<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 3, 1996
REGISTRATION NO. 333-4336
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
AMENDMENT NO. 1
To
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
______________________
TOYOTA AUTO RECEIVABLES TRUSTS
(Issuer with respect to the Securities)
TOYOTA MOTOR CREDIT RECEIVABLES CORPORATION
(Originator of the Trusts described herein)
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
CALIFORNIA 6146 33-056836
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
19001 SOUTH WESTERN AVENUE
TORRANCE, CALIFORNIA 90509
(310) 618-4000
(Address, including zip code, and telephone number,
including area code, of Originator's principal executive offices)
______________________
ALAN F. COHEN, ESQ.
c/o TOYOTA MOTOR CREDIT CORPORATION
19001 SOUTH WESTERN AVENUE
TORRANCE, CALIFORNIA 90509
(310) 618-4000
(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.
ANDREWS & KURTH L.L.P.
601 S. FIGUEROA
LOS ANGELES, CALIFORNIA 90017
(213) 896-3192
______________________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to a dividend or interest reinvestment plan, please check the
following box. [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box.[x]
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ] __________
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration number of the earlier effective registration
statement for the same offering. [ ] ________________
______________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=========================================================================================================================
Proposed Maximum Proposed Amount of
Proposed Title of Amount to Be Offering Price Per Maximum Aggregate Registration
Securities to be Registered Registered Unit(1) Offering Price (1) Fee
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Asset Backed Securities $1,500,000,000 100% $1,500,000,000 $517,241.38
=========================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee on
the basis of the proposed maximum offering price per unit.
(2) Of which $344.83 previously has been paid.
______________________
THIS REGISTRATION STATEMENT SHALL HEREAFTER BECOME EFFECTIVE IN
ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933, AS AMENDED.
================================================================================
<PAGE> 2
INTRODUCTORY NOTE
This Registration Statement contains (i) a form of Prospectus relating
to the offering of one or more series of Asset Backed Notes and/or Asset Backed
Certificates by various Trusts created from time to time by Toyota Motor Credit
Corporation and (ii) two forms of Prospectus Supplement relating to the
offering by each separate trust of a particular series of Asset Backed
Certificates or of Asset Backed Notes and Asset Backed Certificates described
therein. Each form of Prospectus Supplement relates only to the securities
described therein and is a form which may be used, among others, by Toyota
Motor Credit Corporation to offer Asset Backed Notes and/or Asset Backed
Certificates under this Registration Statement.
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS SHALL
NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR
SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY JURISDICTION IN WHICH SUCH
OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO THE REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH JURISDICTION.
SUBJECT TO COMPLETION, DATED JULY 3, 1996
PROSPECTUS
TOYOTA AUTO RECEIVABLES TRUSTS
ASSET BACKED NOTES
ASSET BACKED CERTIFICATES
TOYOTA MOTOR CREDIT RECEIVABLES CORPORATION,
SELLER
TOYOTA MOTOR CREDIT CORPORATION,
SERVICER
The Asset Backed Notes (the "Notes") and the Asset Backed Certificates
(the "Certificates" and, together with the Notes, the "Securities") described
herein may be sold from time to time in one or more series, in amounts, at
prices and on terms to be determined at the time of sale and to be set forth in
a supplement to this Prospectus (a "Prospectus Supplement"). Each series of
Securities, which may include one or more classes of Notes and/or one or more
classes of Certificates, will be issued by a trust to be formed with respect to
such series (each, a "Trust"). Each Trust will be formed pursuant to either a
Trust Agreement to be entered into among Toyota Motor Credit Receivables
Corporation, as Seller (the "Seller") and the Trustee specified in the related
Prospectus Supplement (the "Trustee") or a Pooling and Servicing Agreement to
be entered into among the Trustee, the Seller and Toyota Motor Credit
Corporation, as Servicer (the "Servicer"). If a series of Securities includes
Notes, such Notes of a series will be issued and secured pursuant to an
Indenture between the Trust and the Indenture Trustee specified in the related
Prospectus Supplement (the "Indenture Trustee") and will represent indebtedness
of the related Trust. If a series of Securities includes Certificates, such
Certificates of a series will represent undivided ownership interest in the
related Trust. The related Prospectus Supplement will specify which class or
classes of Notes, if any, and which class or classes of Certificates, if any,
of the related series are being offered thereby. The property of each Trust
will include a pool of retail installment sale contracts secured by new or used
automobiles and/or light duty trucks (the "Receivables"), certain monies due or
received thereunder on and after the applicable Cutoff Date set forth in the
related Prospectus Supplement, security interests in the vehicles financed
thereby and certain other property, all as described herein and in the related
Prospectus Supplement.
(Continued on next page)
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER
"RISK FACTORS" COMMENCING ON PAGE 10 HEREIN AND IN THE RELATED PROSPECTUS
SUPPLEMENT.
EXCEPT AS OTHERWISE SPECIFIED IN THE RELATED PROSPECTUS SUPPLEMENT, ANY NOTES
OF A SERIES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES OF A SERIES
REPRESENT BENEFICIAL INTERESTS IN, THE RELATED TRUST ONLY AND DO NOT REPRESENT
OBLIGATIONS OF OR INTERESTS IN, AND ARE NOT GUARANTEED OR INSURED BY, TOYOTA
MOTOR CREDIT RECEIVABLES CORPORATION, TOYOTA MOTOR CREDIT CORPORATION, TOYOTA
MOTOR SALES, U.S.A., INC. OR ANY OF THEIR RESPECTIVE AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
Retain this Prospectus for future reference. This Prospectus may not
be used to consummate sales of Securities offered hereby unless accompanied by
a Prospectus Supplement.
The date of this Prospectus is _____________, 199__
<PAGE> 4
(Continued from prior page)
Except as otherwise provided in the related Prospectus Supplement,
each class of Securities of any series will represent the right to receive
specified payments in respect of collections of principal and interest on the
related Receivables, at the rates, on the dates and in the manner described
herein and in the related Prospectus Supplement. If a series includes multiple
classes of Securities, the rights of one or more classes of Securities to
receive payments may be senior or subordinate to the rights of one or more of
the other classes of such series. Distributions on Certificates of a series
may be subordinated in priority to payments due on any related Notes to the
extent described herein and in the related Prospectus Supplement. A series may
include one or more classes of Notes and/or Certificates which differ as to the
timing and priority of payment, interest rate or amount of distributions in
respect of principal or interest or both. A series may include one or more
classes of Notes or Certificates entitled to distributions in respect of
principal with disproportionate, nominal or no interest distributions, or to
interest distributions, with disproportionate, nominal or no distributions in
respect of principal. The rate of payment in respect of principal of any class
of Notes and distributions in respect of the Certificate Balance of the
Certificates of any class will depend on the priority of payment of such class
and the rate and timing of payments (including prepayments, defaults,
liquidations and repurchases of Receivables) on the related Receivables. A
rate of payment lower or higher than that anticipated may affect the weighted
average life of each class of Securities in the manner described herein and in
the related Prospectus Supplement.
-ii-
<PAGE> 5
AVAILABLE INFORMATION
The Seller, as originator of each Trust, has filed with the Securities
and Exchange Commission (the "Commission") a Registration Statement (together
with all amendments and exhibits thereto, referred to herein as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Notes and the Certificates offered
pursuant to this Prospectus. For further information, reference is made to the
Registration Statement which may be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549; and at the Commission's regional offices at Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven
World Trade Center, New York, New York 10048. Copies of the Registration
Statement may also be obtained at prescribed rates from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents filed by the Seller, as originator of any Trust,
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, as amended, subsequent to the date of this Prospectus and prior to the
termination of the offering of the Securities shall be deemed to be
incorporated by reference in this Prospectus. Any statement contained herein
or in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Seller will provide without charge to each person, including any
beneficial owner of Securities, to whom a copy of this Prospectus is delivered,
on the written or oral request of any such person, a copy of any or all of the
documents incorporated herein or in any related Prospectus Supplement by
reference, except the exhibits to such documents (unless such exhibits are
specifically incorporated by reference in such documents). Requests for such
copies should be directed to the Seller at 19001 South Western Avenue,
Torrance, California 90509 (Telephone: (310) 618-4000).
-iii-
<PAGE> 6
SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus and by reference to
the information with respect to the Securities of any series contained in the
related Prospectus Supplement to be prepared and delivered in connection with
the offering of such Securities. Certain capitalized terms used herein are
defined elsewhere in this Prospectus on the pages indicated in the "Index of
Terms".
<TABLE>
<S> <C>
ISSUER . . . . . . . . . . . . . . . . . With respect to each series of Securities, the Trust to be formed pursuant to
either a Trust Agreement (as amended and supplemented from time to time, a
"Trust Agreement") among the Seller and the Trustee for such Trust (the "Trust"
or the "Issuer") or a Pooling and Servicing Agreement (as amended and
supplemented from time to time, the "Pooling and Servicing Agreement") among the
Seller, the Servicer and the Trustee for such Trust.
SELLER . . . . . . . . . . . . . . . . . Toyota Motor Credit Receivables Corporation (the "Seller").
SERVICER . . . . . . . . . . . . . . . . Toyota Motor Credit Corporation (the "Servicer" or "TMCC").
TRUSTEE . . . . . . . . . . . . . . . . . With respect to each series of Securities, the Trustee specified in the related
Prospectus Supplement.
INDENTURE TRUSTEE . . . . . . . . . . . With respect to any applicable series of Securities that includes one or more
classes of Notes, the Indenture Trustee specified in the related Prospectus
Supplement.
THE NOTES . . . . . . . . . . . . . . . A series of Securities may include one or more classes of Notes, which will be
issued pursuant to an Indenture between the Trust and the Indenture Trustee (as
amended and supplemented from time to time, an "Indenture"). The related
Prospectus Supplement will specify which class or classes, if any, of Notes of
the related series are being offered thereby.
Unless otherwise specified in the related Prospectus Supplement, Notes will be
available for purchase in denominations of $1,000 and integral multiples thereof
and will be available in book-entry form only. Unless otherwise specified in
the related Prospectus Supplement, Noteholders will be able to receive
Definitive Notes only in the limited circumstances described herein or in the
related Prospectus Supplement. See "Certain Information Regarding the
Securities--Definitive Securities".
Unless otherwise specified in the related Prospectus Supplement, each class of
Notes will have a stated principal amount and will bear interest at a specified
rate or rates (with
</TABLE>
1
<PAGE> 7
<TABLE>
<S> <C>
respect to each class of Notes, the "Interest Rate"). Each class of Notes may
have a different Interest Rate, which may be a fixed, variable or adjustable
Interest Rate, or any combination of the foregoing. The related Prospectus
Supplement will specify the Interest Rate for each class of Notes, or the method
for determining the Interest Rate.
With respect to a series that includes two or more classes of Notes, each class
may differ as to the timing and priority of payments, seniority, allocations of
losses, Interest Rate or amount of payments of principal or interest, or
payments of principal or interest in respect of any such class or classes may or
may not be made upon the occurrence of specified events or on the basis of
collections from designated portions of the Receivables Pool.
In addition, a series may include one or more classes of Notes ("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. If the Seller, the Servicer or a successor thereto
exercises its option to purchase the Receivables of a Trust in the manner and
on the respective terms and conditions described under "Description of the
Transfer and Servicing Agreements--Termination", the outstanding Notes will be
redeemed as set forth in the related Prospectus Supplement.
THE CERTIFICATES . . . . . . . . . . . . A series may include one or more classes of Certificates and may not include any
Notes. The related Prospectus Supplement will specify which class or classes,
if any, of the Certificates are being offered thereby.
Unless otherwise specified in the related Prospectus Supplement, Certificates
will be available for purchase in a minimum denomination of $1,000 and in
integral multiples thereof and will be available in book-entry form only.
Unless otherwise specified in the related Prospectus Supplement,
Certificateholders will be able to receive Definitive Certificates only in the
limited circumstances described herein or in the related Prospectus Supplement.
See "Certain Information Regarding the Securities--Definitive Securities".
Unless otherwise specified in the related Prospectus Supplement, each class of
Certificates will have a stated Certificate Balance specified in the related
Prospectus Supplement (the "Certificate Balance") and will accrue interest on
such Certificate Balance at a specified rate (with respect to each class of
Certificates, the "Pass Through Rate").
</TABLE>
2
<PAGE> 8
<TABLE>
<S> <C>
Each class of Certificates may have a different Pass Through Rate, which may be
a fixed, variable or adjustable Pass Through Rate, or any combination of the
foregoing. The related Prospectus Supplement will specify the Pass Through Rate
for each class of Certificates or the method for determining the Pass Through
Rate.
With respect to a series that includes two or more classes of Certificates, each
class may differ as to timing and priority of distributions, seniority,
allocations of losses, Pass Through Rate or amount of distributions in respect
of principal or interest, or distributions in respect of principal or interest
in respect of any such class or classes may or may not be made upon the
occurrence of specified events or on the basis of collections from designated
portions of the Receivables Pool. In addition, a series may include one or more
classes of Certificates ("Strip Certificates") entitled to (i) distributions in
respect of principal with disproportionate, nominal or no interest distributions
or (ii) interest distributions with disproportionate, nominal or no
distributions in respect of principal.
If a series of securities includes classes of Notes, distributions in respect of
the Certificates may be subordinated in priority of payment to payments on the
Notes to the extent specified in the related Prospectus Supplement.
If the Seller, the Servicer or a successor thereto exercises its option to
purchase the Receivables of a Trust in the manner and on the respective terms
and conditions described under "Description of the Transfer and Servicing
Agreements--Termination", the outstanding Certificates will be redeemed as set
forth in the related Prospectus Supplement.
THE TRUST PROPERTY . . . . . . . . . . . The property of each Trust will include a pool of retail installment sale
contracts secured by new or used automobiles and/or light duty trucks (the
"Receivables") between dealers (the "Dealers") and retail purchasers (the
"Obligors"), including rights to receive certain payments made with respect to
such Receivables, security interests in the vehicles financed thereby (the
"Financed Vehicles"), certain accounts and the proceeds thereof and any proceeds
from claims on certain related insurance policies or from Dealer Recourse, if
any. The property of each Trust will also include the rights of the Seller
under the related Sale and Servicing Agreement or Pooling and Servicing
Agreement, as applicable, and the right to realize upon any property (including
the right to receive future liquidation proceeds) that shall have secured a
</TABLE>
3
<PAGE> 9
<TABLE>
<S> <C>
receivable and have been repossessed by or on behalf of the Trustee. The
property of each Trust will also include amounts on deposit in certain trust
accounts, including the related Certificate Account and any Yield Maintenance
Account, Reserve Fund or other account identified in the applicable Prospectus
Supplement.
On or before the date of initial issuance of a series of securities (the related
"Closing Date") as specified in the related Prospectus Supplement with respect
to a Trust, the Seller will sell or transfer Receivables (the "Receivables")
having an aggregate principal balance specified in the related Prospectus
Supplement as of the dates specified therein (the "Cutoff Date") to such 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
among the Seller, the Servicer and the Trustee (as amended from time to time,
the "Pooling and Servicing Agreement").
The Receivables will have been originated by Dealers in accordance with TMCC's
requirements and subsequently purchased by TMCC. The Receivables will evidence
the indirect financing made available by TMCC to the related Obligors. The
Receivables to be sold by TMCC to the Seller and resold by the Seller to a Trust
will be selected based on the criteria specified in the Sale and Servicing
Agreement or Pooling and Servicing Agreement, as applicable, and described
herein and in the related Prospectus Supplement.
</TABLE>
4
<PAGE> 10
<TABLE>
<S> <C>
CREDIT AND CASH FLOW
ENHANCEMENT . . . . . . . . . . . . . . If and to the extent specified in the related Prospectus Supplement, credit
enhancement with respect to a Trust or any class or classes of Securities may
include any one or more of the following: subordination of one or more other
classes of Securities, a Reserve Fund, a Yield Maintenance Account
over-collateralization, letters of credit, credit or liquidity facilities,
surety bonds, guaranteed investment contracts, swaps or other interest rate
protection agreements, repurchase obligations, cash deposits or other agreements
or arrangements with respect to third party payments or other support. Unless
otherwise specified in the related Prospectus Supplement, any form of credit
enhancement will have certain limitations and exclusions from coverage
thereunder, which will be described in the related Prospectus Supplement.
RESERVE FUND . . . . . . . . . . . . . . Unless otherwise specified in the related Prospectus Supplement, a Reserve Fund
will be created for each Trust with an initial deposit by the Seller or a third
party named in the related Prospectus Supplement of cash or certain investments
having a value equal to the amount specified in the related Prospectus
Supplement. To the extent specified in the related Prospectus Supplement, funds
in the Reserve Fund will thereafter be supplemented by the deposit of amounts
remaining on any Distribution Date after making all other distributions required
on such date. Amounts in the Reserve Fund will be available to cover shortfalls
in amounts due to the holders of those classes of Securities specified in the
related Prospectus Supplement in the manner and under the circumstances
specified therein. The related Prospectus Supplement will also specify to whom
and the manner and circumstances under which amounts on deposit in the Reserve
Fund (after giving effect to all other required distributions to be made by the
applicable Trust) in excess of the Specified Reserve Fund Balance (as defined in
the related Prospectus Supplement) will be distributed.
TRANSFER AND SERVICING
AGREEMENTS . . . . . . . . . . . . . . . With respect to each Trust, the Seller will sell the related Receivables to such
Trust pursuant to a Sale and Servicing Agreement or a Pooling and Servicing
Agreement. The rights and benefits of any Trust under a Sale and Servicing
Agreement will be assigned to the Indenture Trustee as collateral for the Notes
of the related series. The Servicer will agree with such Trust to be
responsible for servicing, managing, maintaining custody of and making
collections on the Receivables. TMCC will undertake certain administrative
</TABLE>
5
<PAGE> 11
<TABLE>
<S> <C>
duties under an Administration Agreement with respect to any Trust that has
issued Notes.
On the Business Day immediately preceding each Distribution Date, the Servicer
will advance to the Trust, in respect of each (i) Precomputed Receivable, that
portion, if any, of the related Scheduled Payment that was not timely made
(each, a "Precomputed Advance") and (ii) Simple Interest Receivable, 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 ("APR"), minus the amount of interest actually received on such Receivable
during such Collection Period (each, a "Simple Interest Advance", and together
with the Precomputed Advances, the "Advances"). If such 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 out of interest collections
in respect of the Simple Interest Receivables during the related Collection
Period in reimbursement of outstanding Simple Interest Advances. Outstanding
Precomputed Advances shall be reimbursable to the Servicer, without interest,
from payments (other than Administrative Purchase Payments) subsequently
received in respect of the related Precomputed 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 all outstanding
Advances made in respect of such Receivable, be withdrawn from the Collection
Account and paid to the Servicer in reimbursement of such outstanding Advances.
The Servicer will be required to make an Advance only to the extent that it
determines such Advance will be recoverable from future payments and collections
on or in respect of such Receivable. Upon the determination by the Servicer
that such reimbursement is unlikely, the Servicer will be entitled to recover
Advances from payments and collections on or in respect of other Receivables.
See "Description of the Transfer and Servicing Agreements--Advances".
Unless otherwise provided in the related Prospectus Supplement, the Seller will
be obligated to repurchase any Receivable if the interest of the applicable
Trust in such Receivable is materially adversely affected by a breach of any
representation or warranty made by the Seller with respect to the Receivable, if
the breach has not been cured following the discovery by or notice to the Seller
of the breach.
</TABLE>
6
<PAGE> 12
<TABLE>
<S> <C>
Unless otherwise provided in the related Prospectus Supplement, the Servicer
will be obligated to purchase or make certain Advances with respect to any
Receivable if, among other things, it amends the total number of Scheduled
Payments, the Amount Financed or the APR thereof, extends the date for final
payment by the Obligor of such Receivable beyond the applicable Final Scheduled
Maturity Date (as defined in the related Prospectus Supplement, the "Final
Scheduled Maturity Date") or releases the security interest in the related
Financed Vehicle granted in the Receivable. See "Description of the Transfer
and Servicing Agreements--Servicing Procedures" and "--Advances".
Unless otherwise specified in the related Prospectus Supplement, the Servicer
will be entitled to receive a fee for servicing the Receivables of each Trust
equal to a specified percentage of the aggregate principal balance of the
related Receivables Pool, as set forth in the related Prospectus Supplement,
plus certain late fees, prepayment charges and other administrative fees or
similar charges. See "Description of the Transfer and Servicing
Agreements--Servicing Compensation and Payment of Expenses" herein and in the
related Prospectus Supplement.
CERTAIN LEGAL ASPECTS OF
THE RECEIVABLES;
REPURCHASE OBLIGATIONS . . . . . . . . . In connection with the sale of Receivables to a Trust, security interests in the
Financed Vehicles securing such Receivables will be assigned by the Seller to
such Trust. Due to administrative burden and expense, the certificates of title
to the Financed Vehicles will not be amended to reflect the assignment to such
Trust. In the absence of such an amendment, such Trust may not have a perfected
security interest in the Financed Vehicles securing the Receivables in some
states. Unless otherwise specified in the related Prospectus Supplement, the
Seller will be obligated to repurchase any Receivable sold to a Trust as to
which the breach of any such representation or warranty that materially
adversely affect the interest of the holders of the related Securities in such
Receivable (including the representations as to the first priority perfected
security interest therein as of the date such Receivable is purchased by such
Trust) if such breach shall not have been cured by the last day of the second
(or, if the Seller elects, the first) month following the discovery by or notice
to the Seller of such breach. If such Trust does not have a perfected security
interest in a Financed Vehicle, its ability to realize on such Financed Vehicle
in the event of a default may be adversely affected. To the extent the
</TABLE>
7
<PAGE> 13
<TABLE>
<S> <C>
security interest is a first priority perfected security interest, such Trust
will have a prior claim over subsequent purchasers of such Financed Vehicles and
holders of subsequently perfected security interests. However, as against liens
for repairs of Financed Vehicles or for taxes unpaid by an Obligor under a
Receivable, or because of fraud or negligence, such Trust could lose the
priority of its security interest or its security interest in Financed Vehicles.
Neither the Seller nor the Servicer will have any obligation to repurchase a
Receivable as to which any of the aforementioned occurrences result in a Trust's
losing its security interest or the priority of its security interest in such
Financed Vehicle after the Closing Date.
Pursuant to agreements between TMCC and the Dealers, each Dealer is obligated,
after purchase by TMCC of retail installment sales contracts from such Dealer,
to repurchase from TMCC such 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 Agreement will require that any recovery by
TMCC in respect of any Receivable pursuant to any Dealer Recourse be deposited
in the related 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.
Federal and state consumer protection laws impose requirements upon creditors in
connection with extensions of credit and collections of retail installment
loans, and certain of these laws make an assignee of such a loan liable to the
obligor thereon for any violation by the lender. Unless otherwise specified in
the related Prospectus Supplement, the Seller will be obligated to repurchase
any Receivable which fails to comply with such requirements.
TAX STATUS . . . . . . . . . . . . . . . Unless the Prospectus Supplement specifies that the related Trust will be
treated as a grantor trust and, except as otherwise provided in such Prospectus
Supplement, upon the issuance of
</TABLE>
8
<PAGE> 14
<TABLE>
<S> <C>
the related series of Securities, Tax Counsel to such Trust will deliver an
opinion to the effect that (i) for federal income tax purposes (a) any Notes of
such series will be characterized as debt and (b) such Trust will not be
characterized as an association (or a publicly traded partnership) taxable as a
corporation and (ii) the same characterizations would apply for California
income and franchise tax purposes. In respect of any such series, each
Noteholder, if any, by the acceptance of a Note of such series, will agree to
treat such Note as indebtedness, and each Certificateholder, by the acceptance
of a Certificate of such series, will agree to treat such Trust as a partnership
in which such Certificateholder is a partner for federal income and California
income and franchise tax purposes. Alternative characterizations of such Trust
and such Certificates are possible, but would not result in materially adverse
tax consequences to Certificateholders.
If the Prospectus Supplement specifies that the related Trust will be treated as
a grantor trust and except as otherwise provided in such Prospectus Supplement,
upon the issuance of the related series of Certificates, Tax Counsel to such
Trust will deliver an opinion to the effect that such Trust will be treated as a
grantor trust for federal income tax purposes and will not be subject to federal
income tax.
See "Certain Federal Income Tax Consequences" and "Certain State Tax
Consequences" for additional information concerning the application of federal
and California tax laws.
ERISA CONSIDERATIONS . . . . . . . . . . Subject to the considerations discussed under "ERISA Considerations" herein and
in the related Prospectus Supplement, and unless otherwise specified therein,
any Notes of a series and any Certificates that are issued by a Trust that is a
grantor trust and are not subordinated to any other class of Certificates are
eligible for purchase by employee benefit plans. Unless otherwise specified in
the related Prospectus Supplement, the Certificates of any series that are
subordinated to any other Security of that series may not be acquired by any
employee benefit plan subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or by any individual retirement account. See "ERISA
Considerations" herein and in the related Prospectus Supplement.
</TABLE>
9
<PAGE> 15
RISK FACTORS
Certain Legal Aspects--Security Interests in Financed
Vehicles--Consumer Protection Laws. In connection with the sale of Receivables
to a Trust, security interests in the Financed Vehicles securing such
Receivables will be assigned by the Seller to such Trust simultaneously with
the sale of such Receivables to such Trust. In order to minimize administrative
burden and expense, the certificates of title to the Financed Vehicles will not
be amended to reflect the assignment to the Trust. In the absence of such an
amendment, such Trust may not have a perfected security interest in the
Financed Vehicles securing the Receivables in some states. Unless otherwise
provided in the related Prospectus Supplement, the Seller will be obligated to
repurchase any Receivable sold to such Trust as to which a perfected security
interest in the name of the Seller in the Financed Vehicle securing such
Receivable shall not exist as of the date such Receivable is transferred to
such Trust, if such breach shall materially adversely affect the interest of
such Trust in such Receivable and if such failure or breach shall not have been
cured by the last day of the second (or, if the Seller elects, the first) month
following the discovery by or notice to the Seller of such breach. If such
Trust does not have a perfected security interest in a Financed Vehicle, its
ability to realize on such Financed Vehicle in the event of a default may be
adversely affected. To the extent the security interest is perfected, such
Trust will have a prior claim over subsequent purchasers of such Financed
Vehicles and holders of subsequently perfected security interests. However, as
against liens for repairs of Financed Vehicles or for taxes unpaid by an
Obligor under a Receivable, or through fraud or negligence, such Trust could
lose the priority of its security interest or its security interest in a
Financed Vehicle. Neither the Seller nor the Servicer will have any obligation
to repurchase a Receivable as to which any of the aforementioned occurrences
result in such Trust's losing the priority of its security interest or its
security interest in such Financed Vehicle after the date such security
interest was conveyed to such Trust. Federal and state consumer protection
laws impose requirements upon creditors in connection with extensions of credit
and collections of retail installment loans and certain of these laws make an
assignee of such a loan (such as such Trust) liable to the obligor thereon for
any violation by the lender. Unless otherwise specified in the related
Prospectus Supplement, the Seller will be obligated to repurchase any
Receivable which fails to comply with such requirements. See "Certain Legal
Aspects of the Receivables--Security Interests" and "--Consumer Protection
Laws".
Certain Legal Aspects--Bankruptcy Considerations. The Seller will
warrant to each Trust in the related Sale and Servicing Agreement or Pooling
and Servicing Agreement, as applicable, that the sale of the Receivables by the
Seller to such Trust is a valid sale of the Receivables to such Trust.
Notwithstanding the foregoing, if the Seller were to become a debtor in a
bankruptcy case and a creditor or trustee-in-bankruptcy of such debtor or such
debtor itself were to take the position that the sale of Receivables to such
Trust should instead be treated as a pledge of such Receivables to secure a
borrowing of such debtor, delays in payments of collections of Receivables to
the related Securityholders could occur or (should the court rule in favor of
any such trustee, debtor or creditor) reductions in the amounts of such
payments could result. If the transfer of Receivables to a Trust is treated as
a pledge instead of a sale, a tax or government lien on the property of the
Seller arising before the transfer of a Receivable to such Trust may have
priority over such Trust's interest in such Receivable. If the transactions
contemplated herein are treated as a sale, the Receivables would not be part of
the Seller's bankruptcy estate and would not be available to the Seller's
creditors.
In a case decided by the U.S. Court of Appeals for the Tenth Circuit,
Octagon Gas System, Inc. v. Rimmer, the court determined that "accounts," a
defined term under the Uniform Commercial Code, would be included in the
bankruptcy estate of a transferor regardless of whether the transfer is treated
as a sale or
10
<PAGE> 16
a secured loan. Although the Receivables are likely to be viewed as "chattel
paper," as defined under the Uniform Commercial Code, rather than as accounts,
the Octagon holding is equally applicable to chattel paper. The circumstances
under which the Octagon ruling would apply are not fully known and the extent
to which the Octagon decision will be followed in other courts or outside of
the Tenth Circuit is not certain. If the holding in the Octagon case were
applied in a bankruptcy of the Seller, however, even if the transfer of
Receivables to the Trust were treated as a sale, the Receivables could be
determined to be part of the Seller's bankruptcy estate and, if so, would be
subject to claims of certain creditors, and delays and reductions in payments
to the Securityholders could result.
With respect to each Trust that is not a grantor trust, upon the
occurrence of an Insolvency Event with respect to the Seller, the Indenture
Trustee or Trustee for such Trust will promptly sell, dispose of or otherwise
liquidate the related Receivables in a commercially reasonable manner on
commercially reasonable terms, except under certain limited circumstances. The
proceeds from any such sale, disposition or liquidation of Receivables will be
treated as collections on the Receivables and deposited in the related
Collection Account of such Trust. If the proceeds from the liquidation of the
Receivables and any amounts on deposit in the Reserve Fund and the Collection
Account with respect to any such Trust and any amounts available from any
credit enhancement are not sufficient to pay any Notes and the Certificates of
the related series in full, the amount of principal returned to any
Noteholders or the Certificateholders will be reduced and such Noteholders and
Certificateholders will incur a loss. See "Description of the Transfer and
Servicing Agreements--Insolvency Event" and "Certain Legal Aspects of the
Receivables--Certain Bankruptcy Considerations".
Trust's Relationship to the Seller, TMCC and their Affiliates. None
of the Seller, TMCC or Toyota Motor Sales, U.S.A., Inc. ("TMS") or their
respective affiliates is generally obligated to make any payments in respect of
any Notes, the Certificates or the Receivables of a given Trust. However, in
connection with the sale of Receivables by the Seller to a given Trust, the
Seller will make representations and warranties with respect to the
characteristics of such Receivables and, in certain circumstances, the Seller
may be required to repurchase Receivables with respect to which such
representations and warranties have been breached. See "Description of the
Transfer and Servicing Agreements--Sale and Assignment of Receivables". In
addition, under certain circumstances, the Servicer may be required to purchase
Receivables. See "Description of the Transfer and Servicing
Agreements--Servicing Procedures". Moreover, if TMCC were to cease acting as
Servicer, delays in processing payments on the Receivables and information in
respect thereof could occur and result in delays in payments to the
Securityholders.
The related Prospectus Supplement may set forth certain additional
information regarding the Seller, TMCC and TMS. In addition, TMCC is subject
to the information requirements of the Exchange Act and in accordance therewith
files reports and other information with the Commission. For further
information regarding TMCC, reference is made to such reports and other
information, which are available as described under "Available Information".
Subordination; Limited Assets. To the extent specified in the related
Prospectus Supplement, distributions of interest and principal on one or more
classes of Certificates of a series may be subordinated in priority of payment
to interest and principal due on the Notes, if any, of such series or one or
more other classes of Certificates of such series. Moreover, each Trust will
not have, nor is it permitted or expected to have, any significant assets or
sources of funds other than the Receivables and, to the extent provided in the
related Prospectus Supplement, a Reserve Fund and any other credit enhancement.
The Notes of any series will represent obligations solely of, and the
Certificates of any series will represent interests solely in, the related
Trust and neither the Notes nor the Certificates of any series will be insured
or guaranteed by the
11
<PAGE> 17
Seller or the Servicer or any of their respective affiliates, the applicable
Trustee, any Indenture Trustee or any other person or entity. Consequently,
holders of the Securities of any series must rely for repayment upon payments
on the related Receivables and, if and to the extent available, amounts on
deposit in the Reserve Fund, if any, and any other credit enhancement, all as
specified in the related Prospectus Supplement.
Maturity and Prepayment Considerations. All the Receivables are
prepayable at any time. (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) and liquidations due
to default, as well as receipts of proceeds from physical damage, credit life
and disability insurance policies and certain other Receivables repurchased for
administrative reasons.) The rate of prepayments on the Receivables may be
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. The rate of
prepayment on the Receivables may also be influenced by the structure of the
loan. In addition, under certain circumstances, the Seller will be obligated
to repurchase Receivables pursuant to a Sale and Servicing Agreement or Pooling
and Servicing Agreement as a result of breaches of representations and
warranties and, under certain circumstances, the Servicer will be obligated to
purchase Receivables pursuant to such Sale and Servicing Agreement or Pooling
and Servicing Agreement as a result of breaches of certain covenants. See
"Description of the Transfer and Servicing Agreements--Sale and Assignment of
Receivables". In addition, a Dealer may have Dealer Recourse obligations to
repurchase from TMCC contracts which do not meet certain representations and
warranties made by such Dealer. The applicable Sale and Servicing Agreement or
Pooling and Servicing Agreement will require TMCC to deposit into the related
Collection Account any recovery with respect to the Receivables pursuant to
Dealer Recourse. Any reinvestment risks resulting from a faster or slower
incidence of prepayment of Receivables held by a given Trust will be borne
entirely by the Securityholders of the related series of Securities. See also
"Description of the Transfer and Servicing Agreements--Termination" regarding
the Servicer's option to purchase the Receivables of a given Receivables Pool
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.
Indexed Securities. An investment in Securities indexed, as to
principal, premium and/or interest, to one or more values of currencies
(including exchange rates and swap indices between currencies), commodities,
interest rates or other indices entails significant risks that are not
associated with similar investments in a conventional fixed-rate debt security.
If the interest rate of such a Security is so indexed, it may result in an
interest rate that is less than that payable on a conventional fixed-rate debt
security issued at the same time, including the possibility that no interest
will be paid, and, if the principal amount of such a Security is so indexed,
the principal amount payable on the related final Distribution Date may be less
than the original purchase price of such Security if allowed pursuant to the
terms of such Security, including the possibility that no principal will be
paid. The secondary market for such Securities will be affected by a number of
factors, independent of the characteristics of the Receivables, structure of
the cash flows and the value of the applicable currency, commodity, interest
rate or other index, including the volatility of the applicable currency,
commodity, interest rate or other index, the time remaining to the maturity of
such Securities, the amount outstanding of such Securities and market interest
rates. The value of the applicable currency, commodity, interest rate or other
index depends on a number of interrelated factors, including economic,
financial and political events. Additionally, if the formula used to determine
the principal amount, premium, if any, or interest payable with respect to such
Securities contains a multiple or leverage factor, the effect of any change in
the applicable currency, commodity, interest rate or other index may be
increased. The historical experience of the relevant currencies, commodities,
interest rates
12
<PAGE> 18
or other indices should not be taken as an indication of future performance of
such currencies, commodities, interest rates or other indices during the term
of any Security. The credit ratings assigned to any series or class of
securities, in no way, are reflective of the potential impact of the factors
discussed above, or any other factors, on the market value of the Securities.
Accordingly, prospective investors should consult their own financial and legal
advisors as to the risks entailed by an investment in such Securities and the
suitability of such Securities in light of their particular circumstances.
Risk of Commingling. 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 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 Prime-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 such Collection Account, collections on the
related Receivables may be invested by the Servicer at its own risk and for its
own benefit and will not be segregated from funds of the Servicer. If the
Servicer were unable to remit such funds, the applicable Securityholders might
incur a loss. To the extent set forth in the related Prospectus Supplement, the
Servicer may, in order to satisfy the requirements described above, obtain a
letter of credit or other security for the benefit of the related Trust to
secure timely remittances of collections on the related Receivables and payment
of the aggregate Administrative Purchase Amount with respect to Receivables
purchased by the Servicer.
Servicer Default. Unless otherwise provided in the related Prospectus
Supplement with respect to a series of Securities that includes Notes, in the
event a Servicer Default occurs, the Indenture Trustee or the Noteholders with
respect to such series, as described under "Description of the Transfer and
Servicing Agreements--Rights upon Servicer Default", may remove the Servicer
without the consent of the Trustee or any of the Certificateholders with
respect to such series. The Trustee or the Certificateholders with respect to
such series will not have the ability to remove the Servicer if a Servicer
Default occurs. In addition, the Noteholders of such series have the ability,
with certain specified exceptions, to waive defaults by the Servicer, including
defaults that could materially adversely affect the Certificateholders of such
series. See "Description of the Transfer and Servicing Agreements--Waiver of
Past Defaults".
Book-Entry Registration. Unless otherwise specified in the related
Prospectus Supplement, persons acquiring beneficial ownership interests in the
Securities of any series or class will hold their Certificates through DTC, in
the United States, or Cedel or Euroclear in Europe. Transfers within DTC,
Cedel or Euroclear, as the case may be, will be in accordance with the usual
rules and operating procedures of the relevant system. So long as the
Securities are Book-Entry Securities, such Securities will be evidenced by one
or more certificates registered in the name of Cede & Co., as the nominee of
DTC, or Citibank N.A. or Morgan Guaranty Trust Company of New York, the
relevant depositaries of Cedel and Euroclear, respectively, and each a
participating member of DTC. No Certificate Owner will be entitled to receive
a definitive certificate representing such person's interest, except in the
event that Definitive Certificates are issued under the limited circumstances
described herein. See "Book-Entry Registration". Unless and until Definitive
Securities for such series are issued, holders of such Securities will not be
recognized by the Trustee or any applicable Indenture Trustee as
"Certificateholders", "Noteholders" or "Securityholders", as the case may be
(as such terms are used herein or in the related Pooling and Servicing
Agreement or related Indenture and Trust Agreement, as applicable). Hence,
until Definitive Securities are issued, holders of such Securities will only be
able to exercise the rights of Securityholders indirectly through DTC (if in
the United
13
<PAGE> 19
States) and its participating organizations, or Cedel and Euroclear (in Europe)
and their respective participating organizations. See "Book-Entry
Registration".
Since transactions in the Securities can be effected only through DTC,
Cedel, Euroclear, participating organizations, indirect participants and
certain banks, the ability of the beneficial owner thereof to pledge such
Securities to persons or entities that do not participate in the DTC, Cedel or
Euroclear system, or otherwise to take actions in respect of such Certificate,
may be limited due to lack of a physical certificate representing such
Securities.
Beneficial owners of Securities may experience some delay in their
receipt of distributions of interest of and principal since such distributions
will be forwarded by the Trustee or Indenture Trustee to DTC and DTC will
credit such distributions to the accounts of its Participants (as defined
herein) which will thereafter credit them to the accounts of the beneficial
owners thereof either directly or indirectly through indirect participants.
THE TRUSTS
With respect to each series of Securities, the Seller will establish a
separate Trust pursuant to the respective Trust Agreement or Pooling and
Servicing Agreement, as applicable, for the transactions described herein and
in the related Prospectus Supplement. The property of each Trust will include
a pool (a "Receivables Pool") of retail installment sales contracts between
dealers (the "Dealers") and purchasers (the "Obligors") of new and used
automobiles and/or light duty trucks and all payments due thereunder on and
after the applicable Cutoff Date (as such term is defined in the related
Prospectus Supplement, a "Cutoff Date"). The Receivables of each Receivables
Pool were originated by the Dealers and purchased by TMCC in the ordinary
course of business pursuant to agreements with Dealers ("Dealer Agreements").
Such Receivables will continue to be serviced by the Servicer and will evidence
indirect financing made available by TMCC to the Obligors. On the applicable
Closing Date, the Seller will sell the Receivables comprising the related
Receivables Pool to the Trust as specified in the related Prospectus
Supplement. 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, as described herein and
in the related Prospectus Supplement; (ii) security interests in 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. To the extent specified in the related
Prospectus Supplement, a Yield Maintenance Account, Reserve Fund or other form
of credit enhancement may be a part of the property of any given Trust or may
be held by the Trustee or an Indenture Trustee for the benefit of holders of
the related Securities. Additionally, pursuant to contracts between TMCC and
the Dealers, the Dealers have an obligation after origination to repurchase
Receivables as to which Dealers have made certain misrepresentations.
The Servicer will continue to service the Receivables held by each
Trust and will receive fees for such services. See "Description of the
Transfer and Servicing Agreements--Servicing Compensation and
14
<PAGE> 20
Payment of Expenses" herein. To facilitate the servicing of the Receivables,
the Seller and each Trustee will authorize the Servicer to retain physical
possession of the Receivables held by each Trust and other documents relating
thereto as custodian for each such Trust. In order to minimize administrative
burden and expense, the certificates of title to the Financed Vehicles will not
be amended to reflect the sale and assignment of the security interest in the
Financed Vehicles to each Trust. In the absence of such an amendment, any
Trust may not have a perfected security interest in the Financed Vehicles in
all states. See "Certain Legal Aspects of the Receivables--Security Interests"
and "Description of the Transfer and Servicing Agreements--Sale and Assignment
of Receivables".
If the protection provided to any holders of Securities of any class
by the subordination of other Securities of such series, by the Reserve Fund,
if any, or by other credit enhancement for such series is insufficient, such
Noteholders or Certificateholders, as the case may be, would have to look
principally to the Obligors on the related Receivables, the proceeds from the
repossession and sale of Financed Vehicles which secure defaulted Receivables
and the proceeds from any recourse against Dealers with respect to such
Receivables. In such event, certain factors, such as the applicable Trust's
not having perfected security interests in the Financed Vehicles in all states,
may affect the Servicer's ability to repossess and sell the collateral securing
the Receivables, and thus may reduce the proceeds to be distributed to the
holders of the Securities of such series. See "Description of the Transfer and
Servicing Agreements--Distributions", "--Credit and Cash Flow Enhancement" and
"Certain Legal Aspects of the Receivables--Security Interests".
The principal offices of each Trust that is not a grantor trust and
the related Trustee will be specified in the applicable Prospectus Supplement.
THE TRUSTEE
The Trustee or Indenture Trustee for each Trust 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 RECEIVABLES POOLS
GENERAL
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
15
<PAGE> 21
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,
including that, unless otherwise provided in the related Prospectus Supplement,
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 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 were
used in selecting the related Receivables.
Each Receivable provides 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").
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 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.
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 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.
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 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.
16
<PAGE> 22
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. Distributions to Certificateholders will not be affected by such
rebates under the Rule of 78s Receivables because pursuant to the Agreement
such distributions will be determined using the actuarial method.
Unless otherwise provided in the related Prospectus Supplement, each
Trust will account for the Rule of 78s Receivables as if such Receivables were
Actuarial Receivables. Amounts received upon prepayment in full of a Rule of
78s Receivable in excess of the then outstanding principal balance of such
Receivable and accrued interest thereon (calculated pursuant to the actuarial
method) will not be paid to the Noteholders or passed through to the
Certificateholders of the applicable series but will be deemed to be an Excess
Amount and released to the Seller or otherwise applied as set forth in the
related Prospectus Supplement.
Additional information with respect to each Receivables Pool will be
set forth in the related Prospectus Supplement, including, to the extent
appropriate, the composition, the distribution by APR and by the states of
origination, the portion of such Receivables Pool consisting of Precomputed
Receivables and of Simple Interest Receivables and the portion of such
Receivables Pool secured by new vehicles and by used vehicles.
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 are prepayable at any time without penalty to
the Obligor. However, partial prepayments on the Precomputed Receivables made
be Obligors will not be distributed on the Distribution
17
<PAGE> 23
Date following the Collection Period in which they were received but will be
retained and applied towards payments due in one or more future 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 if calculated on the basis of the assumption that
payments will be made as scheduled and that no such prepayments will be made.
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 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 representations and warranties
and the Servicer will be obligated to purchase Receivables from such Trust
pursuant to such Sale and Servicing Agreement or Pooling and Servicing
Agreement as a result of breaches of certain covenants. See "Description of the
Transfer and Servicing Agreements--Sale and Assignment of Receivables" and
"--Servicing Procedures". See also "Description of the Transfer and Servicing
Agreements--Termination" regarding the Servicer's 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. Any reinvestment risk resulting from
the rate of prepayments of the Receivables and the distribution of such
prepayments to Certificateholders will be borne entirely by the
Certificateholders. In addition, early retirement of the Certificates 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 Cutoff Date Pool Balance.
In addition, pursuant to agreements between TMCC and the Dealers, each
Dealer is obligated, after purchase by TMCC of retail installment sales
contracts from such Dealer, 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 any recovery by TMCC in respect of any Receivable pursuant to
any Dealer Recourse be deposited in the related 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. See "Description of the Transfer and
Servicing Agreements--Sale and Assignment of Receivables" and "--Servicing
Procedures".
18
<PAGE> 24
See also "Description of the Transfer and Servicing Agreements--Termination"
regarding the Servicer'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.
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 distribution with respect
to such class of Notes indicating the remaining outstanding principal balance
of such class of Notes, as of the applicable Distribution Date (after giving
effect to payments to be made on such Distribution Date), as a fraction of the
initial outstanding principal balance of such class of Notes. The "Certificate
Pool Factor" for each class of Certificates will be a seven-digit decimal which
the Servicer will compute prior to each distribution with respect to such class
of Certificates indicating the remaining Certificate Balance of such class of
Certificates, as of the applicable Distribution Date (after giving effect to
distributions to be made on such 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 distributed on the
preceding Distribution Date and any reconciliation of such amounts with
information provided by the Servicer prior to such current Distribution Date.
In addition, Securityholders of record during any calendar year will be
furnished information for tax reporting purposes not later than the latest date
permitted by law. See "Certain Information Regarding the Securities--Reports
to Securityholders".
19
<PAGE> 25
USE OF PROCEEDS
Unless otherwise provided in the related Prospectus Supplement, the
net proceeds from the sale of the Securities of a given series will be applied
by the applicable Trust (i) to the purchase of the Receivables from the Seller,
(ii) to make the initial deposit into the Reserve Fund, if any, and (iii) to
make the required initial deposit into the Yield Maintenance Account, if any.
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.
THE SELLER
The Seller was incorporated in the State of California on June 24,
1993, as a wholly owned, limited purpose subsidiary of TMCC. The principal
executive offices of the Seller are located at 19001 South Western Avenue,
Torrance, California 90509 and its telephone number is (310) 618-4000.
The Seller was organized primarily for the purpose of acquiring
installment sales contracts similar to the Receivables and associated rights
from TMCC, causing the issuance of certificates similar to the Certificates and
engaging in related transactions. The Seller's articles of incorporation limit
the activities of the Seller to the foregoing purposes and to any activities
incidental to and necessary for such purposes.
The Seller will warrant to each Trust in the related Sale and
Servicing Agreement or Pooling and Servicing Agreement that the sale of the
applicable Receivables by the Seller to such Trust is a valid sale of such
Receivables to such Trust. In addition, the Seller and such Trust will treat
the transactions described herein and in the related Prospectus Supplement as a
sale of such Receivables to such Trust and the Seller will take all actions
that are required to perfect the Trust's ownership interest in such
Receivables. Notwithstanding the foregoing, if the Seller were to become a
debtor in a bankruptcy case and a creditor or trustee in bankruptcy of such
debtor or such debtor itself were to take the position that the sale of
Receivables to a Trust should instead be treated as a pledge of such
Receivables to secure a borrowing of such debtor, then delays in payments of
collections of such Receivables could occur or (should the court rule in favor
of any such trustee, debtor or creditor) reductions in the amount of such
payments could result. If the transfer of Receivables to a Trust is treated as
a pledge instead of a sale, a tax or government lien on the property of the
Seller arising before the transfer of Receivables to such Trust may have
priority over such Trust's interest in such Receivables. If the transactions
contemplated herein are treated as a sale, the Receivables would not be part of
the Seller's bankruptcy estate and would not be available to the Seller's
creditors.
THE SERVICER
Toyota Motor Credit Corporation ("TMCC") was incorporated in
California on October 4, 1982, and commenced operations in May 1983. At March
31, 1996, TMCC had 34 branches in various locations in the United States. In
addition to the Seller, TMCC has four wholly owned subsidiaries engaged in the
insurance business. TMCC and its subsidiaries are collectively referred to as
"TMCC". TMCC's address is 19001 South Western Avenue, Torrance, California
90509.
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
20
<PAGE> 26
customers in the United States (excluding Hawaii). 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 1,300 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 were originated by Dealers in
accordance with TMCC's requirements under existing agreements with such Dealers
and were 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 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.
