section 4.02,
the Servicer shall be entitled to reimbursement only from amounts received in
respect of such Receivable that are in excess of the amount of the Scheduled
Payment in the related Collection Period.
(c) To the extent that during any Collection Period any funds described
above in Section 5.04(b) with respect to a Receivable as to which the Servicer
previously has made an unreimbursed Advance are received by the Owner Trustee,
Indenture Trustee or the Servicer,
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and the Servicer determines that any Outstanding Advances with respect to such
Receivable are unlikely to be recovered from payments made on or with respect to
such Receivable (each, a "Nonrecoverable Advance"), then, on the related
Distribution Date, upon the Servicer providing the Seller, the Owner Trustee and
the Indenture Trustee with an Officer's Certificate setting forth the basis for
its determination of any such amount, the Relevant Trustee shall promptly remit
to the Servicer (i) from Available Interest an amount equal to the portion of
such Nonrecoverable Advance allocable to interest and (ii) from Available
Principal an amount equal to the portion of such Nonrecoverable Advance
allocable to principal, in each case without interest, in accordance with
Section 5.06(c)(i). In lieu of causing the Relevant Trustee to remit any such
amounts or the amounts described in clauses (i) through (iv) in Section 5.04(b),
the Servicer may deduct such amounts from deposits otherwise to be made into the
Collection Account.
SECTION 5.05 Additional Deposits. The following additional deposits shall
be made to the Collection Account: (i) the Seller shall remit the aggregate
Warranty Purchase Payments with respect to Warranty Receivables pursuant to
Section 4.07 or the amount required upon the optional termination of the Trust
by the Seller or the Servicer, or any successor to the Servicer, pursuant to
Section 9.01; (ii) the Servicer shall remit (A) the amount required to be
remitted in respect of certain full Prepayments pursuant to Section 4.03, (B)
the aggregate Advances pursuant to Sections 4.02, 4.08 and 5.04(a), and (C) the
aggregate Administrative Purchase Payments with respect to Administrative
Receivables pursuant to Sections 3.02 and 4.08; and (iii) the Trustee shall
transfer the Yield Maintenance Deposit from the Yield Maintenance Account to the
Collection Account pursuant to Sections 5.06 and 5.08(b) (in assuring the
availability therein of the related Available Interest) and shall transfer the
amounts described in Sections 5.06 and 5.07(b) from the Reserve Fund to the
Collection Account pursuant to Section 5.07(b).
(b) All deposits required to be made pursuant to this Section by the
Seller or the Servicer, as the case may be, may be made in the form of a single
deposit and shall be made in immediately available funds, no later than 5:00
P.M., New York City time, on the Business Day immediately preceding the related
Distribution Date. At the direction of the Servicer, the Relevant Trustee shall
invest such amounts in Eligible Investments maturing not later than [3:00 P.M.]
New York City Time, on the related Distribution Date.
SECTION 5.06 Distributions.
(a) On each Distribution Date (or, if both the Accounts are not maintained
by the Relevant Trustee, on the Business Day immediately preceding each
Distribution Date), the Relevant Trustee shall cause to be made the following
transfers and distributions in immediately available funds in the amounts set
forth in the Servicer's Certificate for such Distribution Date:
(i) from the Payahead Account (or directly from the Servicer in the
case of Payments Ahead held by the Servicer pursuant to Section 5.02(b) or
(c)) to the Collection Account, the aggregate Applied Payments Ahead; and
(ii) if the Servicer is not permitted to hold Payments Ahead
pursuant to Section 5.02(b) or (c), from the Collection Account to the
Payahead Account, the aggregate Payments Ahead for the related Collection
Period.
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(b) On each Determination Date, the Servicer shall calculate the Available
Interest, the Available Principal, the Noteholders' Distributable Amount, the
Certificateholders' Distributable Amount, the amount to be distributed to
Noteholders of each Class and the Certificateholders, and all other
distributions, deposits and withdrawals to be made on the related Distribution
Date.
(c) The rights of the Certificateholders to receive distributions in
respect of the Certificates shall be and hereby are subordinated to the rights
of the Noteholders to receive distributions in respect of the Notes to the
extent provided in this Section. On each Distribution Date, the Relevant Trustee
shall make the following distributions from the Collection Account in the
following order of priority and in the amounts set forth in the Servicer's
Certificate for such Distribution Date; provided, however, that except as
otherwise provided in Sections 5.05(a) or 5.06(a), such distributions shall be
made only from those funds deposited in the Collection Account for the related
Collection Period:
(i) to the Servicer from Available Interest or Available Principal,
any payments in respect of Nonrecoverable Advances required pursuant to
Section 5.04(c);
(ii) to the Servicer, from Available Interest (after giving effect
to any reduction in Available Interest described in clause (i) above), the
Total Servicing Fee (including any unpaid Total Servicing Fees from one or
more prior Collection Periods);
(iii) 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 clauses (i) and (ii) above);
provided that if such Available Interest is insufficient, the Noteholders
will be entitled to receive such amount first, from the
Certificateholders' Percentage of Available Principal and second, if such
amounts are insufficient, from monies on deposit in the Reserve Fund;
(iv) 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 and any unpaid Class A-1 Principal
Carryover Shortfall, such amount to be paid from Available Principal (as
Available Principal has been reduced by reimbursing the Servicer for the
principal component of any outstanding Advances and any reduction in
Available Principal described in clause (iii) above); provided that 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) to (iii) above) and second, if such amounts are insufficient, from
monies on deposit in the Reserve Fund, until the principal amount of the
Class A-1 Notes is reduced to zero;
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(v) to the Class A-2 Noteholders, an amount equal to the
Noteholders' Principal Distributable Amount and any unpaid Class A-2
Principal Carryover Shortfall, such amount to be paid from Available
Principal (as Available Principal has been reduced by reimbursing the
Servicer for the principal component of any outstanding Advances and any
reduction in Available Principal described in clauses (iii) and (iv)
above); provided that 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) to (iv) above) and second, if such
amounts are insufficient, from monies on deposit in the Reserve Fund,
until the principal amount of the Class A-2 Notes is reduced to zero;
(vi) to the Class A-3 Noteholders, an amount equal to the
Noteholders' Principal Distributable Amount and any unpaid Class A-3
Principal Carryover Shortfall, such amount to be paid from Available
Principal (as Available Principal has been reduced by reimbursing the
Servicer for the principal component of any outstanding Advances and any
reduction in Available Principal described in clauses (iii) to (v) above);
provided that 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) to (v) above) and second, if such amounts are
insufficient, from monies on deposit in the Reserve Fund, until the
principal amount of the Class A-3 Notes is reduced to zero;
(vii) 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 the reduction in Available
Interest described in clauses (i) and (ii) above); provided that if such
Available Interest is insufficient, the Certificateholders will be
entitled to receive such amount from monies on deposit in the Reserve
Fund; and
(viii) to the Certificateholders, an amount equal to the
Certificateholders' Principal Distributable Amount and any unpaid
Certificateholder Principal Carryover Shortfall, such amount to be paid
from Available Principal (as Available Principal has been reduced by
reimbursing the Servicer for the principal component of any outstanding
Advances and any reduction in Available Principal described in clauses
(iii) to (vi) above); provided that if such Available Principal is
insufficient, the 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) to (vii) above)
and second, if such amounts are insufficient, from monies on deposit in
the Reserve Fund.
(d) On each Distribution Date, the Relevant Trustee shall deposit any
Excess Amounts into the Reserve Fund until the amount on deposit therein equals
the Specified Reserve Fund Balance and shall distribute the remainder, if any,
to the Seller.
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(e) Except with respect to the final payment upon retirement of a Note or
Certificate, the Servicer shall on each Distribution Date instruct the Relevant
Trustee to distribute to each Securityholder of record on the related Record
Date by check mailed to such Securityholder at the address of such Holder
appearing in the Certificate Register or Note Register, as the case may be, (or,
if DTC, its nominee or a Clearing Agency is the relevant Holder, by wire
transfer of immediately available funds or pursuant to other arrangements), the
amount to be distributed to such Securityholder pursuant to such Holder's Note
or Certificate. With respect to the final payment upon retirement of a Note or
Certificate, the Servicer shall on the relevant final Distribution Date instruct
the Relevant Trustee to distribute the amounts due thereon only upon delivery
for cancellation of the certificate representing such Note or Certificate in
accordance with the Indenture or the Trust Agreement, as the case may be.
SECTION 5.07 Reserve Fund.
(a) (i) In order to effectuate the subordination provided for herein
and to assure that sufficient amounts to make required distributions to
Noteholders and Certificateholders will be available, the Servicer shall
establish and maintain with the Relevant Trustee a trust account: the
"Reserve Fund" which will include the money and other property deposited
and held therein pursuant to Section 5.06(d) and this Section. Except as
otherwise provided in this Agreement, the Reserve Fund shall be a
segregated trust account initially established and maintained as set forth
in Section 4.01.
(ii) On or prior to the Closing Date, the Seller shall deposit an
amount equal to the Reserve Fund Initial Deposit into the Reserve Fund.
The Seller hereby acknowledges that the Reserve Fund Initial Deposit (and
any investment earnings thereon) are assets of the Owner Trust Estate or
the Trust Estate, as the case may be, subject to the Seller's right to
amounts released therefrom as being in excess of the Specified Reserve
Fund Balance on any Distribution Date or upon the termination of the
trusts established under the Trust Agreement and the Indenture, and the
Seller hereby agrees to treat the same as the assets (and earnings) of the
Issuer for federal income tax and all other purposes. On each Distribution
Date, Excess Amounts will be deposited into the Reserve Fund by the
Relevant Trustee to the extent set forth in Section 5.06(d).
(iii) In order to give effect to the subordination provided for
herein and to assure availability of the amounts maintained in the Reserve
Fund, the Seller hereby sells, conveys and transfers to the Relevant
Trustee, as collateral agent, and its successors and assigns, the Reserve
Fund Initial Deposit and all proceeds thereof and hereby pledges to the
Relevant Trustee as collateral agent, and its successors and assigns, all
other amounts deposited in or credited to the Reserve Fund from time to
time under this Agreement, all earnings and distributions thereon and
proceeds thereof (other than the amounts to be released to the Seller as
described in clause (ii) above) subject, however, to the limitations set
forth below, and solely for the purpose of securing and providing for
payment of the Noteholders' Distributable Amounts and Certificateholders'
Distributable Amounts, together with any Interest Carryover Shortfalls and
Principal Carryover Shortfalls, in accordance with Section 5.06 and this
Section to have and to hold all the aforesaid property, rights and
privileges unto the Relevant Trustee, its successors and assigns, in trust
for the uses and purposes, and subject to the terms and provisions, set
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forth in this Section. The Issuer and the Owner Trustee hereby acknowledge
such transfer and accept the trusts hereunder, and the Issuer and the
Owner Trustee will not execute any Indenture unless the related Indenture
Trustee thereunder acknowledges such transfer and accepts such trusts, and
each of them shall hold and distribute the Reserve Fund in accordance with
the terms and provisions of this Section.
(b) Consistent with the limited purposes for which such trusts are
granted, on each Distribution Date the amount on deposit in the Reserve Fund
shall be available for, and applied to make, distributions as provided in
Section 4.06. In addition, on each Distribution Date on which the amount on
deposit in the Reserve Fund (after giving effect to all deposits thereto or
withdrawals therefrom on such Distribution Date) is greater than the Specified
Reserve Fund Balance, the Trustee will distribute any remaining amounts to the
Seller in its capacity as Owner without regard to its holding or beneficial
ownership of any Certificates. Upon any such distribution to the Seller, the
Issuer, Owner Trustee, Certificateholders, Indenture Trustee and Noteholders
will have no further rights in, or claims to, such amounts.
(c) Amounts held in the Reserve Fund shall be invested in the manner
specified in Section 5.01(b). Such investments shall not be sold or disposed of
prior to their maturity. All such investments shall be made in the name of the
Relevant Trustee, its Financial Intermediary or its nominee, in either case as
collateral agent, and all income and gain realized thereon shall be solely for
the benefit of the Seller and shall be payable by the Relevant Trustee to the
Seller in its capacity as Owner without regard to its holding or beneficial
ownership of any Certificates on each Distribution Date. Realized losses, if
any, on investment of the Reserve Fund shall be charged first against
undistributed investment earnings attributable to the Reserve Fund and then
against the Reserve Fund.
(d) Effective upon Delivery of the Reserve Fund property in the form of
Physical Property, book-entry securities or uncertificated securities, the
Issuer or the Relevant Trustee, as the case may be, shall be deemed to have
purchased such Reserve Fund property for value, in good faith and without notice
of any adverse claim thereto.
(e) Each of the Seller and the Servicer agrees to take or cause to be
taken such further actions, to execute, deliver and file or cause to be
executed, delivered and filed such further documents and instruments (including,
without limitation, any UCC financing statements or this Agreement) as may be
determined to be necessary, in an Opinion of Counsel to the Seller delivered to
the Relevant Trustee, in order to perfect the interests created by this Section
and otherwise fully to effectuate the purposes, terms and conditions of this
Section. The Seller and/or the Servicer, as the case may be, shall:
(i) promptly execute, deliver and file any financing statements,
amendments, continuation statements, assignments, certificates and other
documents with respect to such interests and perform all such other acts
as may be necessary in order to perfect or to maintain the perfection of
the security interest of the Issuer or the Relevant Trustee, as the case
may be; and
(ii) make the necessary filings of financing statements or
amendments thereto within ten Business Days after the occurrence of any of
the following: (1) any change in
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their respective corporate names or any trade names, (2) any change in the
location of their respective chief executive offices or principal places
of business and (3) any merger or consolidation or other change in their
respective identities or corporate structures; and shall promptly notify
the Relevant Trustee of any such filings.
(f) Neither the Owner Trustee nor the Indenture Trustee shall enter into
any subordination or intercreditor agreement with respect to the Reserve Fund.
(g) Upon termination of the trusts created pursuant to the Indenture and
the Trust Agreement, any amounts on deposit in the Reserve Fund, after payment
of all amounts due to the Noteholders and Certificateholders, shall be paid to
the Seller in its capacity as Owner without regard to its holding or beneficial
ownership of any Certificates.
[SECTION 5.08 Yield Maintenance Account.
(a) (1) In order to assure that sufficient amounts to make required
distributions of interest to Noteholders and Certificateholders will be
available, the Servicer shall establish and maintain with the Relevant
Trustee a trust account (the "Yield Maintenance Account") which will
include the money and other property deposited and held therein pursuant
to this Section. Except as otherwise provided in this Agreement, the Yield
Maintenance Account shall be a segregated trust account initially
established and maintained as set forth in Section 4.01.
(ii) On or prior to the Closing Date, the Seller [or third party]
shall deposit an amount equal to the Yield Maintenance Account Initial
Deposit into the Yield Maintenance Account. In addition, on each
subsequent Distribution Date, the Seller [or third party] shall, pursuant
to the Yield Maintenance Agreement [and the Collateral Security Agreement]
deposit an amount equal to the Additional Yield Maintenance Amount into
the Yield Maintenance Account. The Yield Maintenance Account shall be held
by the Relevant Trustee for the benefit of the Holders of the Notes and
Certificates. [The [Seller hereby acknowledges][third party, pursuant to
the Collateral Security Agreement and the Yield Maintenance Agreement],
has acknowledged] that the Yield Maintenance Account Initial Deposit, all
Additional Yield Maintenance Amounts and any investment earnings thereon
are owned directly by it, and the [Seller hereby agrees][third party has
thereunder agreed] to treat the same as its assets (and earnings) for
federal income tax and all other purposes.]
(iii) In order to assure availability of the amounts maintained in
the Yield Maintenance Account, the [third party has, pursuant to the Yield
Maintenance Agreement and the Collateral Security Agreement, sold,
conveyed and transferred] [Seller hereby sells, conveys and transfers] to
the Relevant Trustee, as collateral agent, and its successors and assigns,
the Yield Maintenance Account Initial Deposit and all proceeds thereof and
[pursuant to the Yield Maintenance Agreement and the Collateral Security
Agreement has pledged][hereby pledges] to the Relevant Trustee as
collateral agent, and its successors and assigns, all other amounts
deposited in or credited to the Yield Maintenance Account from time to
time under the Yield Maintenance Agreement, all earnings and distributions
thereon and proceeds thereof (other than proceeds constituting
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interest or net investment earnings attributable to investment of the
Yield Maintenance Account at the direction of the Servicer) subject,
however, to the limitations set forth below, and solely for the purpose of
securing and providing for payment of each Yield Maintenance Deposit
comprising a portion of Available Interest to be distributed in accordance
with Section 5.07 and this Section on any Distribution Date, to have and
to hold all the aforesaid property, rights and privileges unto the
Relevant Trustee, its successors and assigns, in trust for the uses and
purposes, and subject to the terms and provisions, set forth in this
Section. The Issuer and the Owner Trustee hereby acknowledge such transfer
and accept the trusts hereunder, and the Issuer and the Owner Trustee will
not execute any Indenture unless the related Indenture Trustee thereunder
acknowledges such transfer and accepts such trusts, and each of them shall
hold and distribute the Reserve Fund in accordance with the terms and
provisions of this Section.
(b) Consistent with the limited purposes for which such trust are granted,
on each Distribution Date the amount of the related Yield Maintenance Deposit,
to the extent amounts on deposit in the Yield Maintenance Account are sufficient
therefor, shall be available for distribution as provided in Section 5.06 (in
determining and distributing Available Interest) and, on each Distribution Date,
if the amount on deposit in the Yield Maintenance Account (after giving effect
to all deposits thereto or withdrawals therefrom on such Distribution Date) is
greater than the Required Yield Maintenance Amount, the Indenture Trustee will
distribute any remaining amounts to the Seller [or third party]. Upon any such
distribution to the Seller [or third party], the Issuer, Owner Trustee,
Certificateholders, Indenture Trustee and Noteholders will have no further
rights in, or claims to, such amounts.
(c) Amounts held in the Yield Maintenance Account shall be invested in the
manner specified in Section 5.01(b). Such investments shall not be sold or
disposed of prior to their maturity. All such investments shall be made in the
name of the Relevant Trustee, its Financial Intermediary or its nominee, in
either case as collateral agent, and all income and gain realized thereon shall
be solely for the benefit of the Seller (in its capacity as Owner without regard
to its holding or beneficial ownership of any Certificates) [or third party] and
shall be payable by the Relevant Trustee to the Seller (in its capacity as Owner
without regard to its holding or beneficial ownership of any Certificates) [or
third party] on each Distribution Date. Realized losses, if any, on investment
of the Yield Maintenance Account shall be charged first against undistributed
investment earnings attributable to the Yield Maintenance Account and then
against the Yield Maintenance Account.
(d) Effective upon Delivery of the Yield Maintenance Account property in
the form of Physical Property, book-entry securities or uncertificated
securities, the Issuer or the Relevant Trustee, as the case may be, shall be
deemed to have purchased such Yield Maintenance Account property for value, in
good faith and without notice of any adverse claim thereto.
(e) Each of the Seller and the Servicer agrees [and, pursuant to the Yield
Maintenance Agreement and the Collateral Security Agreement, the third party has
agreed,] to take or cause to be taken such further actions, to execute, deliver
and file or cause to be executed, delivered and filed such further documents and
instruments (including, without limitation, any UCC financing statements or this
Agreement) as may be determined to be necessary, in an Opinion of Counsel to
[the Seller] [the third party] delivered to the Relevant Trustee, in order to
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perfect the interests created by this Section and otherwise fully to effectuate
the purposes, terms and conditions of this Section. The [third party][Seller
and/or the Servicer], as the case may be, shall:
(i) promptly execute, deliver and file any financing statements,
amendments, continuation statements, assignments, certificates and other
documents with respect to such interests and perform all such other acts
as may be necessary in order to perfect or to maintain the perfection of
the security interest of the Issuer or the Relevant Trustee, as the case
may be; and
(ii) make the necessary filings of financing statements or
amendments thereto within ten Business Days after the occurrence of any of
the following: (1) any change in their respective corporate names or any
trade names, (2) any change in the location of their respective chief
executive offices or principal places of business and (3) any merger or
consolidation or other change in their respective identities or corporate
structures; and shall promptly notify the Relevant Trustee of any such
filings.
(f) Neither the Owner Trustee nor the Indenture Trustee shall enter into
any subordination or intercreditor agreement with respect to the Yield
Maintenance Account.
(g) Upon termination of the trusts created pursuant to the Indenture and
the Trust Agreement, any amounts on deposit in the Yield Maintenance Account,
after payment of all amounts due to the Noteholders and Certificateholders,
shall be paid to the [Seller in its capacity as Owner without regard to its
holding or beneficial ownership of any Certificates][third party].]
SECTION 5.09 Statements to Certificateholders and Noteholders.
(a) On each Distribution Date, the Servicer shall provide to the Indenture
Trustee (with a copy to the Rating Agencies and each Paying Agent) for the
Indenture Trustee to forward to each Noteholder of record as of the most recent
Record Date and to the Owner Trustee (with a copy to each Paying Agent) for the
Owner Trustee to forward to each Certificateholder of record as of the most
recent Record Date a statement substantially in the form of Exhibit XXX, setting
forth at least the following information as to the Notes and the Certificates to
the extent applicable:
(i) the amount of the distribution allocable to principal in respect
of each Class of Notes and the Certificates;
(ii) the amount of the distribution allocable to interest on or with
respect to each Class of Notes and the Certificates;
(iii) the Pool Balance as of the close of business on the last day
of the preceding Collection Period;
(iv) the aggregate Outstanding Amount, the Outstanding Amount with
respect to each Class of Notes and the Note Pool Factor, and the
Certificate Balance and the Certificate Pool Factor, in each case after
giving effect to all payments in respect of principal on such Distribution
Date;
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(v) the amount of the Servicing Fee paid to the Servicer with
respect to the related Collection Period;
(vi) the Class A-1 Rate, the Class A-2 Rate, the Class A-3 Rate and
the Pass Through Rate for the Interest Period relating to the succeeding
Distribution Date;
(vii) the Interest Carryover Shortfall and Principal Carryover
Shortfall, if any, with respect to each Class of Notes, and the
Certificateholders' Interest Carryover Shortfall and the
Certificateholders' Principal Carryover Shortfall, if any, and the change
in such amounts from the preceding Distribution Date;
(viii) the aggregate amount of Payments Ahead on deposit in the
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 Reserve Fund and the Yield Maintenance
Account on such Distribution Date, after giving effect to changes thereto
on such Distribution Date and the amount of such changes.
SECTION 5.10 Net Deposits. As an administrative convenience, the Seller,
the Servicer, the Owner Trustee and the Indenture Trustee may make any
remittances pursuant to this Article net of amounts to be distributed by the
applicable recipient to such remitting party. Nonetheless, each such party shall
account to the Owner Trustee, the Indenture Trustee, the Noteholders and the
Certificateholders for all of the above described remittances and distributions
as if all deposits, distributions and transfers were made individually.
ARTICLE VI
The Seller
SECTION 6.01 Representations of Seller. The Seller makes the following
representations on which the Issuer is deemed to have relied in acquiring the
Receivables. The representations speak as of the execution and delivery of this
Agreement and as of the Closing Date, and shall survive the sale of the
Receivables to the Issuer and the pledge thereof to the Indenture Trustee
pursuant to the Indenture.
(a) Organization and Good Standing. The Seller shall have been duly
organized and shall be validly existing as a corporation in good standing under
the laws of the State of California, with corporate power and authority to own
its properties and to conduct its business as such properties shall be currently
owned and such business is presently conducted, and had at all relevant times,
and shall now have, corporate power, authority and legal right to acquire, own
and sell the Receivables.
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(b) Due Qualification. The Seller shall be duly qualified to do business
as a foreign corporation in good standing, and shall have obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or lease of
property or the conduct of its business shall require such qualifications.
(c) Power and Authority. The Seller shall have the corporate power and
authority to execute and deliver this Agreement and to carry out its terms; the
Seller shall have full corporate power and authority to sell and assign the
property to be sold and assigned to and deposited as part of the Owner Trust
Estate or Trust Estate, as the case may be, and shall have duly authorized such
sale and assignment to the Issuer, the Owner Trustee or the Indenture Trustee,
as the case may be, by all necessary corporate action; and the execution,
delivery and performance of this Agreement shall have been duly authorized by
the Seller by all necessary corporate action.
(d) Valid Sale; Binding Obligations. This Agreement shall evidence a valid
sale, transfer and assignment of the Receivables, enforceable against creditors
of and purchasers from the Seller; and shall constitute a legal, valid and
binding obligation of the Seller enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights generally or by
general equity principles.
(e) No Violation. The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms of this Agreement shall not
conflict with, result in any breach of any of the terms and provisions of, nor
constitute (with or without notice or lapse of time) a default under, the
articles of incorporation or bylaws of the Seller or any indenture, agreement or
other instrument to which the Seller is a party or by which it shall be bound;
nor result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement or other instrument
(other than this Agreement), nor violate any law or, to the best of the Seller's
knowledge, any order, rule or regulation applicable to the Seller of any court
or of any federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Seller or its
properties which breach, default, conflict, lien or violation would have a
material adverse effect on the earnings, business affairs or business prospects
of the Seller.
(f) No Proceedings. There is no action, suit or proceeding before or by
any court or governmental agency or body, domestic or foreign, now pending, or
to the Seller's knowledge, threatened, against or affecting the Seller: (i)
asserting the invalidity of this Agreement, the Trust Agreement, the Indenture,
the Certificates or the Notes, (ii) seeking to prevent the issuance of the
Certificates or the Notes or the consummation of any of the transactions
contemplated by this Agreement, the Trust Agreement or the Indenture, (iii)
seeking any determination or ruling that might materially and adversely affect
the performance by the Seller of its obligations under, or the validity or
enforceability of, this Agreement, the Trust Agreement, the Indenture, the
Certificates or the Notes, or (iv) relating to the Seller and which might
adversely affect the federal income tax attributes of the Issuer, the
Certificates or the Notes.
SECTION 6.02 Corporate Existence. During the term of this Agreement, the
Seller will keep in full force and effect its existence, rights and franchises
as a corporation under the laws of the jurisdiction of its incorporation and
will obtain and preserve its qualification to do business in
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each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of the Basic Documents and each other
instrument or agreement necessary or appropriate to the proper administration of
this Agreement and the transactions contemplated hereby. In addition, all
transactions and dealings between the Seller and its Affiliates (including the
Issuer) will be conducted on an arm's length basis.
SECTION 6.03 Liability of Seller; Indemnities. The Seller shall be liable
in accordance herewith only to the extent of the obligations specifically
undertaken by the Seller under this Agreement:
(a) The Seller shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Indenture Trustee, the Issuer and the Servicer and
any of the officers, directors, employees and agents of the Issuer, the
Owner Trustee and the Indenture Trustee from and against any taxes that
may at any time be asserted against any such Person with respect to the
transactions contemplated herein and in the Basic Documents, including any
sales, gross receipts, general corporation, tangible personal property,
privilege or license taxes (but, in the case of the Issuer, not including
any taxes asserted with respect to, and as of the date of, the sale of the
Receivables to the Issuer or the issuance and original sale of the
Certificates and the Notes, or asserted with respect to ownership of the
Receivables or federal or other income taxes arising out of distributions
on the Certificates or the Notes) and costs and expenses in defending
against the same.
(b) The Seller shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Indenture Trustee, the Issuer, the
Certificateholders and the Noteholders and any of the officers, directors,
employees and agents of the Issuer, the Owner Trustee and the Indenture
Trustee from and against any loss, liability or expense incurred by reason
of (i) the Seller's willful misfeasance, bad faith or negligence in the
performance of its duties under this Agreement, or by reason of reckless
disregard of its obligations and duties under this Agreement and (ii) the
Seller's or the Issuer's violation of federal or state securities laws in
connection with the offering and sale of the Notes and the Certificates.
(c) The Seller shall indemnify, defend and hold harmless the Owner
Trustee and the Indenture Trustee and their respective officers,
directors, employees and agents from and against all costs, expenses,
losses, claims, damages and liabilities arising out of or incurred in
connection with the acceptance or performance of the trusts and duties
herein and in the Trust Agreement contained, in the case of the Owner
Trustee, and in the Indenture contained, in the case of the Indenture
Trustee, except to the extent that such cost, expense, loss, claim, damage
or liability: (i) in the case of the Owner Trustee, shall be due to the
willful misfeasance, bad faith or negligence (except for errors in
judgment) of the Owner Trustee or, in the case of the Indenture Trustee,
shall be due to the willful misfeasance, bad faith or negligence (except
for errors in judgment) of the Indenture Trustee; or (ii) in the case of
the Owner Trustee, shall arise from the breach by the Owner Trustee of any
of its representations or warranties set forth in Section 7.03 of the
Trust Agreement.
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(d) The Seller shall pay any and all taxes levied or assessed upon
all or any part of the Owner Trust Estate.
Indemnification under this Section shall survive the resignation or
removal of the Owner Trustee or the Indenture Trustee and the termination of
this Agreement and shall include reasonable fees and expenses of counsel and
expenses of litigation. If the Seller shall have made any indemnity payments
pursuant to this Section and the Person to or on behalf of whom such payments
are made thereafter shall collect any of such amounts from others, such Person
shall promptly repay such amounts to the Seller, without interest.
SECTION 6.04 Merger or Consolidation of, or Assumption of the Obligations
of, Seller. Any Person (a) into which the Seller may be merged or consolidated,
(b) which may result from any merger or consolidation to which the Seller shall
be a party or (c) which may succeed to the properties and assets of the Seller
substantially as a whole, which person in any of the foregoing cases executes an
agreement of assumption to perform every obligation of the Seller under this
Agreement, shall be the successor to the Seller hereunder without the execution
or filing of any document or any further act by any of the parties to this
Agreement; provided, however, that (i) immediately after giving effect to such
transaction, no representation or warranty made pursuant to Section 3.01 shall
have been breached and no Servicer Default, and no event that, after notice or
lapse of time, or both, would become a Servicer Default shall have occurred and
be continuing, (ii) the Seller shall have delivered to the Owner Trustee and the
Indenture Trustee an Officers' Certificate and an Opinion of Counsel each
stating that such consolidation, merger or succession and such agreement of
assumption comply with this Section and that all conditions precedent, if any,
provided for in this Agreement relating to such transaction have been complied
with, (iii) the Seller shall have given 10 days' written notice to each Rating
Agency of its intent or expectation to enter such transaction and neither Rating
Agency shall have notified the Seller, the Owner Trustee or the Indenture
Trustee that such transaction might or would cause it to reduce, withdraw or
modify its then current rating of any Class of Notes or the Certificates and
(iv) the Seller shall have delivered to the Owner Trustee and the Indenture
Trustee an Opinion of Counsel either (A) stating that, in the opinion of such
counsel, all financing statements and continuation statements and amendments
thereto have been executed and filed that are necessary fully to preserve and
protect the interest of the Owner Trustee and Indenture Trustee, respectively,
in the Receivables and reciting the details of such filings, or (B) stating
that, in the opinion of such counsel, no such action shall be necessary to
preserve and protect such interests. Notwithstanding anything herein to the
contrary, the execution of the foregoing agreement of assumption and compliance
with clauses (i), (ii), (iii) and (iv) above shall be conditions to the
consummation of the transactions referred to in clauses (a), (b) or (c) above.
SECTION 6.05 Limitation on Liability of Seller and Others. The Seller and
any director, officer, employee or agent of the Seller may rely in good faith on
the advice of counsel or on any document of any kind, prima facie properly
executed and submitted by any Person respecting any matters arising hereunder.
The Seller shall not be under any obligation to appear in, prosecute or defend
any legal action that shall not be incidental to its obligations under this
Agreement and that in its opinion may involve it in any expense or liability.
SECTION 6.06 Seller May Own Certificates or Notes. The Seller and any
Affiliate thereof may in its individual or any other capacity become the owner
or pledgee of Certificates
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or Notes with the same rights as it would have if it were not the Seller or an
Affiliate thereof, except as expressly provided in any Basic Document.
ARTICLE VII
The Servicer
SECTION 7.01 Representations of Servicer. The Servicer makes the following
representations on which the Issuer is deemed to have relied in acquiring the
Receivables. The representations speak as of the execution and delivery of this
Agreement and as of the Closing Date, in the case of the Initial Receivables, if
any, and as of the applicable Subsequent Transfer Date, in the case of the
Subsequent Receivables, and shall survive the sale of the Receivables to the
Issuer and the pledge thereof to the Indenture Trustee pursuant to the
Indenture.
(a) Organization and Good Standing. The Servicer shall have been duly
organized and shall be validly existing as a corporation in good standing under
the laws of the State of California, with corporate power and authority to own
its properties and to conduct its business as such properties shall be currently
owned and such business is presently conducted, and had at all relevant times,
and shall now have, corporate power, authority and legal right to acquire, own
and sell the Receivables.
(b) Due Qualification. The Servicer shall be duly qualified to do business
as a foreign corporation in good standing, and shall have obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or lease of
property or the conduct of its business shall require such qualifications.
(c) Power and Authority. The Servicer shall have the corporate power and
authority to execute and deliver this Agreement and to carry out its terms; and
the execution, delivery and performance of this Agreement have been duly
authorized by the Servicer by all necessary corporate action.
(d) Binding Obligations. This Agreement shall constitute a legal, valid
and binding obligation of the Servicer enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights generally or by
general equity principles.
(e) No Violation. The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms of this Agreement shall not
conflict with, result in any breach of any of the terms and provisions of, nor
constitute (with or without notice or lapse of time) a default under, the
articles of incorporation or bylaws of the Servicer or any indenture, agreement
or other instrument to which the Servicer is a party or by which it shall be
bound; nor result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement or other
instrument (other than this Agreement), nor violate any law or, to the best of
the Servicer's knowledge, any order, rule or regulation applicable to the
Servicer of any court or of any federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over the
Servicer or its properties which
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breach, default, conflict, lien or violation would have a material adverse
effect on the earnings, business affairs or business prospects of the Servicer.
(f) No Proceedings. There is no action, suit or proceeding before or by
any court or governmental agency or body, domestic or foreign, now pending, or
to the Servicer's knowledge, threatened, against or affecting the Servicer: (i)
asserting the invalidity of this Agreement, the Trust Agreement, the Indenture,
the Certificates or the Notes, (ii) seeking to prevent the issuance of the
Certificates or the Notes or the consummation of any of the transactions
contemplated by this Agreement, the Trust Agreement or the Indenture, (iii)
seeking any determination or ruling that might materially and adversely affect
the performance by the Servicer of its obligations under, or the validity or
enforceability of, this Agreement, the Trust Agreement, the Indenture, the
Certificates or the Notes, or (iv) relating to the Servicer and which might
adversely affect the federal income tax attributes of the Issuer, the
Certificates or the Notes.
(g) No Insolvent Obligors. As of the Cutoff Date, no Obligor on a
Receivable is indicated on the related Receivable File to be the subject of a
bankruptcy proceeding.
SECTION 7.02 Indemnities of Servicer. The Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer under this Agreement:
(a) The Servicer shall indemnify, defend and hold harmless the Seller, the
Issuer, the Owner Trustee, the Indenture Trustee, the Noteholders and the
Certificateholders and any of the officers, directors, employees and agents of
the Seller, the Issuer, the Owner Trustee and the Indenture Trustee from and
against any and all costs, expenses, losses, damages, claims and liabilities,
arising out of or resulting from the use, ownership or operation by the Servicer
or any Affiliate thereof of a Financed Vehicle.
(b) The Servicer shall indemnify, defend and hold harmless the Seller, the
Issuer, the Owner Trustee, the Indenture Trustee, the Certificateholders and the
Noteholders and any of the officers, directors, employees and agents of the
Seller, the Issuer, the Owner Trustee and the Indenture Trustee from and against
any and all costs, expenses, losses, claims, damages and liabilities to the
extent that such cost, expense, loss, claim, damage or liability arose out of,
or is imposed upon any such Person through, the negligence, willful misfeasance
or bad faith of the Servicer in the performance of its duties under this
Agreement or by reason of reckless disregard of its obligations and duties under
this Agreement.
For purposes of this Section, in the event of the termination of the
rights and obligations of TMCC (or any successor thereto pursuant to Section
7.03) as Servicer pursuant to Section 8.01, or a resignation by such Servicer
pursuant to this Agreement, such Servicer shall be deemed to be the Servicer
pending appointment of a successor Servicer (other than the Indenture Trustee)
pursuant to Section 8.02.
Indemnification under this Section shall survive the resignation or
removal of the Owner Trustee or the Indenture Trustee or the termination of this
Agreement and shall include reasonable fees and expenses of counsel and expenses
of litigation. If the Servicer shall have made any indemnity payments pursuant
to this Section and the Person to or on behalf of whom
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such payments are made thereafter collects any of such amounts from others, such
Person shall promptly repay such amounts to the Servicer, without interest.
SECTION 7.03 Merger or Consolidation of, or Assumption of the Obligations
of, Servicer. Any corporation (i) into which the Servicer may be merged or
consolidated, (ii) which may result from any merger, conversion or consolidation
to which the Servicer shall be a party or (iii) which may succeed to all or
substantially all of the business of the Servicer, which corporation in any of
the foregoing cases executes an agreement of assumption to perform every
obligation of the Servicer under this Agreement, shall be the successor to the
Servicer under this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties to this; provided, however,
that (i) immediately after giving effect to such transaction, no Servicer
Default, and no event which, after notice or lapse of time, or both, would
become a Servicer Default shall have occurred and be continuing, (ii) the
Servicer shall have delivered to the Owner Trustee and the Indenture Trustee an
Officers' Certificate and an Opinion of Counsel each stating that such
consolidation, merger or succession and such agreement of assumption comply with
this Section and that all conditions precedent provided for in this Agreement
relating to such transaction have been complied with, (iii)the Servicer shall
have given 10 days' written notice to each Rating Agency of its intent or
expectation to enter such transaction and neither Rating Agency shall have
notified the Seller, the Owner Trustee or the Indenture Trustee that such
trasaction might or would cause it to reduce, withdraw or modify its then
current rating of any Class of Notes or the Certificates, (iv) immediately after
giving effect to such transaction, the successor to the Servicer shall become
the Administrator under the Administration Agreement in accordance with Section
8 of such Agreement and (v) the Servicer shall have delivered to the Owner
Trustee and the Indenture Trustee an Opinion of Counsel stating that, in the
opinion of such counsel, either (A) all financing statements and continuation
statements and amendments thereto have been executed and filed that are
necessary fully to preserve and protect the interest of the Owner Trustee and
the Indenture Trustee, respectively, in the Receivables and reciting the details
of such filings or (B) no such action shall be necessary to preserve and protect
such interests. Notwithstanding anything herein to the contrary, the execution
of the foregoing agreement of assumption and compliance with clauses (i), (ii),
(iii), (iv) and (v) above shall be conditions to the consummation of the
transactions referred to in clause (a), (b) or (c) above.
SECTION 7.04 Limitation on Liability of Servicer and Others. Neither the
Servicer nor any of the directors, officers, employees or agents of the Servicer
shall be under any liability to the Seller, the Issuer, the Noteholders or the
Certificateholders, except as provided under this Agreement, for any action
taken or for refraining from the taking of any action pursuant to this Agreement
or for errors in judgment; provided, however, that this provision shall not
protect the Servicer or any such person against any liability that would
otherwise be imposed by reason of willful misfeasance, bad faith or negligence
in the performance of duties or by reason of reckless disregard of obligations
and duties under this Agreement. The Servicer and any director, officer,
employee or agent of the Servicer may rely in good faith on any document of any
kind prima facie properly executed and submitted by any person respecting any
matters arising under this Agreement.
Except as provided in this Agreement, the Servicer shall not be under any
obligation to appear in, prosecute or defend any legal action that shall not be
incidental to its duties to service the Receivables in accordance with this
Agreement, and that in its opinion may involve it in any
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expense or liability; provided, however, that the Servicer may undertake any
reasonable action that it may deem necessary or desirable in respect of the
Basic Documents and the rights and duties of the parties to the Basic Documents
and the interests of the Certificateholders under this Agreement and the
Noteholders under the Indenture.
SECTION 7.05 TMCC Not To Resign as Servicer. Subject to the provisions of
Section 7.03, TMCC shall not resign from the obligations and duties hereby
imposed on it as Servicer under this Agreement except upon a determination that
the performance of its duties under this Agreement shall no longer be
permissible under applicable law. Notice of any such determination permitting
the resignation of TMCC shall be communicated to the Owner Trustee, the
Indenture Trustee and each Rating Agency at the earliest practicable time (and,
if such communication is not in writing, shall be confirmed in writing at the
earliest practicable time) and any such determination shall be evidenced by an
Opinion of Counsel to such effect delivered to the Owner Trustee and the
Indenture Trustee concurrently with or promptly after such notice. No such
resignation shall become effective until the Indenture Trustee or a successor
Servicer shall have (i) assumed the responsibilities and obligations of TMCC in
accordance with Section 8.02 and (ii) become the Administrator under the
Administration Agreement in accordance with Section 8 of such Agreement.
ARTICLE VIII
Default
SECTION 8.01 Servicer Default. If any one of the following events (a
"Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer (or the Seller, so long as TMCC is
the Servicer) to deliver to the Indenture Trustee for deposit in any of
the Trust Accounts any required payment or to direct the Relevant Trustee
to make any required distributions therefrom, which failure continues
unremedied for a period of three Business Days after written notice of
such failure is received (i) by the Servicer (or the Seller, so long as
TMCC is the Servicer) from the Owner Trustee or the Indenture Trustee or
after discovery of such failure by an officer of the Servicer or (ii) 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
evidencing not less than 25% of the sum of the Outstanding Amount and the
Certificate Balance, acting together as a single class;
(b) failure by the Servicer or the Seller, as the case may be, duly
to observe or to perform in any material respect any other covenants or
agreements of the Servicer or the Seller (as the case may be) set forth in
this Agreement, which failure shall materially and adversely affect the
rights of Certificateholders or Noteholders and shall continue unremedied
for a period of 90 days after the date on which written notice of such
failure is received (i) by the Servicer (or the Seller, so long as TMCC is
the Servicer) from the Owner Trustee or the Indenture Trustee or after
discovery of such failure by an officer of the Servicer or (ii) 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 evidencing
not less than 25% of the sum of the Outstanding Amount and the Certificate
Balance, acting together as a single class; or
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(c) the occurrence of an Insolvency Event with respect to the
Seller, the Servicer or the Issuer;
then, and in each and every case, so long as the Servicer Default shall not have
been remedied, either the Indenture Trustee or the Holders of Notes evidencing
not less than 51% of the Outstanding Amount of the Notes (but excluding for
purposes of such calculation and action all Securities held or beneficially
owned by TMCC, TMCRC or any of their affiliates), by notice then given in
writing to the Servicer (and to the Indenture Trustee and the Owner Trustee if
given by the Noteholders) may terminate all the rights and obligations (other
than the obligations set forth in Section 7.02 hereof) of the Servicer under
this Agreement. On or after the receipt by the Servicer of such written notice,
all authority and power of the Servicer under this Agreement, whether with
respect to the Notes, the Certificates or the Receivables or otherwise, shall,
without further action, pass to and be vested in the Indenture Trustee or such
Successor Servicer as may be appointed under Section 8.02; and, without
limitation, the Indenture Trustee and the Owner Trustee are hereby authorized
and empowered to execute and deliver, for the benefit of the predecessor
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement of the Receivables and related documents,
or otherwise. The predecessor Servicer shall cooperate with the Successor
Servicer and the Trustee in effecting the termination of the responsibilities
and rights of the predecessor Servicer under this Agreement, including, without
limitation, the transfer to the Successor Servicer for administration by it of
all cash amounts that shall at the time be held by the predecessor Servicer for
deposit, or have been deposited by the predecessor Servicer, in the Accounts or
the Reserve Fund or thereafter received with respect to the Receivables and all
Payments Ahead that shall at that time be held by the predecessor Servicer. All
reasonable costs and expenses (including attorneys' fees) incurred in connection
with transferring the Receivable Files to the Successor Servicer and amending
this Agreement to reflect such succession as Servicer pursuant to this Section
shall be paid by the predecessor Servicer upon presentation of reasonable
documentation of such costs and expenses. Notwithstanding the foregoing, in the
event the predecessor Servicer is the Trustee, the original Servicer hereunder
shall reimburse the Trustee for all reasonable costs and expenses as described
in the immediately preceding sentence. Upon receipt of notice of the occurrence
of a Servicer Default, the Owner Trustee shall give notice thereof to the Rating
Agencies.
SECTION 8.02 Appointment of Successor.
(a) Upon the Servicer's receipt of notice of termination pursuant to
Section 8.01 or the Servicer's resignation in accordance with the terms of this
Agreement, the predecessor Servicer shall continue to perform its functions as
Servicer under this Agreement, in the case of termination, only until the date
specified in such termination notice or, if no such date is specified in a
notice of termination, until receipt of such notice and, in the case of
resignation, until the later of (i) the date 45 days from the delivery to the
Owner Trustee and the Indenture Trustee of written notice of such resignation
(or written confirmation of such notice) in accordance with the terms of this
Agreement and (ii) the date upon which the predecessor Servicer shall become
unable to act as Servicer, as specified in the notice of resignation and
accompanying Opinion of Counsel. In the event of the Servicer's termination
hereunder, the Indenture Trustee shall appoint a Successor Servicer, and the
Successor Servicer shall accept its
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appointment (including its appointment as Administrator under the Administration
Agreement as set forth in Section 8.02(b)) by a written assumption in form
acceptable to the Owner Trustee and the Indenture Trustee. In the event that a
Successor Servicer has not been appointed at the time when the predecessor
Servicer has ceased to act as Servicer in accordance with this Section, the
Indenture Trustee without further action shall automatically be appointed the
Successor Servicer and the Indenture Trustee shall be entitled to the Servicing
Fee. Notwithstanding the above, the Indenture Trustee shall, if it shall be
legally unable so to act, appoint or petition a court of competent jurisdiction
to appoint any established institution having a net worth of not less than
$50,000,000 and whose regular business shall include the servicing of automotive
receivables, as the successor to the Servicer under this Agreement.