21
<PAGE> 27
DESCRIPTION OF THE NOTES
GENERAL
With respect to each Trust that issues Notes, one or more classes of
Notes of the related series will be issued pursuant to the terms of an
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 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
distributions, notices, reports and statements to Noteholders refer to
distributions, notices, reports and statements to DTC or its nominee, as the
registered holder of the Notes, for distribution to Noteholders in accordance
with DTC's procedures with respect thereto. See "Certain Information Regarding
the Securities--Book-Entry Registration" and "--Definitive Securities".
PRINCIPAL AND INTEREST ON THE NOTES
The timing and priority of payment, seniority, allocations of losses,
Interest Rate and amount of or method of determining payments of principal and
interest on each class of Notes of a given series will be described in the
related Prospectus Supplement. 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, as
described in the related Prospectus Supplement. Unless otherwise provided in
the related Prospectus Supplement, payments of interest on the Notes of such
series will be made prior to payments of principal thereon. To the extent
provided in the related Prospectus Supplement, a series may include one or more
classes of 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 under the circumstances specified in the related Prospectus
Supplement, including as a result of the Servicer's exercising its option to
purchase the related Receivables Pool.
22
<PAGE> 28
To the extent specified in any Prospectus Supplement, one or more
classes of Notes of a given series may have fixed principal payment schedules,
as set forth in such Prospectus Supplement; Noteholders of such Notes would be
entitled to receive as payments of principal on any given Distribution Date the
applicable amounts set forth on such schedule with respect to such Notes, in
the manner and to the extent set forth in the related Prospectus Supplement.
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, the amount available
for such payments could be less than the amount of interest payable on the
Notes on any of the dates specified for payments in the related Prospectus
Supplement (each, a "Distribution Date"), in which 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 available to
be distributed in respect of interest on the Notes of such series. See
"Description of the Transfer and Servicing Agreements--Distributions" and
"--Credit and Cash Flow Enhancement".
In the case of a series of Notes which 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. With respect to each Trust that 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
23
<PAGE> 29
with respect to any of the collateral for such Notes or, except as otherwise
permitted or contemplated in such Indenture, terminate the lien of such
Indenture on any such collateral or deprive the holder of any such Note of the
security afforded by the lien of such Indenture.
Unless otherwise provided in the applicable Prospectus Supplement, the
Trust and the applicable Indenture Trustee may also enter into supplemental
indentures, without obtaining the consent of the Noteholders of the related
series, for the purpose of, among other things, adding any provisions to or
changing in any manner or eliminating any of the provisions of the related
Indenture or of modifying in any manner the rights of such Noteholders;
provided that such action will not materially and adversely affect the interest
of any such Noteholder.
Events of Default; Rights upon Event of Default. With respect to the
Notes of a given series, unless otherwise specified in the related Prospectus
Supplement, "Events of Default" under the related Indenture will consist of:
(i) a default for five days or more in the payment of any interest on any such
Note; (ii) a default in the payment of the principal of or any installment of
the principal of any such Note when the same becomes due and payable; (iii) a
default in the observance or performance of any covenant or agreement of the
applicable Trust made in the related Indenture and the continuation of any such
default for a period of 90 days after notice thereof is given to such Trust by
the applicable Indenture Trustee or to such Trust and such Indenture Trustee by
the holders of at least 25% in principal amount of such Notes then outstanding
acting together as a single class; (iv) any representation or warranty made by
such Trust in the related Indenture or in any certificate delivered pursuant
thereto or in connection therewith having been incorrect in a material respect
as of the time made, and such breach not having been cured within 30 days after
notice thereof is given to such Trust by the applicable Indenture Trustee or to
such Trust and such Indenture Trustee by the holders of at least 25% in
principal amount of such Notes then outstanding acting together as a single
class; or (v) certain events of bankruptcy, insolvency, receivership or
liquidation of the applicable Trust. However, the amount of principal required
to be paid to Noteholders of such series under the related Indenture will
generally be limited to amounts available to be deposited in the Collection
Account. Therefore, unless otherwise specified in the related Prospectus
Supplement, the failure to pay principal on a class of Notes generally will not
result in the occurrence of an Event of Default until the final scheduled
Distribution Date for such class of Notes.
If an Event of Default should occur and be continuing with respect to
the Notes of any series, the related Indenture Trustee or holders of a majority
in principal amount of such Notes then outstanding may declare the principal of
such Notes to be immediately due and payable. Unless otherwise specified in
the related Prospectus Supplement, such declaration may, under certain
circumstances, be rescinded by the holders of a majority in principal amount of
such Notes then outstanding.
If the Notes of any series are due and payable following an Event of
Default with respect thereto, the related Indenture Trustee may institute
proceedings to collect amounts due or foreclose on Trust property, exercise
remedies as a secured party, sell the related Receivables or elect to have the
applicable Trust maintain possession of such Receivables and continue to apply
collections on such Receivables as if there had been no declaration of
acceleration. Unless otherwise specified in the related Prospectus Supplement,
however, such Indenture Trustee is prohibited from selling the related
Receivables following an Event of Default, other than a default in the payment
of any principal of or a default for five days or more in the payment of any
interest on any Note of such series, unless (i) the holders of all such
outstanding Notes consent to such sale, (ii) the proceeds of such sale are
sufficient to pay in full the principal of and the accrued interest on such
outstanding Notes at the date of such sale or (iii) such Indenture Trustee
determines that the proceeds of Receivables would not be sufficient on an
ongoing basis to make all payments on such Notes
24
<PAGE> 30
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.
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.
25
<PAGE> 31
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 under the
section of the related Prospectus Supplement entitled "The Trust". 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.
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.
26
<PAGE> 32
DESCRIPTION OF THE CERTIFICATES
GENERAL
With respect to each Trust, one or more classes 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 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 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").
DISTRIBUTIONS OF PRINCIPAL AND INTEREST
The timing and priority of distributions, seniority, allocations of
losses, Pass Through Rate and amount of or method of determining distributions
with respect to principal and interest of each class of Certificates will be
described in the related Prospectus Supplement. Distributions of interest on
such Certificates will be made on the dates specified in the related Prospectus
Supplement (each, a "Distribution Date") and will be made prior to
distributions with respect to principal of such Certificates. To the extent
provided in the related Prospectus Supplement, a series may include one or more
classes of Strip Certificates entitled to (i) distributions in respect of
principal with disproportionate, nominal or no interest distributions or (ii)
interest distributions with disproportionate, nominal or no distributions 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
27
<PAGE> 33
Certificates of a given series or the method for determining such Pass Through
Rate. See also "Certain Information Regarding the Securities--Fixed Rate
Securities" and "--Floating Rate Securities". Unless otherwise provided in the
related Prospectus Supplement, distributions 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. Distributions 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 distributions 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
distributions 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--Distributions 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
28
<PAGE> 34
"Statistical Release H.15(519), Selected Interest Rates", or any successor
publication, published by the Board of Governors of the Federal Reserve System.
"Composite Quotations" means the daily statistical release entitled "Composite
3:30 p.m. Quotations for U.S. Government Securities" published by the Federal
Reserve Bank of New York. "Interest Reset Date" will be the first day of the
applicable Interest Reset Period, or such other day as may be specified in the
related Prospectus Supplement with respect to a class of Floating Rate
Securities.
Each applicable Prospectus Supplement will specify whether the rate of
interest on the related Floating Rate Securities will be reset daily, weekly,
monthly, quarterly, semiannually, annually or such other specified period
(each, an "Interest Reset Period") and the dates on which such Interest Rate
will be reset (each, an "Interest Reset Date"). Unless otherwise specified in
the applicable Prospectus Supplement, the Interest Reset Date will be, in the
case of Floating Rate Securities which reset: (i) daily, each Business Day;
(ii) weekly, the Wednesday of each week (with the exception of weekly reset
Treasury Rate Securities which will reset the Tuesday of each week, except as
specified below); (iii) monthly, the third Wednesday of each month; (iv)
quarterly, the third Wednesday of March, June, September and December of each
year; (v) semiannually, the third Wednesday of the two months specified in the
applicable 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. "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 European Currency Unit
("ECU"), on which dealings in deposits in such Index Currency are transacted in
the London interbank market or (b) if the Index Currency is the ECU, that is
not designated as an ECU Non-Settlement Day by the ECU Banking Association in
Paris or otherwise generally regarded in the ECU interbank market as a day on
which payments on ECUs shall not be made.
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 Pricing 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
29
<PAGE> 35
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 Supplements, 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, 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,
30
<PAGE> 36
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"
(with an Index Maturity of one month or three months being deemed to be
equivalent to an Index Maturity of 30 days or 90 days, respectively). In the
event that such rate is not published prior to 3:00 p.m., New York City time,
on the Calculation Date (as defined below) pertaining to such 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". 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.
31
<PAGE> 37
"Money Market Yield" means a yield (expressed as a percentage rounded
upward to the nearest one hundred-thousandth of a percentage point) calculated
in accordance with the following formula:
Money Market Yield = D X 360 X 100
---------------
360 - (D X M)
where "D" refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal, and "M" refers to the
actual number of days in the Interest Period for which interest is being
calculated.
The "Calculation Date" pertaining to any Commercial Paper Rate Determination
Date shall be the first to occur of (a) the tenth calendar day after such
Commercial Paper Rate Determination Date or, if such day is not a business day,
the next succeeding business day or (b) the second business day preceding the
related Distribution Date.
Federal Funds Rate Securities. Each Federal Funds Rate Security will
bear interest for each Interest Reset Period at the interest rate calculated
with reference to the Federal Funds Rate and the Spread or Spread Multiplier,
if any, specified in such Security and in the applicable Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement,
the "Federal Funds Rate" for each Interest Reset Period shall be the effective
rate on the Interest Reset Date for such Interest Reset Period (a "Federal
Funds Rate Determination Date") for Federal Funds as published in H.15(519)
under the heading "Federal Funds (Effective)". In the event that such rate is
not published prior to 3:00 p.m., New York City time, on the Calculation Date
(as defined below) pertaining to such Federal Funds Rate Determination Date,
the "Federal Funds Rate" for such Interest Reset Period shall be the rate on
such Federal Funds Rate Determination Date as published in Composite Quotations
under the heading "Federal Funds/Effective Rate". If by 3:00 p.m., New York
City time, on such Calculation Date such rate is not yet published in either
H.15(519) or Composite Quotations, then the "Federal Funds Rate" for such
Interest Reset Period shall be calculated by the Calculation Agent for such
Federal Funds Rate Securities and will be the arithmetic mean of the rates for
the last transaction in overnight United States dollar federal funds arranged
by three leading brokers of federal funds transactions in The City of New York
selected by the Calculation Agent prior to 9:00 A.M., New York City time on
such Federal Funds Rate Interest Determination Date; provided, however that if
the brokers so selected by the Calculation Agent are not quoting as mentioned
in this sentence, the Federal Funds Rate with respect to such Federal Funds
Rate Interest Determination Date will be the Federal Funds Rate in effect for
the preceding Interest Reset Period.
The "Calculation Date" pertaining to any Federal Funds Rate
Determination Date shall be the next succeeding Business Day.
LIBOR Securities. Each LIBOR Security will bear interest for each
Interest Reset Period at the interest rate calculated with reference to LIBOR
and the Spread or Spread Multiplier, if any, specified in such Security and in
the applicable Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement,
with respect to LIBOR indexed to the offered rates for U.S. dollar deposits,
"LIBOR" for each Interest Reset Period will be determined by the Calculation
Agent for any LIBOR Security as follows:
32
<PAGE> 38
(i) On the second London Banking 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
33
<PAGE> 39
applicable Prospectus Supplement (or such other page as may replace such
designated page on that service for the purpose of displaying London interbank
rates of major banks) for the applicable Index Currency, or (b) if "LIBOR
Telerate" is designated in the applicable Prospectus Supplement, the display on
the Dow Jones Telerate Service on the page designated in the applicable
Prospectus Supplement (or such other page as may replace such designated page on
that service or such other service or services as may be nominated by the
British Bankers' Association for the purpose of displaying London interbank
offered rates for the related Index Currency) for the purpose of displaying the
London interbank rates of major banks for the applicable Index Currency. If
neither LIBOR Reuters nor LIBOR Telerate is specified in the applicable
Prospectus Supplement, LIBOR for the applicable Index 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, Italian lira, Swiss francs, Dutch guilders and ECUs,
the Principal Financial Center shall be The City of New York, Frankfurt, Milan,
Zurich, Amsterdam and Luxembourg, 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
34
<PAGE> 40
business day, the next succeeding business day or (b) the second business day
preceding the date any payment is required to be made for any period following
the applicable Interest Reset Date.
INDEXED SECURITIES
To the extent so specified in any Prospectus Supplement, any class of
Securities of a given series may consist of Securities ("Indexed Securities")
in which the principal amount payable on the final Distribution Date for such
class (the "Indexed Principal Amount") and/or the interest payable on any
Distribution Date is determined by reference to a measure (the "Index") which
will be related to the exchange rates of one or more currencies or composite
currencies (the "Index Currencies"); the price or prices of specified
commodities; or specified stocks, which may be based on U.S. or foreign
stocks, on specified dates specified in the applicable Prospectus Supplement,
or such other price, interest rate, exchange rate or other financial index or
indices as are described in the applicable Prospectus Supplement. Holders of
Indexed Securities may receive a principal amount on the related final
Distribution Date that is greater than or less than the face amount of the
Indexed Securities depending upon the relative value on the related final
Distribution Date of the specified indexed item. Information as to the method
for determining the principal amount payable on the related final Distribution
Date, if any, and, where applicable, certain historical information with
respect to the specific indexed item or items and special tax considerations
associated with investment in Indexed Securities, will be set forth in the
applicable Prospectus Supplement. Notwithstanding anything to the contrary
herein, for purposes of determining the rights of a holder of a Security
indexed as to principal in respect of voting for or against amendments to the
related Trust Agreement or Indenture, 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.
35
<PAGE> 41
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 DTC. Unless
otherwise specified in the related Prospectus Supplement, Securityholders may
hold beneficial interests in Securities through DTC (in the United States) or
Cedel or Euroclear (in Europe) 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.
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.
36
<PAGE> 42
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 Commission.
Unless otherwise specified in the related Prospectus Supplement,
Securityholders that are not DTC Participants or Indirect DTC Participants but
desire to purchase, sell or otherwise transfer ownership of, or other interests
in, Securities may do so only through DTC Participants and Indirect DTC
Participants. DTC Participants will receive a credit for the Securities on
DTC's records. The ownership interest of each Securityholder will in turn be
recorded on respective records of the DTC Participants and Indirect DTC
Participants. Securityholders will not receive written confirmation from DTC
of their purchase, but Securityholders are expected to receive written
confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the DTC Participant or Indirect DTC
Participant through which the Securityholder entered into the transaction.
Transfers of ownership interests in the Securities of any class will be
accomplished by entries made on the books of DTC Participants acting on behalf
of Securityholders.
To facilitate subsequent transfers, all Securities deposited by DTC
Participants with DTC will be registered in the name of Cede, a nominee of DTC.
The deposit of Securities with DTC and their registration in the name of Cede
will effect no change in beneficial ownership. DTC will have no knowledge of
the actual Securityholders and its records will reflect only the identity of
the DTC Participants to whose accounts such Securities are credited, which may
or may not be the Securityholders. DTC Participants and Indirect DTC
Participants will remain responsible for keeping account of their holdings on
behalf of their customers. While the Securities of a Series are held in
book-entry form, Securityholders will not have access to the list of
Securityholders of such Series, which may impede the ability of Securityholders
to communicate with each other.
Conveyance of notices and other communications by DTC to DTC
Participants, by DTC Participants to Indirect DTC Participants and by DTC
Participants and Indirect DTC Participants to Securityholders will be governed
by arrangements among them, subject to any statutory or regulatory requirements
as may be in effect from time to time.
Under the rules, regulations and procedures creating and affecting DTC
and its operations, DTC is required to make book-entry transfers among DTC
Participants on whose behalf it acts with respect to the Securities and is
required to receive and transmit distributions 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.
37
<PAGE> 43
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 Bank, societe anonyme ("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.
38
<PAGE> 44
The Euroclear System was created in 1968 to hold securities for
participants of the Euroclear System ("Euroclear Participants") and to clear
and settle transactions between Euroclear Participants through simultaneous
electronic book-entry delivery against payment, thereby eliminating the need
for physical movement of certificates and any risk from lack of simultaneous
transfers of securities and cash. Transactions may now be settled in any of 27
currencies, including United States dollars. The Euroclear System includes
various other services, including securities lending and borrowing, and
interfaces with domestic markets in several countries generally similar to the
arrangements for cross-market transfers with DTC described above. The
Euroclear System is operated by Morgan Guaranty Trust Company of New York,
Brussels, Belgium office (the "Euroclear Operator" 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.
Distributions 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 distributions 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.
39
<PAGE> 45
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.
Distributions 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
distributions 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 distribution 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 distribution 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.
40
<PAGE> 46
LIST OF SECURITYHOLDERS
Unless otherwise specified in the related Prospectus Supplement with
respect to the Notes of any series, three or more holders of the Notes of such
series or one or more holders of such Notes evidencing not less than 25% of the
aggregate outstanding principal balance of such Notes may, by written request
to the related Indenture Trustee, obtain access to the list of all Noteholders
maintained by such Indenture Trustee for the purpose of communicating with
other Noteholders with respect to their rights under the related Indenture or
under such Notes. Such Indenture Trustee may elect not to afford the
requesting Noteholders access to the list of Noteholders if it agrees to mail
the desired communication or proxy, on behalf of and at the expense of the
requesting Noteholders, to all Noteholders of such series.
Unless otherwise specified in the related Prospectus Supplement with
respect to the Certificates of any series, three or more holders of the
Certificates of such series or one or more holders of such Certificates
evidencing not less than 25% of the Certificate Balance of such Certificates
may, by written request to the related Trustee, obtain access to the list of
all Certificateholders maintained by such Trustee for the purpose of
communicating with other Certificateholders with respect to their rights under
the related Trust Agreement or Pooling and Servicing Agreement or under such
Certificates.
The Pooling and Servicing Agreement, Trust Agreement and Indenture
will not provide for the holding of annual or other meetings of
Securityholders.
REPORTS TO SECURITYHOLDERS
With respect to each series of Securities that includes Notes, on or
prior to each Distribution Date, the Servicer will prepare and provide to the
related Indenture Trustee a statement to be delivered to the related
Noteholders on such Distribution Date. With respect to each series of
Securities that includes Certificates, on or prior to each Distribution Date,
the Servicer will prepare and provide to the related Trustee a statement to be
delivered to the related Certificateholders. With respect to each series of
Securities, each such statement to be delivered to Noteholders 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 distribution 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 distribution 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;
41
<PAGE> 47
(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 Payments Ahead on deposit in
the related Payahead Account or held by the Servicer with respect to
the related Receivables and the change in such amount from the
immediately preceding Distribution Date;
(ix) the amount of Advances made in respect of the related
Receivables and the related Collection Period and the amount of
unreimbursed Advances on such Distribution Date; and
(x) the balance of any related Reserve Fund, Yield
Maintenance Account or other credit or liquidity enhancement on such
date, after giving effect to changes thereto on such date and the
amount of such changes.
Within the prescribed period of time for tax reporting purposes after
the end of each calendar year during the term of each Trust, the Applicable
Trustee will mail to each person who at any time during such calendar year has
been a Securityholder with respect to such Trust and received any payment
thereon a statement containing certain information for the purposes of such
Securityholder's preparation of federal income tax returns. See "Certain
Federal Income Tax Consequences".
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes certain terms of each Sale and
Servicing Agreement or Pooling and Servicing Agreement pursuant to which a
Trust will purchase Receivables from the Seller and the Servicer will agree to
service such Receivables, each Trust Agreement (in the case of a grantor trust,
the Pooling and Servicing Agreement) pursuant to which a Trust will be created
and Certificates will be issued 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 (the "Closing Date"), TMCC will sell
and assign to the Seller, without recourse, pursuant to a Receivables Purchase
Agreement (the "Receivables Purchase Agreement"), its entire interest in the
Receivables comprising the related Receivables Pool, including the security
interests in the Financed Vehicles. On the Closing Date, the Seller will
transfer and assign to the applicable Trustee, 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
42
<PAGE> 48
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, 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 the required initial
deposit into the Yield Maintenance Account.
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 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 were or 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
was 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, 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 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 Certificateholders or the Trustee
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
43
<PAGE> 49
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 distribution 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 distribution to the
applicable Noteholders or Certificateholders. The Payahead Account will
initially be maintained with the applicable Indenture Trustee or Trustee.
Any other accounts to be established with respect to a Trust,
including any Yield Maintenance Account or any Reserve Fund will be described
in the related Prospectus Supplement.
For any series of Securities, funds in the related Collection Account,
any Yield Maintenance Account, the Reserve Fund and such other accounts as may
be identified in the related Prospectus Supplement (collectively, the "Trust
Accounts") will be invested as provided in the related Sale and Servicing
Agreement or Pooling and Servicing Agreement in Eligible Investments.
"Eligible Investments" are generally limited to investments acceptable to the
Rating Agencies rating such Securities as being consistent with the rating of
such Securities and may include retail installment sale contracts secured by
new or used automobiles and/or light duty trucks. Except as described below or
in the related Prospectus Supplement, Eligible Investments are limited to
obligations or securities that mature on or before the next Distribution Date
for such series. However, to the extent permitted by the Rating Agencies, funds
in any Trust Account may be invested in securities that will not mature prior
to the date of the next distribution 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
44
<PAGE> 50
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
distributed 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, 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 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
45
<PAGE> 51
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 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 distributed 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 Prime-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
46
<PAGE> 52
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 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
47
<PAGE> 53
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.
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 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 distribution 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 distributions 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
48
<PAGE> 54
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).
DISTRIBUTIONS
With respect to each series of Securities, beginning on the
Distribution Date specified in the related Prospectus Supplement, distributions
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 distributions 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 distributed 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 distribution 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,
distributions in respect of principal of a class of Securities of a given
series will be subordinate to distributions in respect of interest on such
class, and distributions in respect of one or more classes of Certificates of
such series may be subordinate to payments in respect of Notes, if any, of such
series or other classes of Certificates of such series.
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 supplement 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,
49
<PAGE> 55
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 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. 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
distributions on such date. The related Prospectus Supplement will describe
the circumstances and manner under which distributions 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 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 distributions 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
50
<PAGE> 56
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 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 (see "--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 distributions 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, distributions 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 public
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
51
<PAGE> 57
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.
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
52
<PAGE> 58
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.
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.
53
<PAGE> 59
WAIVER OF PAST DEFAULTS
With respect to each Trust that has issued Notes, unless otherwise
provided in the related Prospectus Supplement, (i) the holders of Notes
evidencing not less than 51% of the principal amount of the then outstanding
Notes of the related series, acting together as a single class or (ii) in the
case of any Servicer Default which does not adversely affect the related
Indenture Trustee or such Noteholders, the holders of the Certificates of such
series evidencing not less than 51% of the outstanding Certificate Balance
(but excluding for purposes of such calculation and action all Certificates
held by the Seller, the Servicer or any of their affiliates), acting together
as a single class, may, on behalf of all such Noteholders or
Certificateholders, waive any default by the Servicer in the performance of its
obligations under the related Sale and Servicing Agreement and its
consequences, except a Servicer Default in making any required deposits to or
payments from any of the Trust Accounts in accordance with such Sale and
Servicing Agreement. With respect to each Trust that has not issued Notes,
holders of Certificates of such series evidencing not less than 51% of the
principal amount of such Certificates then outstanding (but excluding for
purposes of such calculation and action all Certificates held by the Seller,
the Servicer or any of their affiliates), acting together as a single class,
may, on behalf of all such Certificateholders, waive any default by the
Servicer in the performance of its obligations under the related Sale and
Servicing Agreement or Pooling and Servicing Agreement, except a Servicer
Default in making any required deposits to or payments from the related Trust
Accounts in accordance with such Sale and Servicing Agreement or Pooling and
Servicing Agreement. No such waiver will impair such Noteholders' or
Certificateholders' rights with respect to subsequent defaults.
AMENDMENT
Unless otherwise provided in the related Prospectus Supplement, each
of the Transfer and Servicing Agreements may be amended by the parties thereto,
without the consent of the related Noteholders or Certificateholders for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of such Transfer and Servicing Agreements or of modifying
in any manner the rights of such Noteholders or Certificateholders; provided
that such action will not, in the opinion of counsel satisfactory to the
related Trustee or Indenture Trustee, as applicable, materially and adversely
affect the interest of any such Noteholder or Certificateholder. Unless
otherwise specified in the related Prospectus Supplement, the Transfer and
Servicing Agreements may also be amended by the Seller, the Servicer, the
related Trustee and any related Indenture Trustee with the consent of (i) the
holders of Notes evidencing not less than 51% of the principal amount of then
outstanding Notes, if any, of the related series, acting together as a single
class, or (ii) in the case of any amendment which does not adversely affect the
related Indenture Trustee or such Noteholders, the holders of the Certificates
of such series evidencing not less than 51% of the outstanding Certificate
Balance (but excluding for purposes of such calculation and action all
Certificates held by the Seller, the Servicer or any of their affiliates),
acting together as a single class, for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of such Transfer
and Servicing Agreements or of modifying in any manner the rights of such
Noteholders or Certificateholders; provided, however, that no such amendment
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.
54
<PAGE> 60
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.
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.
55
<PAGE> 61
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 Owner Trustee (based on
the Owner Trustee's receipt of such notice) shall be permitted to purchase the
Receivables. The Owner Trustee and Indenture Trustee 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 distribution to the
related Certificateholders of all amounts required to be distributed 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.
56
<PAGE> 62
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
GENERAL
The transfer of the Receivables to the applicable Trustee, the
perfection of the security interests in the Receivables and the enforcement of
rights to realize on the Financed Vehicles as collateral for the Receivables
are subject to a number of federal and state laws, including the UCC as in
effect in various states. The Servicer and the Seller will take the action
described below to perfect the rights of the applicable Trustee in the
Receivables. If, through inadvertence or otherwise, another party purchases
(including the taking of a security interest in) the Receivables for new value
in the ordinary course of its business, without actual knowledge of the Trust's
interest, and takes possession of the Receivables, such purchaser would acquire
an interest in the Receivables superior to the interest of the Trust.
SECURITY INTERESTS
General. In states in which retail installment sale contracts such as
the Receivables evidence the credit sale of automobiles and/or light duty
trucks by dealers to obligors, the contracts also constitute personal property
security agreements and include grants of security interests in the vehicles
under the applicable UCC. Perfection of security interests in 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".
57
<PAGE> 63
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. Such a failure, however,
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
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.
58
<PAGE> 64
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, 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.
59
<PAGE> 65
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
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.
The Seller has received the opinion of Andrews & Kurth L.L.P. to the
effect that, based on a reasoned analysis of analogous case law (although there
is no precedent based on directly similar facts), and,
60
<PAGE> 66
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 solvent, 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 distributions on the Certificates (and
possible reductions in the amount of such distributions) 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.
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. A case decided
by the United States Court of Appeals for the Tenth Circuit in 1993 contains
language to the effect that under the UCC accounts sold by a debtor would
remain property of the debtor's bankruptcy estate whether or not the sale of
the accounts was perfected. Although the Receivables constitute chattel paper
under the UCC, rather than accounts, Article 9 of the UCC applies to the sale
of chattel paper as well as the sale of accounts and perfection of a security
interest in both chattel paper and accounts may be accomplished by the filing
of a UCC-1 financing statement. If, following a bankruptcy of TMCC, a court
were to follow the reasoning of the Tenth Circuit reflected in the above case,
then the Receivables could be included in the bankruptcy estate of TMCC and
delays in payments of collections on or in respect of the Receivables could
occur.
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.
61
<PAGE> 67
The so-called "Holder-in-Due-Course" Rule of the Federal Trade
Commission (the "FTC Rule"), the provisions of which are generally duplicated
by the Uniform Consumer Credit Code, other statutes or the common law, has the
effect of subjecting a seller (and certain related creditors and their
assignees) in a consumer credit transaction to all claims and defenses which
the obligor in the transaction could assert against the seller of the goods.
Liability under the FTC Rule is limited to the amounts paid by the obligor
under the contract, and the holder of the contract may also be unable to
collect any balance remaining due thereunder from the obligor. The FTC Rule is
generally duplicated by the Uniform Consumer Credit Code, other state statutes
or the common law in certain states.
Most of the Receivables will be subject to the requirements of the FTC
Rule. Accordingly, each Trust, as holder of the related Receivables, will be
subject to any claims or defenses that the purchaser of the applicable Financed
Vehicle may assert against the seller of the Financed Vehicle. As to each
Obligor, such claims are limited to a maximum liability equal to the amounts
paid by the Obligor on the related Receivable. 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
62
<PAGE> 68
Seller to repurchase the Receivable unless the breach is cured. See
"Description of the Transfer and Servicing Agreements--Sale and Assignment of
Receivables".
OTHER LIMITATIONS
In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including federal bankruptcy laws and
related state laws, may interfere with or affect the ability of a secured party
to realize upon collateral or to enforce a deficiency judgment. For example,
in a Chapter 13 proceeding under the federal bankruptcy law, a court may
prevent a creditor from repossessing a vehicle, and, as part of the
rehabilitation plan, reduce the amount of the secured indebtedness to the
market value of the vehicle at the time of bankruptcy (as determined by the
court), leaving the creditor as a general unsecured creditor for the remainder
of the indebtedness. A bankruptcy court may also reduce the monthly payments
due under a contract or change the rate of interest and time of repayment of
the indebtedness.
Under the terms of the Soldiers' and Sailors' Relief Act of 1940, an
Obligor who enters the military service after the origination of such Obligor's
Receivable (including an Obligor who is a member of the National Guard or is in
reserve status at the time of the origination of the Obligor's Receivable and
is later called to active duty) may not be charged interest above an annual
rate of 6% during the period of such Obligor's active duty status, unless a
court orders otherwise upon application of the lender. In addition, pursuant
to the Military Reservist Relief Act, under certain circumstances, California
residents called into active duty with the reserves can delay payments on
retail installment sales contracts, including the Receivables, for a period,
not to exceed 180 days, beginning with the order to active duty and ending 30
days after release. It is possible that the foregoing could have an effect on
the ability of the Servicer to collect the full amount of interest owing on
certain of the Receivables. In addition, the Relief Acts impose limitations
that would impair the ability of the Servicer to repossess an affected
Receivable during the Obligor's period of active duty status. Thus, in the
event that such a Receivable goes into default, there may be delays and losses
occasioned by the inability to exercise the Trust's rights with respect to the
related Financed Vehicle in a timely fashion.
Any such shortfall pursuant to either of the two preceding paragraphs,
to the extent not covered by amounts payable to the Securityholders from
amounts on deposit in the related Reserve Fund or from coverage provided under
any other credit enhancement mechanism, could result in losses to the
Securityholders.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following general discussion of the anticipated material federal
income tax consequences of the purchase, ownership and disposition of the Notes
and the Certificates of any series, to the extent it relates to matters of law
or legal conclusions with respect thereto, represents the opinion of tax
counsel to each Trust with respect to the related series on the material
matters associated with such consequences, subject to the qualifications set
forth herein. "Tax Counsel" with respect to each Trust will be Andrews & Kurth
L.L.P. 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
63
<PAGE> 69
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 the Prospectus under the heading "Certain Federal
Income Tax Consequences--Trusts for Which a Partnership Election is Made", and
is of the opinion that such statements are correct in all material respects.
Such statements are intended as an explanatory discussion of the related tax
matters affecting investors generally, but do not purport to furnish
information in the level of detail or with the attention to an investor's
specific tax circumstances that would be provided by an investor's own tax
advisor. Accordingly, each investor is advised to consult its own tax advisors
with regard to the tax consequences to it of investing in Notes or
Certificates.
Tax Counsel will deliver its opinion that a Trust for which a
partnership election is made will not be an association (or publicly traded
partnership) taxable as a corporation for federal income tax purposes. This
opinion will be based on the assumption that the terms of the Trust Agreement
and related documents will be complied with, and on 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 distributions on the Certificates, and Certificateholders could
be liable for any such tax that is unpaid by the Trust.
64
<PAGE> 70
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 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 may elect under Section 1281 of
the Code to accrue interest income on all nongovernment debt obligations with a
term of one year or less, in which case the taxpayer would include interest on
the Short-Term Note in income as it accrues, but would not be subject to the
interest expense deferral rule referred to in the preceding sentence. Certain
special rules apply if a Short-Term Note is purchased for more or less than its
principal amount.
Sale or Other Disposition. If a Noteholder sells a Note, the holder
will recognize gain or loss in an amount equal to the difference between the
amount realized on the sale and the holder's adjusted tax basis in the Note.
The adjusted tax basis of a Note to a particular Noteholder will equal the
holder's cost for the Note, increased by any market discount, acquisition
discount, OID and gain previously included by such Noteholder in income 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
will be capital gain or loss if the Note was held as a capital asset,
65
<PAGE> 71
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 payments made (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 the
foreign person (i) 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 and
(ii) provides 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. If such
interest is not 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 in the taxable year.
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 containing 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 holder'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 generally
would 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.
66
<PAGE> 72
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 distributions 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). The Trust Agreement will
provide, in general, that the Certificateholders 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 distributed;
(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. Based
on the economic arrangement of the parties, this approach for allocating Trust
income 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 other items described above even
though the Trust might not have sufficient cash to make current cash
distributions of such amount. Thus, cash basis holders will in effect be
required to
67
<PAGE> 73
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.
All 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 distributed 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
distribute its assets to the partners, who would then be treated as
recontributing those assets to the Trust, as a new 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 distributions received with respect to such
Certificate. In addition, both the tax basis in the Certificates and the
amount realized on a sale of a Certificate would include the holder's share of
the Notes and other liabilities of the Trust. A holder
68
<PAGE> 74
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 distributions 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.
69
<PAGE> 75
Under Section 6031 of the Code, any person that holds Certificates as
a nominee at any time during a calendar year is required to furnish the Trust
with a statement containing certain information on the nominee, the beneficial
owners and the Certificates so held. Such information includes (i) the name,
address and taxpayer identification number of the nominee and (ii) as to each
beneficial owner (x) the name, address and identification number of such
person, (y) whether such person is a United States person, a tax-exempt entity
or a foreign government, an international organization, or any wholly owned
agency or instrumentality of either of the foregoing, and (z) certain
information on Certificates that were held, bought or sold on behalf of such
person throughout the year. In addition, brokers and financial institutions
that hold Certificates through a nominee are required to furnish directly to
the Trust information as to themselves and their ownership of Certificates. A
clearing agency registered under Section 17A of the Exchange Act is not
required to furnish any such information statement to the Trust. The
information referred to above for any calendar year must be furnished to the
Trust on or before the following January 31. Nominees, brokers and financial
institutions that fail to provide the Trust with the information described
above may be subject to penalties.
The Seller will be designated as the tax matters partner in the
related Trust Agreement and, as such, will be responsible for representing 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. 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
70
<PAGE> 76
will not be considered "portfolio interest." As a result, Certificateholders
will 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. Distributions 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.
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 the 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") will be treated for federal income tax purposes as owners
of a portion of the Trust's assets as described below. 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
71
<PAGE> 77
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 acquires
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 by the IRS, each purchaser of a Grantor Trust
Certificate will be treated as the purchaser of a stripped bond which generally
should be treated as a single debt instrument issued on the day it is purchased
for purposes of calculating any original issue discount. Generally, under
applicable Treasury regulations (the "Section 1286 Treasury Regulations"), if
the discount on a stripped bond is larger than a de minimis amount (as
calculated for purposes of the OID rules of the Code) such stripped bond will
be considered to have been issued with OID. See "Original Issue Discount."
Based on the preamble to the Section 1286 Treasury Regulations, Tax Counsel is
of the opinion that, although the matter is not entirely clear, the interest
income on the Certificates at the sum of the Pass Through Rate and the portion
of the Servicing Fee Rate that does not constitute excess servicing will be
treated as "qualified stated interest" within the meaning of the Section 1286
Treasury Regulations and such income will be so treated in the Trustee's tax
information reporting.
72
<PAGE> 78
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
73
<PAGE> 79
discount for purposes of determining the tax treatment of subsequent principal
payments or dispositions of the market discount bond is to be reduced by the
amount so treated as ordinary income.
The Code also grants the Treasury Department authority to issue
regulations providing for the computation of accrued market discount on debt
instruments, the principal of which is payable in more than one installment.
While the Treasury Department has not yet issued regulations, rules described
in the relevant legislative history will apply. Under those rules, the holder
of a market discount bond may elect to accrue market discount either on the
basis of a constant interest rate or according to one of the following methods.
If a Grantor Trust Certificate is issued with OID, the amount of market
discount that accrues during any accrual period would be equal to the product
of (i) the total remaining market discount and (ii) a fraction, the numerator
of which is the OID accruing during the period and the denominator of which is
the total remaining OID at the beginning of the accrual period. For Grantor
Trust Certificates issued without OID, the amount of market discount that
accrues during a period is equal to the product of (i) the total remaining
market discount and (ii) a fraction, the numerator of which is the amount of
stated interest paid during the accrual period and the denominator of which is
the total amount of stated interest remaining to be paid at the beginning of
the accrual period. For purposes of calculating market discount under any of
the above methods in the case of instruments (such as the Grantor Trust
Certificates) that provide for payments that may be accelerated by reason of
prepayments of other obligations securing such instruments, the same prepayment
assumption applicable to calculating the accrual of OID will apply. Because the
regulations described above have not been issued, it is impossible to predict
what effect those regulations might have on the tax treatment of a Grantor
Trust Certificate purchased at a discount or premium in the secondary market.
A holder who acquired a Grantor Trust Certificate at a market discount
also may be required to defer a portion of its interest deductions for the
taxable year attributable to any indebtedness incurred or continued to purchase
or carry such Grantor Trust Certificate purchased with market discount. For
these purposes, the de minimis rule referred 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 its 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
74
<PAGE> 80
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.
Sale or Exchange of a Grantor Trust Certificate. Sale or exchange of
a Grantor Trust Certificate prior to its maturity will result in gain or loss
equal to the difference, if any, between the amount received and the owner's
adjusted basis in the Grantor Trust Certificate. Such adjusted basis generally
will equal the seller's purchase price for the Grantor Trust Certificate,
increased by the OID included in the seller's gross income with respect to the
Grantor Trust Certificate, and reduced by principal payments on the Grantor
Trust Certificate previously received by the seller. Such gain or loss will be
capital gain or loss to an owner for which a Grantor Trust Certificate is a
"capital asset" within the meaning of Section 1221, and will be long-term or
short-term depending on whether the Grantor Trust Certificate has been owned
for the long-term capital gain holding period (currently more than one year).
Grantor Trust Certificates will be "evidences of indebtedness" within
the meaning of Section 582(c)(1), so that gain or loss recognized from the sale
of a Grantor Trust Certificate by a bank or a thrift institution to which such
section applies will be treated as ordinary income or loss.
Non-U.S. Persons. Generally, interest or OID paid by the person
required to withhold tax under Section 1441 or 1442 to (i) an owner that is not
a U.S. Person (as defined below) or (ii) a Grantor Trust Certificateholder
holding on behalf of an owner that is not a U.S. Person and 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 a citizen or resident of the
United States, a corporation or a partnership organized in or under the laws of
the United States or any political subdivision thereof or an estate or trust,
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.
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
75
<PAGE> 81
may be required with respect to any payments. Any amounts deducted and
withheld from a distribution 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.
TAX CONSEQUENCES WITH RESPECT TO THE NOTES
It is expected that Tax Counsel will advise each such 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 a regulation 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, if the
arrangement created by the Trust Agreement is treated as a partnership (not
taxable as a corporation) for federal income tax purposes, Tax Counsel will
opine that the same treatment should also apply 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 distributions to
Certificateholders). A Certificateholder also should not be subject to the
California franchise tax on income received through the partnership if such
Certificateholder is not otherwise subject to taxation in California.
76
<PAGE> 82
Under current law, Certificateholders that are nonresidents of
California and are not otherwise subject to California income tax should not 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
distributions 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 A
NOTEHOLDER'S OR CERTIFICATEHOLDER'S PARTICULAR TAX SITUATION. PROSPECTIVE
PURCHASERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM 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 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 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. Due
77
<PAGE> 83
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.
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 Andrews &
Kurth L.L.P. In addition, certain United States federal and California state
tax and other matters will be passed upon for the related Trust by Andrews &
Kurth L.L.P.
78
<PAGE> 84
INDEX OF TERMS
<TABLE>
<S> <C>
Actuarial Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16, 50
Administration Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Administration Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Administrative Purchase Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Administrative Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6, 48
APR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Base Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Benefit Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Calculation Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Calculation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31, 32, 34
CD Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30, 31
CD Rate Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Cedel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Cedel Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Certificate Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Certificate Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Certificate Pool Factor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -i-
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4, 42
Collection Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Collection Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Commercial Paper Rate Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -iii-
Cooperative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Cutoff Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4, 14
Dealer Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8, 18
Dealers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 14
Definitive Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Definitive Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Definitive Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36, 40
Depository . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Designated LIBOR Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
disqualified persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23, 27
DTC Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22, 37
Eligible Deposit Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Eligible Institution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Eligible Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Euroclear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Euroclear Operator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
</TABLE>
79
<PAGE> 85
<TABLE>
<S> <C>
Euroclear Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Excess Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Federal Funds Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Federal Funds Rate Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Final Scheduled Maturity Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Financed Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Fixed Rate Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Floating Rate Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -i-
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Index Currencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Index Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Index Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Indexed Principal Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Indexed Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Indirect DTC Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Initial Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Insolvency Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Insolvency Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Interest Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Interest Reset Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Interest Reset Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Investment Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
LIBOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
LIBOR Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
London Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Note Pool Factor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -i-
Obligors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Pass Through Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Payahead Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Pool Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19, 49
Pooling and Servicing Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 4
Precomputed Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6, 47
Precomputed Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Principal Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Principal Financial Center . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Prospectus Supplement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -i-
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -i-, 3, 4
Receivables Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Receivables Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
</TABLE>
80
<PAGE> 86
<TABLE>
<S> <C>
Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -iii-
Related Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Required Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Required Yield Maintenance Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Reserve Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Rule of 78s Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Sale and Servicing Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Schedule of Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -i-
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -iii-
Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -i-, 1
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -i-, 1
Servicer Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Servicing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Servicing Fee Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Simple Interest Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6, 48
Simple Interest Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Spread . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Spread Multiplier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Strip Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Strip Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Tax Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
TMCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 20
TMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11, 21
Transfer and Servicing Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Treasury Rate Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -i-, 1
Trust Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -i-
Underwriting Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Warranty Purchase Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Warranty Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
weighted average life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Yield Maintenance Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Yield Maintenance Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
</TABLE>
81
<PAGE> 87
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This Prospectus Supplement and the accompanying Prospectus shall
not constitute an offer to sell or the solicitation of an offer to buy nor
shall there be any sale of these securities in any jurisdiction in which such
offer, solicitation or sale would be unlawful prior to the registration or
qualification under the securities laws of any such jurisdiction.
SUBJECT TO COMPLETION, DATED JULY 3, 1996
PROSPECTUS SUPPLEMENT
(To Prospectus dated____ , 1996)
$_____________________
TOYOTA AUTO RECEIVABLES 199_-__ GRANTOR TRUST
$__________ ___% ASSET BACKED CERTIFICATES, CLASS A
$___________ ___% ASSET BACKED CERTIFICATES, CLASS B
TOYOTA MOTOR CREDIT RECEIVABLES CORPORATION,
SELLER
TOYOTA MOTOR CREDIT CORPORATION,
SERVICER
The Toyota Auto Receivables 199_-__ Grantor Trust (The "Trust") will
be formed pursuant to a Pooling and Servicing Agreement, to be dated as of
__________, 199__, among Toyota Motor Credit Receivables Corporation (the
"Seller"), Toyota Motor Credit Corporation (the "Servicer") and ___________, as
trustee (the "Trustee"), and will issue $______________ aggregate principal
amount of ___% Asset Backed Certificates, Class A (the "Class A Certificates")
and $___________ aggregate principal amount of ___% Asset Backed Certificates,
Class B (the "Class B Certificates" and, together with the Class A
Certificates, the "Certificates"). The Class A Certificates and Class B
Certificates will evidence in the aggregate undivided ownership interests of
approximately ___% and ___%, respectively, of the Trust. The rights of
(continued on next page)
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER
"RISK FACTORS" COMMENCING ON PAGE 12 HEREOF AND IN THE ACCOMPANYING PROSPECTUS.
THE CERTIFICATES WILL REPRESENT BENEFICIAL OWNERSHIP INTERESTS IN THE TRUST
ONLY AND DO NOT REPRESENT OBLIGATIONS OF OR INTERESTS IN TOYOTA MOTOR CREDIT
RECEIVABLES CORPORATION, TOYOTA MOTOR CREDIT CORPORATION, TOYOTA MOTOR SALES,
U.S.A., INC. OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THE CERTIFICATES
NOR THE RECEIVABLES ARE INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
Price to the Public(1) Underwriting Discount Proceeds to the Seller(2)
------------------- --------------------- ----------------------
<S> <C> <C> <C>
Per Class A Certificate
Per Class B Certificate
Total $ $ $
</TABLE>
(1) Plus accrued interest, if any, from ________, 199__.
(2) Before deducting expenses payable by the Seller estimated to be $________.
The Class A Certificates and Class B Certificates are offered by the
Underwriters when, as and if issued and accepted by the Underwriters and
subject to their right to reject orders in whole or in part. It is expected
that delivery of the Certificates will be made in book-entry form only through
the Same Day Funds Settlement System of The Depository Trust Company, Cedel
Bank, societe anonyme and the Euroclear System on or about ____________, 199__
against payment therefor in immediately available funds.
[UNDERWRITERS]
The date of this Prospectus Supplement is ______________, 199__.
<PAGE> 88
(continued from previous page)
the Class B Certificateholders to receive distributions with respect to the
Receivables are subordinated to the rights of the Class A Certificateholders to
the extent described herein. The assets of the Trust will primarily include a
pool of retail installment sales contracts (the "Receivables") secured by the
new and used automobiles and/or light duty trucks financed thereby (the
"Financed Vehicles"), certain monies due or received thereunder on or after
_______, 199_ , security interests in the Financed Vehicles, and certain other
property as further described herein.
Principal, and interest to the extent of the Class A Pass Through Rate
of __% per annum and the Class B Pass Through Rate of __% per annum, will be
distributed to the Class A Certificateholders and the Class B
Certificateholders, respectively, on the ___ day of each month (or, if such day
is not a Business Day, the next succeeding Business Day) beginning __________,
199__ (each a "Distribution Date"). The Final Scheduled Distribution Date will
be __________.
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION ABOUT THE
OFFERING OF THE CERTIFICATES. ADDITIONAL INFORMATION IS CONTAINED IN THE
PROSPECTUS AND PROSPECTIVE INVESTORS ARE URGED TO READ BOTH THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS IN FULL. SALES OF THE CERTIFICATES MAY NOT BE
CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS. TO THE EXTENT ANY STATEMENTS IN THIS PROSPECTUS SUPPLEMENT
CONFLICT WITH STATEMENTS IN THE PROSPECTUS, THE STATEMENTS IN THIS PROSPECTUS
SUPPLEMENT SHALL CONTROL.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE CERTIFICATES
AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
UNTIL ____, 19__, ALL DEALERS EFFECTING TRANSACTIONS IN THE
CERTIFICATES WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED
TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO
DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITER AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
_____________________________________
AVAILABLE INFORMATION
The Seller has filed with the Securities and Exchange Commission (the
"Commission"), on behalf of the Trust, a Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement"), of which this Prospectus Supplement and the accompanying
Prospectus is a part, under the Securities Act of 1933, as amended. This
Prospectus Supplement and the accompanying Prospectus does not contain all of
the information set forth in the Registration Statement, certain parts of which
have been omitted in accordance with the rules and regulations of the
Commission. For further information, reference is made to the Registration
Statement which is available for inspection without charge at the public
reference facilities of the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and the regional offices of the Commission at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661,
and Seven World Trade Center, Suite 1300, New York, New York 10048. Copies of
such information can be obtained from the Public Reference Section of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates. The Servicer, on behalf of the Trust, will also file or
cause to be filed with the Commission such periodic reports as are required
under the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission thereunder.
REPORTS TO CERTIFICATEHOLDERS
____________, as Trustee, will provide to Certificateholders (which
shall be Cede & Co. as the nominee of DTC unless Definitive Certificates are
issued under the limited circumstances described herein) unaudited monthly and
annual reports concerning the Receivables. See "Certain Information Regarding
the Securities--Reports to Certificateholders" and "Description of the Transfer
and Servicing Agreements--Evidence as to Compliance".