(b) Upon appointment, the successor Servicer (including the Indenture
Trustee acting as successor Servicer) shall (i) be the successor in all respects
to the predecessor Servicer and shall be subject to all the responsibilities,
duties and liabilities arising thereafter relating thereto placed on the
predecessor Servicer and shall be entitled to the Servicing Fee and all the
rights granted to the predecessor Servicer by the terms and provisions of this
Agreement and (ii) become the Administrator under the Administration Agreement
in accordance with Section 8 of such Agreement.
SECTION 8.03 Repayment of Advances. If the Servicer shall resign or be
terminated, the Servicer shall be entitled to receive reimbursement for
Outstanding Advances pursuant to Sections 5.03 and 5.04 with respect to all
Advances previously made thereby.
SECTION 8.04 Notification to Noteholders and Certificateholders. Upon any
termination of, or appointment of a successor to, the Servicer pursuant to this
Article VIII, the Owner Trustee shall give prompt written notice thereof to
Certificateholders, and the Indenture Trustee shall give prompt written notice
thereof to Noteholders and the Rating Agencies.
SECTION 8.05 Waiver of Past Defaults. The Holders of Notes evidencing not
less than 51% of the Outstanding Amount of the Notes, or, in the case of any
default which does not adversely affect the Indenture Trustee or the
Noteholders, the Holders of Certificates evidencing not less than 51% of the
Certificate Balance, in each case excluding for purposes of such calculation and
action all Securities held or beneficially owned by TMCC, TMCRC or any of their
affiliates, may, on behalf of all Noteholders and Certificateholders, waive in
writing any default by the Servicer in the performance of its obligations
hereunder and its consequences, except a default in making any required deposits
to or payments from any of the Trust Accounts in accordance with this Agreement.
Upon any such waiver of a past default, such default shall cease to exist, and
any Servicer Default arising therefrom shall be deemed to have been remedied for
every purpose of this Agreement. No such waiver shall extend to any subsequent
or other default or impair any right consequent thereto.
ARTICLE IX
Termination
SECTION 9.01 Optional Purchase of All Receivables.
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(a) On each Distribution Date following the last day of a Collection
Period as of which the Pool Balance shall be less than the Optional Purchase
Percentage (expressed as a seven-digit decimal figure) multiplied by the
Original Pool Balance, the Seller or the Servicer, or any successor to the
Servicer, shall have the option to purchase the corpus of the Owner Trust
Estate; provided that the option to purchase provided in this Section shall not
be exercised if the final distribution to Noteholders of any Class or
Certificateholders would be less than the aggregate Outstanding Amount or
Certificate Balance, as the case may be, plus the sum of (i) the Noteholders'
Interest Distributable Amount for the related Distribution Date, (ii) any unpaid
Interest Carryover Shortfall with respect to any Class of Notes, (iii) the
Certificateholders' Interest Distributable Amount for the related Distribution
Date and (iv) any unpaid Certificateholders' Interest Carryover Shortfall. To
exercise such option, the Seller or the Servicer, or any successor to the
Servicer, as the case may be, shall notify the Owner Trustee and the Indenture
Trustee in writing, no later than the tenth day of the month preceding the month
in which the Distribution Date as of which such purchase is to be effected and
shall, on or before the Distribution Date on which such purchase is to occur,
deposit pursuant to Section 5.06 in the Collection Account an amount equal to
the aggregate Administrative Purchase Payments for the Receivables (including
Defaulted Receivables), plus the appraised value of any other property held by
the Trust (less liquidation expenses to be incurred in connection with the
recovery thereof), such value to be determined by an appraiser mutually agreed
upon by the Seller, the Servicer, the Owner Trustee and the Indenture Trustee,
and shall succeed to all interests in and to the Trust Estate and the Owner
Trust Estate. Notwithstanding the foregoing, if Moody's is a Rating Agency, the
Seller or the Servicer, as the case may be, may not effect any such purchase if
the long-term unsecured debt obligations of the related entity are rated less
than ___, unless the Owner Trustee and Indenture Trustee shall have received an
Opinion of Counsel that such purchase will not constitute a fraudulent
conveyance, or Moody's is otherwise satisfied, as evidenced by written notice
from Moody's to the Owner Trustee and the Indenture Trustee. Upon such deposit
of the amount necessary to purchase the corpus of the Owner Trust Estate, the
Servicer shall for all purposes of this Agreement be deemed to have released all
claims for reimbursement of Outstanding Advances made in respect of the
Receivables. The payment shall be made in the manner specified in Section 5.06,
and shall be distributed pursuant to Section 5.07. In the event that both the
Seller and the Servicer, or any successor to the Servicer, elect to purchase the
Receivables pursuant to this Section, the party first notifying the Owner
Trustee (based on the Owner Trustee's receipt of such notice) shall be permitted
to purchase the Receivables.
(b) Notice of any such purchase of the Owner Trust Estate shall be given
by the Owner Trustee and the Indenture Trustee to each Securityholder as soon as
practicable after their receipt of notice thereof from the Seller or the
Servicer, as the case may be.
(c) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the Noteholders hereunder other
than Section 5.07(b) and the Owner Trustee will succeed to the rights of, and
assume the obligations of, the Indenture Trustee pursuant to this Agreement.
(d) Upon the repurchase of any Receivable by the Seller or the Servicer,
pursuant to any provision hereof, the Owner Trustee on behalf of the Issuer and
the Certificateholders, and the Indenture Trustee on behalf of the Noteholders,
shall, without further action, be deemed to
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transfer, assign, set-over and otherwise convey to the Seller, all right, title
and interest of the Owner Trustee on behalf of the Issuer in, to and under such
repurchased Receivable, all monies due or to become due with respect thereto and
all proceeds thereof and the other property conveyed to the Issuer hereunder
pursuant to Section 2.01 with respect to such Receivable, and all security and
any documents relating thereto, such assignment being an assignment outright and
not for security; and the Seller or the Servicer, as applicable, shall thereupon
own each such Receivable, and all such related security and documents, free of
any further obligation to the Issuer, the Owner Trustee, the Certificateholders,
the Indenture Trustee or the Noteholders with respect thereto.. The Owner
Trustee and Indenture Trustee shall execute such documents and instruments of
transfer and assignment and take such other actions as shall be reasonably
requested by the Seller or the Servicer, as the case may be, to effect the
conveyance of such Receivable pursuant to this Section. If in any enforcement
suit or legal proceeding it is held that the Seller or Servicer may not enforce
a repurchased Receivable on the ground that it is not a real party in interest
or a holder entitled to enforce the Receivable, the Owner Trustee on behalf of
the Issuer and the Certificateholders, and the Indenture Trustee on behalf of
the Noteholders shall, at the written direction and expense of the Seller or
Servicer, as the case may be, take such reasonable steps as the Owner Trustee or
Indenture Trustee deems necessary to enforce the Receivable, including bringing
suit in the name or names of the Issuer, Certificateholders or Noteholders.
ARTICLE X
Miscellaneous
SECTION 10.01 Amendment. This Agreement may be amended by the Seller, the
Servicer and the Issuer, with the consent of the Indenture Trustee, but without
the consent of any of the Noteholders or the Certificateholders, to cure any
ambiguity, to correct or supplement any provisions in this Agreement or for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions in this Agreement or of modifying in any manner the rights of
the Noteholders or the Certificateholders; provided, however, that such action
shall not, as evidenced by an Opinion of Counsel delivered to the Owner Trustee
and the Indenture Trustee, adversely affect in any material respect the
interests of any Noteholder or Certificateholder.
This Agreement may also be amended from time to time by the Seller, the
Servicer and the Issuer, with the consent of the Indenture Trustee, the consent
of the Holders of Notes evidencing not less than a 51% of the Outstanding Amount
of the Notes, or in the case of any amendment which does not adversely affect
the interests of the Indenture Trustee or such Noteholders, the holders of the
Certificates evidencing not less than 51% of the Certificate Balance (but
excluding for purposes all Certificates held or beneficially owned by TMCC,
TMCRC or any of their affiliates), for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of this Agreement
or of modifying in any manner the rights of such Noteholders or
Certificateholders; provided, however, that no such amendment may (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 any Noteholders or Certificateholders or
(ii) reduce the aforesaid percentage of
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the Notes or Certificates required to consent to any such amendment, without the
consent of the holders of all the outstanding Notes or Certificates, as the case
may be.
Promptly after the execution of any such amendment or consent, the Owner
Trustee shall furnish written notification of the substance of such amendment or
consent to each Certificateholder, the Indenture Trustee and each of the Rating
Agencies.
It shall not be necessary for the consent of Certificateholders or
Noteholders pursuant to this Section to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof.
Prior to the execution of any amendment to this Agreement, the Owner
Trustee and the Indenture Trustee shall be entitled to receive and rely upon an
Opinion of Counsel stating that the execution of such amendment is authorized or
permitted by this Agreement and the Opinion of Counsel referred to in Section
10.02. The Owner Trustee and the Indenture Trustee may, but shall not be
obligated to, enter into any such amendment which affects the Owner Trustee's or
the Indenture Trustee's, as applicable, own rights, duties or immunities under
this Agreement or otherwise.
SECTION 10.02 Protection of Title to Trust.
(a) The Seller shall execute and file such financing statements and cause
to be executed and filed such continuation statements, all in such manner and in
such places as may be required by law fully to preserve, maintain and protect
the interest of the Issuer and of the Indenture Trustee in the Receivables and
in the proceeds thereof. The Seller shall deliver (or cause to be delivered) to
the Owner Trustee and the Indenture Trustee file-stamped copies of, or filing
receipts for, any document filed as provided above, as soon as available
following such filing.
(b) Neither the Seller nor the Servicer shall change its name, identity or
corporate structure in any manner that would, could or might make any financing
statement or continuation statement filed in accordance with paragraph (a) above
seriously misleading within the meaning of Section 9-402(7) of the UCC, unless
it shall have given the Owner Trustee and the Indenture Trustee at least five
days' prior written notice thereof and shall have promptly filed appropriate
amendments to all previously filed financing statements or continuation
statements.
(c) Each of the Seller and the Servicer shall have an obligation to give
the Owner Trustee and the Indenture Trustee at least 60 days' prior written
notice of any relocation of its principal executive office if, as a result of
such relocation, the applicable provisions of the UCC would require the filing
of any amendment of any previously filed financing or continuation statement or
of any new financing statement and shall promptly file any such amendment or new
financing statement. The Servicer shall at all times maintain each office from
which it shall service Receivables, and its principal executive office, within
the United States of America.
(d) The Servicer shall maintain accounts and records as to each Receivable
accurately and in sufficient detail to permit (i) the reader thereof to know at
any time the status of such Receivable, including payments and recoveries made
and payments owing (and the nature of each) and (ii) reconciliation between
payments or recoveries on (or with respect to) each
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Receivable and the amounts from time to time deposited in the Collection Account
in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Receivables, the Servicer's
master computer records (including any backup archives) that refer to any
Receivable shall indicate clearly the interest of the Issuer, the Owner Trustee
and the Indenture Trustee in such Receivable and that such Receivable is owned
by the Issuer and has been pledged to the Indenture Trustee. Indication of these
respective interests in a Receivable shall be deleted from or modified on the
Servicer's computer systems when, and only when, the related Receivable shall
have been paid in full or repurchased.
(f) If at any time the Seller or the Servicer shall propose to sell, grant
a security interest in, or otherwise transfer any interest in automotive
receivables to, any prospective purchaser, lender or other transferee, the
Servicer shall give to such prospective purchaser, lender or other transferee
computer tapes, records or printouts (including any restored from backup
archives) that, if they shall refer in any manner whatsoever to any Receivable,
shall indicate clearly that such Receivable has been sold and is owned by the
Issuer and has been pledged to the Indenture Trustee.
(g) The Servicer shall permit the Indenture Trustee and its agents at any
time during normal business hours to inspect, audit and make copies of and
abstracts from the Servicer's records regarding any Receivable.
(h) Upon request, the Servicer shall furnish to the Owner Trustee or to
the Indenture Trustee, within five Business Days, a list of all Receivables (by
contract number and name of Obligor) then held as part of the Trust, together
with a reconciliation of such list to the Schedule of Receivables and to each of
the Servicer's Certificates furnished before such request indicating removal of
Receivables from the Trust.
(i) The Servicer shall deliver to the Owner Trustee and the Indenture
Trustee:
(A) promptly after the execution and delivery of this Agreement and,
if required pursuant to Section 10.01, of each amendment hereto and on
certain Distribution Dates as required by Sections 2.02(b)(2)(iv) and
2.05(b)(2)(x), an Opinion of Counsel stating that, in the opinion of such
counsel, either (A) all financing statements and continuation statements
have been executed and filed that are necessary fully to preserve and
protect the interest of the Owner Trustee and the Indenture Trustee in the
Receivables, and reciting the details of such filings or referring to
prior Opinions of Counsel in which such details are given, or (B) no such
action shall be necessary to preserve and protect such interest, in each
case also specifying any action necessary (as of the date of such opinion)
to be taken in the following year to preserve and protect such interest;
and
(B) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months
after the first Cutoff Date, an Opinion of Counsel, dated as of a date
during such 90-day period, stating that, in the opinion of such counsel,
either (A) all financing statements and continuation statements
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have been executed and filed that are necessary fully to preserve and
protect the interest of the Owner Trustee and the Indenture Trustee in the
Receivables, and reciting the details of such filings or referring to
prior Opinions of Counsel in which such details are given, or (B) no such
action shall be necessary to preserve and protect such interest.
(j) The Seller shall, to the extent required by applicable law, cause the
Certificates and the Notes to be registered with the Commission pursuant to
Section 12(b) or Section 12(g) of the Exchange Act within the time periods
specified in such sections.
SECTION 10.03 Notices. All demands, notices, communications and
instructions upon or to the Seller, the Servicer, the Owner Trustee, the
Indenture Trustee or the Rating Agencies under this Agreement shall be in
writing, personally delivered or mailed by certified mail, return receipt
requested, and shall be deemed to have been duly given upon receipt (a) in the
case of the Seller, to Toyota Motor Credit Corporation, 19001 S. Western Avenue,
Torrance, Californian 90509, Attention of Secretary ((310) 718-4800), (b) in the
case of the Servicer, to Toyota Motor Credit Receivables Corporation, 19300
Gramercy Place, North Building, Attention of Secretary ((310) 787-1310), (c) in
the case of the Issuer or the Owner Trustee, at the Corporate Trust Office (as
defined in the Trust Agreement), (d) in the case of the Indenture Trustee, at
the Corporate Trust Office, (e) in the case of Moody's, to Moody's Investors
Service, Inc., ABS Monitoring Department, 99 Church Street, New York, New York
10007, (f) in the case of Standard & Poor's, to Standard & Poor's Ratings Group,
26 Broadway (15th Floor), New York, New York 10004, Attention of Asset Backed
Surveillance Department, (g) in the case of Fitch Investors Service, Inc., to
One State Street Plaza, New York, N.Y. 10004, and (h) in the case of Duff &
Phelps Credit Rating Company, to 55 E. Monroe Street (35th Floor), Chicago,
Illinois 60603; or, as to each of the foregoing, at such other address as shall
be designated by written notice to the other parties.
SECTION 10.04 Assignment by the Seller or the Servicer. Notwithstanding
anything to the contrary contained herein, except as provided in the remainder
of this Section, as provided in Sections 6.04 and 7.03 herein and as provided in
the provisions of this Agreement concerning the resignation of the Servicer,
this Agreement may not be assigned by the Seller or the Servicer. [Insert any
caveats necessary regarding third party rights under the Yield Maintenance
agreement or the Collateral Security Agreement.]
SECTION 10.05 Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Seller, the Servicer, the Issuer,
the Owner Trustee, the Certificateholders, the Indenture Trustee and the
Noteholders, and nothing in this Agreement, whether express or implied, shall be
construed to give to any other Person any legal or equitable right, remedy or
claim in the Owner Trust Estate or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein.
SECTION 10.06 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
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SECTION 10.07 Separate Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 10.08 Headings. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
SECTION 10.09 Governing Law. This Agreement shall be construed in
accordance with the laws of the State of California, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
SECTION 10.10 Assignment by Issuer. The Seller hereby acknowledges and
consents to any mortgage, pledge, assignment and grant of a security interest by
the Issuer to the Indenture Trustee pursuant to the Indenture for the benefit of
the Noteholders of all right, title and interest of the Issuer in, to and under
the Receivables and/or the assignment of any or all of the Issuer's rights and
obligations hereunder to the Indenture Trustee.
SECTION 10.11 Nonpetition Covenants.
(a) Notwithstanding any prior termination of this Agreement, the Servicer
and the Seller shall not, prior to the date which is one year and one day after
the termination of this Agreement with respect to the Issuer, acquiesce,
petition or otherwise invoke or cause the Issuer to invoke the process of any
court or government authority for the purpose of commencing or sustaining a case
against the Issuer under any federal or state bankruptcy, insolvency or similar
law, or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Issuer or any substantial part of
its property, or ordering the winding up or liquidation of the affairs of the
Issuer.
(b) Notwithstanding any prior termination of this Agreement, the Servicer
shall not, prior to the date which is one year and one day after the termination
of this Agreement with respect to the Seller, acquiesce, petition or otherwise
invoke or cause the Seller to invoke the process of any court or government
authority for the purpose of commencing or sustaining a case against the Seller
under any federal or state bankruptcy, insolvency or similar law, appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Seller or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Seller.
SECTION 10.12 Limitation of Liability of Owner Trustee and Indenture
Trustee.
(a) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by not in its individual capacity but solely in
its capacity as Owner Trustee of the Issuer and in no event shall in its
individual capacity or, except as expressly provided in the Trust Agreement, as
beneficial owner of the Issuer have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer hereunder
or in any of the certificates, notices or agreements delivered pursuant hereto,
as to all of which recourse shall be had solely to the assets of the Issuer. For
all purposes of this Agreement, in the performance of
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its duties or obligations hereunder or in the performance of any duties or
obligations of the Issuer hereunder, the Owner Trustee shall be subject to, and
entitled to the benefits of, the terms and provisions of Articles VI, VII and
VIII of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by , not in its individual capacity but solely as
Indenture Trustee and in no event shall have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Issuer hereunder or in any of the certificates, notices or agreements delivered
pursuant hereto, as to all of which recourse shall be had solely to the assets
of the Issuer.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
TOYOTA AUTO RECEIVABLES OWNERS
TRUST 199_-_
By:______________________________________,
not in its individual capacity but
solely as Owner Trustee on behalf
of the Trust
By:_______________________________________
Name:_____________________________________
Title:____________________________________
TOYOTA MOTOR CREDIT RECEIVABLES
CORPORATION, Seller
By:_______________________________________
Name:_____________________________________
Title:____________________________________
TOYOTA MOTOR CREDIT CORPORATION, Servicer
By:_______________________________________
Name:_____________________________________
Title:____________________________________
ACKNOWLEDGED AND ACCEPTED AS OF
THE DAY AND YEAR FIRST ABOVE WRITTEN:
_________________________, not in its
individual capacity but solely as
Indenture Trustee
By:_______________________________________
Name:_____________________________________
Title:____________________________________
71
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SCHEDULE A
Schedule of Receivables
(To be Delivered to the Trust at Closing and supplemented
on each Subsequent Transfer Date for Subsequent Receivables)
72
<PAGE>
EXHIBIT A
Form of Servicer's Certificate
TOYOTA AUTO RECEIVABLES _______
GRANTOR TRUST
Servicer's Certificate
For the Month of __,__
Principal and Interest Collections
- ----------------------------------
Beginning Pool Balance (1)$
Beginning Pool Factor [(1)/--] (2)
Principal Collected (3)$
Interest Collected (4)$
Less: Beginning Purchased Accrued
Interest Repaid (5)
Plus: Purchased Accrued Interest --
End of Collection Period (6)
Net decrease/(increase) in Purchased
Accrued Interest [(5)-(6)] (7)$
Plus: Non-Reimbursable Interest Payment (8)
Total Interest Received
[(4)-(5)+(6)+(8)] (9)$
Additional Deposits (4.07)
(i) Repurchase Amounts (10)
(ii) Liquidation Proceeds (11)
Total Additional Deposits (12)$
Total Available Funds [(3)+(9)+(12)] (13)
73
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TOYOTA AUTO RECEIVABLES __ GRANTOR TRUST
Servicer's Certificate
For the Month of ,
Distributions:
- --------------
Class A Class B Total
------- ------- -----
Class Percentage ______% ______% 100.00%
Pool Factor _______ _______ _______
____ Beginning Pool Balance _______ _______ _______
____ Ending Pool Balance _______ _______ _______
Collected Principal (3) _______ _______ _______
Collected Interest (9) _______ _______ _______
Defaulted Receivables (13) _______ _______ _______
Servicing Fee [(____/12)x(1)] (_____) (_____) (_____)
Total Available Funds _______ _______ _______
Payments to Certificateholders
- ------------------------------
Monthly Principal Payment [(15)-(16) _______ _______ _______
Interest Distributable Amount
[(15)x(____%/12] _______ _______ _______
Total payments to Certificateholders _______ _______ _______
Amount due Class B but paid to
Class A (subordination) _______ _______ _______
Class A Interest Carryover Shortfall _______ _______ _______
Class B Interest Carryover Shortfall _______ _______ _______
Class A Principal Carryover Shortfall _______ _______ _______
Class B Principal Carryover Shortfall _______ _______ _______
Amounts to be paid to the Seller _______ _______ _______
Payments from/(to) the
Reserve Fund _______ _______ _______
Reserve Fund Balance _______ _______ _______
Specified Reserve Fund Balance _______ _______ _______
Yield Maintenance Amount _______ _______ _______
Required Yield Maintenance Amount _______ _______ _______
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TOYOTA AUTO RECEIVABLES __ GRANTOR TRUST
Servicer's Certificate
For the Month of _,_
Reconciliation of the Reserve Fund
- ----------------------------------
Beginning Reserve Fund Balance (45)$
Reserve Fund Prior to Payments to Seller (48)$
Specified Reserve Fund Balance: (1)$_____
Required Amount (49)
Amount of Excess Spread released [(48)-(49)] (50)
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TOYOTA AUTO RECEIVABLES GRANTOR TRUST
Servicer's Certificate
For the Month of _,_
Delinquent Accounts
- -------------------
Period of Delinquency Units Amount Percent of Pool
30 - 59 days $ 0.00%
60 - 89 days 0.00%
90 days or more 0.00% (A)
----- ----- -----
Total $____ 0.00%
-----
Repossession Inventory _____ $____ ____(B)
Delinquency Percentage
(less than 1.5%?)
[(A)+(B)/(1)] ____%
Realized Loss Analysis (Section 5.02)
- ----------------------
Quarter
Month Month Month Total
Realized Losses/(Recoveries) (X) $ $ $ $
Beginning Pool Balance (mils) (Y) $ $ $ $
Realized Loss Percentage
(less than 1.5%?) [(X)/(Y)) *4] _____%
Realized Losses Since Inception $_____
Change in Realized Losses $_____
Proceeds from Insurance and Dealer Repurchases
- ----------------------------------------------
Proceeds received during the month from
physical damage insurance $_____
Proceeds received during the month from Dealer
repurchase obligations relating to Defaulted
Receivables $_____
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POOLING AND SERVICING AGREEMENT
TOYOTA MOTOR CREDIT RECEIVABLES CORPORATION,
Seller
and
TOYOTA MOTOR CREDIT CORPORATION,
Servicer
and
---------------------------------,
Trustee
Dated as of -
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions...................................................1
ARTICLE II
CREATION OF TRUST; CONVEYANCE OF RECEIVABLES;
CUSTODY OF RECEIVABLE FILES
SECTION 2.1 Creation of Trust; Conveyance of Receivables.................20
SECTION 2.2 Custody of Receivable Files..................................21
SECTION 2.3 Acceptance by Trustee........................................22
SECTION 2.4 Representations and Warranties of Seller as to the
Receivables .................................................22
SECTION 2.5 Repurchase of Receivables Upon Breach........................25
SECTION 2.6 Duties of Servicer as Custodian..............................26
SECTION 2.7 Instructions; Authority to Act...............................27
SECTION 2.8 Indemnification of Custodian.................................27
SECTION 2.9 Effective Period and Termination.............................27
SECTION 2.10 Usage of Terms...............................................28
SECTION 2.11 Cutoff Date and Record Date..................................28
SECTION 2.12 Section References...........................................28
SECTION 2.13 Agent for Service............................................28
ARTICLE III
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 3.1 Duties of Servicer...........................................28
SECTION 3.2 Collection of Receivable Payments............................29
SECTION 3.3 Rebates on Full Prepayments..................................29
SECTION 3.4 Realization Upon Receivables.................................30
SECTION 3.5 Maintenance of Physical Damage Insurance Policies............30
SECTION 3.6 Maintenance of Security Interests in Financed Vehicles.......30
SECTION 3.7 Covenants of Servicer........................................31
SECTION 3.8 Purchase of Receivables Upon Breach..........................31
SECTION 3.9 Total Servicing Fee; Payment of Certain Expenses by
Servicer ....................................................31
SECTION 3.10 Servicer's Certificate.......................................32
SECTION 3.11 Annual Statement as to Compliance; Notice of Default.........32
SECTION 3.12 Annual Accountants' Report...................................32
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<PAGE>
TABLE OF CONTENTS
(continued)
Page
SECTION 3.13 Access to Certain Documentation and Information
Regarding Receivables........................................33
SECTION 3.14 Amendments to Schedule of Receivables........................33
SECTION 3.15 Reports to Certificateholders and Rating Agencies............33
ARTICLE IV
ACCOUNTS; DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS
SECTION 4.1 Accounts.....................................................34
SECTION 4.2 Collections..................................................35
SECTION 4.3 Application of Collections...................................36
SECTION 4.4 Advances.....................................................36
SECTION 4.5 Additional Deposits..........................................38
SECTION 4.6 Distributions................................................38
SECTION 4.7 Reserve Fund.................................................40
SECTION 4.8 Yield Maintenance Account....................................43
SECTION 4.9 Net Deposits.................................................47
SECTION 4.10 Statements to Certificateholders.............................47
ARTICLE V
THE CERTIFICATES
SECTION 5.1 The Certificates.............................................48
SECTION 5.2 Authentication and Delivery of Certificates..................48
SECTION 5.3 Registration of Transfer and Exchange of Certificates........49
SECTION 5.4 Registration of Transfer and Exchange of Class B
Certificates ................................................50
SECTION 5.5 Mutilated, Destroyed, Lost or Stolen Certificates............51
SECTION 5.6 Persons Deemed Owners........................................52
SECTION 5.7 Access to List of Certificateholders' Names and Addresses....52
SECTION 5.8 Maintenance of Office or Agency..............................52
SECTION 5.9 Temporary Certificates.......................................52
SECTION 5.10 Book-Entry Certificates......................................53
SECTION 5.11 Notices to Clearing Agency...................................53
SECTION 5.12 Definitive Certificates......................................54
ARTICLE VI
THE SELLER
SECTION 6.1 Representations of Seller....................................54
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<PAGE>
TABLE OF CONTENTS
(continued)
Page
SECTION 6.2 Liability of Seller; Indemnities.............................55
SECTION 6.3 Merger or Consolidation of, or Assumption of the
Obligations of, Seller; Certain Limitations..................55
SECTION 6.4 Limitation on Liability of SellerandOthers...................58
SECTION 6.5 Seller May Own Certificates..................................58
SECTION 6.6 No Transfer..................................................58
ARTICLE VII
THE SERVICER
SECTION 7.1 Representations of Servicer..................................58
SECTION 7.2 Liability of Servicer; Indemnities...........................60
SECTION 7.3 Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer.................................61
SECTION 7.4 Limitation on Liability of Servicer and Others...............61
SECTION 7.5 Servicer Not to Resign.......................................62
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1 Events of Default............................................62
SECTION 8.2 Consequences of an Event of Default..........................63
SECTION 8.3 Trustee to Act; Appointment of Successor Servicer............64
SECTION 8.4 Notification to Certificateholders...........................64
SECTION 8.5 Waiver of Past Defaults......................................64
SECTION 8.6 Repayment of Advances........................................65
ARTICLE IX
THE TRUSTEE
SECTION 9.1 Duties of Trustee............................................65
SECTION 9.2 Trustee's Certificate........................................66
SECTION 9.3 Trustee's Assignment of Administrative Receivables and
Warranty Receivables.........................................67
SECTION 9.4 Certain Matters Affecting the Trustee........................67
SECTION 9.5 Limitation on Trustee's Liability............................68
SECTION 9.6 Trustee May Own Certificates.................................70
SECTION 9.7 Trustee's Fees and Expenses..................................70
SECTION 9.8 Indemnity of Trustee and Successor Servicer..................70
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<PAGE>
TABLE OF CONTENTS
(continued)
Page
SECTION 9.9 Eligibility Requirements for Trustee.........................70
SECTION 9.10 Resignation or Removal of Trustee............................71
SECTION 9.11 Successor Trustee............................................71
SECTION 9.12 Merger or Consolidation of Trustee...........................72
SECTION 9.13 Appointment of Co-Trustee or Separate Trustee................72
SECTION 9.14 Representations and Warranties of Trustee....................73
SECTION 9.15 Tax Returns..................................................74
SECTION 9.16 Trustee May Enforce Claims Without Possession of
Certificates ................................................74
SECTION 9.17 Suit for Enforcement.........................................75
SECTION 9.18 Rights of Certificateholders to Direct Trustee...............75
ARTICLE X
TERMINATION
SECTION 10.1 Termination of the Trust.....................................75
SECTION 10.2 Optional Purchase of All Receivables.........................76
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.1 Amendment....................................................77
SECTION 11.2 Protection of Title to Trust.................................78
SECTION 11.3 Limitation on Rights of Certificateholders...................80
SECTION 11.4 Governing Law................................................81
SECTION 11.5 Notices......................................................81
SECTION 11.6 Severability of Provisions...................................81
SECTION 11.7 Assignment...................................................81
SECTION 11.8 Certificates Nonassessable and Fully Paid....................82
SECTION 11.9 No Petition..................................................82
EXHIBIT A Form of Servicer's Certificate Pursuant to Section 3.10 A-1
EXHIBIT B Trustee's Certificate Pursuant to Section 9.02 or 9.03 B-1
EXHIBIT C Form of Class A Certificate C-1
EXHIBIT D Form of Class B Certificate D-1
EXHIBIT E Form of Transferee Certificate E-1
EXHIBIT F Form of Letter of Representations F-1
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ARTICLE I
DEFINITIONS
1.01 Definitions. Except as otherwise provided in this Agreement, whenever
used herein, the following words and phrases, unless the context otherwise
requires, shall have the following meanings:
"Accounts" means the Collection Account, the Payahead Account, the Yield
Maintenance Account, if any, and the Reserve Fund.
"Actual Payment" means, with respect to a Receivable and a Collection
Period, all payments received by the Servicer from or for the account of the
related Obligor on such Receivable during such Collection Period (and, in the
case of the first Collection Period, all payments received by the Servicer from
or for the account of such Obligor since the Cutoff Date through the last day of
such Collection Period), net of any Supplemental Servicing Fees attributable to
such Receivable. Actual Payments do not include Applied Payments Ahead.
"Actuarial Receivable" means any Receivable which provides for the
allocation of payments according to the "actuarial" method.
"Additional Agreements" shall have the meaning specified in Section
6.03(b)(ii)(C).
"Additional Trusts" shall have the meaning specified in Section
6.03(b)(ii)(C).
"Additional Yield Maintenance Amount" means, with respect to any
Distribution Date, the amount, if any, by which the Required Yield Maintenance
Amount exceeds the Yield Maintenance Amount.
"Administrative Purchase Payment" means, with respect to a Distribution
Date and to (1) an Administrative Receivable which is a Precomputed Receivable
purchased by the Seller or the Servicer as of the end of the related Collection
Period, (a) the sum of (i) all Scheduled Payments on such Receivable due after
the last day of such Collection Period (plus any portion of a Yield Maintenance
Amount attributable to such Receivable), (ii) an amount equal to any
reimbursement of Outstanding Advances made pursuant to Section 4.04(b) with
respect to such Receivable (plus all Outstanding Advances made in respect of
such Receivable, in the case of an Administrative Purchase Payment made by the
Seller) and (iii) all past due Scheduled Payments for which an Advance has not
been made, minus (b) any Rebate and (2) an Administrative Receivable which is a
Simple Interest Receivable purchased by the Seller or the Servicer during the
related Collection Period, the sum of (a) the unpaid principal balance owed by
the Obligor in respect of such Receivable plus (b) interest on such unpaid
principal balance at a rate equal to the sum of the [Class B Pass Through Rate]
[or specify other rate] and the Servicing Fee Rate to the last day in the
related Collection Period.
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"Administrative Receivable" means a Receivable which the Servicer is
required to purchase pursuant to Section 3.02 or 3.08 or which the Seller or the
Servicer has elected to purchase pursuant to Section 10.02.
"Advance" means a Precomputed Advance or a Simple Interest Advance.
"Affiliate" means, with respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified 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 term "controlling" and
"controlled" have meanings correlative to the foregoing.
"Aggregate Net Losses" means, with respect to a Collection Period, an
amount equal to the aggregate Principal Balance of all Receivables that became
Defaulted Receivables during such Collection Period minus all Net Liquidation
Proceeds collected during such Collection Period with respect to Defaulted
Receivables.
"Agreement" means this Pooling and Servicing Agreement with respect to the
Toyota Auto Receivables Grantor Trust 199_-_ among Toyota Motor Credit
Receivables Corporation, Toyota Motor Credit Corporation and the Trustee, as the
same may be amended or supplemented from time to time.
"Amount Financed" in respect of a Receivable means the aggregate amount
advanced under such Receivable toward the purchase price of the related Financed
Vehicle and any related costs, including but not limited to accessories,
insurance premiums, service and warranty contracts and other items customarily
financed as part of retail automobile and light duty truck installment sale
contracts.
"Annual Percentage Rate" or "APR" of a Receivable means the annual rate of
finance charges specified in such Receivable.
"Applicants" shall have the meaning specified in Section 5.07.
"Applied Payment Ahead" means, with respect to a Precomputed Receivable
and a Collection Period as to which (a) the Actual Payment is less than the
Scheduled Payment and (b) a Deferred Prepayment is on deposit in the Payahead
Account, an amount equal to the lesser of (i) such Deferred Prepayment and (ii)
the amount by which the Scheduled Payment exceeds the Actual Payment.
"Automobile Receivables" shall have the meaning specified in Section
6.03(b)(ii)(A).
"Available Interest" means, with respect to any Distribution Date, the
total of the following amounts allocable to interest received by the Servicer on
or in respect of the Receivables during the related Collection Period (in the
case of the Precomputed Receivables, computed in accordance with the actuarial
method and in the case of the Simple Interest
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Receivables, computed in accordance with the simple interest method): (a) the
sum of the interest component of (i) all collections on or in respect of all
Receivables other than Defaulted Receivables (including Scheduled Surplus,
Prepayment Surplus and the interest portion of Applied Payments Ahead, but
otherwise excluding Payments Ahead), (ii) the Yield Maintenance Deposit, if
applicable, (iii) all Net Liquidation Proceeds, (iv) all Advances made by the
Servicer, (v) all Warranty Purchase Payments and (vi) all Administrative
Purchase Payments, less (b) the sum of all (i) amounts received on or in respect
of a particular Receivable (other than a Defaulted Receivable) to the extent of
the aggregate Outstanding Interest Advances in respect of such Receivable and
(ii) Net Liquidation Proceeds with respect to a particular Receivable to the
extent of the aggregate Outstanding Interest Advances in respect of such
Receivable.
"Available Principal" means, with respect to any Distribution Date, the
total of the following amounts allocable to principal received by the Servicer
on or in respect of the Receivables during the related Collection Period (in the
case of the Precomputed Receivables, computed in accordance with the actuarial
method and in the case of the Simple Interest Receivables, computed in
accordance with the simple interest method): (a) the sum of the principal
component of all (i) collections on or in respect of all Receivables other than
Defaulted Receivables (including the principal portion of Applied Payments Ahead
but otherwise excluding Payments Ahead), (ii) Net Liquidation Proceeds, (iii)
Advances made by the Servicer, (iv) Warranty Purchase Payments, and (v)
Administrative Purchase Payments, less (b) an amount equal to all (i) amounts
received on or in respect of a particular Receivable (other than a Defaulted
Receivable) to the extent of the aggregate Outstanding Principal Advances in
respect of such Receivable, and (ii) Net Liquidation Proceeds with respect to a
particular Receivable to the extent of the aggregate Outstanding Principal
Advances in respect of such Receivable.
"Basic Servicing Fee" means the fee payable to the Servicer on each
Distribution Date, calculated pursuant to Section 3.09, for services rendered
during the related Collection Period, which shall be equal to one-twelfth of the
Servicing Fee Rate multiplied by the Pool Balance as of the first day of the
related Collection Period or, with respect to the first Distribution Date, the
Original Pool Balance.
"Book-Entry Certificates" means a beneficial interest in the Certificates,
ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in Section 5.10.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which banking institutions in New York, New York or Los Angeles, California are
authorized or obligated by law, executive order or governmental decree to be
closed.
"Certificate Register" means the register maintained pursuant to Section
5.03.
"Certificateholder" or "Holder" means the Person in whose name a
Certificate is registered in the Certificate Register, except that, solely for
the purposes of giving certain consents, waivers, requests or demands pursuant
to this Agreement, the interest evidenced by any Class A Certificate registered
in the name of the Seller or the Servicer, or any Person actually known to a
Responsible Officer of the Trustee to be controlling, controlled by or under
common
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control with the Seller or the Servicer, shall not be taken into account in
determining whether the requisite percentage necessary to effect any such
consent, waiver, request or demand shall have been obtained.
"Certificate Owner" means, with respect to a Book-Entry Certificate, the
Person who is the owner of such Book-Entry Certificate, as reflected on the
books of the Clearing Agency, or on the books of a Person maintaining an account
with such Clearing Agency (directly or as an indirect participant, in either
case in accordance with the rules of such Clearing Agency) and shall mean, with
respect to a Definitive Certificate, the related Certificateholder.
"Certificate Registrar" means the Trustee unless a successor thereto is
appointed pursuant to Section 5.03. The Certificate Registrar initially
designates its offices at -, as its offices for purposes of Section 5.08.
"Certificates" means the Class A Certificates and the Class B
Certificates.
"Charge-off Rate" means, with respect to a Collection Period, the
percentage equivalent of a fraction, the numerator of which is the Aggregate Net
Losses for such Collection Period, and the denominator of which is the average
of (i) the aggregate Principal Balance on the last day of the Collection Period
immediately preceding such Collection Period and (ii) the aggregate Principal
Balance on the last day of such Collection Period; such quotient is then
multiplied by twelve to arrive at an annualized percentage.
"Class" means all Certificates whose form is identical except for
variation in denomination, principal amount or owner.
"Class A Certificate" means one of the Certificates executed by the
Trustee on behalf of the Trust and authenticated by the Trustee in substantially
the form attached hereto as Exhibit C.
"Class A Certificate Balance" shall initially equal the Original Class A
Certificate Balance and, on any date thereafter, shall equal the Original Class
A Certificate Balance, reduced by all amounts previously distributed to Class A
Certificateholders and allocable to principal; provided, however, that on any
Distribution Date on or after the Distribution Date on which the Class B
Certificate Balance is reduced to zero, after all required distributions and
deposits have been made, the Class A Certificate Balance will be reduced by the
amount, if any, necessary to cause the Class A Certificate Balance to equal the
Pool Balance as of the last day of the related Collection period.
"Class A Distributable Amount" means, with respect to any Distribution
Date, the sum of the Class A Principal Distributable Amount and the Class A
Interest Distributable Amount.
"Class A Interest Carryover Shortfall" means, with respect to any
Distribution Date, the excess, if any, of (i) the Class A Interest Distributable
Amount for such Distribution Date plus any outstanding Class A Interest
Carryover Shortfall from the immediately preceding Distribution Date plus
interest on such outstanding Class A Interest Carryover Shortfall, to the extent
permitted by law, at the Class A Pass Through Rate from and including such
immediately
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preceding Distribution Date to but excluding the current Distribution Date, over
(ii) the amount of interest distributed to Class A Certificateholders on such
current Distribution Date.
"Class A Interest Distributable Amount" means, with respect to any
Distribution Date, the product of one-twelfth of the Class A Pass Through Rate
and the Class A 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
Original Class A Certificate Balance.
"Class A Pass Through Rate" means -% per annum.
"Class A Percentage" means -%.
"Class A Pool Factor" means, with respect to any Distribution Date, a
seven-digit decimal figure (rounded upwards) equal to the Class A Certificate
Balance as of such Distribution Date divided by the Original Class A Certificate
Balance.
"Class A Principal Carryover Shortfall" means, with respect to any
Distribution Date, the excess, if any, of (i) the Class A Principal
Distributable Amount plus any outstanding Class A Principal Carryover Shortfall
with respect to one or more prior Distribution Dates, over (ii) the amount of
principal distributed to Class A Certificateholders on such current Distribution
Date.
"Class A Principal Distributable Amount" means, with respect to any
Distribution Date, the sum of the Class A Percentage of the following amounts
(but not exceeding the Class A Certificate Balance as of such Distribution
Date): (i) 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, (ii) in the case of Simple Interest
Receivables, the principal portion of all Scheduled Payments actually received
during the related Collection Period, (iii) the principal portion of all
Prepayments received during such Collection Period (to the extent such amounts
are not included in clauses (i) and (ii) above), and (iv) the Principal Balance
of each Receivable that became an Administrative Receivable, a Warranty
Receivable or a Defaulted Receivable during such Collection Period (to the
extent such amounts are not included in clauses (i), (ii) and (iii) above). In
addition, with respect to the Final Scheduled Distribution Date or the
Distribution Date upon which all remaining Receivables are to be purchased
pursuant to Section 10.02, the Class A Principal Distributable Amount will
include the portion of such amount necessary (after giving effect to the other
amounts to be distributed to the Class A Certificateholders on such Final
Scheduled Distribution Date or Distribution Date and allocable to principal) to
reduce the Class A Certificate Balance to zero.
"Class B Certificate" means any one of the Certificates executed by the
Trustee on behalf of the Trust and authenticated by the Trustee in substantially
the form attached hereto as Exhibit D.
"Class B Certificate Balance" shall initially equal the Original Class B
Certificate Balance and, on any Distribution Date, shall equal the amount by
which the Pool Balance as of
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the last day of the related Collection Period exceeds the Class A Certificate
Balance on such Distribution Date.
"Class B Distributable Amount" means, with respect to any Distribution
Date, the sum of the Class B Principal Distributable Amount and the Class B
Interest Distributable Amount.
"Class B Interest Carryover Shortfall" means, with respect to any
Distribution Date, the excess, if any, of (i) the Class B Interest Distributable
Amount for such Distribution Date plus any outstanding Class B Interest
Carryover Shortfall from the immediately preceding Distribution Date plus
interest on such outstanding Class B Interest Carryover Shortfall, to the extent
permitted by law, at the Class B Pass Through Rate from and including such
immediately preceding Distribution Date to but excluding the current
Distribution Date, over (ii) the amount of interest distributed to Class B
Certificateholders on such current Distribution Date.
"Class B Interest Distributable Amount" means, with respect to any
Distribution Date, the product of one-twelfth of the Class B Pass Through Rate
and the Class B 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
Original Class B Certificate Balance.
"Class B Pass Through Rate" means -% per annum.
"Class B Percentage" means -%.
"Class B Principal Carryover Shortfall" means, with respect to any
Distribution Date, the excess, if any, of (i) the Class B Principal
Distributable Amount and any outstanding Class B Principal Carryover Shortfall
with respect to one or more prior Distribution Dates, over (ii) the amount of
principal distributed to Class B Certificateholders on such current Distribution
Date.
"Class B Principal Distributable Amount" means, with respect to any
Distribution Date, the sum of the Class B Percentage of the following amounts
(but not exceeding the Class B Certificate Balance as of such Distribution
Date): (i) in the case of Precomputed Receivables, the principal portion of all
Scheduled Payments due during the related Collection Period, computed in
accordance with actuarial method, (ii) in the case of Simple Interest
Receivables, the principal portion of all Scheduled Payments actually received
during the related Collection Period, (iii) the principal portion of all
Prepayments received during such Collection Period (to the extent such amounts
are not included in clauses (i) and (ii) above), and (iv) the Principal Balance
of each Receivable that became an Administrative Receivable, a Warranty
Receivable or a Defaulted Receivable during such Collection Period (to the
extent such amounts are not included in clauses (i), (ii) and (iii) above). In
addition, with respect to the Final Scheduled Distribution Date or the
Distribution Date upon which all remaining Receivables are to be purchased
pursuant to Section 10.02, the Class B Principal Distributable Amount will
include the portion of such amount necessary (after giving effect to the other
amounts to be distributed to the Class B Certificateholders on such Final
Scheduled Distribution Date or Distribution Date and allocable to principal) to
reduce the Class B Certificate Balance to zero.
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"Clearing Agency" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means -.
"Code" means the Internal Revenue Code of 1986, as amended.
["Collateral Security Agreement" means the Collateral Security Agreement
dated -, by and among the Seller, the Servicer, [third party] and the Trustee,
as collateral agent, pursuant to which [third party] has conveyed the property
and proceeds of any Yield Maintenance Account to the Trustee in trust for the
benefit of the Certificateholders as described in Section 4.08(a).]
"Collection Account" means the account or accounts designated as such and
established and maintained pursuant to Section 4.01.
"Collection Period" means, with respect to any Distribution Date, the
calendar month immediately preceding the month in which such Distribution Date
occurs (or, in the case of the first Distribution Date, the period of time since
the Cutoff Date through the end of the calendar month immediately preceding the
month in which such first Distribution Date occurs).
"Commission" means the Securities and Exchange Commission, and any
successor thereto.
"Corporate Trust Office" means the office of the Trustee at which at any
particular time its corporate trust business shall be principally administered,
which office at the date of execution of this Agreement is located at -.