-ii-
<PAGE> 89
SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere herein and in the Prospectus. Certain
capitalized terms used herein are defined elsewhere in this Prospectus
Supplement on the pages indicated in the "Index of Terms" or, to the extent not
defined herein, have the meanings assigned to such terms in the Prospectus.
ISSUER . . . . . . . . . Toyota Auto Receivables 199_-__ Grantor Trust (the
"Trust" or the "Issuer"), a trust to be formed by
the Seller and the Trustee pursuant to the
Agreement.
SELLER . . . . . . . . . Toyota Motor Credit Receivables Corporation (the
"Seller") a wholly owned, limited purpose
subsidiary of Toyota Motor Credit Corporation.
SERVICER . . . . . . . . Toyota Motor Credit Corporation ("TMCC" or, in its
capacity as servicer, the "Servicer"), a wholly
owned subsidiary of Toyota Motor Sales, U.S.A.,
Inc. ("TMS"). TMCC is primarily engaged in
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). TMS 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 TMS's parent, Toyota Motor
Corporation, or its affiliates.
TRUSTEE . . . . . . . . . _________________, as trustee under the Agreement
(the "Trustee").
THE CERTIFICATES . . . . The Trust will issue Toyota Auto Receivables
199_-_ Grantor Trust Asset Backed Certificates
(the "Certificates") in an aggregate initial
principal amount of $____________. The
Certificates represent undivided ownership
interests in the Trust and will be issued pursuant
to a Pooling and Servicing Agreement to be dated
as of _____________, 199__ (as amended and
supplemented from time to time, the "Agreement"),
among the Seller, the Servicer and the Trustee.
The Certificates will consist of $_____________
aggregate principal amount of ___% Toyota Auto
Receivables 199_-_ Grantor Trust Asset Backed
Certificates, Class A (the "Class A Certificates")
and $_____________ aggregate principal amount of
___% Toyota Auto Receivables 199_-_ Grantor Trust
Asset Backed Certificates, Class B (the "Class B
S-1
<PAGE> 90
Certificates"). The assets of the
Trust will primarily include a
pool of retail installment sales
contracts (the "Receivables")
secured by the new and used
automobiles and/or light duty
trucks financed thereby (the
"Financed Vehicles"), certain
monies due or received under the
Receivables on and after
__________, 199_ (the "Cutoff
Date"), security interests in
the Financed Vehicles, certain
bank accounts and the proceeds
thereof, proceeds from claims
under certain insurance policies
in respect of individual
Financed Vehicles or Obligors
and certain rights under the
Agreement. See "The Trust
--General".
The Class A Certificates will
evidence in the aggregate an
undivided ownership interest
(the "Class A Percentage") of
approximately ___% of the Trust
(initially representing
$___________) and the Class B
Certificates will evidence in
the aggregate an undivided
ownership interest (the "Class B
Percentage") of approximately
___% of the Trust (initially
representing $____________).
The Class B Certificates will be
subordinated to the Class A
Certificates to the extent
described herein. See
"Summary--Terms of the
Certificates" and "Description
of the
Certificates--Subordination of
the Class B Certificates;
Reserve Fund". The Certificates
will be issued in fully
registered form in denominations
of $1,000 and integral multiples
thereof.
REGISTRATION OF THE CERTIFICATES . . . . Persons acquiring beneficial
ownership interests in the
Certificates ("Certificate
Owners") will hold their
Certificates through The
Depository Trust Company
("DTC"), in the United States,
or Cedel Bank, societe anonyme
("Cedel") or the Euroclear
System ("Euroclear") in Europe.
Transfers within DTC, Cedel or
Euroclear, as the case may be,
will be in accordance with the
usual rules and operating
procedures of the relevant
system. So long as the
Certificates are Book-Entry
Certificates, such Certificates
will be evidenced by one or more
certificates registered in the
name of Cede & Co., as the
nominee of DTC, or Citibank N.A.
or Morgan Guaranty Trust Company
of New York, the relevant
depositaries of Cedel and
Euroclear, respectively, and
each a participating member of
DTC. No Certificate Owner will
be entitled to receive a
definitive certificate
representing such person's
interest, except in the event
that Definitive Certificates are
issued under the limited
circumstances described herein.
See "Risk Factors--Book-Entry
Registration" herein, "ANNEX A:
Global Clearance, Settlement and
Tax Documentation Procedures"
and "Certain Information
Regarding the
Securities--Book-Entry
Registration" in the Prospectus.
Unless and until Certificates of
a Class are issued in definitive
S-2
<PAGE> 91
form, all references herein to
distributions, notices, reports
and statements and to actions by
and effects upon the related
Certificateholders will refer to
the same actions and effects
with respect to DTC or Cede,
Cedel or Euroclear as the case
may be, for the benefit of the
related Certificate Owners in
accordance with DTC procedures.
THE RECEIVABLES . . . . . . . . . . . . On ______________, 199__ (the
"Closing Date"), the Trust will
purchase Receivables (the
"Receivables") having an
aggregate principal balance of
approximately $___________ as of
________, 199_ (the "Cutoff
Date") from the Seller pursuant
to the Agreement, among the
Trust, the Seller and the
Servicer. See "The Receivables
Pool" herein and "The
Receivables Pools" in the
Prospectus.
No Receivable has a scheduled
maturity later than ___________
(the "Final Scheduled Maturity
Date"), and the Servicer will be
obligated to repurchase or make
Advances with respect to any
Receivable as to which it
adjusts the maturity to be a
date later than the Final
Scheduled Maturity Date. See
"Description of the Transfer and
Servicing Agreements--Servicing
Procedures" and "--Advances" in
the Prospectus.
The "Pool Balance" will equal the
aggregate of the Principal
Balances 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 (as
defined in the Prospectus), that
portion of all Scheduled
Payments (as defined in the
Prospectus) 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 (as
defined in the Prospectus), that
portion of all Scheduled
Payments actually received on or
prior to such date allocable to
principal, (iii) any Warranty
Purchase Payment (as defined in
the Prospectus) or
Administrative Purchase Payment
(as defined in the Prospectus)
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).
S-3
<PAGE> 92
TERMS OF THE CERTIFICATES . . . . . . . . The principal terms of the
Certificates will be as
described below:
A. Class A Pass Through Rate
___% per annum (the "Class A Pass
Through Rate").
B. Class B Pass Through Rate
___% per annum (the "Class B Pass
Through Rate").
C. Distribution Dates
Distributions with respect to the
Certificates will be made on the
___ day of each month (or, if
any such day is not a Business
Day, the next succeeding
Business Day) beginning
__________, 199__ (each, a
"Distribution Date").
Distributions will be made to
holders of the Certificates (the
"Certificateholders") of record
as of the day immediately
preceding such Distribution Date
or, if Definitive Certificates
are issued, as of the last day
of the preceding month (each
such date, a "Record Date").
The Final Scheduled Distribution
Date will be _____________. A
"Business Day" is a day other
than a Saturday or 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.
D. Interest
On each Distribution Date, the
Trustee will distribute (i) pro
rata to the holders of the Class
A Certificates (the "Class A
Certificateholders") as of the
related Record Date, interest in
an amount equal to one-twelfth
of the product of the Class A
Pass Through Rate, calculated on
the basis of a 360-day year
consisting of twelve 30-day
months, 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 and (ii) pro
rata to holders of record of the
Class B Certificates (the "Class
B Certificateholders" and,
together with the Class A
Certificateholders, the
"Certificateholders") as of the
related Record Date, interest in
an amount equal to one-twelfth
of the product of the Class B
Pass Through Rate, calculated on
the basis of a 360-day year
consisting of twelve 30-day
months, and the Class B
Certificate Balance as of the
immediately
S-4
<PAGE> 93
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.
The "Class A Certificate Balance"
will initially equal $__________
(the "Original Class A
Certificate Balance") and on
each Distribution Date will
equal the Original Class A
Certificate Balance reduced by
all principal distributions made
on or prior to such Distribution
Date on the Class A
Certificates; provided that
after the Class B Certificate
Balance has been reduced to
zero, the Class A Certificate
Balance will be equal to the
Pool Balance. The "Class B
Certificate Balance" will
initially equal $_____________
(the "Original Class B
Certificate Balance") and on
each Distribution Date will be
equal to the Pool Balance less
the Class A Certificate Balance,
in each case as of the close of
business on the immediately
preceding Distribution Date.
See "Description of the
Certificates-- Distributions".
E. Principal
On each Distribution Date, the
Trustee will distribute (i) pro
rata to the Class A
Certificateholders as of the
related Record Date an amount
equal to the Class A Percentage,
and (ii) pro rata to the Class B
Certificateholders as of the
related Record Date an amount
equal to the Class B Percentage,
of: (a) the principal portion of
all scheduled monthly payments
(each, a "Scheduled Payment") on
Precomputed Receivables due
during the immediately preceding
calendar month (each, a
"Collection Period") and the
principal portion of all
Scheduled Payments on Simple
Interest Receivables actually
received during such Collection
Period; (b) the principal portion
of all prepayments in full on the
Receivables and all partial
prepayments on Simple Interest
Receivables, in each case
received by the Servicer during
such Collection Period; (c) 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
such Collection Period; and (d)
the principal balance of each
Receivable that became a
Defaulted Receivable during such
Collection Period. See
"Description of the
Certificates--Distributions--
Calculation of Distributable
Amounts".
F. Optional Purchase
The Seller, the Servicer or any
successor to the Servicer may
purchase all of the Receivables
remaining in the Trust after the
S-5
<PAGE> 94
last day of any Collection Period
during which the Pool Balance
declines to 10% or less of the
Initial Pool Balance at a
purchase price determined as
described under "Description of
the Certificates--Termination".
Upon such optional purchase, the
Class A Certificateholders will
receive an amount equal to the
Class A Certificate Balance
together with accrued interest
at the Class A Pass Through
Rate, the Class B
Certificateholders will receive
an amount equal to the Class B
Certificate Balance together
with accrued interest at the
Class B Pass Through Rate, and
the Certificates will be
retired. The "Initial Pool
Balance" will equal the Pool
Balance as of the Cutoff Date.
See "Description of the
Certificates--Termination"
herein.
YIELD MAINTENANCE ACCOUNT;
YIELD MAINTENANCE AGREEMENT . . . . . . Certain of the Receivables have
annual percentage rates of
interest ("APRs") which are less
than the sum of [the Class B
Pass Through Rate][or specify
other rate] and the Servicing
Fee Rate (the sum of such rates,
the "Required Rate"). The Yield
Maintenance Account is a
segregated trust account which
will be maintained by and in the
name of the Trustee, but will
not be an asset of the Trust.
The Yield Maintenance Account
will be created with an initial
deposit (the "Yield Maintenance
Account Initial Deposit") in an
amount (which amount may be
discounted at a rate to be
specified in the Agreement)
equal to the aggregate amount by
which (i) interest on the
Principal Balance of each
Receivable for the period
commencing on the Cutoff Date
and ending with the scheduled
maturity of each such Receivable
(assuming that payments on such
Receivables are made as
scheduled and no prepayments are
made) at a rate equal to the
Required Rate, exceeds (ii)
interest on such Principal
Balance at the APR of such
Receivable[less factors]. As
used herein, the "Yield
Maintenance Amount" means the
amount on deposit in the Yield
Maintenance Account on any given
date.
[The Servicer, the Seller [,third
party] and the Trustee will
enter into a yield supplement
agreement to be dated as of
_____________, 19__ (the "Yield
Maintenance Agreement") pursuant
to which on each Distribution
Date the Trustee will deposit an
amount (which amount may be
discounted at a rate to be
specified in the Agreement), if
any, into the Yield Maintenance
Account (the "Additional Yield
Maintenance Amount") equal to
the amount by which the Required
Yield Maintenance Amount exceeds
the Yield Maintenance Amount [or
alternative formula]. See
"Description of the Transfer and
Servicing Agreements--The Yield
Maintenance Account; The Yield
Maintenance Agreement".
S-6
<PAGE> 95
On each Determination Date, the Servicer is
permitted to recalculate the amount required to be
on deposit in the Yield Maintenance Account (the
"Required Yield Maintenance Amount") (which amount
may be discounted at a rate to be specified in the
Agreement) which shall be [equal to the aggregate
amount by which (i) interest on the Principal
Balance of each Receivable currently an asset of
the Trust for the period commencing on the last
day of the related Collection Period and ending
with the last day of the Collection Period during
which such Receivable is scheduled to mature
(assuming that all subsequent payments on such
Receivable are made as scheduled and no
prepayments are made) at a rate equal to the
Required Rate exceeds (ii) interest on the
Principal Balance of such Receivable at the
related APR][less factors][or state alternative
formula].
The Required Yield Maintenance Amount may decline
as Receivables having less than the Required Rate
prepay or are otherwise removed from the Trust.
Any amounts in excess of the Required Yield
Maintenance Amount will be released to the Seller.
Otherwise, the only withdrawals from the Yield
Maintenance Account will be the amounts (the
"Yield Maintenance Deposit") withdrawn therefrom
by the Trustee on each Distribution Date and
deposited into the Collection Account in respect
of the difference between (i) the amount of
interest accrued on such Receivables at their
respective APRs and due during the related
Collection Period and (ii) the aggregate amount of
interest that would have accrued thereon had their
respective APRs been equal to the Required Rate.
SUBORDINATION . . . . . . The rights of the Class B Certificateholders to
receive distributions to which they would
otherwise be entitled with respect to the
Receivables are subordinated to the rights of the
Class A Certificateholders, as described more
fully under "Description of the
Certificates--Subordination of the Class B
Certificates; Reserve Fund".
The Class B Certificateholders will not receive
any distributions 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 distributed to the
Class A Certificateholders, and the Class B
Certificateholders will not receive any
distributions 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 distributed to the Class A
Certificateholders. Distributions of interest on
the Class B Certificates, to the extent of
collections on Receivables
S-7
<PAGE> 96
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 protection afforded to the
Class A Certificateholders by the
subordination feature described
above will be effected by the
preferential right of the Class
A Certificateholders to receive
current distributions from
collections on or in respect of
the Receivables to the extent
described herein.
RESERVE FUND . . . . . . . . . . . . . . Certificateholders will have the
benefit of a segregated trust
account maintained by the
Trustee for the benefit of the
Certificateholders (the "Reserve
Fund") which will not be an
asset of the Trust. The Reserve
Fund will be created with an
initial deposit by the Seller
[or third party] on the Closing
Date of cash or Eligible
Investments having a value of at
least $________ (the "Reserve
Fund Initial Deposit").
The funds in the Reserve Fund
will be supplemented on each
Distribution Date by the deposit
therein of all Excess Amounts,
until the amount in the Reserve
Fund reaches an amount to be
specified in the Agreement (the
"Specified Reserve Fund
Balance"). "Excess Amounts" in
respect of a Distribution Date
will be all remaining Available
Interest on deposit in the
Collection Account (as defined
in the Prospectus) in respect of
such Distribution Date, after
the Servicer has been reimbursed
for any outstanding Advances and
has been paid the Servicing Fee
(including any unpaid Servicing
Fees with respect to one or more
prior Collection Periods) and
after giving effect to all
distributions of interest and
principal required to be made to
the Certificateholders on such
Distribution Date.
On each Distribution Date, after
giving effect to all
distributions made on such
Distribution Date, any amounts in
the Reserve Fund in excess of the
Specified Reserve Fund Balance
that are not applied to cover
shortfalls in distributions to
Certificateholders as described
below will be distributed to the
Seller [or third party] as
described under "Description of
the Certificates--Subordination
of the Class B Certificates;
Reserve Fund". Upon such
distribution, the
Certificateholders will have no
further rights in, or claims to,
such amounts.
On each Distribution Date, to the
extent available, funds will be
withdrawn from the Reserve Fund
as described herein for
distribution first to the Class
A Certificateholders to the
extent of shortfalls in the
amount available to make
required distributions of
interest on the Class A
Certificates, second, to
S-8
<PAGE> 97
the Class B Certificateholders
to the extent of shortfalls in
the amount available to make
required distributions of
interest on the Class B
Certificates, third, to the
Class A Certificateholders to
the extent of shortfalls in the
amount available to make
required distributions of
principal on the Class A
Certificates and, fourth, to the
Class B Certificateholders to
the extent of shortfalls in the
amount available to make
required distributions of
principal on the Class B
Certificates. See "Description
of the
Certificates--Subordination of
the Class B Certificates;
Reserve Fund".
ADVANCES . . . . . . . . . . . . . . . . On the Business Day immediately
preceding each Distribution
Date, the Servicer will advance
to the Trust, in respect of each
(i) Precomputed Receivable, that
portion, if any, of the related
Scheduled Payment that was not
timely made (each, a
"Precomputed Advance") and (ii)
Simple Interest Receivable, 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 APR,
minus the amount of interest
actually received on such
Receivable during such
Collection Period (each, a
"Simple Interest Advance", and
together with the Precomputed
Advances, the "Advances"). If
such 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 out of interest
collections in respect of the
Simple Interest Receivables
during the related Collection
Period in reimbursement of
outstanding Simple Interest
Advances. Outstanding
Precomputed Advances shall be
reimbursable to the Servicer,
without interest, from payments
(other than Administrative
Purchase Payments) subsequently
received in respect of the
related Precomputed 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 all
outstanding Advances made in
respect of such Receivable, be
withdrawn from the Collection
Account and paid to the Servicer
in reimbursement of such
outstanding Advances. The
Servicer will be required to
make an Advance only to the
extent that it determines such
Advance will be recoverable from
future payments and collections
on or in respect of such
Receivable. Upon the
determination by the Servicer
that such reimbursement is
unlikely, the Servicer will be
entitled to recover Advances
from payments and collections on
or in respect of other
Receivables. See "Description
of the Transfer and Servicing
Agreements--Advances" herein and
in the Prospectus.
S-9
<PAGE> 98
The Servicer will be obligated to purchase or make
Advances with respect to any Receivable if, among
other things, it amends the total number of
Scheduled Payments, the Amount Financed or the APR
thereof or extends the date for final payment by
the Obligor of such Receivable beyond the Final
Scheduled Maturity Date. See "Description of the
Transfer and Servicing Agreements--Servicing
Procedures" and "--Advances" in the Prospectus.
SERVICING FEE . . . . . . The Servicer will receive a monthly fee, payable
on each Distribution Date, equal to one-twelfth of
the product of __% (the "Servicing Fee Rate") and
the Pool Balance as of the first day of the
related Collection Period. The Servicer will be
entitled to receive additional servicing
compensation in the form of investment earnings on
the amounts on deposit in the Collection Account,
Reserve Fund, Yield Maintenance Account and
Payahead Account, if any, late fees and other
administrative fees and expenses or similar
charges received by the Servicer during such
Collection Period. See "Description of the
Transfer and Servicing Agreement--Servicing
Compensation".
TAX STATUS . . . . . . . In the opinion of Andrews & Kurth L.L.P. ("Tax
Counsel") the Trust will be treated as a grantor
trust for federal income tax purposes and will not
be subject to federal income tax. Certificate
Owners will report their pro rata share of all
income earned on the Receivables (other than
amounts, if any, treated as "stripped coupons")
and, subject to certain limitations in the case of
Certificate Owners who are individuals, trusts, or
estates, may deduct their pro rata share of
reasonable servicing and other fees. See "Certain
Federal Income Tax Consequences" in the Prospectus
for additional information concerning the
application of federal income tax laws to the
Trust and the Certificates.
ERISA CONSIDERATIONS . . Subject to the considerations discussed under
"ERISA Considerations" herein and in the
Prospectus, the Class A Certificates will be
eligible for purchase by employee benefit plans.
The Class B Certificates may not be acquired by
any employee benefit plan subject to the Employee
Retirement Income Security Act of 1974, as amended
("ERISA") or by an individual retirement account,
but under limited circumstances may be purchased
as limited investments by persons using insurance
company general accounts or separate accounts. See
"ERISA Considerations" herein and in the
Prospectus. Any benefit plan fiduciary
considering purchase of the Certificates should,
among other things, consult with its counsel in
determining whether all required conditions have
been satisfied.
S-10
<PAGE> 99
RATINGS OF THE CERTIFICATES . . . . . . . It is a condition to the
issuance of the Class A
Certificates that they be rated
in the highest investment rating
category by at least two
nationally recognized rating
agencies, and that the Class B
Certificates be rated by at
least two nationally recognized
rating agencies at least "___"
or its equivalent. There can be
no assurance that a rating will
not be lowered or withdrawn by a
rating agency if circumstances
so warrant. In the event that
the rating initially assigned to
the Certificates is subsequently
lowered or withdrawn for any
reason, no person or entity will
be obligated to provide any
additional credit enhancement
with respect to the
Certificates. There can be no
assurance whether any other
rating agency will rate any
Class of the Certificates, or if
one does, what rating would be
assigned by such other rating
agency. A security rating is
not a recommendation to buy,
sell or hold securities.
S-11
<PAGE> 100
RISK FACTORS
Prospective investors in the Certificates should consider the
following risk factors (as well as the factors set forth under "Risk Factors"
in the Prospectus) in connection with the purchase of Certificates. Any
statistical information presented below is based upon the characteristics of
the Receivables proposed to be included in the Trust as of the date of this
Prospectus Supplement. Such information may vary as a result of the
possibility that certain Receivables may be removed from the Trust prior to the
Closing Date.
Limited Liquidity. There is currently no secondary market for the
Class A Certificates or the Class B Certificates. The Underwriters currently
intend to make a market in the Class A Certificates and the Class B
Certificates, but they are under no obligation to do so. There can be no
assurance that a secondary market will develop or, if a secondary market does
develop, that it will provide the Certificateholders with liquidity of
investment or that it will continue for the life of the Class A Certificates or
the Class B Certificates.
Certain Legal Aspects. Because of the administrative burden and
expense that would be entailed in doing so, the certificates of title for the
Financed Vehicles will not be amended to identify the Trustee as the secured
party. If there are any Financed Vehicles as to which the Trust failed to
obtain a perfected security interest, its security interest would be
subordinate to, among others, subsequent purchasers of the Financed Vehicles
and holders of perfected security interests. Pursuant to the Agreement, the
Seller will assign its security interests in the Financed Vehicles to the
Trustee. Under the laws of some states, such an assignment of security
interests may not be sufficient to convey to the Trustee perfected security
interests in the Financed Vehicles. In addition, because the Trustee will not
be listed as legal owner on the certificates of title to the Financed Vehicles,
its security interest could be defeated through fraud, forgery or negligence.
The Seller will covenant in the Agreement to repurchase any Receivable if, on
the Closing Date, a valid, subsisting and enforceable first priority security
interest in the related Financed Vehicle, which will have been assigned to the
Trust, has not been perfected (or is not in the process of being perfected) in
favor of the Seller. The Seller will also covenant in the Pooling Agreement to
repurchase any Receivable if, after the Closing Date, a valid subsisting and
enforceable first priority security interest in the name of the Seller is not
maintained on behalf of the Trust in the related Financed Vehicle. See
"Certain Legal Aspects of Receivables--Security Interests" in the Prospectus.
Yield and Prepayment Considerations. The weighted average life of the
Certificates will be reduced by full or partial prepayments on the Receivables.
The Receivables will generally be prepayable at any time without penalty.
Prepayments (or, for this purpose, equivalent payments to the Trust) may result
from payments by or on behalf of the related Obligors, liquidations due to
default, the receipt of proceeds from physical damage or credit life and/or
credit disability insurance, repurchases by the Seller as a result of certain
uncured breaches of representations and warranties made with respect to the
Receivables, purchases by the Servicer as a result of certain uncured breaches
of the covenants made by it with respect to the servicing of the Receivables or
the exercise by the Seller of its Optional Repurchase.
The Seller has limited historical experience with respect to
prepayments, has not as of the date hereof prepared data on prepayment rates,
and is not aware of publicly available industry statistics that set forth
principal prepayment experience for retail installment sales contracts similar
to the Receivables. The Seller can make no prediction as to the actual
prepayment rates that will be experienced on the Receivables. The Seller,
however, believes that the actual rate of prepayments will result in a weighted
average life of the Receivables that will end prior to the Final Scheduled
Maturity Date.
S-12
<PAGE> 101
Book-Entry Registration. Issuance of the Certificates in book-entry
form may reduce the liquidity of such Certificates in the secondary trading
market since investors may be unwilling to purchase Certificates for which they
cannot obtain definitive physical securities representing such
Certificateholders' interests, except in certain circumstances described
herein. Certificateholders may experience some delay in their receipt of
distributions of interest on and principal of the Certificates since
distributions may be required to be forwarded by the Trustee to DTC, Cedel or
Euroclear and, in such case, DTC, Cedel or Euroclear, as the case may be, will
be required to credit such distributions to the accounts of its participating
organization which thereafter will be required to credit to the accounts of the
Certificateholders either directly or indirectly through indirect participants.
See "Certain Information Regarding the Securities--Book-Entry Registration" in
the Prospectus.
Consumer Protection Laws. The Receivables are subject to federal and
state consumer protection laws which impose requirements with respect to the
making, transfer, acquisition, enforcement and collection of consumer loans.
Such laws, as well as any new laws or rules which may be adopted, may adversely
affect the Servicer's ability to collect on the Receivables. In addition,
failure by the Seller to have complied, or the Servicer to comply, with such
requirements could adversely affect the enforceability of the Receivables. The
Seller will make representations and warranties relating to the validity and
enforceability of the Receivables and its compliance with applicable law in
connection with its performance of the transactions contemplated by the
Agreement. Pursuant to the Agreement, if the Trust's interest in a Receivable
is materially and adversely affected by the failure of such Receivable to
comply with applicable requirements of consumer protection law, such Receivable
will be repurchased by the Seller. The sole remedy if any such representation
or warranty is not complied with and such noncompliance continues beyond the
applicable cure period is that the Receivables affected thereby will be
repurchased by the Seller. See "Certain Legal Aspects of the
Receivables--Consumer Protection Laws" in the Prospectus.
Trust's Relationship to the Seller and Toyota Motor Credit
Corporation. None of the Seller, TMCC or Toyota Motor Sales, U.S.A., Inc.
("TMS") or their respective affiliates is generally obligated to make any
payments in respect of the Certificates or the Receivables. However, in
connection with the sale of Receivables by the Seller to the Trust, the Seller
will make representations and warranties with respect to the characteristics of
such Receivables and, in certain circumstances, the Seller may be required to
repurchase Receivables with respect to which such representations and
warranties have been breached. See "Description of the Transfer and Servicing
Agreements--Sale and Assignment of Receivables" in the Prospectus. In
addition, under certain circumstances, the Servicer may be required to purchase
Receivables. See "Description of the Transfer and Servicing
Agreements--Servicing Procedures" in the Prospectus. Moreover, if TMCC were to
cease acting as Servicer, delays in processing payments on the Receivables and
information in respect thereof could occur and result in delays in payments to
the Certificateholders.
Subordination. Distributions of interest on the Class B Certificates
will be subordinated in priority of payment to interest due on the Class A
Certificates. Distributions of principal on the Class B Certificates will be
subordinated in priority of payment to interest and principal due on the Class
A Certificates. Consequently, the Class B Certificateholders will not receive
any distributions of interest with respect to a Collection Period until the
full amount of interest on the Class A Certificates on such Distribution Date
has been distributed to the Class A Certificateholders and will not receive any
distributions of principal with respect to a Collection Period until the full
amount of interest on and principal of the Class A Certificates on such
Distribution Date has been distributed to the Class A Certificateholders. Any
amounts released from the Reserve Fund to the Seller [or third party] will not
be available to the Certificateholders.
S-13
<PAGE> 102
Limited Assets. The Trust will not have, nor is it permitted or
expected to have, any significant assets or sources of funds other than the
Receivables, the Yield Maintenance Account and the Reserve Fund. The
Certificates represent interests solely in the Trust and are not obligations
of, and will not be insured or guaranteed by, the Seller, the Servicer, TMS or
any of their respective affiliates, or the Trustee or any other person or
entity. Holders of the Certificates must rely for repayment upon payments on
the Receivables and, if and to the extent available, amounts on deposit in the
Yield Maintenance Account and the Reserve Fund. Similarly, although funds in
the Reserve Fund will be available on each Distribution Date to cover
shortfalls in distributions of interest and principal on the Certificates,
amounts to be deposited in the Reserve Fund are limited in amount. If the
Reserve Fund is exhausted, the Trust will depend solely on current
distributions on the Receivables to make payments on the Certificates.
Ratings of the Certificates. It is a condition to the issuance of the
Certificates that the Class A Certificates be rated in the highest rating
category, and the Class B Certificates be rated "___" or its equivalent, by at
least two nationally recognized rating agencies (the "Rating Agencies"). A
rating is not a recommendation to purchase, hold or sell Certificates, inasmuch
as such rating does not comment as to market price or suitability for a
particular investor. The ratings of the Certificates address the likelihood of
the payment of principal and interest on the Certificates pursuant to their
terms. There can be no assurance that a rating will remain for any given
period of time or that a rating will not be lowered or withdrawn entirely by a
Rating Agency if in its judgment circumstances in the future so warrant.
THE TRUST
GENERAL
The Seller will establish the Trust by selling and assigning the
assets of the Trust to the Trustee in exchange for the Certificates. 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". To facilitate servicing and to minimize
administrative burden and expense, the Servicer will be appointed custodian for
the Receivables by the Trustee, but will not stamp the Receivables to reflect
the sale and assignment of the Receivables to the Trust or amend the
certificates of title of the Financed Vehicles. In the absence of amendments
to the certificates of title, the Trustee may not have perfected security
interests in the Financed Vehicles securing the Receivables originated in some
states. See "Risk Factors--Certain Legal Aspects" herein and "Certain Legal
Aspects of the Receivables--Security Interests" in the Prospectus.
If the protection provided to the Certificateholders by the Reserve
Fund and, in the case of the Class A Certificateholders, the subordination of
the Class B Certificates is insufficient, the Trust will look only to the
payments made by or on behalf of the Obligors on or in respect of the
Receivables, the proceeds from the repossession and sale of Financed Vehicles
which secure defaulted Receivables and the proceeds of any Dealer Recourse
(described below) to make distributions on their respective Certificates. In
such event, certain factors, such as the possibility that the Trust may not
have a first priority perfected security interest in the Financed Vehicles in
all states, may affect the Trust's ability to repossess and sell the collateral
securing the Receivables or may limit the amount realized to less than the
amount due from the related Obligors. Certificateholders may thus be subject
to delays in payment and may incur losses on their investments in the
Certificates as a result of defaults or delinquencies by Obligors and because
of depreciation in the value of the related Financed Vehicles. See "Risk
Factors", "Description of the Certificates--Distributions" and "--Reserve Fund"
herein and "Certain Legal Aspects of the Receivables" in the Prospectus.
S-14
<PAGE> 103
Pursuant to agreements between TMCC and the Dealers, each Dealer is
obligated, after purchase by TMCC of retail installment sales contracts from
such Dealer, to repurchase from TMCC such 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 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 retail installment sales contracts between
Dealers and Obligors, and all payments due 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 and Yield Maintenance Account will be
maintained by the Trustee for the benefit of the Certificateholders, but will
not be part of the Trust.
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 Obligors. On or before the date of initial issuance of the
Certificates (the "Closing Date"), TMCC will sell the Receivables to the Seller
pursuant to a 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 were purchased by TMCC from Dealers through its
nationwide branch system in the ordinary course of business. The Receivables
were selected from TMCC's portfolio of automobile and/or light duty truck
installment sales contracts that met the selection criteria herein and in the
Prospectus under "The Receivables Pools". Such selection criteria included
that: (i) at the time of origination, each Receivable was secured by a new or
used automobile and/or light duty truck; (ii) each Receivable was originated in
the United States; (iii) each Receivable provides for level monthly Scheduled
Payments that fully amortize the amount financed by such Receivable over its
original term except that the payment in the first or last month in the life of
the Receivable may be minimally different from the level payment; (iv) each
Receivable was originated prior to ___________; (v) each Receivable has an
original term of __ to __ months and, as of the Cutoff Date, had a scheduled
remaining term to maturity of not less than __ months and not more than 60
S-15
<PAGE> 104
months; (vi) each Receivable provides for the payment of a finance charge at an
APR ranging from __% to __%; (vii) each Receivable does not have a payment that
is more than __ days past due as of the Cutoff Date; (viii) each Receivable is
being serviced by TMCC; (ix) to the best knowledge of the Seller, no Receivable
is due from any Obligor who is presently the subject of a bankruptcy proceeding
or is bankrupt or insolvent; (x) no Financed Vehicle has been repossessed
without reinstatement as of the Cutoff Date; and (xi) no Financed Vehicle was
subject to force-placed insurance as of the Cutoff Date. Retail installment
sales contracts serviced by an independent finance company conducting business
in five southeastern states (Alabama, Florida, Georgia, North Carolina and
South Carolina) on behalf of TMCC with respect to Toyota vehicles will not be
included in the Trust. No selection procedures believed by the Seller to be
adverse to Certificateholders were used in selecting the Receivables.
The Receivables represent financing of new and used automobiles and/or
light duty trucks. Based on the Cutoff Date Pool Balance, approximately __%
and __% of the Receivables represented financing of new vehicles and used
vehicles, respectively. As of the Cutoff Date, the weighted average Principal
Balance of the Receivables was approximately $_____. Based on the addresses of
the originating Dealers, the Receivables were originated in __ states. Except
in the case of any breach of representations and warranties by the related
Dealer, as described under "The Trust--General", the Receivables generally do
not provide for recourse against the originating Dealer.
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>
Aggregate 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 Maturity(1) . . . . . . ____ months
Range of Original Maturities . . . . . . . . . . ___months to__ months
Weighted Average Remaining Maturity(1) . . . . . . _____ months
Range of Remaining Maturities . . . . . . . . . ___months to__ months
- ----------
(1) Weighted by Principal Balance as of the Cutoff Date.
</TABLE>
S-16
<PAGE> 105
DISTRIBUTION OF THE RECEIVABLES BY APR
<TABLE>
<CAPTION>
Percentage of
Aggregate Cutoff Date Percentage of
Number of Number of Principal Cutoff Date
Range of APRs Receivables Receivables Balance Pool Balance
- ------------- ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C>
8.00% to 8.99% ....
9.00% to 9.99% ....
10.00% to 10.99% ....
11.00% to 11.99% ....
12.00% to 12.99% ....
13.00% to 13.99% ....
14.00% to 14.99% ....
15.00% to 15.99% ....
16.00% to 16.99% ....
17.00% to 17.99% ....
18.00% to 18.99% ....
19.00% to 19.99% ....
20.00% to 20.99% ....
21.00% to 21.99% ....
22.00% ....
Total(1) ....
</TABLE>
- ----------
(1) Percentages do not add to 100.00% due to rounding.
S-17
<PAGE> 106
DISTRIBUTION OF THE INITIAL RECEIVABLES BY STATE (1)
<TABLE>
<CAPTION>
Cutoff Date Percentage of
Number of Principal Cutoff Date
State Receivables Balance Pool Balance
----- ----------- ----------- -------------
<S> <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
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Total(2)
</TABLE>
----------
(1) Based solely on the addresses of the originating Dealers.
(2) Percentages do not add to 100.00% due to rounding.
S-18
<PAGE> 107
DISTRIBUTION OF THE RECEIVABLES BY COLLATERAL TYPE
<TABLE>
<CAPTION>
Percentage of
Number Aggregate Percentage of
of Number of Cutoff Date Cutoff Date
Collateral Type Receivables Receivables Principal Balance Pool Balance
- --------------- ----------- ------------- ----------------- -------------
<S> <C> <C> <C> <C>
Toyota(1) . . . . .
Lexus . . . . . .
Other . . . . . .
Total(2) . . .
</TABLE>
______________________________
(1) Includes new and used automobiles and/or light duty trucks.
(2) Percentages do not add to 100.00% due to rounding.
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.
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.
Retail installment sales contracts serviced by an independent finance company
conducting business in five southeastern states will not be included in the
Trust, and accordingly are not included in the information set forth below.
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.
Credit losses are an expected cost in the business of extending credit and are
considered in TMCC's rate-setting process. TMCC's objective is to minimize
credit losses while providing financing support for the sale of Toyota and
Lexus products. Losses and delinquencies are affected by, among other things,
general and regional economic conditions and the supply of and demand for
automobiles and/or light duty trucks. The favorable net loss experience since
1991 is attributable in part to improved credit granting procedures and
collection efforts. TMCC plans to continue controlling its credit loss
exposure; however, there can be no assurances that this favorable trend will
continue. For example, approximately __% of the Receivables, based on the
Cutoff Date Pool Balance, were located in the State of California. If there
were a further decline in the economy of California or the existing reduced
level of economic activity was sustained for an extended period of time, there
can be no assurance that the number of delinquencies or defaults would not
increase.
S-19
<PAGE> 108
HISTORICAL DELINQUENCY EXPERIENCE
<TABLE>
<CAPTION>
At September 30,
---------------------------------------------------------------------------
At May 31, 1996(2) 1995 (2) 1994(1) 1993(1) 1992 1991
------------------- ----- ---------- ------------ ---------------------------------
<S> <C> <C> <C> <C> <C> <C>
Number of Contracts
Outstanding at
End of Period . . 538,241 517,325 514,120 485,540 466,008 421,765
Delinquencies
as a Percentage of
Contracts Outstanding(3)
31-60 Days . . . 1.32% 1.25% 1.04% 1.04% 1.25% 1.39%
61-90 Days . . . 0.10% 0.11% 0.10% 0.10% 0.13% 0.16%
Over 90 Days . . 0.07% 0.06% 0.06% 0.06% 0.07% 0.07%
</TABLE>
____________________
(1) Includes contracts sold by TMCC in August 1993 in connection with the
formation of the Toyota Auto Receivables 1993-A Grantor Trust, which TMCC
is servicing.
(2) Includes contracts sold by TMCC in August 1993 and September 1995,
respectively, in connection with the formation of the Toyota Auto
Receivables 1993-A Grantor Trust and the formation of the Toyota Auto
Receivables 1995-A Grantor Trust, which TMCC is servicing.
(2) The period of delinquency is based on the number of days scheduled
payments are contractually past due.
NET LOSS AND REPOSSESSION EXPERIENCE
<TABLE>
<CAPTION>
At or for the
Eight Months Ended At or for the Year Ended September 30,
------------------------------------------------------------------------
May 31, 1996(2) 1995(2) 1994(1) 1993(1) 1992 1991
---------------- --------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net Receivables (Dollars in Thousands)
Outstanding (3) . 5,326,595 4,930,711 $4,757,142 $4,198,373 $3,863,884 $3,396,401
Average Net Receivables
Outstanding (3) . 5,128,653 4,843,927 $4,477,758 $4,031,129 $3,630,143 $3,138,335
Number of Contracts
Outstanding . . . 538,241 517,325 514,120 485,540 466,008 421,765
Average Number of Contracts
Outstanding (4) . 527,783 515,723 499,830 475,774 443,887 386,396
Number of Repossessions 5,869 8,438 8,386 8,925 9,183 9,407
Number of Repossessions as a
Percentage of the Contracts
Outstanding . . . 1.64%(7) 1.63% 1.63% 1.84% 1.97% 2.23%
Number of Repossessions as a
Percentage of the Average
Number of Contracts
Outstanding . . . 1.67%(7) 1.64% 1.68% 1.88% 2.07% 2.43%
Gross Charge-Offs (5) $20,977 $27,282 $22,748 $26,361 $31,594 $32,935
Recoveries (6) . . $4,207 $5,957 $6,564 $6,587 $6,387 $6,378
Net Losses (6) . . $16,770 $21,325 $16,184 $19,774 $25,207 $26,557
Net Losses as a Percentage
of Net Receivables
Outstanding . . . 0.47%(7) 0.43% 0.34% 0.47% 0.65% 0.78%
Net Losses as a Percentage
of Average Net
Receivables Outstanding 0.49%(7) 0.44% 0.36% 0.49% 0.69% 0.85%
</TABLE>
____________________
(1) Includes contracts sold by TMCC in August 1993 in connection with the
formation of the Toyota Auto Receivables 1993-A Grantor Trust, which
TMCC is servicing.
(2) Includes contracts sold by TMCC in August 1993 and September 1995,
respectively, in connection with the formation of the Toyota Auto
Receivables 1993-A Grantor Trust and the formation of the Toyota Auto
Receivables 1995-A Grantor Trust, which TMCC is servicing.
(3) Net Receivables Outstanding includes principal, accrued interest and
unamortized dealer reserve.
(4) Average of current period and beginning of period amount or number of
contracts outstanding.
(5) Amount charged-off is the net remaining principal balance, including
earned but not yet received finance charges, repossession expenses and
unpaid extension fees less any proceeds from the liquidation of the
related vehicle. Also includes dealer reserve charge-offs.
(6) Recoveries from liquidation of the related vehicle and any recoveries
from post-disposition monies received on previously charged-off
contracts. Also includes recoveries for dealer reserve charge-offs and
dealer reserve chargebacks.
(7) Annualized.
S-20
<PAGE> 109
THE SELLER AND THE SERVICER
Information regarding the Seller and the Servicer is set forth under
"The Seller and the Servicer" in the Prospectus.
USE OF PROCEEDS
The net proceeds to be received by the Seller from the sale of the
Certificates will be used by the Seller to purchase the Receivables from TMCC
pursuant to the Receivables Purchase Agreement and to fund the Reserve Fund and
the Yield Maintenance Account.
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. As 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 distribution 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 Receivables have different APRs, some of which are below the
Required Rate. However, the application of funds in the Yield Maintenance
Account will have the effect of causing the weighted average of the scheduled
interest payments on all Receivables with respect to any Collection Period
plus the Yield Maintenance Deposit with respect to the related Distribution
Date to equal or exceed the Required Rate. Therefore, disproportionate rates
of prepayments between Receivables with higher and lower APRs should not affect
the yield to Class A or Class B Certificateholders on the outstanding principal
balance of the Class A Certificates or the Class B Certificates, as the case
may be.
The Class B Certificates will provide limited protection against
losses on the Receivables. Accordingly, the yield on 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 B Certificates may be lower than
anticipated.
POOL FACTORS AND TRADING INFORMATION
The "Class A Pool Factor" and the "Class B Pool Factor" will be
seven-digit decimal numbers which the Servicer will compute each month
indicating the Class A Certificate Balance and Class B 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 or Original Class B Certificate
Balance, as the case may be. Each Pool Factor will initially be 1.0000000 and
thereafter will decline to reflect reductions in the Class A Certificate
Balance or Class B Certificate Balance, as the case may be. The Class A
Certificate Balance and Class B Certificate
S-21
<PAGE> 110
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 A Certificate Balance or Class B
Certificate Balance for a given month allocable to a Class A Certificateholder
or Class B Certificateholder, as the case may be, 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 Class A Pool Factor, the Class B 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 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 Commission following
the issuance 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 evidence undivided ownership interests in the
Trust created pursuant to the Agreement. The Class A Certificates will
evidence in the aggregate an undivided ownership interest (the "Class A
Percentage") of approximately ___% of the Trust and the Class B Certificates
will evidence in the aggregate an undivided ownership interest (the "Class B
Percentage") of approximately ___% of the Trust.
In general, it is intended that Class A Certificateholders receive, on
each Distribution Date, the Class A Principal Distributable Amount plus
interest at the Class A Pass Through Rate on the Class A Principal Balance.
Subject to the prior rights of the Class A Certificateholders, it is intended
that the Class B Certificateholders receive, on each Distribution Date, the
Class B Principal Distributable Amount plus interest at the Class B Pass
Through Rate on the Class B 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.
S-22
<PAGE> 111
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, the
Reserve Fund and the Yield Maintenance Account, in the name of the Trustee on
behalf of the Certificateholders. The Reserve Fund and the Yield Maintenance
Account will not be assets of the Trust.
THE YIELD MAINTENANCE ACCOUNT; THE YIELD MAINTENANCE AGREEMENT
The Yield Maintenance Account. The Yield Maintenance Account will be
created with an initial deposit by the Seller [or third party] of an amount
equal to the Yield Maintenance Account Initial Deposit. The Yield Maintenance
Account Initial Deposit will be $__________.
On each Distribution Date, the Trustee will transfer to the Collection
Account from monies on deposit in the Yield Maintenance Account an amount equal
to the Yield Maintenance Deposit in respect of the Receivables for such
Distribution Date. Amounts on deposit on any Distribution Date in the Yield
Maintenance Account in excess of the Required Yield Maintenance Amount, after
giving effect to all distributions to be made on such Distribution Date, will
be paid 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 Agreement. See "Description of the Transfer and Assignment
Agreements--Accounts" in the Prospectus. Any monies remaining on deposit in
the Yield Maintenance Account upon the termination of the Trust will be paid to
the Seller.
The Yield Maintenance Agreement. Pursuant to the Yield Maintenance
Agreement, on each Distribution Date TMCC [or third party] will deposit into
the Yield Maintenance Account an amount equal to the difference between the
Yield Maintenance Amount 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.
SERVICING COMPENSATION
"The Servicing Fee Rate" with respect to any Collection Period will be
one-twelfth of ___% of the Pool Balance as of the first day of the Collection
Period or, in the case of the first Distribution Date, the Cutoff Date Pool
Balance. The Servicing Fee (together with any portion of the Servicing Fee
that remains unpaid from prior Distribution Dates) 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" herein and "Description of the Transfer and Servicing
Agreements--Servicing Compensation and Payment of Expenses" in the Prospectus.
COLLECTIONS
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
S-23
<PAGE> 112
until deposited in the Collection Account on 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 Prime-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 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 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
immediately 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, upon the determination
by the Servicer 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.
S-24
<PAGE> 113
NET DEPOSITS
As an administrative convenience, unless the Servicer is required to
remit collections daily (see "--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 distributions 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 distributions were made individually. See
"Description of the Transfer and Servicing Agreements--Net Deposits" in the
Prospectus.
DISTRIBUTIONS
On the __ calendar day of each month or, if such day is not a Business
Day, the immediately succeeding Business Day (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 and, based on the available funds and other amounts available for
distribution on the related Distribution Date as described below, the amount to
be distributed to the Class A Certificateholders and the Class B
Certificateholders.
On 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.
On each Distribution Date the Trustee will also cause an amount equal to the
Yield Maintenance Deposit to be withdrawn from the Yield Maintenance Account
and Deposited in the Collection Account.
The Trustee will make distributions to the Certificateholders out of
the amounts on deposit in the Collection Account. The amount to be distributed
to the Certificateholders will be determined in the manner described below.
Calculation of Available Amounts. The amount of funds available for
distribution 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 allocable to interest received or allocated by the Servicer
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) from: (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) the Yield Maintenance Deposit; (iii) all proceeds of the
liquidation of Defaulted Receivables, net of expenses incurred by the Servicer
in accordance with its customary servicing procedures in connection with such
liquidation, including amounts received in subsequent Collection Periods ("Net
Liquidation Proceeds"); (iv) all Advances made by the Servicer; and (v) all
Warranty Purchase Payments with respect to Warranty Receivables repurchased by
the Seller and
S-25
<PAGE> 114
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) and (iii) through (v) of the immediately
preceding paragraph 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 and (ii) Net Liquidation
Proceeds with respect to a particular Receivable to the extent of unreimbursed
Advances in respect of such Receivable. 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 ___ 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 A Distributable
Amount" with respect to a Distribution Date will equal the sum of (i) the
"Class A Principal Distributable Amount", consisting of the Class A 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), and (ii) the
"Class A Interest Distributable Amount", consisting of one month's interest at
the Class A Pass Through Rate on 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.
The "Class A Certificate Balance" will equal, initially,
$______________ (the "Original Class A Certificate Balance") and, on any
Distribution Date, will equal the Original Class A Certificate Balance, reduced
by all amounts distributed on or prior to such Distribution Date on the Class A
Certificates and allocable to principal. In addition, on each Distribution
Date from and including the Distribution Date on which the Class B Certificate
Balance is 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 after
taking account of all distributions, deposits and withdrawals to be made on
such Distribution Date.
The "Class B Distributable Amount" with respect to a Distribution Date
will be an amount equal to the sum of (i) the "Class B Principal Distributable
Amount", consisting of the Class B Percentage of the amounts set forth under
clauses (i)(a) through (i)(d) in the second preceding paragraph with respect to
the Class A Principal Distributable Amount and (ii) the "Class B Interest
Distributable Amount", consisting of
S-26
<PAGE> 115
one month's interest at the Class B Pass Through Rate on 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.