"Current Receivable" means each Receivable that is not a Defaulted
Receivable or a Liquidated Receivable.
"Cutoff Date" means -.
"Dealer" means the dealer of automobile and/or light duty trucks who sold
a Financed Vehicle and who originated and assigned the Receivable relating to
such Financed Vehicle to TMCC under an existing agreement between such dealer
and TMCC.
"Dealer Recourse" means, with respect to a Receivable, all recourse rights
against the Dealer which originated the Receivable, and any successor Dealer.
"Defaulted Receivable" means a Receivable (other than an Administrative
Receivable or a Warranty Receivable) as to which (i) all or any part of a
Scheduled Payment is - or more days past due and the Servicer has not
repossessed the related Financed Vehicle, or (ii) the Servicer has, in
accordance with its customary servicing procedures, determined that eventual
payment in
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full is unlikely and 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.
"Definitive Certificates" shall have the meaning specified in Section
5.10.
"Deferred Prepayment" means, with respect to a Precomputed Receivable and
a Collection Period, the aggregate amount, if any, of Payments Ahead remitted to
the Servicer in respect of such Receivable during one or more prior Collection
Periods and currently held by the Servicer or in the Payahead Account.
"Delinquency Percentage" means, with respect to a Collection Period, the
percentage equivalent of a fraction, the numerator of which is the number of (i)
all outstanding Receivables 61 days or more delinquent (after taking into
account permitted extensions) as of the last day of such Collection Period,
determined in accordance with the Servicer's normal practices, plus (ii) all
repossessed Financed Vehicles that have not been liquidated (to the extent the
related Receivable is not otherwise reflected in clause (i) above), and the
denominator of which is the aggregate number of Current Receivables on the last
day of such Collection Period.
"Delivery" means, when used with respect to the Reserve Fund:
(i) with respect to certificated securities, bankers' acceptances,
commercial paper, negotiable certificates of deposit and other obligations
that constitute "instruments" within the meaning of Section 9-105(1)(i) of
the UCC and are susceptible of physical delivery (collectively, "Physical
Property"), transfer thereof to the Trustee or its financial intermediary
as defined in Section 8-313(4) of the UCC (a "Financial Intermediary") in
accordance with Sections 8-313(1)(a), 8-313(1)(d)(i) or 8-313(1)(g) of the
UCC, and evidence that any such Physical Property that is in registrable
form has been registered in the name of the Trustee, its Financial
Intermediary, its custodian or its nominee;
(ii) with respect to any Reserve Fund property that is a book-entry
security held through the Federal Reserve System pursuant to federal
book-entry regulations, the following procedures, all in accordance with
applicable law, including applicable federal regulations and Articles 8
and 9 of the UCC: (A) book-entry registration of such property to an
appropriate book-entry account maintained with a Federal Reserve Bank by
the Trustee or by a custodian and issuance to the Trustee or to such
custodian, as the case may be, of a deposit advice or other written
confirmation of such book-entry registration, (B) the making by any such
custodian of entries in its books and records identifying such book-entry
security held through the Federal Reserve System pursuant to federal
book-entry regulations as belonging to the Trustee and indicating that
such custodian holds such Reserve Fund property solely as agent for the
Trustee, and the making by the Trustee of entries in its books and records
establishing that it holds such Reserve Fund property solely as Trustee
pursuant to Section 4.07, and (C) such additional or alternative
procedures as may hereafter become necessary to effect complete transfer
of ownership of
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any such Reserve Fund property to the Trustee, consistent with changes in
applicable law or regulations or the interpretation thereof; and
(iii) with respect to any Reserve Fund property that is an
uncertificated security under Article 8 of the UCC and that is not
governed by clause (ii) above, registration of the transfer to, and
ownership of such Reserve Fund property by, the Trustee, its Financial
Intermediary, its custodian or its nominee by the issuer of such Reserve
Fund.
"Determination Date" means, with respect to any Distribution Date, the o
calendar day of the month in which such Distribution Date occurs or, if such day
is not a Business Day, the next succeeding Business Day.
"Distribution Date" means, with respect to a Collection Period, the o
calendar day of the following calendar month, or if such day is not a Business
Day, the next succeeding Business Day, commencing -.
"DTC" means The Depository Trust Company, and its successors.
"Duff & Phelps" means Duff & Phelps Inc., and its successors.
"Eligible Investments" means, at any time, any one or more of the
following obligations and securities:
(i) obligations of, and obligations fully guaranteed as to timely
payment of principal and interest by, the United States or any agency
thereof, provided such obligations are backed by the full faith and credit
of the United States;
(ii) general obligations of or obligations guaranteed by FNMA or any
state of the United States, the District of Columbia or the Commonwealth
of Puerto Rico then rated the highest available credit rating of each
Rating Agency for such obligations;
(iii) securities bearing interest or sold at a discount issued by
any corporation incorporated under the laws of the United States, any
state thereof, the District of Columbia or the Commonwealth of Puerto
Rico, so long as at the time of such investment or contractual commitment
providing for such investment either the long-term unsecured debt of such
corporation has the highest available rating from each Rating Agency for
such obligations or the commercial paper or other short-term debt which is
then rated has the highest available credit rating of each Rating Agency
for such obligations;
(iv) certificates of deposit issued by any depository institution or
trust company (including the Trustee) incorporated under the laws of the
United States or of any state thereof, the District of Columbia or the
Commonwealth of Puerto Rico and subject to supervision and examination by
banking authorities of one or more of such jurisdictions, provided that
the short-term unsecured debt obligations of such depository institution
or trust company is then rated the highest available rating of each Rating
Agency for such obligations;
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(v) certificates of deposit issued by any bank, trust company,
savings bank or other savings institution and fully insured by the FDIC;
(vi) repurchase obligations held by the Trustee that are acceptable
to the Trustee with respect to any security described in clauses (i), (ii)
or (vii) hereof or any other security issued or guaranteed by any other
agency or instrumentality of the United States, in either case entered
into with a federal agency or a depository institution or trust company
(acting as principal) described in clause (iv) above;
(vii) interests in any closed-end management type investment company
or investment trust (a) registered under the Investment Company Act, the
portfolio of which is limited to the obligations of, or guaranteed by, the
United States and to agreements to repurchase such obligations, which
agreements, with respect to principal and interest, are at least 100%
collateralized by such obligations marked to market on a daily basis and
the investment company or investment trust shall take delivery of such
obligations either directly or through an independent custodian designated
in accordance with the Investment Company Act and (b) acceptable to each
Rating Agency (as approved in writing by each Rating Agency) as collateral
for securities having ratings equivalent to the rating of the Rated
Certificates on the Closing Date;
(viii) money market funds, including, without limitation, the VISTA4
Money Market Funds, so long as such funds are rated ___ by Moody's (so
long as Moody's is a Rating Agency) and ___ by Standard & Poor's (so long
as Standard & Poor's is a Rating Agency), and any other fund for which the
Trustee or an Affiliate of the Trustee serves as an investment advisor,
administrator, shareholder servicing agent and/or custodian or
subcustodian, provided that any shares of such funds have a credit rating
of at least ___ by Moody's (so long as Moody's is a Rating Agency) and ___
by Standard & Poor's (so long as Standard & Poor's is a Rating Agency) and
notwithstanding that (i) the Trustee or an Affiliate of the Trustee
charges and collects fees and expenses from such funds for services
rendered, (ii) the Trustee charges and collects fees and expenses for
services rendered pursuant to this Agreement, and (iii) services performed
for such funds and pursuant to this Agreement may converge at any time.
Each of the Seller and the Servicer hereby specifically authorizes the
Trustee or an Affiliate of the Trustee to charge and collect all fees and
expenses from such funds for services rendered to such funds, in addition
to any fees and expenses the Trustee may charge and collect for services
rendered pursuant to this Agreement; and
(ix) such other investments acceptable to each Rating Agency (as
approved in writing by each Rating Agency) as will not result in the
qualification, downgrading or withdrawal of the rating then assigned to
the Rated Certificates by such Rating Agency;
provided that each of the foregoing investments shall mature no later than the
Business Day prior to the Distribution Date immediately following the date of
purchase (other than in the case of the investment of monies in instruments of
which the entity at which the related Account is located
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is the obligor, which may mature on the related Distribution Date), and shall be
required to be held to such maturity.
Notwithstanding anything to the contrary contained in this definition, (a)
no Eligible Investment may be purchased at a premium, (b) any of the foregoing
which constitutes a certificated security shall not be considered a Eligible
Investment unless it is registered in the name of the Trustee in its capacity as
such, and (c) any of the foregoing which constitutes an uncertificated security
shall not be considered a Eligible Investment unless (i) it is registered in the
name of the Trustee in its capacity as such or in the name of its Financial
Intermediary; (ii) no notation of the right of the issuer thereof to a Lien
thereon is contained in the initial transaction statement therefor sent to the
Trustee; (iii) a Responsible Officer of the Trustee does not have notice or
actual knowledge of (A) any restriction on the transfer thereof imposed by the
issuer thereof, or (B) any adverse claim, and no notation of any such
restriction or of any specific adverse claim as to which the issuer has a duty
under the law of the state in which the Corporate Trust Office is located at the
time of registration is contained in the initial transaction statement therefor
sent to the Trustee; and (iv) to a Responsible Officer of the Trustee's actual
knowledge, no creditor has served legal process upon the issuer thereof at its
chief executive office in the United States which legal process attempts to
place a Lien thereon prior to the registration thereof in the name of the
Trustee.
For purposes of this definition, any reference to the highest available
credit rating of an obligation shall mean the highest available credit rating
for such obligation, or such lower credit rating (as approved in writing by each
Rating Agency) as will not result in the qualification, downgrading or
withdrawal of the rating then assigned to the Rated Certificates by such Rating
Agency.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default" shall have the meaning specified in Section 8.01.
"Excess Amounts" means, with respect to any Distribution Date, the
remaining Available Interest on deposit in the Collection Account in respect of
such Distribution Date after all distributions pursuant to Section 4.06(c) have
been made. Excess Amounts shall include all amounts received upon prepayment in
full of Rule of 78s Receivables in excess of the then outstanding principal
balances thereof and accrued interest thereon (calculated pursuant to the
actuarial method).
"Excess Payment" means, with respect to a Receivable and a Collection
Period, the amount, if any, by which the Actual Payment exceeds the sum of (i)
the Scheduled Payment, and (ii) any Overdue Payment.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"FDIC" means the Federal Deposit Insurance Corporation, and its
successors.
"FNMA" means the Federal National Mortgage Association, and its
successors.
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"Final Scheduled Distribution Date" shall mean -.
"Final Scheduled Maturity Date" shall mean -.
"Financed Vehicle" means, with respect to a Receivable, the related
automobile or light duty truck, as the case may be, together with all accessions
thereto, securing the related Obligor's indebtedness under such Receivable.
"Financial Intermediary" shall have the meaning specified in the
definition of the term "Delivery."
"Independent Director" means a director of the Seller who is not (i) a
director, officer or employee of any affiliate of the Seller, (ii) a natural
person related to any director or officer of any affiliate of the Seller, (iii)
a holder (directly or indirectly) of more than 10% of any voting securities of
any affiliate of the Seller, or (iv) a natural person related to a holder
(directly or indirectly) of more than 10% of any voting securities of any
affiliate of the Seller.
"Insurance Policy" means, with respect to a Receivable, an insurance
policy covering physical damage, credit life, credit disability, theft,
mechanical breakdown or similar event relating to the related Financed Vehicle
or Obligor.
"Investment Company Act" means the Investment Company Act of 1940, as
amended.
"Lien" means any security interest, lien, charge, pledge, equity or
encumbrance of any kind other than tax liens, mechanics' liens and any liens
that attach to a Receivable or any property, as the context may require, by
operation of law.
"Liquidated Receivable" means a Receivable that (i) has been the subject
of a Prepayment in full, or (ii) has been paid in full or the final amounts in
respect of such payment have been paid with respect to a Defaulted Receivable,
regardless of whether all or any part of such payment has been made by the
Obligor under such Receivable, the Seller pursuant to this Agreement, the
Servicer pursuant to this Agreement or pursuant to the Receivables Purchase
Agreement, an insurer pursuant to an Insurance Policy or otherwise.
"Liquidation Expenses" means, with respect to a Defaulted Receivable, the
amount charged by the Servicer, in accordance with its customary servicing
procedures, to or for its account for repossessing, refurbishing and disposing
of the related Financed Vehicle and other out-of-pocket costs related to such
liquidation.
"Liquidation Proceeds" means, with respect to a Defaulted Receivable, all
amounts realized with respect to such Receivable from whatever sources
(including, without limitation, proceeds of any Insurance Policy), net of
amounts that are required by law or such Receivable to be refunded to the
related Obligor.
"Monthly Payment" means, with respect to any Receivable, the amount of
each fixed monthly payment payable to the obligee under such Receivable in
accordance with the terms
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thereof, net of any portion of such monthly payment that represents late payment
charges, extension fees or collections allocable to payments to be made by
Obligors for payment of insurance premiums, extended service contracts or
similar items.
"Monthly Remittance Conditions" shall have the meaning specified in
Section 4.02(a).
"Moody's" means Moody's Investors Service, Inc., and its successors.
"Net Liquidation Proceeds" means, with respect to a Defaulted Receivable,
Liquidation Proceeds less Liquidation Expenses.
"Nonrecoverable Advance" shall have the meaning specified in Section
4.04(c).
"Obligor" on a Receivable means the purchaser or co-purchasers of the
related Financed Vehicle purchased in part or in whole by the execution and
delivery of such Receivable or any other Person who owes or may be liable for
payments under such Receivable.
"Offered Certificates" shall have the meaning specified in Section
6.03(b)(ii)(D).
"Officer's Certificate" means a certificate signed by the president, any
vice president, the treasurer or the secretary of the Seller or the Servicer, as
the case may be, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel (who, in the case
of counsel to the Seller or the Servicer, may be an employee of or outside
counsel to the Seller or the Servicer), which counsel shall be acceptable to the
Trustee.
"Optional Purchase Percentage" means 10.00%.
"Original Class A Certificate Balance" means $-
"Original Class B Certificate Balance" means $-
"Original Pool Balance" means $-.
"Outstanding Advances" means, with respect to a Receivable and the last
day of a Collection Period, the sum of all Advances made as of or prior to such
date, minus all payments or collections as of or prior to such date which are
specified in Section 4.04(b) as applied to reimburse all unpaid Advances with
respect to such Receivable.
"Outstanding Interest Advances" means, as of the last day of a Collection
Period with respect to a Receivable, the portion of Outstanding Advances
allocable to interest.
"Outstanding Principal Advances" means, as of the last day of a Collection
Period with respect to a Receivable, the portion of Outstanding Advances
allocable to principal.
"Overdue Payment" shall have the meaning specified in Section 4.03(a).
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"Pass Through Rate" means the Class A Pass Through Rate or the Class B
Pass Through Rate, as indicated by the context.
"Payahead Account" means the account or accounts designated as such and
established and maintained pursuant to Section 4.01.
"Payment Ahead" means, with respect to a Precomputed Receivable and a
Collection Period, any Excess Payment (not representing prepayment in full of
such Precomputed Receivable) which the Servicer, in accordance with its
customary servicing practices, will apply towards the payment of Scheduled
Payments in one or more future Collection Periods.
"Person" means any legal person, including any individual, corporation,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Physical Property" shall have the meaning specified in the definition of
the term "Delivery."
"Pool Balance" means, as of any date, the aggregate Principal Balance of
the Receivables (exclusive of all Administrative Receivables for which the
Servicer has paid the Administrative Purchase Payment, Warranty Receivables for
which the Seller has paid the Warranty Purchase Payment and Defaulted
Receivables) as of the close of business on such date.
"Pool Factor" as of any Distribution Date, means a seven-digit decimal
figure equal to the Pool Balance as of such Distribution Date divided by the
Original Pool Balance.
"Precomputed Advance" shall have the meaning specified in Section 4.04(a).
"Precomputed Receivable" means any Actuarial Receivable or Rule of 78s
Receivable.
"Prepayment" means (i) with respect to any Precomputed Receivable, any
Excess Payment other than a Payment Ahead or (ii) with respect to any Simple
Interest Receivable, any prepayment, whether in part or in full, in respect of
such Simple Interest Receivable.
"Prepayment Surplus" means, with respect to any Distribution Date on which
a Prepayment is to be applied with respect to a Precomputed Receivable, that
portion of such Prepayment which is not attributable to principal in accordance
with the actuarial method, net of one month's interest at the Weighted Average
Pass-Through Rate on the Principal Balance of such Receivable as of the first
day of the related Collection Period.
"Principal Balance" means, with respect to any Receivable as of any date,
the Amount Financed minus the sum of the following amounts: (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
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with respect to such Receivable allocable to principal, and (iv) any Prepayments
or other payments applied to reduce the unpaid principal balance of such
Receivable.
"Rated Certificates" means any Class of Certificates that has been rated
by a Rating Agency at the request of the Seller.
"Rating Agency" means each of Moody's and Standard & Poor's.
"Rebate" means, with respect to a Precomputed Receivable and any date, the
rebate, calculated on an actuarial basis, under such Precomputed Receivable that
is or would be payable to the related Obligor for unearned finance charges or
any other charges subject to rebate if such Obligor were to prepay such
Receivable in full on such date.
"Receivable" means any retail installment sale contract executed by an
Obligor in respect of a Financed Vehicle, and all proceeds thereof and payments
thereunder, which Receivable shall be identified in the Schedule of Receivables.
"Receivable File" means the documents specified in Section 2.02 pertaining
to a particular Receivable.
"Receivables Purchase Agreement" means that certain Receivables Purchase
Agreement, dated as of the Cutoff Date, between the Seller and TMCC.
"Record Date" means, with respect to Certificates of either Class and each
Distribution Date, the calendar day immediately preceding such Distribution Date
or, if Definitive Certificates representing Certificates of such Class have been
issued, the last day of the month immediately preceding the month in which such
Distribution Date occurs. Any amount stated "as of a Record Date" or "on a
Record Date" shall give effect to (i) all applications of collections, and (ii)
all distributions to any party under this Agreement or to the related Obligor,
as the case may be, in each case as determined as of the opening of business on
the related Record Date.
"Released Administrative Amount" means, with respect to a Distribution
Date and to an Administrative Receivable, the Deferred Prepayment, if any, for
such Administrative Receivable.
"Released Warranty Amount" means, with respect to a Distribution Date and
to a Warranty Receivable, the Deferred Prepayment, if any, for such Warranty
Receivable.
"Required Rate" means, with respect to each Collection Period, [the sum of
the Servicing Fee Rate and the Class B Pass Through Rate][or specify other
rate].
"Required Rating" means a rating of ___ by Moody's and ___ by Standard &
Poor's.
"Required Yield Maintenance Amount" means, with respect to any
Distribution Date, an amount equal to [the aggregate amount by which (i) the
aggregate amount of interest that would accrue on the Principal Balance of each
Receivable that is an asset of the Trust for the period commencing on the last
day of the related Collection Period and ending on the last day of the
Collection Period during which such Receivable is scheduled to mature if such
Receivable bore
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interest at the Required Rate (assuming that all subsequent payments on such
Receivable are made as scheduled and no prepayments are made in respect thereof)
exceeds (ii) the aggregate amount of interest that would accrue thereon for the
same period at the related APR][or specify other formula][specify discounting
factors].
"Reserve Fund" means the segregated trust account established and
maintained for the benefit of the Certificateholders as a reserve fund pursuant
to Section 4.07(a).
"Reserve Fund Initial Deposit" means $-.
"Residual Certificate" shall have the meaning specified in Section 5.01.
"Responsible Officer" means, when used with respect to the Trustee, any
officer within the Corporate Trust Office of the Trustee, including any Vice
President, Assistant Vice President, Assistant Treasurer, Assistant Secretary or
any other officer of the Trustee customarily performing functions similar to
those performed by any of the above designated officers and also, with respect
to a particular matter, any other officer to whom such matter is referred
because of such officer's knowledge of and familiarity with such particular
subject.
"Rule of 78s Receivable" means any Receivable which provides for the
allocation of payments according to the "sum of periodic balances" or "sum of
monthly payments" method.
"Schedule of Receivables" means the schedule of receivables attached as
Schedule A to this Agreement, as it may be amended from time to time.
"Scheduled Payment" means, with respect to any Distribution Date and to a
Receivable, the payment set forth in such Receivable as due from the Obligor in
the related Collection Period; provided, however, that in the case of the first
Collection Period, the Scheduled Payment shall include all such payments due
from the Obligor on or after the Cutoff Date.
"Scheduled Surplus" means, with respect to any Distribution Date for any
Receivable having an APR which exceeds the sum of the Weighted Average Pass
Through Rate and the Servicing Fee Rate, the product of (i) the interest portion
of the related Scheduled Payment (in the case of any Precomputed Receivable,
determined in accordance with the actuarial method), and (ii) the remainder of
(a) one minus (b) a fraction, the numerator of which equals the sum of the
Weighted Average Pass Through Rate and the Servicing Fee Rate and the
denominator of which equals such APR.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" means Toyota Motor Credit Receivables Corporation, in its
capacity as seller of the Receivables under this Agreement, and each successor
thereto (in the same capacity) pursuant to Section 6.03.
"Servicer" means TMCC, in its capacity as servicer of the Receivables
pursuant to this Agreement, and each successor thereto (in the same capacity)
appointed pursuant to Section 8.03.
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"Servicer's Certificate" means an Officer's Certificate of the Servicer
completed and executed pursuant to Section 3.10, substantially in the form
attached hereto as Exhibit A.
"Servicing Fee Rate" means -% per annum.
"Simple Interest Advance" shall have the meaning specified in Section
4.04(a).
"Simple Interest Receivable" means any Receivable which provides for the
allocation of payments according to the simple interest method.
"Specified Reserve Fund Balance" means with respect to any Distribution
Date, an amount equal to [-% of the sum of the Class A Certificate Balance and
the Class B Certificate Balance (after giving effect to distributions of
principal to be made on such Distribution Date), except that, if on any
Distribution Date (i) the average of the Charge-off Rates for the preceding
three Collection Periods exceeds -% or (ii) the average of the Delinquency
Percentages for the preceding three Collection Periods exceeds -%, then the
Specified Reserve Fund Balance for such Distribution Date will be an amount
equal to -% of such sum (after giving effect to such principal distributions).
Finally, on any Distribution Date on which the sum of the Class A Certificate
Balance and the Class B Certificate Balance is $- or less after giving effect to
distributions of principal on such Distribution Date, the Specified Reserve Fund
Balance for the immediately succeeding Distribution Date will be the greater of
the applicable amount determined as set forth above or $-; provided, however,
that the Specified Reserve Fund Balance shall in no event be more than the sum
of the Class A Certificate Balance and the Class B Certificate Balance, in each
case as of such Distribution Date][or specify other formula].
"Standard & Poor's" means Standard & Poor's Ratings Services, and its
successors.
"Successor Servicer" means any entity appointed as a successor to the
Servicer pursuant to Section 8.03.
"Supplemental Servicing Fee" means, with respect to any Distribution Date,
all late fees, prepayment charges, extension fees and other administrative fees
and expenses or similar charges allowed by applicable law with respect to the
Receivables received by the Servicer during the related Collection Period.
"TMCC" means Toyota Motor Credit Corporation, and its successors and
assigns.
"Total Servicing Fee" means the sum of the Basic Servicing Fee and the
Supplemental Servicing Fee.
"Trust" means the trust created by this Agreement, the estate of which
consists of (i) the Receivables (other than Warranty Receivables for which the
Seller has paid the Warranty Purchase Payment and Administrative Receivables for
which the Servicer or the Seller has paid the Administrative Purchase Payment)
and all monies paid thereunder, or due and to become due thereunder, in each
case on and after the Cutoff Date; (ii) security interests in the Financed
Vehicles; (iii) such assets (excluding investment earnings thereon) as are from
time to time
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deposited in the Accounts, other than the Reserve Fund and any Yield Maintenance
Account; (iv) proceeds from claims on any Insurance Policies; (v) the right to
realize upon any property (including the right to receive future Liquidation
Proceeds) that shall have secured a Receivable and have been repossessed by or
on behalf of the Trustee; (vi) an assignment of the Seller's rights as purchaser
under the Receivables Purchase Agreement; (vii) the right of the Seller to
receive payments pursuant to any Dealer Recourse; and (viii) all proceeds of the
foregoing. Neither the Reserve Fund nor any Yield Maintenance Account shall be a
part of or otherwise includable in the Trust.
"Trustee" means - and any successor trustee appointed pursuant to Section
9.11.
"Transferee's Certificate" means the representation letter to be delivered
to the Trustee by any transferee of a Class B Certificate pursuant to Section
5.04, substantially in the form attached hereto as Exhibit E.
"Trustee's Certificate" means a certificate completed and executed by a
Responsible Officer pursuant to Section 9.02 or 9.03, substantially in the form
attached hereto as Exhibit B.
"UCC" means the Uniform Commercial Code as in effect in the respective
jurisdiction.
"United States" means the United States of America.
"Vice President" of any Person means any vice president of such Person,
whether or not designated by a number or words before or after the title "Vice
President", who is a duly elected officer of such Person.
"Voting Interests" means the aggregate voting strength evidenced by the
Class A Certificates or the Class B Certificates, as the case may be; provided,
however, that where the Voting Interests are relevant in determining whether the
vote of the requisite percentage of Class A Certificateholders necessary to
effect any consent, waiver, request or demand shall have been obtained, the
Voting Interests shall be deemed to be reduced by the amount equal to the Voting
Interests (without giving effect to this provision) represented by the interests
evidenced by any Certificate registered in the name of the Seller, the Servicer
or any Person actually known to a Responsible Officer of the Trustee to be
controlling, controlled by or under common control with the Seller or the
Servicer.
"Warranty Purchase Payment" means, with respect to a Distribution Date and
to (1) a Warranty Receivable which is a Precomputed Receivable repurchased by
the Seller as of the end of the related Collection Period, (a) the sum of (i)
all Scheduled Payments on such Receivable due after the last day of such
Collection Period (plus the portion of the Yield Maintenance Amount attributable
to such Receivable, if any), (ii) all past due Scheduled Payments for which an
Advance has not been made, (iii) an amount equal to any reimbursement of
Outstanding Advances made pursuant to Section 4.04(b) with respect to such
Receivable and (iv) all Outstanding Advances made in respect of such Receivable,
minus (b) the sum of (i) any Rebate and (ii) any other proceeds in respect of
such Receivable previously received (to the extent applied to reduce the
Principal Balance of such Receivable on such Distribution Date), and (2) a
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Warranty Receivable which is a Simple Interest Receivable repurchased by the
Seller as of the end of the related Collection Period, the sum of (a) the unpaid
principal balance owed by the Obligor in respect of such Receivable plus (b)
interest on such unpaid principal balance at a rate equal to the sum of [the
Class B Pass Through Rate][or specify other rate] and the Servicing Fee Rate to
the last day in the related Collection Period.
"Warranty Receivable" means a Receivable which the Seller is required to
repurchase pursuant to Section 2.05.
"Weighted Average Pass Through Rate" means the averge of the Class A Pass
Through Rate and Class B Pass Through Rate weighted on the basis of the Class A
Certificate Balance and the Class B Certificate Balance as of the first day of
the relevant Interest Period.
"Yield Maintenance Account" means the segregated trust account established
and maintained for the benefit of the Certificateholders as a reserve fund
pursuant to Section 4.08(a), if any.
"Yield Maintenance Agreement" means the Yield Maintenance Agreement dated
o, among the Servicer, the Seller [, third party] and the Trustee, pursuant to
which Additional Yield Maintenance Amounts are to be deposited in the Yield
Maintenance Account on each Distribution Date.
"Yield Maintenance Amount" means, with respect to any Distribution Date,
the aggregate amount on Deposit in any Yield Maintenance Account after giving
effect to the withdrawal therefrom of any related Yield Maintenance Deposit and
without regard to any amounts on deposit therein in respect of interest or
investment earnings earned on the investment of amounts on deposit therein in
Eligible Investments for any period.
"Yield Maintenance Account Initial Deposit" means an amount equal to [the
aggregate amount by which (i) the aggregate amount of interest that would accrue
on the Principal Balance of each Receivable that is an asset of the Trust for
the period commencing on the last day of the first Collection Period and ending
on the last day of the Collection Period during which such Receivable is
scheduled to mature if such Receivable bore interest at the Required Rate
(assuming that all subsequent payments on such Receivable are made as scheduled
and no prepayments are made in respect thereof) exceeds (ii) the aggregate
amount of interest that would accrue thereon for the same period at the related
APR][or specify other formula][specify discounting factors].
"Yield Maintenance Deposit" means, with respect to any Distribution Date,
the amount by which (i) the aggregate amount of interest that would have been
due during the related Collection Period on all Receivables that have APRs less
than the Required Rate if such Receivables bore interest at the Required Rate
exceeds (ii) the amount of interest accrued on such receivables at their
respective APRs and due during such Collection Period.
ARTICLE II
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CREATION OF TRUST; CONVEYANCE OF RECEIVABLES;
CUSTODY OF RECEIVABLE FILES
2.01 Creation of Trust; Conveyance of Receivables. (a) Upon the execution
of this Agreement by the parties hereto, there is hereby created the Toyota Auto
Receivables 199_-_ Grantor Trust. The Seller, pursuant to the mutually agreed
upon terms contained in this Agreement, shall sell, transfer, assign and
otherwise convey to the Trustee on behalf of the Trust, without recourse (but
subject to the Seller's obligations in this Agreement), all of its right, title
and interest in and to the Receivables and any proceeds related thereto,
including any Dealer Recourse and such other items as shall be specified in this
Agreement.
(b) In consideration of the Trustee's delivery to the Seller on
behalf of the Trust of authenticated Certificates, in authorized
denominations, in an aggregate amount equal to the Original Pool Balance,
the Seller does hereby sell, transfer, assign and otherwise convey to the
Trustee, in trust for the benefit of the Certificateholders, without
recourse (subject to the Seller's obligations herein):
(i) all right, title and interest of the Seller in and to the
Receivables and all monies due thereon or paid thereunder or in
respect thereof (including proceeds of the repurchase of Receivables
by the Seller pursuant to Section 2.05 or 10.02 or the purchase of
Receivables by the Servicer pursuant to Section 3.08 or 10.02) on or
after the Cutoff Date;
(ii) the interest of the Seller in the security interests in
the Financed Vehicles granted by the Obligors pursuant to the
Receivables and any accessions thereto;
(iii) the interest of the Seller in any proceeds of any
physical damage insurance policies covering Financed Vehicles and in
any proceeds of any credit life or credit disability insurance
policies relating to the Receivables or the Obligors;
(iv) the interest of the Seller in any Dealer Recourse;
(v) the interest of the Seller under the Receivables Purchase
Agreement;
(vi) the right of the Seller to realize upon any property
(including the right to receive future Liquidation Proceeds) that
shall have secured a Receivable and have been repossessed by or on
behalf of the Trustee;
(vii) all other assets comprising the Trust; and
(viii) all proceeds of the foregoing.
(c) It is the intention of the Seller that the transfer and
assignment contemplated by this Agreement shall constitute a sale of the
Receivables from the Seller to the Trust
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and the beneficial interest in and title to the Receivables shall not be
part of the Seller's estate in the event of the filing of a bankruptcy
petition by or against the Seller under any bankruptcy law. The Seller
agrees to execute and file all filings (including filings under the UCC)
necessary in any jurisdiction to provide third parties with notice of the
sale of the Receivables pursuant to this Agreement and to perfect such
sale under the UCC.
(d) Although the parties hereto intend that the transfer and
assignment contemplated by this Agreement be a sale, in the event such
transfer and assignment is deemed to be other than a sale, the parties
intend that all filings described in the foregoing paragraph shall give
the Trustee on behalf of the Trust a first priority perfected security
interest in, to and under the Receivables, and other property conveyed
hereunder and all proceeds of any of the foregoing. This Agreement shall
be deemed to be the grant of a security interest from the Seller to the
Trustee on behalf of the Trust, and the Trustee on behalf of the Trust
shall have all the rights, powers and privileges of a secured party under
the UCC.
(e) In connection with the foregoing conveyance, the Servicer shall
maintain its computer system so that, from and after the time of sale of
the Receivables to the Trustee on behalf of the Trust under this
Agreement, the Servicer's master computer records (including any back-up
archives) that refer to any Receivable indicate clearly the interest of
the Trust in such Receivables and that the Receivable is owned by the
Trustee on behalf of the Trust. Indication of the Trust's ownership of a
Receivable shall be deleted from or modified on the Servicer's computer
systems when, and only when, the Receivable has been paid in full,
repurchased or assigned pursuant to this Agreement.
2.02 Custody of Receivable Files. To assure uniform quality in servicing
the Receivables and to reduce administrative costs, the Trustee on behalf of the
Trust, upon the execution and delivery of this Agreement, revocably appoints the
Servicer, and the Servicer accepts such appointment, to act as the agent of the
Trust as custodian of the following documents or instruments which are hereby
constructively delivered to the Trustee with respect to each Receivable:
(a) the fully executed original of the Receivable;
(b) documents evidencing or related to any Insurance Policy;
(c) the original credit application of each Obligor, fully executed
by such Obligor on TMCC's customary form, or on a form approved by TMCC,
for such application;
(d) the original certificate of title (or evidence that such
certificate of title has been applied for) or such documents that the
Servicer shall keep on file, in accordance with TMCC's customary
procedures, evidencing the security interest in the related Financed
Vehicle; and
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(e) any and all other documents that the Seller or the Servicer, as
the case may be, shall keep on file, in accordance with its customary
procedures, relating to such Receivable or the related Obligor or Financed
Vehicle.
2.03 Acceptance by Trustee. The Trustee hereby acknowledges its
acceptance, on behalf of the Trust, pursuant to this Agreement, of all right,
title and interest in and to the Receivables conveyed by the Seller pursuant to
this Agreement and declares and shall declare from and after the date hereof
that the Trustee holds and shall hold such right, title and interest, upon the
trust set forth in this Agreement.
2.04 Representations and Warranties of Seller as to the Receivables. The
Seller does hereby make the following representations and warranties on which
the Trustee shall rely in accepting the Receivables in trust and authenticating
the Certificates:
(a) Characteristics of Receivables. Each Receivable (i) shall have
been originated in the United States by a Dealer for the retail sale of
the related Financed Vehicle in the ordinary course of such Dealer's
business, shall have been fully and properly executed by the parties
thereto, shall have been purchased by TMCC from such Dealer under an
existing agreement with TMCC and shall have been validly assigned by such
Dealer to TMCC in accordance with the terms of such agreement and shall
have been subsequently sold by TMCC to the Seller pursuant to the
Receivables Purchase Agreement, (ii) shall have created or shall create a
valid, subsisting and enforceable first priority security interest in
favor of TMCC in the related Financed Vehicle, which security interest has
been assigned by TMCC to the Seller and shall be assignable, and shall be
so assigned, by the Seller to the Trustee, (iii) shall, except as
otherwise provided in this Agreement, provide for level Monthly Payments
(provided that the payment in the first or last month in the life of the
Receivable may be minimally different from the level payment) that fully
amortize the Amount Financed by maturity and provide for a finance charge
or yield interest at its APR, in either case calculated based on the Rule
of 78s, the simple interest method or the actuarial method, (iv) shall
contain customary and enforceable provisions, such that the rights and
remedies of the holder thereof shall be adequate for realization against
the collateral of the benefits of the security and (v) shall provide for,
in the event that such Receivable is prepaid, a prepayment that fully pays
the Principal Balance and includes accrued but unpaid interest in an
amount calculated by using an interest rate at least equal to its APR.
(b) Schedule of Receivables. The information set forth in the
Schedule of Receivables shall be true and correct in all material respects
as of the opening of business on the Cutoff Date, and no selection
procedures adverse to the Certificateholders shall have been utilized in
selecting the Receivables from those automobile and light duty truck
receivables of TMCC which met the selection criteria set forth in this
Section and this Agreement.
(c) Compliance with Law. Each Receivable and each sale of the
related Financed Vehicle shall have complied at the time it was originated
or made, and shall comply at the
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time of execution of this Agreement, in all material respects with all
requirements of applicable federal, state and local laws, and regulations
thereunder, including usury laws, the Federal Truth-in-Lending Act, the
Equal Credit Opportunity Act, the Fair Credit Billing Act, the Fair Credit
Reporting Act, the Fair Debt Collection Practices Act, the Federal Trade
Commission Act, the Magnuson-Moss Warranty Act, Federal Reserve Board
Regulations B, M and Z (to the extent applicable), state adaptations of
the National Consumer Act and of the Uniform Consumer Credit Code and
other consumer credit, equal credit opportunity and disclosure laws.
(d) Binding Obligation. Each Receivable shall constitute the legal,
valid and binding payment obligation in writing of the related Obligor,
enforceable by the holder thereof in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting the enforcement of creditors'
rights in general and by general principles of equity, regardless of
whether such enforceability shall be considered in a proceeding in equity
or at law.
(e) No Bankrupt Obligors. None of the Receivables shall be due, to
the best knowledge of the Seller, from any Obligor who is presently the
subject of a bankruptcy proceeding or is bankrupt or is insolvent.
(f) No Government Obligors. None of the Receivables shall be due
from the United States or any state, or from any agency, department or
instrumentality of the United States or any state or local government.
(g) Employee Obligors. None of the Receivables shall be due from any
employee of the Seller, TMCC or any of their respective affiliates.
(h) Security Interest in Financed Vehicles. Immediately prior to the
sale, assignment and transfer thereof, each Receivable shall be secured by
a validly perfected first priority security interest in the related
Financed Vehicle in favor of TMCC as secured party or all necessary and
appropriate action with respect to such Receivable shall have been taken
to perfect a first priority security interest in such Financed Vehicle in
favor of TMCC as secured party.
(i) Receivables in Force. No Receivable shall have been satisfied,
subordinated or rescinded, nor shall any Financed Vehicle have been
released in whole or in part from the lien granted by the related
Receivable.
(j) No Waivers. No provision of a Receivable shall have been waived
in such a manner that such Receivable fails to meet all of the other
representations and warranties made by the Seller herein with respect
thereto.
(k) No Amendments. No Receivable shall have been amended or modified
in such a manner that the total number of Scheduled Payments has been
increased or that the related Amount Financed has been increased or that
such Receivable fails to meet all of the other representations and
warranties made by the Seller herein with respect thereto.
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(l) No Defenses. No facts shall be known to the Seller which would
give rise to any right of rescission, setoff, counterclaim or defense, nor
shall the same have been asserted or threatened, with respect to any
Receivable.
(m) No Liens. To the knowledge of the Seller, no liens or claims
shall have been filed, including liens for work, labor or materials
relating to a Financed Vehicle, that shall be liens prior to, or equal or
coordinate with, the security interest in such Financed Vehicle granted by
the related Receivable.
(n) No Default; No Repossession. Except for payment defaults that,
as of the Cutoff Date, have been continuing for a period of not more than
- days, no default, breach, violation or event permitting acceleration
under the terms of any Receivable shall have occurred as of the Cutoff
Date; no continuing condition that with notice or the lapse of time would
constitute a default, breach, violation or event permitting acceleration
under the terms of any Receivable shall have arisen; the Seller shall not
have waived any of the foregoing; and no Financed Vehicle has been
repossessed without reinstatement as of the Cutoff Date.
(o) Insurance. At the time of origination of each Receivable, each
Obligor was required under the terms of such Receivable to obtain and
maintain physical damage insurance covering the related Financed Vehicle.
(p) Good Title. It is the intention of the Seller that the transfer
and assignment herein contemplated, taken as a whole, constitute a sale of
the Receivables from the Seller to the Trust and that the beneficial
interest in and title to the Receivables not be part of the debtor's
estate in the event of the filing of a bankruptcy petition by or against
the Seller under any bankruptcy law. No Receivable has been sold,
transferred, assigned or pledged by the Seller to any Person other than
the Trust, and no provision of a Receivable shall have been waived, except
as provided in clause (j) above; immediately prior to the transfer and
assignment herein contemplated, the Seller had good and marketable title
to each Receivable free and clear of all Liens and rights of others;
immediately upon the transfer and assignment thereof, the Trust shall have
good and marketable title to each Receivable, free and clear of all Liens
and rights of others; and the transfer and assignment herein contemplated
has been perfected under the UCC.
(q) Lawful Assignment. No Receivable shall have been originated in,
or shall be subject to the laws of, any jurisdiction under which the sale,
transfer and assignment of such Receivable under this Agreement or
pursuant to a transfer of the related certificate of title shall be
unlawful, void or voidable.
(r) All Filings Made. All filings (including UCC filings) necessary
in any jurisdiction to provide third parties with notice of the transfer
and assignment herein contemplated, to perfect the sale of the Receivables
from the Seller to the Trustee and to give the Trustee on behalf of the
Trust a first priority perfected security interest in the Receivables
shall have been made.
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(s) One Original. There shall be only one original executed copy of
each Receivable.
(t) Chattel Paper. Each Receivable constitutes "chattel paper" as
defined in the UCC.
(u) Maturity of Receivables. Each Receivable shall have an original
maturity of not less than - months nor greater than - months and, as of
the Cutoff Date, a remaining maturity of not less than - months nor
greater than - months.
(v) Finance Charge. Each Receivable provides for an APR equal to or
greater than -% and equal to or less than -%.
(w) Principal Balance. Each Receivable had an original principal
balance of not less than $- nor more than $- and an unpaid principal
balance, as of the Cutoff Date, of not less than $- nor more than $-.
(x) No Overdue Payments. No Receivable shall have a Scheduled
Payment that is more than - days past due as of the Cutoff Date.
(y) Location of Receivable Files. Each Receivable File shall be kept
at one of the locations listed in the Schedule of Receivables or at such
other office as shall be specified to the Trustee by 30 days' prior
written notice.
(z) Payments on the Receivables. Each Receivable shall provide for
level monthly payments that fully amortize the Amount Financed by
maturity, except that the payment in the first or last month in the life
of the Receivable may be minimally different from the level payment.
(aa) Origination Date. Each Receivable was originated on or before
-.
(bb) No Special Financing. No Receivable was originated under a
special financing program.
(cc) No Force-Placed Insurance. No Financed Vehicle was subject to
force-placed insurance as of the Cutoff Date.
2.05 Repurchase of Receivables Upon Breach. Upon discovery by the Seller
or the Servicer or upon the actual knowledge of a Responsible Officer of the
Trustee of a breach of any of the representations and warranties of the Seller
set forth in this Agreement that materially and adversely affects the interests
of the Certificateholders in any Receivable, the party discovering such breach
shall give prompt written notice to the others. As of the last day of the second
Collection Period following the Collection Period in which it discovers or
receives notice of such breach (or, at the Seller's election, the last day of
the first Collection Period following the Collection Period in which it
discovers or receives notice of such breach), the Seller shall, unless such
breach shall have been cured in all material respects, repurchase such
Receivable and, if
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necessary, the Seller shall enforce the obligation of TMCC under the Receivables
Purchase Agreement to repurchase such Receivable from the Seller. This
repurchase obligation shall obtain for all representations and warranties of the
Seller contained in this Agreement whether or not the Seller has knowledge of
the breach at the time of the breach or at the time the representations and
warranties were made. In consideration of the repurchase of any such Receivable,
on the Business Day immediately preceding the related Distribution Date, the
Seller shall remit the Warranty Purchase Payment of such Receivable to the
Collection Account in the manner specified in Section 4.05 and shall be entitled
to receive the Released Warranty Amount. In the event that any Liens or claims
shall have been filed, including Liens for work, labor or materials relating to
a Financed Vehicle, that shall be prior to, or equal or coordinate with, the
lien granted by the related Receivable, which Liens or claims shall not have
been satisfied or otherwise released in full as of the Closing Date, and such
breach materially and adversely affects the interests of the Trust in such
Receivable, the Seller shall repurchase such Receivable on the terms and in the
manner specified above.
Upon any such repurchase, the Trustee on behalf of the Trust shall,
without further action, be deemed to transfer, assign, set-over and otherwise
convey to the Seller, all right, title and interest of the Trustee on behalf of
the Trust in, to and under such repurchased Receivable, all monies due or to
become due with respect thereto and all proceeds thereof. The Trustee shall
execute such documents and instruments of transfer and assignment and take such
other actions as shall be reasonably requested by the Seller to effect the
conveyance of such Receivable pursuant to this Section. The sole remedy of the
Trustee, the Trust or the Certificateholders with respect to a breach of the
Seller's representations and warranties pursuant to this Agreement or with
respect to the existence of any such Liens or claims shall be to require the
Seller to repurchase the related Receivable pursuant to this Section and to
enforce TMCC's obligation to the Seller to repurchase such Receivables pursuant
to the Receivables Purchase Agreement. The Trustee shall have no duty to conduct
any affirmative investigation as to the occurrence of any condition requiring
the repurchase of any Receivable pursuant to this Section.
2.06 Duties of Servicer as Custodian.
(a) Safekeeping. The Servicer, in its capacity as custodian, shall
hold the Receivable Files on behalf of the Trustee for the use and benefit
of all present and future Certificateholders, and maintain such accurate
and complete accounts, records and computer systems pertaining to each
Receivable File as shall enable the Trustee to comply with this Agreement.
In performing its duties as custodian, the Servicer shall act with
reasonable care, using that degree of skill and attention that it
exercises with respect to the receivable files of comparable automobile
and light duty truck receivables that the Servicer services for itself or
others. The Servicer shall conduct, or cause to be conducted, periodic
examinations of the files of receivables owned or serviced by it which
shall include Receivable Files held by it under this Agreement, and of the
related accounts, records and computer systems, in such a manner as shall
enable the Trustee to verify the accuracy of the Servicer's record
keeping. The Servicer shall promptly report to the Trustee any failure on
its part to hold the Receivable Files and maintain its
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accounts, records and computer systems as herein provided and promptly
take appropriate action to remedy any such failure.