The "Class B Certificate Balance" will initially equal $___________
(the "Original Class B Certificate Balance") and, on any Distribution Date,
will equal the amount by which the Pool Balance on the last day of the
preceding Collection Period exceeds the Class A Certificate Balance on such
Distribution Date (after giving effect to distributions in respect of principal
to Class A Certificateholders on such Distribution Date). In addition, on each
Distribution Date the Class B Certificate Balance will be reduced by the
amount, if any, necessary to cause it to equal the difference between the Pool
Balance and the Class A Certificate Balance after taking account of all
distributions, deposits and withdrawals to be made on such Distribution Date.
Payment of Distributable Amounts. Prior to each Distribution Date,
the Servicer will calculate the amount to be distributed to the
Certificateholders. On each Distribution Date, the Trustee will distribute to
Certificateholders the following amounts in the following order of priority, to
the extent of funds available for distribution on such Distribution Date:
(i) 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 (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 Class A Certificateholders will be entitled to
receive such amount first, from the Class B 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 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 the reduction in Available Interest
described in clause (i) above); and if such Available Interest is
insufficient, the Class B Certificateholders will be entitled to
receive such amount from monies transferred from the Reserve Fund to
the Collection Account;
(iii) 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 (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
Certificateholders will be entitled to receive such amount first, from
Available Interest (after giving effect to the 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; and
(iv) 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
S-27
<PAGE> 116
from Available Principal (after giving effect to the reduction in
Available Principal described in clauses (i) and (iii) 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 the reductions in Available
Interest described in clauses (i), (ii) and (iii)) above and second,
if such amounts are insufficient, from monies transferred from the
Reserve Fund to the Collection Account.
The "Class A Interest Carryover Shortfall" with respect to any
Distribution Date will equal the excess, if any, of (x) the Class A Interest
Distributable Amount for such Distribution Date and 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 such immediately
preceding Distribution Date through the current Distribution Date, over (y) the
amount of interest distributed to the Class A Certificateholders on such
Distribution Date. The "Class A Principal Carryover Shortfall" with respect to
any Distribution Date will equal the excess of the Class A Principal
Distributable Amount plus any outstanding Class A Principal Carryover Shortfall
with respect to one or more prior Distribution Dates over the amount of
principal that the holders of the Class A Certificates actually received on
such Distribution Date. The "Class B Interest Carryover Shortfall" and the
"Class B Principal Carryover Shortfall" with respect to any Distribution Date
will be calculated in the same manner as the Class A Interest Carryover
Shortfall and the Class A Principal Carryover Shortfall, as the case may be,
appropriately modified to relate to the Class B Certificates.
Any excess amounts in the Collection Account with respect to any
Distribution Date, after giving effect to the distributions described in
clauses (i) through (iv) of the second preceding paragraph ("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 [or third party].
SUBORDINATION OF THE CLASS B CERTIFICATES; RESERVE FUND
The rights of the Class B Certificateholders to receive distributions
with respect to the Receivables will be subordinated to the rights of the
Servicer (to the extent that the Servicer is paid the Servicing Fee with
respect to the related Collection Period, including any unpaid Servicing Fees
with respect to one or more prior Collection Periods and any additional
servicing compensation as described under "--Servicing Compensation", and to
the extent the Servicer is reimbursed for certain unreimbursed Advances) and
the Class A Certificateholders to the extent described above. This
subordination is intended to enhance the likelihood of timely receipt by Class
A Certificateholders of the full amount of interest and principal required to
be paid to them, and to afford such Class A Certificateholders limited
protection against losses in respect of the Receivables.
The Class B Certificateholders will not receive any distributions 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
distributed to the Class A Certificateholders and the Class B
Certificateholders will not receive any distributions of principal with respect
to such Distribution Date until the full amount of interest and principal of
the Class A Certificates relating to such Distribution Date has been
distributed to the Class A Certificateholders. In the event of delinquencies
or losses on the Receivables, the protection afforded to the Class A
Certificateholders will be effected by the application of Available Interest
and Available Principal for each Distribution Date in the priority specified
under "--Distributions--Payment of Distributable Amounts". Distributions of
interest on the Class B Certificates, to the extent of collections on
Receivables
S-28
<PAGE> 117
allocable to interest and the amount on deposit in the Reserve Fund, will not
be subordinated to the payment of principal on the Class A Certificates.
In addition, the Certificateholders will have the benefit of the
Reserve Fund. The Reserve Fund will not be a part of or otherwise includible
in the Trust and will be a segregated trust account held by the Trustee. Any
amounts held on deposit in the Reserve Fund are owned by the Seller [or third
party] and any investment earnings thereon will be taxable to the Seller [or
third party] for federal income tax purposes. The Reserve Fund will be created
with an initial deposit by the Seller [or third party] of an amount equal to
the Reserve Fund Initial Deposit and will thereafter be funded on each
Distribution Date by the deposit therein of all Excess Amounts, until the
monies in the Reserve Fund reach an amount equal to the Specified Reserve Fund
Balance. Thereafter, all Excess Amounts will be deposited from time to time in
the Reserve Fund to the extent necessary to maintain the amount in the Reserve
Fund at the Specified Reserve Fund Balance.
The "Specified Reserve Fund Balance" with respect to any Distribution
Date will be 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
three preceding Collection Periods exceeds ___% or (ii) the average of the
Delinquency Percentages for the three preceding Collection Periods exceeds
___%, then the Specified Reserve Fund Balance will be an amount equal to ___%
of such sum (after giving effect to such principal distributions). 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.
Notwithstanding the foregoing, on any Distribution Date on which the sum of the
Class A Certificate Balance and the Class B Certificate Balance is
approximately $_____________ or less after giving effect to distributions of
principal on such Distribution Date, the Specified Reserve Fund Balance will be
the greater of the applicable balance determined as described above or
approximately $_____________; 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.
The "Charge-off Rate" with respect to a Collection Period will equal
the Aggregate Net Losses with respect to the Receivables 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 Net Liquidation Proceeds collected during such Collection
Period with respect to all Defaulted Receivables plus 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
__ 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.
S-29
<PAGE> 118
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 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 the Class A Certificates or the Class B 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 Certificateholder, to reflect such new calculation.
On each Distribution Date, the Trustee will deposit all Excess Amounts
into 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
[or thrd party]. If the amount on deposit in the Reserve Fund on such
Distribution Date (after giving effect to all deposits or withdrawals therefrom
on such Distribution Date) 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 [or
third party]. 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 distribution to
Certificateholders or otherwise subject to any claims or rights of the
Certificateholders and will be paid to the Seller [or third party]. Any loss
on such investments will be charged to the Reserve Fund.
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 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.
Neither the Class B Certificateholders, the Seller nor the Servicer
will be required to refund any amounts properly distributed or paid to them,
whether or not there are sufficient funds on any subsequent Distribution Date
to make full distributions to the Class A Certificateholders.
OPTIONAL PURCHASE
If the Seller, the Servicer or any successor to the Servicer exercises
its option to purchase the Receivables when the Pool Balance declines to 10% or
less of the Initial Pool Balance, Certificateholders will receive an amount in
respect of the Certificates equal to the outstanding Certificate Balance
together with accrued interest at the applicable Pass Through Rate, which
distribution shall effect the early retirement of the Certificates. See
"Description of the Transfer and Servicing Agreements--Termination" in the
Prospectus.
S-30
<PAGE> 119
THE TRUSTEE
_________________ will be the Trustee under the Agreement. 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).
The Trustee's Corporate Trust Office is located at ________________.
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, and will
not be accountable for the use or application by the Seller or the Servicer of
any funds paid to the Seller or the Servicer in respect of the 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,
S-31
<PAGE> 120
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 and the Class B
Certificates, acting together as a single class, thereof 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.
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 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 DOL has granted to ___________________________ an administrative
exemption (Prohibited Transaction Exemption __-__ (the "Exemption")) from
certain of the prohibited transaction rules of ERISA with respect to the
initial purchase, the holding and the subsequent resale by Benefit Plans of
certificates 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 Exemption. The receivables covered by the
Exemption include motor vehicle installment obligations such as the
Receivables.
Among the conditions that must be satisfied for the Exemption 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, Inc.
(iv) The Trustee is not an affiliate of any member of the
Restricted Group (as defined below).
S-32
<PAGE> 121
(v) The sum of all payments made to the Underwriters in
connection with the distribution of the Class A Certificates represents not
more than reasonable compensation for underwriting the Class A Certificates.
The sum of all payments made to and retained by the 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 of 1933, as amended.
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 rating categories of Standard &
Poor's, Moody's, Duff & Phelps Inc. or Fitch Investors Service, Inc.
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 certificates.
The Exemption does 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, the
Exemption provides relief from certain self-dealing/conflict of interest
prohibited transactions only if, among other requirements, (i) a Benefit Plan's
investment in the Class A Certificates does not exceed 25% of all of the Class
A Certificates outstanding at the time of the acquisition and (ii) immediately
after the acquisition, no more than 25% of the assets of a Benefit Plan with
respect to which 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 Exemption will apply to the acquisition,
holding and resale of the Class A Certificates by a Benefit Plan and that all
conditions of the Exemption 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 Exemption is 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.
S-33
<PAGE> 122
Before purchasing the Class A Certificates, a Benefit Plan's fiduciary should
consult with its counsel to determine whether the conditions of the Exemption
or any other exemption would be met. A purchaser of the Class A Certificates
should be aware, however, that even if the conditions specified in one or more
exemptions are met, the scope of the relief provided by the applicable
exemption or exemptions might not cover all acts that might be construed as
prohibited transactions.
As described above, the acquisition of a Class A Certificate by a
Benefit Plan could result in various unfavorable consequences for the Benefit
Plan or its fiduciaries under the regulations unless one of the exceptions in
the regulations or an exemption is available. See "ERISA Considerations" in
the Prospectus.
Prospective Benefit Plan investors should consult with their legal
advisors concerning the impact of ERISA and the Code, the applicability of the
Exemption 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 Exemption will not apply to the acquisition, holding or resale
of the Class B Certificates.
THE CLASS B CERTIFICATES
The U.S. Department of Labor recently issued Prohibited Transaction
Class Exemption 95-60 ("PTE 95-60"). Section III of PTE 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) which do not meet the requirements of the Exemption
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 highest rating categories from Standard & Poor's, Moody's, Duff
& Phelps, Inc. or Fitch Investors Service, Inc. All other conditions of the
Exemption would have to be satisfied in order for PTE 95-60 to be available.
Before purchasing Class B Certificates, an insurance company general account
seeking to rely on Section III of PTE 95-60 should itself confirm that all
applicable conditions and other requirements have been satisfied.
The Class B 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 any entity whose underlying assets include plan assets by reason
of a plan's investment in the entity. By its acceptance of a Class B
Certificate, each Class B Certificateholder will be deemed to have represented
and warranted that it is not subject to the foregoing limitation. For
additional information regarding treatment of the Class B Certificates under
ERISA, see "ERISA Considerations" in the Prospectus.
S-34
<PAGE> 123
UNDERWRITING
Subject to the terms and conditions set forth in an Underwriting
Agreement (the "Underwriting Agreement"), the Seller has agreed to cause the
Trust to sell to each of the Underwriters named below (the "Underwriters"), and
each of the Underwriters has severally agreed to purchase, the principal amount
of Class A Certificates and Class B Certificates set forth opposite its name
below:
<TABLE>
<CAPTION>
Class A Class B
Underwriter Certificates Certificates
----------- ------------ ------------
<S> <C> <C>
TOTAL
</TABLE>
The Seller has been advised by the Representatives that they propose
to offer the Class A Certificates and the Class B Certificates to the public at
the respective public offering prices set forth on the cover page of this
Prospectus, to certain dealers at such price less a concession not in excess of
_____% of the Class A Certificate denominations and ____% of the Class B
Certificate denominations and that the Underwriters and such dealers may allow
a discount not in excess of _____% of the Class A Certificate denominations and
___% of the Class B 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 Representatives.
LEGAL OPINIONS
In addition to the legal opinions described in the Prospectus, certain
legal matters relating to the Certificates will be passed upon for the
Underwriters and certain federal income tax and other matters will be passed
upon for the Trust by Andrews & Kurth L.L.P.
S-35
<PAGE> 124
INDEX OF TERMS
<TABLE>
<S> <C>
Additional Yield Maintenance Amount . . . . . . . . . . . . . . . . . . . S-6
Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-9
Aggregate Net Losses . . . . . . . . . . . . . . . . . . . . . . . . . . S-29
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
APR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6, S-9
Available Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . S-25
Available Principal . . . . . . . . . . . . . . . . . . . . . . . . . . . S-26
Benefit Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-32
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
Certificate Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . -i-, S-1
Charge-off Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-29
Class A Certificate Balance . . . . . . . . . . . . . . . . . . . . S-5, S-26
Class A Certificateholders . . . . . . . . . . . . . . . . . . . . . . . S-4
Class A Certificates . . . . . . . . . . . . . . . . . . . . . . . . -i-, S-1
Class A Distributable Amount . . . . . . . . . . . . . . . . . . . . . . S-26
Class A Interest Carryover Shortfall . . . . . . . . . . . . . . . . . . S-28
Class A Interest Distributable Amount . . . . . . . . . . . . . . . . . . S-26
Class A Pass Through Rate . . . . . . . . . . . . . . . . . . . . . . . . S-4
Class A Percentage . . . . . . . . . . . . . . . . . . . . . . . . S-2, S-22
Class A Pool Factor . . . . . . . . . . . . . . . . . . . . . . . . . . . S-21
Class A Principal Carryover Shortfall . . . . . . . . . . . . . . . . . . S-28
Class A Principal Distributable Amount . . . . . . . . . . . . . . . . . S-26
Class B Certificate Balance . . . . . . . . . . . . . . . . . . . . S-5, S-27
Class B Certificateholders . . . . . . . . . . . . . . . . . . . . . . . S-4
Class B Certificates . . . . . . . . . . . . . . . . . . . . . . . . -i-, S-1
Class B Distributable Amount . . . . . . . . . . . . . . . . . . . . . . S-26
Class B Interest Carryover Shortfall . . . . . . . . . . . . . . . . . . S-28
Class B Interest Distributable Amount . . . . . . . . . . . . . . . . . . S-26
Class B Pass Through Rate . . . . . . . . . . . . . . . . . . . . . . . . S-4
Class B Percentage . . . . . . . . . . . . . . . . . . . . . . . . S-2, S-22
Class B Pool Factor . . . . . . . . . . . . . . . . . . . . . . . . . . . S-21
Class B Principal Carryover Shortfall . . . . . . . . . . . . . . . . . . S-28
Class B Principal Distributable Amount . . . . . . . . . . . . . . . . . S-26
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3, S-15
Collection Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -ii-
Current Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . S-29
Cutoff Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2, S-3
Dealer Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-15
Defaulted Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . S-26
Delinquency Percentage . . . . . . . . . . . . . . . . . . . . . . . . . S-29
Determination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . S-25
</TABLE>
S-36
<PAGE> 125
<TABLE>
<S> <C>
Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . . -ii-, S-4
Eligible Investments . . . . . . . . . . . . . . . . . . . . . . . . . . S-24
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-10
Excess Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . S-8, S-28
Excess Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-24
Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-32
Final Scheduled Maturity Date . . . . . . . . . . . . . . . . . . . S-3, S-10
Financed Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . -ii-, S-2
Initial Pool Balance . . . . . . . . . . . . . . . . . . . . . . . . . . S-6
Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
Liquidated Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . S-29
Net Liquidation Proceeds . . . . . . . . . . . . . . . . . . . . . . . . S-25
Original Class A Certificate Balance . . . . . . . . . . . . . . . S-5, S-26
Original Class B Certificate Balance . . . . . . . . . . . . . . . S-5, S-27
Pool Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Precomputed Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . S-9
Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-24
Principal Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Rating Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-14
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2, S-3
Receivables Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-15
Receivables Purchase Agreement . . . . . . . . . . . . . . . . . . . . . S-15
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . -ii-
Required Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6
Required Yield Maintenance Amount . . . . . . . . . . . . . . . . . . . . S-7
Reserve Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-8
Reserve Fund Initial Deposit . . . . . . . . . . . . . . . . . . . . . . S-8
Restricted Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-33
Scheduled Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -i-, S-1
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -i-, S-1
Servicing Fee Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . S-10
Simple Interest Advance . . . . . . . . . . . . . . . . . . . . . . . . . S-9
Specified Reserve Fund Balance . . . . . . . . . . . . . . . . . . S-8, S-29
Tax Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-10
The Servicing Fee Rate . . . . . . . . . . . . . . . . . . . . . . . . . S-23
TMCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
TMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1, S-13
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -i-, S-1
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -i-, S-1
Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-35
Underwriting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . S-35
Yield Maintenance Account Initial Deposit . . . . . . . . . . . . . . . . S-6
Yield Maintenance Agreement . . . . . . . . . . . . . . . . . . . . . . . S-6
Yield Maintenance Amount . . . . . . . . . . . . . . . . . . . . . . . . S-6
</TABLE>
S-37
<PAGE> 126
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 Prospectus and, if given or
made, such information or representations must not be relied upon. This
Prospectus Supplement and the 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. The delivery of
this Prospectus Supplement or the Prospectus at any time does not imply that
information herein or therein is correct as of any time subsequent to its
date.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
PROSPECTUS SUPPLEMENT
<S> <C>
Available Information . . . . . . . . . . . . . . . . . . . . . . . ii
Reports to Certificateholders . . . . . . . . . . . . . . . . . . . ii
Summary of Terms . . . . . . . . . . . . . . . . . . . . . . . . . S-1
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . S-12
The Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-14
The Receivables Pool . . . . . . . . . . . . . . . . . . . . . . . S-15
Delinquencies, Repossessions and Net Losses . . . . . . . . . . . . S-19
The Seller and the Servicer . . . . . . . . . . . . . . . . . . . . S-21
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . S-21
Prepayment and Yield Considerations . . . . . . . . . . . . . . . . S-21
Pool Factors and Trading Information . . . . . . . . . . . . . . . S-21
Description of the Certificates . . . . . . . . . . . . . . . . . . S-22
ERISA Considerations . . . . . . . . . . . . . . . . . . . . . . . S-32
Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . S-35
Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . S-35
Index of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . S-36
ANNEX A: Global Clearance, Settlement and Tax
Documentation Procedures . . . . . . . . . . . . . . . . . . . . A-1
PROSPECTUS
Available Information . . . . . . . . . . . . . . . . . . . . . . . iii
Incorporation of Certain Documents by Reference . . . . . . . . . . iii
Summary of Terms . . . . . . . . . . . . . . . . . . . . . . . . 1
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
The Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
The Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 15
The Receivables Pools . . . . . . . . . . . . . . . . . . . . . . . 15
Delinquencies, Repossessions and Net Losses . . . . . . . . . . . . 17
Weighted Average Life of the Securities . . . . . . . . . . . . . . 17
Pool Factors and Trading Information . . . . . . . . . . . . . . 19
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . 20
The Seller . . . . . . . . . . . . . . . . . . . . . . . . . 20
The Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Description of the Notes . . . . . . . . . . . . . . . . . . . . . 22
Description of the Certificates . . . . . . . . . . . . . . . . . . 27
Certain Information Regarding the Securities . . . . . . . . . . . 28
Description of the Transfer and Servicing Agreements . . . . . . . 42
Certain Legal Aspects of the Receivables . . . . . . . . . . . . . 56
Certain Federal Income Tax Consequence . . . . . . . . . . . . . . 63
ERISA Considerations . . . . . . . . . . . . . . . . . . . . . . . 77
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . 78
Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Index of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . 79
</TABLE>
$_______________________
TOYOTA AUTO RECEIVABLES
199_-__ GRANTOR TRUST
$_______________
$_________ ___% ASSET
BACKED CERTIFICATES, CLASS A
$_________ ___% ASSET
BACKED CERTIFICATES, CLASS B
TOYOTA MOTOR CREDIT
RECEIVABLES CORPORATION
SELLER
TOYOTA MOTOR CREDIT CORPORATION
SERVICER
___________________________
PROSPECTUS SUPPLEMENT
[DATE]
[UNDERWRITERS]
S-38
<PAGE> 127
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This Prospectus Supplement and the accompanying Prospectus shall
not constitute an offer to sell or the solicitation of an offer to buy nor
shall there be any sale of these securities in any jurisdiction in which such
offer, solicitation or sale would be unlawful prior to the registration or
qualification under the securities laws of any such jurisdiction.
SUBJECT TO COMPLETION, DATED JULY 3, 1996
PROSPECTUS SUPPLEMENT
(To Prospectus dated _________, 1996)
$___________________________
TOYOTA AUTO RECEIVABLES 199_-__ OWNER TRUST
$___________ CLASS A-1 ____% ASSET BACKED NOTES
$___________ CLASS A-2 ____% ASSET BACKED NOTES
$___________ CLASS A-3 ____% ASSET BACKED NOTES
$____________ ____% ASSET BACKED CERTIFICATES
TOYOTA MOTOR CREDIT RECEIVABLES CORPORATION,
SELLER
TOYOTA MOTOR CREDIT CORPORATION,
SERVICER
The Toyota Auto Receivables 199_-__ Owner Trust (The "Trust") will be
governed by a Trust Agreement, to be dated as of ___________, 199__, among
Toyota Motor Credit Receivables Corporation (the "Seller") and ______________,
as owner trustee (the "Owner Trustee"). The Trust will issue $___________
aggregate principal amount of Class A-1 ___% Asset Backed Notes (the "Class A-1
Notes"), $_____________ aggregate principal amount of Class A-2 ___% Asset
Backed Notes (the "Class A-2 Notes") and $_____________ aggregate principal
amount of 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")
pursuant to an Indenture to be dated as of _________, 19__, between the Trust
and ____________,
(continued on next page)
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER
"RISK FACTORS" COMMENCING ON PAGE 13 HEREOF AND IN THE ACCOMPANYING PROSPECTUS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
Price to Public(1) Underwriting Discount Proceeds to the 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, if any, from ________, 199__.
(2) Before deducting expenses payable by the Seller estimated to be $________.
The Notes and the Certificates are offered by the Underwriters when,
as and if issued and accepted by the Underwriters and subject to their right to
reject orders in whole or in part. It is expected that delivery of the Notes
and the Certificates will be made in book-entry form only through the Same Day
Funds Settlement System of The Depository Trust Company, Cedel Bank, societe
anonyme and the Euroclear System on or about ___________, 19__ against payment
therefor in immediately available funds.
[UNDERWRITERS]
The date of this Prospectus Supplement is _____________, 199__.
<PAGE> 128
(Continued from preceding page)
as Indenture Trustee. The Trust will also issue $___________ aggregate
principal amount of ___% Asset Backed Certificates (the "Certificates" and,
together with the Notes, the "Securities"). The assets of the Trust will
primarily include a pool of retail installment sales contracts, secured by the
new and used automobiles and/or light duty trucks financed thereby, certain
monies due or received thereunder on or after ________, 199__, and certain
other property as further described herein.
Interest on all Classes of Notes will accrue at the fixed per annum
interest rates specified above. Interest on the Notes will generally be
distributable to the Noteholders on the ___ day of each month (or, if such day
is not a Business Day, the next succeeding Business Day), beginning ____ (each,
a "Distribution Date"). Principal of the Notes will be payable on each
Distribution Date to the extent described herein, except that no principal will
be paid on the Class A-2 Notes until the Class A-1 Notes have been paid in full
and no principal will be paid on the Class A-3 Notes until the Class A-2 Notes
have been paid in full.
The Certificates will represent undivided ownership interests in the
Trust. Interest, to the extent of the Pass Through Rate specified above, will
be distributed to the Certificateholders on each Distribution Date. Principal,
to the extent described herein, will be distributed to the Certificateholders
on each Distribution Date commencing with the later of (i) the Distribution
Date next succeeding the Distribution Date on which the Class A-1 Notes were
paid in full and (ii) the __________, 199__ Distribution Date. Distributions
of principal and interest on the Certificates will be subordinated in priority
to payments due on the Notes as described herein.
Each class of the Notes and the Certificates will be payable in full
on the applicable final scheduled Distribution Date as set forth herein.
However, payment in full of a class of Notes or of the Certificates could occur
earlier than such dates as described herein. In addition, the Class A-3 Notes
will be subject to redemption in whole, but not in part, and the Certificates
will be subject to prepayment in whole, but not in part, on any Distribution
Date on which the Servicer exercises its option to purchase the Receivables.
The Seller or the Servicer, or any successor to the Servicer, may purchase the
Receivables when the aggregate principal balance of the Receivables shall have
declined to 10% or less of the initial aggregate principal balance of the
Receivables purchased by the Trust.
THE NOTES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES REPRESENT UNDIVIDED
OWNERSHIP INTERESTS IN, THE TRUST ONLY AND DO NOT REPRESENT OBLIGATIONS OF OR
INTERESTS IN TOYOTA MOTOR CREDIT RECEIVABLES CORPORATION, TOYOTA MOTOR CREDIT
CORPORATION, TOYOTA MOTOR SALES, U.S.A., INC. OR ANY OF THEIR RESPECTIVE
AFFILIATES. NONE OF THE NOTES, THE CERTIFICATES OR THE RECEIVABLES ARE INSURED
OR GUARANTEED BY ANY GOVERNMENTAL AGENCY.
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION ABOUT THE
OFFERING OF THE NOTES AND THE CERTIFICATES. ADDITIONAL INFORMATION IS
CONTAINED IN THE PROSPECTUS AND PROSPECTIVE INVESTORS ARE URGED TO READ BOTH
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS IN FULL. SALES OF THE NOTES OR
THE CERTIFICATES MAY NOT BE CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. TO THE EXTENT ANY STATEMENTS IN
THIS PROSPECTUS SUPPLEMENT CONFLICT WITH STATEMENTS IN THE PROSPECTUS, THE
STATEMENTS IN THIS PROSPECTUS SUPPLEMENT SHALL CONTROL.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE NOTES AND THE
CERTIFICATES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
UNTIL __________, 19__, ALL DEALERS EFFECTING TRANSACTIONS IN THE
NOTES [OR CERTIFICATES] WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY
BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF
DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITER AND WITH RESPECT TO
THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
_____________________________________
-ii-
<PAGE> 129
AVAILABLE INFORMATION
The Seller has filed with the Securities and Exchange Commission (the
"Commission"), on behalf of the Trust, a Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement"), of which this Prospectus is a part, under the Securities Act of
1933, as amended. This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which have been omitted
in accordance with the rules and regulations of the Commission. For further
information, reference is made to the Registration Statement which is available
for inspection without charge at the public reference facilities of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
and the regional offices of the Commission at Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661, and Seven World Trade Center,
Suite 1300, New York, New York 10048. Copies of such information can be
obtained from the Public Reference Section of the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
The Servicer, on behalf of the Trust, will also file or cause to be filed with
the Commission such periodic reports as are required under the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Commission thereunder.
REPORTS TO SECURITYHOLDERS
____________, as Trustee, will provide to 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. See "Certain Information Regarding the
Securities--Reports to Securityholders" and "Description of the Transfer and
Servicing Agreements--Evidence as to Compliance" in the Prospectus.
-iii-
<PAGE> 130
SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere herein and in the Prospectus. Certain
capitalized terms used herein are defined elsewhere in this Prospectus
Supplement on the pages indicated in the "Index of Terms" or, to the extent not
defined herein, have the meanings assigned to such terms in the Prospectus.
ISSUER . . . . . . . . . . . . Toyota Auto Receivables 199_-__ Owner Trust
(the "Trust" or the "Issuer"), a Delaware
business trust established pursuant to a
trust agreement (the "Trust Agreement") dated
as of _____________, 199__, among the Seller
and the Owner Trustee.
SELLER . . . . . . . . . . . . Toyota Motor Credit Receivables Corporation
(the "Seller"), a wholly owned limited
purpose subsidiary, Toyota Motor Credit
Corporation.
SERVICER . . . . . . . . . . . Toyota Motor Credit Corporation ("TMCC" or,
in its capacity as servicer, the
"Servicer"), a wholly owned subsidiary of
Toyota Motor Sales, U.S.A., Inc. ("TMS").
TMCC is primarily engaged in 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). TMS 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 TMS's parent, Toyota Motor
Corporation, or its affiliates.
INDENTURE TRUSTEE . . . . . . ___________________, as trustee under the
Indenture (the "Indenture Trustee").
OWNER TRUSTEE . . . . . . . . ___________________, as trustee under the
Trust Agreement (the "Owner Trustee").
THE NOTES . . . . . . . . . . The Trust will issue Asset Backed Notes (the
"Notes") pursuant to an Indenture to be dated
as of ____________, 199__ (as amended and
supplemented from time to time, the
"Indenture"), between the Issuer and the
Indenture Trustee, as follows: (1) Class A-1
___% Asset Backed Notes (the "Class A-1
Notes") in the aggregate principal amount of
$______________; (2) Class A-2 ___% Asset
Backed Notes (the "Class A-2 Notes") in the
aggregate principal amount of
$_______________; and (3) Class A-3 ___%
Asset Backed Notes (the "Class A-3 Notes") in
the aggregate principal amount of
$___________. The Notes will be secured by
the assets of the Trust pursuant to the
Indenture.
S-1
<PAGE> 131
The assets of the Trust will
primarily include a pool of retail
installment sales contracts (the
"Receivables") secured by the new
and used automobiles and/or light
duty trucks financed thereby (the
"Financed Vehicles"), certain
monies due or paid under the
Receivables on and after
__________, 199_ (the "Cutoff
Date"), security interests in the
Financed Vehicles, certain bank
accounts and the proceeds thereof,
proceeds from claims under certain
insurance policies in respect of
individual Financed Vehicles or
Obligors and certain rights under
the Agreement. See "The
Trust--General".
THE CERTIFICATES . . . . . . . . . . . . The Trust will issue ___% Asset
Backed Certificates (the
"Certificates" and, together with
the Notes, the "Securities") with
an aggregate initial Certificate
Balance of $____________. The
Certificates will represent
undivided ownership interests in
the Trust and will be issued
pursuant to the Trust Agreement.
THE RECEIVABLES . . . . . . . . . . . . On ______________, 199__ (the
"Closing Date"), the Trust will
purchase Receivables (the
"Receivables") having an aggregate
principal balance of approximately
$___________ as of (the "Cutoff
Date") from the Seller pursuant to
a Sale and Servicing Agreement to
be dated as of ____________, 199__
(as amended and supplemented from
time to time, the "Sale and
Servicing Agreement"), among the
Trust, the Seller and the
Servicer. See "The Receivables
Pool" herein and "The Receivables
Pools" in the Prospectus.
No Receivable has a scheduled
maturity later than ___________
(the "Final Scheduled Maturity
Date"), and the
Servicer will be obligated to
repurchase or make Advances with
respect to any Receivable as to
which it adjusts the maturity to
be a date later than the Final
Scheduled Maturity Date. See
"Description of the Transfer and
Servicing Agreements--Servicing
Procedures" and "--Advances" in
the Prospectus.
The "Pool Balance" will equal the
aggregate of the Principal
Balances 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 (as defined
in the Prospectus), that portion
of all Scheduled Payments (as
defined in the Prospectus) 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 (as defined in the
Prospectus), that portion of all
Scheduled Payments actually
received on or prior to such date
allocable to principal, (iii) any
Warranty Purchase Payment (as
defined in the Prospectus) or
Administrative Purchase Payment
(as defined in the Prospectus)
with respect to such Receivable
allocable to principal (to the
extent not included in
S-2
<PAGE> 132
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).
TERMS OF THE NOTES . . . . . . The principal terms of the Notes will be as
described below:
A. Distribution Dates
Payments of interest and principal on the
Notes will be made on the __ day of each
month or, if any such day is not a Business
Day, on the next succeeding Business Day
(each, a "Distribution Date") commencing
___________, 199__ . Payments will be made to
holders of record of the Notes (the
"Noteholders") as of the day immediately
preceding such Distribution Date or, if
Definitive Notes are issued, as of the ___
day of the preceding month (a "Record Date").
A "Business Day" is a day other than a
Saturday, a Sunday or a day on which banking
institutions in New York, New York, or Los
Angeles, California are authorized or
obligated by law, regulation, executive order
or decree to be closed.
B. Interest Rates
The Interest Rates on the Notes will be as
follows: (i) Class A-1 Notes, ___% per annum
(the "Class A-1 Rate"), (ii) Class A-2 Notes,
___% per annum (the "Class A-2 Rate"), and
(iii) Class A-3 Notes, ___% per annum (the
"Class A-3 Rate" and, together with the Class
A-1 Rate and the Class A-2 Rate, the
"Interest Rates").
C. Interest
Interest on the outstanding principal amount
of the Notes of each class will accrue at the
applicable Interest Rate during each Interest
Period. The "Interest Period" with respect
to each Distribution Date and each class of
Notes will be the calendar month preceding
the related Distribution Date, or in the case
of the first Distribution Date from the
Closing Date to and including the last day of
__________. Interest on the Notes will be
calculated on the basis of a 360-day year of
twelve 30-day months. See "Description of
the Notes--Payments of Interest" herein.
D. Principal
Principal of the Notes will be payable on
each Distribution Date in an amount equal to
the Noteholders' Principal Distributable
Amount with respect to each Collection
Period, to the extent of
S-3
<PAGE> 133
funds available therefor. The
"Collection Period" relating to
any Distribution Date will be the
calendar month preceding such
Distribution Date or, in the case
of the first Distribution Date,
the period from the Cutoff Date to
and including the last day of
_________. The "Noteholders'
Principal Distributable Amount"
with respect to any Collection
Period will be the Noteholders'
Percentage of the amount of
principal paid or, in certain
circumstances, scheduled to be
paid with respect to the
Receivables (exclusive of
Payaheads allocable to principal
that have not been applied as
payments under the related
Receivables in such Collection
Period and inclusive of Payaheads
allocable to principal that have
been applied as payments under the
related Receivables in such
Collection Period) plus, certain
prepayments, payments on defaulted
Receivables and payments in
connection with the repurchase of
Receivables in connection with
breaches of representations and
warranties, as calculated by the
Servicer as described under
"Description of the Transfer and
Servicing
Agreements--Distributions".
On the 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--Distributions--Calculat
ion of Available Amounts" and
"--Calculation of Distributable
Amounts" herein and "Description
of the Transfer and Servicing
Agreements--Distributions--Allocati
on of Collections on Receivables"
in the Prospectus, and payments to
Securityholders on the following
Distribution Date will be based on
such allocation.
Payments of principal on the Notes will
be made on each Distribution Date
in the amounts and subject to the
priorities described in
"Description of the
Notes--Payments of Principal"
herein.
The outstanding principal amount of the
Class A-1 Notes, to the extent not
previously paid, will be payable
on _______, 199__ (the "Class A-1
final scheduled Distribution
Date"), the outstanding principal
amount of the Class A-2 Notes, to
the extent not previously paid,
will be payable on __________,
199__ (the "Class A-2 final
scheduled Distribution Date") and
the outstanding principal amount
of the Class A-3 Notes, to the
extent not previously paid, will
be payable on __________, 199__
(the "Class A-3 final scheduled
Distribution Date").
S-4
<PAGE> 134
E. Optional Redemption
The outstanding Notes will be redeemed in
whole, but not in part, on any Distribution
Date on which the Seller or the Servicer, or
any successor to the Servicer, exercises its
option to purchase the Receivables, which can
occur after the Pool Balance declines to 10%
or less of the Initial Pool Balance, at a
redemption price equal to the unpaid
principal amount of such Notes plus accrued
and unpaid interest thereon. See
"Description of the Notes--Optional
Redemption" herein. The "Initial Pool
Balance" will equal the Pool Balance as of
the Cutoff Date.
TERMS OF THE CERTIFICATES . . . The principal terms of the Certificates will
be as described below:
A. Pass Through Rate
___% per annum (the "Pass Through Rate").
B. Interest
On each Distribution Date, the Owner Trustee
will distribute pro rata to the holders of
the Certificates (the "Certificateholders",
and, together with the Noteholders, the
"Securityholders") as of the related Record
Date, to the extent of funds available
following payment of the Servicing Fee and
distributions in respect of the Notes from
the Total Distribution Amount and the Reserve
Fund, interest in an amount equal to
one-twelfth of the product of the Pass
Through Rate, calculated on the basis of a
360-day year consisting of twelve 30-day
months, and 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 Original
Certificate Balance.
The "Certificate Balance" will initially
equal $_____________ (the "Original
Certificate Balance") and on each
Distribution Date will equal the Original
Certificate Balance reduced by all principal
distributions made on or prior to such
Distribution Date on the Certificates.
C. Principal
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'
S-5
<PAGE> 135
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 Certificateholders' Principal
Distributable Amount will be based
on the Certificateholders'
Percentage of certain Scheduled
Payments, prepayments, payments on
defaulted Receivables and payments
in connection with the repurchase
of Receivables in connection with
breaches of representations and
warranties, and will be calculated
by the Servicer in the manner
described under "Description of
the Transfer and Servicing
Agreements-- Distributions". The
outstanding principal amount, if
any, of the Certificates will be
payable in full on __________,
199__ (the "Final Scheduled
Distribution Date").
D. Optional Purchase
The Seller, the Servicer or any
successor to the Servicer may
purchase all of the Receivables
remaining in the Trust after the
last day of any Collection Period
during which the Pool Balance
declines to 10% or less of the
Initial Pool Balance at a purchase
price determined as described
under "Description of the Transfer
and Servicing
Agreements--Termination." Upon
such optional purchase the
Certificateholders will receive an
amount equal to the Certificate
Balance together with accrued
interest at the Pass Through Rate.
See "Description of the
Certificates--Optional Prepayment"
herein.
REGISTRATION OF THE SECURITIES . . . . . Persons acquiring beneficial
ownership interests in the
Securities ("Security Owners")
will hold their Securities through
The Depository Trust Company
("DTC"), in the United States, or
Cedel Bank, societe anonyme
("Cedel") or the Euroclear System
("Euroclear") in Europe.
Transfers within DTC, Cedel or
Euroclear, as the case may be,
will be in accordance with the
usual rules and operating
procedures of the relevant system.
So long as the Securities are
Book-Entry Certificates, such
Securities will be evidenced by
one or more certificates
registered in the name of Cede &
Co., as the nominee of DTC, or
Citibank N.A. or Morgan Guaranty
Trust Company of New York, the
relevant depositaries of Cedel and
Euroclear, respectively, and each
a participating member of DTC. No
Security Owner will be entitled to
receive a definitive certificate
representing such person's
interest, except in the event that
Definitive Securities are issued
under the limited circumstances
described herein. See "Risk
Factors--Book-Entry Registration"
herein, "ANNEX A: Global
Clearance, Settlement and Tax
Documentation Procedures" and
"Certain Information Regarding the
Securities--Book-Entry
Registration" in the Prospectus.
S-6
<PAGE> 136
Unless and until Definitive Securities
are issued, all references herein
to distributions, notices, reports
and statements and to actions by
and effects upon the related
Securityholders will refer to the
same actions and effects with
respect to DTC or Cede, Cedel or
Euroclear as the case may be, for
the benefit of the related
Security Owners in accordance with
DTC procedures.
YIELD MAINTENANCE ACCOUNT;
YIELD MAINTENANCE AGREEMENT . . . . . . Certain of the Receivables have
annual percentage rates of
interest ("APRs") which are less
than the sum of the Pass Through
Rate and the Servicing Fee Rate
(the sum of such rates, the
"Required Rate"). The Yield
Maintenance Account is a
segregated trust account which
will be maintained in the name of
the Indenture Trustee, but will
not be an asset of the Trust.
The Yield Maintenance Account will
be created with an initial deposit
(the "Yield Maintenance Account
Initial Deposit") in an amount
(which amount may be discounted at
a rate to be specified in the
Agreement) equal to the aggregate
amount by which (i) interest on
the Principal Balance of each
Receivable for the period
commencing on the Cutoff Date and
ending with the scheduled maturity
of each such Receivable (assuming
that payments on such Receivables
are made as scheduled and no
prepayments are made) at a rate
equal to the Required Rate,
exceeds (ii) interest on such
Principal Balance at the APR of
such Receivable, less [factors].
As used herein, the "Yield
Maintenance Amount" means the
amount on deposit in the Yield
Maintenance Account as of any
date.
[The Servicer, the Seller [,third
party] and the Indenture Trustee
will enter into a yield supplement
agreement to be dated as of
_____________, 19__ (the "Yield
Maintenance Agreement") pursuant
to which on each Distribution Date
the Indenture Trustee will deposit
an amount (which amount may be
discounted at a rate to be
specified in the Agreement), if
any, into the Yield Maintenance
Account (the "Additional Yield
Maintenance Amount") equal to the
amount by which the Required Yield
Maintenance Amount exceeds the
Yield Maintenance Amount [or
alternative formula]. See
"Description of the Transfer and
Servicing Agreements--The Yield
Maintenance Account; The Yield
Maintenance Agreement".
On each Determination Date, the
Servicer is permitted to
recalculate the amount required to
be on deposit in the Yield
Maintenance Account (the "Required
Yield Maintenance Amount") (which
amount may be discounted at a rate
to be specified in the Agreement)
which shall be equal to [the
aggregate amount by which (i)
interest on the Principal Balance
of each Receivable currently an
asset of the Trust for the period
S-7
<PAGE> 137
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 (assuming that all
subsequent payments on such
Receivable are made as scheduled
and no prepayments are made) at a
rate equal to the Required Rate
exceeds (ii) interest on the
Principal Balance of such
Receivable at the related
APR][less factors][or state
alternative formula].
The Required Yield Maintenance Amount
may decline as Receivables having
less than the Required Rate prepay
or are otherwise removed from the
Trust. Any amounts in excess of
the Required Yield Maintenance
Amount will be released to the
Seller. Otherwise, the only
withdrawals from the Yield
Maintenance Account will be the
amounts (the "Yield Maintenance
Deposit") withdrawn therefrom by
the Owner Trustee on each
Distribution Date and deposited
into the Collection Account in
respect of the difference between
(i) the amount of interest accrued
on such Receivables at their
respective APRs and due during the
related Collection Period and (ii)
the aggregate amount of interest
that would have accrued thereon
had their respective APRs been
equal to the Required Rate.
RESERVE FUND . . . . . . . . . . . . . . The Noteholders and the
Certificateholders will have the
benefit of a segregated trust
account maintained by and in the
name of the Indenture Trustee for
the benefit of the Noteholders and
the Certificateholders (the
"Reserve Fund").
The Reserve Fund will be created with
an initial deposit by the Seller
[or third party] on the Closing
Date of cash or Eligible
Investments having a value at
least equal to __% of the Initial
Pool Balance. The amount
initially deposited in the Reserve
Fund by the Seller [or third
party] is referred to as the
"Reserve Fund Initial Deposit".
The funds in the Reserve Fund will be
supplemented on each Distribution
Date by the deposit therein of all
Excess Amounts, until the amount
in the Reserve Fund reaches an
amount to be specified in the
Agreement (the "Specified Reserve
Fund Balance"). "Excess Amounts"
in respect of a Distribution Date
will be all remaining Available
Interest on deposit in the
Collection Account in respect of
such Distribution Date, after the
Servicer has been reimbursed for
any outstanding Advances and has
been paid the Servicing Fee
(including any unpaid Servicing
Fees with respect to one or more
prior Collection Periods) and
after giving effect to all
distributions of interest and
principal required to be made to
the Noteholders and
Certificateholders on such
Distribution Date.
S-8
<PAGE> 138
On each Distribution Date, after giving
effect to all distributions made
on such Distribution Date, any
amounts in the Reserve Fund in
excess of the Specified Reserve
Fund Balance that are not applied
to cover shortfalls in
distributions to Noteholders or
the Certificateholders as
described below will be
distributed to the Seller [or
third party] as described under
"Description of the Sale and
Servicing
Agreements--Subordination of the
Certificates; Reserve Fund". Upon
such distribution, neither the
Noteholders nor the
Certificateholders will have any
further rights in, or claims to,
such amounts.
On each Distribution Date, to the
extent available, funds will be
withdrawn from the Reserve Fund up
to the Available Amount to the
extent that the Total Distribution
Amount with respect to any
Collection Period remaining after
the Servicing Fee is paid exceeds
the sum of Available Interest and
Available Principal and will be
deposited in the Collection
Account for distribution to the
Noteholders and
Certificateholders, as the case
may be, on the related
Distribution Date as set forth
under "Description of the Transfer
and Servicing
Agreements--Subordination of the
Certificates; Reserve Fund".
COLLECTION ACCOUNT . . . . . . . . . . . One or more accounts will be
established by and maintained in
the name of the Indenture Trustee
into which collections on the
Receivables and certain other
amounts will be deposited as
described herein (collectively,
the "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 Prime-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
S-9
<PAGE> 139
before the Business Day immediately
preceding the related Distribution
Date. See "Description of the
Transfer and Sale
Agreements--Collections" in the
Prospectus. Pursuant to the Sale
and Servicing Agreement, the
Servicer will have the revocable
power to instruct the Indenture
Trustee to withdraw funds on
deposit in the Collection Account
and to apply such funds on each
Distribution Date to the following
(in the priority indicated): (i)
the Servicing Fee for the prior
Collection Period and any overdue
Servicing Fees to the Servicer,
(ii) the Noteholders' Interest
Distributable Amount and the
Noteholders' Principal
Distributable Amount to the
related Noteholders, (iii) the
Certificateholders' Interest
Distributable Amount and,
commencing on the later of (a) the
199__ Distribution Date and (b)
the Distribution Date next
succeeding the Distribution Date
on which the Class A-1 Notes were
paid in full, the
Certificateholders' Principal
Distributable Amount to the
related Certificateholders and
(iv) the remaining balance, if
any, to the Reserve Fund.
ADVANCES . . . . . . . . . . . . . . . . On the Business Day immediately
preceding each Distribution Date,
the Servicer will advance to the
Trust, in respect of each (i)
Precomputed Receivable, that
portion, if any, of the related
Scheduled Payment that was not
timely made (each, a "Precomputed
Advance") and (ii) Simple Interest
Receivable, 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 APR,
minus the amount of interest
actually received on such
Receivable during such Collection
Period (each, a "Simple Interest
Advance", and together with the
Precomputed Advances, the
"Advances"). If such 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 out of interest
collections in respect of the
Simple Interest Receivables during
the related Collection Period in
reimbursement of outstanding
Simple Interest Advances.
Outstanding Precomputed Advances
shall be reimbursable to the
Servicer, without interest, from
payments (other than
Administrative Purchase Payments)
subsequently received in respect
of the related Precomputed
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 all
outstanding Advances made in
respect of such Receivable, be
withdrawn from the Collection
Account and paid to the Servicer
in reimbursement of such
outstanding Advances. The
Servicer will be required to make
an Advance only to the extent that
it determines such Advance will be
recoverable from future payments
and collections on or in respect
of such Receivable. Upon the
determination by the
S-10
<PAGE> 140
Servicer that such reimbursement is unlikely,
the Servicer will be entitled to recover
Advances from payments and collections on or
in respect of other Receivables. See
"Description of the Transfer and Servicing
Agreements--Advances" herein and in the
Prospectus.
The Servicer will be obligated to purchase or
make Advances with respect to any Receivable
if, among other things, it amends the total
number of Scheduled Payments, the Amount
Financed or the APR thereof or extends the
date for final payment by the Obligor of such
Receivable beyond the Final Scheduled
Maturity Date. See "Description of the
Transfer and Servicing Agreements--Servicing
Procedures" and "--Advances" in the
Prospectus.
SERVICING FEE . . . . . . . . . The Servicer will receive a monthly fee,
payable on each Distribution Date, equal to
one-twelfth of the product of __% (the
"Servicing Fee Rate") and the Pool Balance as
of the first day of the related Collection
Period. The Servicer will be entitled to
receive additional servicing compensation in
the form of investment earnings on the
amounts on deposit in the Collection Account,
Yield Maintenance Account, Reserve Fund and
the Payahead Account, if any, late fees and
other administrative fees and expenses or
similar charges received by the Servicer
during such Collection Period. See
"Description of the Transfer and Servicing
Agreements--Servicing Compensation".
TAX STATUS . . . . . . . . . . In the opinion of Andrews & Kurth L.L.P.
("Tax Counsel") (i) for federal income tax
purposes, the Notes will be characterized as
debt, and the Trust will not be characterized
as an association (or a publicly traded
partnership) taxable as a corporation and
(ii) the same characterization will apply for
California income and franchise tax purposes.
Each Noteholder, by the acceptance of a Note,
will agree to treat the Notes as
indebtedness, and each Certificateholder, by
the acceptance of a Certificate, 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. Alternative
characterizations of the Trust and the
Certificates are possible, but would not
result in materially adverse tax consequences
to Certificateholders. See "Certain Federal
Income Tax Consequences" and "Certain State
Tax Consequences with respect to Trusts for
which a Partnership Election is Made" in the
Prospectus for additional information
concerning the application of federal income
and California tax laws to the Trust and the
Securities.
S-11
<PAGE> 141
ERISA CONSIDERATIONS . . . . . . . . . . Subject to the considerations
discussed under "ERISA
Considerations" herein and in the
Prospectus the Notes are eligible
for purchase by employee benefit
plans.
The Certificates may not be acquired by
any employee benefit plan subject
to the Employee Retirement Income
Security Act of 1974, as amended
("ERISA") or Section 4975 of the
Internal Revenue Code of 1986, as
amended (the "Code") or by an
individual retirement account.
See "ERISA Considerations" herein
and in the Prospectus. Any
benefit plan fiduciary considering
purchase of the Certificates
should, among other things,
consult with its counsel in
determining whether all required
conditions have been satisfied.
LEGAL INVESTMENT
CONSIDERATIONS . . . . . . . . . . . . . [The Class A-1 Notes will be
eligible securities for purchase
by money market funds under Rule
2a-7 under the Investment Company
Act of 1940, as amended.]
RATING OF THE NOTES . . . . . . . . . . It is a condition to the issuance
of the Notes that they be rated in
the highest investment rating
category by at least two
nationally recognized rating
agencies. However, the rating
agencies do not evaluate, and the
rating does not address, the
likelihood that the Note
Prepayment Premium will be paid.
There can be no assurance that a
rating will not be lowered or
withdrawn by a rating agency if
circumstances so warrant. In the
event that the rating initially
assigned to the Notes is
subsequently lowered or withdrawn
for any reason, no person or
entity will be obligated to
provide any additional credit
enhancement with respect to the
Notes. There can be no assurance
whether any other rating agency
will rate any Class of the Notes,
or if one does, what rating would
be assigned by such other rating
agency. A security rating is not
a recommendation to buy, sell or
hold securities.
RATING OF THE CERTIFICATES . . . . . . . It is condition of the issuance of
the Certificates that they be
rated (at least) "___" or its
equivalent by at least two
nationally recognized rating
agencies. However, the rating
agencies do not evaluate, and the
rating does not address, the
likelihood that the Certificate
Prepayment Premium will be paid.
There can be no assurance that a
rating will not be lowered or
withdrawn by a rating agency if
circumstances so warrant. In the
event that the rating initially
assigned to the Certificates is
subsequently lowered or withdrawn
for any reason, no person or
entity will be obligated to
provide any additional credit
enhancement with respect to the
Certificates. There can be no
assurance whether any other rating
agency will rate any Class of the
Certificates, or if one does, what
rating would be assigned by such
other rating agency. A security
rating is not a recommendation to
buy, sell or hold securities.
S-12
<PAGE> 142
RISK FACTORS
Prospective investors in the Certificates should consider the
following risk factors (as well as the factors set forth under "Risk Factors"
in the Prospectus) in connection with the purchase of Notes or Certificates.
Any statistical information presented below is based upon the characteristics
of the Receivables proposed to be included in the Trust as of the date of this
Prospectus Supplement. Such information may vary as a result of the
possibility that certain Receivables may be removed from the Trust prior to the
Closing Date.
Limited Liquidity. There is currently no secondary market for the
Securities. Each Underwriter currently intends to make a market in the
Securities for which it is an Underwriter, but it is under no obligation to do
so. There can be no assurance that a secondary market will develop or, if a
secondary market does develop, that it will provide the Securityholders with
liquidity of investment or that it will continue for the life of the
Securities.
Certain Legal Aspects. Because of the administrative burden and
expense that would be entailed in doing so, the certificates of title for the
Financed Vehicles will not be amended to identify the Trustee as the secured
party. If there are any Financed Vehicles as to which the Trust failed to
obtain a perfected security interest, its security interest would be
subordinate to, among others, subsequent purchasers of the Financed Vehicles
and holders of perfected security interests. Pursuant to the Agreement, the
Seller will assign its security interests in the Financed Vehicles to the
Trustee. Under the laws of some states, such an assignment of security
interests may not be sufficient to convey to the Trustee perfected security
interests in the Financed Vehicles. In addition, because the Trustee will not
be listed as legal owner on the certificates of title to the Financed Vehicles,
its security interest could be defeated through fraud, forgery or negligence.
The Seller will covenant in the Agreement to repurchase any Receivable if on
the Closing Date a valid, subsisting and enforceable first priority security
interest in the related Financed Vehicle, which will have been assigned to the
Trust, has not been perfected (or is not in the process of being perfected) in
favor of the Seller. The Seller will also covenant in the Pooling Agreement to
repurchase any Receivable if, after the Closing Date, a valid subsisting and
enforceable first priority security interest in the name of the Seller is not
maintained on behalf of the Trust in the related Financed Vehicle. See
"Certain Legal Aspects of Receivables--Security Interests" in the Prospectus.
Yield and Prepayment Considerations. The weighted average life of the
Securities will be reduced by full or partial prepayments on the Receivables.
The Receivables will generally be prepayable at any time without penalty.
Prepayments (or, for this purpose, equivalent payments to the Trust) may result
from payments by or on behalf of the related Obligors, liquidations due to
default, the receipt of proceeds from physical damage or credit life and/or
credit disability insurance, repurchases by the Seller as a result of certain
uncured breaches of representations and warranties made with respect to the
Receivables, purchases by the Servicer as a result of certain uncured breaches
of the covenants made by it with respect to the servicing of the Receivables or
the exercise by the Seller of its Optional Repurchase.
The Seller has limited historical experience with respect to
prepayments, has not as of the date hereof prepared data on prepayment rates,
and is not aware of publicly available industry statistics that set forth
principal prepayment experience for retail installment sales contracts similar
to the Receivables. The Seller can make no prediction as to the actual
prepayment rates that will be experienced on the Receivables. The Seller,
however, believes that the actual rate of prepayments will result in a weighted
average life of the Receivables that will end prior to the Final Scheduled
Maturity Date.
S-13
<PAGE> 143
Indexed Securities. An investment in Securities indexed, as to
principal, premium and/or interest, to one or more values of currencies
(including exchange rates and swap indices between currencies), commodities,
interest rate or other indices entails significant risks that are not associated
with similar investments in a conventional fixed-rate debt security. If the
interest rate of such a Security is so indexed, it may result in an interest
rate that is less than that payable on a conventional fixed-rate debt security
issued at the same time, including the possibility that no interest will be
paid, and, if the principal amount of such a Security is so indexed, the
principal amount payable on the related final Distribution Date may be less than
the original purchase price of such Security if allowed pursuant to the terms of
such Security, including the possibility that no principal will be paid. The
secondary market for such Securities will be affected by a number of factors,
independent of the characteristics of the Receivables, structure of the cash
flows and the value of the applicable currency, commodity, interest rate or
other index, including the volatility of the applicable currency, commodity,
interest rate or other index, the time remaining to the maturity of such
Securities, the amount outstanding of such Securities and market interest rates.
The value of the applicable currency, commodity, interest rate or other index
depends on a number of interrelated factors, including economic, financial and
political events. Additionally, if the formula used to determine the principal
amount, premium, if any, or interest payable with respect to such Securities
contains a multiple or leverage factor, the effect of any change in the
applicable currency, commodity, interest rate or other index may be increased.
The historical experience of the relevant currencies, commodities, interest
rates or other indices should not be taken as an indication of future
performance of such currencies, commodities, interest rates or other indices
during the term of any Note. The credit ratings assigned to any series or class
of securities, in no way, are reflective of the potential impact of the factors
discussed above, or any other factors, on the market value of the Securities.
Accordingly, prospective investors should consult their own financial and legal
advisors as to the risks entailed by an investment in such Notes and the
suitability of such Securities in light of their particular circumstances.
Book-Entry Registration. Issuance of the Notes and Certificates in
book-entry form may reduce the liquidity thereof in the secondary trading
market since investors may be unwilling to purchase securities for which they
cannot obtain definitive physical securities representing such interests,
except in certain circumstances described herein. Noteholders and
Certificateholders may experience some delay in their receipt of distributions
of interest on and principal thereof since distributions may be required to be
forwarded by the related Paying Agent to DTC, Cedel or Euroclear and, in such
case, DTC, Cedel or Euroclear, as the case may be, will be required to credit
such distributions to the accounts of its participating organization which
thereafter will be required to credit to the accounts of the
Certificateholders, as the case may be, either directly or indirectly through
indirect participants. See "Description of the Certificates--Book-Entry
Registration" in the Prospectus.
Consumer Protection Laws. The Receivables are subject to federal and
state consumer protection laws which impose requirements with respect to the
making, transfer, acquisition, enforcement and collection of consumer loans.
Such laws, as well as any new laws or rules which may be adopted, may adversely
affect the Servicer's ability to collect on the Receivables. In addition,
failure by the Seller to have complied, or the Servicer to comply, with such
requirements could adversely affect the enforceability of the Receivables. The
Seller will make representations and warranties relating to the validity and
enforceability of the Receivables and its compliance with applicable law in
connection with its performance of the transactions contemplated by the
Agreement. Pursuant to the Agreement, if the Trust's interest in a Receivable
is materially and adversely affected by the failure of such Receivable to
comply with applicable requirements of consumer protection law, such Receivable
will be repurchased by the Seller. The sole remedy if any such representation
or warranty is not complied with and such noncompliance continues beyond the
applicable cure period is that the Receivables affected thereby will be
repurchased by the Seller. See "Certain Legal Aspects of the
Receivables--Consumer Protection Laws" in the Prospectus.
S-14
<PAGE> 144
Trust's Relationship to the Seller and Toyota Motor Credit
Corporation. None of the Seller, TMCC or Toyota Motor Sales, U.S.A., Inc.
("TMS") or their respective affiliates is generally obligated to make any
payments in respect of any Notes, the Certificates or the Receivables. However,
in connection with the sale of Receivables by the Seller to the Trust, the
Seller will make representations and warranties with respect to the
characteristics of such Receivables and, in certain circumstances, the Seller
may be required to repurchase Receivables with respect to which such
representations and warranties have been breached. See "Description of the
Transfer and Servicing Agreements--Sale and Assignment of Receivables" in the
Prospectus. In addition, under certain circumstances, the Servicer may be
required to purchase Receivables. See "Description of the Transfer and
Servicing Agreements--Servicing Procedures" in the Prospectus. Moreover, if
TMCC were to cease acting as Servicer, delays in processing payments on the
Receivables and information in respect thereof could occur and result in delays
in payments to the Securityholders.
Subordination. Distributions of principal on the Class A-2 Notes will
be subordinated to distributions of principal on the Class A-1 Notes and
distributions of principal on the Class A-3 Notes will be subordinated to
distributions of principal on the Class A-1 Notes and Class A-2 Notes inasmuch
as no principal will be distributed to the Class A-2 Noteholders until the
principal amount of the Class A-1 Notes has been reduced to zero and no
principal will be distributed to the Class A-3 Noteholders until the principal
amount of the Class A-2 Notes has been reduced to zero, except as set forth
herein. Distributions of interest on the Certificates will be subordinated in
priority of payment to interest due on the Notes. Distributions of principal
on the Certificates will be subordinated in priority of payment to interest and
principal due on the Notes. Consequently, the Certificateholders may not
receive any distributions with respect to interest for a Collection Period
until the full amount of interest on the Notes on such Distribution Date has
been deposited in the Collection Account and may not receive any distributions
with respect to principal for a Collection period until the full amount of
interest and principal in respect of the Notes on such Distribution Date has
been so deposited. The Certificateholders will not receive any distributions
of principal until after the later to occur of (i) the Distribution Date next
succeeding the Distribution Date on which the Class A-1 Notes were paid in full
and (ii) the ____________, 199__ Distribution Date.
Limited Assets. The Trust will not have, nor is it permitted or
expected to have, any significant assets or sources of funds other than the
Receivables, the Yield Maintenance Account and the Reserve Fund. The
Certificates represent interests solely in the Trust and the Notes represent
debt obligations of the Trust. Neither are obligations of, and neither will be
insured or guaranteed by, the Seller, the Servicer, TMS, any of their
respective affiliates, the Trustee or any other person or entity. Holders of
the Notes and the Certificates must rely for repayment upon payments on the
Receivables and, if and to the extent available, amounts on deposit in the
Reserve Fund. Similarly, although funds in the Reserve Fund will be available
on each Distribution Date to cover shortfalls in distributions of interest and
principal on the Notes and the Certificates, amounts to be deposited in the
Reserve Fund are limited in amount. If the Reserve Fund is exhausted, the
Trust will depend solely on current distributions on the Receivables to make
payments on the Notes and the Certificates.
Ratings of the Securities. It is a condition to the issuance of each
class of the Notes and of the Certificates that each class of the Notes be
rated in the highest rating category, and the Certificates be rated (at least)
"__" or its equivalent, by at least two nationally recognized statistical
rating agencies (the "Rating Agencies"). A rating is not a recommendation to
purchase, hold or sell Securities, inasmuch as such rating does not comment as
to market price or suitability for a particular investor. The ratings of the
Securities address the likelihood of the payment of principal and interest on
the Securities pursuant to their terms. There can be no assurance that a
rating will remain for any given period of time or that a rating will not be
lowered or withdrawn entirely by a Rating Agency if in its judgment
circumstances in the future so warrant.
S-15
<PAGE> 145
THE TRUST
GENERAL
The Issuer, Toyota Auto Receivables Owner Trust 199_ -__ , is a
business trust formed under the laws of the State of Delaware pursuant to the
Trust Agreement for the transactions described in this Prospectus Supplement.
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 and the Yield Maintenance
Account.
The Servicer will service the Receivables pursuant to the Sale and
Servicing Agreement, the Administration Agreement and the Trust Agreement
(collectively, the "Transfer and Servicing Agreements") and will be compensated
for such services as described under "Description of the Transfer and Servicing
Agreements--Servicing Compensation" herein and "Description of the Transfer and
Servicing Agreements--Servicing Compensation and Payment of Expenses" in the
Prospectus. To facilitate servicing and to minimize administrative burden and
expense, the Servicer will be appointed custodian for the Receivables and
documents relating thereto by the Trustee. The Servicer will hold the
Receivables and related documents in its capacity as Custodian, but will not
stamp the Receivables to reflect the sale and assignment of the Receivables to
the Trust, nor amend the certificates of title to the Financed Vehicles to
reflect the assignment of the security interest in the Financed Vehicles to the
Trustee. In the absence of such an amendment, the Trustee may not have a
perfected security interest in the Financed Vehicles in all states. See
"Certain Legal Aspects of the Receivables--Security Interest in Vehicles" in
the Prospectus and "Description of the Transfer and Servicing Agreements--Sale
and Assignment of Receivables" herein and in the Prospectus.
If the protection provided to the investment of the Securityholders by
the Reserve Fund is insufficient, the Trust will look only to the Obligors on
the Receivables, the proceeds from the repossession and sale of Financed
Vehicles which secure defaulted Receivables and the proceeds of any Dealer
Recourse (described below) to make payments with respect to the Securities. In
such event, certain factors, such as the possibility that the Trust may not
have a first priority perfected security interest in the Financed Vehicles in
all states, may affect the Trust's ability to repossess and sell the collateral
securing the Receivables or may limit the amount realized to less than the
amount due from the related Obligors. Securityholders may thus be subject to
delays in payment and may incur losses on their investments in the Securities
as a result of defaults or delinquencies by Obligors and because of
depreciation in the value of the related Financed Vehicles. See "Description
of the Transfer and Servicing Agreements--Distributions" and "--Reserve Fund"
herein and "Certain Legal Aspects of the Receivables" in the Prospectus.
S-16
<PAGE> 146
Pursuant to agreements between TMCC and the Dealers, each Dealer is
obligated, after purchase by TMCC of retail installment sales contracts from
such Dealer, to repurchase from TMCC such 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 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 retail installment sales contracts between
Dealers and Obligors, and all payments due 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 and Yield Maintenance Account will be
maintained by the Trustee for the benefit of the Certificateholders.
The Trust's principal offices are in _______________, in care of
______________, as Owner Trustee, at the address set forth below under "--The
Owner Trustee".
S-17
<PAGE> 147
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>
<S> <C>
Class A-1 Notes $________________
Class A-2 Notes $________________
Class A-3 Notes $________________
Certificates $________________
Total $________________
</TABLE>
THE OWNER TRUSTEE
___________________ is the Owner Trustee under the Trust Agreement.
_________________ is a _____________ and its principal offices are located at
______________________________. The Seller and its affiliates may maintain
normal commercial banking relations with the Owner Trustee and its affiliates.
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 Obligors. On or before the date of initial issuance of the
Certificates (the "Closing Date"), TMCC will sell the Receivables to the Seller
pursuant to a 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 were purchased by TMCC from Dealers in the ordinary
course of business. The Receivables were selected from TMCC's portfolio of
automobile and/or light duty truck installment sales contracts that meet the
selection criteria set forth herein and in the Prospectus under "The
Receivables Pools," Such selection criteria included that: (i) at the time of
origination, each Receivable was secured by a new or used automobile and/or
light duty truck; (ii) each Receivable was originated in the United States;
(iii) each Receivable provides for level monthly Scheduled Payments that fully
amortize the amount financed by such Receivable over its original term except
that the payment in the first or last month in the life of the Receivable may
be minimally different from the level payment; (iv) each Receivable was
originated prior to ___________; (v) each Receivable has an original term of __
to __ months and, as of the Cutoff Date, had a scheduled remaining term to
maturity of not less than __ months and not more than 60 months; (vi) each
Receivable provides for the payment of a finance charge at an APR ranging from
__% to __%; (vii) each Receivable does not have a payment that is more than __
days past due as of the Cutoff Date; (viii) each Receivable is being serviced
by TMCC; (ix) to the best knowledge of the Seller, no Receivable is due from
any Obligor who is presently the subject of a bankruptcy proceeding or is
bankrupt or insolvent; (x) no Financed Vehicle has been repossessed without
reinstatement as of the Cutoff Date; and (xi) no Financed Vehicle was subject
to force-placed insurance as of the Cutoff Date. Retail installment sales
contracts serviced by an independent finance company conducting business in
five southeastern states (Alabama,
S-18
<PAGE> 148
Florida, Georgia, North Carolina and South Carolina) on behalf of TMCC with
respect to Toyota vehicles will not be included in the Trust. No selection
procedures believed by the Seller to be adverse to Securityholders were used in
selecting the Receivables.
The Receivables represent financing of new and used automobiles and/or
light duty trucks. Based on the Cutoff Date Pool Balance, approximately __%
and __% of the Receivables represented financing of new vehicles and used
vehicles, respectively. As of the Cutoff Date, the weighted average Principal
Balance of the Receivables was approximately $_____. Based on the addresses of
the originating Dealers, the Receivables were originated in __ states. Except
in the case of any breach of representations and warranties by the related
Dealer, as described under "The Trust--General", the Receivables generally do
not provide for recourse against the originating Dealer.
The composition, distribution by APR and geographic distribution of
the Receivables Pool as of the Cutoff Date are set forth in the following
tables.
COMPOSITION OF THE RECEIVABLES
<TABLE>
<S> <C>
Aggregate 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 Maturity(1) . . . . . ____ months
Range of Original Maturities . . . . . . . . ___months to__ months
Weighted Average Remaining Maturity(1) . . . . _____ months
Range of Remaining Maturities . . . . . . . . __ months to __ months
</TABLE>
___________
(1) Weighted by Principal Balance as of the Cutoff Date.
S-19
<PAGE> 149
DISTRIBUTION OF THE RECEIVABLES BY APR
<TABLE>
<CAPTION>
Percentage of
Aggregate Cutoff Date Percentage of
Number of Number of Principal Cutoff Date
Range of APRs Receivables Receivables Balance Pool Balance
- ------------- ----------- ------------- ----------- --------------
<S> <C> <C> <C> <C>
8.00% to 8.99% ....
9.00% to 9.99% ....
10.00% to 10.99% ....
11.00% to 11.99% ....
12.00% to 12.99% ....
13.00% to 13.99% ....
14.00% to 14.99% ....
15.00% to 15.99% ....
16.00% to 16.99% ....
17.00% to 17.99% ....
18.00% to 18.99% ....
19.00% to 19.99% ....
20.00% to 20.99% ....
21.00% to 21.99% ....
22.00% ....
Total(1) ....
</TABLE>
__________
(1) Percentages do not add to 100.00% due to rounding.
S-20
<PAGE> 150
DISTRIBUTION OF THE RECEIVABLES BY STATE (1)
<TABLE>
<CAPTION>
Cutoff Date Percentage of
Number of Principal Cutoff Date
State Receivables Balance Pool Balance
----- ----------- ----------- -------------
<S> <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
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Total(2)
</TABLE>
__________
(1) Based solely on the addresses of the originating Dealers.
(2) Percentages do not add to 100.00% due to rounding.
S-21
<PAGE> 151
DISTRIBUTION OF RECEIVABLES BY COLLATERAL TYPE
<TABLE>
<CAPTION>
Percentage of
Number Aggregate Percentage of
of Number of Cutoff Date Cutoff Date
Collateral Type Receivables Receivables Principal Balance Pool Balance
- --------------- ----------- ------------- ----------------- -------------
<S> <C> <C> <C> <C>
Toyota(1) . . . . .
Lexus . . . . . .
Other . . . . . .
Total(2) . . .
</TABLE>
______________________________
(1) Includes new and used automobiles and/or light duty trucks.
(2) Percentages do not add to 100.00% due to rounding.
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.
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.
Retail installment sales contracts serviced by an independent finance company
conducting business in five southeastern states will not be included in the
Trust, and accordingly are not included in the information set forth below.
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.
Credit losses are an expected cost in the business of extending credit and are
considered in TMCC's rate-setting process. TMCC's objective is to minimize
credit losses while providing financing support for the sale of Toyota and
Lexus products. Losses and delinquencies are affected by, among other things,
general and regional economic conditions and the supply of and demand for
automobiles and/or light duty trucks. The favorable net loss experience since
1991 is attributable in part to improved credit granting procedures and
collection efforts. TMCC plans to continue controlling its credit loss
exposure; however, there can be no assurances that this favorable trend will
continue. For example, approximately ___% of the Receivables, based on the
Cutoff Date Pool Balance, were located in the State of California. If there
were a further decline in the economy of California or the existing reduced
level of economic activity was sustained for an extended period of time, there
can be no assurance that the number of delinquencies or defaults would not
increase.
S-22
<PAGE> 152
HISTORICAL DELINQUENCY EXPERIENCE
<TABLE>
<CAPTION>
At September 30,
----------------------------------------------------------------------
At May 31, 1996(2) 1995(2) 1994(1) 1993(1) 1992 1991
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Number of Contracts
Outstanding at
End of Period . . 538,241 517,325 514,120 485,540 466,008 421,765
Delinquencies
as a Percentage of
Contracts Outstanding(3)
31-60 Days . . . 1.32% 1.25% 1.04% 1.04% 1.25% 1.39%
61-90 Days . . . 0.10% 0.11% 0.10% 0.10% 0.13% 0.16%
Over 90 Days . . 0.07% 0.06% 0.06% 0.06% 0.07% 0.07%
</TABLE>
____________________
(1) Includes contracts sold by TMCC in August 1993 in connection with the
formation of the Toyota Auto Receivables 1993-A Grantor Trust, which TMCC
is servicing.
(2) Includes contracts sold by TMCC in August 1993 and September 1995,
respectively, in connection with the formation of the Toyota Auto
Receivables 1993-A Grantor Trust and the formation of the Toyota Auto
Receivables 1995-A Grantor Trust, which TMCC is servicing.
(2) The period of delinquency is based on the number of days scheduled
payments are contractually past due.
NET LOSS AND REPOSSESSION EXPERIENCE
<TABLE>
<CAPTION>
At or for the At or for the Year Ended September 30,
8 Months Ended ----------------------------------------------------------------------------
May 31, 1996(2) 1995(2) 1994(1) 1993(1) 1992 1991
---------------------------------------------------------------------------------------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Net Receivables
Outstanding (3) . 5,326,595 4,930,711 $4,757,142 $4,198,373 $3,863,884 $3,396,401
Average Net Receivables
Outstanding (3) . 5,128,653 4,843,927 $4,477,758 $4,031,129 $3,630,143 $3,138,335
Number of Contracts
Outstanding . . . 538,241 517,325 514,120 485,540 466,008 421,765
Average Number of Contracts
Outstanding (4) . 527,783 515,723 499,830 475,774 443,887 386,396
Number of Repossessions 5,869 8,438 8,386 8,925 9,183 9,407
Number of Repossessions as a
Percentage of the Contracts
Outstanding . . . 1.64%(7) 1.63% 1.63% 1.84% 1.97% 2.23%
Number of Repossessions as a
Percentage of the Average
Number of Contracts
Outstanding . . . 1.67%(7) 1.64% 1.68% 1.88% 2.07% 2.43%
Gross Charge-Offs (5) $20,977 $27,282 $22,748 $26,361 $31,594 $32,935
Recoveries (6) . . $4,207 $5,957 $6,564 $6,587 $6,387 $6,378
Net Losses (6) . . $16,770 $21,325 $16,184 $19,774 $25,207 $26,557
Net Losses as a Percentage
of Net Receivables
Outstanding . . . 0.47%(7) 0.43% 0.34% 0.47% 0.65% 0.78%
Net Losses as a Percentage
of Average Net
Receivables Outstanding 0.49%(7) 0.44% 0.36% 0.49% 0.69% 0.85%
</TABLE>
____________________
(1) Includes contracts sold by TMCC in August 1993 in
connection with the formation of the Toyota Auto Receivables
1993-A Grantor Trust, which TMCC is servicing.
(2) Includes contracts sold by TMCC in August 1993 and September 1995,
respectively, in connection with the formation of the Toyota Auto
Receivables 1993-A Grantor Trust and the formation of the Toyota Auto
Receivables 1995-A Grantor Trust, which TMCC is servicing.
(3) Net Receivables Outstanding includes principal, accrued interest and
unamortized dealer reserve.
(4) Average of current period and beginning of period amount or number of
contracts outstanding.
(5) Amount charged-off is the net remaining principal balance, including
earned but not yet received finance charges, repossession expenses and
unpaid extension fees less any proceeds from the liquidation of the
related vehicle. Also includes dealer reserve charge-offs.
(6) Recoveries from liquidation of the related vehicle and any recoveries
from post-disposition monies received on previously charged-off
contracts. Also includes recoveries for dealer reserve charge-offs
and dealer reserve chargebacks.
(7) Annualized.
S-23
<PAGE> 153
THE SELLER AND THE SERVICER
Information regarding the Seller and the Servicer is set forth under
"The Seller and the Servicer" in the Prospectus.
USE OF PROCEEDS
The net proceeds to be received by the Seller from the sale of the
Securities will be used by the Seller to purchase the Receivables from TMCC
pursuant to the Receivables Purchase Agreement and to fund the Reserve Fund and
the Yield Maintenance Account.
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. Except as otherwise provided herein, 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 distributions 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" herein. As 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
distribution in respect of the Certificates could occur significantly earlier
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. Any reinvestment risk
resulting from the rate of prepayment of the Receivables and the distribution
of such payments to Securityholders will be borne entirely by the
Securityholders. No prediction can be made as to the rate of prepayments on
the Receivables in either stable or changing interest rate environments.
The Receivables have different APRs, some of which are below the
Required Rate. However, the application of funds in the Yield Maintenance
Account will have the effect of causing the weighted average of the scheduled
interest payments on all Receivables with respect to any Collection Period
plus the Yield Maintenance Deposit with respect to the related Distribution
Date to equal or exceed the Required 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 their
Notes or Certificates, as the case may be.
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
S-24
<PAGE> 154
and amount of such losses assumed by an investor, the yield to maturity on the
Certificates may be lower than anticipated.
POOL FACTORS AND TRADING INFORMATION
The "Pool Factor" with respect to any class of Notes or the
Certificates will be seven-digit decimal numbers which the Servicer will
compute each month indicating the principal amount of such class of Notes and
the Certificate Balance 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. 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 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 Commission 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. _______________, a
________________, will be the Indenture Trustee under the Indenture.
___________'s principal executive offices are located at _______________. The
Seller and its affiliates may maintain normal commercial banking relations with
the Indenture Trustee and its affiliates.
S-25
<PAGE> 155
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 and
will be payable to the Noteholders monthly on each Distribution Date commencing
______________, 199__. 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 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 specified below (to the
extent lawful). Interest payments on the Notes will generally be made from the
Total Distribution Amount remaining after the payment of the Servicing Fee and
from the Reserve Fund. See "Description of the Transfer and Servicing
Agreements --Distributions" and "--Reserve Fund" herein.
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 in an aggregate amount equal to the Noteholders' Distribution
Amount subject to the limits of Available Principal and the credit enhancement
described below. Prior to the later 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 Distribution Amount and the Certificateholders' Principal
Distribution Amount subject to the limits of Available Principal and the credit
enhancement described below. Principal payments on the Notes generally will be
made from the Total Distribution Amount and the amount, if any, in the Reserve
Fund up to the Available Amount remaining after the payment of the Servicing
Fee and the Noteholders' Interest Distributable Amount. See "Description of
the Transfer and Servicing Agreements--Distributions" and "--Reserve Fund".
On the 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 --Distributions", 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 the Class A-1 Notes, to
the extent not previously paid, will be due on the Class A-1 final scheduled
Distribution Date, the principal balance of the Class A-2 Notes, to the extent
not previously paid, will be due on the Class
S-26
<PAGE> 156
A-2 Final Scheduled Distribution Date, and the principal balance of the Class
A-3 Notes, to the extent not previously paid, will be due on 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" herein and in the Prospectus.
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the terms of the Trust
Agreement, a form of which has been filed as an exhibit to the Registration
Statement. A copy of the Trust Agreement will be filed with the Commission
following the issuance of the Securities. The following summary describes
certain terms of the Certificates and the Trust Agreement. The summary does
not purport to be complete and is subject to, and qualified in its entirety by
reference to, all the provisions of the Certificates and the Trust Agreement.
The following summary supplements, and to the extent inconsistent therewith
replaces, the description of the general terms and provisions of the
Certificates of any given series and the related Trust Agreement set forth in
the Prospectus, to which description reference is hereby made.
PAYMENTS OF INTEREST INCOME
On each Distribution Date, commencing ___________, 199__, the
Certificateholders will be entitled to distributions in an amount equal to the
amount of interest that would accrue 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 of twelve 30-day
months. Interest distributions due for any Distribution Date but not
distributed 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 distributions with respect to the
Certificates will generally be funded from the portion of the Total
Distribution Amount and the funds in the Reserve Fund remaining after the
distribution of the Servicing Fee and the Noteholders' Distributable Amount.
See "Description of the Transfer and Servicing Agreements--Distributions" and
"--Reserve Fund".
PAYMENTS OF PRINCIPAL
Certificateholders will be entitled to distributions on each
Distribution Date, commencing with the later 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, in an amount
generally equal to the Certificateholders' Principal Distribution Amount.
Distributions with respect to principal payments will generally be funded from
the portion of the Total Distribution Amount and funds in the Reserve Fund
remaining after the distribution of the Servicing Fee, the Noteholders'
Distributable Amount and the Certificateholders' Interest Distributable Amount.
See "Description of the Transfer and Servicing Agreements--Distributions" and
"--Reserve Fund".
S-27
<PAGE> 157
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes certain terms of the Indenture, Sale
and Servicing Agreement, the Administration Agreement and the Trust Agreement
(collectively, 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 Commission following the issuance of the Securities. 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 Transfer and Servicing Agreements. The
following summary 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 headings "Description of the
Transfer and Servicing Agreements" in the Prospectus, to which description
reference is hereby made.
SALE AND ASSIGNMENT OF RECEIVABLES
Certain information with respect to the conveyance of the Receivables
from the Seller to the Trust on the Closing Date pursuant to the Sale and
Servicing Agreement is set forth under "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, the Reserve Fund and the Yield Maintenance Account, each in the name
of the Trustee on behalf of the Noteholders and the Certificateholders.
THE YIELD MAINTENANCE ACCOUNT; THE YIELD MAINTENANCE AGREEMENT
The Yield Maintenance Account. The Yield Maintenance Account will be
created with an initial deposit by the Seller [or third party] of an amount
equal to the Yield Maintenance Account Initial Deposit. The Yield Maintenance
Account Initial Deposit will be $_____________.
On each Distribution Date, the Indenture Trustee will transfer to the
Collection Account from monies on deposit in the Yield Maintenance Account an
amount equal to the Yield Maintenance Deposit in respect of the Receivables for
such Distribution Date. Amounts on deposit on any Distribution Date in the
Yield Maintenance Account in excess of the Required Yield Maintenance Amount,
after giving effect to all distributions to be made on such Distribution Date,
will be paid 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 Agreement. See "Description of the Transfer and
Assignment Agreements--Accounts" in the Prospectus. Any monies remaining on
deposit in the Yield Maintenance Account upon the termination of the Trust will
be paid to the Seller.
The Yield Maintenance Agreement. Pursuant to the Yield Maintenance
Agreement, on each Distribution Date TMCC [or third party] will deposit into
the Yield Maintenance Account an amount equal to the difference between the
Yield Maintenance Amount and the Required Yield Maintenance Amount, in
S-28
<PAGE> 158
each case determined after giving effect to all required withdrawals from the
Yield Maintenance Account on such Distribution Date.
SERVICING COMPENSATION
The "Servicing Fee Rate" with respect to any Collection Period will be
one-twelfth of ____% of the Pool Balance as of the first day of the related
Collection Period or, in the case of the final Distribution Date, the Cutoff
Date Pool Balance. The Servicing Fee (together with any portion of the
Servicing Fee that remains unpaid from prior Distribution Dates) 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". See "Description of the Transfer and Servicing
Agreements--Servicing Compensation and Payment of Expenses" in the Prospectus.
COLLECTIONS
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 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 Prime-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
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
immediately preceding paragraph is
S-29
<PAGE> 159
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, upon the determination
by the Servicer 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 (see "--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 distributions 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 distributions were made individually. See
"Description of the Transfer and Servicing Agreements--Net Deposits" in the
Prospectus.
DISTRIBUTIONS
On the __ calendar day of each month or, if such day is not a Business
Day, the immediately succeeding Business Day (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 Total Distribution Amount, Noteholders' Distributable Amount
and Certificateholders' Distributable Amount and, based on the available funds
and other amounts available for distribution on the related Distribution Date
as described below, the amount to be distributed to the Noteholders and
Certificateholders.
On 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. On each Distribution Date the Indenture Trustee will also cause an
amount equal to the Yield Maintenance Deposit to be withdrawn from the Yield
Maintenance Account and Deposited in the Collection Account.
S-30
<PAGE> 160
The Trustee will make distributions 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 Amounts. The amount of funds available for
distribution 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 allocable to interest received or allocated by the Servicer
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) from: (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) the Yield Maintenance Deposit; (iii) all proceeds of the
liquidation of Defaulted Receivables, net of expenses incurred by the Servicer
in accordance with its customary servicing procedures in connection with such
liquidation, including amounts received in subsequent Collection Periods ("Net
Liquidation Proceeds"); (iv) all Advances made by the Servicer; and (v) all
Warranty Purchase Payments with respect to Warranty Receivables repurchased by
the Seller and Administrative Purchase Payments with respect to Administrative
Receivables purchased by the Servicer, in each case in respect of such
Collection Period.
"Available Principal" for a Distribution Date will equal the sum of
the amounts described in clauses (i) and (iii) through (v) of the immediately
preceding paragraph 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 and (ii) Net Liquidation
Proceeds with respect to a particular Receivable to the extent of unreimbursed
Advances in respect of such Receivable. 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 ___ 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", consisting 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
S-31
<PAGE> 161
(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), and (ii) the
"Noteholders' Interest Distributable Amount", which shall be an amount equal to
the aggregate of the Class A-1 Interest Distributable Amount, the Class A-2
Interest Distributable Amount and the Class A-3 Interest Distributable Amount.
The "Class A-1 Interest Distributable Amount"shall be an amount equal
to the 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.
The "Class A-2 Interest Distributable Amount" and the "Class A-3
Interest Distributable Amount" have the same meanings appropriately modified to
related to the Class A-2 Notes and Class A-3 Notes, respectively.
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", consisting of the
Certificateholders' Percentage of the amounts set forth under clauses (i)(a)
through (i)(d) in the third preceding paragraph with respect to the
Noteholders' Principal Distributable Amount and (ii) the "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.
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
distribute to Noteholders and Certificateholders the following amounts in the
following order of priority, to the extent of funds available for distribution
on such Distribution Date:
(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;
S-32
<PAGE> 162
(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-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 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;
(v) 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 clause (i) 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
(vi) 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) through (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 the reductions in Available Interest described
in clauses (i) through (iv)) above and second,
S-33
<PAGE> 163
if such amounts are insufficient, from monies transferred from the
Reserve Fund to the Collection Account.
The "Class A-1 Interest Carryover Shortfall" with respect to any
Distribution Date will equal 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. The "Class A-1 Principal Carryover Shortfall" with respect
to any Distribution Date on which the Class A-1 Notes are outstanding will
equal 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. The "Class A-2
Interest Carryover Shortfall", "Class A-3 Interest Carryover Shortfall" ,
"Class A-2 Principal Carryover Shortfall" and "Class A-3 Principal Carryover
Shortfall" with respect to any Distribution Date will be calculated in the same
manner as the Class A-1 Interest Carryover Shortfall and the Class A-1
Principal Carryover Shortfall, as the case may be, appropriately modified to
relate to the Class A-2 Notes or Class A-3 Notes, as the case may be.
The "Certificateholder 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
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. The
"Certificateholder Principal Carryover Shortfall" 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
_________, 199_, will equal 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, will
equal zero.
Any excess amounts in the Collection Account with respect to any
Distribution Date, after giving effect to the distributions described in
clauses (i) through (vi) of the third preceding paragraph ("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 [or third party].
SUBORDINATION OF THE CERTIFICATES; RESERVE FUND
The rights of the Certificateholders to receive distributions 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 current distributions with respect to the
Receivables 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.
S-34
<PAGE> 164
The Certificateholders will not receive any distributions of interest
or principal with respect to a Distribution Date until the full amount of
interest and principal due on each class of Notes on such Distribution Date has
been distributed to the Noteholders. In the event of delinquencies or losses
on the Receivables, the protection afforded to the Noteholders will be effected
by the application of Available Interest and Available Principal for each
Distribution Date in the priority specified under "--Distributions --Payment of
Distributable Amounts".
In addition, the Securityholders will have the benefit of the Reserve
Fund. The Reserve Fund will be a segregated trust account held by the
Indenture Trustee. Any investment earnings on amounts held on deposit in the
Reserve Fund are owned by the Seller [or third party] and will be taxable to
the Seller for federal income tax purposes. The Reserve Fund will be created
with an initial deposit by the Seller [or third party]of an amount equal to the
Reserve Fund Initial Deposit and will thereafter be funded on each Distribution
Date by the deposit therein of all Excess Amounts, until the monies in the
Reserve Fund reach an amount equal to the Specified Reserve Fund Balance.
Thereafter, all Excess Amounts will be deposited from time to time in the
Reserve Fund to the extent necessary to maintain the amount in the Reserve Fund
at the Specified Reserve Fund Balance.
Subject to reduction as hereafter described, the "Specified Reserve
Fund Balance" with respect to any Distribution Date means the lesser of (i)
___% of the Initial Pool Balance and (ii) ___% of the Pool Balance on the first
day of the related Collection Period. However, so long as on any Distribution
Date (except the first Distribution Date) the sum of (x) the outstanding
principal balance of the Securities (after giving effect to distributions made
on the prior Distribution Date) and (y) the aggregate amount of Payaheads that
have been collected but not yet applied as payments under the related
Receivables as of the first day of the related Collection Period is less than
or equal to ___% of the Pool Balance on the first day of the related Collection
Period, then the portion of the Specified Reserve Fund Balance set forth in
clause (i) above will be reduced to ___% of the Initial Pool Balance. In
addition, so long as on any Distribution Date (except the first Distribution
Date) the sum of (x) the outstanding principal balance of the Securities (after
giving effect to distributions made on the prior Distribution Date) and (y) the
aggregate amount of Payaheads that have been collected but not yet applied as
payments under the related Receivables as of the first day of the related
Collection Period is less than or equal to ___% of the Pool Balance on the
first day of the related Collection Period, then such portion of the Specified
Reserve Fund Balance set forth in clause (i) above will be reduced to ___% of
the Initial Pool Balance. With respect to the portion of the Specified Reserve
Fund Balance set forth in clause (ii) above, so long as on any Distribution
Date (except the first Distribution Date) the sum of (x) the outstanding
principal balance of the Securities (after giving effect to distributions made
on the prior Distribution Date) and (y) the aggregate amount of Payaheads that
have been collected but not yet applied as payments under the related
Receivables as of the first day of the related Collection Period is less than
or equal to ___% of the Pool Balance on the first day of the related Collection
Period, then such portion will be reduced to an amount equal to the product of
(I) the Pool Balance on the first day of the related Collection Period and (II)
the percentage (which shall not be greater than ___% or less than zero) equal
to (X) the percentage derived from the fraction, the numerator of which is the
outstanding principal balance of the Securities (after giving effect to
distributions made on the prior Distribution Date) and the denominator of which
is such Pool Balance, less (Y) ___%. The portion of the Specified Reserve Fund
Balance specified in clause (ii) above may be invested in retail installment
sale contracts originated by TMCC and secured by motor vehicles financed
thereby that are not included in the Pool Balance.
If the amount on deposit in the Reserve Fund on any Distribution Date
(after giving effect to all deposits or withdrawals therefrom on such
Distribution Date) is greater than the Specified Reserve Fund
S-35
<PAGE> 165
Balance for such Distribution Date, except as described below and subject to
certain limitations, the Servicer will instruct the Indenture Trustee to
distribute such excess to the Seller [or third party]. 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.
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 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 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
Certificateholder, to reflect such new calculation.
On each Distribution Date, the Trustee will deposit all Excess Amounts
into 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.
If the amount on deposit in the Reserve Fund on such Distribution Date (after
giving effect to all deposits or withdrawals therefrom on such Distribution
Date) 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 [or third party].
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 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 and 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. If funds applied in
accordance with the preceding sentence are insufficient to distribute interest
due on the Certificates, subject to certain limitations, funds will be
withdrawn from the Reserve Fund and applied to distribute interest due on the
Certificates to the extent of the Certificate Interest Reserve Amount. 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) less the Certificate Interest Reserve Amount with
respect to such Distribution Date, in each case, before giving effect to any
reduction thereto on such Distribution Date.
"Certificate Interest Reserve Amount" means the lesser of (i)
$________ less the amount of any application of the Certificate Interest
Reserve Amount to pay interest on the Certificates on any prior
S-36
<PAGE> 166
Distribution Date and (ii) ___% of the Certificate Balance on such Distribution
Date (before giving effect to any reduction thereof on such Distribution Date);
provided, however, that the Certificate Interest Reserve Amount shall be zero
subsequent to any reduction by any Rating Agency to less than "___" or its
equivalent, or withdrawal by any Rating Agency, of its rating of any class of
Notes, unless such rating has been restored.
If on any Distribution Date the entire Noteholders' Distributable
Amount for such Distribution Date (after giving effect to any amounts withdrawn
from the Reserve Fund) is not deposited in the Collection Account, the
Certificateholders generally will not receive any distributions.
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 [or
third party].
OPTIONAL PURCHASE
The outstanding Notes and the Certificates will be redeemed in whole,
but not in part, on any Distribution Date after all the other classes of Notes
have been paid in full 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.
THE TRUSTEE AND INDENTURE TRUSTEE
The 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 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 Sale and Servicing Agreement and the Trust 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 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 Trustee or the Indenture
Trustee.
The 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 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
Trustee. Any resignation or removal of the Trustee or Indenture Trustee and
appointment of a successor thereto will not become effective until acceptance
of the appointment by such successor.
S-37
<PAGE> 167
The Trust Agreement will provide that the Servicer will pay the fees
and expenses of the 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 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
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 TRUSTEE AND INDENTURE TRUSTEE
The 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, and will not be accountable for the use or application by the Seller
or the Servicer of any funds paid to the Seller or the Servicer in respect of
the Notes, the Certificates or the Receivables, or the investment of any monies
by the Servicer before such monies are deposited into the Collection Account or
Payahead Account. 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
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 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 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
Trustee obtains actual knowledge of such failure as will be specified in the
Trust Agreement.
The 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
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
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 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.
The Indenture Trustee will make no representations as to the validity
or sufficiency of the Indenture, the Certificates, the Notes (other than the
execution and authentication thereof) or of any Receivables or related
documents, and will not be accountable for the use or application by the Seller
or the Servicer of any funds paid to the Seller or the Servicer in respect of
the Notes, the Certificates or the Receivables, or the investment of any monies
by the Servicer before such monies are deposited into the Collection Account or
Payahead Account. If no Indenture Event of Default has occurred and is
continuing, the 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
S-38
<PAGE> 168
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 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) an employee benefit plan
(as defined in Section 3(3) of ERISA) that is subject to the provisions of
Title I of ERISA, (b) a plan described in Section 4975(e)(1) of the Code or (c)
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. By
its acceptance of a Certificate, each Certificateholder will be deemed to have
represented and warranted that it is not subject to the foregoing
S-39
<PAGE> 169
limitation. In this regard, purchasers that are insurance companies should
consult with their counsel with respect to the United States Supreme Court
case interpreting the fiduciary responsibility rules of ERISA, John Hancock
Mutual Life Insurance Co. v. Harris Bank and Trust (decided December 12,
1993). In John Hancock, the Supreme Court ruled that assets held in an
insurance company's general account may be deemed to be "plan assets" for ERISA
purposes under certain circumstances. Prospective purchasers should determine
whether the decision affects their ability to make purchases of the
Certificates. For additional information regarding treatment of the
Certificates under ERISA, see "ERISA Considerations" in the Prospectus.
UNDERWRITING
Subject to the terms and conditions set forth in an Underwriting
Agreement (the "Note Underwriting Agreement"), the Seller has agreed to cause
the Trust to sell to each of the Note Underwriters named below (collectively,
the "Note Underwriters"), and each of the Note Underwriters has severally
agreed to purchase, the principal amount of Notes set forth opposite its name
below:
<TABLE>
<CAPTION>
PRINCIPAL
PRINCIPAL AMOUNT OF PRINCIPAL AMOUNT OF AMOUNT OF
UNDERWRITER CLASS A-1 NOTES CLASS A-2 NOTES CLASS A-3 NOTES
----------- ------------------- ------------------- ---------------
<S> <C> <C> <C>
TOTAL
</TABLE>
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 herein, 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:
S-40
<PAGE> 170
<TABLE>
<CAPTION>
UNDERWRITERS PRINCIPAL AMOUNT OF CERTIFICATES
------------ --------------------------------
<S> <C>
TOTAL
</TABLE>
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 herein, 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.
LEGAL OPINIONS
In addition to the legal opinions described in the Prospectus, certain
legal matters relating to the Notes and the Certificates will be passed upon
for the Underwriters and certain federal income tax and California state income
tax and other matters will be passed upon for the Trust by Andrews & Kurth
L.L.P.