(b) Maintenance of and Access to Records. The Servicer shall
maintain each Receivable File at one of its offices specified in the
Schedule of Receivables or at such other office as shall be specified to
the Trustee by 30 days' prior written notice. The Servicer shall make
available to the Trustee or its duly authorized representatives, attorneys
or auditors the Receivable Files and the related accounts, records and
computer systems maintained by the Servicer at such times as the Trustee
shall reasonably instruct.
(c) Release of Documents. Upon instruction from the Trustee, the
Servicer shall release any document in the Receivable Files to the Trustee
or its agent or designee, as the case may be, at such place or places as
the Trustee may designate, as soon as practicable. The Servicer shall not
be responsible for any loss occasioned by the failure of the Trustee to
return any document or any delay in doing so.
2.07 Instructions; Authority to Act. The Servicer shall be deemed to have
received proper instructions with respect to the Receivable Files upon its
receipt of written instructions signed by a Responsible Officer of the Trustee.
A certified copy of a bylaw or of a resolution of the board of directors of the
Trustee shall constitute conclusive evidence of the authority of any such
Responsible Officer to act and shall be considered in full force and effect
until receipt by the Servicer of written notice to the contrary given by the
Trustee.
2.08 Indemnification of Custodian. The Servicer, as custodian of the
Receivable Files, shall indemnify the Trustee for any and all liabilities,
obligations, losses, compensatory damages, payments, costs or expenses of any
kind whatsoever (including reasonable attorney's fees and expenses incurred in
connection with defending against any such claim) that may be imposed on,
incurred or asserted against the Trustee as the result of any improper act or
omission in any way relating to the maintenance and custody of the Receivable
Files by the Servicer, as custodian; provided, however, that the Servicer shall
not be liable for any portion of any such amount resulting from the willful
misfeasance, bad faith or negligence of the Trustee.
2.09 Effective Period and Termination. The Servicer's appointment as
custodian of the Receivable Files shall become effective as of the Cutoff Date
and shall continue in full force and effect until terminated pursuant to this
Section. If the Servicer shall resign as Servicer pursuant to Section 7.05 or if
all of the rights and obligations of the Servicer have been terminated pursuant
to Section 8.02, the appointment of the Servicer as custodian of the Receivable
Files shall be terminated by the Trustee, or by Certificate Owners representing
in the aggregate not less than 51% of the voting interests of the Class A
Certificates and Class B Certificates, acting as a single Class, in the same
manner as the Trustee or such Holders may terminate the rights and obligations
of the Servicer under Section 8.02. The Trustee may terminate the Servicer's
appointment as custodian of the Receivable Files with cause at any time
immediately upon written notification to the Servicer. As soon as practicable
after any termination of such appointment, the Servicer shall deliver the
Receivable Files to the Trustee or its agent at such place or places as the
Trustee may reasonably designate. Notwithstanding the termination of the
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Servicer as custodian of the Receivable Files, the Trustee agrees that upon any
such termination, the Trustee shall provide, or cause its agent to provide,
access to the Receivable Files to the Servicer, upon reasonable advance written
request and during normal business hours, for the purpose of carrying out its
duties and responsibilities with respect to the servicing of the Receivables
pursuant to this Agreement.
2.10 Usage of Terms. With respect to all terms in this Agreement, the
singular includes the plural and the plural the singular; words importing any
gender include the other genders; references to "writing" include printing,
typing, lithography and other means of reproducing words in a visible form;
references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement; references to
Persons include their permitted successors and assigns; and the term "including"
means "including without limitation."
2.11 Cutoff Date and Record Date. All references to the Record Date prior
to the first Record Date in the life of the Trust shall be to the Cutoff Date.
2.12 Section References. All section references shall be to Sections in
this Agreement.
2.13 Agent for Service. The agent for service for the Seller shall be its
President, 19001 South Western Avenue, Torrance, California 90501, and the agent
for service for the Servicer shall be its Senior Vice President, 19001 South
Western Avenue, Torrance, California 90501.
ARTICLE III
ADMINISTRATION AND SERVICING OF RECEIVABLES
3.01 Duties of Servicer. The Servicer, as agent for the Trust, shall
manage, service, administer and make collections on and in respect of the
Receivables with reasonable care, using that degree of skill and attention that
the Servicer exercises with respect to all comparable automobile and light duty
truck receivables that it services for itself or others. The Servicer's duties
shall include collecting and posting of all payments, responding to inquiries of
Obligors or by federal, state or local government authorities with respect to
the Receivables, investigating delinquencies, sending payment information to
Obligors, reporting tax information to Obligors in accordance with its customary
practices, policing the collateral, accounting for collections, furnishing
monthly and annual statements to the Trustee with respect to distributions,
generating federal income tax information, making Advances and performing the
other duties specified herein. The Servicer shall follow its customary
standards, policies and procedures and shall have full power and authority,
acting alone, to do any and all things in connection with such managing,
servicing, administration and collection that it may deem necessary or
desirable.
Without limiting the generality of the foregoing, the Servicer shall be
authorized and empowered by the Trustee to execute and deliver, on behalf of
itself, the Trust, the Trustee or the Certificateholders or any of them, any and
all instruments of satisfaction or cancellation, or of partial or full release
or discharge and all other comparable instruments, with respect to the
Receivables and the Financed Vehicles. The Servicer is hereby authorized to
commence, in its
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own name or in the name of the Trust, a legal proceeding to enforce a Defaulted
Receivable pursuant to Section 3.04 or to commence or participate in a legal
proceeding (including without limitation a bankruptcy proceeding) relating to or
involving a Receivable, including a Defaulted Receivable. If the Servicer
commences or participates in such a legal proceeding in its own name, the
Trustee shall thereupon be deemed to have automatically assigned, solely for the
purpose of collection on behalf of the party retaining an interest in such
Receivable, such Receivable and the other property conveyed to the Trust
pursuant to Section 2.01 with respect to such Receivable to the Servicer for
purposes of commencing or participating in any such proceeding as a party or
claimant, and the Servicer is authorized and empowered by the Trustee to execute
and deliver in the Servicer's name any notices, demands, claims, complaints,
responses, affidavits or other documents or instruments in connection with any
such proceeding. If in any enforcement suit or legal proceeding it shall be held
that the Servicer may not enforce a Receivable on the grounds that it shall not
be a real party in interest or a holder entitled to enforce such Receivable, the
Trustee on behalf of the Trust shall, at the Servicer's expense and written
direction, take reasonable steps to enforce such Receivable, including bring
suit in its name or the name of the Certificateholders. The Trustee shall
furnish the Servicer with any powers of attorney and other documents and take
any other steps which the Servicer may deem reasonably necessary or appropriate
to enable the Servicer to carry out its servicing and administrative duties
under this Agreement.
3.02 Collection of Receivable Payments. The Servicer shall make reasonable
efforts to collect all payments called for under the terms and provisions of the
Receivables as and when the same shall become due, and shall follow such
customary collection procedures as it follows with respect to comparable
automobile or light duty truck receivables that it services for itself or
others. The Servicer shall be authorized to grant extensions, rebates or
adjustments on a Receivable in accordance with the customary servicing standards
of the Servicer without the prior consent of the Trustee; provided, however,
that if, as a result of any change in the related APR, increase in the total
number of Scheduled Payments, extension of payments such that the Receivable
will be outstanding later than the Final Scheduled Maturity Date, or other
modification of the terms of a Receivable, the amount of any Scheduled Payment
due in a subsequent Collection Period is reduced, the Servicer shall be
obligated to either repurchase such Receivable pursuant to Section 3.08 or to
make an Advance in respect of such Receivable in each subsequent Collection
period equal to the amount by which such Scheduled Payment has been reduced. In
addition, in the event that any such rescheduling or extension of a Receivable
modifies the terms of such Receivable in such a manner as to release the
security interest in the related Financed Vehicle or constitute a cancellation
of such Receivable and the creation of a new automobile or light duty truck
receivable, the Servicer shall purchase such Receivable pursuant to Section
3.08, and the receivable created shall not be included in the Trust. The
Servicer may, in accordance with its customary servicing procedures, waive any
prepayment charge, late payment charge or any other fees that may be collected
in the ordinary course of servicing the Receivables.
3.03 Rebates on Full Prepayments. In the event that the amount of a full
Prepayment by an Obligor under a Precomputed Receivable, after adjustment for
the applicable Rebate, is less than the amount that would be payable under the
actuarial method if a full Prepayment were made at
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the end of the billing month under such Precomputed Receivable, either because
the Rebate calculated under the terms of such Precomputed Receivable is greater
than the amount calculable under the actuarial method or because the Servicer's
customary servicing procedure is to credit a greater Rebate, the Servicer, as
part of its servicing duties, shall remit such difference to the Trust by
deposit into the Collection Account pursuant to Section 4.05.
3.04 Realization Upon Receivables. On behalf of the Trust, the Servicer
shall use its best efforts, consistent with its customary servicing procedures,
to repossess or otherwise comparably convert the ownership of any Financed
Vehicle that it has reasonably determined should be repossessed or otherwise
converted following a default under the Receivable secured by the Financed
Vehicle (and shall specify such Receivables to the Trustee no later than the
Determination Date following the end of the Collection Period in which the
Servicer shall have made such determination). The Servicer shall follow such
practices and procedures as it shall deem necessary or advisable and as shall be
customary and usual in its servicing of automobile and light duty truck
receivables, which practices and procedures may include reasonable efforts to
realize upon any Dealer Recourse, selling the related Financed Vehicle at public
or private sale and other actions by the Servicer in order to realize upon such
a Receivable. The Servicer shall be entitled to recover its reasonable
Liquidation Expenses with respect to each Defaulted Receivable. All Net
Liquidation Proceeds realized in connection with any such action with respect to
a Receivable shall be deposited by the Servicer in the Collection Account in the
manner specified in Section 4.02. The foregoing is subject to the proviso that,
in any case in which the Financed Vehicle shall have suffered damage, the
Servicer shall not expend funds in connection with any repair or towards the
repossession of such Financed Vehicle unless it shall determine in its
discretion that such repair and/or repossession shall increase the Liquidation
Proceeds of the related Receivable by an amount greater than the amount of such
expenses.
3.05 Maintenance of Physical Damage Insurance Policies. The Servicer
shall, in accordance with its customary servicing procedures and underwriting
standards, require that each Obligor shall have obtained physical damage
insurance covering each Financed Vehicle as of the origination of the related
Receivable.
3.06 Maintenance of Security Interests in Financed Vehicles. The Servicer
shall, in accordance with its customary servicing procedures and at its own
expense, take such steps as are necessary to maintain perfection of the security
interest created by each Receivable in the related Financed Vehicle. The Trustee
hereby authorizes the Servicer, and the Servicer hereby agrees, to take such
steps as are necessary to again perfect such security interest on behalf of the
Trust in the event of the relocation of a Financed Vehicle or for any other
reason. In the event that the assignment of a Receivable to the Trust is
insufficient, without a notation on the related Financed Vehicle's certificate
of title, to grant to the Trust a first priority perfected security interest in
the related Financed Vehicle, the Servicer hereby agrees to serve as the agent
of the Trust for the purpose of perfecting the security interest of the Trust in
such Financed Vehicle and agrees that the Servicer's listing as the secured
party on the certificate of title is in this capacity as agent of the Trust.
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3.07 Covenants of Servicer. The Servicer shall make the following
covenants on which the Trustee shall rely in accepting the Receivables in trust
and authenticating the Certificates.
(a) Liens in Force. Except as contemplated by this Agreement, the
Servicer shall not release in whole or in part any Financed Vehicle from
the security interest securing the related Receivable.
(b) No Impairment. The Servicer shall do nothing to impair the
rights of the Certificateholders in the Receivables.
(c) No Amendments. Except as provided in Section 3.02, the Servicer
shall not amend or otherwise modify any Receivable such that the total
number of Scheduled Payments, the Amount Financed or the APR is altered or
extends the maturity of such Receivable beyond the Final Scheduled
Maturity Date.
3.08 Purchase of Receivables Upon Breach. Upon discovery by the Seller,
the Servicer or the Trustee of a breach of any of the covenants of the Servicer
set forth in Section 3.07 that materially and adversely affects the interests of
the Certificateholders in a Receivable, or if an improper extension,
rescheduling or modification of a Receivable is made by the Servicer as
described in Section 3.02, the party discovering such breach shall give prompt
written notice to the others. As of the last day of the second Collection Period
following the Collection Period in which it discovers or receives notice of such
breach (or, at the Servicer's election, the last day of the first Collection
Period following the Collection Period in which it discovers or receives notice
of such breach), the Servicer shall, unless such breach or impropriety shall
have been cured in all material respects, purchase from the Trust such
Receivable. In consideration of the purchase of any such Receivable, on the
Business Day immediately preceding the related Distribution Date the Servicer
shall remit the Administrative Purchase Payment to the Collection Account in the
manner specified in Section 4.05, and shall be entitled to receive the Released
Administrative Amount. Upon such deposit of the Administrative Purchase Payment,
the Servicer shall for all purposes of this Agreement be deemed to have released
all claims for reimbursement of Outstanding Advances made in respect of such
Receivable. The sole remedy of the Trustee, the Trust or the Certificateholders
against the Servicer with respect to a breach pursuant to Section 3.02 or 3.07
shall be to require the Servicer to purchase the related Receivables pursuant to
this Section, except as otherwise provided in Section 7.02. The Trustee shall
have no duty to conduct any affirmative investigation as to the occurrence of
any condition requiring the repurchase of any Receivable pursuant to this
Section except as otherwise provided in Section 7.02.
3.09 Total Servicing Fee; Payment of Certain Expenses by Servicer. As
compensation for the performance of its obligations hereunder, the Servicer
shall be entitled to receive on each Distribution Date, out of Available
Interest, the Total Servicing Fee. The Basic Servicing Fee in respect of a
Collection Period shall be calculated based on a 360 day year comprised of
twelve 30-day months. Except to the extent otherwise provided herein, the
Servicer shall be required to pay all expenses incurred by it in connection with
its activities under this Agreement (including fees and disbursements of the
Trustee and independent accountants, taxes imposed on the
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Servicer, expenses incurred in connection with distributions and reports to
Certificateholders and all other fees and expenses not expressly stated under
this Agreement to be for the account of the Certificateholders).
3.10 Servicer's Certificate. On or before each Determination Date, the
Servicer shall deliver to the Trustee and each Rating Agency a Servicer's
Certificate executed by the President or any Vice President or principal
accounting officer of the Servicer substantially in the form attached hereto as
Exhibit A (and setting forth such additional information as requested by the
Trustee or any Rating Agency from time to time which information the Servicer is
able to reasonably provide) containing all information necessary to make the
distributions required by Sections 4.06 and 4.07 in respect of the Collection
Period immediately preceding the date of such Servicer's Certificate and all
information necessary for the Trustee to send statements to Certificateholders
pursuant to Section 4.10(a). The Servicer shall also specify to the Trustee, no
later than the Determination Date following the last day of a Collection Period
as of which the Seller shall be required to repurchase or the Servicer shall be
required to purchase a Receivable, the identity of any such Receivable and the
identity of any Receivable which the Servicer shall have determined to be a
Defaulted Receivable during such Collection Period. Receivables purchased or to
be purchased by the Servicer or the Seller and Receivables that the Servicer has
determined during such Collection Period to be Defaulted Receivables and with
respect to which payment of the Administrative Purchase Payment or Warranty
Purchase Payment has been provided from whatever source as of the last day of
such Collection Period shall be identified by the related Obligor's account
number (as specified in the Schedule of Receivables).
3.11 Annual Statement as to Compliance; Notice of Default.
(a) The Servicer shall deliver to the Trustee, on or before December
31 of each year, beginning with [ ], 199_, an Officer's
Certificate of the Servicer, stating that (i) a review of the activities
of the Servicer during the preceding 12-month period ended [ ]
(or other applicable period in the case of the first such Officer's
Certificate) and of its performance under this Agreement has been made
under such officer's supervision, and (ii) to such officer's knowledge,
based on such review, the Servicer has fulfilled all its obligations under
this Agreement throughout such period, or, if there has been a default in
the fulfillment of any such obligation, specifying each such default known
to such officer and the nature and status thereof.
(b) The Servicer shall deliver to the Trustee, promptly after having
obtained knowledge thereof, but in no event later than five Business Days
thereafter, an Officer's Certificate specifying the nature and status of
any event which with the giving of notice or lapse of time, or both, would
become an Event of Default.
3.12 Annual Accountants' Report. The Servicer shall cause a firm of
independent accountants (who may also render other services to the Servicer or
to the Seller) to deliver to the Trustee on or before [ ] of each year,
beginning with beginning with [ ], 199_, an Officer's Certificate of the
Servicer, stating that (i) a review of the activities of the Servicer during the
preceding 12-month period ended [ ] (or other applicable period in the
case of
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the first such report or letter) to the effect that such accountants have
reviewed certain records and documents relating to the servicing of the
Receivables under this Agreement (using procedures specified in such report or
letter) and as a result of such review, and in connection with such procedures,
they are reporting such exceptions, if any, as shall be set forth therein. Such
report or letter shall also indicate that the firm is independent with respect
to the Seller and the Servicer within the meaning of the Code of Professional
Ethics of the American Institute of Certified Public Accountants.
3.13 Access to Certain Documentation and Information Regarding
Receivables. The Servicer shall provide to the Trustee reasonable access to the
documentation regarding the Receivables. The Servicer shall provide such access
to any Certificateholder only in such cases where a Certificateholder is
required by applicable statutes or regulations to review such documentation. In
each case, such access shall be afforded without charge but only upon reasonable
request and during normal business hours at the respective offices of the
Servicer. Nothing in this Section shall derogate from the obligation of the
Servicer to observe any applicable law prohibiting disclosure of information
regarding the Obligors, and the failure of the Servicer to provide access as
provided in this Section as a result of such obligation shall not constitute a
breach of this Section.
3.14 Amendments to Schedule of Receivables. If the Servicer, during a
Collection Period, assigns to a Receivable an account number that differs from
the original account number identifying such Receivable on the Schedule of
Receivables, the Servicer shall deliver to the Seller and the Trustee on or
before the Distribution Date relating to such Collection Period an amendment to
the Schedule of Receivables reporting the newly assigned account number,
together with the old account number of each such Receivable. The first such
delivery of amendments to the Schedule of Receivables to the Trustee shall
include monthly amendments reporting account numbers appearing on the Schedule
of Receivables with the new account numbers assigned to such Receivables during
any prior Collection Period.
3.15 Reports to Certificateholders and Rating Agencies.
(a) The Trustee shall provide to any Certificateholder or
Certificate Owner who so requests in writing a copy of any (i) Servicer's
Certificate, (ii) annual statement as to compliance described in Section
3.11(a), (iii) annual accountants' report described in Section 3.12 or
(iv) statement to Certificateholders pursuant to Section 4.10(a). The
Trustee may require such Certificateholder or Certificate Owner to pay a
reasonable sum to cover the cost of the Trustee's complying with such
request.
(b) The Trustee shall forward to each Rating Agency a copy of each
(i) Servicer's Certificate, (ii) annual statement as to compliance
described in Section 3.11(a), (iii) Officer's Certificate of the Servicer
described in Section 3.11(b), (iv) annual accountants' report pursuant to
Section 3.12, (v) statement to Certificateholders pursuant to Section
4.10(a), (vi) Trustee's Certificate delivered by the Trustee pursuant to
Section 9.02 or 9.03 and (vii) other report it may receive pursuant to
this Agreement at its address specified in Section 11.05 or in this
Agreement.
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ARTICLE IV
ACCOUNTS; DISTRIBUTIONS;
STATEMENTS TO CERTIFICATEHOLDERS
4.01 Accounts.
(a) The Servicer shall establish the Accounts in the name of the
Trustee for the benefit of the Certificateholders. Except as otherwise
provided in this Agreement, each Account shall be an account initially
established with the Trustee and maintained with the Trustee so long as
(i) the commercial paper or other short-term unsecured debt obligations of
the Trustee have the Required Rating, or (ii) such Account is a segregated
trust account located in the corporate trust department of the Trustee
bearing a designation clearly indicating that the funds deposited therein
(other than interest or investment earnings thereon) are held in trust for
the benefit of the Certificateholders, and the Trustee has a long-term
deposit rating from Moody's (so long as Moody's is a Rating Agency) of at
least ___ (or such lower rating as Moody's shall approve in writing) and
corporate trust powers under applicable federal and state laws and is
organized under the laws of the United States or any state thereof, the
District of Columbia or the Commonwealth of Puerto Rico. Except as
otherwise provided in this Agreement, in the event that the Trustee no
longer meets either of the foregoing requirements, then the Servicer
shall, with the Trustee's assistance as necessary, cause the Accounts to
be moved to a bank or trust company that satisfies either of such
requirements.
(b) For so long as the depository institution or trust company then
maintaining the Accounts meets the requirements of Section 4.01(a)(i) or
(a)(ii), all amounts held in the Accounts shall, to the extent permitted
by applicable laws, rules and regulations, be invested, as directed in
writing by the Servicer, in Eligible Investments; otherwise such amounts
shall be maintained in cash. Such Investments shall not be sold or
disposed of prior to their maturity. Earnings on investment of funds in
the Accounts (net of losses and investment expenses) shall be paid to the
Servicer and any losses and investment expenses shall be charged against
the funds on deposit in the related Account.
(c) For so long as - is the Trustee, the Accounts shall be
maintained with the Trustee as described in clause (ii) of the second
sentence of Section 4.01(a). In the event that (i) the long-term debt
rating of the Trustee does not satisfy clause (ii) of the second sentence
of Section 4.01(a) and clause (B) of the second sentence of Section
4.07(a)(i) or (ii) Moody's informs the parties hereto that the first
sentence of this Section shall no longer be operative, the Servicer shall,
with the assistance of the Trustee as necessary, cause (1) the Collection
Account and the Payahead Account to be moved to an institution or an
account otherwise satisfying the requirements of Section 4.01(a) and (2)
any Yield Maintenance Account and the Reserve Fund to be moved to an
institution or accounts otherwise satisfying the requirements of Section
[4.08(a)(i) and] 4.07(a)(i).
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4.02 Collections.
(a) Except as otherwise provided in this Agreement, the Servicer
shall remit daily to the Collection Account all payments received by or on
behalf of the Obligors on or in respect of the Receivables (other than, in
the case of Precomputed Receivables, payments constituting Payments Ahead)
and all Net Liquidation Proceeds within two Business Days after receipt
thereof. Notwithstanding the foregoing, for so long as (i) TMCC is the
Servicer, (ii) either (a) TMCC's short-term unsecured debt is rated ___ by
Moody's and ___ by Standard & Poor's (so long as Moody's and Standard &
Poor's are Rating Agencies), or (b) certain arrangements are made that
have been approved in writing by each Rating Agency and (iii) an Event of
Default shall not have occurred and be continuing (collectively, the
"Monthly Remittance Conditions"), the Servicer shall not be required to
remit such collections to the Collection Account on the foregoing daily
basis but shall be entitled to retain such collections, without
segregation from its other funds, until the Business Day before each
Distribution Date at which time the Servicer shall remit all such
collections in respect of the related Collection Period to the Collection
Account in immediately available funds. Commencing with the first day of
the first Collection Period that begins at least two Business Days after
the day on which any Monthly Remittance Condition ceases to be satisfied
and for so long as any Monthly Remittance Conditions is not satisfied, all
collections then held by the Servicer shall be immediately deposited into
the Collection Account and all future collections on or in respect of the
Receivables and all Net Liquidation Proceeds shall be remitted by the
Servicer to the Collection Account on a daily basis within two Business
Days after receipt thereof.
(b) Except as otherwise provided in this Agreement, the Servicer
shall deposit all Payments Ahead in the Collection Account within two
Business Days after receipt thereof, which Payments Ahead shall be
transferred to the Payahead Account pursuant to Section 4.06(a)(ii).
Notwithstanding the foregoing, so long as all Monthly Remittance
Conditions are satisfied, the Servicer will not be required to deposit
Payments Ahead in the Payahead Account within two Business Days after
receipt thereof but shall be entitled to retain such Payments Ahead,
without segregation from its other funds, until such time as the Servicer
shall be required to remit Applied Payments Ahead to the Collection
Account pursuant to Section 4.06(a)(ii). Commencing with the first day of
the first Collection Period that begins at least two Business Days after
the day on which any Monthly Remittance Condition ceases to be satisfied
and for so long as all Monthly Remittance Conditions are not satisfied,
all Payments Ahead then held by the Servicer shall be immediately
deposited into the Payahead Account and all future Payments Ahead shall be
remitted by the Servicer to the Payahead Account within two Business Days
after receipt thereof.
(c) The Servicer shall give the Trustee and each Rating Agency
written notice of the failure of any Monthly Remittance Condition (and any
subsequent curing of a failed Monthly Remittance Condition) as soon as
practical after the occurrence thereof. Notwithstanding the failure of any
Monthly Remittance Condition, the Servicer may
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utilize an alternative collection or Payment Ahead remittance schedule
(which may be the remittance schedule previously utilized prior to the
failure of such Monthly Remittance Condition), if the Servicer provides to
the Trustee written confirmation from each Rating Agency that such
alternative remittance schedule will not result in the qualification,
reduction or withdrawal of the rating then assigned to any Class of Rated
Certificates.
4.03 Application of Collections. As of the Business Day immediately
preceding the related Distribution Date, all collections for the related
Collection Period shall be applied by the Servicer as follows:
(a) With respect to each Receivable (other than an Administrative
Receivable or a Warranty Receivable), payments made by or on behalf of the
Obligor which are not Supplemental Servicing Fees shall be applied first
to reimburse the Servicer for Outstanding Advances made with respect to
such Receivable (each such payment, an "Overdue Payment"). Next, the
amount of any payment in excess of Supplemental Servicing Fees and
Outstanding Advances with respect to such Receivable shall be applied to
the Scheduled Payment with respect to such Receivable. If the amount of
such payment remaining after the applications described in the two
preceding sentences (i) equals (together with any Deferred Prepayment) the
unpaid principal balance of such Receivable, it shall be applied to prepay
the principal balance of such Receivable, or (ii) is less than the unpaid
principal balance of such Receivable, it shall constitute an Excess
Payment with respect to such Receivable.
(b) With respect to each Administrative Receivable and Warranty
Receivable, payments made by or on behalf of the Obligor shall be applied
in the same manner, except that any Released Administrative Amount or
Released Warranty Amount shall be remitted to the Servicer or the Seller,
as applicable. A Warranty Purchase Payment or an Administrative Purchase
Payment shall be applied to reduce Outstanding Advances and such Warranty
Purchase Payment or Administrative Purchase Payment, as applicable, shall
be applied to the Scheduled Payment, in each case to the extent that the
payments by the Obligor shall be insufficient, and then to prepay the
unpaid principal balance of such Receivable in full.
4.04 Advances.
(a) As of last day of a Collection Period, if the payments during
such Collection Period by or on behalf of the Obligor on or in respect of
a Precomputed Receivable (other than an Administrative Receivable or a
Warranty Receivable) after application under Section 4.03(a) shall be less
than the Scheduled Payment (determined as of the Closing Date), whether as
a result of any modification or extension granted to the Obligor or
otherwise, then the Deferred Prepayment, if any, with respect to such
Precomputed Receivable shall be applied by the Servicer to the extent of
the shortfall, and such Deferred Prepayment shall be reduced accordingly.
Subject to the provisions of the last sentence of this paragraph, the
Servicer shall deposit an amount equal to such shortfall (each, a
"Precomputed Advance") in the Collection Account on the Business Day
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immediately preceding the related Distribution Date. In addition, as of
last day of a Collection Period, if the payments during such Collection
Period by or on behalf of the Obligor on or in respect of a Simple
Interest Receivable (other than an Administrative Receivable or a Warranty
Receivable) after application under Section 4.03(a) shall be less than the
Scheduled Payment (determined as of the Closing Date), whether as a result
of any modification or extension granted to the Obligor or otherwise, then
an amount equal to the product of the principal balance of such Receivable
as of the first day of the related Collection Period and one-twelfth of
its Annual Percentage Rate minus the amount of interest actually received
on such Receivable during the Collection Period (each, a "Simple Interest
Advance") shall be deposited by the Servicer into the Collection Account
on the Business Day immediately preceding the related Distribution Date.
If such a calculation in respect of a Simple Interest Receivable results
in a negative number, an amount equal to such negative amount shall be
paid to the Servicer in reimbursement of any Outstanding Advances in
respect of Simple Interest Receivables. 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 Outstanding Advances
in respect of Simple Interest Receivables in respect thereof, be withdrawn
from the Collection Account and paid to the Servicer in reimbursement of
such Outstanding Advances. No Advances will be made with respect to the
Principal Balance of Simple Interest Receivables. The Servicer shall not
be required to make an Advance (other than a Simple Interest Advance in
respect of an interest shortfall arising from the Prepayment of a Simple
Interest Receivable) to the extent that the Servicer, in its sole
discretion, shall determine that such Advance is unlikely to be recovered
from subsequent payments made by or on behalf of the related Obligor,
Liquidation Proceeds, by the Administrative Purchase Payment or by the
Warranty Purchase Payment with respect to such Receivable or otherwise.
(b) The Servicer shall be entitled to reimbursement for Outstanding
Advances, without interest, with respect to a Receivable from the
following sources with respect to such Receivable: (i) subsequent payments
made by or on behalf of the related Obligor, (ii) Liquidation Proceeds,
(iii) the Administrative Purchase Payment, and (iv) the Warranty Purchase
Payment; provided, however, that in the case of Advances made pursuant to
Section 3.02, the Servicer shall be entitled to reimbursement only from
amounts received in respect of such Receivable that are in excess of the
amount of the Scheduled Payment in the related Collection Period.
(c) To the extent that during any Collection Period any funds
described above in Section 4.04(b) with respect to a Receivable as to
which the Servicer previously has made an unreimbursed Advance are
received by the Trustee or the Servicer, and the Servicer determines that
any Outstanding Advances with respect to such Receivable are unlikely to
be recovered from payments made on or with respect to such Receivable
(each, a "Nonrecoverable Advance"), then, on the related Distribution
Date, upon the Servicer providing the Seller and the Trustee with an
Officer's Certificate setting forth the basis for its determination of any
such amount, the Trustee shall promptly remit to the Servicer (i) from
Available Interest an amount equal to the portion of such Nonrecoverable
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Advance allocable to interest and (ii) from Available Principal an amount
equal to the portion of such Nonrecoverable Advance allocable to
principal, in each case without interest, in accordance with Section
4.06(c)(i). In lieu of causing the Trustee to remit any such amounts or
the amounts described in clauses (i) through (iv) in Section 4.04(b), the
Servicer may deduct such amounts from deposits otherwise to be made into
the Collection Account.
4.05 Additional Deposits.
(a) The following additional deposits shall be made to the
Collection Account: (i) the Seller shall remit the aggregate Warranty
Purchase Payments with respect to Warranty Receivables pursuant to Section
2.05 or the amount required upon the optional termination of the Trust by
the Seller or the Servicer, or any successor to the Servicer, pursuant to
Section 10.02; (ii) the Servicer shall remit (A) the amount required to be
remitted in respect of certain full Prepayments pursuant to Section 3.03,
(B) the aggregate Advances pursuant to Sections 3.02, 3.08 and 4.04(a),
and (C) the aggregate Administrative Purchase Payments with respect to
Administrative Receivables pursuant to Sections 3.02 and 3.08; and (iii)
the Trustee shall transfer any Yield Maintenance Deposit from the Yield
Maintenance Account to the Collection Account pursuant to Sections 4.06
(in assuring the availability therein of the related Available Interest)
and 4.08(b) and shall transfer the amounts described in Sections 4.06 and
4.07(b) from the Reserve Fund to the Collection Account pursuant to
Section 4.07(b).
(b) All deposits required to be made pursuant to this Section by the
Seller or the Servicer, as the case may be, may be made in the form of a
single deposit and shall be made in immediately available funds, no later
than 5:00 P.M., New York City time, on the Business Day immediately
preceding the related Distribution Date. At the direction of the Servicer,
the Trustee shall invest such amounts in Eligible Investments maturing not
later than [3:00 P.M.] New York City Time, on the related Distribution
Date.
4.06 Distributions.
(a) On each Distribution Date (or, if both the Accounts are not
maintained by the Trustee, on the Business Day immediately preceding each
Distribution Date), the Trustee shall cause to be made the following
transfers and distributions in immediately available funds in the amounts
set forth in the Servicer's Certificate for such Distribution Date:
(i) from the Payahead Account (or directly from the Servicer
in the case of Payments Ahead held by the Servicer pursuant to
Section 4.02(b) or (c)) to the Collection Account, the aggregate
Applied Payments Ahead; and
(ii) if the Servicer is not permitted to hold Payments Ahead
pursuant to Section 4.02(b) or (c), from the Collection Account to
the Payahead Account, the aggregate Payments Ahead for the related
Collection Period.
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(b) On each Determination Date, the Servicer shall calculate the
Available Interest, the Available Principal, the Class A Distributable
Amount, the Class B Distributable Amount, the amount to be distributed to
Certificateholders of each Class and all other distributions to be made on
the related Distribution Date.
(c) The rights of the Class B Certificateholders to receive
distributions in respect of the Class B Certificates shall be and hereby
are subordinated to the rights of the Class A Certificateholders to
receive distributions in respect of the Class A Certificates to the extent
provided in this Section. On each Distribution Date, the Trustee shall
make the following distributions from the Collection Account in the
following order of priority and in the amounts set forth in the Servicer's
Certificate for such Distribution Date; provided, however, that except as
otherwise provided in Sections 4.05(a) or 4.06(a), such distributions
shall be made only from those funds deposited in the Collection Account
for the related Collection Period:
(i) to the Servicer from Available Interest or Available
Principal, any payments in respect of Nonrecoverable Advances
required pursuant to Section 4.04(c);
(ii) to the Servicer, from Available Interest (after giving
effect to any reduction in Available Interest described in clause
(i) above), the Total Servicing Fee (including any unpaid Total
Servicing Fees from one or more prior Collection Periods);
(iii) to the Class A Certificateholders of record, from
Available Interest (after giving effect to the reduction in
Available Interest described in clauses (i) and (ii) above), an
amount equal to the sum of the Class A Interest Distributable Amount
and any outstanding Class A Interest Carryover Shortfall from the
immediately preceding Distribution Date and, if such Available
Interest is insufficient, the Class A Certificateholders will
receive such shortfall first, from the Class B Percentage of
Available Principal and second, if such amounts are still
insufficient, from monies on deposit in the Reserve Fund;
(iv) to the Class B Certificateholders of record, from
Available Interest (after giving effect to the reduction in
Available Interest described in clauses (i), (ii) and (iii) above),
an amount equal to the sum of the Class B Interest Distributable
Amount and any outstanding Class B Interest Carryover Shortfall from
the immediately preceding Distribution Date and, if such Available
Interest is insufficient, the Class B Certificateholders will
receive such shortfall from monies on deposit in the Reserve Fund;
(v) to the Class A Certificateholders of record, from
Available Principal (after giving effect to any reduction in
Available Principal described in clauses (i) and (iii) above), an
amount equal to the sum of the Class A Principal Distributable
Amount and any outstanding Class A Principal Carryover Shortfall
from the immediately preceding Distribution Date and, if such
Available Principal is
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insufficient, the Class A Certificateholders will receive such
shortfall first, from Available Interest (after giving effect to the
reduction in Available Interest described in clauses (i) through
(iv) above) and second, if such amounts are still insufficient, from
monies on deposit in the Reserve Fund; and
(vi) to the Class B Certificateholders of record, from
Available Principal (after giving effect to the reduction in
Available Principal described in clauses (i), (iii) and (v) above),
an amount equal to the sum of the Class B Principal Distributable
Amount and any outstanding Class B Principal Carryover Shortfall
from the immediately preceding Distribution Date and, if such
Available Principal is insufficient, the Class B Certificateholders
will receive such shortfall first, from Available Interest (after
giving effect to the reduction in Available Interest described in
clauses (i) through (v) above) and second, if such amounts are still
insufficient, from monies on deposit in the Reserve Fund.
(d) On each Distribution Date, the Trustee shall deposit any Excess
Amounts into the Reserve Fund until the amount on deposit therein equals
the Specified Reserve Fund Balance and shall distribute the remainder, if
any, to the Seller.
(e) Subject to Section 10.01 respecting the final payment upon
retirement of each Certificate, the Servicer shall on each Distribution
Date instruct the Trustee to distribute to each Certificateholder of any
Class of record on the related Record Date by check mailed to such
Certificateholder at the address of such Holder appearing in the
Certificate Register (or, if DTC, its nominee or a Clearing Agency is the
relevant Certificateholder, by wire transfer of immediately available
funds or pursuant to other arrangements), the amount to be distributed to
such Certificateholder pursuant to such Holder's Certificates.
4.07 Reserve Fund.
(a) (i) In order to effectuate the subordination provided for herein
and to assure that sufficient amounts to make required distributions
to Certificateholders will be available, the Servicer shall
establish and maintain with the Trustee a trust account: the
"Reserve Fund" which will include the money and other property
deposited and held therein pursuant to Section 4.06(d) and this
Section. Except as otherwise provided in this Agreement, the Reserve
Fund shall (A) be a segregated trust account initially established
with the Trustee and maintained with the Trustee so long as the
commercial paper or other short-term unsecured debt obligations of
the Trustee have the Required Rating and (B) in the event that the
commercial paper or other short-term unsecured debt obligations of
the Trustee no longer have the Required Rating, the Servicer shall,
with the assistance of the Trustee as necessary, cause the Reserve
Fund to be moved to (1) a segregated deposit account in a bank or
trust company, the commercial paper or other short-term unsecured
debt obligations of which shall have the Required Rating, or (2) a
segregated trust account bearing a designation clearly indicating
the funds deposited therein are held in trust for the benefit of the
Class A Certificateholders
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and the Class B Certificateholders located in the corporate trust
department of a depository institution or trust company (which may
include the Trustee) having a long-term deposit rating from Moody's
(so long as Moody's is a Rating Agency) of at least ___ (or such
lower rating as Moody's shall approve in writing) and corporate
trust powers under applicable federal and state laws and organized
under the laws of the United States or any state thereof, the
District of Columbia or the Commonwealth of Puerto Rico.
On or prior to the Closing Date, the Seller shall deposit an
amount equal to the Reserve Fund Initial Deposit into the Reserve
Fund. The Reserve Fund shall not be part of the Trust but instead
will be held for the benefit of the Holders of the Class A
Certificates and the Class B Certificates. The Seller hereby
acknowledges that the Reserve Fund Initial Deposit (and any
investment earnings thereon) are owned directly by it, and the
Seller hereby agrees to treat the same as its assets (and earnings)
for federal income tax and all other purposes. On each Distribution
Date, Excess Amounts will be deposited into the Reserve Fund by the
Trustee to the extent set forth in Section 4.06(d).
(ii) In order to give effect to the subordination provided for
herein and to assure availability of the amounts maintained in the
Reserve Fund, the Seller hereby sells, conveys and transfers to the
Trustee, as collateral agent, and its successors and assigns, the
Reserve Fund Initial Deposit and all proceeds thereof and hereby
pledges to the Trustee as collateral agent, and its successors and
assigns, all other amounts deposited in or credited to the Reserve
Fund from time to time under this Agreement, all earnings and
distributions thereon and proceeds thereof (other than proceeds
constituting interest or net investment earnings attributable to the
investment of the Reserve Fund at the direction of the Servicer)
subject, however, to the limitations set forth below, and solely for
the purpose of securing and providing for payment of the Class A and
Class B Distributable Amounts, together with any Class A and Class B
Interest Carryover Shortfalls and Class A and Class B Principal
Carryover Shortfalls, in accordance with Section 4.06 and this
Section to have and to hold all the aforesaid property, rights and
privileges unto the Trustee, its successors and assigns, in trust
for the uses and purposes, and subject to the terms and provisions,
set forth in this Section. The Trustee hereby acknowledges such
transfer and accepts the trust hereunder and shall hold and
distribute the Reserve Fund in accordance with the terms and
provisions of this Section.
(b) Consistent with the limited purposes for which such trust are
granted, on each Distribution Date the amount on deposit in the Reserve
Fund shall be available for, and applied to make, distributions as
provided in Section 4.06. In addition, on each Distribution Date on which
the amount on deposit in the Reserve Fund (after giving effect to all
deposits thereto or withdrawals therefrom on such Distribution Date) is
greater than the Specified Reserve Fund Balance, the Trustee will
distribute any
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remaining amounts to the Seller. Upon any such distribution to the Seller,
the Certificateholders will have no further rights in, or claims to, such
amount.
(c) (i) Amounts held in the Reserve Fund shall be invested in the
manner specified in Section 4.01(b). Such investments shall not be sold or
disposed of prior to their maturity. All such investments shall be made in
the name of the Trustee, its Financial Intermediary or its nominee, in
either case as collateral agent, and all income and gain realized thereon
shall be solely for the benefit of the Seller and shall be payable by the
Trustee to the Seller on each Distribution Date. Realized losses, if any,
on investment of the Reserve Fund shall be charged first against
undistributed investment earnings attributable to the Reserve Fund and
then against the Reserve Fund.
(ii) With respect to the Reserve Fund, the Seller and the
Trustee agree that:
(A) any Reserve Fund property that is held in deposit
accounts shall be held solely in the name of the Trustee, as
collateral agent, at the Trustee (in a segregated trust account if
the deposits of the Trustee do not have the Required Rating) or at
one or more depository institutions which are eligible to maintain
the Reserve Fund as described in Section 4.07(a)(i); such deposit
account shall be subject to the exclusive custody and control of the
Trustee, and the Trustee shall have sole signature authority with
respect thereto;
(B) any Reserve Fund property that constitutes Physical
Property shall be delivered to the Trustee, as collateral agent, in
accordance with paragraph (i) of the definition of the term
"Delivery" and shall be held, pending maturity or disposition,
solely by the Trustee, as collateral agent or a financial
intermediary (as such term is defined in Section 8-313(4) of the
UCC) acting solely for the Trustee, as collateral agent;
(C) any Reserve Fund property that is a book-entry
security held through the Federal Reserve pursuant to federal
book-entry regulations shall be delivered in accordance with
paragraph (ii) of the definition of the term "Delivery" and shall be
maintained by the Trustee, as collateral agent, pending maturity or
disposition, through continued book-entry registration of such
Reserve Fund as described in such paragraph; and
(D) any Reserve Fund property that is an "uncertificated
security" under Article Eight of the UCC and that is not governed by
clause (C) above shall be delivered to the Trustee, as collateral
agent, in accordance with paragraph (iii) of the definition of the
term "Delivery" and shall be maintained by the Trustee, as
collateral agent, pending maturity or disposition, through continued
registration of the Trustee's or its Financial Intermediary's (or
its custodian's or its nominee's) ownership of such security, in its
capacity as collateral agent.
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Effective upon Delivery of the Reserve Fund property in the form of
Physical Property, book-entry securities or uncertificated
securities, the Trustee shall be deemed to have purchased such
Reserve Fund property for value, in good faith and without notice of
any adverse claim thereto.
(iii) Each of the Seller and the Servicer agrees to take or
cause to be taken such further actions, to execute, deliver and file
or cause to be executed, delivered and filed such further documents
and instruments (including, without limitation, any UCC financing
statements or this Agreement) as may be determined to be necessary,
in an Opinion of Counsel to the Seller delivered to the Trustee, in
order to perfect the interests created by this Section and otherwise
fully to effectuate the purposes, terms and conditions of this
Section. The Seller and/or the Servicer, as the case may be, shall:
(A) promptly execute, deliver and file any financing
statements, amendments, continuation statements, assignments,
certificates and other documents with respect to such interests and
perform all such other acts as may be necessary in order to perfect
or to maintain the perfection of the Trustee's security interest;
and
(B) make the necessary filings of financing statements
or amendments thereto within ten Business Days after the occurrence
of any of the following: (1) any change in their respective
corporate names or any trade names, (2) any change in the location
of their respective chief executive offices or principal places of
business and (3) any merger or consolidation or other change in
their respective identities or corporate structures; and shall
promptly notify the Trustee of any such filings.
(iv) The Trustee shall not enter into any subordination or
intercreditor agreement with respect to the Reserve Fund.
(d) Upon termination of the Trust pursuant to Section 10.01, any
amounts on deposit in the Reserve Fund, after payment of all amounts due
to the Certificateholders, shall be paid to the Seller.
4.08 Yield Maintenance Account. (a) (i) In order to assure that sufficient
amounts to make required distributions of interest to Certificateholders will be
available, the Servicer shall establish and maintain with the Trustee a trust
account: the "Yield Maintenance Account" which will include the money and other
property deposited and held therein pursuant to this Section. Except as
otherwise provided in this Agreement, the Yield Maintenance Account shall (A) be
a segregated trust account initially established with the Trustee and maintained
with the Trustee so long as the commercial paper or other short-term unsecured
debt obligations of the Trustee have the Required Rating and (B) in the event
that the commercial paper or other short-term unsecured debt obligations of the
Trustee no longer have the Required Rating, the Servicer shall, with the
assistance of the Trustee as necessary, cause the Yield Maintenance Account to
be moved to (1) a segregated deposit account in a bank or trust company, the
commercial paper or other short-term
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unsecured debt obligations of which shall have the Required Rating, or (2) a
segregated trust account bearing a designation clearly indicating the funds
deposited therein are held in trust for the benefit of the Class A
Certificateholders and the Class B Certificateholders located in the corporate
trust department of a depository institution or trust company (which may include
the Trustee) having a long-term deposit rating from Moody's (so long as Moody's
is a Rating Agency) of at least ___ (or such lower rating as Moody's shall
approve in writing) and corporate trust powers under applicable federal and
state laws and organized under the laws of the United States or any state
thereof, the District of Columbia or the Commonwealth of Puerto Rico.
On or prior to the Closing Date, the Seller [or third party] shall deposit
an amount equal to the Yield Maintenance Account Initial Deposit into the Yield
Maintenance Account. In addition, on each subsequent Distribution Date, the
Seller [or third party] shall, pursuant to the Yield Maintenance Agreement [and
the Collateral Security Agreement] deposit an amount equal to the Additional
Yield Maintenance Amount into the Yield Maintenance Account. The Yield
Maintenance Account shall not be part of the Trust but instead will be held for
the benefit of the Holders of the Class A Certificates and the Class B
Certificates. The [Seller hereby acknowledges][third party, pursuant to the
Collateral Security Agreement and the Yield Maintenance Agreement], has
acknowledged] that the Yield Maintenance Account Initial Deposit, all Additional
Yield Maintenance Amounts and any investment earnings thereon are owned directly
by it, and the [Seller hereby agrees][third party has thereunder agreed] to
treat the same as its assets (and earnings) for federal income tax and all other
purposes.
(ii) In order to assure availability of the amounts maintained
in the Yield Maintenance Account, the [third party has, pursuant to
the Yield Maintenance Agreement and the Collateral Security
Agreement, sold, conveyed and transferred] [Seller hereby sells,
conveys and transfers] to the Trustee, as collateral agent, and its
successors and assigns, the Yield Maintenance Account Initial
Deposit and all proceeds thereof and [pursuant to the Yield
Maintenance Agreement and the Collateral Security Agreement has
pledged][hereby pledges] to the Trustee as collateral agent, and its
successors and assigns, all other amounts deposited in or credited
to the Yield Maintenance Account from time to time under the Yield
Maintenance Agreement, all earnings and distributions thereon and
proceeds thereof (other than proceeds constituting interest or net
investment earnings attributable to investment of the Yield
Maintenance Account at the direction of the Servicer) subject,
however, to the limitations set forth below, and solely for the
purpose of securing and providing for payment of each Yield
Maintenance Deposit, if applicable, comprising a portion of
Available Interest to be distributed in accordance with Section 4.06
and this Section on any Distribution Date, to have and to hold all
the aforesaid property, rights and privileges unto the Trustee, its
successors and assigns, in trust for the uses and purposes, and
subject to the terms and provisions, set forth in this Section. The
Trustee hereby acknowledges such transfer and accepts the trust
hereunder and shall hold and distribute the Yield Maintenance
Account in accordance with the terms and provisions of this Section.
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(b) Consistent with the limited purposes for which such trusts are
granted, on each Distribution Date the amount of the related Yield
Maintenance Deposit, if any, to the extent amounts on deposit in the Yield
Maintenance Account are sufficient therefor, shall be available for
distribution as provided in Section 4.06 (in determining and distributing
Available Interest) and, on each Distribution Date, if the amount on
deposit in the Yield Maintenance Account (after giving effect to all
deposits thereto or withdrawals therefrom on such Distribution Date) is
greater than the Required Yield Maintenance Amount, the Trustee will
distribute any remaining amounts to the Seller [or third party]. Upon any
such distribution to the Seller [or third party], the Certificateholders
will have no further rights in, or claims to, such amount.
(c) (i) Amounts held in the Yield Maintenance Account shall be
invested in the manner specified in Section 4.01(b). Such
investments shall not be sold or disposed of prior to their
maturity. All such investments shall be made in the name of the
Trustee, its Financial Intermediary or its nominee, in either case
as collateral agent, and all income and gain realized thereon shall
be solely for the benefit of the Seller [or third party] and shall
be payable by the Trustee to the Seller [or third party] on each
Distribution Date. Realized losses, if any, on investment of the
Yield Maintenance Account shall be charged first against
undistributed investment earnings attributable to the Yield
Maintenance Account and then against the Yield Maintenance Account.
(ii) With respect to the Yield Maintenance Account, [the
Seller and the Trustee agree] [, in the Yield Maintenance Agreement
and the Collateral Security Agreement, the Seller, the third party
and the Trustee have agreed] that:
(A) any Yield Maintenance Account property that is held
in deposit accounts shall be held solely in the name of the Trustee,
as collateral agent, at the Trustee (in a segregated trust account
if the deposits of the Trustee do not have the Required Rating) or
at one or more depository institutions which are eligible to
maintain the Yield Maintenance Account as described in Section
4.07(a)(i); such deposit account shall be subject to the exclusive
custody and control of the Trustee, and the Trustee shall have sole
signature authority with respect thereto;
(B) any Yield Maintenance Account property that
constitutes Physical Property shall be delivered to the Trustee, as
collateral agent, in accordance with paragraph (i) of the definition
of the term "Delivery" and shall be held, pending maturity or
disposition, solely by the Trustee, as collateral agent or a
financial intermediary (as such term is defined in Section 8-313(4)
of the UCC) acting solely for the Trustee, as collateral agent;
(C) any Yield Maintenance Account property that is a
book-entry security held through the Federal Reserve pursuant to
federal book-entry regulations shall be delivered in accordance with
paragraph (ii) of the definition of
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the term "Delivery" and shall be maintained by the Trustee, as
collateral agent, pending maturity or disposition, through continued
book-entry registration of such Yield Maintenance Account as
described in such paragraph; and
(D) any Yield Maintenance Account property that is an
"uncertificated security" under Article Eight of the UCC and that is
not governed by clause (C) above shall be delivered to the Trustee,
as collateral agent, in accordance with paragraph (iii) of the
definition of the term "Delivery" and shall be maintained by the
Trustee, as collateral agent, pending maturity or disposition,
through continued registration of the Trustee's or its Financial
Intermediary's (or its custodian's or its nominee's) ownership of
such security, in its capacity as collateral agent.
Effective upon Delivery of the Yield Maintenance Account property in
the form of Physical Property, book-entry securities or
uncertificated securities, the Trustee shall be deemed to have
purchased such Yield Maintenance Account property for value, in good
faith and without notice of any adverse claim thereto.
(iii) Each of the Seller and the Servicer agrees [and,
pursuant to the Yield Maintenance Agreement and the Collateral
Security Agreement, the third party has agreed,] to take or cause to
be taken such further actions, to execute, deliver and file or cause
to be executed, delivered and filed such further documents and
instruments (including, without limitation, any UCC financing
statements or this Agreement) as may be determined to be necessary,
in an Opinion of Counsel to [the Seller] [the third party] delivered
to the Trustee, in order to perfect the interests created by this
Section and otherwise fully to effectuate the purposes, terms and
conditions of this Section. The [third party][Seller and/or the
Servicer], as the case may be, shall:
(A) promptly execute, deliver and file any financing
statements, amendments, continuation statements, assignments,
certificates and other documents with respect to such interests and
perform all such other acts as may be necessary in order to perfect
or to maintain the perfection of the Trustee's security interest;
and
(B) make the necessary filings of financing statements
or amendments thereto within ten Business Days after the occurrence
of any of the following: (1) any change in their respective
corporate names or any trade names, (2) any change in the location
of their respective chief executive offices or principal places of
business and (3) any merger or consolidation or other change in
their respective identities or corporate structures; and shall
promptly notify the Trustee of any such filings.
(iv) The Trustee shall not enter into any subordination or
intercreditor agreement with respect to the Yield Maintenance
Account.
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(d) Upon termination of the Trust pursuant to Section 10.01, any
amounts on deposit in the Yield Maintenance Account, after payment of all
amounts due to the Certificateholders, shall be paid to the [Seller][third
party].
4.09 Net Deposits. For so long as TMCC shall be, the Seller, the Servicer
and the Trustee may make any remittances pursuant to this Article net of amounts
to be distributed by the applicable recipient to such remitting party.
Nonetheless, each such party shall account for all of the above described
remittances and distributions as if the amounts were deposited and/or
transferred separately.
4.10 Statements to Certificateholders.
(a) On each Distribution Date, the Trustee shall include with each
distribution to each Certificateholder of record, a statement, prepared by
the Servicer, based on information in the Servicer's Certificate furnished
pursuant to Section 3.10, setting forth for the related Collection Period
the following information as of the related Record Date or such
Distribution Date, as the case may be:
(i) the amount of such distribution allocable to principal on
each Class of Certificates;
(ii) the amount of such distribution allocable to interest on
each Class of Certificates;
(iii) the Pool Balance as of the close of business on the last
day of such Collection Period;
(iv) the amount of the Basic Servicing Fee paid to the
Servicer with respect to the related Collection Period and the
amount of any Supplemental Servicing Fee received by the Servicer
with respect to such Collection Period;
(v) the amount of the Interest and Principal Carryover
Shortfalls with respect to each Class of Certificates, if any, on
such Distribution Date and the change in such amounts from the
immediately preceding Distribution Date;
(vi) the Class A Certificate Balance, the Class B Certificate
Balance and the Pool Factor with respect to each Class of
Certificates as of such Distribution Date, in each case after giving
effect to distributions in respect of principal reported under
clause (i) above;
(vii) the amount otherwise distributable to the Class B
Certificateholders that is distributed to the Class A
Certificateholders on such Distribution Date;
(viii) the balance on deposit in the Reserve Fund, after
giving effect to distributions made on such Distribution Date, and
the change in such balance from the immediately preceding
Distribution Date;
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(ix) the aggregate amount of Payments Ahead on deposit in the
Payahead Account or held by the Servicer and the change in such
amount from the immediately preceding Distribution Date;
(x) the amount of Outstanding Advances made in respect of such
Collection Period and the amount of unreimbursed Advances on such
Distribution Date; and
(xi) the Specified Reserve Fund Balance, the amount on deposit
in the Reserve Fund, any Required Yield Maintenance Amount and Yield
Maintenance Amount as of such Distribution Date, in each case after
giving effect to all distributions, deposits and withdrawals made on
such Distribution Date.
(b) Within a reasonable period of time after the end of each
calendar year, but not later than the latest date permitted by law, the
Trustee shall mail a statement or statements prepared by the Servicer to
each Person who at any time during such calendar year shall have been a
Holder of a Class A or Class B Certificate that reiterates the amounts set
forth in clauses (i), (ii), (iv) and (v) above for each Distribution Date
during the preceding calendar year and that specifies in the the aggregate
the amounts set forth in clauses (i), (ii), (iv) and (v) above for such
calendar year for purposes of such Certificateholder's preparation of
federal income tax returns. In addition, the Servicer shall furnish to the
Trustee for distribution to each such Person at such time any other
information that the Servicer actually knows is necessary under applicable
law for the preparation of such income tax returns.
ARTICLE V
THE CERTIFICATES
5.01 The Certificates. The Class A Certificates and the Class B
Certificates shall be substantially in the form attached hereto as Exhibit C or
Exhibit D, as the case may be. Each Class of Certificates shall be issuable in
minimum denominations of $1,000 and integral multiples in excess thereof;
provided, however, that one Class A Certificate and one Class B Certificate may
be issued in a denomination that includes any remaining portion of the Original
Class A Certificate Balance and the Original Class B Certificate Balance,
respectively (each, a "Residual Certificate"). The Certificates shall be
executed on behalf of the Trust by manual or facsimile signature of a
Responsible Officer and authenticated on behalf of the Trustee by the manual or
facsimile signature of a Responsible Officer. Certificates bearing the manual or
facsimile signatures of individuals who were, at the time when such signatures
were affixed, authorized to sign on behalf of the Trustee shall be valid and
binding obligations of the Trust, notwithstanding that such individuals or any
of them have ceased to be so authorized prior to the authentication and delivery
of such Certificates or did not hold such offices at the date of such
Certificates. All Certificates shall be dated the date of their authentication.
5.02 Authentication and Delivery of Certificates. The Trustee shall cause
to be authenticated and delivered to or upon the order of the Seller, in
exchange for the Receivables
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and the other assets of the Trust, simultaneously with the sale, assignment and
transfer to the Trust of the Receivables, and the constructive delivery to the
Trustee on behalf of the Trust of the Receivable Files and the other components
of the Trust, Certificates duly authenticated by the Trustee, in authorized
denominations equaling in the aggregate the Original Pool Balance and evidencing
the entire ownership of the Trust. No Certificate shall be entitled to any
benefit under this Agreement, or be valid for any purpose, unless there appears
on such Certificate a certificate of authentication substantially in the form
set forth in the form of such Certificate attached hereto as Exhibit C or
Exhibit D, as the case may be, executed by the Trustee by manual or facsimile
signature, and such certificate upon any Certificate shall be conclusive
evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered under this Agreement.
5.03 Registration of Transfer and Exchange of Certificates.
(a) The Certificate Registrar shall maintain a Certificate Register
in which, subject to such reasonable regulations as it may prescribe, the
Certificate Registrar shall provide for the registration of Certificates
and transfers and exchanges of Certificates as provided in this Agreement.
The Trustee is hereby initially appointed Certificate Registrar for the
purpose of registering Certificates and transfers and exchanges of
Certificates as provided in this Agreement In the event that, subsequent
to the Closing Date, the Trustee notifies the Servicer that it is unable
to act as Certificate Registrar, the Servicer shall appoint another bank
or trust company, having an office or agency located in the [Borough of
Manhattan], The City of New York, agreeing to act in accordance with the
provisions of this Agreement applicable to it, and otherwise acceptable to
the Trustee, to act as successor Certificate Registrar under this
Agreement.
(b) Upon surrender for registration of transfer of any Certificate
at the Corporate Trust Office, the Trustee on behalf of the Trust shall
execute, and the Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Certificates of
the same Class in authorized denominations of a like aggregate principal
amount.
(c) At the option of a Certificateholder, Certificates may be
exchanged for other Certificates of the same Class of authorized
denominations of a like aggregate principal amount, upon surrender of the
Certificates to be exchanged at any such office or agency. Whenever any
Certificates are so surrendered for exchange the Trustee on behalf of the
Trust shall execute, authenticate and deliver the Certificates that the
Certificateholder making the exchange is entitled to receive. Every
Certificate presented or surrendered for registration of transfer or
exchange shall be accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Certificate Registrar duly executed by
the Holder thereof or his attorney duly authorized in writing.
(d) No service charge shall be made for any registration of transfer
or exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
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(e) All Certificates surrendered for registration of transfer or
exchange shall be canceled and subsequently destroyed by the Trustee.
(f) Registration of transfer and sale of the Class B Certificates
shall be subject to the further conditions specified in Section 5.04.
(g) Each purchaser of a Class A Certificate that is Plan (as defined
in Section 5.04(a)(i)) that is a purhaser of a Class A Certificate or of a
benficial interest therein shall be deemed to have represented and
warranted, by accepting such Certificate or beneficial interest, that such
purchaser is an "accredited investor" as defined in Rule 501(a) under the
Securities Act.
5.04 Registration of Transfer and Exchange of Class B Certificates.
(a) No transfer of a Class B Certificate shall be made unless the
Trustee shall have received a representation from the transferee of such
Certificate acceptable to and in form and substance satisfactory to the
Trustee (in the event such Certificate is a Definitive Certificate, such
requirement will be satisfied only by the Trustee's receipt of a
representation letter from the transferee substantially in the form of
Exhibit E) to the effect that:
(i) such transferee (A) is not an employee benefit plan or
arrangement subject to Section 406 of ERISA or a plan subject to
Section 4975 of the Code (a "Plan"), nor a person acting on behalf
of a Plan nor using the assets of a Plan to effect such transfer,
and (B) is not an insurance company purchasing a Class B Certificate
with funds contained in an "insurance company general account" or
"insurance company separate account" (as defined in Section V(e) of
Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60")) as to
which there is a Plan with respect to which the amount of such
general account's reserves and liabilities for the contracts held by
or on behalf of such Plan and all other Plans maintained by the same
employer (or affiliate thereof as defined in Section V(a)(1) of PTCE
95-60) of by the same employee organization exceed 10% of the total
of all reserves and liabilities of such general account (as such
amounts are determined under Section I(a) of PTCE 95-60) at the date
of acquisition; or
(ii) is a Plan or a person acting on behalf of a Plan or using
the assets of a Plan to effect such transfer, or is an insurance
company purchasing a Class B Certificate with funds contained in an
insurance company general account or insurance company separate
account, having attached thereto an opinion of counsel satisfactory
to the Trustee, which opinion shall not be an expense of either the
Trustee or the Trust Fund, addressed to the Trustee, to the effect
that the purchase or holding of such Class B Certificate will not
result in the assets of the Trust Fund being deemed to be "plan
assets" and subject to the prohibited transaction provisions of
ERISA and the Code and will not subject the Trustee to any
obligation in addition to those expressly undertaken in this
Agreement or to any liability.
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For purposes of the preceding sentence, with respect to a Class B
Certificate that is a Book-Entry Certificate, in the event the Transferee
Certificate is not furnished, the representations contained in clause (i)
above shall be deemed to have been made to the Trustee by the transferee's
(including an initial acquiror's) acceptance of such Certificate.
Notwithstanding anything else to the contrary herein, any purported
transfer of a Class B Certificate or beneficial interest therein to or on
behalf of an employee benefit plan subject to ERISA or to the Code or to
an insurance company purchasing with funds from a general account or
insurance company separate accunt not exempt pursuant to PTCE 95-60
without the delivery to the Trustee of an opinion of counsel satisfactory
to the Trustee as described in clause (ii) above shall be void and of no
effect.
(b) To the extent permitted under applicable law (including, but not
limited to, ERISA), the Trustee shall be under no liability to any Person
for any registration of transfer of any ERISA-Restricted Certificate that
is in fact not permitted by this Section 23.01(b) or for making any
payments due on such Certificate to the Holder thereof or taking any other
action with respect to such Holder under the provisions of the Pooling and
Servicing Agreement so long as the transfer was registered by the Trustee
in accordance with the foregoing requirements.
5.05 Mutilated, Destroyed, Lost or Stolen Certificates. If (i) any
mutilated Certificate is surrendered to the Certificate Registrar, or the
Certificate Registrar receives evidence to its satisfaction of the destruction,
loss or theft of any Certificate, and (ii) there is delivered to the Certificate
Registrar and the Trustee such security or indemnity as may be required by them
to save each of them harmless, then, in the absence of notice that such
Certificate has been acquired by a bona fide purchaser, the Trustee on behalf of
the Trust shall execute and the Trustee shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like tenor and fractional undivided interest.
In connection with the issuance of any new Certificate under this Section, the
Trustee may require the payment by the Holder of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto.
If, after the delivery of such replacement Certificate or payment of a
destroyed, lost or stolen Certificate, a bona fide purchaser of the original
Certificate in lieu of which such replacement Certificate was issued presents
for payment such original Certificate, the Seller and the Trustee shall be
entitled to recover such replacement Certificate (or such payment) from the
Person to whom it was delivered or any Person taking such replacement
Certificate from such Person to whom such replacement Certificate was delivered
or any assignee of such Person, except a bona fide purchaser, and shall be
entitled to recover upon the security or indemnity provided therefor to the
extent of any loss, damage, cost or expense incurred by the Seller or the
Trustee in connection therewith.
5.06 Persons Deemed Owners. Prior to due presentation of a Certificate for
registration of transfer, the Trustee, the Certificate Registrar and any of
their respective agents may treat the Person in whose name any Certificate is
registered as the owner of such Certificate for the purpose of receiving
distributions pursuant to Section 4.06 and for all other purposes whatsoever,
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and neither the Trustee, the Certificate Registrar nor any of their respective
agents shall be affected by any notice to the contrary.
5.07 Access to List of Certificateholders' Names and Addresses. The
Certificate Registrar shall furnish or cause to be furnished to the Servicer,
within 15 days after receipt by the Certificate Registrar of a written request
therefor from the Servicer, a list of the names and addresses of the
Certificateholders as of the most recent Record Date. If three or more
Certificateholders, or one or more Holders of Class A or Class B Certificates
evidencing not less than 25% of the Voting Interests thereof (hereinafter
referred to as "Applicants"), apply in writing to the Trustee, and such
application states that the Applicants desire to communicate with other
Certificateholders with respect to their rights under this Agreement or under
the Certificates and such application is accompanied by a copy of the
communication that such Applicants propose to transmit, then the Trustee shall,
within five Business Days after the receipt of such application, afford such
Applicants access, during normal business hours, to the current list of
Certificateholders. Every Certificateholder, by receiving and holding a
Certificate, agrees with the Servicer and the Trustee that neither the Servicer
nor the Trustee shall be held accountable by reason of the disclosure of any
such information as to the names and addresses of the Certificateholders under
this Agreement, regardless of the source from which such information was
derived.
5.08 Maintenance of Office or Agency. The Trustee shall maintain in The
City of New York, an office or offices or agency or agencies where Certificates
may be surrendered for registration of transfer or exchange and where notices
and demands to or upon the Trustee in respect of the Certificates and this
Agreement may be served. The Trustee initially shall designate the Corporate
Trust Office as its office for such purposes. The Trustee shall give prompt
written notice to the Seller, the Servicer and to Certificateholders of any
change in the location of the Certificate Register or any such office or agency.
5.09 Temporary Certificates. Pending the preparation of definitive
Certificates of either Class, the Trustee, on behalf of the Trust, may execute,
authenticate and deliver, temporary Certificates of either Class that are
printed, lithographed, typewritten, mimeographed or otherwise produced, in any
authorized denomination, substantially of the tenor of the definitive
Certificates of either Class in lieu of which they are issued. If temporary
Certificates of either Class are issued, the Seller will cause definitive
Certificates of either Class to be prepared without unreasonable delay. After
the preparation of definitive Certificates of either Class, the temporary
Certificates of either Class shall be exchangeable for definitive Certificates
of either Class upon surrender of the temporary Certificates of either Class at
the office or agency to be maintained as provided in Section 5.08, without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Certificates of either Class, the Trustee on behalf of the Trust shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
like principal amount of definitive Certificates of either Class in authorized
denominations. Until so exchanged the temporary Certificates of either Class
shall in all respects be entitled to the same benefits under this Agreement as
definitive Certificates of either Class.
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5.10 Book-Entry Certificates. The Class A and Class B Certificates, upon
original issuance (except for the Residual Certificates) will be issued in
minimum denominations of $1,000 and integral multiples thereof, and initially
shall be issued as Book-Entry Certificates, to be delivered to DTC, the initial
Clearing Agency, by, or on behalf of, the Seller. The certificate or
certificates delivered to DTC evidencing such Certificates shall initially be
registered on the Certificate Register in the name of CEDE & CO., the nominee of
the initial Clearing Agency, and no Certificate Owner will receive a definitive
certificate representing such Certificate Owner's interest in the Class A or
Class B Certificates, except as provided in Section 5.12. Subject to Section
5.12, unless and until definitive, fully registered Certificates of either Class
(the "Definitive Certificates") have been issued to Certificate Owners pursuant
to Section 5.12:
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Seller, the Servicer, the Certificate Registrar and
the Trustee may deal with the Clearing Agency for all purposes
(including the making of distributions on the Certificates and the
giving of instructions or directions hereunder) as the authorized
representative of the Certificate Owners;
(iii) to the extent that the provisions of this Section
conflict with any other provisions of this Agreement, the provisions
of this Section shall control;
(iv) the rights of Certificate Owners shall be exercised only
through the Clearing Agency (or through procedures established by
the Clearing Agency) and shall be limited to those established by
law and agreements between such Certificate Owners and the Clearing
Agency and/or the Clearing Agency Participants. Unless and until
Definitive Certificates are issued pursuant to Section 5.12, the
initial Clearing Agency will make book-entry transfers among the
Clearing Agency Participants and receive and transmit distributions
of principal and interest on the Certificates to such Clearing
Agency Participants; and
(v) whenever this Agreement requires or permits actions to be
taken based upon instructions or directions of Holders of
Certificates evidencing a specified percentage of the Voting
Interests of either Class or both Classes the Clearing Agency shall
be deemed to represent such percentage only to the extent that it
has received instructions to such effect from Certificate Owners
and/or Clearing Agency Participants owning or representing,
respectively, such required percentage of the beneficial interest in
such Certificates and has delivered such instructions to the
Trustee.
5.11 Notices to Clearing Agency. Whenever notice or other communication to
the Class A or Class B Certificateholders is required under this Agreement,
other than to the Holder of a Residual Certificate, unless and until Definitive
Certificates shall have been issued to Certificate Owners pursuant to Section
5.12, the Trustee and the Servicer shall give all such notices and
communications specified herein to be given to Holders of Certificates to the
Clearing Agency.
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5.12 Definitive Certificates. If (i)(A) the Seller advises the Trustee in
writing that the Clearing Agency is no longer willing or able to properly
discharge its responsibilities as described in the Letter of Representations (a
form of which is attached hereto as Exhibit F) and (B) the Trustee or the Seller
is unable to locate a qualified successor, (ii) the Seller at its option,
advises the Trustee in writing that it elects to terminate the book-entry system
through the Clearing Agency, or (iii) after the occurrence of an Event of
Default, Certificate Owners representing in the aggregate not less than 51% of
the voting interests of the Class A Certificates and Class B Certificates,
acting as a single Class, advise the Trustee and the Clearing Agency through the
Clearing Agency Participants in writing that the continuation of a book-entry
system through the Clearing Agency is no longer in the best interests of the
Certificate Owners, then the Trustee shall notify all Certificate Owners,
through the Clearing Agency, of the occurrence of any such event and of the
availability of Definitive Certificates to Certificate Owners requesting the
same. Upon surrender to the Trustee of the Class A or Class B Certificates by
the Clearing Agency, accompanied by registration instructions from the Clearing
Agency for registration, the Trustee shall issue the Definitive Certificates and
deliver such Definitive Certificates in accordance with the instructions of the
Clearing Agency. Neither the Seller, the Certificate Registrar nor the Trustee
shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Certificates, the Trustee shall recognize the
Holders of the Definitive Certificates as Class A or Class B Certificateholders
hereunder. The Trustee shall not be liable if the Trustee or the Seller is
unable to locate a qualified successor Clearing Agency.
ARTICLE VI
THE SELLER
6.01 Representations of Seller. The Seller shall make the following
representations on which the Trustee shall rely in accepting the Receivables in
trust and executing and authenticating the Certificates. The representations
shall speak as of the execution and delivery of this Agreement and shall survive
the sale of the Receivables to the Trustee.
(a) Organization and Good Standing. The Seller shall have been duly
organized and shall be validly existing as a corporation in good standing
under the laws of the State of California, with corporate power and
authority to own its properties and to conduct its business as such
properties shall be currently owned and such business is presently
conducted, and had at all relevant times, and shall now have, corporate
power, authority and legal right to acquire, own and sell the Receivables.
(b) Due Qualification. The Seller shall be duly qualified to do
business as a foreign corporation in good standing, and shall have
obtained all necessary licenses and approvals in all jurisdictions in
which the ownership or lease of property or the conduct of its business
shall require such qualifications.
(c) Power and Authority. The Seller shall have the corporate power
and authority to execute and deliver this Agreement and to carry out its
terms; the Seller shall have full
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corporate power and authority to sell and assign the property to be sold
and assigned to and deposited with the Trustee as part of the Trust and
shall have duly authorized such sale and assignment to the Trustee by all
necessary corporate action; and the execution, delivery and performance of
this Agreement shall have been duly authorized by the Seller by all
necessary corporate action.
(d) Valid Sale; Binding Obligations. This Agreement shall evidence a
valid sale, transfer and assignment of the Receivables, enforceable
against creditors of and purchasers from the Seller; and shall constitute
a legal, valid and binding obligation of the Seller enforceable in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting
creditors' rights generally or by general equity principles.
(e) No Violation. The consummation of the transactions contemplated
by this Agreement and the fulfillment of the terms of this Agreement shall
not conflict with, result in any breach of any of the terms and provisions
of, nor constitute (with or without notice or lapse of time) a default
under, the articles of incorporation or bylaws of the Seller or any
indenture, agreement or other instrument to which the Seller is a party or
by which it shall be bound; nor result in the creation or imposition of
any Lien upon any of its properties pursuant to the terms of any such
indenture, agreement or other instrument (other than this Agreement), nor
violate any law or, to the best of the Seller's knowledge, any order, rule
or regulation applicable to the Seller of any court or of any federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Seller or its properties
which breach, default, conflict, lien or violation would have a material
adverse effect on the earnings, business affairs or business prospects of
the Seller.
(f) No Proceedings. There is no action, suit or proceeding before or
by any court or governmental agency or body, domestic or foreign, now
pending, or to the Seller's knowledge, threatened, against or affecting
the Seller: (i) asserting the invalidity of this Agreement or the
Certificates, (ii) seeking to prevent the issuance of the Certificates or
the consummation of any of the transactions contemplated by this
Agreement, (iii) seeking any determination or ruling that might materially
and adversely affect the performance by the Seller of its obligations
under, or the validity or enforceability of, this Agreement or the
Certificates, or (iv) relating to the Seller and which might adversely
affect the federal income tax attributes of the Certificates.
6.02 Liability of Seller; Indemnities. The Seller shall be liable in
accordance with this Agreement only to the extent of the obligations in this
Agreement specifically undertaken by the Seller in such capacity under this
Agreement and shall have no other obligations or liabilities hereunder.
6.03 Merger or Consolidation of, or Assumption of the Obligations of,
Seller; Certain Limitations.
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(a) Any corporation (i) into which the Seller may be merged or
consolidated, (ii) which may result from any merger, conversion or
consolidation to which the Seller shall be a party, or (iii) which may
succeed to all or substantially all of the business of the Seller, which
corporation in any of the foregoing cases executes an agreement of
assumption to perform every obligation of the Seller under this Agreement,
shall be the successor to the Seller under this Agreement without the
execution or filing of any document or any further act on the part of any
of the parties to this Agreement, except that if the Seller in any of the
foregoing cases is not the surviving entity, then the surviving entity
shall execute an agreement of assumption to perform every obligation of
the Seller hereunder. The Seller shall provide notice of any merger,
consolidation or succession pursuant to this Section to each Rating Agency
and shall receive from each Rating Agency a letter to the effect that such
merger, consolidation or succession will not result in a qualification,
downgrading or withdrawal of the then-current ratings on the Rated
Certificates.
(b) (i) Subject to paragraph (ii) below, the purpose of the Seller
shall be to engage in any lawful activity for which a corporation
may be organized under the General Corporation Law of California
other than the banking business, the trust company business or the
practice of a profession permitted to be incorporated by the
California Corporations Code.
(ii) Notwithstanding paragraph (b)(i) above, the purpose of
the Seller shall be limited to the following purposes, and
activities incident to and necessary or convenient to accomplish the
following purposes: (A) to acquire from time to time from the
Servicer, all right, title and interest in and to receivables or
leases arising out of or relating to the sale or lease of new or
used motor vehicles (including automobiles and light trucks) or
industrial equipment, wholesale loans secured by new or used motor
vehicles (including automobiles and light duty trucks) or industrial
equipment, moneys due thereunder, security interests in the vehicles
or industrial equipment financed thereby, proceeds from claims on
insurance policies related thereto and related rights (collectively,
"Automobile Receivables"); (B) to acquire, own, hold, service, sell,
assign, pledge and otherwise deal with the Automobile Receivables,
collateral securing the Automobile Receivables, related insurance
policies, agreements with the Servicer and any proceeds or further
rights associated with any of the foregoing; (C) to transfer
Automobile Receivables to grantor trusts or owner trusts (the
"Additional Trusts") pursuant to pooling and servicing agreements or
similar agreements (the "Additional Agreements") to be entered into
by and among the Servicer, as servicer, the Seller and the trustee
named therein; (D) to sell any class of asset-backed certificates or
other securities issued by the Additional Trusts under the related
Additional Agreements ("Offered Certificates"); (E) to hold and
enjoy all of the rights and privileges of any Offered Certificates
issued by the Additional Trusts to the Seller under the related
Additional Agreements; (F) to perform its obligations under the
Additional Agreements; and (G) to engage in any activity and to
exercise any powers permitted to corporations under the laws of the
State
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of California that are related or incidental to the foregoing and
necessary, convenient or advisable to accomplish the foregoing.
(iii) So long as any outstanding debt of the Seller or Offered
Certificates are rated by any nationally recognized statistical
rating agency, the Seller shall not issue unsecured notes or
otherwise borrow money unless (A) the Seller has made a written
request to the related nationally recognized rating agency to issue
unsecured notes or incur borrowings and such notes or borrowings are
rated by the related nationally recognized rating agency the same as
or higher than the rating afforded any outstanding rated debt or
Offered Certificates, or (B) such notes or borrowings (1) are fully
subordinated (and which shall provide for payment only after payment
in respect of all outstanding rated debt and/or Offered
Certificates) or are nonrecourse against any assets of the Seller
other than the assets pledged to secure such notes or borrowings,
(2) do not constitute a claim against the Seller in the event such
assets are insufficient to pay such notes or borrowings, and (3)
where such notes or borrowings are secured by the rated debt or
Offered Certificates, are fully subordinated (and which shall
provide for payment only after payment in respect of all outstanding
rated debt and/or Offered Certificates) to such rated debt or
Offered Certificates.
(c) Notwithstanding any other provision of this Section and any
provision of law, the Seller shall not do any of the following:
(i) engage in any business or activity other than as set forth
in clause (b) above;
(ii) without the affirmative vote of a majority of the members
of the Board of Directors of the Seller (which must include the
affirmative vote of all duly appointed Independent Directors, as
required by the articles of incorporation and bylaws of the Seller),
(A) dissolve or liquidate, in whole or in part, or institute
proceedings to be adjudicated bankrupt or insolvent, (B) consent to
the institution of bankruptcy or insolvency proceedings against it,
(C) file a petition seeking or consent to reorganization or relief
under any applicable federal or state law relating to bankruptcy,
(D) consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the corporation
or a substantial part of its property, (E) make a general assignment
for the benefit of creditors, (F) admit in writing its inability to
pay its debts generally as they become due, or (G) take any
corporate action in furtherance of the actions set forth in clauses
(A) through (F) above, provided, however, that no director may be
required by any shareholder of the Seller to consent to the
institution of bankruptcy or insolvency proceedings against the
Seller so long as it is solvent; or
(iii) merge or consolidate with any other corporation, company
or entity or sell all or substantially all of its assets or acquire
all or substantially all of the assets or capital stock or other
ownership interest of any other corporation,
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company or entity (except for the acquisition of Automobile
Receivables of TMCC and the sale of Automobile Receivables to one or
more trusts in accordance with the terms of clause (b)(ii) above,
which shall not be otherwise restricted by this Section 6.03(c)).
6.04 Limitation on Liability of Seller and Others. The Seller and any
director or officer or employee or agent of the Seller may rely in good faith on
the advice of counsel or on any document of any kind, prima facie properly
executed and submitted by any Person respecting any matters arising under this
Agreement. The Seller shall not be under any obligation to appear in, prosecute
or defend any legal action that is not incidental to its obligations as Seller
of the Receivables under this Agreement and that in its opinion may involve it
in any expense or liability.
6.05 Seller May Own Certificates. The Seller and any Person controlling,
controlled by or under common control with the Seller may in its individual or
any other capacity become the owner or pledgee of Certificates with the same
rights as it would have if it were not the Seller or an affiliate thereof except
as otherwise specifically provided in the definition of the term
"Certificateholder." Certificates so owned by or pledged to the Seller or such
controlling or commonly controlled Person shall have an equal and proportionate
benefit under the provisions of this Agreement, without preference, priority or
distinction as among all of the Certificates, except as set forth herein with
respect to certain rights to vote, consent or give directions to the Trustee as
a Holder.
6.06 No Transfer. The Seller hereby covenants that, except as otherwise
provided in this Agreement, it will not transfer, pledge or assign to any Person
any part of its right to receive any Excess Amounts pursuant to Section
4.06(d)(iii) unless it has first delivered to the Trustee and each Rating Agency
an Opinion of Counsel in form and substance satisfactory to the Trustee stating
that such transfer will not (i) adversely affect the status of the Trust as a
grantor trust pursuant to subpart E, part I of subchapter J of the Code and (ii)
cause the Reserve Fund to be taxable as a corporation under the Code. The Seller
shall give written notice to each Rating Agency of any proposed transfer, pledge
or assignment to any Person of all or any part of its right to receive Excess
Amounts pursuant to Section 4.06(d)(iii).
ARTICLE VII
THE SERVICER
7.01 Representations of Servicer. The Servicer shall make the following
representations on which the Trustee shall rely in accepting the Receivables in
trust and executing and authenticating the Certificates. The representations
shall speak as of the execution and delivery of this Agreement and shall survive
the sale of the Receivables to the Trustee.
(a) Organization and Good Standing. The Servicer shall have been
duly organized and shall be validly existing as a corporation in good
standing under the laws of the State of California, with corporate power
and authority to own its properties and to conduct its business as such
properties shall be currently owned and such business is
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presently conducted, and had at all relevant times, and shall now have,
corporate power, authority and legal right to acquire, own, sell and
service the Receivables and to hold the Receivable Files as custodian on
behalf of the Trustee.
(b) Due Qualification. The Servicer shall be duly qualified to do
business as a foreign corporation in good standing, and shall have
obtained all necessary licenses and approvals in all jurisdictions in
which the ownership or lease of property or the conduct of its business
(including the servicing of the Receivables as required by this Agreement)
shall require such qualifications.
(c) Power and Authority. The Servicer shall have the corporate power
and authority to execute and deliver this Agreement and to carry out its
terms; and the execution, delivery and performance of this Agreement shall
have been duly authorized by the Servicer by all necessary corporate
action.
(d) Binding Obligations. This Agreement shall constitute a legal,
valid and binding obligation of the Servicer enforceable in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting
creditors' rights generally or by general principles of equity.
(e) No Violation. The consummation of the transactions contemplated
by this Agreement and the fulfillment of the terms of this Agreement shall
not conflict with, result in any breach of any of the terms and provisions
of, nor constitute (with or without notice or lapse of time) a default
under, the articles of incorporation or bylaws of the Servicer, or
conflict with or breach any of the material terms or provisions of, or
constitute (with or without notice or lapse of time) a default under, any
indenture, agreement or other instrument to which the Servicer is a party
or by which it shall be bound; nor result in the creation or imposition of
any Lien upon any of its properties pursuant to the terms of any such
indenture, agreement or other instrument (other than this Agreement); nor
violate any law or, to the best of the Servicer's knowledge, any order,
rule or regulation applicable to the Servicer of any court or of any
federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Servicer or its
properties; which breach, default, conflict, lien or violation would have
a material adverse effect on the earnings, business affairs or business
prospects of the Servicer.
(f) No Proceedings. There is no action, suit or proceeding before or
by any court or governmental agency or body, domestic or foreign, now
pending, or to the Servicer's knowledge, threatened, against or affecting
the Servicer: (i) asserting the invalidity of this Agreement or the
Certificates, (ii) seeking to prevent the issuance of the Certificates or
the consummation of any of the transactions contemplated by this
Agreement, (iii) seeking any determination or ruling that might materially
and adversely affect the performance by the Servicer of its obligations
under, or the validity or enforceability of, this Agreement or the
Certificates or (iv) relating to the Servicer and which might adversely
affect the federal income tax attributes of the Certificates.
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7.02 Liability of Servicer; Indemnities.
(a) The Servicer shall be liable in accordance herewith only to the
extent of the obligations specifically undertaken by the Servicer under
this Agreement and shall have no other obligations or liabilities under
this Agreement. Such obligations shall include the following:
(i) the Servicer shall defend, indemnify and hold harmless the
Trustee, the Trust and the Certificateholders from and against any
and all costs, expenses, losses, damages, claims and liabilities,
including reasonable fees and expenses of counsel and expenses of
litigation arising out of or resulting from the use or operation by
the Servicer or any affiliate thereof of any Financed Vehicle;
(ii) the Servicer shall indemnify, defend and hold harmless
the Trustee and the Trust from and against any taxes that may at any
time be asserted against the Trustee or the Trust with respect to
the transactions contemplated in this Agreement, including, without
limitation, any sales, gross receipts, general corporation, tangible
or intangible personal property, privilege or license taxes (but not
including any taxes asserted with respect to, and as of the date of,
the sale of the Receivables to the Trust or the issuance and
original sale of the Certificates, or asserted with respect to
ownership of the Receivables, or federal or other income taxes
arising out of distributions on the Certificates) and costs and
expenses in defending against the same;
(iii) the Servicer shall indemnify, defend and hold harmless
the Trustee, the Trust and the Certificateholders from and against
any and all costs, expenses, losses, claims, damages and liabilities
to the extent that such cost, expense, loss, claim, damage or
liability arose out of, and was imposed upon the Trustee, the Trust
or the Certificateholders through the negligence, willful
misfeasance or bad faith of the Servicer in the performance of its
duties under this Agreement or by reason of reckless disregard of
its obligations and duties under this Agreement; and
(iv) the Servicer shall indemnify, defend and hold harmless
the Trustee from and against all costs, expenses, losses, claims,
damages and liabilities arising out of or incurred in connection
with the acceptance or performance of the trusts and duties
contained in this Agreement, except to the extent that such cost,
expense, loss, claim, damage or liability: (A) shall be due to the
willful misfeasance, bad faith or negligence of the Trustee (B)
shall arise from the breach by the Trustee of any of its
representations or warranties set forth in Section 9.14, (C) relates
to any tax other than the taxes with respect to which either the
Seller or the Servicer shall be required to indemnify the Trustee,
or (D) shall arise out of or be incurred in connection with the
performance by the Trustee of the duties of a Successor Servicer
under this Agreement.
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(b) Indemnification under this Section shall include, without
limitation, reasonable fees and expenses of counsel and expenses of
litigation. If the Servicer has made any indemnity payments pursuant to
this Section and the recipient thereafter collects any of such amounts
from others, the recipient shall promptly repay such amounts collected to
the Servicer, without interest, so long as no amounts are outstanding to
the Trustee.
(c) The provisions of this Section shall survive the resignation or
removal of the Trustee and the termination of this Agreement.
7.03 Merger or Consolidation of, or Assumption of the Obligations of, the
Servicer. Any corporation (i) into which the Servicer may be merged or
consolidated, (ii) which may result from any merger, conversion or consolidation
to which the Servicer shall be a party or (iii) which may succeed to all or
substantially all of the business of the Servicer, which corporation in any of
the foregoing cases executes an agreement of assumption to perform every
obligation of the Servicer under this Agreement, shall be the successor to the
Servicer under this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties to this Agreement. The
Servicer shall provide notice of any merger, consolidation or succession
pursuant to this Section to the Trustee and each Rating Agency.
7.04 Limitation on Liability of Servicer and Others.
(a) Neither the Servicer nor any of its directors, officers,
employees or agents shall be under any liability to the Trust, the Trustee
or the Certificateholders, except as provided in this Agreement, for any
action taken or for refraining from the taking of any action pursuant to
this Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Servicer or any such person against any
liability that would otherwise be imposed by reason of willful
misfeasance, bad faith or negligence in the performance of duties or by
reason of reckless disregard of obligations and duties under this
Agreement. The Servicer and any director, officer, employee or agent of
the Servicer may rely in good faith on any document of any kind prima
facie properly executed and submitted by any Person respecting any matters
arising under this Agreement.
(b) Except as provided in this Agreement, the Servicer shall not be
under any obligation to appear in, prosecute, or defend any legal action
that shall not be incidental to its duties to service the Receivables in
accordance with this Agreement, and that in its opinion may involve it in
any expense or liability; provided, however, that the Servicer may
undertake any reasonable action that it may deem necessary or desirable in
respect of this Agreement and the rights and duties of the parties to this
Agreement and the interests of the Certificateholders under this
Agreement.
(c) The Servicer and any director, officer, employee or agent of the
Servicer may rely in good faith on the advice of counsel or on any
document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising under this Agreement. The Servicer
shall not be under any obligation to appear in, prosecute, nor
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defend any legal action that shall not be incidental to its obligations
under this Agreement, and that in its opinion may involve it in any
expense or liability.
7.05 Servicer Not to Resign. Subject to the provisions of Section 7.03,
TMCC shall not resign from the obligations and duties hereby imposed on it as
Servicer under this Agreement except upon determination that the performance of
its duties under this Agreement shall no longer be permissible under applicable
law. Notice of any such determination permitting the resignation of TMCC shall
be communicated to the Trustee at the earliest practicable time and any such
determination shall be evidenced by an Opinion of Counsel to such effect
delivered to the Trustee concurrently with or promptly after such notice. No
such resignation shall become effective until the Trustee or a successor
Servicer shall have assumed the responsibilities and obligations of TMCC in
accordance with Section 8.03.
ARTICLE VIII
EVENTS OF DEFAULT
8.01 Events of Default. For purposes of this Agreement, each of the
following shall constitute an "Event of Default":
(a) any failure by the Servicer to deliver to the Trustee the
Servicer's Certificate for the related Collection Period, or any failure
by the Servicer (or, so long as the Servicer is TMCC, the Seller) to
deliver to the Trustee, for distribution to Certificateholders, any
proceeds or payment required to be so delivered under the terms of the
Certificates or this Agreement, in each case that continues unremedied for
a period of three Business Days after discovery by an officer of the
Servicer (or, so long as the Servicer is TMCC, the Seller) or written
notice has been given (i) to the Servicer by the Trustee or (ii) to the
Trustee and the Servicer (or, so long as the Servicer is TMCC, the Seller)
by holders of Certificates evidencing not less than 25% of the Voting
Interests of the Class A Certificate and the Class B Certificates, voting
together as a single class; or
(b) failure on the part of the Servicer (or so long as the Servicer
is TMCC, the Seller) duly to observe or to perform in any material respect
any other covenants or agreements of the Servicer (or so long as the
Servicer is TMCC, the Seller) set forth in the Certificates or in this
Agreement, which failure shall (i) materially and adversely affect the
rights of the Trust and (ii) continue unremedied for a period of 90 days
after the date on which written notice of such failure, requiring the same
to be remedied, shall have been given (A) to the Servicer or the Seller,
as the case may be, by the Trustee or (B) to the Trustee and the Servicer
or the Seller, as the case may be, by holders of Certificates evidencing
not less than 25% of the Voting Interests of the Class A Certificate and
the Class B Certificates, voting together as a single class; or
(c) the entry of a decree or order by a court or agency or
supervisory authority having jurisdiction in the premises for the
appointment of a trustee in bankruptcy, conservator, receiver or
liquidator for the Servicer (or, so long as the Servicer is TMCC, the
Seller) in any bankruptcy, insolvency, readjustment of debt, marshalling
of assets and
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liabilities or similar proceedings, or for the winding up or liquidation
of their respective affairs, and the continuance of any such decree or
order unstayed and in effect for a period of 90 consecutive days; or
(d) the consent by the Servicer (or, so long as the Servicer is
TMCC, the Seller) to the appointment of a trustee in bankruptcy,
conservator or receiver or liquidator in any bankruptcy, insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Servicer (or, so long as the Servicer is
TMCC, the Seller) of or relating to substantially all of their property,
or the Servicer (or, so long as the Servicer is TMCC, the Seller) shall
admit in writing its inability to pay its debts generally as they become
due, file a petition to take advantage of any applicable insolvency or
reorganization statute, make an assignment for the benefit of its
creditors, or voluntarily suspend payment of its obligations.