S-41
<PAGE> 171
INDEX OF TERMS
<TABLE>
<S> <C>
Additional Yield Maintenance Amount . . . . . . . . . . . . . . . . . . . S-7
Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-10
APR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -ii-, S-7, S-10
Available Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-36
Available Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . S-31
Available Principal . . . . . . . . . . . . . . . . . . . . . . . . . . . S-31
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Certificate Balance . . . . . . . . . . . . . . . . . . . . . . . . S-5, S-32
Certificate Interest Reserve Amount . . . . . . . . . . . . . . . . . . . S-36
Certificate Underwriters . . . . . . . . . . . . . . . . . . . . . . . . S-40
Certificate Underwriting Agreement . . . . . . . . . . . . . . . . . . . S-40
Certificateholder Interest Carryover Shortfall . . . . . . . . . . . . . S-34
Certificateholder Principal Carryover Shortfall . . . . . . . . . . . . . S-34
Certificateholders' Distributable Amount . . . . . . . . . . . . . . . . S-32
Certificateholders' Interest Distributable Amount . . . . . . . . . . . . S-32
Certificateholders' Principal Distributable Amount . . . . . . . . . . . S-32
Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Class A Distributable Amount . . . . . . . . . . . . . . . . . . . . . . S-31
Class A Interest Distributable Amount . . . . . . . . . . . . . . . . . . S-32
Class A-1 Final Scheduled Distribution Date . . . . . . . . . . . . . . . S-4
Class A-1 Interest Carryover Shortfall . . . . . . . . . . . . . . . . . S-34
Class A-1 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -i-
Class A-1 Principal Carryover Shortfall . . . . . . . . . . . . . . . . . S-34
Class A-1 Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Class A-2 Final Scheduled Distribution Date . . . . . . . . . . . . . . . S-4
Class A-2 Interest Carryover Shortfall . . . . . . . . . . . . . . . . . S-34
Class A-2 Interest Distributable Amount . . . . . . . . . . . . . . . . . S-32
Class A-2 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -i-
Class A-2 Principal Carryover Shortfall . . . . . . . . . . . . . . . . . S-34
Class A-2 Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Class A-3 Final Scheduled Distribution Date . . . . . . . . . . . . . . . S-4
Class A-3 Interest Carryover Shortfall . . . . . . . . . . . . . . . . . S-34
Class A-3 Interest Distributable Amount . . . . . . . . . . . . . . . . . S-32
Class A-3 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -i-
Class A-3 Principal Carryover Shortfall . . . . . . . . . . . . . . . . . S-34
Class A-3 Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Class B Interest Distributable Amount . . . . . . . . . . . . . . . . . . S-32
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2, S-18
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-12, S-39
Collection Account . . . . . . . . . . . . . . . . . . . . . . . . . . . S-9
Collection Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -iii-
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1, S-2
</TABLE>
S-42
<PAGE> 172
<TABLE>
<S> <C>
Cutoff Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Dealer Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-17
Defaulted Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . S-31
Determination Date . . . . . . . . . . . . . . . . . . . . . . . . S-4, S-30
Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Eligible Investments . . . . . . . . . . . . . . . . . . . . . . . . . . S-29
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-12
ERISA Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . S-11
Excess Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . S-8, S-34
Excess Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-29
Final Scheduled Distribution Date . . . . . . . . . . . . . . . . . . . . S-6
Final Scheduled Maturity Date . . . . . . . . . . . . . . . . . . . S-2, S-11
Financed Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Initial Certificate Balance . . . . . . . . . . . . . . . . . . . . . . . S-32
Initial Pool Balance . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Interest Period . . . . . . . . . . . . . . . . . . . . . . . . . . S-3, S-26
Interest Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Net Liquidation Proceeds . . . . . . . . . . . . . . . . . . . . . . . . S-31
Note Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-40
Note Underwriting Agreement . . . . . . . . . . . . . . . . . . . . . . . S-40
Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Noteholders' Interest Distributable Amount . . . . . . . . . . . . . . . S-32
Noteholders' Principal Distributable Amount . . . . . . . . . . . . S-4, S-31
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -i-
Original Certificate Balance . . . . . . . . . . . . . . . . . . . . . . S-5
Original Class A Certificate Balance . . . . . . . . . . . . . . . . . . S-5
Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -i-
Pass Through Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-39
Pool Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Pool Factor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-25
Precomputed Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . S-10
Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-29
Principal Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Rating Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-15
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Receivables Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-18
Receivables Purchase Agreement . . . . . . . . . . . . . . . . . . . . . S-18
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-37
Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . -iii-
Required Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-7
Required Yield Maintenance Amount . . . . . . . . . . . . . . . . . . . . S-7
Reserve Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-8
Reserve Fund Initial Deposit . . . . . . . . . . . . . . . . . . . . . . S-8
Sale and Servicing Agreement . . . . . . . . . . . . . . . . . . . . . . S-2
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
</TABLE>
S-43
<PAGE> 173
<TABLE>
<S> <C>
Security Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6
Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -i-
Servicing Fee Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . S-11
Simple Interest Advance . . . . . . . . . . . . . . . . . . . . . . . . . S-10
Specified Reserve Fund Balance . . . . . . . . . . . . . . . . . . . . . S-8
Tax Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-11
TMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1, S-15
Total Distribution Amount . . . . . . . . . . . . . . . . . . . . . . . . S-31
Transfer and Servicing Agreements . . . . . . . . . . . . . . . . . . . . S-16
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -i-, S-1
Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-40
Yield Maintenance Account Initial Deposit . . . . . . . . . . . . . . . . S-7
Yield Maintenance Agreement . . . . . . . . . . . . . . . . . . . . . . . S-7
Yield Maintenance Amount . . . . . . . . . . . . . . . . . . . . . . . . S-7
</TABLE>
S-44
<PAGE> 174
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 Prospectus and, if given or
made, such information or representations must not be relied upon. This
Prospectus Supplement and the 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. The delivery of
this Prospectus Supplement or the Prospectus at any time does not imply that
information herein or therein is correct as of any time subsequent to its
date.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PROSPECTUS SUPPLEMENT Page
----
<S> <C>
Available Information . . . . . . . . . . . . . . . . . . iii
Reports to Securityholders . . . . . . . . . . . . . . . iii
Summary of Terms . . . . . . . . . . . . . . . . . . . . S-1
Risk Factors . . . . . . . . . . . . . . . . . . . . . . S-13
The Trust . . . . . . . . . . . . . . . . . . . . . . . . S-16
Capitalization of the Trust . . . . . . . . . . . . . . . S-18
The Owner Trustee . . . . . . . . . . . . . . . . . . . . S-18
The Receivables Pool . . . . . . . . . . . . . . . . . . S-18
Delinquencies, Repossessions and Net Losses . . . . . . . S-22
The Seller and the Servicer . . . . . . . . . . . . . . . S-24
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . S-24
Prepayment and Yield Considerations . . . . . . . . . . . S-24
Pool Factors and Trading Information . . . . . . . . . . S-25
Description of the Notes . . . . . . . . . . . . . . . . S-25
Description of the Certificates . . . . . . . . . . . . . S-27
Description of the Transfer and Servicing Agreements . . S-28
ERISA Considerations . . . . . . . . . . . . . . . . . . S-39
Underwriting . . . . . . . . . . . . . . . . . . . . . . S-40
Legal Opinions . . . . . . . . . . . . . . . . . . . . . S-41
Index of Terms . . . . . . . . . . . . . . . . . . . . . S-42
ANNEX A: Global Clearance, Settlement and Tax
Documentation Procedures . . . . . . . . . . . . . . . A-1
PROSPECTUS
Available Information . . . . . . . . . . . . . . . . . . iii
Incorporation of Certain Documents by Reference . . . . . iii
Summary of Terms . . . . . . . . . . . . . . . . . . . . 1
Risk Factors . . . . . . . . . . . . . . . . . . . . . . 10
The Trusts . . . . . . . . . . . . . . . . . . . . . . . 14
The Trustee . . . . . . . . . . . . . . . . . . . . . . . 15
The Receivables Pools . . . . . . . . . . . . . . . . . . 15
Delinquencies, Repossessions and Net Losses . . . . . . . 17
Weighted Average Life of the Securities . . . . . . . . . 17
Pool Factors and Trading Information . . . . . . . . . . 19
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . 20
The Servicer . . . . . . . . . . . . . . . . . . . . . . 20
The Seller . . . . . . . . . . . . . . . . . . . . . . . 20
Description of the Notes . . . . . . . . . . . . . . . . 22
Description of the Certificates . . . . . . . . . . . . . 27
Certain Information Regarding the Securities . . . . . . 28
Description of the Transfer and Servicing Agreements . . 42
Certain Legal Aspects of the Receivables . . . . . . . . 56
Certain Federal Income Tax Consequence . . . . . . . . . 63
ERISA Considerations . . . . . . . . . . . . . . . . . . 77
Plan of Distribution . . . . . . . . . . . . . . . . . . 78
Legal Opinions . . . . . . . . . . . . . . . . . . . . . 78
Index of Terms . . . . . . . . . . . . . . . . . . . . . 79
</TABLE>
TOYOTA AUTO RECEIVABLES 199__-__ OWNER
TRUST
$_______________________
ASSET BACKED NOTES
AND
ASSET BACKED CERTIFICATES
$________ CLASS A-1 ____% ASSET BACKED NOTES
$________ CLASS A-2 ____% ASSET BACKED NOTES
$________ CLASS A-3 ____% ASSET BACKED NOTES
$_________ ___% ASSET BACKED CERTIFICATES
TOYOTA MOTOR CREDIT
RECEIVABLES CORPORATION
SELLER
TOYOTA MOTOR CREDIT CORPORATION
SERVICER
___________________________
PROSPECTUS SUPPLEMENT
[DATE]
[UNDERWRITERS]
S-46
<PAGE> 175
ANNEX A
GLOBAL CLEARANCE, SETTLEMENT AND
TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered
Securities (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., seven calendar day settlement).
Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedure applicable
to U.S. corporate debt obligations and prior asset-backed securities issues.
Secondary cross-market trading between Cedel 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.
A-1
<PAGE> 176
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 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 Participants or Euroclear Participant's particular cost of funds.
A-2
<PAGE> 177
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) borrowing though 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
A-3
<PAGE> 178
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.
The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of the
United States or any political subdivision thereof or (iii) an estate or trust
that is subject to United States federal income tax, regardless of the source
of its income. The term "Non-U.S. Person" means any person who is not a U.S.
Person. This summary does not deal with all aspects of U.S. federal income tax
withholding that may be relevant to foreign holders of Global Securities.
Investors are advised to consult their own tax advisors for specific tax advice
concerning their holding and disposing of Global Securities.
A-4
<PAGE> 179
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF 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.
<TABLE>
<S> <C>
Registration Fee . . . . . . . . . . . . . . . . . . . . $ 517,241.38
Blue Sky Fees and Expenses . . . . . . . . . . . . . . . 20,000.00
-------------
Printing Expenses . . . . . . . . . . . . . . . . . . . . 80,000.00
-------------
Trustee Fees and Expenses . . . . . . . . . . . . . . . . 15,000.00
-------------
Legal Fees and Expenses . . . . . . . . . . . . . . . . . 175,000.00
-------------
Accounting Fees and Expenses . . . . . . . . . . . . . . 100,000.00
-------------
Rating Agencies' Fees . . . . . . . . . . . . . . . . . . 364,000.00
-------------
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 28,758.62
-------------
Total . . . . . . . . . . . . . . . . . . . . . $1,300,000.00
-------------
</TABLE>
* All amounts except registration fee are estimates.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 317(b) of the California Corporations Code (the "Corporations
Code") provides that a corporation may indemnify any person who was or is a
party or is threatened to be made a party to any "proceeding" (as defined in
Section 317(a) of the Corporations Code), 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 a director, officer, employee or other agent of
the corporation (collectively, an "Agent"), against expenses, judgments, fines,
settlements and other amounts actually and reasonably incurred in connection
with such proceeding if the Agent acted in good faith and in a manner the Agent
reasonably believed to be in the best interest of the corporation and, in the
case of a criminal proceeding, had no reasonable cause to believe the conduct
was unlawful.
Section 317(c) of the Corporations Code provides that a corporation
shall have power to indemnify any Agent who was or is a party or is threatened
to be made a party to any threatened, pending or completed 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 Agent, against expenses actually and
reasonably incurred by the Agent in connection with the defense or settlement
of such action if the Agent acted in good faith and in a manner such Agent
believed to be in the best interest of the corporation and its shareholders.
Section 317(c) further provides that no indemnification may be made
thereunder for any of the following: (i) in respect of any matter as to which
an Agent shall have been adjudged to be liable to the corporation, unless the
court in which such proceeding is or was pending shall determine that such
Agent is fairly and reasonably entitled to indemnity for expenses, (ii) amounts
paid in settling or otherwise disposing of a pending action without court
approval and (iii) expenses incurred in defending a pending action which is
settled or otherwise disposed of without court approval.
II-1
<PAGE> 180
Section 317(d) of the Corporations Code requires that an Agent be
indemnified against expenses actually and reasonably incurred to the extent the
Agent has been successful on the merits in the defense of proceedings referred
to in subdivisions (b) or (c) of Section 317.
Except as provided in Section 317(d), and pursuant to Section 317(e),
indemnification under Section 317 shall be made by the corporation only if
specifically authorized and upon a determination that indemnification is proper
in the circumstances because the Agent has met the applicable standard of
conduct, by any of the following: (i) a majority vote of a quorum consisting of
directors who are not parties to the proceeding, (ii) if such a quorum of
directors is not obtainable, by independent legal counsel in a written opinion,
(iii) approval of the shareholders, provided that any shares owned by the Agent
may not vote thereon, or (iv) the court in which such proceedings is or was
Pending.
Pursuant to Section 317(f) of the Corporations Code, the corporation
may advance expenses incurred in defending any proceeding upon receipt of an
undertaking by the Agent to repay such amount if it is ultimately determined
that the Agent is not entitled to be indemnified.
Section 317(h) provides, with certain exceptions, that no
indemnification shall be made under Section 317 where it appears that it would
be inconsistent with a provision of the corporation's articles, bylaws, a
shareholder resolution or an agreement which prohibits or otherwise limits
indemnification, or where it would be inconsistent with any condition expressly
imposed by a court in approving a settlement.
Section 317(i) authorizes a corporation to purchase and maintain
insurance on behalf of an Agent for liabilities arising by reason of the
Agent's status, whether or not the corporation would have the power to
indemnify the Agent against such liability under the provisions of Section 317.
Reference is also made to Section 7 of the Underwriting Agreement
among the Registrant, Toyota Motor Credit Corporation and the Underwriters
named therein (see Exhibit 1.1), which provides for indemnification of the
Registrant under certain circumstances.
Article VIII of the Articles of Incorporation of the Registrant (see
Exhibit 3.1) provides that the liability of the directors for monetary damages
shall be eliminated to the fullest extent permissible under California law.
Article IX of the Bylaws of the Registrant (see Exhibit 3.2) permits
the Registrant to indemnify its directors, officers, employees and agents to
the full extent permitted under California law and the Registrant's Articles of
Incorporation.
[Remainder of Page Intentionally Left Blank]
II-2
<PAGE> 181
ITEM 16. EXHIBITS AND FINANCIAL STATEMENTS
a. Exhibits:
<TABLE>
<S> <C>
1.1 Form of Underwriting Agreement for Notes and Certificates
1.2 Form of Underwriting Agreement for Certificates
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
5.1(a) Opinion of Andrews & Kurth L.L.P.
5.1(b) Opinion of Andrews & Kurth L.L.P. regarding Certificates
8.1 Opinion of Andrews & Kurth L.L.P. with respect to tax matters
23.1 Consent of Andrews & Kurth L.L.P. (included as part of Exhibit 5.1(a)(b))
23.2 Consent of Andrews & Kurth L.L.P. (included as part of Exhibit 8.1)
24.1 Power of Attorney of Directors and Officers of the Registrant (included on Page II-5.*
</TABLE>
________________________
* Previously filed.
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
II-3
<PAGE> 182
(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.
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.
II-4
<PAGE> 183
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all the requirements for filing on Form S-3 and has duly caused this Amendment
No. 1 to its Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Torrance and State of
California, on the 3rd day of July, 1996.
TOYOTA MOTOR CREDIT
RECEIVABLES CORPORATION
By: /s/ Lloyd Mistele*
-------------------------------
Lloyd Mistele, Director and
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Lloyd Mistele* Director and Principal July 3, 1996
- -------------------------------------- Executive Officer
Lloyd Mistele
/s/ Nobu Shigemi* Director and Principal July 3, 1996
- -------------------------------------- Financial Officer and
Nobu Shigemi Principal Accounting Officer
/s/ Donald J. Puglisi* Director July 3, 1996
- --------------------------------------
Donald J. Puglisi
/s/ Patrick J. Breene
- --------------------------------------
*By: Patrick J. Breene
Attorney-in-Fact
</TABLE>
<PAGE> 1
EXHIBIT 1.1
FORM OF UNDERWRITING AGREEMENT FOR NOTES
TOYOTA AUTO RECEIVABLES 199_-_ OWNER TRUST
$o CLASS A-1 o% ASSET BACKED NOTES
$o CLASS A-2 o% ASSET BACKED NOTES
$o CLASS A-3 o% ASSET BACKED NOTES
$o o% ASSET BACKED CERTIFICATES, CLASS A
UNDERWRITING AGREEMENT
[Date]
[Names of Investment Banks]
As Representatives of the
several Underwriters
c/o [Address]
Dear Sirs:
Section 1. Introductory. Toyota Motor Credit Receivables Corporation,
a California corporation (the "Seller") and a wholly owned subsidiary of Toyota
Motor Credit Corporation, a California corporation ("TMCC"), proposes to cause
Toyota Auto Receivables 199_-_ Owner Trust (the "Trust"), a business trust
organized under the laws of the State of Delaware, to sell $o aggregate
principal amount of Class A-1 o% Asset Backed Notes (the "Class A-1 Notes"),
$o aggregate principal amount of Class A-2 o% Asset Backed Notes (the "Class
A-2 Notes"), $o aggregate principal amount of Class A-3 o% Asset Backed Notes
(the "Class A-3 Notes", and together with the Class A-1 Notes and the Class A-2
Notes, the "Notes") and $o aggregate principal amount of o% Asset Backed
Certificates (the "Certificates", and together with the Notes, the
"Securities"). The Trust will be governed by a Trust Agreement (the "Trust
Agreement") to be dated as of o among the Seller, and o as owner trustee (the
"Owner Trustee"). The assets of the Trust will include, among other things, a
pool of retail installment sale contracts (the "Receivables") secured by the new
and used automobiles and/or light duty trucks financed thereunder (the "Financed
Vehicles") and certain monies due or to become due thereunder on or after o (the
"Cutoff Date"). The Receivables and other assets of the Trust will be sold by
TMCC to the Seller pursuant to a Receivables Purchase Agreement (the
"Receivables Purchase Agreement") to be dated as of o between TMCC and the
Seller; such Receivables and other assets will be sold by the Seller to the
Trust pursuant to a Sale and Servicing Agreement (the "Sale and Servicing
Agreement") to be dated as of o among TMCC, the Seller and the Trust. As of the
Cutoff Date, the Receivables had an aggregate principal balance
<PAGE> 2
of $o. The Notes will be issued pursuant to the terms of an Indenture (as
defined below) and the Certificates will represent an undivided ownership
interest in the Trust, all as described in the Prospectus, as defined below.
The Indenture (the "Indenture") to be dated as of o will be entered into by the
Trust and o as indenture trustee (the "Indenture Trustee"). Pursuant to the
terms of the Administration Agreement (the "Administration Agreement") to be
dated as of o among TMCC, the Trust and the Indenture Trustee, TMCC will agree
to perform certain administrative functions with respect to the Securities.
The Trust Agreement, the Receivables Purchase Agreement, the Sale and Servicing
Agreement, the Indenture and the Administration Agreement, are herein referred
to as, the "Basic Documents".
This Underwriting Agreement shall hereinafter be referred to as "this
Agreement". Capitalized terms used herein and not otherwise defined shall have
the meanings ascribed thereto in the Indenture.
Section 2. Representations and Warranties of the Trust, the Seller
and TMCC.
(a) Each of the Trust, the Seller and TMCC, jointly and severally,
represents and warrants to, and agrees with, each of the Underwriters named in
Schedule I hereto (the "Underwriters") that:
(i) A registration statement on Form S-3 (No. 333-4336),
including a form of prospectus, relating to the Securities has been
filed with the Securities and Exchange Commission (the "Commission")
and either (A) has been declared effective under the Securities Act of
1933, as amended (the "Act"), and is not proposed to be amended or (B)
is proposed to be amended by amendment or post-effective amendment.
If such registration statement (the "initial registration statement")
has been declared effective, either (i) any additional registration
statement (the "additional registration statement") relating to the
Securities has been filed with the Commission pursuant to Rule 462(b)
("Rule 462(b)") under the Act and declared effective upon filing
pursuant to Rule 462(b) and the Securities have been duly registered
under the Act pursuant to the initial registration statement and such
additional registration statement or (ii) any such additional
registration statement proposed to be filed with the Commission
pursuant to Rule 462(b) will become effective upon filing pursuant to
Rule 462(b) and upon such filing the Securities will have been duly
registered under the Act pursuant to the initial registration
statement and such additional registration statement. If the Seller
does not propose to amend the initial registration statement, any such
additional registration statement or any post-effective amendment to
either such registration statement filed with the Commission prior to
the execution and delivery of this Agreement, then the most recent
amendment (if any) to each such registration statement has been
declared effective by the Commission or has become effective upon
filing pursuant to Rule 462(c) under the Act ("Rule 462(c)") or Rule
462(b).
For purposes of this Agreement, "Effective Time" with
respect to the initial registration statement or, if filed prior to
the execution and delivery of this Agreement, the additional
registration statement means (A) if the Seller has advised the
Representatives that it does not propose to amend such registration
statement, the date and time as of which such
2
<PAGE> 3
registration statement, or the most recent post-effective amendment
thereto (if any) filed prior to the execution and delivery of this
Agreement, was declared effective by the Commission or has become
effective upon filing pursuant to Rule 462(c) or (B) if the Seller has
advised the Representatives that it proposes to file an amendment or
post-effective amendment to such registration statement, the date and
time as of which such registration statement, as amended by such
amendment or post-effective amendment, as the case may be, is declared
effective by the Commission. If the Seller has advised the
Representatives that it proposes to file, but has not filed, an
additional registration statement prior to the execution and delivery
of this Agreement, "Effective Time" with respect to such additional
registration statement means the date and time as of which such
registration statement is filed and becomes effective pursuant to Rule
462(b). "Effective Date" with respect to the initial registration
statement or the additional registration statement (if any) means the
date of the Effective Time thereof.
The initial registration statement, as amended at its
Effective Time, including all information (A) contained in the
additional registration statement (if any), (B) deemed to be a part of
the initial registration statement as of the Effective Time of the
additional registration statement (if any) pursuant to the General
Instructions of the Form on which it is filed and (C) deemed to be a
part of the initial registration statement as of its Effective Time
pursuant to Rule 430A(b) under the Act ("Rule 430A(b)"), is
hereinafter referred to as the "Initial Registration Statement". The
additional registration statement, as amended at its Effective Time,
including (A) the contents of the initial registration statement
incorporated by reference therein and (B) deemed to be a part of the
additional registration statement as of its Effective Time pursuant to
Rule 430A(b), is hereinafter referred to as the "Additional
Registration Statement". The Initial Registration Statement and the
Additional Registration Statement are hereinafter referred to
collectively as the "Registration Statements" and individually as a
"Registration Statement". The form of prospectus relating to the
Securities, as first filed with the Commission pursuant to and in
accordance with Rule 424(b) under the Act ("Rule 424(b)") or, if no
such filing is required, as included in a Registration Statement,
including all material incorporated by reference in such prospectus,
is hereinafter referred to as the "Prospectus". [No document has been
or will be prepared or distributed in reliance on Rule 434 under the
Act.]
(ii) (A) On the Effective Date of any Registration
Statement whose Effective Time is prior to the execution and delivery
of this Agreement, each such Registration Statement conformed, (B) on
the date of this Agreement each such Registration Statement conforms
and (C) on any related Effective Date subsequent to the date of this
Agreement, each such Registration Statement will conform, in all
material respects with the requirements of the Act and the rules and
regulations of the Commission promulgated under the Act (the "Rules
and Regulations"), and at such times did not and will not include any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading. At the time of the filing of the Prospectus
pursuant to Rule 424(b) or, if no such filing is required, at the
Effective Date of the Additional Registration Statement that includes
the Prospectus, on the date of this
3
<PAGE> 4
Agreement and at the Closing Date (as such term is defined in Section
3 hereof), the Prospectus will conform in all material respects to the
requirements of the Act and the Rules and Regulations, and does not
include, or will not include, any untrue statement of a material fact,
nor does the Prospectus omit, nor will it omit, any material fact,
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The two
immediately preceding sentences do not apply to statements in or
omissions from a Registration Statement or the Prospectus based upon
written information furnished to the Seller by any Underwriter through
o (the "Lead Underwriter") specifically for use therein. If the
Effective Time of the Initial Registration Statement is subsequent to
the date of this Agreement, no Additional Registration Statement has
been or will be filed.
(iii) The consummation of the transactions contemplated by
this Agreement and the Basic Documents, and the fulfillment of the
terms thereof, will not conflict with or result in a breach of any of
the terms or provisions of, or constitute a default under, or result
in the creation of any lien, charge, or encumbrance upon any of the
property or assets of the Trust, the Seller or TMCC pursuant to the
terms of, any indenture, mortgage, deed of trust, loan agreement,
guarantee, lease financing agreement or similar agreement or
instrument under which the any of them is a debtor or guarantor.
(iv) No consent, approval, authorization or order of, or
filing with, any court or governmental agency or body is required to
be obtained or made by the Trust, the Seller or TMCC for the
consummation of the transactions contemplated by this Agreement except
such as have been obtained and made under the Act or the Rules and
Regulations, such as may be required under state securities laws and
filing of any financing statements required to perfect the transfer of
the Receivables.
(v) None of the Trust, the Seller nor TMCC is in
violation of its charter or by-laws or other organizational documents
or in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any agreement or
instrument to which it is a party or by which it or its properties are
bound which could have a material adverse effect on the transactions
contemplated herein or in the Basic Documents. The execution,
delivery and performance of this Agreement and the Basic Documents and
the issuance and sale of the Securities and compliance with the terms
and provisions of the Securities will not, subject to obtaining any
consents or approvals as may be required under the state securities
laws of various jurisdictions, result in a breach or violation of any
of the terms and provisions of, or constitute a default under, any
statute, rule, regulation or order of any governmental agency or body
or any court having jurisdiction over the Trust, the Seller or TMCC or
any of their respective properties or any agreement or instrument to
which any of them is a party or by which any of them is bound or to
which any of their respective properties is subject, or with the
charter or by-laws or other organizational documents of the Trust, the
Seller or TMCC, and each of them has full corporate power and
authority to enter into this Agreement and the Basic Documents and to
consummate the transactions contemplated hereby and thereby.
4
<PAGE> 5
(vi) This Agreement has been duly authorized, executed and
delivered by each of the Trust, the Seller and TMCC.
(b) As of the Closing Date, the representations and warranties of the
Trust, the Seller and of TMCC in the Basic Documents will be true and correct,
and the Underwriters may rely on such representations and warranties as if they
were set forth herein in full.
Section 3. Purchase, Sale and Delivery of the Securities. On the
basis of the representations, warranties and agreements herein contained, but
subject to the terms and conditions herein set forth, the Trust agrees to sell
to the Underwriters, and the Underwriters agree, severally and not jointly, to
purchase from the Trust, the respective principal amounts of Securities set
forth opposite the names of the Underwriters in Schedule I hereto. The Notes
are to be purchased at a purchase price equal to (i) in the case of the Class
A-1 Notes, o% of the aggregate principal amount thereof plus accrued interest
at the Class A-1 Rate from (and including) o, 199_, to (but excluding) the
Closing Date (ii) in the case of the Class A-2 Notes, o% of the aggregate
principal amount thereof plus accrued interest at the Class A-2 Rate from (and
including) o, 199_, to (but excluding) the Closing Date, (iii) in the case of
the Class A-3 Notes, o% of the aggregate principal amount thereof plus accrued
interest at the Class A-3 Rate from (and including) o, 199_, to (but excluding)
the Closing Date and (iv) in the case of the Certificates, o% of the aggregate
principal amount thereof plus accrued interest at the Pass Through Rate from
(and including) o, 199_, to (but excluding) the Closing Date.
The Notes will initially be represented by (i) in the case of the
Class A-1 Notes, o certificates representing $o aggregate principal amount of
Class A-1 Notes registered in the name of Cede & Co., the nominee of The
Depository Trust Company, New York, New York ("DTC") (the "Class A-1 DTC
Notes"), and one fully registered certificate representing $o aggregate
principal amount of Class A Notes registered in the name of the Trust, (ii) in
the case of the Class A-2 Notes, o certificates representing $o aggregate
principal amount of Class A-2 Notes registered in the name of DTC (the "Class
A-2 DTC Notes"), and one fully registered certificate representing $o aggregate
principal amount of Class A-2 Notes registered in the name of the Trust and
(iii) in the case of the Class A-3 Notes, o certificates representing $o
aggregate principal amount of Class A-3 Notes registered in the name of DTC
(the "Class A-3 DTC Notes", and together with the Class A-1 DTC Notes and the
Class A-2 DTC Notes, the "DTC Notes"), and one fully registered certificate
representing $o aggregate principal amount of Class A-3 Notes registered in
the name of the Trust. The Certificates will initially be represented by o
certificates representing $o aggregate principal amount of Certificates
registered in the name of Cede & Co., the nominee of DTC (the "DTC
Certificates", and together with the DTC Notes, the "DTC Securities"), and one
fully registered certificate representing $o aggregate principal amount of
Certificates registered in the name of the Trust. The interests of beneficial
owners of the DTC Securities will be represented by book entries on the records
of DTC and participating members thereof. Definitive certificates evidencing
the Securities will be available only under the limited circumstances specified
in the Prospectus.
The Trust will deliver the DTC Securities to the Representatives for
the respective securities accounts of the Underwriters at the office of DTC, 55
Water Street, 49th Floor, New York, New
5
<PAGE> 6
York 10004, against payment to the Trust of the purchase price for the
Securities by wire transfer in immediately available funds, at 10:00 A.M., New
York time, on o, or at such other time not later than seven full business days
thereafter as the Trust, the Seller, TMCC and the Representatives determine,
such time being herein referred to as the "Closing Date". The certificates
evidencing the DTC Securities and the Securities registered in the name of the
Trust will be made available for checking and packaging at the office of o in
The City of New York at least 24 hours prior to the Closing Date.
Section 4. Offering by the Underwriters. It is understood that the
several Underwriters propose to offer the Securities for sale to the public as
set forth in the Prospectus.
Section 5. Certain Agreements of the Seller and TMCC. Each of the
Seller and TMCC, as the case may be, jointly and severally, covenants and
agrees with the several Underwriters that:
(a) If the Effective Time is prior to the execution and
delivery of this Agreement, the Seller will file the Prospectus with
the Commission pursuant to and in accordance with Rule 424(b)(1) (or,
if applicable and if consented to by the Underwriter, Rule 424(b)(4))
not later than the earlier of (i) the second business day following
the execution and delivery of this Agreement or (ii) the fifteenth
business day after the Effective Date of the Initial Registration
Statement. The Seller will advise the Underwriter promptly of any
such filing pursuant to Rule 424(b). If the Effective Time of the
Initial Registration Statement is prior to the execution and delivery
of this Agreement and an additional registration statement is
necessary to register a portion of the Securities under the Act but
the Effective Time thereof has not occurred as of such execution and
delivery, the Seller will file the Additional Registration Statement
or a post-effective amendment thereto, as the case may be, with the
Commission pursuant to and in accordance with Rule 424(b) on or prior
to 10:00 P.M., New York time, on the date of this Agreement or, if
earlier, on or prior to the time the Prospectus is printed and
distributed to any Underwriter, or will make such filing at such later
date as shall have been consented to by the Underwriter.
(b) The Seller will advise the Representatives promptly of
any proposal to amend or supplement the initial registration statement
or any additional registration statement as filed or the related
prospectus or any Registration Statement or the Prospectus and will
not effect any such amendment or supplement without the consent of the
Representatives; and the Seller will also advise the Representatives
promptly of the effectiveness of each Registration Statement (if the
related Effective Time is subsequent to the execution and delivery of
this Agreement) and of any amendment or supplement of any Registration
Statement or the Prospectus and of the institution by the Commission
of any stop order proceedings in respect of any Registration Statement
and will use its best efforts to prevent the issuance of any such stop
order and to obtain as soon as possible its lifting, if issued.
(c) If, at any time when a prospectus relating to the
Securities is required to be delivered under the Act, any event occurs
as a result of which the Prospectus as then amended or supplemented
would include an untrue statement of a material fact or omit to
6
<PAGE> 7
state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, or if it is necessary at any time to amend or
supplement the Prospectus to comply with the Act, the Seller will
promptly notify the Representatives and will promptly prepare and
file, or cause to be prepared and filed, with the Commission an
amendment or supplement which will correct such statement or omission,
or an amendment or supplement which will effect such compliance.
Neither the Representatives' consent to, nor the delivery by the
Representatives of, any such amendment or supplement shall constitute
a waiver of any of the conditions set forth in Section 6 hereof.
(d) As soon as practicable, but not later than the
Availability Date (as defined below), the Trust will cause the
Indenture Trustee to make generally available to the holders of the
Securities an earnings statement with respect to the Trust covering a
period of at least 12 months beginning after the Effective Date of the
Initial Registration Statement (or of any Additional Registration
Statement) that will satisfy the provisions of Section 11(a) of the
Act. For the purpose of the preceding sentence, "Availability Date"
means the 45th day after the end of the Seller's fourth fiscal quarter
following the Seller's fiscal quarter that includes such Effective
Date, except that, if such fourth fiscal quarter is the last quarter
of the Seller's fiscal year, "Availability Date" means the 90th day
after the end of such fourth fiscal quarter.
(e) The Seller will furnish to the Underwriters copies of
each Registration Statement as originally filed and each amendment
thereto (in each case at least two of which will be signed and will
include all exhibits), each related preliminary prospectus, the
Prospectus and all amendments and supplements to such documents, in
each case as soon as available and in such quantities as the
Representatives may reasonably request. The Prospectus shall be so
furnished no later than 3:00 P.M., New York City time, on the second
business day following the later of the execution and delivery of this
Agreement or the Effective Time of the Initial Registration Statement.
All other documents shall be furnished as soon as available. The
Seller will pay the expenses of printing and distributing to the
Underwriters all such documents.
(f) The Seller will arrange for the qualification of the
Securities for sale under the securities laws of such jurisdictions in
the United States as the Representatives may reasonably designate and
will continue such qualifications in effect so long as required for
the distribution of the Securities, provided that the Seller shall not
be obligated to qualify to do business nor become subject to service
of process generally, but only to the extent required for such
qualification, in any jurisdiction in which it is not currently so
qualified.
(g) So long as any of the Securities are outstanding, the
Trust, the Seller or TMCC, as the case may be, will deliver or cause
to be delivered to the Representatives (i) copies of each report
regarding the Securities mailed to holders pursuant to Section 5.09 of
the Sale and Servicing Agreement, (ii) the annual statement as to
compliance and the annual statement of a firm of independent public
accountants furnished to the Owner Trustee pursuant to Sections 4.10
and 4.11 of the Sale and Servicing Agreement (as amended), as soon as
such statements are furnished to the Owner Trustee, (iii) the reports,
if any, prepared
7
<PAGE> 8
and delivered by the Trust and the Indenture Trustee pursuant to
Sections 7.03 and 7.04 of the Indenture, (iv) copies of all documents
required to be filed with the Commission pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or any order of
the Commission thereunder and (v) such other information concerning
the Seller, TMCC (relating to the Receivables, the servicing thereof
or the ability of TMCC to act as Servicer), the Securities or the
Trust as the Representatives may reasonably request from time to time.
(h) The Trust, the Seller and TMCC will pay all expenses
incident to the performance of their respective obligations under this
Agreement, including without limitation, (i) expenses incident to the
printing, reproduction and distribution of the Registration Statement
as originally filed and each amendment thereto, preliminary
prospectuses and the Prospectus (including any amendments and
supplements thereto), (ii) the fees and disbursements of the Owner
Trustee and the Indenture Trustee and their respective counsel, (iii)
the fees and disbursements of counsel to the Trust, the Seller and
TMCC and the independent public accountants of the Seller, (iv) the
fees charged by Moody's Investors Service, Inc. ("Moody's") and
Standard & Poor's Ratings Services ("Standard & Poor's", and together
with Moody's, the "Rating Agencies") in connection with the rating of
the Securities, (v) the fees of DTC in connection with the book-entry
registration of the DTC Securities and (vi) expenses incurred in
distributing preliminary prospectuses and the Prospectus (including
any amendments and supplements thereto) to the Underwriters, and will
reimburse the Underwriters for any expenses (including reasonable fees
and disbursements of counsel) incurred by the Underwriters in
connection with the qualification of the Securities for sale under the
securities laws of such jurisdictions in the United States as the
Representatives may designate pursuant to Section 5(f) hereof.
(i) On or before the Closing Date, the Seller and TMCC shall
cause their respective books and records (including any computer
records) relating to the Receivables to be marked to show the Trust's
absolute ownership of the Receivables, and from and after the Closing
Date neither the Seller nor TMCC, as Servicer, shall take any action
inconsistent with the Trust's ownership of such Receivables, other
than as permitted by the Indenture or the Sale and Servicing Agreement
or as required by law.
(j) For a period of 14 days from the date hereof, none of the
Trust, the Seller, TMCC nor any of their respective affiliates will,
without the prior written consent of the Representatives, directly or
indirectly, offer, sell or contract to sell or announce the offering
of, in a public or private transaction in the United States, any other
collateralized securities similar to the Securities.
(k) So long as any Securities are outstanding, the Trust, the
Seller and TMCC will cause to be delivered to the Representatives a
reliance letter relating to each Opinion of Counsel delivered to
either Rating Agency by counsel to the Trust, the Seller or TMCC
pursuant to any Basic Document.
8
<PAGE> 9
(l) To the extent, if any, that the rating at the Closing
Date provided with respect to the Securities by either Rating Agency
is conditional upon the furnishing of documents or the taking of any
other actions by the Seller or TMCC, the Seller or TMCC, as the case
may be, shall furnish such documents and take any such other actions
as may be required.
Section 6. Conditions of the Obligations of the Underwriters. The
obligations of the several Underwriters to purchase and pay for any of the
Securities will be subject to the accuracy of the respective representations
and warranties on the part of the Trust, the Seller and TMCC herein, to the
accuracy of the statements of the Trust, the Seller and TMCC made in any
officers' certificates pursuant to the provisions hereof, to the performance by
the Trust, the Seller and TMCC of their respective obligations hereunder and to
the following additional conditions precedent:
(a) On (i) the date of this Agreement, the Representatives,
the Trust and the Seller shall have received a letter, dated the date
of delivery thereof (which, if the Effective Time of the Initial
Registration Statement is prior to the execution and delivery of this
Agreement, shall be on or prior to the date of this Agreement or, if
such Effective Time is subsequent to the execution and delivery of
this Agreement, shall be prior to the filing of the amendment or
post-effective amendment to the registration statement to be filed
shortly prior to such Effective Time), of Price Waterhouse LLP
confirming that they are independent public accountants with respect
to the Seller and TMCC within the meaning of the Act and the Rules and
Regulations, with respect to certain information contained in the
Registration Statements and substantially in the form of the draft to
which the Representatives previously have agreed and otherwise in form
and in substance satisfactory to the Representatives and counsel for
the Underwriters and (ii) the Closing Date, the Representatives, the
Trust and the Seller shall have received a letter, dated as of the
Closing Date, from Price Waterhouse LLP, updating the letter referred
to in clause (i) above, in form and substance satisfactory to the
Representatives and counsel for the Underwriters. As used in this
subsection, (i) "Registration Statements" shall mean (A) the Initial
Registration Statement as proposed to be amended by the amendment or
post-effective amendment to be filed shortly prior to its Effective
Time, if the Effective Time of the Initial Registration Statement is
subsequent to the date of this Agreement, or (B) the Initial
Registration Statement and the additional registration statement as
proposed to be filed or as proposed to be amended by the
post-effective amendment to be filed shortly prior to its Effective
Time, if the Effective Time is prior to the execution and delivery of
this Agreement but the Effective Time of the Additional Registration
Statement is subsequent to such execution and delivery, and (ii)
"Prospectus" shall mean the prospectus included in the Registration
Statements.
(b) If the Effective Time of the Initial Registration
Statement is not prior to the execution and delivery of this
Agreement, such Effective Time shall have occurred not later than
10:00 P.M., New York time, on the date of this Agreement or such later
date as shall have been consented to by the Representatives. If the
Effective Time of the Initial Registration Statement is prior to the
execution and delivery of this Agreement, the Prospectus shall have
been filed with the Commission in accordance with the Rules and
Regulations and Section 5(a) hereof. If the Effective Time of the
Additional Registration
9
<PAGE> 10
Statement (if any) is not prior to the execution and delivery of this
Agreement, such Effective Time shall have occurred not later than
10:00 P.M., New York time, on the date of this Agreement or, if
earlier, the time the Prospectus is printed and distributed to any
Underwriter, or shall have occurred at such later date as shall have
been consented to by the Underwriter. Prior to the Closing Date, no
stop order suspending the effectiveness of any Registration Statement
shall have been issued and no proceedings for that purpose shall have
been instituted or, to the knowledge of the Seller or the
Representatives, shall be contemplated by the Commission.
(c) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred (i) any material adverse
change in the condition, financial or otherwise, or in the business
affairs or business prospects of the Trust, the Seller or TMCC which,
in the reasonable judgment of a majority in interest of the
Underwriters including the Representatives, materially impairs the
investment quality of any of the Securities, or makes it impractical
or inadvisable to proceed with completion of the sale of and payment
for any of the Securities; (ii) any downgrading in the rating of any
debt securities of TMCC or Toyota Motor Sales, U.S.A., Inc. or any of
their direct or indirect subsidiaries by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule
436(g) under the Act), or any public announcement that any such
organization has under surveillance or review its rating of any such
debt securities (other than an announcement with positive implications
of a possible upgrading, and no implication of a possible downgrading,
of such rating); (iii) any suspension or limitation of trading in
securities generally on the New York Stock Exchange or any setting of
minimum prices for trading on such exchange, or any suspension of
trading of any securities of TMCC on any exchange or in the
over-the-counter market; (iv) any banking moratorium declared by
federal, California or New York authorities; or (v) any outbreak or
escalation of major hostilities in which the United States is
involved, any declaration of war by the United States Congress or any
other substantial national or international calamity or emergency if,
in the reasonable judgment of a majority in interest of the
Underwriters including the Representatives, the effect of any such
outbreak, escalation, declaration, calamity or emergency makes it
impractical or inadvisable to proceed with completion of the sale of
and payment for any of the Securities.
(d) The Representatives shall have received:
(1) The favorable opinion, dated the Closing Date, of
Andrews & Kurth L.L.P., special counsel for the Trust, the Seller and
TMCC, in form and scope satisfactory to the Representatives, to the
effect that:
(i) Each Basic Document has been duly authorized
by all necessary corporate action on the part of each of the
Trust, the Seller and TMCC, as the case may be, and has been
executed and delivered by each of the Trust, the Seller and
TMCC, as the case may be, and, assuming the due authorization,
execution and delivery thereof by the other parties thereto,
constitutes a legally valid and binding obligation of each of
the Trust, the Seller and TMCC, as the case may be,
enforceable
10
<PAGE> 11
in accordance with its respective terms, except as limited by
bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or affecting creditors' rights generally
(including, without limitation, fraudulent conveyance laws).
Such counsel may state, however, that enforceability of the
Basic Documents is subject to the effect of general principles
of equity including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing and
the possible unavailability of specific performance or
injunctive relief, regardless of whether considered in a
proceeding in equity or at law.
(ii) The Securities have been duly and validly
authorized and, when executed and authenticated by the Trustee
(in the case of the Notes) as specified in the Indenture, and
by the Owner Trustee (in the case of the Certificates) as
specified in the Trust Agreement and delivered to the
Representatives for the respective accounts of the
Underwriters against payment of the consideration specified
herein, will be duly and validly issued and outstanding and
entitled to the benefits of the Indenture or the Trust
Agreement, as the case may be, except as the enforceability of
the Pooling and Servicing Agreement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or affecting creditors' rights generally
(including, without limitation, fraudulent conveyance laws),
and general principles of equity, including, without
limitation, concepts of materiality, reasonableness, good
faith and fair dealing and the possible unavailability of
specific enforcement or injunctive relief, regardless of
whether considered in a proceeding in equity or at law.
(iii) Neither the Seller nor the Trust is required
to be registered under the Investment Company Act.
(iv) With respect to Financed Vehicles in the
State of California, no filing or other action other than (A)
the filing of a UCC financing statement naming TMCC as
transferor and the Seller as the transferee, and (B) the
filing of a UCC financing statement naming the Seller as the
transferor and the Owner Trustee as transferee and the filing
of a UCC filing statement naming the Owner Trustee as the
transferor and the Indenture Trustee as the transferee, which
filings have been completed, is necessary to perfect the
transfer and assignment of TMCC's security interest in such
Financed Vehicles to the Seller, and the Seller's security
interest in such Financed Vehicles to the Owner Trustee, and
the Owner Trustee's security interest in such Financed
Vehicles to the Indenture Trustee, respectively, and as a
result of such transfer and assignment and filing of such
financing statements, the Indenture Trustee has a first
perfected security interest in such Financed Vehicles, except
that so long as TMCC is named as the legal owner and lien
holder on a certificate of title, TMCC has the ability to
release the security interest in the Financed Vehicle or to
assign it to another party.
11
<PAGE> 12
(v) The Trust will not be classified as an
association (or a publicly traded partnership) taxable as a
corporation for federal or California income tax purposes.
(vi) The statements in the Prospectus under
"Summary--Tax Status" and "--ERISA Considerations", "Certain
Federal Income Tax Considerations" and "ERISA Considerations",
to the extent that they constitute matters of law or legal
conclusions with respect thereto, have been reviewed by such
counsel and are correct in all material respects.
(vii) This Agreement and each Basic Document has
been duly authorized by all necessary corporate action on the
part of each of the Trust, the Seller and TMCC, as the case
may be, and has been duly executed and delivered by each of
them.
(viii) No authorization, approval, consent or order
of any court or governmental agency or body is required, under
the Federal law of the United States or the laws of the State
of California or the State of New York, for the consummation
by any of the Trust, the Seller or TMCC of the transactions
contemplated in this Agreement or the Basic Documents except
such as may be required under the Act, the Rules and
Regulations or state securities laws, and those
authorizations, approvals, consents, orders and filings which
have previously been obtained or made and are in full force
and effect as of the Closing Date; provided, that such counsel
need express no opinion as to state securities laws.
(ix) To such counsel's knowledge, there are no
actions, proceedings or investigations pending or threatened,
to which the Trust, the Seller or TMCC is a party or of which
any property of the Trust, the Seller or TMCC is the subject
required to be disclosed in the Registration Statements, other
than those disclosed therein, (A) asserting the invalidity of
this Agreement, any Basic Document or the Securities, (B)
seeking to prevent the issuance of the Securities or the
consummation of any of the transactions contemplated by this
Agreement or the Basic Documents, (C) that would, if
determined adversely to the Trust, TMCC or the Seller,
materially and adversely affect the performance by the Trust,
the Seller or TMCC of their respective obligations under, or
the validity or enforceability of, this Agreement, either
Basic Document or the Securities or (D) seeking adversely to
affect the federal income tax attributes of the Securities as
described in the Prospectus under the heading "Certain Federal
Income Tax Considerations" or the California income tax
attributes of the Securities.
(x) At the time of execution and delivery of (A)
the Receivables Purchase Agreement, TMCC had the corporate
power and corporate authority to transfer the Receivables and
such other property being transferred to the Seller pursuant
to the Receivables Purchase Agreement, (B) the Sale and
Servicing Agreement, the Seller had the corporate power and
corporate authority to transfer the Receivables and such
12
<PAGE> 13
other property being transferred to the Owner Trustee pursuant
to the Pooling and Servicing Agreement, and (C) the Indenture,
the Owner Trustee had the corporate power and corporate
authority to transfer the interests in the Receivables and
such other property being transferred to the Indenture Trustee
pursuant to the Indenture and to cause the transfer of the
Securities to the Underwriters.
(xi) The Securities and the Basic Documents each
conform in all material respects with the respective
descriptions thereof contained in the Registration Statements
and the Prospectus.
(xii) The statements in the Registration Statements
and Prospectus under the heading "Certain Legal Aspects of the
Receivables", to the extent that they constitute matters of
law or legal conclusions are correct in all material respects.
(xiii) The Sale and Servicing Agreement is not
required to be qualified under the Trust Indenture Act of
1939, as amended (the "1939 Act"); the Indenture has been duly
qualified under the 1939 Act.
(xiv) The Receivables constitute "chattel paper" as
such term is defined in the California Uniform Commercial Code.
(xv) The Initial Registration Statement and any
Additional Registration Statement filed with the Commission
has been declared effective under the Act, and, to such
counsel's knowledge upon due inquiry, no stop order suspending
the effectiveness of a Registration Statement has been issued
under the Act or proceedings therefor initiated or threatened
by the Commission, and each Registration Statement and the
Prospectus, and each amendment or supplement thereto, as of
its respective effective or issue date, complied or complies
in all material respects with the requirements as to form of
the Act and the Rules and Regulations.
In addition, such counsel shall state that such counsel has
participated in conferences with the officers and other representatives of the
Trust, TMCC and the Seller, representatives of the independent public
accountants therefor and the Underwriters, at which the contents of the
Registration Statement and the Prospectus and related matters were discussed
and, although such counsel is not passing upon, and does not assume any
responsibility for, the accuracy, completeness or fairness of the statements
contained therein and have not made any independent check or verification
thereof, during the course of such participation (relying as to factual matters
as to materiality to a large extent upon the statements of officers and other
representatives of the Trust, TMCC and the Seller), such counsel does not
believe that any Registration Statement, at the related Effective Time, or any
such amendment or supplement, as of its effective date, contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements therein not misleading,
or that the Prospectus, at the date of this Agreement (or any such amendment or
supplement, as of its respective date) or at the Closing Date
13
<PAGE> 14
included or includes an untrue statement of a material fact or omitted or omits
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading; it
being understood that such counsel need express no opinion as to the Form T-1
filed as an exhibit to the Registration Statement or any financial statements
or other financial or statistical data contained in any Registration Statement
or the Prospectus.
(2) The favorable opinion, dated the Closing Date, of
Alan F. Cohen, Esq., General Counsel of TMCC, and counsel to the Trust
and the Seller, in form and substance scope to the Representatives and
their counsel, to the effect that:
(i) Each of the Seller and TMCC is a corporation
duly organized, existing and in good standing under the laws
of the State of California.
(ii) To such counsel's knowledge, each of the
Seller and TMCC is duly incorporated or qualified as a foreign
corporation to transact business and is in good standing in
each jurisdiction in which their respective ownership or lease
of substantial properties or the conduct of their respective
businesses requires such qualification and in which the
failure to so qualify and be in good standing would materially
adversely affect their respective businesses or financial
condition.
(iii) To such counsel's knowledge (A) there are no
legal or governmental proceedings pending or threatened which
are required to be disclosed in the Registration Statements,
other than those disclosed therein, (B) there are no legal or
governmental proceedings to which TMCC is a party or to which
any of its property is subject which are not described in
TMCC's Annual Report on Form 10-K for the year ended o, or its
Quarterly Reports for the quarters ended o, o, and o, which
are required to be disclosed therein other than those
disclosed therein and (C) there are no pending legal or
governmental proceedings to which the Seller is a party or to
which any of its property is subject.
(iv) To such counsel's knowledge (A) no default
exists in the due performance or observance by TMCC of any
obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which it is a party or by which it may be
bound, which default would have a material adverse effect on
the financial condition, earnings, business affairs, business
prospects, properties or results of operations of TMCC and its
subsidiaries considered as one enterprise, and (B) other than
this Agreement and the Basic Documents, the Seller is not a
party to any material contract, indenture, mortgage, loan
agreement, note, lease or other instrument.
(v) The transfer of the Receivables and the other
property of the Trust transferred by TMCC to the Seller
pursuant to the Receivables Purchase Agreement, the execution,
delivery and performance of the Basic Documents and this
Agreement and the consummation of the transactions herein and
therein contemplated will not
14
<PAGE> 15
(A) conflict with or constitute a breach of, or default under,
or result in the creation or imposition of any Lien upon any
property or assets of TMCC or any of its subsidiaries pursuant
to, any material contract, indenture, mortgage, loan
agreement, note, lease or other instrument known to such
counsel to which TMCC or any of its subsidiaries is a party or
by which it or any of them may be bound, or to which any of
the property or assets of TMCC or any of its subsidiaries is
subject, (B) result in any violation of the provisions of the
charter or bylaws of TMCC or (C) to such counsel's knowledge,
result in any violation of any applicable law, administrative
regulation or administrative or court decree.
(vi) The transfer of the Receivables to the Owner
Trustee acting on behalf of the Trust, the assignment of the
security interest of the Seller in the Financed Vehicles, and
the execution and delivery of this Agreement and the Basic
Documents, and the consummation of the transactions
contemplated herein and therein will not (A) conflict with or
constitute a breach of, or default under, or result in the
creation or imposition of any Lien upon any property or assets
of the Seller pursuant to, any material contract, indenture,
mortgage, loan agreement, note, lease or other instrument to
which the Seller is a party or by which it may be bound, or to
which any of the property or assets of the Seller is subject,
(B) result in any violation of the provisions of the charter
or bylaws of the Seller or (C) to such counsel's knowledge,
result in any violation of any applicable law, administrative
regulation or administrative or court decree.
(vii) Each of the Seller and TMCC has obtained all
necessary licenses and approvals under the federal law of the
United States and the laws of the State of California to
conduct their respective businesses in which the failure to
obtain such licenses and approvals would render any Receivable
or any other material part of the corpus of the Trust
unenforceable or would materially and adversely affect the
ability of any of the Trust, the Seller or TMCC to perform any
of their respective obligations under, or the enforceability
of, any Basic Document.
(viii) Such counsel is familiar with the standard
operating procedures of TMCC relating to the acquisition by
TMCC of a first perfected security interest in the automobiles
or light duty trucks financed by the retail installment sale
contracts purchased by TMCC in the ordinary course of its
business and relating to the sale to TMCC of such contracts
and such security interests in the automobiles or light duty
trucks financed thereby in the ordinary course of its
business. Assuming that such standard procedures are followed
with respect to the perfection of security interests in the
Financed Vehicles (and such counsel has no reason to believe
that TMCC has not or will not continue to follow its standard
procedures in connection with the perfection of first
perfected security interests in the Financed Vehicles), TMCC
has acquired a first perfected security interest in the
Financed Vehicles.
15
<PAGE> 16
(3) The favorable opinion, dated the Closing Date, of o,
special Delaware counsel to the Trust, in form and scope satisfactory
to the Representatives and their counsel, to the effect that
(i) The trust is duly organized, existing and in
good standing as a Delaware business trust under the laws of
the State of Delaware.
(ii) The transfer of the Receivables to the
Indenture Trustee pursuant to the terms of the Indenture, the
assignment of the security interest of the Trust in the
Financed Vehicles, the issuance and sale of the Securities,
and the execution and delivery of this Agreement, the Basic
Documents and the Securities, and the consummation of the
transactions contemplated herein and therein will not (A)
conflict with or constitute a breach of, or default under, or
result in the creation or imposition of any Lien upon any
property or assets of the Trust pursuant to, any material
contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which the Seller is a party or by which it
may be bound, or to which any of the property or assets of the
Trust is subject, (B) result in any violation of the
provisions of the Trust Agreement or other organizational
documents of the Seller or (C) to such counsel's knowledge,
result in any violation of any applicable law, administrative
regulation or administrative or court decree.
(4) The favorable opinion, dated the Closing Date, of o,
special [name of state] counsel to the Trust, the Seller and TMCC, in
form and scope satisfactory to the Representatives and their counsel,
to the effect that the blank forms of Contracts identified and
reviewed by them and attached to such opinion comply, or complied when
in use, with all applicable provisions of the law of such state and
the regulations promulgated thereunder regarding retail installment
sales of motor vehicles.
(5) The favorable opinion, dated the Closing Date, of o,
special [name of state] counsel to the Seller and TMCC, in form and
scope satisfactory to the Representatives and their counsel, to the
effect that, assuming the due authorization, execution and delivery
thereof by the parties thereto, each of the Receivables in the form
attached to such opinion constitutes the valid, binding and
enforceable agreement of the parties thereto; and such Receivables
comply as to content and form with all applicable state laws and
federal disclosure laws relating to consumer credit, including without
limitation, consumer protection laws.
(6) Reliance letters relating to each opinion rendered to
either Rating Agency by (A) Andrews & Kurth L.L.P and (B) Alan F.
Cohen, Esq.
(7) The favorable opinion, dated the Closing Date, of
counsel to the Indenture Trustee, in form and scope satisfactory to
the Representatives and counsel for the Underwriters, to the effect
that:
16
<PAGE> 17
(i) The Indenture Trustee is a New York banking
corporation duly organized and validly existing under the laws
of the State of New York, and is duly authorized and empowered
to exercise trust powers under applicable law.
(ii) The Indenture Trustee has full power and
authority to execute, deliver and perform its obligations
under the Indenture and the Administration Agreement and has
taken all necessary action to authorize the execution,
delivery and performance of its obligations thereunder.
(iii) The Indenture and Administration
Agreement have each been duly authorized, executed and
delivered by the Indenture Trustee, and constitutes a legal,
valid and binding obligation of the Indenture Trustee,
enforceable against the Indenture Trustee in accordance with
its terms, except that certain of such obligations may be
exercisable solely against the estate of the Trust and except
that such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium, liquidation or other
similar laws applicable to New York banking corporations
affecting the enforcement of creditors' rights generally, and
by general principles of equity, including, without
limitation, concepts of materiality, reasonableness, good
faith and fair dealing (regardless of whether such
enforceability is considered in a proceeding in equity or at
law).
(iv) The Notes have been duly executed,
authenticated and delivered by the Indenture Trustee in
accordance with the terms of the Indenture.
(v) The execution, delivery and performance by
the Indenture Trustee of the Indenture and the Administration
Agreement shall not (a) violate any provision of any law
governing the banking or trust powers of the Indenture Trustee
or, to the best knowledge of such counsel, any order, writ,
judgment or decree of any court, arbitrator or governmental
authority applicable to the Indenture Trustee or any of its
assets, (b) shall not violate any provision of the corporate
charter or by-laws of the Indenture Trustee and (c) to the
best of such counsel's knowledge, violate any material
provision of, constitute, with or without notice or lapse of
time, a material default under, or result in the creation or
imposition of any lien on any properties of the Trust pursuant
to the provisions of any mortgage, indenture, contract,
agreement or other undertaking to which the Indenture Trustee
is a party.
(vi) The execution, delivery and performance by
the Indenture Trustee of each of the Indenture and the
Administration 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 or corporate trust activities of the Indenture
Trustee.
17
<PAGE> 18
(8) The favorable opinion, dated the Closing Date, of
counsel to the Owner Trustee, in form and scope satisfactory to the
Representatives and counsel for the Underwriters, to the effect that:
(i) The Owner Trustee is a o duly organized and
validly existing under the laws of o, and is duly authorized
and empowered to exercise trust powers under applicable law.
(ii) The Owner Trustee has full power and
authority to execute, deliver and perform its obligations
under the Trust Agreement and has taken all necessary action
to authorize the execution, delivery and performance of its
obligations under the Trust Agreement.
(iii) The Trust Agreement has been duly
authorized, executed and delivered by the Owner Trustee, and
constitutes a legal, valid and binding obligation of the Owner
Trustee, enforceable against the Owner Trustee in accordance
with its terms, except that certain of such obligations may be
exercisable solely against the estate of the Trust and except
that such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium, liquidation or other
similar laws applicable to o affecting the enforcement of
creditors' rights generally, and by general principles of
equity, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(iv) The Certificates have been duly executed,
authenticated and delivered by the Owner Trustee in accordance
with the terms of the Trust Agreement.
(v) The execution, delivery and performance by
the Owner Trustee of the Trust Agreement shall not (a) violate
any provision of any law governing the banking or trust powers
of the Owner Trustee or, to the best knowledge of such
counsel, any order, writ, judgment or decree of any court,
arbitrator or governmental authority applicable to the Owner
Trustee or any of its assets, (b) shall not violate any
provision of the corporate charter or by-laws of the Owner
Trustee and (c) to the best of such counsel's knowledge,
violate any material provision of, constitute, with or without
notice or lapse of time, a material default under, or result
in the creation or imposition of any lien on any properties of
the Trust pursuant to the provisions of any mortgage,
indenture, contract, agreement or other undertaking to which
the Owner Trustee is a party.
(vi) The execution, delivery and performance by
the Owner Trustee of the Trust 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 or corporate trust activities of the
Owner Trustee.
18
<PAGE> 19
(9) The favorable opinion of Andrews &
Kurth L.L.P., counsel for the Underwriters, dated the Closing
Date, with respect to the existence of the Trust, the Seller
and TMCC, the validity of the Securities and such other
related matters as the Representatives shall request and the
Trust, the Seller and TMCC shall have furnished or caused to
be furnished to such counsel such documents as they may
reasonably request for the purpose of enabling them to pass
upon such matters.
(e) The Representatives shall have received a certificate,
dated the Closing Date, signed by the President or any Vice President
and a principal financial or accounting officer of (i) the Seller in
which such officers shall state that, (A) to the best of their
knowledge after reasonable investigation, the representations and
warranties of the Seller in this Agreement are true and correct, (B)
the Seller has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or
prior to the Closing Date, (C) no stop order suspending the
effectiveness of any Registration Statement has been issued and no
proceedings for that purpose have been instituted or, to the best of
their knowledge, are contemplated by the Commission, (D) the
Additional Registration Statement, if any, satisfying the requirements
of Rule 462(b)(1) and Rule 462(b)(3) was filed in accordance with Rule
462(b) (including payment of the applicable filing fee in accordance
with Rule 111(a) or Rule 111(b) under the Act) prior to the time the
Prospectus was printed or distributed to the Underwriter and (E)
subsequent to the date of this Agreement, there has been no material
adverse change in the condition, financial or otherwise, or in the
business affairs or business prospects of the Seller except as set
forth or contemplated in the Prospectus,(ii) TMCC in which such
officers shall state that, to the best of their knowledge after
reasonable investigation, the representations and warranties of TMCC
in this Agreement are true and correct, that TMCC has complied with
all agreements and satisfied all conditions on its part to be
performed or satisfied hereunder and that subsequent to the date of
this Agreement there has been no material adverse change in the
condition, financial or otherwise, or in the business affairs or
business prospects of TMCC which would materially and adversely affect
the performance by TMCC of its obligations under this Agreement or the
Basic Documents , and (iii) the Trust in which such officers shall
state that, to the best of their knowledge after reasonable
investigation, the representations and warranties of The Trust in this
Agreement are true and correct, that the Trust has complied with all
agreements and satisfied all conditions on its part to be performed or
satisfied hereunder and that subsequent to the date of this Agreement
there has been no material adverse change in the condition, financial
or otherwise, or in the business affairs or business prospects of the
Trust which would materially and adversely affect the performance by
the Trust of its obligations under this Agreement or the Basic
Documents.
(f) The o shall be rated "o" by Moody's and "AAA" by Standard
& Poor's.
(g) The o shall be rated at least "o" by Moody's and at least
"o" by Standard & Poor's.
19
<PAGE> 20
Section 7. Indemnification and Contribution.
(a) The Trust, the Seller and TMCC will, jointly and severally,
indemnify and hold harmless each Underwriter against any losses, claims,
damages or liabilities, joint or several, to which such Underwriter may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any Registration Statement, the Prospectus or any amendment or supplement
thereto, or any related preliminary prospectus, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and will reimburse each Underwriter for any legal or other expenses
reasonably incurred by such Underwriter in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses
are incurred; provided, however, that none of the Trust, the Seller nor TMCC
will be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement in or omission or alleged omission from any of such documents
in reliance upon and in conformity with written information furnished to the
Seller by any Underwriter through the Lead Underwriter specifically for use
therein.
(b) Each Underwriter, severally and not jointly, will indemnify
and hold harmless each of the Trust, the Seller and TMCC against any losses,
claims, damages or liabilities to which the Seller or TMCC may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any Registration Statement, the Prospectus or any amendment or supplement
thereto, or any related preliminary prospectus, or arise out of or are based
upon the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with written information furnished
to the Seller by any Underwriter through the Lead Underwriter specifically for
use therein, and will reimburse any legal or other expenses reasonably incurred
by the Trust, the Seller and TMCC in connection with investigating or defending
any such loss, claim, damage, liability or action as such expenses are
incurred.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying
party under subsection (a) or (b) above, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under subsection (a) or (b) above. In case any such action is
brought against any indemnified party and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its
20
<PAGE> 21
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above (i)
in such proportion as is appropriate to reflect the relative benefits received
by the Trust, the Seller and TMCC on the one hand and the Underwriters on the
other from the offering of the Securities or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Trust, the Seller and TMCC on the one
hand and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities as well
as any other relevant equitable considerations. The relative benefits received
by the Trust, the Seller and TMCC on the one hand and the Underwriters on the
other shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Trust bear to the
total underwriting discounts and commissions received by the Underwriters. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Trust, the Seller or TMCC or the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The amount paid by an indemnified party as
a result of the losses, claims, damages or liabilities referred to in the first
sentence of this subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any action or claim which is the subject of this
subsection (d). Notwithstanding the provisions of this subsection (d), no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Certificates underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) The obligations of the Trust, the Seller and TMCC under this
Section shall be in addition to any liability that the Trust, the Seller or
TMCC may otherwise have and shall extend, upon the same terms and conditions,
to each person, if any, who controls any Underwriter within the meaning of the
Act; and the obligations of the Underwriters under this Section shall be in
addition to any liability that the respective Underwriters may otherwise have
and shall extend, upon the same terms and conditions, to each director of the
Seller, to each officer of the Seller who has signed any Registration Statement
and to each person, if any, who controls the Trust, the Seller or TMCC within
the meaning of the Act.
21
<PAGE> 22
Section 8. Default of Underwriters. If any Underwriter or
Underwriters default in their obligations to purchase any Securities hereunder
and the aggregate principal amount of the Securities that such defaulting
Underwriter or Underwriters agreed but failed to purchase does not exceed 10%
of the total principal amount of the Securities, the Representatives may make
arrangements satisfactory to the Trust, the Seller and TMCC for the purchase of
such Securities by other persons, including any of the Underwriters, but if no
such arrangements are made by the Closing Date, the non-defaulting Underwriters
shall be obligated severally, in proportion to their respective commitments
hereunder, to purchase the Securities that such defaulting Underwriters agreed
but failed to purchase. If any Underwriter or Underwriters so default and the
aggregate principal amount of the Securities with respect to which such default
or defaults occur exceeds 10% of the total principal amount of the Securities
and arrangements satisfactory to the Trust, the Seller and TMCC for the
purchase of such Securities by other persons are not made within 36 hours after
such default, this Agreement will terminate without liability on the part of
any non-defaulting Underwriter, the Trust, the Seller or TMCC, except as
provided in Section 9 hereof. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter from liability
for its default.
Section 9. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of the Trust, the Seller and TMCC or their respective officers and
of the several Underwriters set forth in or made pursuant to this Agreement
will remain in full force and effect, regardless of any investigation or
statement as to the results thereof, made by or on behalf of any Underwriter,
the Trust, the Seller, TMCC or any of their respective representatives,
officers or directors or any controlling person, and will survive delivery of
and payment for the Securities. If this Agreement is terminated pursuant to
Section 8 hereof or if for any reason the purchase of the Securities by the
Underwriters is not consummated, the Trust, the Seller and TMCC shall remain
responsible for the expenses to be paid or reimbursed by the Trust, the Seller
and TMCC pursuant to Section 5(h) hereof and the respective obligations of the
Trust, the Seller, TMCC and the Underwriters pursuant to Section 7 hereof shall
remain in effect. If the purchase of the Securities by the Underwriters is not
consummated for any reason other than solely because of the termination of this
Agreement pursuant to Section 8 hereof or the occurrence of any event specified
in clause (iii), (iv) or (v) of Section 6(c) hereof, the Trust, the Seller and
TMCC will reimburse the Underwriters for all out-of-pocket expenses (including
fees and disbursements of counsel) reasonably incurred by it in connection with
the offering of the Securities.
Section 10. Notices. All communications hereunder will be in writing
and, if sent to the Representatives or the Underwriters, will be mailed,
delivered or telegraphed and confirmed to the Representatives c/o o, Attention:
o; if sent to the Trust or the Seller, will be mailed, delivered or telegraphed
and confirmed at Toyota Motor Credit Receivables Corporation, 19001 South
Western Avenue, Torrance, California 90501, Attention: Lloyd Mistele --
President; or if sent to TMCC, will be mailed, delivered or telegraphed and
confirmed to it at Toyota Motor Credit Corporation, 19001 South Western Avenue,
Torrance, California 90501, Attention: Wolfgang Jahn -- Senior Vice President
and General Manager. Notwithstanding the foregoing, any notice to an
Underwriter pursuant to Section 7 hereof will be mailed, delivered or
telegraphed and confirmed to such Underwriter.
22
<PAGE> 23
Section 11. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 7 hereof,
and no other person will have any right or obligation hereunder.
Section 12. Representation of Underwriters. The Representatives will
act for the several Underwriters in connection with the transactions described
in this Agreement, and any action taken by the Representatives under this
Agreement, jointly or by the Lead Underwriter, will be binding upon all the
Underwriters.
Section 13. Representations and Warranties of Underwriters. Each
Underwriter represents and agrees to the following selling restrictions with
respect to the Securities for purposes of the issue of Securities:
(a) Each Underwriter represents and agrees that it will comply
with all applicable laws and regulations in each jurisdiction in which it
purchases, offers or sells Securities or possesses or distributes the
Prospectus or any other offering material and will obtain any consent, approval
or permission required by it for the purchase, offer or sale by it of
Securities under the laws and regulations in force in any jurisdiction to which
it is subject or in which it makes such purchases, offers or sales and none of
the Trust, the Seller or TMCC shall have any responsibility therefor;
(b) No action has been or will be taken by the Underwriters that
would permit a public offering of the Securities or possession or distribution
of any offering material in relation to the Securities in any jurisdiction
where action for that purpose is required unless the Trust, the Seller or TMCC
has agreed to such actions and such actions have been taken;
(c) Each Underwriter represents and agrees that it will not offer,
sell or deliver any of the Securities or distribute any such offering material
in or from any jurisdiction except under circumstances which will result in
compliance with applicable laws and regulations and which will not impose any
obligation on the Trust, the Seller or TMCC or the Underwriters;
(d) No Underwriter is authorized to give any information or make
any representations in relation to the Securities other than those contained or
incorporated by reference in the Prospectus for the Securities and such
additional information, if any, as the Trust, the Seller or TMCC shall, in
writing, provide to and authorize the Underwriter so to use and distribute to
actual and potential purchasers of Securities;
(e) Each Underwriter represents and agrees that it has not,
directly or indirectly, offered or sold and will not, directly or indirectly,
offer or sell in Hong Kong, by means of any document, any Securities other than
to persons whose ordinary business it is to buy or sell shares or debentures,
whether as principal or agent, or in circumstances which do not constitute an
offer to the public within the meaning of the Companies Ordinance (Cap. 32) of
Hong Kong. Each Underwriter further represents and agrees that, unless it is a
person who is permitted to do so under the securities laws of Hong Kong, it has
not issued, or had in its possession for the purposes of issuing, and it will
not issue, or have in its possession for the purposes of issuing, any
advertisement, invitation or document relating to Securities other than with
respect to Securities intended to be disposed of to persons outside Hong Kong
or to persons whose business involves the acquisition, or disposal or holding
of securities, whether as principal or agent; and
(f) Each Underwriter has not offered or sold and will not offer
or sell any Securities to persons in the United Kingdom prior to admission of
such Securities to listing in accordance with Part IV of the
23
<PAGE> 24
Financial Services Act 1986 ("FSA") except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995 or the FSA;
(g) Each Underwriter has complied and will comply with all
applicable provisions of the FSA with respect to anything done by us in
relation to the Securities in, from or otherwise involving the United Kingdom;
and
(h) Each Underwriter will have only issued or passed on and will
only issue or pass on in the United Kingdom any document received by us in
connection with the issue of the Securities, other than any document which
consists of or any part of listing particulars, supplementary listing
particulars or any document required or permitted to be published by listing
rules under Part IV of the FSA, to a person who is of a kind described in
Article 11(3) of the FSA (Investment Advertisements) (Exemptions) Order 1995 or
is a person to whom such document may otherwise lawfully be issued or passed
on.
Section 14. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but
all such counterparts shall together constitute one and the same Agreement.
Section 15. Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
24
<PAGE> 25
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us one of the counterparts hereof,
whereupon it will become a binding agreement between the Seller and TMCC and
the Underwriters in accordance with its terms.
Very truly yours,
TOYOTA MOTOR CREDIT
RECEIVABLES CORPORATION
By:
--------------------------------
Name:
Title:
TOYOTA MOTOR CREDIT CORPORATION
By:
--------------------------------
Name:
Title:
The foregoing Underwriting
Agreement is hereby confirmed
and accepted, as of the date
first above written:
[Names of Investment Banks]
As Representatives of the
several Underwriters
By:
--------------------------
Name:
Title:
Acting on behalf of themselves
and as the Representatives of
the several Underwriters.
25
<PAGE> 26
Schedule I
<TABLE>
<CAPTION>
Principal Principal
Principal Amount Amount of Amount of Principal
of Class Class Class Amount of
Underwriter A-1 Notes A-2 Notes A-3 Notes Certificates
----------- ---------------- --------- --------- ------------
<S> <C> <C> <C> <C>
o $o $o $o $o
o $o $o $o $o
</TABLE>
26
<PAGE> 1
EXHIBIT 1.2
FORM OF UNDERWRITING AGREEMENT FOR CERTIFICATES
TOYOTA AUTO RECEIVABLES 199_-_ GRANTOR TRUST
$ -- % ASSET BACKED CERTIFICATES, CLASS A
$ -- % ASSET BACKED CERTIFICATES, CLASS B
UNDERWRITING AGREEMENT
[Date]
[Names of Investment Banks]
As Representatives of the
several Underwriters
c/o [Address]
Dear Sirs:
Section 1. Introductory. Toyota Motor Credit Receivables
Corporation, a California corporation (the "Seller") and a wholly owned
subsidiary of Toyota Motor Credit Corporation, a California corporation
("TMCC"), proposes to sell $o aggregate principal amount of o% Asset Backed
Certificates, Class A (the "Class A Certificates") and $o aggregate principal
amount of o% Asset Backed Certificates, Class B (the "Class B Certificates",
and, together with the Class A Certificates, the "Certificates") of the Toyota
Auto Receivables 199_-_ Grantor Trust (the "Trust"). Each Certificate will
represent a fractional undivided interest in the Trust. The assets of the
Trust will include, among other things, a pool of retail installment sale
contracts (the "Receivables") secured by the new and used automobiles and light
duty trucks financed thereunder (the "Financed Vehicles") and certain monies
due or to become due thereunder on or after o (the "Cutoff Date"). The
Receivables and other assets of the Trust will be sold by TMCC to the Seller
pursuant to a Receivables Purchase Agreement (the "Receivables Purchase
Agreement") to be dated as of o between TMCC and the Seller. As of the Cutoff
Date, the Receivables had an aggregate principal balance of $o, the Class A
Certificates in the aggregate will represent a o% undivided interest in the
Trust, equal to $o of the aggregate principal balance of the Receivables and
the Class B Certificates in the aggregate will represent a o% undivided
interest in the Trust, equal to $o of the aggregate principal balance of the
Receivables, all as described in the Prospectus, as defined below. The
Certificates will be issued pursuant to a Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement" and, together with the "Receivables Purchase
Agreement, the "Basic Documents") to be dated as of o, among the Seller, TMCC,
as servicer (in such capacity, the "Servicer"), and o, as trustee (the
"Trustee").
<PAGE> 2
This Underwriting Agreement shall hereinafter be referred to as "this
Agreement". Capitalized terms used herein and not otherwise defined shall have
the meanings ascribed thereto in the Pooling and Servicing Agreement.
Section 2. Representations and Warranties of the Seller and TMCC.
(a) Each of the Seller and TMCC, jointly and severally, represents
and warrants to, and agrees with, each of the Underwriters named in Schedule I
hereto (the "Underwriters") that:
(i) A registration statement on Form S-3 (No. 333-4336),
including a form of prospectus, relating to the Certificates has been
filed with the Securities and Exchange Commission (the "Commission")
and either (A) has been declared effective under the Securities Act of
1933, as amended (the "Act"), and is not proposed to be amended or (B)
is proposed to be amended by amendment or post-effective amendment.
If such registration statement (the "initial registration statement")
has been declared effective, either (i) any additional registration
statement (the "additional registration statement") relating to the
Certificates has been filed with the Commission pursuant to Rule
462(b) ("Rule 462(b)") under the Act and declared effective upon
filing pursuant to Rule 462(b) and the Certificates have been duly
registered under the Act pursuant to the initial registration
statement and such additional registration statement or (ii) any such
additional registration statement proposed to be filed with the
Commission pursuant to Rule 462(b) will become effective upon filing
pursuant to Rule 462(b) and upon such filing the Certificates will
have been duly registered under the Act pursuant to the initial
registration statement and such additional registration statement. If
the Seller does not propose to amend the initial registration
statement, any such additional registration statement or any
post-effective amendment to either such registration statement filed
with the Commission prior to the execution and delivery of this
Agreement, then the most recent amendment (if any) to each such
registration statement has been declared effective by the Commission
or has become effective upon filing pursuant to Rule 462(c) under the
Act ("Rule 462(c)") or Rule 462(b).
For purposes of this Agreement, "Effective Time" with
respect to the initial registration statement or, if filed prior to
the execution and delivery of this Agreement, the additional
registration statement means (A) if the Seller has advised the
Representatives that it does not propose to amend such registration
statement, the date and time as of which such registration statement,
or the most recent post-effective amendment thereto (if any) filed
prior to the execution and delivery of this Agreement, was declared
effective by the Commission or has become effective upon filing
pursuant to Rule 462(c) or (B) if the Seller has advised the
Representatives that it proposes to file an amendment or
post-effective amendment to such registration statement, the date and
time as of which such registration statement, as amended by such
amendment or post-effective amendment, as the case may be, is declared
effective by the Commission. If the Seller has advised the
Representatives that it proposes to file, but has not filed, an
additional registration statement prior to the execution and delivery
of this Agreement, "Effective Time" with respect to such additional
registration statement means the date and time as of which such
registration statement is filed
<PAGE> 3
and becomes effective pursuant to Rule 462(b). "Effective Date" with
respect to the initial registration statement or the additional
registration statement (if any) means the date of the Effective Time
thereof.
The initial registration statement, as amended at its
Effective Time, including all information (A) contained in the
additional registration statement (if any), (B) deemed to be a part of
the initial registration statement as of the Effective Time of the
additional registration statement (if any) pursuant to the General
Instructions of the Form on which it is filed and (C) deemed to be a
part of the initial registration statement as of its Effective Time
pursuant to Rule 430A(b) under the Act ("Rule 430A(b)"), is
hereinafter referred to as the "Initial Registration Statement". The
additional registration statement, as amended at its Effective Time,
including (A) the contents of the initial registration statement
incorporated by reference therein and (B) deemed to be a part of the
additional registration statement as of its Effective Time pursuant to
Rule 430A(b), is hereinafter referred to as the "Additional
Registration Statement". The Initial Registration Statement and the
Additional Registration Statement are hereinafter referred to
collectively as the "Registration Statements" and individually as a
"Registration Statement". The form of prospectus relating to the
Certificates, as first filed with the Commission pursuant to and in
accordance with Rule 424(b) under the Act ("Rule 424(b)") or, if no
such filing is required, as included in a Registration Statement,
including all material incorporated by reference in such prospectus,
is hereinafter referred to as the "Prospectus". [No document has been
or will be prepared or distributed in reliance on Rule 434 under the
Act.]
(ii) (A) On the Effective Date of any Registration
Statement whose Effective Time is prior to the execution and delivery
of this Agreement, each such Registration Statement conformed, (B) on
the date of this Agreement each such Registration Statement conforms
and (C) on any related Effective Date subsequent to the date of this
Agreement, each such Registration Statement will conform, in all
material respects with the requirements of the Act and the rules and
regulations of the Commission promulgated under the Act (the "Rules
and Regulations"), and at such times did not and will not include any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading. At the time of the filing of the Prospectus
pursuant to Rule 424(b) or, if no such filing is required, at the
Effective Date of the Additional Registration Statement that includes
the Prospectus, on the date of this Agreement and at the Closing Date
(as such term is defined in Section 3 hereof), the Prospectus will
conform in all material respects to the requirements of the Act and
the Rules and Regulations, and does not include, or will not include,
any untrue statement of a material fact, nor does the Prospectus omit,
nor will it omit, any material fact, necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. The two immediately preceding sentences do
not apply to statements in or omissions from a Registration Statement
or the Prospectus based upon written information furnished to the
Seller by any Underwriter through o (the "Lead Underwriter")
specifically for use therein. If the Effective Time of the Initial
Registration Statement is subsequent to the date of this Agreement, no
Additional Registration Statement has been or will be filed.
3
<PAGE> 4
(iii) The consummation of the transactions contemplated by
this Agreement and the Basic Documents, and the fulfillment of the
terms thereof, will not conflict with or result in a breach of any of
the terms or provisions of, or constitute a default under, or result
in the creation of any lien, charge, or encumbrance upon any of the
property or assets of the Seller or TMCC pursuant to the terms of, any
indenture, mortgage, deed of trust, loan agreement, guarantee, lease
financing agreement or similar agreement or instrument under which the
Seller or TMCC is a debtor or guarantor.
(iv) No consent, approval, authorization or order of, or
filing with, any court or governmental agency or body is required to
be obtained or made by the Seller or TMCC for the consummation of the
transactions contemplated by this Agreement except such as have been
obtained and made under the Act or the Rules and Regulations, such as
may be required under state securities laws and filing of any
financing statements required to perfect the transfer of the
Receivables.
(v) Neither the Seller nor TMCC is in violation of its
charter or by-laws or in default in the performance or observance of
any obligation, agreement, covenant or condition contained in any
agreement or instrument to which it is a party or by which it or its
properties are bound which could have a material adverse effect on the
transactions contemplated herein or in the Basic Documents. The
execution, delivery and performance of this Agreement and the Basic
Documents and the issuance and sale of the Certificates and compliance
with the terms and provisions of the Certificates will not, subject to
obtaining any consents or approvals as may be required under the state
securities laws of various jurisdictions, result in a breach or
violation of any of the terms and provisions of, or constitute a
default under, any statute, rule, regulation or order of any
governmental agency or body or any court having jurisdiction over the
Seller or TMCC or any of their respective properties or any agreement
or instrument to which the Seller or TMCC is a party or by which the
Seller or TMCC is bound or to which any of their respective properties
is subject, or with the charter or by-laws of the Seller or TMCC, and
each of the Seller and TMCC has full corporate power and authority to
enter into this Agreement and the Basic Documents and to consummate
the transactions contemplated hereby and thereby.
(vi) This Agreement has been duly authorized, executed and
delivered by the Seller and TMCC.
(b) As of the Closing Date, the representations and warranties of the
Seller and of TMCC in the Basic Documents will be true and correct, and the
Underwriters may rely on such representations and warranties as if they were
set forth herein in full.
Section 3. Purchase, Sale and Delivery of the Certificates. On the
basis of the representations, warranties and agreements herein contained, but
subject to the terms and conditions herein set forth, the Seller agrees to sell
to the Underwriters, and the Underwriters agree, severally and not jointly, to
purchase from the Seller, the respective principal amounts of Class A
Certificates and Class B Certificates set forth opposite the names of the
Underwriters in Schedule I hereto. The
4
<PAGE> 5
Certificates are to be purchased at a purchase price equal to (i) in the case
of the Class A Certificates, o% of the aggregate principal amount thereof plus
accrued interest at the Class A Pass Through Rate from (and including) o, 199_,
to (but excluding) the Closing Date and (ii) in the case of the Class B
Certificates, o% of the aggregate principal amount thereof plus accrued
interest at the Class B Pass Through Rate from (and including) o, 199_, to (but
excluding) the Closing Date.
The Class A Certificates will initially be represented by o
certificates representing $o aggregate principal amount of Class A Certificates
registered in the name of Cede & Co., the nominee of The Depository Trust
Company, New York, New York ("DTC") (the "Class A DTC Certificates"), and one
fully registered certificate representing $o aggregate principal amount of
Class A Certificates registered in the name of the Seller. The Class B
Certificates will initially be represented by o certificates representing $o
aggregate principal amount of Class B Certificates registered in the name of
Cede & Co., the nominee of DTC (the "Class B DTC Certificates", and together
with the Class A DTC Certificates, the "DTC Certificates"), and one fully
registered certificate representing $o aggregate principal amount of Class B
Certificates registered in the name of the Seller. The interests of beneficial
owners of the DTC Certificates will be represented by book entries on the
records of DTC and participating members thereof. Definitive certificates
evidencing the Certificates will be available only under the limited
circumstances specified in the Pooling and Servicing Agreement.
The Seller will deliver the DTC Certificates to the Representatives
for the respective securities accounts of the Underwriters at the office of
DTC, 55 Water Street, 49th Floor, New York, New York 10004, against payment to
the Seller of the purchase price for the Certificates by wire transfer in
immediately available funds, at 10:00 A.M., New York time, on o, or at such
other time not later than seven full business days thereafter as the Seller,
TMCC and the Representatives determine, such time being herein referred to as
the "Closing Date". The certificates evidencing the DTC Certificates and the
Seller Certificates will be made available for checking and packaging at the
office of o in The City of New York at least 24 hours prior to the Closing
Date.
Section 4. Offering by the Underwriters. It is understood that the
several Underwriters propose to offer the Certificates for sale to the public
as set forth in the Prospectus.
Section 5. Certain Agreements of the Seller and TMCC. Each of the
Seller and TMCC, as the case may be, jointly and severally, covenants and
agrees with the several Underwriters that:
(a) If the Effective Time is prior to the execution and
delivery of this Agreement, the Seller will file the Prospectus with
the Commission pursuant to and in accordance with Rule 424(b)(1) (or,
if applicable and if consented to by the Underwriter, Rule 424(b)(4))
not later than the earlier of (i) the second business day following
the execution and delivery of this Agreement or (ii) the fifteenth
business day after the Effective Date of the Initial Registration
Statement. The Seller will advise the Underwriter promptly of any
such filing pursuant to Rule 424(b). If the Effective Time of the
Initial Registration Statement is prior to the execution and delivery
of this Agreement and an additional registration statement is
necessary to register a portion of the Certificates under the Act but
the Effective Time thereof
5
<PAGE> 6
has not occurred as of such execution and delivery, the Seller will
file the Additional Registration Statement or a post-effective
amendment thereto, as the case may be, with the Commission pursuant to
and in accordance with Rule 424(b) on or prior to 10:00 P.M., New York
time, on the date of this Agreement or, if earlier, on or prior to the
time the Prospectus is printed and distributed to any Underwriter, or
will make such filing at such later date as shall have been consented
to by the Underwriter.
(b) The Seller will advise the Representatives promptly of
any proposal to amend or supplement the initial registration statement
or any additional registration statement as filed or the related
prospectus or any Registration Statement or the Prospectus and will
not effect any such amendment or supplement without the consent of the
Representatives; and the Seller will also advise the Representatives
promptly of the effectiveness of each Registration Statement (if the
related Effective Time is subsequent to the execution and delivery of
this Agreement) and of any amendment or supplement of any Registration
Statement or the Prospectus and of the institution by the Commission
of any stop order proceedings in respect of any Registration Statement
and will use its best efforts to prevent the issuance of any such stop
order and to obtain as soon as possible its lifting, if issued.
(c) If, at any time when a prospectus relating to the
Certificates is required to be delivered under the Act, any event
occurs as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, or if it is necessary at any time to amend
or supplement the Prospectus to comply with the Act, the Seller will
promptly notify the Representatives and will promptly prepare and
file, or cause to be prepared and filed, with the Commission an
amendment or supplement which will correct such statement or omission,
or an amendment or supplement which will effect such compliance.
Neither the Representatives' consent to, nor the delivery by the
Representatives of, any such amendment or supplement shall constitute
a waiver of any of the conditions set forth in Section 6 hereof.
(d) As soon as practicable, but not later than the
Availability Date (as defined below), the Seller will cause the
Trustee to make generally available to the Certificateholders an
earnings statement with respect to the Trust covering a period of at
least 12 months beginning after the Effective Date of the Initial
Registration Statement (or of any Additional Registration Statement)
that will satisfy the provisions of Section 11(a) of the Act. For the
purpose of the preceding sentence, "Availability Date" means the 45th
day after the end of the Seller's fourth fiscal quarter following the
Seller's fiscal quarter that includes such Effective Date, except
that, if such fourth fiscal quarter is the last quarter of the
Seller's fiscal year, "Availability Date" means the 90th day after the
end of such fourth fiscal quarter.
(e) The Seller will furnish to the Underwriters copies of
each Registration Statement as originally filed and each amendment
thereto (in each case at least two of which will be signed and will
include all exhibits), each related preliminary prospectus, the
Prospectus and all amendments and supplements to such documents, in
each case as soon as available and
6
<PAGE> 7
in such quantities as the Representatives may reasonably request. The
Prospectus shall be so furnished no later than 3:00 P.M., New York
City time, on the second business day following the later of the
execution and delivery of this Agreement or the Effective Time of the
Initial Registration Statement. All other documents shall be
furnished as soon as available. The Seller will pay the expenses of
printing and distributing to the Underwriters all such documents.
(f) The Seller will arrange for the qualification of the
Certificates for sale under the securities laws of such jurisdictions
in the United States as the Representatives may reasonably designate
and will continue such qualifications in effect so long as required
for the distribution of the Certificates, provided that the Seller
shall not be obligated to qualify to do business nor become subject to
service of process generally, but only to the extent required for such
qualification, in any jurisdiction in which it is not currently so
qualified.
(g) So long as any of the Certificates are outstanding, the
Seller or TMCC, as the case may be, will deliver or cause to be
delivered to the Representatives (i) copies of each report regarding
the Certificates mailed to Certificateholders pursuant to Section 4.10
of the Pooling and Servicing Agreement, (ii) the annual statement as
to compliance and the annual statement of a firm of independent public
accountants furnished to the Trustee pursuant to Sections 3.11 and
3.12 of the Pooling and Servicing Agreement (as amended), as soon as
such statements are furnished to the Trustee, (iii) copies of all
documents required to be filed with the Commission pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
any order of the Commission thereunder and (iv) such other information
concerning the Seller, TMCC (relating to the Receivables, the
servicing thereof or the ability of TMCC to act as Servicer), the
Certificates or the Trust as the Representatives may reasonably
request from time to time.
(h) The Seller and TMCC will pay all expenses incident to the
performance of their respective obligations under this Agreement,
including without limitation, (i) expenses incident to the printing,
reproduction and distribution of the Registration Statement as
originally filed and each amendment thereto, preliminary prospectuses
and the Prospectus (including any amendments and supplements thereto),
(ii) the fees and disbursements of the Trustee and its counsel, (iii)
the fees and disbursements of counsel to the Seller and TMCC and the
independent public accountants of the Seller, (iv) the fees charged by
Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's
Ratings Services ("Standard & Poor's", and together with Moody's, the
"Rating Agencies") in connection with the rating of the Class A
Certificates and the Class B Certificates, (v) the fees of DTC in
connection with the book-entry registration of the DTC Certificates
and (vi) expenses incurred in distributing preliminary prospectuses
and the Prospectus (including any amendments and supplements thereto)
to the Underwriters, and will reimburse the Underwriters for any
expenses (including reasonable fees and disbursements of counsel)
incurred by the Underwriters in connection with the qualification of
the Certificates for sale under the securities laws of such
jurisdictions in the United States as the Representatives may
designate pursuant to Section 5(f) hereof.
7
<PAGE> 8
(i) On or before the Closing Date, the Seller and TMCC shall
cause their respective books and records (including any computer
records) relating to the Receivables to be marked to show the Trust's
absolute ownership of the Receivables, and from and after the Closing
Date neither the Seller nor TMCC, as Servicer, shall take any action
inconsistent with the Trust's ownership of such Receivables, other
than as permitted by the Pooling and Servicing Agreement or as
required by law.
(j) For a period of 14 days from the date hereof, neither the
Seller, TMCC nor any of their respective affiliates will, without the
prior written consent of the Representatives, directly or indirectly,
offer, sell or contract to sell or announce the offering of, in a
public or private transaction in the United States, any other
collateralized securities similar to the Certificates.
(k) So long as any Certificates are outstanding, the Seller
and TMCC will cause to be delivered to the Representatives a reliance
letter relating to each Opinion of Counsel delivered to either Rating
Agency by counsel to the Seller or counsel to TMCC pursuant to either
Basic Document.
(l) To the extent, if any, that the rating at the Closing
Date provided with respect to the Class A Certificates or the Class B
Certificates by either Rating Agency is conditional upon the
furnishing of documents or the taking of any other actions by the
Seller or TMCC, the Seller or TMCC, as the case may be, shall furnish
such documents and take any such other actions as may be required.
Section 6. Conditions of the Obligations of the Underwriters. The
obligations of the several Underwriters to purchase and pay for the
Certificates will be subject to the accuracy of the respective representations
and warranties on the part of the Seller and TMCC herein, to the accuracy of
the statements of the Seller and TMCC made in any officers' certificates
pursuant to the provisions hereof, to the performance by the Seller and TMCC of
their respective obligations hereunder and to the following additional
conditions precedent:
(a) On (i) the date of this Agreement, the Representatives
and the Seller shall have received a letter, dated the date of
delivery thereof (which, if the Effective Time of the Initial
Registration Statement is prior to the execution and delivery of this
Agreement, shall be on or prior to the date of this Agreement or, if
such Effective Time is subsequent to the execution and delivery of
this Agreement, shall be prior to the filing of the amendment or
post-effective amendment to the registration statement to be filed
shortly prior to such Effective Time), of Price Waterhouse LLP
confirming that they are independent public accountants with respect
to the Seller and TMCC within the meaning of the Act and the Rules and
Regulations, with respect to certain information contained in the
Registration Statements and substantially in the form of the draft to
which the Representatives previously have agreed and otherwise in form
and in substance satisfactory to the Representatives and counsel for
the Underwriters and (ii) the Closing Date, the Representatives and
the Seller shall have received a letter, dated as of the Closing Date,
from Price Waterhouse, updating
8
<PAGE> 9
the letter referred to in clause (i) above, in form and substance
satisfactory to the Representatives and counsel for the Underwriters.
As used in this subsection, (i) "Registration Statements" shall mean
(A) the Initial Registration Statement as proposed to be amended by
the amendment or post-effective amendment to be filed shortly prior to
its Effective Time, if the Effective Time of the Initial Registration
Statement is subsequent to the date of this Agreement, or (B) the
Initial Registration Statement and the additional registration
statement as proposed to be filed or as proposed to be amended by the
post-effective amendment to be filed shortly prior to its Effective
Time, if the Effective Time is prior to the execution and delivery of
this Agreement but the Effective Time of the Additional Registration
Statement is subsequent to such execution and delivery, and (ii)
"Prospectus" shall mean the prospectus included in the Registration
Statements.
(b) If the Effective Time of the Initial Registration
Statement is not prior to the execution and delivery of this
Agreement, such Effective Time shall have occurred not later than
10:00 P.M., New York time, on the date of this Agreement or such later
date as shall have been consented to by the Representatives. If the
Effective Time of the Initial Registration Statement is prior to the
execution and delivery of this Agreement, the Prospectus shall have
been filed with the Commission in accordance with the Rules and
Regulations and Section 5(a) hereof. If the Effective Time of the
Additional Registration Statement (if any) is not prior to the
execution and delivery of this Agreement, such Effective Time shall
have occurred not later than 10:00 P.M., New York time, on the date of
this Agreement or, if earlier, the time the Prospectus is printed and
distributed to any Underwriter, or shall have occurred at such later
date as shall have been consented to by the Underwriter. Prior to the
Closing Date, no stop order suspending the effectiveness of any
Registration Statement shall have been issued and no proceedings for
that purpose shall have been instituted or, to the knowledge of the
Seller or the Representatives, shall be contemplated by the
Commission.
(c) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred (i) any material adverse
change in the condition, financial or otherwise, or in the business
affairs or business prospects of the Seller or TMCC which, in the
reasonable judgment of a majority in interest of the Underwriters
including the Representatives, materially impairs the investment
quality of the Class A Certificates or the Class B Certificates, or
makes it impractical or inadvisable to proceed with completion of the
sale of and payment for the Class A Certificates or the Class B
Certificates; (ii) any downgrading in the rating of any debt
securities of TMCC or Toyota Motor Sales, U.S.A., Inc. or any of their
direct or indirect subsidiaries by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule
436(g) under the Act), or any public announcement that any such
organization has under surveillance or review its rating of any such
debt securities (other than an announcement with positive implications
of a possible upgrading, and no implication of a possible downgrading,
of such rating); (iii) any suspension or limitation of trading in
securities generally on the New York Stock Exchange or any setting of
minimum prices for trading on such exchange, or any suspension of
trading of any securities of TMCC on any exchange or in the
over-the-counter market; (iv) any
9
<PAGE> 10
banking moratorium declared by federal, California or New York
authorities; or (v) any outbreak or escalation of major hostilities in
which the United States is involved, any declaration of war by
Congress or any other substantial national or international calamity
or emergency if, in the reasonable judgment of a majority in interest
of the Underwriters including the Representatives, the effect of any
such outbreak, escalation, declaration, calamity or emergency makes it
impractical or inadvisable to proceed with completion of the sale of
and payment for the Class A Certificates or the Class B Certificates.