8.02 Consequences of an Event of Default. If an Event of Default shall
occur and be continuing, so long as such Event of Default has not been cured or
waived, either the Trustee or the Holders of Certificates evidencing not less
than 51% of the voting interests of the Class A Certificates and the Class B
Certificates, voting together as a single class (but excluding for purposes of
such calculation and action all Certificates held by the Seller, the Servicer or
any of their affiliates), by notice then given in writing to the Servicer (and
to the Trustee if given by Certificateholders), may terminate all of the rights
and obligations of the Servicer under this Agreement. On or after the receipt by
the Servicer of such written notice, all authority and power of the Servicer
under this Agreement, whether with respect to the Certificates, the Receivables
or otherwise, shall, without further action, pass to and be vested in the
Trustee pursuant to and under this Section or such Successor Servicer as may be
appointed under Section 8.03; and, without limitation, the Trustee shall be
hereby authorized and empowered to execute and deliver, on behalf of the
predecessor Servicer, as attorney-in-fact or otherwise, any and all documents
and other instruments, and to do or accomplish all other acts or things
necessary or appropriate to effect the purposes of such notice of termination,
whether to complete the transfer and endorsement of the Receivables and related
documents, or otherwise. The predecessor Servicer shall cooperate with the
Successor Servicer and the Trustee in effecting the termination of the
responsibilities and rights of the predecessor Servicer under this Agreement,
including, without limitation, the transfer to the Successor Servicer for
administration by it of all cash amounts that shall at the time be held by the
predecessor Servicer for deposit, or have been deposited by the predecessor
Servicer, in the Accounts or the Reserve Fund or thereafter received with
respect to the Receivables and all Payments Ahead that shall at that time be
held by the predecessor Servicer. All reasonable costs and expenses (including
attorneys' fees) incurred in connection with transferring the Receivable Files
to the Successor Servicer and amending this Agreement to reflect such succession
as Servicer pursuant to this Section shall be paid by the predecessor Servicer
upon presentation of reasonable documentation of such costs and expenses.
Notwithstanding the foregoing, in the event the predecessor Servicer is the
Trustee, the original Servicer hereunder shall reimburse the Trustee for all
reasonable costs and expenses as described in the immediately preceding
sentence.
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8.03 Trustee to Act; Appointment of Successor Servicer. On and after the
time the Servicer receives a notice of termination pursuant to Section 8.02 or
tenders its resignation pursuant to Section 7.05, the Trustee shall, by an
instrument in writing, assume the rights and responsibilities of the Servicer in
its capacity as Servicer under this Agreement and the transactions set forth or
provided for in this Agreement, and shall be subject to all the
responsibilities, restrictions, duties and liabilities relating thereto placed
on the Servicer by the terms and provisions of this Agreement. As compensation
therefor, the Trustee shall be entitled to such compensation (whether payable
out of the Collection Account or otherwise) as the Servicer would have been
entitled to under this Agreement if no such notice of termination or resignation
had been given. Notwithstanding the foregoing, the Trustee may, if it shall be
unwilling so to act, or shall, if it is legally unable so to act, appoint, or
petition a court of competent jurisdiction to appoint, any established
institution, having a net worth of not less than $50,000,000 and whose regular
business includes the servicing of automobile and/or light duty truck
receivables, as the successor to the Servicer under this Agreement, provided
that the appointment of any such successor to the Servicer will not result in
the qualification, reduction or withdrawal of the rating then assigned to any
Class of Rated Certificates by either Rating Agency. In connection with such
appointment and assumption, the Trustee may make such arrangements for the
compensation of such successor out of payments on or in respect of the
Receivables as it and such successor shall agree; provided, however, that no
such compensation shall be in excess of that permitted the original Servicer
under this Agreement. The Trustee and such Successor Servicer shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession. The Trustee shall not be relieved of its duties as Successor
Servicer under this Section until the newly appointed Servicer shall have
assumed the responsibilities and obligations of the Servicer under this
Agreement.
8.04 Notification to Certificateholders. Upon a Responsible Officer of the
Trustee obtaining actual knowledge of (i) the occurrence of an Event of Default
and the expiration of any cure period applicable thereto or (ii) any termination
of, or appointment of a successor to, the Servicer pursuant to this Section, the
Trustee shall give prompt written notice thereof to Certificateholders at their
respective addresses appearing in the Certificate Register and to each Rating
Agency.
8.05 Waiver of Past Defaults. The Holders of Certificates evidencing not
less than 51% of the voting interests of the Class A Certificates and the Class
B Certificates, voting together as a single class (but excluding for purposes of
such calculation and action all Certificates held by the Seller, the Servicer or
any of their affiliates), may, waive any Event of Default or default by the
Servicer in the performance of its obligations hereunder and its consequences,
except a default in making any required deposits to or payments from the
Certificate or Payahead Accounts or the Reserve Fund in accordance with this
Agreement or in respect of a covenant or provision of this Agreement that under
Section 11.01 cannot be modified or amended without the consent of the Holder of
each Certificate. Upon any such waiver of a past default, such default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other default or impair any right consequent thereon
except to the extent expressly so waived.
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8.06 Repayment of Advances. If a Successor Servicer replaces the Servicer,
the predecessor Servicer shall be entitled to receive reimbursement for
Outstanding Advances pursuant to Sections 4.03 and 4.04, in the manner specified
in Section 4.06, with respect to all Advances made by the predecessor Servicer.
ARTICLE IX
THE TRUSTEE
9.01 Duties of Trustee.
(a) The Trustee, both prior to and after the occurrence of an Event
of Default, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. If, to the actual knowledge of a
Responsible Officer of the Trustee, an Event of Default has occurred and
has not been cured or waived, the Trustee shall exercise such of the
rights and powers vested in it by this Agreement, and use the same degree
of care and skill in their exercise, as a prudent man would exercise or
use under the circumstances in the conduct of his own affairs; provided,
however, that if the Trustee assumes the duties of the Servicer pursuant
to Section 8.03, the Trustee in performing such duties shall use the
degree of skill and attention customarily exercised by a servicer with
respect to automobile and/or light duty truck receivables that it services
for itself or others.
(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments
furnished to the Trustee that shall be specifically required to be
furnished pursuant to any provision of this Agreement, shall examine them
to determine whether they conform to the requirements of this Agreement.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent
failure to act, its own bad faith or its own willful misfeasance;
provided, however, that:
(i) prior to the occurrence of an Event of Default actually
known to a Responsible Officer of the Trustee, and after the curing
or waiving of all such Events of Default that may have occurred, the
duties and obligations of the Trustee shall be determined solely by
the express provisions of this Agreement, the Trustee shall not be
liable except for the performance of such duties and obligations as
are specifically set forth in this Agreement, no implied covenants
or obligations shall be read into this Agreement against the
Trustee, the permissive right of the Trustee to do things enumerated
in this Agreement shall not be construed as a duty and, in the
absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates
or opinions furnished to the Trustee and conforming to the
requirements of this Agreement;
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(ii) the Trustee shall not be personally liable for an error
of judgment made in good faith by a Responsible Officer of the
Trustee, unless it shall be proved that the Trustee was negligent in
performing its duties in accordance with the terms of this
Agreement; and
(iii) the Trustee shall not be personally liable with respect
to any action taken, suffered or omitted to be taken in good faith
in accordance with the direction of the Holders of Class A
Certificates or Class B Certificates evidencing not less than 25% of
the Voting Interests of the related Class relating to the time,
method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Agreement.
(d) The Trustee shall not be required to expend or risk its own
funds or otherwise incur financial liability in the performance of any of
its duties under this Agreement, or in the exercise of any of its rights
or powers, if there shall be reasonable grounds for believing that the
repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it, and none of the provisions
contained in this Agreement shall in any event require the Trustee to
perform, or be responsible for the manner of performance of, any of the
obligations of the Servicer under this Agreement except during such time,
if any, as the Trustee shall be the successor to, and be vested with the
rights, duties, powers and privileges of, the Servicer in accordance with
the terms of this Agreement.
(e) Except for actions expressly authorized by this Agreement, the
Trustee shall take no action reasonably likely to impair the security
interests created or existing under any Receivable or to impair the value
of any Receivable.
(f) All information obtained by the Trustee regarding the Obligors
and the Receivables, whether upon the exercise of its rights under this
Agreement or otherwise, shall be maintained by the Trustee in confidence
and shall not be disclosed to any other Person, unless such disclosure is
required by this Agreement or any applicable law or regulation.
9.02 Trustee's Certificate. On or as soon as practicable after each date
on which the Servicer shall purchase Administrative Receivables or the Seller
shall repurchase Warranty Receivables, the Trustee shall submit to the Servicer
or the Seller, as applicable, a Trustee's Certificate (substantially in the form
attached hereto as Exhibit B), identifying the purchaser and the Receivables so
purchased, executed by the Trustee and completed as to its date and the date of
this Agreement, and accompanied by a copy of the Servicer's Certificate for the
related Collection Period. The Trustee's Certificate submitted with respect to
such Distribution Date shall operate, as of such Distribution Date, as an
assignment, without recourse, representation or warranty, to the Seller or the
Servicer, as the case may be, of all the Trustee's right, title and interest in
and to such Administrative
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Receivable or Warranty Receivable and to the other property conveyed to the
Trust pursuant to Section 2.01 with respect to such Administrative Receivable or
Warranty Receivable, and all security and documents relating thereto, such
assignment being an assignment outright and not for security.
9.03 Trustee's Assignment of Administrative Receivables and Warranty
Receivables. With respect to all Administrative Receivables and all Warranty
Receivables, the Trustee shall, by a Trustee's Certificate (substantially in the
form attached hereto as Exhibit B) assign, without recourse, representation or
warranty, to the Seller or the Servicer as applicable, all the Trustee's right,
title and interest in and to each such repurchased Receivable and the other
property conveyed to the Trust pursuant to Section 2.01 with respect to such
Receivable, and all security and any documents relating thereto, such assignment
being an assignment outright and not for security; and the Seller or the
Servicer, as applicable, shall thereupon own each such Receivable, and all such
related security and documents, free of any further obligation to the Trustee or
the Certificateholders with respect thereto. If in any enforcement suit or legal
proceeding it is held that the Servicer may not enforce a repurchased Receivable
on the ground that it is not a real party in interest or a holder entitled to
enforce the Receivable, the Trustee on behalf of the Trust shall, at the
Servicer's written direction and expense, take such reasonable steps as the
Trustee deems necessary to enforce the Receivable, including bringing suit in
the Trust's name or the names of the Certificateholders.
9.04 Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 9.01:
(i) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate,
certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(ii) the Trustee may consult with counsel and any advice of
counsel or Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or
suffered or omitted by it under this Agreement in good faith and in
accordance with such advice of counsel or Opinion of Counsel;
(iii) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Agreement, or to
institute, conduct or defend any litigation under this Agreement or
in relation to this Agreement, at the request, order or direction of
any of the Certificateholders pursuant to the provisions of this
Agreement, unless such Certificateholders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses
and liabilities that may be incurred therein or thereby; nothing
contained in this Agreement shall, however, relieve the Trustee of
the obligations, upon the occurrence of an Event of Default actually
known to a Responsible Officer of the Trustee (that shall not have
been cured or waived), to exercise such of the rights and powers
vested in it by this Agreement, and to use the same degree of care
and skill in their exercise as
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a prudent man would exercise or use under the circumstances in the
conduct of his own affairs;
(iv) the Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to
be authorized or within the discretion or rights or powers conferred
upon it by this Agreement;
(v) prior to the occurrence of an Event of Default and after
the curing or waiving of all Events of Default that may have
occurred, the Trustee shall not be bound to make any investigation
into the facts of matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent,
order, approval, bond or other paper or document, unless requested
in writing to do so by Holders of Certificates evidencing not less
than 25% of the Voting Interests of a Class; provided, however, that
if the payment within a reasonable time to the Trustee of the costs,
expenses or liabilities likely to be incurred by it in the making of
such investigation is, in the opinion of the Trustee, not reasonably
assured to the Trustee by the security afforded to it by the terms
of this Agreement, the Trustee may require reasonable indemnity
against such cost, expense or liability as a condition to so
proceeding; the reasonable expense of every such examination shall
be paid by the Seller or, if paid by the Trustee, shall be
reimbursed by the Seller upon demand; and nothing in this clause
shall derogate from the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information regarding the
Obligors; and
(vi) the Trustee may execute any of the trusts or powers under
this Agreement or perform any duties under this Agreement either
directly or by or through agents or attorneys or a custodian and
shall not be liable or responsible for the misconduct or negligence
of any of its agents or attorneys or a custodian appointed with due
care by the Trustee.
(b) No Certificateholder will have any right to institute any
proceeding with respect to this Agreement, unless such Holder shall have
given to the Trustee written notice of default and (i) the Event of
Default arises from the Servicer's failure to remit collections or
payments when due or (ii) the Holders Certificates evidencing not less
than 25% of the Voting Interests of a Class have made written request upon
the Trustee to institute such proceeding in its own name as 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.
9.05 Limitation on Trustee's Liability. The Trustee shall make no
representations as to the validity or sufficiency of this Agreement or of the
Certificates (other than the execution by the Trustee on behalf of the Trust of,
or the certificate of authentication on, the Certificates), or of any Receivable
or related document. The Trustee shall have no obligation to perform any of the
duties of the Seller or the Servicer unless explicitly set forth in this
Agreement. The Trustee shall at no time have any responsibility or liability for
or with respect to the legality, validity and
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enforceability of any security interest in any Financed Vehicle or any
Receivable, or the perfection and priority of such a security interest or the
maintenance of any such perfection and priority, or for or with respect to the
efficacy of the Trust or its ability to generate the payments to be distributed
to Certificateholders under this Agreement, including without limitation, the
existence, condition, location and ownership of any Financed Vehicle; the
existence and enforceability of any physical damage or credit life or credit
disability insurance; the existence and contents of any Receivable or any
computer or other record thereof; the validity of the assignment of any
Receivable to the Trust or of any intervening assignment; the completeness of
any Receivable; the performance or enforcement of any Receivable; the compliance
by the Seller or the Servicer with any covenant or the breach by the Seller or
the Servicer of any warranty or representation made under this Agreement or in
any related document and the accuracy of any such warranty or representation
prior to the Trustee's receipt of notice or other discovery of any noncompliance
therewith or any breach thereof; any investment of monies by the Servicer or any
loss resulting therefrom (it being understood that the Trustee shall remain
responsible as Trustee for any Trust property that it may hold); the acts or
omissions of the Seller, the Servicer or any Obligor; any action of the Servicer
taken in the name of or as the agent of the Trustee; or any action by the
Trustee taken at the instruction of the Servicer; provided, however, that the
foregoing shall not relieve the Trustee of its obligation to perform its duties
under this Agreement. Except with respect to a claim based on the failure of the
Trustee to perform its duties under this Agreement or based on the Trustee's
negligence or willful misconduct, bad faith or negligence, no recourse shall be
had for any claim based on any provision of this Agreement, the Certificates or
any Receivable or assignment thereof against the institution serving as Trustee
in its individual capacity. The Trustee shall not have any personal obligation,
liability or duty whatsoever to any Certificateholder or any other Person with
respect to any such claim, and any such claim shall be asserted solely against
the Trust or any indemnitor who shall furnish indemnity as provided in this
Agreement. The Trustee shall not be accountable for the use or application by
the Seller of any of the Certificates or of the proceeds of such Certificates,
or for the use or application of any funds paid to the Servicer in respect of
the Receivables. The Trustee shall have no responsibility for filing any
financing or continuation statement in any public office at any time or to
otherwise perfect or maintain the perfection of any security interest or lien
granted to it hereunder (unless the Trustee shall have become the successor
Servicer) or to prepare or file any Securities and Exchange Commission filing
for the Trust or to record this Agreement.
It is expressly understood and agreed by the parties hereto that (i) each
of this Agreement and the Certificates is executed and delivered by the Trustee,
not in its individual capacity but solely as trustee of the Trust in the
exercise of its powers and authority conferred and vested in it, (ii) each of
the representations (other than the representations and warranties of the
Trustee set forth in Section 9.14), undertakings and agreements herein made on
the part of the Trust is made and intended not as a representation, undertaking
or agreement by the Trustee in its individual capacity, but is made and intended
for the purpose of binding only the Trust and (iii) under no circumstances shall
the Trustee in its individual capacity be personally liable for the breach or
failure of any obligation, representation, warranty or covenant made or
undertaken by the Trust under this Agreement or the Certificates.
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The Trustee will not be responsible for any losses incurred in connection
with investments in Eligible Investments made in accordance with the terms of
this Agreement, other than losses arising out of the Trustee's negligence, bad
faith or willful misconduct.
9.06 Trustee May Own Certificates. The Trustee in its individual or any
other capacity may become the owner or pledgee of Certificates with the same
rights as it would have if it were not the Trustee.
9.07 Trustee's Fees and Expenses. The Servicer covenants and agrees to pay
to the Trustee from time to time, and the Trustee shall be entitled to,
reasonable compensation (which shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust) for all services
rendered by it in the execution of the trusts created by this Agreement and in
the exercise and performance of any of the powers and duties of the Trustee
under this Agreement, and the Servicer shall pay or reimburse the Trustee upon
its request for all reasonable expenses, disbursements and advances (including
the reasonable compensation and the expenses and disbursements of its counsel
and of all persons not regularly in its employ) incurred or made by the Trustee
in defense of any action brought against it in connection with this Agreement
except any such expense, disbursement or advance as may arise from its
negligence, willful misfeasance or bad faith or that is the responsibility of
Certificateholders under this Agreement. Additionally, the Servicer, pursuant to
Section 7.02, shall indemnify the Trustee with respect to certain matters.
9.08 Indemnity of Trustee and Successor Servicer. Upon the appointment of
a Successor Servicer pursuant to Section 8.03, such Successor Servicer and the
Trustee and their respective agents and employees shall be indemnified by the
Trust and held harmless against any loss, liability, or expense (including
reasonable attorney's fees and expenses) arising out of or incurred in
connection with the acceptance of performance of the trusts and duties contained
in this Agreement to the extent that (i) the Successor Servicer or the Trustee,
as the case may be, shall not be indemnified for such loss, liability or expense
by the Servicer pursuant to Section 8.02; (ii) such loss, liability, or expense
shall not have been incurred by reason of the Successor Servicer's or the
Trustee's wilful misfeasance, bad faith or negligence; and (iii) such loss,
liability or expense shall not have been incurred by reason of the Successor
Servicer's or the Trustee's breach of its respective representations and
warranties pursuant to Sections 8.03, 9.09 and 9.14, respectively.
The Successor Servicer and/or the Trustee shall be entitled to the
indemnification provided by this Section only to the extent all amounts due the
Servicer and all holders of Certificates issued by the Trust with respect to any
Distribution Date pursuant to Sections 4.06 and 4.07 have been paid in full and
all amounts required to be deposited in the Reserve Fund with respect to any
Distribution Date pursuant to Section 4.07 have been so deposited.
9.09 Eligibility Requirements for Trustee.
Except as otherwise provided in this Agreement, the Trustee under this
Agreement shall at all times be a corporation having its corporate trust office
in the same state (or the District of Columbia or the Commonwealth of Puerto
Rico) as the location of the Corporate Trust Office as specified in this
Agreement; organized and doing business under the laws of such state (or the
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District of Columbia or the Commonwealth of Puerto Rico) or the United States;
authorized under such laws to exercise corporate trust powers; having a combined
capital and surplus of at least $50,000,000 and subject to supervision or
examination by federal or state authorities; and having a long-term deposit
rating no lower than ___ by Moody's (if Moody's is a Rating Agency), or be
otherwise acceptable to each Rating Agency, as evidenced by a letter to such
effect from each of them (which acceptance may be evidenced in the form of a
letter, dated on or shortly before the Closing Date, assigning an initial rating
to the Rated Certificates).
If the Trustee shall publish reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purpose of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, the Trustee shall resign immediately in the manner
and with the effect specified in Section 9.10.
9.10 Resignation or Removal of Trustee.
(a) The Trustee may at any time resign and be discharged from the
trusts created by this Agreement by giving written notice thereof to the
Servicer. Upon receiving such notice of resignation, the Servicer shall
promptly appoint a successor Trustee by written instrument, in duplicate,
one copy of which instrument shall be delivered to the resigning Trustee
and one copy to the successor Trustee. If no successor Trustee shall have
been so appointed and have accepted appointment within 30 days after the
giving of such notice of resignation, the resigning Trustee may petition
any court of competent jurisdiction for the appointment of a successor
Trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 9.09 and shall fail to resign
after written request therefor by the Servicer, or if at any time the
Trustee shall be legally unable to act, or shall be adjudged a bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Servicer may remove the Trustee. If
it shall remove the Trustee under the authority of the immediately
preceding sentence, the Servicer shall promptly appoint a successor
Trustee by written instrument, in duplicate, one copy of which instrument
shall be delivered to the Trustee so removed and one copy to the successor
Trustee, and payment of all fees owed to the outgoing Trustee.
(c) Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section shall
not become effective until acceptance of appointment by the successor
Trustee as provided in Section 9.11. The Servicer shall give each Rating
Agency notice of any such resignation or removal of the Trustee and
appointment and acceptance of a successor Trustee.
9.11 Successor Trustee. Any successor Trustee appointed as provided in
Section 9.10 shall execute, acknowledge and deliver to the Servicer and to its
predecessor Trustee an
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instrument accepting such appointment under this Agreement, and thereupon the
resignation or removal of the predecessor Trustee shall become effective and
such successor Trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor under this Agreement, with like effect as if originally named as
Trustee. The predecessor Trustee shall deliver to the successor Trustee all
documents and statements held by it under this Agreement; and the Servicer and
the predecessor Trustee shall execute and deliver such instruments and do such
other things as may reasonably be required for fully and certainly vesting and
confirming in the successor Trustee all such rights, powers, duties and
obligations. No successor Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Trustee shall be
eligible under the provisions of Section 9.09. Upon acceptance of appointment by
a successor Trustee as provided in this Section, the Servicer shall mail notice
of the successor of such Trustee under this Agreement to all Certificateholders
at their addresses as shown in the Certificate Register and shall give notice by
mail to each Rating Agency. If the Servicer fails to mail such notice within ten
days after acceptance of appointment by the successor Trustee, the successor
Trustee shall cause such notice to be mailed at the expense of the Servicer.
9.12 Merger or Consolidation of Trustee. Any corporation (i) into which
the Trustee may be merged or consolidated, (ii) which may result from any
merger, conversion, or consolidation to which the Trustee shall be a party or
(iii) which may succeed to all or substantially all the corporate trust business
of the Trustee, which corporation executes an agreement of assumption to perform
every obligation of the Trustee under this Agreement, shall be the successor of
the Trustee hereunder, provided such corporation shall be eligible pursuant to
Section 9.09, without the execution or filing of any instrument or any further
act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding. Notice of any such merger shall be given by the Trustee to each
Rating Agency.
9.13 Appointment of Co-Trustee or Separate Trustee. Notwithstanding any
other provisions of this Agreement, at any time, for the purpose of meeting any
legal requirements of any jurisdiction in which any part of the Trust or any
Financed Vehicle may at the time be located, the Servicer and the Trustee acting
jointly shall have the power and shall execute and deliver all instruments to
appoint one or more Persons approved by the Trustee to act as co-trustee,
jointly with the Trustee, or separate trustee or separate trustees, of all or
any part of the Trust, and to vest in such Person, in such capacity and for the
benefit of the Certificateholders, such title to the Trust, or any part thereof,
and, subject to the other provisions of this Section, such powers, duties,
obligations, rights and trusts as the Servicer and the Trustee may consider
necessary or desirable. If the Servicer shall not have joined in such
appointment within 15 days after the receipt by it of a request so to do, or in
the case an Event of Default shall have occurred and be continuing, the Trustee
alone shall have the power to make such appointment. No co-trustee or separate
trustee under this Agreement shall be required to meet the terms of eligibility
as a successor trustee pursuant to Section 9.09 and no notice of a successor
Trustee pursuant to Section 9.11 and no notice to Certificateholders of the
appointment of any co-trustee or separate trustee shall be required pursuant to
Section 9.11.
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Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred upon and exercised or
performed by the Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
(whether as Trustee under this Agreement or as successor to the
Servicer under this Agreement), the Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations (including the holding of title to
the Trust or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee or
co-trustee, but solely at the direction of the Trustee;
(ii) no trustee under this Agreement shall be personally
liable by reason of any act or omission of any other trustee under
this Agreement; and
(iii) the Servicer and the Trustee acting jointly (or during
the continuation of an Event of Default, the Trustee alone) may at
any time accept the resignation of or remove any separate trustee or
co-trustee.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then separate trustees and co-trustees, as
effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Section. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
including, but not limited to, every provision of this Agreement relating to the
conduct of, affecting the liability of, or affording protection to, the Trustee.
Each such instrument shall be filed with the Trustee and a copy thereof given to
the Servicer.
Any separate trustee or co-trustee may at any time appoint the Trustee its
agent or attorney-in-fact with full power and authority, to the extent not
prohibited by law, to do any lawful act under or in respect of this Agreement on
its behalf and in its name. If any separate trustee or co-trustee shall die,
become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee. Notwithstanding anything to the contrary in this Agreement,
the appointment of any separate trustee or co-trustee shall not relieve the
Trustee of its obligations and duties under this Agreement.
9.14 Representations and Warranties of Trustee. The Trustee shall make the
following representations and warranties on which the Seller and
Certificateholders may rely:
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(i) Organization and Good Standing. The Trustee is a national
banking corporation duly organized, existing and in good standing;
(ii) Power and Authority. The Trustee has full power,
authority and right to execute, deliver and perform this Agreement
and has taken all necessary action to authorize the execution,
delivery and performance by it of this Agreement;
(iii) No Violation. The execution, delivery and performance by
the Trustee of this Agreement (a) shall not violate any provision of
any law governing the banking and trust powers of the Trustee or, to
the best of the Trustee's knowledge, any order, writ, judgment, or
decree of any court, arbitrator, or governmental authority
applicable to the Trustee or any of its assets, (b) shall not
violate any provision of the corporate charter or by-laws of the
Trustee, and (c) shall not violate any provision of, or constitute,
with or without notice or lapse of time, a default under, or result
in the creation or imposition of any Lien on any properties included
in the Trust pursuant to the provisions of any mortgage, indenture,
contract, agreement or other undertaking to which it is a party,
which violation, default or Lien could reasonably be expected to
materially and adversely affect the Trustee's performance or ability
to perform its duties under this Agreement or the transactions
contemplated in this Agreement;
(iv) No Authorization Required. The execution, delivery and
performance by the Trustee of this Agreement shall not require the
authorization, consent, or approval of, the giving of notice to, the
filing or registration with, or the taking of any other action in
respect of, any governmental authority or agency regulating the
banking and corporate trust activities of the Trustee; and
(v) Duly Executed. This Agreement shall have been duly
executed and delivered by the Trustee and shall constitute the
legal, valid, and binding agreement of the Trustee, enforceable in
accordance with its terms, except as enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting creditors' rights generally or by general
principles of equity.
9.15 Tax Returns. In the event the Trust shall be required to file tax
returns, the Servicer shall prepare or shall cause to be prepared any tax
returns required to be filed by the Trust and shall remit such returns to the
Trustee for signature at least five days before such returns are due to be
filed. The Trustee, upon request, shall furnish the Servicer with all such
information known to the Trustee as may be reasonably required in connection
with the preparation of all tax returns of the Trust, and shall, upon request,
execute such returns.
9.16 Trustee May Enforce Claims Without Possession of Certificates. All
rights of action and claims under this Agreement or the Certificates may be
prosecuted and enforced by the Trustee without the possession of any of the
Certificates or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as Trustee. Any recovery of judgment shall, after provision for the payment of
the
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reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, be for the ratable benefit of the Certificateholders in
respect of which such judgment has been obtained.
9.17 Suit for Enforcement. If an Event of Default shall occur and be
continuing, the Trustee, in its discretion may, subject to the provisions of
Section 9.01, proceed to protect and enforce its rights and the rights of the
Certificateholders under this Agreement by a suit, action or proceeding in
equity or at law or otherwise, whether for the specific performance of any
covenant or agreement contained in this Agreement or in aid of the execution of
any power granted in this Agreement or for the enforcement of any other legal,
equitable or other remedy as the Trustee, being advised by counsel, shall deem
most effectual to protect and enforce any of the rights of the Trustee or the
Certificateholders.
9.18 Rights of Certificateholders to Direct Trustee. Holders of
Certificates evidencing not less the 25% of the Voting Interests of a Class (but
excluding for purposes of such calculation and action all Certificates held by
the Seller, the Servicer or any of their affiliates) shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee; provided, however, that subject to Section 9.01, the Trustee shall have
the right to decline to follow any such direction if the Trustee being advised
by counsel determines that the action so directed may not lawfully be taken, or
if the Trustee in good faith shall, by a Responsible Officer, determine that the
proceedings so directed would be illegal or subject it to personal liability or
be unduly prejudicial to the rights of Certificateholders not parties to such
direction; and provided further that nothing in this Agreement shall impair the
right of the Trustee to take any action deemed proper by the Trustee and which
is not inconsistent with such direction by the Certificateholders.
ARTICLE X
TERMINATION
10.01 Termination of the Trust.
(a) The Trust and the respective obligations and responsibilities of
the Seller, the Servicer and the Trustee shall terminate upon (i) the
purchase as of any Distribution Date by the Seller or Servicer, or any
successor to the Servicer, at its option of the corpus of the Trust as
described in Section 10.02, (ii) the payment to Certificateholders of all
amounts required to be paid to them pursuant to this Agreement or (iii)
the maturity or liquidation of the last Receivable and the disposition of
all property held as part of the Trust; provided, however, that in no
event shall the trust created by this Agreement continue beyond the
expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late ambassador of the United States
to the Court of St. James, living on the date of this Agreement. The
Servicer shall promptly notify the Trustee and each Rating Agency of any
prospective termination pursuant to this Section.
(b) Notice of any termination, specifying the Distribution Date upon
which the Certificateholders must surrender their Certificates to the
Trustee for payment of the final
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distribution and retirement of the Certificates, shall be given promptly
by the Trustee (at the written direction of the Servicer) by letter to
Certificateholders mailed not later than the 15th day and not earlier than
the 30th day prior to the date on which such final distribution is
expected to occur specifying (i) the Distribution Date upon which final
payment of the Certificates shall be made upon presentation and surrender
of Certificates at the office of the Trustee therein specified, (ii) the
amount of any such final payment and (iii) if applicable, that the Record
Date otherwise applicable to such Distribution Date is not applicable,
payments being made only upon presentation and surrender of the
Certificates at the office of the Trustee therein specified. The Trustee
shall give such notice to the Certificate Registrar (if other than the
Trustee) at the time such notice is given to Certificateholders. In the
event such notice is given, the Seller, the Servicer, or any successor to
the Servicer, or the Trustee, as the case may be, shall make deposits into
the Collection Account in accordance with Section 4.05, or, in the case of
an optional purchase of Receivables pursuant to Section 10.02, shall
deposit the amount specified in Section 10.02. Upon presentation and
surrender of the Certificates, the Trustee shall cause to be distributed
to Certificateholders amounts distributable on such Distribution Date
pursuant to Section 4.06.
(c) In the event that all of the Certificateholders shall not
surrender their Certificates for retirement within six months after the
date specified in the above-mentioned written notice, the Trustee shall
give a second written notice to the remaining Certificateholders to
surrender their Certificates for retirement and receive the final
distribution with respect thereto. If within one year after the second
notice all the Certificates shall not have been surrendered for
retirement, the Trustee may take appropriate steps, or may appoint an
agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the
cost thereof shall be paid out of the funds and other assets that remain
subject to this Agreement. Any funds remaining in the Trust after
exhaustion of such remedies shall be distributed by the Trustee to the
California Special Olympics.
10.02 Optional Purchase of All Receivables. On each Distribution Date
following the last day of a Collection Period as of which the Pool Balance shall
be less than the Optional Purchase Percentage (expressed as a seven-digit
decimal figure) multiplied by the Original Pool Balance, the Seller or the
Servicer, or any successor to the Servicer, shall have the option to purchase
the corpus of the Trust; provided that the option to purchase provided in this
Section shall not be exercised if the final distribution to Certificateholders
would be less than the aggregate outstanding principal amount of the
Certificates plus the sum of (i) the Class A Interest Distributable Amount for
the related Distribution Date, (ii) any unpaid Class A Interest Carryover
Shortfall, (iii) the Class B Interest Distributable Amount for the related
Distribution Date and (iv) any unpaid Class B Interest Carryover Shortfall. To
exercise such option, the Seller or the Servicer, or any successor to the
Servicer, as the case may be, shall notify the Trustee in writing, no later than
the tenth day of the month preceding the month in which the Distribution Date as
of which such purchase is to be effected and shall, on or before the
Distribution Date on which such purchase is to occur, deposit pursuant to
Section 4.06 in the Collection Account an amount equal to the aggregate
Administrative Purchase Payments for the
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Receivables (including Defaulted Receivables), plus the appraised value of any
other property held by the Trust (less liquidation expenses to be incurred in
connection with the recovery thereof), such value to be determined by an
appraiser mutually agreed upon by the Seller, the Servicer and the Trustee, and
shall succeed to all interests in and to the Trust. Notwithstanding the
foregoing, if Moody's is a Rating Agency, the Seller or the Servicer, as the
case may be, may not effect any such purchase if the long-term unsecured debt
obligations of the related entity are rated less than ___, unless the Trustee
shall have received an Opinion of Counsel that such purchase will not constitute
a fraudulent conveyance, or Moody's is otherwise satisfied, as evidenced by
written notice from Moody's to the Trustee. Upon such deposit of the amount
necessary to purchase the corpus of the Trust, the Servicer shall for all
purposes of this Agreement be deemed to have released all claims for
reimbursement of Outstanding Advances made in respect of the Receivables. The
payment shall be made in the manner specified in Section 4.06, and shall be
distributed pursuant to Section 4.07. In the event that both the Seller and the
Servicer, or any successor to the Servicer, elect to purchase the Receivables
pursuant to this Section, the party first notifying the Trustee (based on the
Trustee's receipt of such notice) shall be permitted to purchase the
Receivables.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.01 Amendment.
(a) This Agreement may be amended by the Seller, the Servicer and
the Trustee, without the consent of any of the Certificateholders, (i) to
cure any ambiguity, to correct or supplement any provision in this
Agreement which may be inconsistent with any other provision of this
Agreement, to add, change or eliminate any other provision of this
Agreement with respect to matters or questions arising under this
Agreement that shall not be inconsistent with the provisions of this
Agreement or to add or provide for any credit enhancement and (ii) to
change the formula for determining the Specified Reserve Fund Balance, any
Required Yield Maintenance Amount or the manner in which the Reserve Fund
or any Yield Maintenance Account is funded or to amend or modify any
provisions of this Agreement relating to the remittance schedule with
respect to collections deposited into the Collection Account or the
Payahead Account pursuant to Section 4.02; provided, however, that any
such action shall not, as evidenced by an Opinion of Counsel, adversely
affect in any material respect the interests of the Certificateholders and
provided, further, that in connection with any amendment pursuant to
clause (ii) above the Servicer shall deliver to the Trustee a letter from
each Rating Agency to the effect that such amendment will not cause the
then-current rating on the Rated Certificates to be qualified, reduced or
withdrawn.
(b) This Agreement may also be amended from time to time by the
Seller, the Servicer and the Trustee, with the consent of Holders of the
Class A Certificates and the Class B Certificates, acting 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),
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evidencing not less than 51% of the Voting Interests of each Class of
Certificates (which consent of any Holder of a Certificate given pursuant
to this Section or pursuant to any other provision of this Agreement shall
be conclusive and binding on such Holder and on all future Holders of such
Certificate and of any Certificate issued upon the transfer thereof or in
exchange thereof or in lieu thereof whether or not notation of such
consent is made upon the Certificate), for the purpose of adding any
provisions to or changing in any manner or eliminating any of the
provisions of this Agreement, or of modifying in any manner the rights of
either Class of Certificateholders; provided, however, that no such
amendment shall (i) except as otherwise provided in Section 11.01(a),
increase or reduce in any manner the amount of, or accelerate or delay the
timing of, collections of payments on Receivables or distributions that
shall be required to be made on any Certificate or the applicable Pass
Through Rate, Reserve Fund Balance or any Yield Maintenance Amount or (ii)
reduce the aforesaid percentage of the Voting Interests of the
Certificates of either Class required to consent to any such amendment,
without the consent of the Holders of all Certificates of the relevant
Class then outstanding.
(c) Prior to the execution of any such amendment or consent, the
Trustee shall furnish written notification of the substance of such
amendment or consent to each Rating Agency.
(d) Promptly after the execution of any such amendment or consent,
the Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder. It shall not be necessary
for the consent of Certificateholders pursuant to Section 11.01(b) to
approve the particular form of any proposed amendment or consent, but it
shall be sufficient if such consent shall approve the substance thereof.
The manner of obtaining such consents and of evidencing the authorization
by Certificateholders of the execution thereof shall be subject to such
reasonable requirements as the Trustee may prescribe.
(e) Prior to the execution of any amendment to this Agreement, the
Trustee shall be entitled to receive and rely upon an Opinion of Counsel
stating that the execution of such amendment is authorized or permitted by
this Agreement. The Trustee may, but shall not be obligated to, enter into
any such amendment which affects the Trustee's own rights, duties or
immunities under this Agreement or otherwise.
11.02 Protection of Title to Trust.
(a) Each of the Seller and the Servicer or both shall execute and
file such financing statements and cause to be executed and filed such
continuation and other statements, all in such manner and in such places
as may be required by law fully to preserve, maintain and protect the
interest of the Certificateholders and the Trustee under this Agreement in
the Receivables and in the proceeds thereof. Each of the Seller and the
Servicer shall deliver (or cause to be delivered) to the Trustee
file-stamped copies of, or filing receipts for, any document filed as
provided above, as soon as available following such filing.
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(b) Neither the Seller nor the Servicer shall change its name,
identity or corporate structure in any manner that would, could or might
make any financing statement or continuation statement filed by the Seller
in accordance with paragraph (a) above seriously misleading within the
meaning of Section 9-402(7) of the UCC, unless it shall have given the
Trustee at least 60 days' prior written notice thereof and shall have
promptly filed appropriate amendments to all previously filed financing
statements or continuation statements.
(c) Each of the Seller and the Servicer shall give the Trustee at
least 60 days' prior written notice of any relocation of its principal
executive office if, as a result of such relocation, the applicable
provisions of the UCC would require the filing of any amendment of any
previously filed financing or continuation statement or of any new
financing statement and shall promptly file any such amendment. The
Servicer shall at all times maintain each office from which it services
Receivables and its principal executive office within the United States.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader
thereof to know at any time the status of such Receivable, including
payments and recoveries made and payments owing (and the nature of each)
and (ii) reconciliation between payments or recoveries on (or with respect
to) each Receivable and the amounts from time to time deposited in the
Accounts and any Payments Ahead held by the Servicer in respect of such
Receivable.
(e) The Servicer shall maintain its computer systems so that, from
and after the time of sale under this Agreement of the Receivables to the
Trustee, the Servicer's master computer records (including any back-up
archives) that refer to any Receivable indicate clearly the interest of
the Trust in such Receivable and that the Receivable is owned by the
Trustee. Indication of the Trustee's ownership of a Receivable shall be
deleted from or modified on the Servicer's computer systems when, and only
when, the Receivable has been paid in full, repurchased or assigned
pursuant to this Agreement.
(f) If at any time the Seller or the Servicer shall propose to sell,
grant a security interest in, or otherwise transfer any interest in
automobile and/or light duty truck receivables to any prospective
purchaser, lender or other transferee, the Servicer shall give to such
prospective purchaser, lender or other transferee computer tapes, records
or print-outs (including any restored from back-up archives) that, if they
refer in any manner whatsoever to any Receivable, indicate clearly that
such Receivable has been sold and is owned by the Trustee unless such
Receivable has been paid in full, repurchased or assigned pursuant to this
Agreement.
(g) The Servicer shall permit the Trustee and its agents at any time
to inspect, audit and make copies of and abstracts from the Servicer's
records regarding any Receivables then or previously included in the
Trust.
(h) Upon request, the Servicer shall furnish to the Trustee, within
five Business Days, a list of all Receivables (by contract number and name
of Obligor) then held as part
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of the Trust, together with a reconciliation of such list to the Schedule
of Receivables and to each of the Servicer's Certificates furnished before
such request indicating removal of Receivables from the Trust.
(i) The Servicer shall deliver to the Trustee promptly after the
execution and delivery of each amendment to any financing statement, an
Opinion of Counsel either (i) stating that, in the opinion of such
Counsel, all financing statements and continuation statements have been
executed and filed that are necessary fully to preserve and protect the
interest of the Trustee in the Receivables, and reciting the details of
such filings or referring to prior Opinions of Counsel in which such
details are given, or (ii) stating that, in the opinion of such Counsel,
no such action is necessary to preserve and protect such interest.
(j) The Seller shall, to the extent required by applicable law,
cause the Certificates to be registered with the Commission pursuant to
Section 12(b) or Section 12(g) of the Exchange Act within the time periods
specified in such Sections.
(k) This Agreement may be executed simultaneously in any number of
counterparts, each of which shall be deemed to be an original, and all of
which shall constitute but one and the same instrument.
11.03 Limitation on Rights of Certificateholders.
(a) The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the Trust, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting
or to take any action or commence any proceeding in any court for a
partition or winding up of the Trust, nor otherwise affect the rights,
obligations and liabilities of the parties to this Agreement or any of
them.
(b) No Certificateholder shall have any right to vote (except as
provided in Sections 8.05 and 11.01) or in any manner otherwise control
the operation and management of the Trust, or the obligations of the
parties to this Agreement, nor shall anything set forth in this Agreement,
or contained in the terms of the Certificates, be construed so as to
constitute the Certificateholders from time to time as partners or members
of an association; nor shall any Certificateholder be under any liability
to any third person by reason of any action pursuant to any provision of
this Agreement.
(c) No Certificateholder shall have any right by virtue or by
availing itself of any provisions of this Agreement to institute any suit,
action, or proceeding in equity or at law upon or under or with respect to
this Agreement, unless such Holder previously shall have given to the
Trustee a written notice of default and of the continuance thereof, as
hereinbefore provided, and unless also the Holders of Certificates
evidencing not less the 25% of the Voting Interests of the related Class
shall have made written request upon the Trustee to institute such action,
suit or proceeding in its own name as Trustee under this Agreement and
shall have offered to the Trustee such reasonable indemnity as it may
require against the costs, expenses, and liabilities to be incurred
therein or thereby, and
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the Trustee, for 30 days after its receipt of such notice, request and
offer of indemnity, shall have neglected or refused to institute any such
action, suit, or proceeding and during such 30-day period, no request or
waiver inconsistent with such written request has been given to the
Trustee pursuant to this Section or Section 9.05; it being understood and
intended, and being expressly covenanted by each Certificateholder with
every other Certificateholder and the Trustee, that no one or more Holders
of Certificates shall have any right in any manner whatever by virtue or
by availing itself or themselves of any provisions of this Agreement to
affect, disturb, or prejudice the rights of the Holders of any other of
the Certificates, or to obtain or seek to obtain priority over or
preference to any other such Holder, or to enforce any right under this
Agreement, except in the manner provided in this Agreement and for the
equal, ratable, and common benefit of all Certificateholders. For the
protection and enforcement of the provisions of this Section, each and
every Certificateholder and the Trustee shall be entitled to such relief
as can be given either at law or in equity.
11.04 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York and the obligations, rights
and remedies of the parties under this Agreement shall be determined in
accordance with such laws.
11.05 Notices. All demands, notices and communications under this
Agreement shall be in writing, personally delivered or mailed by certified mail,
return receipt requested, and shall be deemed to have been duly given upon
receipt (i) in the case of the Seller or the Servicer, to the agent for service
as specified in this Agreement, or at such other address as shall be designated
by the Seller or the Servicer in a written notice to the Trustee; (ii) in the
case of the Trustee, at the Corporate Trust Office; (iii) in the case of
Standard & Poor's, at 26 Broadway, 15th Floor, New York, New York 10004,
Attention: Asset Backed Surveillance Department; and (iv) in the case of
Moody's, at 99 Church Street, New York, New York 10007 Attention: ABS Monitoring
Department; and (v) in the case of Duff & Phelps, at 55 East Monroe, Chicago,
Illinois 60603. Any notice required or permitted to be mailed to a
Certificateholder shall be given by first class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificateholder shall
receive such notice.
11.06 Severability of Provisions. If any one or more of the covenants,
agreements, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid or unenforceable in any jursidiction, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
11.07 Assignment. Notwithstanding anything to the contrary contained in
this Agreement, except as provided in Sections 6.03 and 7.03 and as provided in
the provisions of this Agreement concerning the resignation of the Servicer,
this Agreement may not be assigned by the Seller or the Servicer without the
prior written consent of Holders of Certificates evidencing not less than
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51% of the Voting Interests of the Class A Certificates and the Class B
Certificates, voting together as a single Class.
11.08 Certificates Nonassessable and Fully Paid. Certificateholders shall
not be personally liable for obligations of the Trust. The interests represented
by the Certificates shall be nonassessable for any losses or expenses of the
Trust or for any reason whatsoever, and, upon the authentication thereof by the
Trustee pursuant to Section 5.02 or 5.03, the Certificates are and shall be
deemed fully paid.
11.09 No Petition. Each of the Servicer and the Trustee (not in its
individual capacity but solely as Trustee) covenants and agrees that prior to
the date which is one year and one day after the date upon which each Class of
Certificates has been paid in full, it will not institute against, or join any
other Person in instituting against the Seller any bankruptcy, reorganization
arrangement, insolvency or liquidation proceeding or other proceedings under any
federal or state bankruptcy or similar law. This Section 11.09 shall survive the
termination of this Agreement or the termination of the Servicer or the Trustee,
as the case may be, under this Agreement.
* * * *
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IN WITNESS WHEREOF, the parties have caused this Pooling and Servicing
Agreement to be duly executed by their respective officers as of the day and
year first above written.
TOYOTA MOTOR CREDIT RECEIVABLES
CORPORATION,
as Seller
By: ________________________________________
Name:
Title:
TOYOTA MOTOR CREDIT CORPORATION,
as Servicer
By: ________________________________________
Name:
Title:
[NAME OF TRUSTEE],
as Trustee
By: ________________________________________
Name:
Title:
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EXHIBIT A
FORM OF SERVICER'S CERTIFICATE
PURSUANT TO SECTION 3.10 OF
POOLING AND SERVICING AGREEMENT
TOYOTA AUTO RECEIVABLES _______
GRANTOR TRUST
Servicer's Certificate
For the Month of ___, ___
Principal and Interest Collections
Beginning Pool Balance (1)$
Beginning Pool Factor [(1)/--] (2)
Principal Collected (3)$
Interest Collected (4)$
Less: Beginning Purchased Accrued
Interest Repaid (5)
Plus: Purchased Accrued Interest --
End of Collection Period (6)
Net decrease/(increase) in Purchased
Accrued Interest [(5)-(6)] (7)$
Plus: Non-Reimbursable Interest Payment (8)
Total Interest Received
[(4)-(5)+(6)+(8)] (9)$
Additional Deposits (4.06)
(i) Repurchase Amounts (10)
(ii) Liquidation Proceeds (11)
Total Additional Deposits (12)$
Total Available Funds [(3)+(9)+(12)] (13)
A-1
<PAGE>
TOYOTA AUTO RECEIVABLES ____ GRANTOR TRUST
Servicer's Certificate
For the Month of ___, ___
Distributions:
Class A Class B Total
------- ------- -----
Class Percentage _______% _______% 100.00%
Pool Factor _______ _______ ______
______Beginning Pool Balance _______ _______ ______
______Ending Pool Balance _______ _______ ______
Collected Principal (3) _______ _______ ______
Collected Interest (9) _______ _______ ______
Defaulted Receivables (13) _______ _______ ___________
Servicing Fee [(______/12)x(1)] (_____) (_____) _____(____)
Total Available Funds _______ _______ ___________
Payments to Certificateholders
Monthly Principal Payment [(15)-(16) _______ _______ ___________
Interest Distributable Amount _______ _______ ___________
[(15)x(__%/12]
Total payments to Certificateholders _______ _______ ___________
Amount due Class B but paid to
Class A (subordination) _______ _______ ___________
Class A Interest Carryover Shortfall _______ _______ ___________
Class B Interest Carryover Shortfall _______ _______ ___________
Class A Principal Carryover Shortfall _______ _______ ___________
Class B Principal Carryover Shortfall _______ _______ ___________
Amounts to be paid to the Seller _______ _______ ___________
Payments from/(to) the
Reserve Fund _______ _______ ___________
Reserve Fund Balance _______ _______ ___________
Specified Reserve Fund Balance _______ _______ ___________
Yield Maintenance Amount _______ _______ ___________
Required Yield Maintenance Amount _______ _______ ___________
A-2
<PAGE>
TOYOTA AUTO RECEIVABLES ____ GRANTOR TRUST
Servicer's Certificate
For the Month of ___, ___
Reconciliation of the Reserve Fund
Beginning Reserve Fund Balance (45)$
Reserve Fund Prior to Payments to Seller (48)$
Specified Reserve Fund Balance: (1) $_____
Required Amount (49)
Amount of Excess Spread released [(48)-(49)] (50)
A-3
<PAGE>
TOYOTA AUTO RECEIVABLES ____ GRANTOR TRUST
Servicer's Certificate
For the Month of ___, ___
Delinquent Accounts
Period of Delinquency Units Amount Percent of Pool
30 - 59 days $ 0.00%
60 - 89 days 0.00%
90 days or more 0.00%(A)
----- ----- -----
Total $ 0.00%
----- -----
(B)
Repossession Inventory ----- $----- -----
Delinquency Percentage
(less than 1.5%?) [(A)+(B)/(1)] ___%
Realized Loss Analysis (Section 5.02)
Quarter
Month Month Month Total
Realized Losses/(Recoveries) (X) $ $ $ $
Beginning Pool Balance (mils) (Y) $ $ $ $
Realized Loss Percentage
(less than 1.5%?) [(X)/(Y)) *4] ______%
Realized Losses Since Inception $_____
Change in Realized Losses $_____
Proceeds from Insurance and Dealer Repurchases
Proceeds received during the month from
physical damage insurance $_____
Proceeds received during the month from Dealer
repurchase obligations relating to Defaulted
Receivables $_____
A-4
<PAGE>
EXHIBIT B
FORM OF TRUSTEE'S CERTIFICATE
PURSUANT TO SECTION 9.02 OR 9.03
OF THE POOLING AND SERVICING
AGREEMENT
_________________, as trustee (the "Trustee") of the Toyota Auto
Receivables ______ Grantor Trust created pursuant to the Pooling and Servicing
Agreement (the "Agreement"), dated as of ________, ________, among Toyota Motor
Credit Receivables Corporation, as Seller, Toyota Motor Credit Corporation, as
Servicer, and the Trustee, does hereby sell, transfer, assign and otherwise
convey to the [Seller][Servicer], without any recourse, representation or
warranty, all of the Trustee's right, title and interest in and to all of the
Receivables identified in the attached Servicer's Certificate as "Repurchased
Receivables," which are to be repurchased by the [Seller pursuant to Section
2.05 or 10.02] [Servicer pursuant to Section 3.08 or 10.02] of the Agreement,
and all security and documents relating thereto.
Capitalized terms used herein that are not otherwise defined shall have
the meanings ascribed thereto in the Agreement.
IN WITNESS WHEREOF, I have hereunto set my hand this __th day of ______,
__.
_____________________________________,
as Trustee
By:___________________________________
Title:
B-1
<PAGE>
EXHIBIT C
FORM OF CLASS A CERTIFICATE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
TOYOTA AUTO RECEIVABLES 199_-_ GRANTOR TRUST
-% ASSET BACKED CERTIFICATE, CLASS A
evidencing a fractional undivided interest in the Trust, as defined below,
the property of which includes a pool of retail installment sale contracts
secured by the new and used automobiles and light duty trucks financed
thereby and sold to the Trust by Toyota Motor Credit Receivables
Corporation. The Final Scheduled Distribution Date is March 15, 2001.
(This Certificate does not represent an interest in or obligation of
Toyota Motor Credit Receivables Corporation, Toyota Motor Credit
Corporation or any of their respective affiliates)
CUSIP -
NUMBER R-A1 $-
THIS CERTIFIES THAT CEDE & CO. is the registered owner of a - ($-)
nonassessable, fully-paid, fractional undivided interest in the Toyota Auto
Receivables 199_-_ Grantor Trust (the "Trust") formed by Toyota Motor Credit
Receivables Corporation, a California corporation (the "Seller"). The Trust was
created pursuant to a Pooling and Servicing Agreement, dated as of - (the
"Agreement"), among the Seller, Toyota Motor Credit Corporation, as Servicer,
and -, as trustee (the "Trustee"). A summary of certain of the pertinent
provisions of the Agreement is set forth below. To the extent not otherwise
defined herein, the capitalized terms used herein have the meanings assigned to
them in the Agreement.
This Certificate is one of the duly authorized Certificates issued under
the Agreement and designated as "Toyota Auto Receivables 199_-_ Grantor Trust -%
Asset Backed Certificates, Class A" (the "Class A Certificates"). Also issued
under the Agreement are Certificates designated as "Toyota Auto Receivables
199_-_ Grantor Trust -% Asset Backed Certificates, Class B" (the "Class B
Certificates" and, together with the Class A Certificates, the
C-1
<PAGE>
"Certificates"). The Class B Certificates are subordinated to the Class A
Certificates to the extent described in the Agreement. The aggregate undivided
interest in the Trust evidenced by all Class A Certificates is -%. This Class A
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Class A
Certificate by virtue of the acceptance hereof assents and by which such Holder
is bound. The property of the Trust includes, among other things, a pool of
retail installment sale contracts (the "Receivables") for the new and used
automobiles and light duty trucks financed thereby (the "Financed Vehicles"),
certain monies due under the Receivables on and after the Cutoff Date, security
interests in the Financed Vehicles, certain bank accounts and the proceeds
thereof, proceeds from claims on physical damage, credit life and disability
insurance policies covering the Financed Vehicles, the Receivables or the
related Obligors, an assignment of the Seller's rights under the Receivables
Purchase Agreement and the right of the Seller to receive the proceeds of any
Dealer Recourse relating to the Receivables.
Under the Agreement, there will be distributed on the - day of each month
or, if such day is not a Business Day, the next succeeding Business Day (each, a
"Distribution Date"), commencing on -, to the Person in whose name this Class A
Certificate is registered at the close of business on the last calendar day
immediately preceding the related Distribution Date or, if Definitive
Certificates are issued, the last day of the immediately preceding calendar
month (each, a "Record Date"), such Class A Certificateholder's percentage
interest in the Class A Distributable Amount for such Distribution Date actually
distributed, together with any outstanding Class A Interest Carryover Shortfall
and any outstanding Class A Principal Carryover Shortfall, all to the extent and
as more specifically set forth in the Agreement.
Distributions on this Class A Certificate will be made by the Trustee by
check or money order mailed to the related Class A Certificateholder of record
in the Certificate Register without the presentation or surrender of this Class
A Certificate or the making of any notation hereon except that with respect to
Class A Certificates registered in the name of Cede & Co., the nominee for The
Depository Trust Company, distributions will be made in the form of immediately
available funds. Except as otherwise provided in the Agreement and
notwithstanding the foregoing, the final distribution on this Class A
Certificate will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Class A
Certificate at the office or agency maintained for that purpose by the Trustee
in the Borough of Manhattan, The City of New York.
The Certificates do not represent an obligation of, or an interest in, the
Seller, the Servicer or any of their respective affiliates. Under no
circumstances shall - in its individual capacity be personally liable for the
breach or failure of any obligation, representation, warranty or covenant made
or undertaken by the Trust under the Agreement or the Certificates. Each of the
Agreement and this Certificate has been executed and delivered by -, not in its
individual capacity but solely as trustee of the Trust. Each of the
representations (other than the representations and warranties of the Trustee
set forth in Section 9.14), undertakings and agreements made by - in the
Agreement is made on the part of the Trust and intended not as a representation,
undertaking or agreement by - in its individual capacity, but is made and
intended for the purpose of binding only the Trust. The Certificates are limited
in right of payment to
C-2
<PAGE>
certain collections and recoveries respecting the Receivables and the monies on
deposit in the Reserve Fund [and the Yield Maintenance Account,] all as more
specifically set forth in the Agreement. A copy of the Agreement may be examined
during normal business hours at the principal office of the Trustee, and at such
other places, if any, designated by the Trustee, by any Certificateholder upon
request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
parties thereto and the rights of the Certificateholders under the Agreement at
any time by the Seller, the Servicer and the Trustee with the consent of the
Holders of Certificates evidencing not less than 51% of the Voting Interests of
each Class of Certificates acting 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). Any such consent by the Holder of this
Class A Certificate shall be conclusive and binding on such Holder and on all
future Holders of this Class A Certificate and of any Class A Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Class A Certificate. The Agreement
also permits the amendment thereof, in certain circumstances, without the
consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Class A Certificate is registrable in the
Certificate Register upon surrender of this Class A Certificate for registration
of transfer at the offices or agencies maintained by the Trustee in its capacity
as Certificate Registrar, or by any successor Certificate Registrar, in The City
of New York, accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Certificate Registrar duly executed by the
Holder hereof or such Holder's attorney duly authorized in writing, and
thereupon one or more new Class A Certificates of authorized denominations
evidencing the same aggregate interest in the Trust will be issued to the
designated transferee.
The Class A Certificates are issuable only as registered Certificates
without coupons in denominations of $1,000 and integral multiples thereof
(except for one Class A Certificate in a smaller minimum denomination
representing any remaining portion of the Original Class A Certificate Balance).
As provided in the Agreement and subject to certain limitations therein set
forth, Class A Certificates are exchangeable for new Class A Certificates of
authorized denominations evidencing the same aggregate principal amount, as
requested by the Holder surrendering the same. No service charge will be made
for any such registration of transfer or exchange, but the Trustee may require
payment of a sum sufficient to cover any tax or governmental charges payable in
connection therewith.
Prior to due presentation of this Class A Certificate for transfer, the
Trustee, the Certificate Registrar and any of their respective agents may treat
the Person in whose name this Class A Certificate is registered as the owner
hereof for the purposes of receiving distributions and for all other purposes,
and neither the Trustee, the Certificate Registrar nor any such agent shall be
affected by any notice to the contrary.
C-3
<PAGE>
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the payment to Certificateholders of
all amounts required to be paid to them pursuant to the Agreement or the
maturity or liquidation of the last Receivable and the disposition of all
property held as part of the Trust. The Seller or the Servicer, or any successor
to the Servicer, may, at its option, purchase the corpus of the Trust at a price
specified in the Agreement, and such purchase of the Receivables and other
property of the Trust will effect early retirement of the Certificates; however,
such right of purchase is exercisable only on a Distribution Date following the
last day of the month in which the Pool Balance is 10% or less of the Original
Pool Balance.
Unless the certificate of authentication hereon shall have been executed
by an authorized officer of the Trustee, by manual signature, this Class A
Certificate shall not entitle the Holder hereof to any benefit under the
Agreement or be valid for any purpose.
C-4
<PAGE>
IN WITNESS WHEREOF, the Trustee, on behalf of the Trust and not in its
individual capacity, has caused this Class A Certificate to be duly executed.
Dated: - TOYOTA AUTO RECEIVABLES 199_-_
GRANTOR TRUST
By: -,
not in its individual capacity
but solely as Trustee
By: ________________________________________
Authorized Officer
This is one of the Certificates referred to in the within-mentioned
Agreement.
-,
as Trustee
By: ________________________________________
Authorized Officer
C-5
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
________________________________________________________________________________
(Please print or typewrite name and address, including postal zip code, of
assignee)
________________________________________________________________________________
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
_______________________________________________________Attorney to transfer said
Certificate on the books of the Certificate Registrar, with full power of
substitution in the premises.
Dated:
______________________________________*
Signature Guaranteed:
______________________________________*
- ----------
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member firm of the New York Stock Exchange or a commercial bank
or trust company.
C-6
<PAGE>
EXHIBIT D
FORM OF CLASS B CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A CERTIFICATES
AS DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE (A) REPRESENTS TO THE TRUSTEE THAT (1) SUCH TRANSFEREE IS NOT AN
EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED, OR SECTION 4975 OF THE CODE OR A PERSON ACTING ON BEHALF OF A
PLAN OR USING THE ASSETS OF A PLAN TO EFFECT SUCH PURCHASE (2) AN INSURANCE
COMPANY PURCHASING SUCH CERTIFICATE OR INTEREST FROM FUNDS IN A GENERAL ACCOUNT
OR SEPARATE ACCOUNT (WITH CERTAIN LIMITATIONS) OR (B) DELIVERS AN OPINION OF
COUNSEL, EACH IN ACCORDANCE WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO
HEREIN. NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY HEREIN, ANY PURPORTED
TRANSFER OF THIS CERTIFICATE TO OR ON BEHALF OF AN EMPLOYEE BENEFIT PLAN SUBJECT
TO ERISA OR TO THE CODE OR A PERSON ACTING ON BEHALF OF A PLAN OR USING THE
ASSETS OF A PLAN TO EFFECT SUCH PURCHASE OR TO AN INSURANCE COMPANY FOR AMOUNTS
IN A NON-EXEMPT INSURANCE COMPANY GENERAL ACCOUNT OR SEPARATE ACCOUNT WITHOUT
DELIVERING THE OPINION OF COUNSEL DESCRIBED ABOVE SHALL BE VOID AND OF NO
EFFECT.
D-1
<PAGE>
TOYOTA AUTO RECEIVABLES 199_-_ GRANTOR TRUST
-% ASSET BACKED CERTIFICATE, CLASS B
evidencing a fractional undivided interest in the Trust, as defined below,
the property of which includes a pool of retail installment sale contracts
secured by the new and used automobiles and light duty trucks financed
thereby and sold to the Trust by Toyota Motor Credit Receivables
Corporation. The Final Scheduled Distribution Date is March 15, 2001.
(This Certificate does not represent an interest in or obligation of
Toyota Motor Credit Receivables Corporation, Toyota Motor Credit
Corporation or any of their respective affiliates)
NUMBER R-B1 CUSIP -
$-
THIS CERTIFIES THAT CEDE & CO. is the registered owner of a - ($-)
nonassessable, fully-paid, fractional undivided interest in the Toyota Auto
Receivables 199_-_ Grantor Trust (the "Trust") formed by Toyota Motor Credit
Receivables Corporation, a California corporation (the "Seller"). The Trust was
created pursuant to a Pooling and Servicing Agreement dated as of - (the
"Agreement") among the Seller, Toyota Motor Credit Corporation, as Servicer, and
o, as trustee (the "Trustee"). A summary of certain of the pertinent provisions
of the Agreement is set forth below. To the extent not otherwise defined herein,
the capitalized terms used herein have the meanings assigned to them in the
Agreement.
This Certificate is one of the duly authorized Certificates issued under
the Agreement and designated as "Toyota Auto Receivables 199_-_ Grantor Trust -%
Asset Backed Certificates, Class B" (the "Class B Certificates"). Also issued
under the Agreement are Certificates designated as "Toyota Auto Receivables
199_-_ Grantor Trust -% Asset Backed Certificates, Class A" (the "Class A
Certificates" and, together with the Class B Certificates, the "Certificates").
The Class B Certificates are subordinated to the Class A Certificates to the
extent described in the Agreement. The aggregate undivided interest in the Trust
evidenced by all Class B Certificates is -%. This Class B Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Class B Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound. The property of the
Trust includes, among other things, a pool of retail installment sale contracts
(the "Receivables") for the new and used automobiles and light duty trucks
financed thereby (the "Financed Vehicles"), certain monies due under the
Receivables on and after the Cutoff Date, security interests in the Financed
Vehicles, certain bank accounts and the proceeds thereof, proceeds from claims
on physical damage, credit life and disability insurance policies covering the
Financed Vehicles, the Receivables or the related Obligors, an assignment of the
Seller's rights under the Receivables Purchase Agreement and the right of the
Seller to receive the proceeds of any Dealer Recourse relating to the
Receivables.
D-2
<PAGE>
Under the Agreement, there will be distributed on the - day of each month
or, if such day is not a Business Day, the next succeeding Business Day (each, a
"Distribution Date"), commencing on -, to the Person in whose name this Class B
Certificate is registered at the close of business on the last calendar day
immediately preceding the related Distribution Date or, if Definitive
Certificates are issued, the last day of the month immediately preceding the
month of such distribution (each, a "Record Date"), such Class B
Certificateholder's percentage interest in an amount equal to the Class B
Distributable Amount for such Distribution Date actually distributed, together
with any outstanding Class B Interest Carryover Shortfall and any outstanding
Class B Principal Carryover Shortfall, all to the extent and as more
specifically set forth in the Agreement.
Distributions on this Class B Certificate will be made by the Trustee by
check or money order mailed to the related Class B Certificateholder of record
in the Certificate Register without the presentation or surrender of this Class
B Certificate or the making of any notation hereon. Except as otherwise provided
in the Agreement and notwithstanding the above, the final distribution on this
Class B Certificate will be made after due notice by the Trustee of the pendency
of such distribution and only upon presentation and surrender of this Class B
Certificate at the office or agency maintained for that purpose by the Trustee
in the Borough of Manhattan, The City of New York.
The Certificates do not represent an obligation of, or an interest in, the
Seller, the Servicer or any of their respective affiliates. Under no
circumstances shall - in its individual capacity be personally liable for the
breach or failure of any obligation, representation, warranty or covenant made
or undertaken by the Trust under the Agreement or the Certificates. Each of the
Agreement and this Certificate has been executed and delivered by -, not in its
individual capacity but solely as trustee of the Trust. Each of the
representations (other than the representations and warranties of the Trustee
set forth in Section 9.14), undertakings and agreements made by - in the
Agreement is made on the part of the Trust and intended not as a representation,
undertaking or agreement by - in its individual capacity, but is made and
intended for the purpose of binding only the Trust. The Certificates are limited
in right of payment to certain collections and recoveries respecting the
Receivables and the monies on deposit in the Reserve Fund [and the Yield
Maintenance Account,] all as more specifically set forth in the Agreement. A
copy of the Agreement may be examined during normal business hours at the
principal office of the Trustee, and at such other places, if any, designated by
the Trustee, by any Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
parties thereto and the rights of the Certificateholders under the Agreement at
any time by the Seller, the Servicer and the Trustee with the consent of the
Holders of Certificates evidencing not less than 51% of the Voting Interests of
each Class of Certificates acting 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). Any such consent by the Holder of this
Class B Certificate shall be conclusive and binding on such Holder and on all
future Holders of this Class B Certificate and of any Class B Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of
D-3
<PAGE>
such consent is made upon this Class B Certificate. The Agreement also permits
the amendment thereof, in certain circumstances, without the consent of the
Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Class B Certificate is registrable in the
Certificate Register upon surrender of this Class B Certificate for registration
of transfer at the offices or agencies maintained by the Trustee in its capacity
as Certificate Registrar, or by any successor Certificate Registrar, in The City
of New York, accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Certificate Registrar duly executed by the
Holder hereof or such Holder's attorney duly authorized in writing, and
thereupon one or more new Class B Certificates of authorized denominations
evidencing the same aggregate interest in the Trust will be issued to the
designated transferee.
No transfer of a Class B Certificate shall be made unless the Trustee
shall have received a representation from the transferee of such Certificate
acceptable to and in form and substance satisfactory to the Trustee (in the
event such Certificate is a Definitive Certificate, such requirement will be
satisfied only by the Trustee's receipt of a representation letter from the
transferee to the effect that:
(i) such transferee (A) is not an employee benefit plan or
arrangement subject to Section 406 of ERISA or a plan subject to Section
4975 of the Code (a "Plan"), nor a person acting on behalf of a Plan nor
using the assets of a Plan to effect such transfer, and (B) is not an
insurance company purchasing a Class B Certificate with funds contained in
an "insurance company general account" or an "insurance company separate
account" (as defined in Section V(e) of Prohibited Transaction Class
Exemption 95-60 ("PTCE 95-60")) as to which there is a Plan with respect
to which the amount of such general account's reserves and liabilities for
the contracts held by or on behalf of such Plan and all other Plans
maintained by the same employer (or affiliate thereof as defined in
Section V(a)(1) of PTCE 95-60) of by the same employee organization exceed
10% of the total of all reserves and liabilities of such general account
(as such amounts are determined under Section I(a) of PTCE 95-60) at the
date of acquisition; or
(ii) is a Plan or a person acting on behalf of a Plan or using the
assets of a Plan to effect such transfer or is an insurance company
purchasing a Class B Certificate with funds contained in an insurance
company general account OR separate account, having attached thereto an
opinion of counsel satisfactory to the Trustee, which opinion shall not be
an expense of either the Trustee or the Trust Fund, addressed to the
Trustee, to the effect that the purchase or holding of such Class B
Certificate will not result in the assets of the Trust Fund being deemed
to be "plan assets" and subject to the prohibited transaction provisions
of ERISA and the Code and will not subject the Trustee to any obligation
in addition to those expressly undertaken in this Agreement or to any
liability.
With respect to a Class B Certificate that is a Book-Entry Certificate, in the
event the representation letter referred to in the preceding sentence is not
furnished, the representations contained in clause (i) above shall be deemed to
have been made to the Trustee by the
D-4
<PAGE>
transferee's (including an initial acquiror's) acceptance of such Certificate.
Notwithstanding anything else to the contrary herein, any purported transfer of
a Class B Certificate to or on behalf of an employee benefit plan subject to
ERISA or to the Code or a person acting on behalf of a Plan or using the assets
of a Plan to effect such transfer or to an insurance company purchasing with
funds from a general account or separate account not exempt pursuant to PTCE
95-60 without the delivery to the Trustee of an opinion of counsel satisfactory
to the Trustee as described in clause (ii) above shall be void and of no effect.
The Class B Certificates are issuable only as registered Certificates
without coupons in denominations of $1,000 and integral multiples thereof
(except for one Class B Certificate in a smaller minimum denomination
representing any remaining portion of the Original Class B Certificate Balance).
As provided in the Agreement and subject to certain limitations therein set
forth, Class B Certificates are exchangeable for new Class B Certificates of
authorized denominations evidencing the same aggregate principal amount, as
requested by the Holder surrendering the same. No service charge will be made
for any such registration of transfer or exchange, but the Trustee may require
payment of a sum sufficient to cover any tax or governmental charges payable in
connection therewith.
Prior to due presentation of this Class B Certificate for transfer, the
Trustee, the Certificate Registrar and any of their respective agents may treat
the Person in whose name this Class B Certificate is registered as the owner
hereof for the purpose of receiving distributions and for all other purposes,
and neither the Trustee, the Certificate Registrar nor any such agent shall be
affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the payment to Certificateholders of
all amounts required to be paid to them pursuant to the Agreement or the
maturity or liquidation of the last Receivable and the disposition of all
property held as part of the Trust. The Seller or the Servicer, or any successor
to the Servicer, may, at its option, purchase the corpus of the Trust at a price
specified in the Agreement, and such purchase of the Receivables and other
property of the Trust will effect early retirement of the Certificates; however,
such right of purchase is exercisable only on a Distribution Date following the
last day of the month in which the Pool Balance is 10% or less of the Original
Pool Balance.
Unless the certificate of authentication hereon shall have been executed
by an authorized officer of the Trustee, by manual signature, this Class B
Certificate shall not entitle the Holder hereof to any benefit under the
Agreement or be valid for any purpose.
D-5
<PAGE>
IN WITNESS WHEREOF, the Trustee, on behalf of the Trust and not in its
individual capacity, has caused this Class B Certificate to be duly executed.
Dated: - TOYOTA AUTO RECEIVABLES 199_-_
GRANTOR TRUST
By: -,
not in its individual capacity
but solely as Trustee
By: _______________________________________
Authorized Officer
This is one of the Certificates referred to in the within-mentioned
Agreement.
-,
as Trustee
By: _______________________________________
Authorized Officer
D-6
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
________________________________________________________________________________
(Please print or typewrite name and address, including postal zip code, of
assignee)
________________________________________________________________________________
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
___________________________________________Attorney to transfer said Certificate
on the books of the Certificate Registrar, with full power of substitution in
the premises.
Dated:
_______________________________________*
Signature Guaranteed:
_______________________________________*
- ----------
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member firm of the New York Stock Exchange or a commercial bank
or trust company.
D-7
<PAGE>
EXHIBIT E
FORM OF
TRANSFEREE CERTIFICATE
Toyota Auto Receivables 199_-_ Grantor Trust
-% Asset Backed Certificates, Class B
I, [Name], hereby represent and warrant to -, as trustee (the "Trustee")
of the above-named trust, as follows:
1. I am [an officer of [Name of Transferee],] the proposed transferee
("Transferee") of an Ownership Interest in a Class B Certificate (the
"Certificate") issued pursuant to the Pooling and Servicing Agreement (the
"Agreement") dated as of -, relating to the above-referenced securities, each
among Toyota Motor Credit Receivables Corporation, as seller (the "Seller"),
Toyota Motor Credit Corporation, as servicer and the Trustee. Capitalized terms
used but not defined herein shall have the meanings ascribed thereto in the
Agreement. [Transferee has authorized me to make the following representations
and warranties on behalf of Transferee.]
2. The Transferee agrees to require a Transfer Certificate substantially
in the form of this Transfer Certificate from any Person to whom the Transferee
attempts to Transfer its interest in the Certificate and in connection with any
Transfer by a Person for whom the Transferee is acting as nominee, trustee or
agent. The Transferee will not Transfer its interest or cause any interest to be
Transferred to any Person that the Transferee knows cannot truthfully complete a
Transfer Affidavit.
3. CHECK APPROPRIATE BOX:
|_| The Transferee (A) is not an employee benefit plan or arrangement
subject to Section 406 of ERISA or a plan subject to Section 4975 of
the Code (a "Plan"), nor a person acting on behalf of a Plan nor
using the assets of a Plan to effect such transfer, and (B) is not
an insurance company purchasing a Class B Certificate with funds
contained in an "insurance company general account" or an "insurance
company separate account" (as defined in Section V(e) of Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60")) as to which there
is a Plan with respect to which the amount of such general account's
reserves and liabilities for the contracts held by or on behalf of
such Plan and all other Plans maintained by the same employer (or
affiliate thereof as defined in Section V(a)(1) of PTCE 95-60) of by
the same employee organization exceed 10% of the total of all
reserves and liabilities of such general account (as such amounts
are determined under Section I(a) of PTCE 95-60) at the date of
acquisition; or
E-1
<PAGE>
|_| The Transferee is a Plan or a person acting on behalf of a Plan or
using the assets of a Plan to effect such transfer or is an
insurance company purchasing a Class B Certificate with funds
contained in an insurance company general account or separate
account, but has attached hereto an opinion of counsel addressed to
the Trustee to the effect that the purchase or holding of such Class
B Certificate will not result in the assets of the Trust Fund being
deemed to be "plan assets" and subject to the prohibited transaction
provisions of ERISA and the Code and will not subject the Trustee to
any obligation in addition to those expressly undertaken in the
Agreement or to any liability.
IN WITNESS WHEREOF, the undersigned has caused this instrument to be
executed this _______ day of ___________, 19__.
____________________________________________
Print Name of Transferee
[By: _______________________________________
Name:
Title:]
E-2
<PAGE>
EXHIBIT F
FORM OF LETTER OF REPRESENTATIONS
[Omitted]
F-1
<PAGE>
RECEIVABLES PURCHASE AGREEMENT
TOYOTA MOTOR CREDIT CORPORATION,
as Seller
and
TOYOTA MOTOR CREDIT RECEIVABLES CORPORATION,
as Purchaser
Dated as of -
<PAGE>
TABLE OF CONTENTS
Page
----
I. DEFINITIONS
SECTION 1.01 Definitions.............................................1
SECTION 1.02 Other Definitional Provisions...........................2
II. CONVEYANCE OF RECEIVABLES
SECTION 2.01 Conveyance of Receivables...............................2
SECTION 2.02 Representations and Warranties of the Seller and
the Purchaser...........................................3
SECTION 2.03 Representations and Warranties of the Seller as to
the Receivables.........................................6
SECTION 2.04 Covenants of the Seller................................10
III. PAYMENT OF RECEIVABLES PURCHASE PRICE
SECTION 3.01 Payment of Receivables Purchase Price..................11
IV. TERMINATION
SECTION 4.01 Termination............................................11
V. MISCELLANEOUS PROVISIONS
SECTION 5.01 Amendment..............................................11
SECTION 5.02 Protection of Right, Title and Interest to
Receivables............................................11
SECTION 5.03 Governing Law..........................................12
SECTION 5.04 Notices................................................12
SECTION 5.05 Severability of Provisions.............................12
SECTION 5.06 Assignment.............................................13
SECTION 5.07 Further Assurances.....................................13
SECTION 5.08 No Waiver; Cumulative Remedies.........................13
SECTION 5.09 Counterparts...........................................13
SECTION 5.10 Third-Party Beneficiaries..............................13
SECTION 5.11 Merger and Integration.................................13
SECTION 5.12 Headings...............................................14
SECTION 5.13 Indemnification........................................14
i
<PAGE>
SECTION 5.14 Merger or Consolidation of, or Assumption of the
Obligations of, the Seller.............................14
Schedule A - Schedule of Receivables.......................................A-1
ii
<PAGE>
RECEIVABLES PURCHASE AGREEMENT, dated as of -, between Toyota Motor Credit
Corporation, a California corporation, as seller, and Toyota Motor Credit
Receivables Corporation, a California corporation, as purchaser.
In consideration of the premises and mutual agreements herein contained,
each party agrees as follows for the benefit of the other party and for the
benefit of the Trustee:
ARTICLE I.
DEFINITIONS
1.01 Definitions. Whenever used in this Agreement, the following words and
phrases shall have the following meanings:
"Agreement" shall mean this Receivables Purchase Agreement and all
amendments hereof and supplements hereto.
"Closing Date" shall mean -.
"Cutoff Date" shall mean -.
"Deferred Prepayment" means, with respect to a Precomputed Receivable and
a Collection Period, the aggregate amount, if any, of Payments Ahead remitted to
the Servicer in respect of such Receivable during one or more prior Collection
Periods and currently held by the Servicer or in the Payahead Account.
["Pooling and Servicing Agreement" shall mean the Pooling and Servicing
Agreement dated as of - by and among Toyota Motor Credit Receivables
Corporation, as seller, Toyota Motor Credit Corporation, as servicer, and the
Trustee.]
"Purchaser" shall mean Toyota Motor Credit Receivables Corporation, in its
capacity as purchaser of the Receivables under this Agreement, and its
successors and assigns.
"Receivable" means any retail installment sale contract executed by an
Obligor in respect of a Financed Vehicle, and all proceeds thereof and payments
thereunder, which Receivable shall be identified in the Schedule of Receivables.
"Receivables Purchase Price" shall mean $-.
"Released Administrative Amount" means, with respect to a Distribution
Date and to an Administrative Receivable, the Deferred Prepayment, if any, for
such Administrative Receivable.
"Released Warranty Amount" means, with respect to a Distribution Date and
to a Warranty Receivable, the Deferred Prepayment, if any, for such Warranty
Receivable.
1
<PAGE>
["Sale and Servicing Agreement" shall mean the Sale and Servicing
Agreement dated as of - by and among Toyota Motor Credit Receivables
Corporation, as seller, Toyota Motor Credit Corporation, as servicer, and the
Trustee.]
"Seller" shall mean Toyota Motor Credit Corporation, in its capacity as
seller of the Receivables under this Agreement, and its successors and assigns.
"Schedule of Receivables" means the schedule of receivables attached as
Schedule A hereto.
["Trust Agreement" means the Trust Agreement dated as of - by and between
Toyota Motor Receivables Corporation, as seller, and -, as trustee.]
"Trustee" shall mean -, as trustee under the [Pooling and Servicing
Agreement][Trust Agreement], or any successor trustee thereunder.
"Warranty Receivable" means a Receivable purchased by the Seller pursuant
to Section 2.03(c).
1.02 Other Definitional Provisions.
(a) All capitalized terms not otherwise defined in this Agreement
shall have the defined meanings used in the [Pooling and Servicing
Agreement][Sale and Servicing Agreement or Trust Agreement, as the case may be].
(b) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; Section, subsection
and Schedule references contained in this Agreement are references to Sections,
subsections and Schedules in or to this Agreement unless otherwise specified;
and the word "including" means including without limitation.
ARTICLE II.
CONVEYANCE OF RECEIVABLES
2.01 Conveyance of Receivables.
(a) Subject to the terms and conditions of this Agreement, on the
Closing Date the Seller agrees to sell to the Purchaser, and the Purchaser
agrees to purchase from the Seller, without recourse (subject to the Seller's
obligations hereunder):
(i) all right, title and interest of the Seller in and to the
Receivables listed in the Schedule of Receivables and all monies due
thereon or paid thereunder or in respect thereof (including proceeds
of the repurchase of Receivables by the Seller pursuant to Section
2.03(c)) on or after the Cutoff Date;
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(ii) the interest of the Seller in the security interests in
the Financed Vehicles granted by the Obligors pursuant to the
Receivables and any accessions thereto;
(iii) the interest of the Seller in any proceeds of any
physical damage insurance policies covering Financed Vehicles and in
any proceeds of any credit life or credit disability insurance
policies relating to the Receivables or the Obligors;
(iv) the interest of the Seller in any Dealer Recourse;
(v) the right of the Seller to realize upon any property
(including the right to receive future Liquidation Proceeds) that
shall have secured a Receivable and have been repossessed by or on
behalf of the Trustee; and
(vi) all proceeds of the foregoing.
(b) In connection with the foregoing conveyance, the Seller
agrees to record and file, at its own expense, a financing statement with
respect to the Receivables necessary to provide third parties with notice of the
conveyance hereunder and to perfect the sale of the Receivables to the
Purchaser, and the proceeds thereof (and any continuation statements as are
required by applicable state law), and to deliver a file-stamped copy of each
such financing statement (or continuation statement) or other evidence of such
filings (which may, for purposes of this Section, consist of telephone
confirmation of such filing with the file stamped copy of each such filing to be
provided to the Purchaser in due course), as soon as is practicable after
receipt by the Seller thereof.
The parties hereto intend that the conveyance hereunder be a sale. In the
event that the conveyance hereunder is not for any reason considered a sale, all
filings described in the foregoing paragraph shall give the Purchaser a first
priority perfected security interest in, to and under the Receivables, other
property conveyed hereunder and all proceeds of any of the foregoing and that
this Agreement constitute a security agreement under applicable law.
In connection with the foregoing conveyance, the Seller further agrees, at
its own expense, on or prior to the Closing Date (i) to annotate and indicate in
its computer files that the Receivables have been transferred to the Purchaser
pursuant to this Agreement, (ii) to deliver to the Purchaser a computer file or
printed or microfiche list containing a true and complete list of all such
Receivables, identified by account number and by the Principal Balance of each
Receivable as of the Cutoff Date, which file or list shall be marked as Schedule
A to this Agreement and is hereby incorporated into and made a part of this
Agreement and (iii) to deliver the Receivable Files to or upon the order of the
Purchaser.
2.02 Representations and Warranties of the Seller and the Purchaser.
(a) The Seller hereby represents and warrants to the Purchaser as of
the date of this Agreement and the Closing Date that:
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(i) Organization and Good Standing. The Seller shall have been
duly organized and shall be validly existing as a corporation in
good standing under the laws of the State of California, with
corporate power and authority to own its properties and to conduct
its business as such properties shall be currently owned and such
business is presently conducted, and had at all relevant times, and
shall now have, corporate power, authority and legal right to
acquire, own and sell the Receivables.
(ii) Due Qualification. The Seller shall be duly qualified to
do business as a foreign corporation in good standing, and shall
have obtained all necessary licenses and approvals in all
jurisdictions in which the ownership or lease of property or the
conduct of its business shall require such qualifications.
(iii) Power and Authority. The Seller shall have the corporate
power and authority to execute and deliver this Agreement and to
carry out its terms; and the execution, delivery and performance of
this Agreement shall have been duly authorized by the Seller by all
necessary corporate action.
(iv) Binding Obligation. This Agreement shall constitute a
legal, valid and binding obligation of the Seller enforceable in
accordance with its terms, except as enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting creditors' rights generally or by general
principles of equity.
(v) No Violation. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms
hereof shall not conflict with, result in any breach of any of the
terms and provisions of, nor constitute (with or without notice or
lapse of time) a default under, the articles of incorporation or
bylaws of the Seller, or conflict with or breach any of the material
terms or provisions of, or constitute (with or without notice or
lapse of time) a default under, any indenture, agreement or other
instrument to which the Seller is a party or by which it shall be
bound; nor result in the creation or imposition of any lien upon any
of its properties pursuant to the terms of any such indenture,
agreement or other instrument (other than this Agreement); nor
violate any law or, to the best of the Seller's knowledge, any
order, rule or regulation applicable to the Seller of any court or
of any federal or state regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over the
Seller or its properties; which breach, default, conflict, lien or
violation would have a material adverse effect on the earnings,
business affairs or business prospects of the Seller.
(vi) No Proceedings. There is no action, suit or proceeding
before or by any court or governmental agency or body, domestic or
foreign, now pending, or to the Seller's knowledge, threatened,
against or affecting the Seller: (i) asserting the invalidity of
this Agreement, (ii) seeking to prevent the consummation of any of
the transactions contemplated by this Agreement or (iii) seeking any
determination or ruling that might materially and adversely effect
the performance by the Seller of its obligations under, or the
validity or enforceability of, this Agreement.
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(b) The Purchaser hereby represents and warrants to the Seller as of
the date of this Agreement and the Closing Date that:
(i) Organization and Good Standing. The Purchaser shall have
been duly organized and shall be validly existing as a corporation
in good standing under the laws of the State of California, and has
corporate power and authority to own its properties and to conduct
its business as such properties shall be currently owned and such
business is presently conducted, and had at all relevant times, and
shall now have, corporate power, authority and legal right to
acquire and own the Receivables.
(ii) Due Qualification. The Purchaser shall be duly qualified
to do business as a foreign corporation in good standing, and shall
have obtained all necessary licenses and approvals in all
jurisdictions in which the ownership or lease of property or the
conduct of its business shall require such qualifications.
(iii) Power and Authority. The Purchaser shall have the
corporate power and authority to execute and deliver this Agreement
and to carry out its terms; and the execution, delivery and
performance of this Agreement shall have been duly authorized by the
Purchaser by all necessary corporate action.
(iv) Binding Obligation. This Agreement shall constitute a
legal, valid and binding obligation of the Purchaser enforceable in
accordance with its terms, except as enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting creditors' rights generally or by general
principles of equity.
(v) No Violation. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms
hereof shall not conflict with, result in any breach of any of the
terms and provisions of, nor constitute (with or without notice or
lapse of time) a default under, the articles of incorporation or
bylaws of the Purchaser, or conflict with or breach any of the
material terms or provisions of, or constitute (with or without
notice or lapse of time) a default under, any indenture, agreement
or other instrument to which the Purchaser is a party or by which it
shall be bound; nor result in the creation or imposition of any Lien
upon any of its properties pursuant to the terms of any such
indenture, agreement or other instrument (other than this
Agreement); nor violate any law or, to the best of the Purchaser's
knowledge, any order, rule or regulation applicable to the Purchaser
of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Purchaser or its properties; which breach,
default, conflict, Lien or violation would have a material adverse
affect on the earnings, business affairs or business prospects of
the Purchaser.
(vi) No Proceedings. There is no action, suit or proceeding
before or by any court or governmental agency or body, domestic or
foreign, now pending, or to the Purchaser's knowledge, threatened,
against or affecting the Purchaser: (i) asserting the invalidity of
this Agreement, (ii) seeking to prevent the consummation of any of
the
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transactions contemplated by this Agreement or (iii) seeking any
determination or ruling that might materially and adversely affect
the performance by the Purchaser of its obligations under, or the
validity or enforceability of, this Agreement.
(c) The representations and warranties set forth in this Section
shall survive the sale of the Receivables by the Seller to the Purchaser
pursuant to this Agreement and the sale of the Receivables by the Purchaser to
the Trust pursuant to the [Pooling and Servicing Agreement][Sale and Servicing
Agreement]. Upon discovery by the Seller, the Purchaser or the Trustee of a
breach of any of the foregoing representations and warranties, the party
discovering such breach shall give prompt written notice to the others.
2.03 Representations and Warranties of the Seller as to the Receivables.
(a) Eligibility of Receivables. The Seller hereby represents and
warrants as of the Cutoff Date that:
(i) Characteristics of Receivables. Each Receivable (A) shall
have been originated in the United States by a Dealer for the retail
sale of the related Financed Vehicle in the ordinary course of such
Dealer's business, shall have been fully and properly executed by
the parties thereto, shall have been purchased by the Seller from
such Dealer under an existing agreement with the Seller and shall
have been validly assigned by such Dealer to the Seller in
accordance with the terms of such agreement, (B) shall have created
or shall create a valid, subsisting and enforceable first priority
security interest in favor of the Seller in the related Financed
Vehicle, which security interest shall be assignable and has been
assigned by the Seller to the Purchaser, (C) shall provide for level
Monthly Payments (provided that the payment in the first or last
month in the life of the Receivable may be minimally different from
the level payment) that fully amortize the Amount Financed by
maturity and provide for a finance charge or yield interest at its
APR, in either case calculated based on the Rule of 78s, the simple
interest method or the actuarial method, (D) shall contain customary
and enforceable provisions such that the rights and remedies of the
holder thereof shall be adequate for realization against the
collateral of the benefits of the security and (E) shall provide
for, in the event that such Receivable is prepaid, a prepayment that
fully pays the Principal Balance and includes accrued but unpaid
interest.
(ii) Schedule of Receivables. The information set forth in the
Schedule of Receivables shall be true and correct in all material
respects as of the opening of business on the Cutoff Date, the
Receivables were selected at random from the retail installment sale
contracts included in the portfolio of the Seller meeting the
selection criteria set forth in this Section and no selection
procedures believed to be adverse to the interests of any
[Certificateholders][Securityholders] shall have been utilized in
selecting the Receivables.
(iii) Compliance with Law. Each Receivable and each sale of
the related Financed Vehicle shall have complied at the time it was
originated or made, and shall
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comply at the time of execution of this Agreement in all material
respects with all requirements of applicable federal, state and
local laws, and regulations thereunder, including usury laws, the
Federal Truth-in-Lending Act, the Equal Credit Opportunity Act, the
Fair Credit Billing Act, the Fair Credit Reporting Act, the Fair
Debt Collection Practices Act, the Federal Trade Commission Act, the
Magnuson-Moss Warranty Act, Federal Reserve Board Regulations B, M
and Z, to the extent applicable, state adaptations of the National
Consumer Act and of the Uniform Consumer Credit Code and other
consumer credit, equal credit opportunity and disclosure laws.
(iv) Binding Obligation. Each Receivable shall constitute the
legal, valid and binding payment obligation in writing of the
related Obligor, enforceable by the holder thereof in accordance
with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting the enforcement of creditors' rights in general and
by general principles of equity, regardless of whether such
enforceability shall be considered in a proceeding in equity or at
law.
(v) No Bankrupt Obligors. None of the Receivables shall be
due, to the best knowledge of the Seller, from any Obligor who is
presently the subject of a bankruptcy proceeding or is insolvent.
(vi) No Government Obligors. None of the Receivables shall be
due from the United States or any state, or from any agency,
department or instrumentality of the United States or any state or
local government.
(vii) Employee Obligors. None of the Receivables shall be due
from any employee of the Seller, the Purchaser or any of their
respective affiliates.
(viii) Security Interest in Financed Vehicles. Immediately
prior to the sale, assignment and transfer thereof pursuant hereto,
each Receivable shall be secured by a validly perfected first
priority security interest in the related Financed Vehicle in favor
of the Seller as secured party or all necessary and appropriate
action with respect to such Receivable shall have been taken to
perfect a first priority security interest in such Financed Vehicle
in favor of the Seller as secured party.
(ix) Receivables in Force. No Receivable shall have been
satisfied, subordinated or rescinded, nor shall any Financed Vehicle
have been released in whole or in part from the lien granted by the
related Receivable.
(x) No Waivers. No provision of a Receivable shall have been
waived in such a manner that such Receivable fails to meet all of
the other representations and warranties made by the Seller herein
with respect thereto.
(xi) No Amendments. No Receivable shall have been amended or
modified in such a manner that the total number of Scheduled
Payments has been increased or that the
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related Amount Financed has been increased or that such Receivable
fails to meet all of the other representations and warranties made
by the Seller herein with respect thereto.
(xii) No Defenses. No facts shall be known to the Seller which
would give rise to any right of rescission, setoff, counterclaim or
defense, nor shall the same have been asserted or threatened, with
respect to any Receivable.
(xiii) No Liens. To the knowledge of the Seller, no liens or
claims shall have been filed, including liens for work, labor or
materials relating to a Financed Vehicle, that shall be liens prior
to, or equal or coordinate with, the security interest in such
Financed Vehicle granted by the related Receivable.
(xiv) No Defaults; No Repossession. Except for payment
defaults that, as of the Cutoff Date, have been continuing for a
period of not more than - days, no default, breach, violation or
event permitting acceleration under the terms of any Receivable
shall have occurred as of the Cutoff Date; no continuing condition
that with notice or the lapse of time would constitute a default,
breach, violation or event permitting acceleration under the terms
of any Receivable shall have arisen; the Seller shall not have
waived any of the foregoing; and no Financed Vehicle has been
repossessed without reinstatement as of the Cutoff Date.
(xv) Insurance. At the time of origination of each Receivable,
each Obligor was required under the terms of such Receivable to
obtain and maintain physical damage insurance covering the related
Financed Vehicle.
(xvi) Good Title. It is the intention of the Seller that the
transfer and assignment herein contemplated, taken as a whole,
constitute a sale of the Receivables from the Seller to the
Purchaser and that the beneficial interest in and title to the
Receivables not be part of the debtor's estate in the event of the
filing of a bankruptcy petition by or against the Seller under any
bankruptcy law. No Receivable has been sold, transferred, assigned
or pledged by the Seller to any Person other than the Purchaser, and
no provision of a Receivable shall have been waived, except as
provided in clause (x) above; immediately prior to the transfer and
assignment herein contemplated, the Seller had good and marketable
title to each Receivable free and clear of all Liens and rights of
others; immediately upon the transfer and assignment thereof, the
Purchaser shall have good and marketable title to each Receivable,
free and clear of all Liens and rights of others; and the transfer
and assignment herein contemplated has been perfected under the UCC.
(xvii) Lawful Assignment. No Receivable shall have been
originated in, or shall be subject to the laws of, any jurisdiction
under which the sale, transfer and assignment of such Receivable
under this Agreement or pursuant to transfers of the related
certificates of title shall be unlawful, void or voidable.
(xviii) All Filings Made. All filings (including UCC filings)
necessary in any jurisdiction to provide third parties with notice
of the transfer and assignment herein
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contemplated, to perfect the sale of the receivables from the Seller
to the Purchaser and to give the Purchaser a first priority
perfected security interest in the Receivables shall have been made.
(xix) One Original. There shall be only one original executed
copy of each Receivable.
(xx) Chattel Paper. Each Receivable constitutes "chattel
paper" as defined in the UCC.
(xxi) Additional Representations and Warranties. (A) Each
Receivable shall have an original maturity of not less than - months
nor greater than - months and a remaining maturity of not less than
- months nor greater than - months; (B) each Receivable provides for
the payment of a finance charge based on an APR ranging from -% to
-%%; (C) each Receivable shall have had an original principal
balance of not less than $- nor more than $- and, as of the Cutoff
Date, an unpaid principal balance of not less than $- and not more
than $-; (D) each Receivable was originated before o; (E) no
Receivable was originated under a special financing program; (F) no
Receivable shall have a Scheduled Payment that is more than - days
past due as of the Cutoff Date; and (G) no Financed Vehicle was
subject to force-placed insurance as of the Cutoff Date.
(b) Notice of Breach. The representations and warranties set forth
in this Section shall speak as of the execution and delivery of this Agreement,
but shall survive the sale, transfer and assignment of the Receivables to the
Purchaser and any subsequent assignment or transfer pursuant to Article Two of
the [Pooling and Servicing Agreement][Sale and Servicing Agreement]. The
Purchaser, the Seller or the Trustee, as the case may be, shall inform the other
parties promptly, in writing, upon discovery of any breach of the Seller's
representations and warranties pursuant to this Section which materially and
adversely affects the interests of any [Certificateholders] [Securityholders] in
any Receivable.
(c) Repurchase of Receivables. In the event of a breach of any
representation or warranty set forth in Section 2.03(a) which materially and
adversely affects the interest of any [Certificateholders][Securityholders] in
any Receivable and unless the breach shall have been cured by the last day of
the second Collection Period following the Collection Period in which the
discovery of the breach is made or notice is received, as the case may be (or,
at the option of the Seller, the last day in the first Collection Period
following the Collection Period in which such discovery is made or such notice
received), the Seller shall repurchase such Receivable. In consideration of the
purchase of any such Receivable, the Seller shall remit an amount equal to the
Warranty Purchase Payment in respect of such Receivable to the Purchaser and
shall be entitled to receive the Released Warranty Amount. In the event that, as
of the date of execution and delivery of this Agreement, any Liens or claims
shall have been filed, including Liens for work, labor or materials relating to
a Financed Vehicle, that shall be liens prior to, or equal or coordinate with,
the Lien granted by the related Receivable (whether or not the Seller has
knowledge thereof), and such breach materially and adversely affects the
interests of any
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[Certificateholders][Securityholders] in such Receivable, the Seller shall
repurchase such Receivable on the terms and in the manner specified above. Upon
any such repurchase, the Purchaser shall, without further action, be deemed to
transfer, assign, set-over and otherwise convey to the Seller, without recourse,
representation or warranty, all the right, title and interest of the Purchaser
in, to and under such repurchased Receivable, all monies due or to become due
with respect thereto and all proceeds thereof. The Purchaser or the Trustee, as
applicable, shall execute such documents and instruments of transfer or
assignment and take such other actions as shall reasonably be requested by the
Seller to effect the conveyance of such Receivable pursuant to this Section. The
sole remedy of the Purchaser with respect to a breach of the Seller's
representations and warranties pursuant to Section 2.03(a) or with respect to
the existence of any such Liens or claims shall be to require the Seller to
repurchase the related Receivables pursuant to this Section.
2.04 Covenants of the Seller. The Seller hereby covenants that:
(a) Security Interests. Except for the conveyances hereunder, the
Seller will not sell, pledge, assign or transfer to any other Person, or grant,
create, incur, assume or suffer to exist any Lien on any Receivable, whether now
existing or hereafter created, or any interest therein, the Seller will
immediately notify the Purchaser of the existence of any Lien on any Receivable
and, in the event that the interests of any
[Certificateholders][Securityholders] in such Receivable are materially and
adversely affected, such Receivable shall be repurchased from the Purchaser by
the Seller in the manner and with the effect specified in Section 2.03(c), and
the Seller shall defend the right, title and interest of the Purchaser in, to
and under the Receivables, whether now existing or hereafter created, against
all claims of third parties claiming through or under the Seller; provided,
however, that nothing in this subsection shall prevent or be deemed to prohibit
the Seller from suffering to exist upon any of the Receivables, Liens for
municipal or other local taxes if such taxes shall not at the time be due and
payable or if the Seller shall currently be contesting the validity of such
taxes in good faith by appropriate proceedings and shall have set aside on its
books adequate reserves with respect thereto.
(b) Delivery of Payments. The Seller agrees to deliver in kind upon
receipt to the Servicer under the [Pooling and Servicing Agreement][Sale and
Servicing Agreement] (if other than the Seller) all payments received by the
Seller in respect of the Receivables as soon as practicable after receipt
thereof by the Seller, from and after the appointment of the Servicer as
Servicer under the [Pooling and Servicing Agreement][Sale and Servicing
Agreement] with respect to the Toyota Auto Receivables 199_-_ [Grantor][Owner]
Trust.
(c) Conveyance of Receivables. The Seller covenants and agrees that
it will not convey, assign, exchange or otherwise transfer the Receivables to
any Person prior to the termination of this Agreement pursuant to Article Four
hereof.
(d) No Impairment. The Seller shall take no action, nor omit to take
any action, which would impair the rights of the Purchaser in any Receivable,
nor shall it, except as
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expressly provided in this Agreement or the [Pooling and Servicing Agreement]
[Sale and Servicing Agreement], reschedule, revise or defer payments due on any
Receivable.
ARTICLE III.
PAYMENT OF RECEIVABLES PURCHASE PRICE
3.01 Payment of Receivables Purchase Price. In consideration of the sale
of the Receivables from the Seller to the Purchaser as provided in Section 2.01,
on the Closing Date the Purchaser agrees to pay the Seller an amount equal to
the Receivables Purchase Price. The Receivables Purchase Price shall be paid in
the form of (i) $-, the net cash proceeds from the public offering by the
Purchaser of the Certificates (less amounts retained to pay expenses of the
Purchaser and to fund the Reserve Fund Initial Deposit and the Yield Maintenance
Account Initial Deposit), and (ii) $- evidenced by a non-recourse promissory
subordinated note.
ARTICLE IV.
TERMINATION
4.01 Termination. The respective obligations and responsibilities of the
Seller and the Purchaser created hereby shall terminate, except for the
indemnity obligations of the Seller as provided herein, upon the termination of
the Trust as provided in Article Ten of the [Pooling and Servicing
Agreement][Sale and Servicing Agreement].
ARTICLE V.
MISCELLANEOUS PROVISIONS
5.01 Amendment.
(a) This Agreement may be amended from time to time by the Purchaser
and the Seller to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to add any
other provision with respect to matters or questions arising under this
Agreement which shall not be inconsistent with the provisions of this Agreement
or the [Pooling and Servicing Agreement][Trust Agreement and Sale and Servicing
Agreement]; provided, however, that such action shall not, as evidenced by an
Opinion of Counsel to the Purchaser delivered to the Trustee, adversely affect
in any material respect the interests of the Trust.
(b) This Agreement may also be amended from time to time by the
Purchaser and the Seller with the consent of the Trustee for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement.
5.02 Protection of Right, Title and Interest to Receivables.
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(a) The Seller at its expense shall cause this Agreement, all
amendments hereto and/or all financing statements and continuation statements
and any other necessary documents covering the Purchaser's right, title and
interest to the Receivables and other property conveyed by the Seller to the
Purchaser hereunder to be promptly recorded, registered and filed, and at all
times to be kept recorded, registered and filed, all in such manner and in such
places as may be required by law fully to preserve and protect the right, title
and interest of the Purchaser hereunder to all of the Receivables and such other
property. The Seller shall deliver to the Purchaser file-stamped copies of, or
filing receipts for, any document recorded, registered or filed as provided
above, as soon as available following such recording, registration or filing.
The Purchaser and the Trustee shall cooperate fully with the Seller in
connection with the obligations set forth above and will execute any and all
documents reasonably required to fulfill the intent of this subsection.
(b) Within 30 days after the Seller makes any change in its name,
identity or corporate structure which would make any financing statement or
continuation statement filed in accordance with paragraph (a) above seriously
misleading within the meaning of Section 9402(7) of the UCC as in effect in the
applicable state, the Seller shall give the Purchaser notice of any such change
and shall execute and file such financing statements or amendments as may be
necessary to continue the perfection of the Purchaser's security interest in the
Receivables and the proceeds thereof.
(c) The Seller will give the Purchaser prompt written notice of any
relocation of any office from which the Seller keeps records concerning the
Receivables or of its principal executive office and whether, as a result of
such relocation, the applicable provisions of the UCC would require the filing
of any amendment of any previously filed financing or continuation statement or
of any new financing statement and shall execute and file such financing
statements or amendments as may be necessary to continue the perfection of the
interest of the Purchaser in the Receivables and the proceeds thereof.
5.03 Governing Law. This Agreement shall be construed in accordance with
the laws of the State of New York and the obligations, rights and remedies of
the parties hereunder shall be determined in accordance with such laws.
5.04 Notices. All demands, notices and communications hereunder shall be
in writing and shall be deemed to have been duly given if personally delivered
at or mailed by registered mail, return receipt requested, to (a) in the case of
the Purchaser, to Toyota Motor Credit Receivables Corporation, 19001 South
Western Avenue, Torrance, California 90501, Attention: President; (b) in the
case of Toyota Motor Credit Corporation, 19001 South Western Avenue, Torrance,
California 90501, Attention: Senior Vice President; and (c) in the case of the
Trustee, to o; or, as to any of such Persons, at such other address as shall be
designated by such Person in a written notice to the other Persons.
5.05 Severability of Provisions. If any one or more of the covenants,
agreements, provisions or terms of this Agreement shall for any reason
whatsoever be held invalid, then such
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covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions and terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions of
this Agreement.
5.06 Assignment. This Agreement may not be assigned by the Purchaser or
the Seller except as contemplated by this Section and the [Pooling and Servicing
Agreement][Trust Agreement and Sale and Servicing Agreement]; provided, however,
that simultaneously with the execution and delivery of this Agreement, the
Purchaser shall assign all of its right, title and interest herein to the
Trustee for the benefit of any [Certificateholders][Securityholders] as provided
in Section 2.01 of the [Pooling and Servicing Agreement][Sale and Servicing
Agreement], to which the Seller hereby expressly consents. The Seller agrees to
perform its obligations hereunder for the benefit of the Trust and that the
Trustee may enforce the provisions of this Agreement, exercise the rights of the
Purchaser and enforce the obligations of the Seller hereunder without the
consent of the Purchaser.
5.07 Further Assurances. The Seller and the Purchaser agree to do and
perform, from time to time, any and all acts and to execute any and all further
instruments required or reasonably requested by the other party hereto or by the
Trustee more fully to effect the purposes of this Agreement, including, without
limitation, the execution of any financing statements, amendments, continuation
statements or releases relating to the Receivables for filing under the
provisions of the UCC or other law of any applicable jurisdiction.
5.08 No Waiver; Cumulative Remedies. No failure to exercise and no delay
in exercising, on the part of the Purchaser, the Trustee or the Seller, any
right, remedy, power or privilege hereunder shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exhaustive of any
rights, remedies, powers and privileges provided by law.
5.09 Counterparts. This Agreement may be executed in two or more
counterparts (and by different parties on separate counterparts), each of which
shall be an original, but all of which together shall constitute one and the
same instrument.
5.10 Third-Party Beneficiaries. This Agreement will inure to the benefit
of and be binding upon the parties signatory hereto, and the Trustee for the
benefit of any [Certificateholders][Securityholders], which shall be considered
to be a third-party beneficiary hereof. Except as otherwise provided in this
Agreement, no other Person will have any right or obligation hereunder.
5.11 Merger and Integration. Except as specifically stated otherwise
herein, this Agreement sets forth the entire understanding of the parties
relating to the subject matter hereof, and all prior understandings, written or
oral, are superseded by this Agreement. This Agreement may not be modified,
amended, waived or supplemented except as provided herein.
13
<PAGE>
5.12 Headings. The headings herein are for purposes of reference only and
shall not otherwise affect the meaning or interpretation of any provision
hereof.
5.13 Indemnification.
(a) Purchaser and Trust. The Seller shall indemnify and hold
harmless the Purchaser, the Trust and the [Certificateholders][Securityholders]
from and against any loss, liability, expense, damage or injury suffered or
sustained by reason of any acts, omissions or alleged acts or omissions arising
out of activities of the Seller pursuant to this Agreement or as a result of the
transactions contemplated hereby, including, but not limited to, any judgment,
award, settlement, reasonable attorneys' fees and other costs or expenses
incurred in connection with the defense of any actual or threatened action,
proceeding or claim; provided, however, that the Seller shall not indemnify the
Purchaser, the Trust or any [Certificateholders][Securityholders] if such acts,
omissions or alleged acts or omissions constitute negligence or willful
misconduct by the Purchaser or any [Certificateholders][Securityholders].
(b) Trustee. The Seller shall indemnify, defend and hold harmless
the Trustee from and against any and all costs, expenses, losses, claims,
damages, injury and liabilities to the extent that such cost, expense, loss,
claim, damage or liability arose out of, and was imposed upon the Trustee
through the negligence, willful misfeasance or bad faith of the Seller in the
performance of its duties under this Agreement or by reason of reckless
disregard of its obligations and duties under this Agreement.
5.14 Merger or Consolidation of, or Assumption of the Obligations of, the
Seller.
(a) The Seller shall not consolidate with or merge into any other
corporation or convey or transfer its properties and assets substantially as an
entirety to any Person, unless:
(i) the corporation formed by such consolidation or into which the
Seller is merged or the Person which acquires by conveyance or transfer
the properties and assets of the Seller substantially as an entirety shall
be organized and existing under the laws of the United States or any State
or the District of Columbia, and, if the Seller is not the surviving
entity, shall expressly assume, by an agreement supplemental hereto,
executed and delivered to the Purchaser and the Trustee, in form
reasonably satisfactory to the Purchaser and the Trustee, the performance
of every covenant and obligation of the Seller hereunder and shall benefit
from all the rights granted to the Seller hereunder; and
(ii) The Seller shall have delivered to the Purchaser and the
Trustee an Officer's Certificate of the Seller and an Opinion of Counsel
each stating that such consolidation, merger, conveyance or transfer and
such supplemental agreement comply with this Section and that all
conditions precedent herein provided for relating to such transaction have
been complied with.
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(b) The obligations of the Seller hereunder shall not be assignable
nor shall any Person succeed to the obligations of the Seller hereunder except
in each case in accordance with the provisions of the foregoing paragraph and of
Section 5.06.
15
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
TOYOTA MOTOR CREDIT CORPORATION,
as Seller
By: ____________________________________
Name:
Title:
TOYOTA MOTOR CREDIT RECEIVABLES
CORPORATION,
as Purchaser
By: ____________________________________
Name:
Title:
ACCEPTED:
-,
not in its individual capacity
but solely as Trustee
By: _______________________________
Name:
Title:
16
<PAGE>
SCHEDULE A
SCHEDULE OF RECEIVABLES
Omitted -- originals on file at the offices
of the Seller, the Purchaser and the Trustee
A-1
<PAGE>
ADMINISTRATION AGREEMENT
among
TOYOTA AUTO RECEIVABLES 199_-_ OWNER TRUST,
as Issuer
TOYOTA MOTOR CREDIT CORPORATION,
as Administrator
and
-,
as Indenture Trustee
Dated as of -
<PAGE>
TABLE OF CONTENTS
Page
1. Duties of the Administrator............................................3
2. Records................................................................9
3. Compensation...........................................................9
4. Additional Information to be Furnished to the Issuer...................9
5. Independence of the Administrator......................................9
6. No Joint Venture......................................................10
7. Other Activities of Administrator.....................................10
8. Term of Agreement; Resignation and Removal of Administrator...........10
9. Action upon Termination, Resignation or Removal.......................11
10. Notices...............................................................11
11. Amendments............................................................12
12. Successor and Assigns.................................................13
13. Governing Law.........................................................13
14. Headings..............................................................13
15. Counterparts..........................................................13
16. Severability of Provisions............................................13
17. Not Applicable to TMCC in Other Capacities............................13
18. Limitation of Liability of Owner Trustee and Indenture Trustee........13
19. Third-Party Beneficiary...............................................14
-i-
<PAGE>
ADMINISTRATION AGREEMENT dated as of -, among TOYOTA AUTO RECEIVABLES
199_-_ OWNER TRUST, a Delaware business trust (the "Issuer"), TOYOTA MOTOR
CREDIT CORPORATION, a California corporation, as administrator (the
"Administration"), and -, a [Delaware banking corporation], not in its
individual capacity but solely as Indenture Trustee (the "Indenture Trustee").
W I T N E S S E T H:
WHEREAS beneficial ownership interests in the Issuer represented by the
Toyota Auto Receivables 199_-_ Owner Trust -% Asset Backed Certificates (the
"Certificates") have been issued in connection with the formation of the Issuer
pursuant to the Trust Agreement dated as of -(the "Trust Agreement"), between
Toyota Motor Credit Receivables Corporation ("TMCRC"), a California corporation,
as depositor, and -, as owner trustee (the "Owner Trustee"), to the owners
thereof (the "Owners");
WHEREAS the Issuer is issuing the Toyota Auto Receivables 199_-_ Owner
Trust Class A-1 -% Asset Backed Notes, the Toyota Auto Receivables 199_-_ Owner
Trust Class A-2 -% Asset Backed Notes and the Toyota Auto Receivables 199_-_
Owner Trust Class A-3 -% Asset Backed Notes (collectively, the "Notes") pursuant
to the Indenture dated as of - (as amended and supplemented from time to time,
the "Indenture"), between the Issuer and the Indenture Trustee (capitalized
terms used herein and not defined herein shall have the meanings assigned such
terms in the Indenture, the Trust Agreement or the Sale and Servicing Agreement
dated as of -, among the Issuer, TMCC, as servicer, and TMCRC, as seller, as the
case may be);
WHEREAS the Issuer has entered into certain agreements in connection with
the issuance of the Certificates and the Notes, including the Basic Documents;
WHEREAS, pursuant to the Basic Documents, the Issuer and the Indenture
Trustee are required to perform certain duties in connection with the
Certificates, the Notes and the Collateral;
WHEREAS the Issuer and the Indenture Trustee desire to appoint TMCC as
administrator to perform certain of the duties of the Issuer and the Owner
Trustee under the Basic Documents and to provide such additional services
consistent with the terms of this Agreement and the Basic Documents as the
issuer and the Owner Trustee may from time to time request; and
WHEREAS the Administrator has the capacity to provide the services
required hereby and is willing to perform such services for the Issuer and the
Owner Trustee on the terms set forth herein;
2
<PAGE>
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows:
1. Duties of the Administrator.
(a) Duties with Respect to the Depository Agreements and the
Indenture.
(i) The Administrator agrees to perform all its duties as
Administrator and the duties of the Issuer under the Depository
Agreements. In addition, the Administrator shall consult with the
Owner Trustee regarding the duties of the Issuer under the Indenture
and the Depository Agreements. The Administrator shall monitor the
performance of the Issuer and shall advise the Owner Trustee when
action by the Issuer or the Owner Trustee is necessary to comply
with the Issuer's duties under the Indenture and the Depository
Agreements. The Administrator shall prepare for execution by the
Issuer or shall cause the preparation by other appropriate persons
of all such documents, reports, filings, instruments, certificates
and opinions as it shall be the duty of the Issuer to prepare, file
or deliver pursuant to the Indenture and the Depository Agreements.
In furtherance of the foregoing, the Administrator shall take all
appropriate action that is the duty of the Issuer to take pursuant
to the Indenture including, without limitation, such of the
foregoing as are required with respect to the following matters
under the Indenture (references are to sections of the Indenture):
(A) causing the Note Register to be kept and giving the
Indenture Trustee notice of any appointment of a new Note
Registrar and the location, or change in location, of the Note
Register (Section 2.04);
(B) preparing the notification to Noteholders of the
final principal payment on their Notes (Section 2.07(b));
(C) fixing or causing to be fixed any specified record
date and the notification of the Indenture Trustee and
Noteholders with respect to special payment dates, if any
(Section 2.07(c));
(D) preparing or obtaining the documents and instruments
required for the proper authentication of Notes and delivering
the same to the Indenture Trustee (section 2.02);
(E) preparing, obtaining and/or filing of all
instruments, opinions and certificates and other documents
required for the release of collateral (Section 2.09) ;
3
<PAGE>
(F) maintaining an office in the [Borough of Manhattan],
City of New York, for the registration of transfer or exchange
of Notes (Section 3.02);
(G) causing newly appointed Paying Agents, if any, to
deliver to the Indenture Trustee the instrument specified in
the Indenture regarding funds held in trust (Section 3.03);
(H) directing the Indenture Trustee to deposit moneys
with Paying Agents, if any, other than the Indenture Trustee
(Section 3.03);
(I) obtaining and preserving the Issuer's qualification
to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity
and enforceability of the Indenture, the Notes, the Collateral
and each other instrument and agreement included in the Trust
Estate (Section 3.04);
(J) preparing all supplements, amendments, financing
statements, continuation statements, instruments of further
assurance and other instruments, in accordance with Section
3.05 of the Indenture, necessary to protect the Trust Estate
(Section 3.05);
(K) delivering the required Opinions of Counsel on the
Closing Date and annually, in accordance with Section 3.06 of
the Indenture, and delivering the annual Officers'
Certificates and certain other statements as to compliance
with the Indenture, in accordance with Section 3.09 of the
Indenture (Sections 3.06 and 3.09);
(L) identifying to the Indenture Trustee in an Officers'
Certificate and Person with whom the Issuer has contracted to
perform its duties under the Indenture (Section 3.07(b));
(M) notifying the Indenture Trustee and the Rating
Agencies of any Servicer Default pursuant to the Sale and
Servicing Agreement and, if such Servicer Default arises from
the failure of the Servicer to perform any of its duties under
the Sale and Servicing Agreement, taking all reasonable steps
available to remedy such failure (Section 3.07(d));
(N) preparing and obtaining documents and instruments
required for the release of the, Issuer from its obligations
under the Indenture (Section 3.10(b));
(O) delivering notice to the Indenture Trustee of each
Event of Default and each other default by the Servicer or the
Seller under the Sale and Servicing Agreement (Section 3.19);
4
<PAGE>
(P) monitoring the Issuer's obligations as to the
satisfaction and discharge of the Indenture and the
preparation of an Officer's Certificate and obtaining the
Opinion of Counsel and the Independent Certificate relating
thereto (Section 4.01);
(Q) [complying with any written directive of the
Indenture Trustee with respect to any sale of any portion of
the Trust Estate in connection with any Event of Default
(Section 5.04);]
(R) preparing and delivering of notice to Noteholders of
any removal of the Indenture Trustee and the appointment of a
successor Indenture Trustee (Section 6.08);
(S) preparing all written instruments required to
confirm the authority of any co-trustee or separate trustee
and any written instruments necessary in connection with the
resignation or removal of any co-trustee or separate trustee
(Sections 6.08 and 6.10);
(T) furnishing the Indenture Trustee with the names and
addresses of Noteholders during any period when the Indenture
Trustee is not the Note Registrar (Section 7.01);
(U) preparing and, after execution by the Issuer, filing
with the Commission, any applicable state agencies and the
Indenture Trustee of documents required to be filed on a
periodic basis with the Commission and any applicable state
agencies (including any summaries thereof required by rules
and regulations prescribed thereby), and transmitting of such
summaries to the Noteholders (Section 7.03);
(V) opening the Trust Accounts, preparing the related
Issuer Orders, Officers' Certificates and Opinions of Counsel
and all other actions necessary with respect to investment and
reinvestment of funds in the Trust Accounts (Sections 8.02 and
8.03);
(W) preparing any Issuer Request and Officers'
Certificates and obtaining any Opinions of Counsel and
Independent Certificates necessary for the release of the
Trust Estate (Sections 8.04 and 8.05);
(X) preparing Issuer Orders and obtaining Opinions of
Counsel with respect to the execution of any supplemental
indentures, and mailing notices to the Noteholders with
respect thereto (Sections 9.01, 9.02 and 9.03);
(Y) executing and delivering new Notes conforming to the
provisions of any supplemental indenture, as appropriate
(Section 9.06);
5
<PAGE>
(Z) notifying Noteholders of any redemption of the Notes
or causing the Indenture Trustee to provide such notice
(Section 10.02);
(AA) preparing all Officers' Certificates, Opinions of
Counsel and Independent Certificates with respect to any
requests by the Issuer of the Indenture Trustee to take any
action under the Indenture (Section 11.01(a));
(BB) preparing and delivering Officers' Certificates and
obtaining Independent Certificates, if necessary, for the
release of property from the lien of the Indenture (Section
11.01(b));
(CC) notifying the Rating Agencies, upon any failure of
the Indenture Trustee to give such notification, of the
information required pursuant to Section 11.04 of the
Indenture (Section 11.04);
(DD) preparing and delivering to Noteholders and the
Indenture Trustee any agreements with respect to alternate
payment and notice provisions (Section 11.06);
(EE) recording the Indenture, if applicable (Section
11.15); and
(ii) The Administrator also will:
(A) pay the Indenture Trustee from time to time the
reasonable compensation provided for in the Indenture with
respect to services rendered by the Indenture Trustee under
the Indenture (which compensation shall not be limited by any
provision of law in regard to the compensation of a Trustee of
an express trust);
(B) reimburse the Indenture Trustee upon its request for
all reasonable expenses, disbursements and advances incurred
or made by the Indenture Trustee in accordance with any
provision of the Indenture (including the reasonable
compensation, expenses and disbursements of its agents and
counsel) to the extent the Indenture Trustee is entitled to
such reimbursement by the Issuer under the Indenture;
(C) indemnify the Indenture Trustee for, and hold it
harmless against, any losses, liability or expense incurred
without negligence or bad faith on the part of the Indenture
Trustee, arising out of or in connection with the acceptance
or administration of the trusts and duties contemplated by the
Indenture, including the reasonable costs and expenses of
defending themselves against any claim or liability in
connection therewith to the extent the Indenture Trustee is
entitled to such indemnification from the Issuer under the
Indenture; and
6
<PAGE>
(D) indemnify the Owner Trustee for, and hold it
harmless against, any loss, liability or expense incurred
without negligence or bad faith on the part of the Owner
Trustee, arising out of or in connection with the acceptance
or administration of the transactions contemplated by the
Trust Agreement, the Indenture, the Depository Agreements or
this Administration Agreement, including the reasonable costs
and expenses of defending themselves against any claim or
liability in connection with the exercise or performance of
any of their powers or duties under the Trust Agreement.
(b) Additional Duties.
(i) In addition to the duties of the Administrator set forth
above, the Administrator shall perform such calculations, and shall
prepare for execution by the Issuer or the Owner Trustee or shall
cause the preparation by other appropriate persons of all such
documents, reports, filings, instruments, certificates and opinions
as it shall be the duty of the Issuer or the Owner Trustee to
prepare, file or deliver pursuant to the Basic Documents, and at the
request of the Owner Trustee shall take all appropriate action that
it is the duty of the Issuer or the Owner Trustee to take pursuant
to the Basic Documents. Subject to Section 5 of this Agreement, and
in accordance with the directions of the Owner Trustee, the
Administrator shall administer, perform or supervise the performance
of such other activities in connection with the Collateral
(including the Basic Documents) as are not covered by any of the
foregoing provisions and as are expressly requested by the Owner
Trustee and are reasonably within the capability of the
Administrator. [Such responsibilities shall Include, the obtainment
and maintenance of any licenses required to be obtained or
maintained by the Trust under the Pennsylvania Motor Vehicle Sales
Finance Act. In addition, the Administrator shall promptly notify
the Indenture Trustee and the Owner Trustee in writing of any
amendment to, the Pennsylvania Motor Vehicle Sales Finance Act that
would affect the duties or obligations of the Indenture Trustee, or
the Owner Trustee under any Basic Document and shall assist the
Indenture Trustee or the Owner Trustee in obtaining and maintaining
any licenses required to be obtained or maintained by the Indenture
Trustee or the Owner Trustee thereunder. In connection therewith,
the Administrator shall pay all fees and expenses under such Act.]
(ii) Notwithstanding anything in this Agreement or the Basic
Documents to the contrary, the Administrator shall be responsible
for promptly notifying the Owner Trustee in the event that any
withholding tax is imposed on the Issuer's payments (or allocations
of income) to an Owner as contemplated in Section 5.02(c) of the
Trust Agreement. Any such notice shall specify the amount of any
withholding tax required to be withheld by the Owner Trustee
pursuant to such provision.
7
<PAGE>
(iii) Notwithstanding anything in this Agreement or the Basic
Documents to the contrary, the Administrator shall be responsible
for performance of the duties of the Owner Trustee set forth in
Section 5.05(a), (b), (c) and (d) of the Trust Agreement with
respect to, among other accounting and reports to Owners; provided,
however, that the Owner Trustee shall remain exclusively responsible
for the distribution of the Schedule K-1s necessary to enable each
Owner to prepare its federal and state income tax returns.
(iv) The Administrator shall satisfy its obligations with
respect to clauses (ii) and (iii) above by retaining, at the expense
of the Issuer payable by the Administrator, a firm of independent
public accountants (the "Accountants") acceptable to the Owner
Trustee which shall perform the obligations of the Administrator
thereunder. In connection with paragraph (ii) above, the Accountants
will provide prior to -, a letter in form and substance satisfactory
to the Owner Trustee as to whether any tax withholding is then
required and, if required, the procedures to be followed with
respect thereto to comply with the requirements of the Code. The
Accountants shall be required to update the letter in each instance
that any additional tax withholding is subsequently required or any
previously required tax withholding shall no longer be required.
(v) The Administrator shall perform the duties of the
Administrator specified in Section 10.02 of the Trust Agreement
required to be performed in connection with the resignation or
removal of the Owner Trustee, and any other duties expressly
required to be performed by the Administrator under the Trust
Agreement.
(vi) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Administrator may enter into
transactions with or otherwise deal with any of its affiliates;
provided, however, that the terms of any such transactions or
dealings shall be in accordance with any directions received from
the Issuer and shall be, in the Administrator's opinion, no less
favorable to the Issuer than would be available from unaffiliated
parties.
(c) Non-Ministerial Matters.
(i) With respect to matters that in the reasonable judgment of
the Administrator are non-ministerial, the Administrator shall not
take any action unless within a reasonable time before the taking of
such action the Administrator shall have notified the Owner Trustee
of the proposed action and the Owner Trustee shall not have withheld
consent or provided an alternative direction. For the purpose of the
preceding sentence, "non-ministerial matters" shall include, without
limitation:
8
<PAGE>
(A) the amendment of the Indenture or execution of any
supplement to the Indenture;
(B) the initiation of any claim or lawsuit by the Issuer
and the compromise of any action, claim or lawsuit brought by
or against the Issuer (other than in connection with the
collection of the Receivables);
(C) the amendment, change or modification of any of the
Basic Documents;
(D) the appointment of successor Note Registrars,
successor Paying Agents or successor Indenture Trustees
pursuant to the Indenture or the appointment of successor
Administrators or Successor Servicers, or the consent to the
assignment by the Note Registrar, Paying Agent or Indenture
Trustee of its obligations, under the Indenture; and
(E) the removal of the indenture Trustee.
(ii) Notwithstanding anything to the contrary in this
Agreement, the Administrator shall not be obligated to, and shall
not, (x) make any payments to the Noteholders under the Basic
Documents, (y) sell the Trust Estate pursuant to Section 5.04 of the
Indenture or (z) take any other action that the issuer directs the
Administrator not to take on its behalf.
2. Records. The Administrator shall maintain appropriate books of account
and records relating to services performed hereunder, which books of account and
records shall be accessible for inspection by the Issuer and the Company at any
time during normal business hours.
3. Compensation. As compensation for the performance of the
Administrator's obligations under this Agreement and as reimbursement for its
expenses related thereto, the Administrator shall be entitled to a fee of $- per
month which shall be solely an obligation of the Servicer.
4. Additional Information to be Furnished to the Issuer. The Administrator
shall furnish to the Issuer from time to time such additional information
regarding the Collateral as the Issuer shall, reasonably request.
5. Independence of the Administrator. For all purposes of this Agreement,
the Administrator shall be an independent contractor and shall not be subject to
the supervision of the Issuer or the Owner Trustee with respect to the manner in
which it accomplishes the performance of its obligations hereunder. Unless
expressly authorized by the Issuer hereunder or otherwise, the Administrator
shall have no authority to act for or represent the Issuer or the Owner Trustee,
and shall not otherwise be or be deemed an agent of the Issuer or the Owner
Trustee.
9
<PAGE>
6. No Joint Venture. Nothing contained in this Agreement shall (i)
constitute the Administrator and either of the Issuer or the Owner Trustee as
members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) be construed to impose
any liability as such on any of them or (iii) be deemed to confer on any of them
any express, implied or apparent authority to incur any obligation or liability
on behalf of the others.
7. Other Activities of Administrator. Nothing herein shall prevent the
Administrator or its Affiliates from engaging in other businesses or, in its or
their sole discretion, from acting as an administrator for any other person or
entity, or in a similar capacity therefor, even though such person or entity may
engage in business activities similar to those of the Issuer, the Owner Trustee
or the Indenture Trustee.
8. Term of Agreement; Resignation and Removal of Administrator.
(a) This Agreement shall continue in force until the dissolution of
the Issuer, upon which event this Agreement shall automatically terminate.
(b) Subject to Section 8(e), the Administrator may resign its duties
hereunder by providing the Issuer with at least 60 days, prior written
notice.
(c) Subject to Section 8(e), the Issuer may remove the Administrator
without cause by providing the Administrator with at least 60 days, prior
written notice.
(d) Subject to Section 8(e), at the sole option of the Issuer, the
Administrator may be removed immediately upon written notice of
termination from the Issuer to the Administrator if any of the following
events shall occur:
(i) the Administrator shall fail to perform in any material
respect any of its duties under this Agreement and, after notice of
such default, shall not cure such default within - days (or, if such
default cannot be cured in such time, shall not give within such o
days such assurance of timely and complete cure as shall be
reasonably satisfactory to the Issuer);
(ii) the entry of a decree or order by a court or agency or
supervisory authority having jurisdiction in the premises for the
appointment of a trustee in bankruptcy, conservator, receiver or
liquidator for the Administrator (or, so long as the Administrator
is TMCC, the Seller) in any bankruptcy, insolvency, readjustment of
debt, marshalling of assets and liabilities or similar proceedings,
or for the winding up or liquidation of their respective affairs,
and the continuance of any such decree or order unstayed and in
effect for a period of - consecutive days; or
(iii) the consent by the Administrator (or, so long as the
Administrator is TMCC, the Seller) to the appointment of a trustee
in bankruptcy, conservator or receiver or liquidator in any
bankruptcy, insolvency, readjustment of debt,
10
<PAGE>
marshalling of assets and liabilities or similar proceedings of or
relating to the Administrator (or, so long as the Administrator is
TMCC, the Seller) of or relating to substantially all of their
property, or the Administrator (or, so long as the Administrator is
TMCC, the Seller) shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take
advantage of any applicable insolvency or reorganization statute,
make an assignment for the benefit of its creditors, or voluntarily
suspend payment of its obligations.
The Administrator agrees that if any of the events specified
in clauses (ii) or (iii) of this Section shall occur, it shall give
written notice thereof to the Issuer, the Owner Trustee and the
Indenture Trustee within seven days after the happening of such
event.
(e) No resignation or removal of the Administrator pursuant to this
Section shall be effective until (i) a successor Administrator shall have
been appointed by the Issuer and (ii) such successor Administrator shall
have agreed in writing to be bound by the terms of this Agreement in the
same manner as the Administrator is bound hereunder.
(f) The appointment of any successor Administrator shall be
effective only after each Rating Agency has provided to the Owner Trustee
and the Indenture Trustee written notice that the proposed appointment
will not result in the reduction or withdrawal of any rating then assigned
by such Rating Agency to any Class of Notes or the Certificates.
(g) Subject to Section 8(e) and 8(f), the Administrator acknowledges
that upon the appointment of a Successor Servicer pursuant to the Sale and
Servicing Agreement, the Administrator shall immediately resign and such
Successor Servicer shall automatically succeed to the rights, duties and
obligations of the Administrator under this Agreement.
9. Action upon Termination, Resignation or Removal. Promptly upon the
effective date of termination of this Agreement pursuant to Section 8(a) or the
resignation or removal of the Administrator pursuant to Section 8(b) or (c),
respectively, the Administrator shall be entitled to be paid all fees and
reimbursable expenses accruing to it to the date of such termination,
resignation or removal. The Administrator shall forthwith upon such termination
pursuant to Section 8(a) deliver to or to the order of the Issuer all property
and documents of or relating to the Collateral then in the custody of the
Administrator in the event of the resignation or removal of the Administrator
pursuant to Section 8(b) or (c), respectively, the Administrator shall cooperate
with the Issuer and take all reasonable steps requested to assist the Issuer in
making an orderly transfer of the duties of the Administrator.
10. Notices. Any notice, report or other communication given hereunder
shall be in writing and addressed as follows:
(a) if to the Issuer or the Owner Trustee, to:
11
<PAGE>
Toyota Auto Receivables 199_-_ Owner Trust
In care of______________________________________
________________________________________________
________________________________________________
Attention:______________________________________
(b) if to the Administrator, to:
Toyota Motor Credit Corporation
19001 South Western Avenue
Torrance, California 90509
Attention:______________________________________
(c) if to the Indenture Trustee, to:
________________________________________________
________________________________________________
________________________________________________
Attention:______________________________________
or to such other address as any party shall have provided to the other parties
in writing. Any notice required to be in writing hereunder shall be deemed given
if such notice is mailed by certified mail, postage prepaid, or hand delivered
to the address of such party as Provided above.
11. Amendments. This Agreement may be amended from time to time by a
written amendment duly executed and delivered by the Issuer, the Administrator
and the Indenture Trustee, with the written consent of the Owner Trustee,
without the consent of the Noteholders or the Certificateholders, for the
purpose of adding any provisions to or modifying or changing in any manner or
eliminating any of the provisions of this Agreement; provided that such
amendment does not and will not, in the Opinion of Counsel satisfactory to the
Indenture Trustee, materially and adversely affect the interest of any
Noteholder or Certificateholder. This Agreement may also be amended by the
Issuer, the Administrator and the Indenture Trustee with the written consent of
the Owner Trustee and the holders of Notes evidencing at least a majority in the
Outstanding Amount of the Notes and the holders of Certificates evidencing at
least a majority of the Certificate Balance for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of Noteholders or the
Certificateholders; provided, however, that no such amendment may (i) increase
or reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on Receivables or distributions that are required to be
made for the benefit of the Noteholders or Certificateholders or (ii) reduce the
aforesaid percentage of the holders of Notes and Certificates which are required
to consent to any such amendment, without the consent of the holders of all the
outstanding Notes and Certificates.
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12. Successor and Assigns. This Agreement may not be assigned by the
Administrator unless such assignment is previously consented to in writing by
the Issuer and the Owner Trustee and the conditions precedent to appointment of
a successor Administrator set forth in Section 8 are satisfied. An assignment
with such consent and satisfaction, if accepted by the assignee, shall bind the
assignee hereunder in the same manner as the Administrator is bound hereunder.
Notwithstanding the foregoing, this Agreement may be assigned by the
Administrator without the consent of the Issuer or the Owner Trustee to a
corporation or other organization that is a successor (by merger, consolidation
or purchase of assets) to the Administrator, provided that such successor
organization executes and delivers to the Issuer, the Owner Trustee and the
Indenture Trustee an agreement in which such corporation or other organization
agrees to be bound hereunder by the terms of said assignment in the same manner'
as the Administrator is bound hereunder. Subject to the foregoing, this
Agreement shall bind any successors or assigns of the parties hereto.
13. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
14. Headings. The section headings hereof have been inserted for
convenience of reference only and shall not be construed to affect the meaning,
construction or effect of this Agreement.
15. Counterparts. This Agreement may be executed in counterparts, each of
which when so executed shall together constitute but one and the same agreement.
16. Severability of Provisions. If any one or more of the agreements,
provisions or terms of this Agreement shall be for any reason whatsoever held
invalid or unenforceable in any jurisdiction, then such agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or the other rights of
the parties hereto.
17. Not Applicable to TMCC in Other Capacities. Nothing in this Agreement
shall affect any obligation TMCC may have in any other capacity.
18. Limitation of Liability of Owner Trustee and Indenture Trustee.
(a) Notwithstanding anything contained herein to the contrary, this
instrument has been countersigned by ____________________ not in its
individual capacity but solely in its capacity as Owner Trustee of the
Issuer and in no event shall _______________ in its individual capacity or
any Owner have any liability for the representations, warranties,
covenants, agreements or other obligations of the Issuer hereunder, as to
all of which recourse shall be had solely to the assets of the Issuer. For
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all purposes of this Agreement, in the performance of any duties or
obligations of the Issuer hereunder, the Owner Trustee shall be subject
to, and entitled to the benefits of, the terms and provisions of [Articles
VI, VII and VIII] of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by _________________ not in its
individual capacity but solely as Indenture Trustee and in no event shall
_____________________ have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer
hereunder or in any of the certificates, notices or agreements delivered
pursuant hereto, as to all of which recourse shall be had solely to the
assets of the Issuer.
19. Third-Party Beneficiary. The Owner Trustee is a third-party
beneficiary to this Agreement and is entitled to the rights and benefits
hereunder and may enforce the provisions hereof as if it were a party hereto.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
TOYOTA AUTO RECEIVABLES 199_-_ OWNER TRUST
By: [Name of Owner Trustee]
not in its individual capacity but solely as Owner
Trustee
By: ____________________________________________________
Name:
Title:
By: [Name of Indenture Trustee]
not in its individual capacity but solely as
Indenture Trustee
By: ____________________________________________________
Name:
Title:
TOYOTA MOTOR CREDIT CORPORATION,
as Administrator
By: ____________________________________________________
Name:
Title:
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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
April 16, 1999