(d) The Representatives shall have received:
(1) The favorable opinion, dated the Closing Date, of
Andrews & Kurth L.L.P., special counsel for the Seller and TMCC, in
form and scope satisfactory to the Representatives, to the effect
that:
(i) Each Basic Document has been duly authorized
by all necessary corporate action on the part of each of the
Seller and TMCC and has been executed and delivered by each of
the Seller and TMCC and, assuming the due authorization,
execution and delivery thereof by the Trustee, constitutes a
legally valid and binding obligation of each of the Seller and
TMCC enforceable in accordance with its respective terms,
except as limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or affecting creditors'
rights generally (including, without limitation, fraudulent
conveyance laws). Such counsel may state, however, that
enforceability of the Basic Documents is subject to the effect
of general principles of equity including, without limitation,
concepts of materiality, reasonableness, good faith and fair
dealing and the possible unavailability of specific
performance or injunctive relief, regardless of whether
considered in a proceeding in equity or at law.
(ii) The Certificates have been duly and validly
authorized and, when executed and authenticated by the Trustee
as specified in the Pooling and Servicing Agreement and
delivered to the Representatives for the respective accounts
of the Underwriters against payment of the consideration
specified herein, will be duly and validly issued and
outstanding and entitled to the benefits of the Pooling and
Servicing Agreement, except as the enforceability of the
Pooling and Servicing Agreement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws
relating to or affecting creditors' rights generally
(including, without limitation, fraudulent conveyance laws),
and general principles of equity, including, without
limitation, concepts of materiality, reasonableness, good
faith and fair dealing and the possible unavailability of
specific enforcement or injunctive relief, regardless of
whether considered in a proceeding in equity or at law.
(iii) Neither the Seller nor the Trust is required
to be registered under the Investment Company Act.
10
<PAGE> 11
(iv) With respect to Financed Vehicles in the
State of California, no filing or other action other than (A)
the filing of a UCC financing statement naming TMCC as
transferor and the Seller as the transferee, and (B) the
filing of a UCC financing statement naming the Seller as the
transferor and the Trustee as transferee, which filings have
been completed, is necessary to perfect the transfer and
assignment of TMCC's security interest in such Financed
Vehicles to the Seller, and the Seller's security interest in
such Financed Vehicles to the Trustee, respectively, and as a
result of such transfer and assignment and filing of such
financing statements, the Trustee has a first perfected
security interest in such Financed Vehicles, except that so
long as TMCC is named as the legal owner and lien holder on a
certificate of title, TMCC has the ability to release the
security interest in the Financed Vehicle or to assign it to
another party.
(v) The Trust will not be classified as an
association taxable as a corporation for federal or California
income tax purposes and, instead, under subpart E, part I of
subchapter J of the Internal Revenue Code of 1986, as amended,
the Trust will be treated as a grantor trust and each holder
of Certificates will be treated as the owner of an undivided
interest in the income and corpus attributable to the Trust.
(vi) The statements in the Prospectus under
"Summary--Tax Status" and "--ERISA Considerations", "Certain
Federal Income Tax Considerations" and "ERISA Considerations",
to the extent that they constitute matters of law or legal
conclusions with respect thereto, have been reviewed by such
counsel and are correct in all material respects.
(vii) This Agreement and each Basic Document has
been duly authorized by all necessary corporate action on the
part of each of the Seller and TMCC, and has been duly
executed and delivered by each of the Seller and TMCC.
(viii) No authorization, approval, consent or order
of any court or governmental agency or body is required, under
the Federal law of the United States or the laws of the State
of California or the State of New York, for the consummation
by either the Seller or TMCC of the transactions contemplated
in this Agreement or the Basic Documents except such as may be
required under the Act, the Rules and Regulations or state
securities laws, and those authorizations, approvals,
consents, orders and filings which have previously been
obtained or made and are in full force and effect as of the
Closing Date; provided, that such counsel need express no
opinion as to state securities laws.
(ix) To such counsel's knowledge, there are no
actions, proceedings or investigations pending or threatened,
to which the Seller or TMCC is a party or of which any
property of the Seller or TMCC is the subject required to be
disclosed in the Registration Statements, other than those
disclosed therein, (A) asserting the
11
<PAGE> 12
invalidity of this Agreement, any Basic Document or the
Certificates, (B) seeking to prevent the issuance of the
Certificates or the consummation of any of the transactions
contemplated by this Agreement or the Basic Documents, (C)
that would, if determined adversely to TMCC or the Seller,
materially and adversely affect the performance by the Seller
or TMCC of its respective obligations under, or the validity
or enforceability of, this Agreement, either Basic Document or
the Certificates or (D) seeking adversely to affect the
federal income tax attributes of the Certificates as described
in the Prospectus under the heading "Certain Federal Income
Tax Considerations" or the California income tax attributes of
the Certificates.
(x) At the time of execution and delivery of (A)
the Receivables Purchase Agreement, TMCC had the corporate
power and corporate authority to transfer the Receivables and
such other property being transferred to the Seller pursuant
to the Receivables Purchase Agreement, and (B) the Pooling and
Servicing Agreement, the Seller had the corporate power and
corporate authority to transfer the Receivables and such other
property being transferred to the Trustee pursuant to the
Pooling and Servicing Agreement and to cause the transfer of
the Certificates to the Underwriters.
(xi) The Certificates and the Basic Documents each
conform in all material respects with the respective
descriptions thereof contained in the Registration Statements
and the Prospectus.
(xii) The statements in the Registration Statements
and Prospectus under the heading "Certain Legal Aspects of the
Receivables", to the extent that they constitute matters of
law or legal conclusions are correct in all material respects.
(xiii) The Pooling and Servicing Agreement is not
required to be qualified under the Trust Indenture Act of
1939, as amended.
(xiv) The Receivables constitute "chattel paper" as
such term is defined in the California Uniform Commercial
Code.
(xv) The Initial Registration Statement and any
Additional Registration Statement filed with the Commission
has been declared effective under the Act, and, to such
counsel's knowledge upon due inquiry, no stop order suspending
the effectiveness of a Registration Statement has been issued
under the Act or proceedings therefor initiated or threatened
by the Commission, and each Registration Statement and the
Prospectus, and each amendment or supplement thereto, as of
its respective effective or issue date, complied or complies
in all
12
<PAGE> 13
material respects with the requirements as to form of the Act
and the Rules and Regulations.
In addition, such counsel shall state that such counsel has
participated in conferences with the officers and other representatives of TMCC
and the Seller, representatives of the independent public accountants therefor
and the Underwriters, at which the contents of the Registration Statement and
the Prospectus and related matters were discussed and, although such counsel is
not passing upon, and does not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained therein and have not made
any independent check or verification thereof, during the course of such
participation (relying as to factual matters as to materiality to a large
extent upon the statements of officers and other representatives of TMCC and
the Seller), such counsel does not believe that any Registration Statement, at
the related Effective Time, or any such amendment or supplement, as of its
effective date, contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus, at the date of this
Agreement (or any such amendment or supplement, as of its respective date) or
at the Closing Date included or includes an untrue statement of a material fact
or omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; it being understood that such counsel need express no
opinion as to any financial statements or other financial or statistical data
contained in any Registration Statement or the Prospectus.
(2) The favorable opinion, dated the Closing Date, of
Alan F. Cohen, Esq., General Counsel of the Seller, in form and
substance scope to the Representatives and their counsel, to the
effect that:
(i) Each of the Seller and TMCC is a corporation
duly organized, existing and in good standing under the laws
of the State of California.
(ii) To such counsel's knowledge, each of the
Seller and TMCC is duly incorporated or qualified as a foreign
corporation to transact business and is in good standing in
each jurisdiction in which their respective ownership or lease
of substantial properties or the conduct of their respective
businesses requires such qualification and in which the
failure to so qualify and be in good standing would materially
adversely affect their respective businesses or financial
condition.
(iii) To such counsel's knowledge (A) there are no
legal or governmental proceedings pending or threatened which
are required to be disclosed in the Registration Statements,
other than those disclosed therein, (B) there are no legal or
governmental proceedings to which TMCC is a party or to which
any of its property is subject which are not described in
TMCC's Annual Report on Form 10-K for the year ended o, or its
Quarterly Reports for the quarters ended o, o, and o, which
are required to be disclosed therein other than those
disclosed therein and (C) there are no pending legal or
governmental proceedings to which the Seller is a party or to
which any of its property is subject.
13
<PAGE> 14
(iv) To such counsel's knowledge (A) no default
exists in the due performance or observance by TMCC of any
obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which it is a party or by which it may be
bound, which default would have a material adverse effect on
the financial condition, earnings, business affairs, business
prospects, properties or results of operations of TMCC and its
subsidiaries considered as one enterprise, and (B) other than
this Agreement and the Basic Documents, the Seller is not a
party to any material contract, indenture, mortgage, loan
agreement, note, lease or other instrument.
(v) The transfer of the Receivables and the other
property of the Trust transferred by TMCC to the Seller
pursuant to the Receivables Purchase Agreement, the execution,
delivery and performance of the Basic Documents and this
Agreement and the consummation of the transactions herein and
therein contemplated will not (A) conflict with or constitute
a breach of, or default under, or result in the creation or
imposition of any Lien upon any property or assets of TMCC or
any of its subsidiaries pursuant to, any material contract,
indenture, mortgage, loan agreement, note, lease or other
instrument known to such counsel to which TMCC or any of its
subsidiaries is a party or by which it or any of them may be
bound, or to which any of the property or assets of TMCC or
any of its subsidiaries is subject, (B) result in any
violation of the provisions of the charter or bylaws of TMCC
or (C) to such counsel's knowledge, result in any violation of
any applicable law, administrative regulation or
administrative or court decree.
(vi) The transfer of the Receivables to the
Trustee acting on behalf of the Trust, the assignment of the
security interest of the Seller in the Financed Vehicles, the
issuance and sale of the Certificates, and the execution and
delivery of this Agreement, the Basic Documents and the
Certificates, and the consummation of the transactions
contemplated herein and therein will not (A) conflict with or
constitute a breach of, or default under, or result in the
creation or imposition of any Lien upon any property or assets
of the Seller pursuant to, any material contract, indenture,
mortgage, loan agreement, note, lease or other instrument to
which the Seller is a party or by which it may be bound, or to
which any of the property or assets of the Seller is subject,
(B) result in any violation of the provisions of the charter
or bylaws of the Seller or (C) to such counsel's knowledge,
result in any violation of any applicable law, administrative
regulation or administrative or court decree.
(vii) Each of the Seller and TMCC has obtained all
necessary licenses and approvals under the federal law of the
United States and the laws of the State of California to
conduct their respective businesses in which the failure to
obtain such licenses and approvals would render any Receivable
or any other material part of the corpus of the Trust
unenforceable or would materially and adversely affect the
ability of either the Seller or TMCC to perform any of their
respective obligations under, or the enforceability of, either
Basic Document.
14
<PAGE> 15
(viii) Such counsel is familiar with the standard
operating procedures of TMCC relating to the acquisition by
TMCC of a first perfected security interest in the automobiles
or light duty trucks financed by the retail installment sale
contracts purchased by TMCC in the ordinary course of its
business and relating to the sale to TMCC of such contracts
and such security interests in the automobiles or light duty
trucks financed thereby in the ordinary course of its
business. Assuming that such standard procedures are followed
with respect to the perfection of security interests in the
Financed Vehicles (and such counsel has no reason to believe
that TMCC has not or will not continue to follow its standard
procedures in connection with the perfection of first
perfected security interests in the Financed Vehicles), TMCC
has acquired a first perfected security interest in the
Financed Vehicles.
(3) The favorable opinion, dated the Closing Date, of o,
special [name of state] counsel to the Seller and TMCC, in form and
scope satisfactory to the Representatives and their counsel, to the
effect that the blank forms of Contracts identified and reviewed by
them and attached to such opinion comply, or complied when in use,
with all applicable provisions of the law of such state and the
regulations promulgated thereunder regarding retail installment sales
of motor vehicles.
(4) The favorable opinion, dated the Closing Date, of o,
special [name of state] counsel to the Seller and TMCC, in form and
scope satisfactory to the Representatives and their counsel, to the
effect that, assuming the due authorization, execution and delivery
thereof by the parties thereto, each of the Receivables in the form
attached to such opinion constitutes the valid, binding and
enforceable agreement of the parties thereto; and such Receivables
comply as to content and form with all applicable state laws and
federal disclosure laws relating to consumer credit, including without
limitation, consumer protection laws.
(5) Reliance letters relating to each opinion rendered to
either Rating Agency by (A) Andrews & Kurth L.L.P and (B) Alan F.
Cohen, Esq.
(6) The favorable opinion, dated the Closing Date, of
counsel to the Trustee, in form and scope satisfactory to the
Representatives and counsel for the Underwriters, to the effect that:
(i) The Trustee is a New York banking
corporation duly organized and validly existing under the laws
of the State of New York, and is duly authorized and empowered
to exercise trust powers under applicable law.
(ii) The Trustee has full power and authority
to execute, deliver and perform its obligations under the
Pooling and Servicing Agreement and has taken all necessary
action to authorize the execution, delivery and performance of
its obligations under the Pooling and Servicing Agreement.
15
<PAGE> 16
(iii) The Pooling and Servicing Agreement has
been duly authorized, executed and delivered by the Trustee,
and constitutes a legal, valid and binding obligation of the
Trustee, enforceable against the Trustee in accordance with
its terms, except that certain of such obligations may be
exercisable solely against the estate of the Trust and except
that such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium, liquidation or other
similar laws applicable to New York banking corporations
affecting the enforcement of creditors' rights generally, and
by general principles of equity, including, without
limitation, concepts of materiality, reasonableness, good
faith and fair dealing (regardless of whether such
enforceability is considered in a proceeding in equity or at
law).
(iv) The Certificates have been duly executed,
authenticated and delivered by the Trustee in accordance with
the terms of the Pooling and Servicing Agreement.
(v) The execution, delivery and performance by
the Trustee of the Pooling and Servicing Agreement shall not
(a) violate any provision of any law governing the banking or
trust powers of the Trustee or, to the best knowledge of such
counsel, 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) to the
best of such counsel's knowledge, violate any material
provision of, constitute, with or without notice or lapse of
time, a material default under, or result in the creation or
imposition of any lien on any properties of the Trust pursuant
to the provisions of any mortgage, indenture, contract,
agreement or other undertaking to which the Trustee is a
party.
(vi) The execution, delivery and performance by
the Trustee of the Pooling and Servicing 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 or corporate trust activities of
the Trustee.
(7) The favorable opinion of Andrews & Kurth L.L.P.,
counsel for the Underwriters, dated the Closing Date, with respect to
the existence of the Seller and TMCC, the validity of the Certificates
and such other related matters as the Representatives shall request
and the Seller and TMCC shall have furnished or caused to be furnished
to such counsel such documents as they may reasonably request for the
purpose of enabling them to pass upon such matters.
(e) The Representatives shall have received a certificate,
dated the Closing Date, signed by the President or any Vice President
and a principal financial or accounting officer of (i) the Seller in
which such officers shall state that, (A) to the best of their
knowledge after reasonable investigation, the representations and
warranties of the Seller in this Agreement
16
<PAGE> 17
are true and correct, (B) the Seller has complied with all agreements
and satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to the Closing Date, (C) no stop order
suspending the effectiveness of any Registration Statement has been
issued and no proceedings for that purpose have been instituted or, to
the best of their knowledge, are contemplated by the Commission, (D)
the Additional Registration Statement, if any, satisfying the
requirements of Rule 462(b)(1) and Rule 462(b)(3) was filed in
accordance with Rule 462(b) (including payment of the applicable
filing fee in accordance with Rule 111(a) or Rule 111(b) under the
Act) prior to the time the Prospectus was printed or distributed to
the Underwriter and (E) subsequent to the date of this Agreement,
there has been no material adverse change in the condition, financial
or otherwise, or in the business affairs or business prospects of the
Seller except as set forth or contemplated in the Prospectus, and (ii)
TMCC in which such officers shall state that, to the best of their
knowledge after reasonable investigation, the representations and
warranties of TMCC in this Agreement are true and correct, that TMCC
has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied hereunder and that subsequent to the
date of this Agreement there has been no material adverse change in
the condition, financial or otherwise, or in the business affairs or
business prospects of TMCC which would materially and adversely affect
the performance by TMCC of its obligations under this Agreement or the
Basic Documents.
(f) The Class A Certificates shall be rated "Aaa" by Moody's
and "AAA" by Standard & Poor's.
(g) The Class B Certificates shall be rated at least "o" by
Moody's and at least "o" by Standard & Poor's.
Section 7. Indemnification and Contribution.
(a) The Seller and TMCC will, jointly and severally, indemnify and
hold harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any Registration Statement, the Prospectus or any amendment or supplement
thereto, or any related preliminary prospectus, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and will reimburse each Underwriter for any legal or other expenses
reasonably incurred by such Underwriter in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses
are incurred; provided, however, that neither the Seller nor TMCC will be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement in or omission or alleged omission from any of such documents in
reliance upon and in conformity with written information furnished to the
Seller by any Underwriter through the Lead Underwriter specifically for use
therein.
17
<PAGE> 18
(b) Each Underwriter, severally and not jointly, will indemnify and
hold harmless each of the Seller and TMCC against any losses, claims, damages or
liabilities to which the Seller or TMCC may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Registration Statement,
the Prospectus or any amendment or supplement thereto, or any related
preliminary prospectus, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Seller by any Underwriter
through the Lead Underwriter specifically for use therein, and will reimburse
any legal or other expenses reasonably incurred by the Seller and TMCC in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying
party under subsection (a) or (b) above, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under subsection (a) or (b) above. In case any such action is
brought against any indemnified party and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above (i)
in such proportion as is appropriate to reflect the relative benefits received
by the Seller and TMCC on the one hand and the Underwriters on the other from
the offering of the Class A Certificates or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Seller and TMCC on the one hand and
the Underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities as well as any
other relevant equitable considerations. The relative benefits received by the
Seller and TMCC on the one hand and the Underwriters on the other shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Seller bear to the total
underwriting discounts and commissions received by the Underwriters. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement
18
<PAGE> 19
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Seller or TMCC or the Underwriters and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission. The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any action or claim which
is the subject of this subsection (d). Notwithstanding the provisions of this
subsection (d), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Certificates
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Seller and TMCC under this Section
shall be in addition to any liability that the Seller or TMCC may otherwise
have and shall extend, upon the same terms and conditions, to each person, if
any, who controls any Underwriter within the meaning of the Act; and the
obligations of the Underwriters under this Section shall be in addition to any
liability that the respective Underwriters may otherwise have and shall extend,
upon the same terms and conditions, to each director of the Seller, to each
officer of the Seller who has signed any Registration Statement and to each
person, if any, who controls the Seller or TMCC within the meaning of the Act.
Section 8. Default of Underwriters. If any Underwriter or
Underwriters default in their obligations to purchase Certificates hereunder
and the aggregate principal amount of the Certificates that such defaulting
Underwriter or Underwriters agreed but failed to purchase does not exceed 10%
of the total principal amount of the Certificates, the Representatives may make
arrangements satisfactory to the Seller and TMCC for the purchase of such Class
A Certificates by other persons, including any of the Underwriters, but if no
such arrangements are made by the Closing Date, the non-defaulting Underwriters
shall be obligated severally, in proportion to their respective commitments
hereunder, to purchase the Class A Certificates that such defaulting
Underwriters agreed but failed to purchase. If any Underwriter or Underwriters
so default and the aggregate principal amount of the Certificates with respect
to which such default or defaults occur exceeds 10% of the total principal
amount of the Certificates and arrangements satisfactory to the Seller and TMCC
for the purchase of such Certificates by other persons are not made within 36
hours after such default, this Agreement will terminate without liability on
the part of any non-defaulting Underwriter, the Seller or TMCC, except as
provided in Section 9 hereof. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter from liability
for its default.
Section 9. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of the Seller and TMCC or their respective officers and of the
several Underwriters set forth in or made pursuant to this Agreement
19
<PAGE> 20
will remain in full force and effect, regardless of any investigation or
statement as to the results thereof, made by or on behalf of any Underwriter,
the Seller, TMCC or any of their respective representatives, officers or
directors or any controlling person, and will survive delivery of and payment
for the Certificates. If this Agreement is terminated pursuant to Section 8
hereof or if for any reason the purchase of the Certificates by the
Underwriters is not consummated, the Seller and TMCC shall remain responsible
for the expenses to be paid or reimbursed by the Seller and TMCC pursuant to
Section 5(h) hereof and the respective obligations of the Seller, TMCC and the
Underwriters pursuant to Section 7 hereof shall remain in effect. If the
purchase of the Certificates by the Underwriters is not consummated for any
reason other than solely because of the termination of this Agreement pursuant
to Section 8 hereof or the occurrence of any event specified in clause (iii),
(iv) or (v) of Section 6(c) hereof, the Seller and TMCC will reimburse the
Underwriters for all out-of-pocket expenses (including fees and disbursements
of counsel) reasonably incurred by it in connection with the offering of the
Certificates.
Section 10. Notices. All communications hereunder will be in writing
and, if sent to the Representatives or the Underwriters, will be mailed,
delivered or telegraphed and confirmed to the Representatives c/o -, Attention:
o; if sent to the Seller, will be mailed, delivered or telegraphed and
confirmed to it at Toyota Motor Credit Receivables Corporation, 19001 South
Western Avenue, Torrance, California 90501, Attention: Lloyd Mistele --
President; or if sent to TMCC, will be mailed, delivered or telegraphed and
confirmed to it at Toyota Motor Credit Corporation, 19001 South Western Avenue,
Torrance, California 90501, Attention: Wolfgang Jahn -- Senior Vice President
and General Manager. Notwithstanding the foregoing, any notice to an
Underwriter pursuant to Section 7 hereof will be mailed, delivered or
telegraphed and confirmed to such Underwriter.
Section 11. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 7 hereof,
and no other person will have any right or obligation hereunder.
Section 12. Representation of Underwriters. The Representatives will
act for the several Underwriters in connection with the transactions described
in this Agreement, and any action taken by the Representatives under this
Agreement, jointly or by the Lead Underwriter, will be binding upon all the
Underwriters.
Section 13. Representations and Warranties of Underwriters. Each
Underwriter represents and agrees to the following selling restrictions with
respect to the Securities for purposes of the issue of Securities:
(a) Each Underwriter represents and agrees that it will comply
with all applicable laws and regulations in each jurisdiction in which it
purchases, offers or sells Securities or possesses or distributes the
Prospectus or any other offering material and will obtain any consent, approval
or permission required by it for the purchase, offer or sale by it of
Securities under the laws and regulations in force in any jurisdiction to which
it is subject or in which it makes such purchases, offers or sales and none of
the Trust, the Seller or TMCC shall have any responsibility therefor;
(b) No action has been or will be taken by the Underwriters that
would permit a public offering of the Securities or possession or distribution
of any offering material in relation to the Securities in any jurisdiction
where action for that purpose is required unless the Trust, the Seller or TMCC
has agreed to such actions and such actions have been taken;
(c) Each Underwriter represents and agrees that it will not offer,
sell or deliver any of the Securities or distribute any such offering material
in or from any jurisdiction except under circumstances which will result in
compliance with applicable laws and regulations and which will not impose any
obligation on the Trust, the Seller or TMCC or the Underwriters;
(d) No Underwriter is authorized to give any information or make
any representations in relation to the Securities other than those contained or
incorporated by reference in the Prospectus for the Securities and such
additional information, if any, as the Trust, the Seller or TMCC shall, in
writing, provide to and authorize the Underwriter so to use and distribute to
actual and potential purchasers of Securities;
(e) Each Underwriter represents and agrees that it has not,
directly or indirectly, offered or sold and will not, directly or indirectly,
offer or sell in Hong Kong, by means of any document, any Securities other than
to persons whose ordinary business it is to buy or sell shares or debentures,
whether as principal or agent, or in circumstances which do not constitute an
offer to the public within the meaning of the Companies Ordinance (Cap. 32) of
Hong Kong. Each Underwriter further represents and agrees that, unless it is a
person who is permitted to do so under the securities laws of Hong Kong, it has
not issued, or had in its possession for the purposes of issuing, and it will
not issue, or have in its possession for the purposes of issuing, any
advertisement, invitation or document relating to Securities other than with
respect to Securities intended to be disposed of to persons outside Hong Kong
or to persons whose business involves the acquisition, or disposal or holding
of securities, whether as principal or agent; and
(f) Each Underwriter has not offered or sold and will not offer
or sell any Securities to persons in the United Kingdom prior to admission of
such Securities to listing in accordance with Part IV of the Financial Services
Act 1986 ("FSA") except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or
agent) for the purposes of their businesses or otherwise in circumstances which
have not resulted and will not result in an offer to the public in the United
Kingdom within the meaning of the Public Offers of Securities Regulations 1995
or the FSA;
(g) Each Underwriter has complied and will comply with all
applicable provisions of the FSA with respect to anything done by us in
relation to the Securities in, from or otherwise involving the United Kingdom;
and
(h) Each Underwriter will have only issued or passed on and will
only issue or pass on in the United Kingdom any document received by us in
connection with the issue of the Securities, other than any document which
consists of or any part of listing particulars, supplementary listing
particulars or any document required or permitted to be published by listing
rules under Part IV of the FSA, to a person who is of a kind described in
Article 11(3) of the FSA (Investment Advertisements) (Exemptions) Order 1995 or
is a person to whom such document may otherwise lawfully be issued or passed
on.
Section 14. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but
all such counterparts shall together constitute one and the same Agreement.
Section 15. Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
20
<PAGE> 21
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us one of the counterparts hereof,
whereupon it will become a binding agreement between the Seller and TMCC and
the Underwriters in accordance with its terms.
Very truly yours,
TOYOTA MOTOR CREDIT
RECEIVABLES CORPORATION
By:
--------------------------------
Name:
Title:
TOYOTA MOTOR CREDIT CORPORATION
By:
--------------------------------
Name:
Title:
The foregoing Underwriting
Agreement is hereby confirmed
and accepted, as of the date
first above written:
[Names of Investment Banks]
As Representatives of the
several Underwriters
By:
-------------------------------
Name:
Title:
Acting on behalf of themselves
and as the Representatives of
the several Underwriters.
21
<PAGE> 22
Schedule I
<TABLE>
<CAPTION>
Principal Amount of Principal Amount of
Underwriter Class A Certificates Class B Certificates
----------- -------------------- --------------------
<S> <C> <C>
o $o $o
o $o $o
</TABLE>
22
<PAGE> 1
EXHIBIT 4.1
FORM OF TRUST AGREEMENT
between
TOYOTA MOTOR CREDIT RECEIVABLES CORPORATION,
as Depositor,
and
o,
as Owner Trustee
Dated as of o
TOYOTA AUTO RECEIVABLES 199_-_ OWNER TRUST
<PAGE> 2
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
<TABLE>
<S> <C>
SECTION 1.01 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
CREATION OF TRUST
SECTION 2.01 Creation of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.02 Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.03 Purposes and Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.04 Appointment of Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.05 Initial Capital Contribution of Owner Trust Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.06 Declaration of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.07 Liability of the Certificateholders, Depositor and TMCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.08 Title to Trust Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.09 Situs of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.02 The Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.03 Authentication of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.04 Registration of Transfer and Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.05 Mutilated, Destroyed, Lost or Stolen Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3.06 Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.07 Access to List of Certificateholders' Names and Addresses . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.08 Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.09 Appointment of Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.10 Ownership by the Depositor of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.11 Book-Entry Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.12 Notices to Clearing Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.13 Definitive Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.14 Temporary Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
i
<PAGE> 3
ARTICLE IV
ACTIONS BY OWNER TRUSTEE OR OWNERS
<TABLE>
<S> <C>
SECTION 4.01 Prior Notice to Owners with Respect to Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 4.02 Action by Owners with Respect to Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 4.03 Action with Respect to Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 4.04 Restrictions on Owners' Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 4.05 Majority Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
SECTION 5.01 Establishment of Collection Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 5.02 Application of Amounts in Trust Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 5.03 Method of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 5.04 Accounting and Reports to the Noteholders,
Owners, the Internal Revenue Service and Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 5.05 Signature on Returns; Tax Matter Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.01 General Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.02 General Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 6.03 Action Upon Instruction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 6.04 No Duties Except as Specified in this Agreement or in Instructions . . . . . . . . . . . . . . . . . . . . . 21
SECTION 6.05 No Action Except Under Specified Documents or Instructions . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 6.06 Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE VII
CONCERNING THE OWNER TRUSTEE
SECTION 7.01 Acceptance of Trusts and Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 7.02 Furnishing of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 7.03 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 7.04 Reliance; Advice of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 7.05 Not Acting in Individual Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
SECTION 7.06 Owner Trustee Not Liable for Certificates or Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 7.07 Owner Trustee May Own Certificates and Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 7.08 [Pennsylvania Motor Vehicle Sales Finance Act Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
SECTION 8.01 Owner Trustee's Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 8.02 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 8.03 Payments to the Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
SECTION 9.01 Termination of Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 9.02 Dissolution upon Bankruptcy of the Depositor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.01 Eligibility Requirements for Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 10.02 Resignation or Removal of Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 10.03 Successor Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 10.04 Merger or Consolidation of Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 10.05 Appointment of Co-Trustee or Separate Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 Supplements and Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 11.02 No Legal Title to Owner Trust Estate in Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 11.03 Limitations on Rights of Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 11.04 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 11.05 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 11.06 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 11.07 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 11.08 No Petition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 11.09 No Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 11.10 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
SECTION 11.11 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 11.12 TMCC Payment Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
EXHIBIT A Form of Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
EXHIBIT B Form of Certificate of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
EXHIBIT C Form of Certificate Depository Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
</TABLE>
iv
<PAGE> 6
ARTICLE I
Definitions
SECTION 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 Section 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.
1
<PAGE> 7
"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.
"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 o, 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.
2
<PAGE> 8
"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.
"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 $o.
"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 o, 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 o% per annum.
"Paying Agent" means any paying agent or co-paying agent appointed
pursuant to Section 3.09, and shall initially be o.
"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.
3
<PAGE> 9
"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.
"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 o among [third party,][TMCC,] the Depositor and the Trust.]
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
Creation of Trust
SECTION 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.
4
<PAGE> 10
SECTION 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.
SECTION 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 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.
SECTION 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.
5
<PAGE> 11
SECTION 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.
SECTION 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 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.
SECTION 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
6
<PAGE> 12
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.
SECTION 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.
SECTION 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 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].
SECTION 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.
7
<PAGE> 13
(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 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.
SECTION 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
8
<PAGE> 14
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
SECTION 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.
SECTION 3.02 The Certificates. The Certificates shall be issued in
minimum denominations of $1,000 and in integral multiples of $1,000 in excess
thereof; provided, however, one 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.
SECTION 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 o, 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
9
<PAGE> 15
evidence, that such Certificate shall have been duly authenticated and
delivered hereunder. All Certificates shall be dated the date of their
authentication.
SECTION 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 o 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 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
10
<PAGE> 16
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 (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.
SECTION 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
11
<PAGE> 17
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 o, 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.
SECTION 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.
SECTION 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, 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.
SECTION 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 o, [Address], as its principal
corporate trust office for such purposes. The Owner Trustee shall give prompt
written notice to the Depositor and to the
12
<PAGE> 18
Certificateholders of any change in the location of the Certificate Register or
any such office or agency.
SECTION 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 o, and any
co-paying agent chosen by o, and acceptable to the Owner Trustee. o shall be
permitted to resign as Paying Agent upon 30 days' written notice to the Owner
Trustee. In the event that o 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, 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.
SECTION 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".
SECTION 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
13
<PAGE> 19
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 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.
SECTION 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.
SECTION 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
14
<PAGE> 20
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.
SECTION 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 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
SECTION 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
15
<PAGE> 21
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.
SECTION 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 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).
SECTION 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.
SECTION 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.
16
<PAGE> 22
SECTION 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
SECTION 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.
(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
17
<PAGE> 23
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.
SECTION 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.
(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,
18
<PAGE> 24
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.
SECTION 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.
SECTION 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.
SECTION 5.05 Signature on Returns; Tax Matters 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.
(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
SECTION 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
19
<PAGE> 25
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 $o , Class A-2 Notes in the aggregate principal
amount of $o, and Class A-3 Notes in the aggregate principal amount of $o
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.
SECTION 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.
SECTION 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 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
20
<PAGE> 26
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.
SECTION 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 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.
SECTION 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)
21
<PAGE> 27
in accordance with any document or instruction delivered to the Owner Trustee
pursuant to Section 6.03.
SECTION 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
SECTION 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 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;
22
<PAGE> 28
(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.
SECTION 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.
SECTION 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.
(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.
23
<PAGE> 29
(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.
SECTION 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.
SECTION 7.05 Not Acting in Individual Capacity. Except as provided
in this Article VII, in accepting the trusts hereby created, o 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.
SECTION 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
24
<PAGE> 30
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.
SECTION 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.
SECTION 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
SECTION 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,
experts and counsel as the Owner Trustee may employ in connection with the
exercise and performance of its rights and its duties hereunder.
25
<PAGE> 31
SECTION 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.
SECTION 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
SECTION 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.
26
<PAGE> 32
(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 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.
SECTION 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
27
<PAGE> 33
required by this sentence shall not prevent or delay, in any manner, a
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
SECTION 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.
SECTION 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
28
<PAGE> 34
instrument shall be delivered to each of the outgoing Owner Trustee and the
successor Owner Trustee and the Indenture Trustee, and shall arrange for the
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.
SECTION 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.
SECTION 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.
29
<PAGE> 35
SECTION 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 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 provisions 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 appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article. Each separate trustee and co-trustee, upon its acceptance of
the trusts thereupon 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
30
<PAGE> 36
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 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
SECTION 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.
31
<PAGE> 37
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.
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.
SECTION 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.
SECTION 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.
SECTION 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.
32
<PAGE> 38
(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.
SECTION 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 way affect the validity or enforceability of the other provisions
of this Agreement or of the Certificates or the rights of the Holders thereof.
SECTION 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.
SECTION 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.
SECTION 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.
SECTION 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.
SECTION 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.
33
<PAGE> 39
SECTION 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.
SECTION 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 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.
34
<PAGE> 40
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:
o,
not in its individual capacity but
solely as Owner Trustee
By:
----------------------------------
Name:
Title:
35
<PAGE> 41
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) 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 ESTATE BEING DEEMED TO BE "PLAN ASSETS" AND SUBJECT
TO THE PROHIBITED TRANSACTION
A-1
<PAGE> 42
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
o% 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/or 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 o, (as
amended and supplemented from time to time, the "Trust Agreement"), between
TMCRC, as depositor (the "Depositor") and o, 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 o (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 "o% 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 o, between the Trust and o, as
indenture trustee (the "Indenture Trustee"), consisting of three classes of
Notes designated as "Class A-1o% Asset Backed Notes", "Class A-2 o% Asset
Backed Notes" and "Class A-3 o% 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 which Trust Agreement
A-2
<PAGE> 43
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/or used automobiles and light duty
trucks (the "Receivables"), all monies due thereunder on or after o, 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 o day of
each month or, if such o day is not a Business Day, the next Business Day,
(each, a "Distribution Date"), commencing on o, 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> 44
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 this 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:
---------------------------------
o,
not in its individual capacity
but solely an Owner Trustee
Dated: By:
------------------------------
Authorized Signatory
A-4
<PAGE> 45
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned Trust
Agreement.
o o,
as Owner Trustee or as Owner Trustee
By: By: o,
--------------------------- as Authenticating
Authorized Signatory Agent
By:
----------------------
Authorized Signatory
A-5
<PAGE> 46
(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 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 o, [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> 47
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> 48
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 New York Stock Exchange or a commercial bank
or trust company.
A-8
<PAGE> 49
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 o, is being duly executed and filed by o, a
[Delaware banking corporation], as trustee, to form a business trust under the
[Delaware Business Trust Act (12 Del. Code, Section 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 o, [Address], Attention: o.
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.
o,
not in its individual
capacity but solely as owner
trustee under a Trust Agreement
dated as of o,
By:
-----------------------------
Name:
Title:
B-1
<PAGE> 1
EXHIBIT 4.2
FORM OF INDENTURE
between
TOYOTA AUTO RECEIVABLES 199_-_ OWNER TRUST,
as Issuer
and
o,
as Indenture Trustee
Dated as of o
<PAGE> 2
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
<TABLE>
<S> <C> <C>
SECTION 1.01 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.02 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
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 Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.11 Notices to Clearing Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.12 Definitive Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.13 Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE III
COVENANTS
SECTION 3.01 Payment of Principal and Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.02 Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 3.03 Money for Payments To Be Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 3.04 Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.05 Protection of Trust Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.06 Opinions as to Trust Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.07 Performance of Obligations; Servicing of Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.08 Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.09 Annual Statement as to Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.10 Issuer May Consolidate, etc., Only on Certain Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.11 Successor or Transferee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 3.12 No Other Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
SECTION 3.13 No Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.14 Servicer's Notice Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.15 Guarantees, Loans, Advances and Other Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.16 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.17 Removal of Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.18 Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.19 Notice of Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.20 Further Instruments and Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.01 Satisfaction and Discharge of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4.02 Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.03 Repayment of Moneys Held by Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE V
REMEDIES
SECTION 5.01 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 5.02 Acceleration of Maturity; Rescission and Annulment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.03 Collection of Indebtedness and Suits for Enforcement by Indenture Trustee . . . . . . . . . . . . . . . . . . 28
SECTION 5.04 Remedies; Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.05 Optional Preservation of the Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.06 Limitation of Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.07 Unconditional Rights of Noteholders To Receive Principal and Interest . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.08 Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.09 Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.10 Delay or Omission Not a Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.11 Control by Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.12 Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 5.13 Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 5.14 Waiver of Stay or Extension Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 5.15 Action on Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.16 Performance and Enforcement of Certain Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
</TABLE>
-ii-
<PAGE> 4
ARTICLE VI
THE INDENTURE TRUSTEE
<TABLE>
<S> <C>
SECTION 6.01 Duties of Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.02 Rights of Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 6.03 Individual Rights of Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 6.04 Indenture Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 6.05 Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 6.06 Reports by Indenture Trustee to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 6.07 Compensation and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 6.08 Replacement of Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.09 Successor Indenture Trustee by Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 6.10 Appointment of Co-Indenture Trustee or Separate Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 6.11 Eligibility; Disqualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 6.12 Preferential Collection of Claims Against Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
[SECTION 6.13 Pennsylvania Motor Vehicle Sales Finance Act Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43]
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.01 Note Registrar To Furnish Names and Addresses of Noteholders . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 7.02 Preservation of Information; Communications to Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 7.03 Reports by Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 7.04 Reports by Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.01 Collection of Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 8.02 Trust Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 8.03 General Provisions Regarding Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 8.04 Release of Trust Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 8.05 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01 Supplemental Indentures Without Consent of Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 9.02 Supplemental Indentures With Consent of Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<S> <C>
SECTION 9.03 Execution of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 9.04 Effect of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 9.05 Conformity with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 9.06 Reference in Notes to Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE X
TERMINATION OF THE TRUST
SECTION 10.01 Termination of the Trusts Created by Indenture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 10.02 Optional Purchase of All Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 Compliance Certificates and Opinions, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 11.02 Form of Documents Delivered to Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 11.03 Acts of Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 11.04 Notices, etc., to Indenture Trustee, Issuer and Rating Agencies . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 11.05 Notices to Noteholders; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 11.06 Alternate Payment and Notice Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 11.07 Conflict with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 11.08 Effect of Headings and Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 11.09 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 11.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 11.11 Benefits of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 11.12 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 11.13 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 11.14 Recording of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 11.15 Trust Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 11.16 No Petition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 11.17 Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
EXHIBIT A - Form of Class A-1 Note, Class A-2 Note and Class A-3 Note
EXHIBIT B - Form of Note Depository Agreement
</TABLE>
-iv-
<PAGE> 6
INDENTURE dated as of o, between TOYOTA AUTO RECEIVABLES 199_-_ OWNER
TRUST, a [Delaware] business trust (the "Issuer"), and o, 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-1o%
Asset Backed Notes (the "Class A-1 Notes"), Class A-2o% Asset Backed Notes (the
"Class A-2 Notes") and Class A-3o% 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 Indenture
<PAGE> 7
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
SECTION 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).
-2-
<PAGE> 8
"Class A-2 Notes" means the Class A-2 ____% Asset Backed Notes,
substantially in the form attached hereto as Exhibit A.
"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.
-3-
<PAGE> 9
"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, 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 o, 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.
-4-
<PAGE> 10
"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.
"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;
-5-
<PAGE> 11
(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 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 o, 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.
-6-
<PAGE> 12
"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 o, 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.
"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.
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."
SECTION 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:
-7-
<PAGE> 13
"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.
ARTICLE II
The Notes
SECTION 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.
SECTION 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
-8-
<PAGE> 14
Indenture Trustee shall upon Issuer Order authenticate and deliver Class A-1
Notes for original issue in an aggregate principal amount of $o, Class A-2
Notes for original issue in an aggregate principal amount of $o and Class A-3
Notes for original issue in an aggregate principal amount of $o. 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.
SECTION 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
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.
SECTION 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.
-9-
<PAGE> 15
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 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.
SECTION 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
-10-
<PAGE> 16
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.
SECTION 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.
SECTION 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
-11-
<PAGE> 17
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.
SECTION 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.
SECTION 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.
-12-
<PAGE> 18
SECTION 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
(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.
SECTION 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.
SECTION 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
-13-
<PAGE> 19
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.
SECTION 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.
ARTICLE III
Covenants
SECTION 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
-14-
<PAGE> 20
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.
SECTION 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.
SECTION 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.
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
-15-
<PAGE> 21
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 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).
-16-
<PAGE> 22
SECTION 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.
SECTION 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.
SECTION 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 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 o 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,
-17-
<PAGE> 23
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 o in the following calendar
year.
SECTION 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 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
-18-
<PAGE> 24
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 affiliates, provided that
the Indenture Trustee, in its capacity as Successor Servicer, shall remain
fully liable for the actions and omissions of such Affiliate.
-19-
<PAGE> 25
(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.
SECTION 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
-20-
<PAGE> 26
(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 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.
SECTION 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.
SECTION 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;
-21-
<PAGE> 27
(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;
(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
-22-
<PAGE> 28
(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 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).
SECTION 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
-23-
<PAGE> 29
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.
SECTION 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
SECTION 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.
SECTION 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 and
Servicing Agreement (including, but not limited to, under Sections 4.09, 4.10,
4.11 and 5.09(b) and Article IX thereof).
SECTION 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.
SECTION 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).
SECTION 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.
SECTION 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,
-24-
<PAGE> 30
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.
SECTION 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.
SECTION 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.
ARTICLE IV
Satisfaction and Discharge
SECTION 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
-25-
<PAGE> 31
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.
SECTION 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 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.
SECTION 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
SECTION 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):
-26-
<PAGE> 32
(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 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.
-27-
<PAGE> 33
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.
SECTION 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:
(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.
SECTION 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
-28-
<PAGE> 34
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.
(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
-29-
<PAGE> 35
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.
(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
-30-
<PAGE> 36
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.
SECTION 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
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:
-31-
<PAGE> 37
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.
SECTION 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, 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.
-32-
<PAGE> 38
SECTION 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.
SECTION 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 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.
SECTION 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
-33-
<PAGE> 39
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.
SECTION 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.
SECTION 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.
SECTION 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 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.
-34-
<PAGE> 40
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.
SECTION 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 in 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.
SECTION 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.
SECTION 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
-35-
<PAGE> 41
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.
SECTION 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).
SECTION 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 consent, request, notice, direction,
approval, extension, or waiver thereunder and any right of the Issuer
to take such action shall be suspended.
-36-
<PAGE> 42
ARTICLE VI
The Indenture Trustee
SECTION 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.
-37-
<PAGE> 43
(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.
SECTION 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.
SECTION 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
-38-
<PAGE> 44
same with like rights. However, in so doing the Indenture Trustee must comply
with Sections 6.11 and 6.12.
SECTION 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.
SECTION 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.
SECTION 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.
SECTION 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
-39-
<PAGE> 45
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.
SECTION 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.
-40-
<PAGE> 46
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.
SECTION 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 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 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.
SECTION 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
-41-
<PAGE> 47
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;
(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.
SECTION 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.
-42-
<PAGE> 48
SECTION 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.]
ARTICLE VII
Noteholders' Lists and Reports
SECTION 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.
SECTION 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
-43-
<PAGE> 49
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).
SECTION 7.03 Reports by Issuer.
(a) The Issuer shall:
(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.
SECTION 7.04 Reports by Indenture Trustee. If required by TIA
Section 313(a), within 60 days after each o beginning with o, 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).
-44-
<PAGE> 50
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
SECTION 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
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.
SECTION 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)):
-45-
<PAGE> 51
(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- 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
-46-
<PAGE> 52
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 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.
SECTION 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
-47-
<PAGE> 53
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.
(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.
SECTION 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
-48-
<PAGE> 54
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.
SECTION 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.
ARTICLE IX
Supplemental Indentures
SECTION 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;
-49-
<PAGE> 55
(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.
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.
SECTION 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:
-50-
<PAGE> 56
(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;
(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.
-51-
<PAGE> 57
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.
SECTION 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.
SECTION 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 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.
SECTION 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.
SECTION 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.
-52-
<PAGE> 58
ARTICLE X
Termination of the Trust
SECTION 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 o
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 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
-53-
<PAGE> 59
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.
SECTION 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 o 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.
ARTICLE XI
Miscellaneous
SECTION 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
-54-
<PAGE> 60
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.
(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.
-55-
<PAGE> 61
(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 o, 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.
SECTION 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 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
-56-
<PAGE> 62
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.
SECTION 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.
(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.
-57-
<PAGE> 63
(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.
SECTION 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.
SECTION 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 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
-58-
<PAGE> 64
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.
SECTION 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.
SECTION 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.
SECTION 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.
SECTION 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.
-59-
<PAGE> 65
SECTION 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.
SECTION 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.
SECTION 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.
SECTION 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.
.
SECTION 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.
SECTION 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
-60-
<PAGE> 66
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.
SECTION 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.
SECTION 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.
-61-
<PAGE> 67
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: o,
not in its individual capacity but
solely as Owner Trustee
By:
------------------------------
Name:
Title:
o,
not in its individual capacity but
solely as Indenture Trustee
By:
------------------------------
Name:
Title:
-62-
<PAGE> 68
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:
- ------------------------
-63-
<PAGE> 69
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:
- ------------------------
-64-
<PAGE> 70
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 o (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.
<PAGE> 71
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
<PAGE> 72
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
<PAGE> 73
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 o day of each month, or, if any such date is not a Business
Day, the next succeeding Business Day, commencing o.
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.
<PAGE> 74
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), agrees to
treat the Notes for
<PAGE> 75
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.
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
<PAGE> 76
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.
<PAGE> 77
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.
<PAGE> 78
EXHIBIT B
(Form of Letter of Representations)
B-1
<PAGE> 1
EXHIBIT 4.3
FORM OF 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 o
<PAGE> 2
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
<TABLE>
<S> <C> <C>
SECTION 1.01 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
CONVEYANCE OF RECEIVABLES
SECTION 2.01 Conveyance of Receivables . . . . . . . . . . . . . . . . . . 25
SECTION 2.02 Custody of Receivables Files. . . . . . . . . . . . . . . . . . 27
SECTION 2.03 Acceptance by Owner Trustee. . . . . . . . . . . . . . . . . . 27
ARTICLE III
THE RECEIVABLES
SECTION 3.01 Representations and Warranties of the Seller
with Respect to the Receivables . . . . . . . . . . . . . . 27
SECTION 3.02 Repurchase upon Breach . . . . . . . . . . . . . . . . . . . . 31
SECTION 3.03 Duties of Servicer as Custodian . . . . . . . . . . . . . . . . 32
SECTION 3.04 Instructions; Authority To Act . . . . . . . . . . . . . . . . 33
SECTION 3.05 Custodian's Indemnification . . . . . . . . . . . . . . . . . . 33
SECTION 3.06 Effective Period and Termination . . . . . . . . . . . . . . . 33
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 4.01 Duties of Servicer . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 4.02 Collection and Allocation of Receivable Payments . . . . . . . 34
SECTION 4.03 Rebates on Full Prepayments . . . . . . . . . . . . . . . . . . 35
SECTION 4.04 Realization upon Receivables . . . . . . . . . . . . . . . . . 35
SECTION 4.05 Physical Damage Insurance . . . . . . . . . . . . . . . . . . . 36
SECTION 4.06 Maintenance of Security Interests in Financed Vehicles . . . . 36
SECTION 4.07 Covenants of Servicer . . . . . . . . . . . . . . . . . . . . . 36
SECTION 4.08 Purchase of Receivables upon Breach . . . . . . . . . . . . . . 36
SECTION 4.09 Servicing Fee and Expenses . . . . . . . . . . . . . . . . . . 37
SECTION 4.10 Servicer's Certificate . . . . . . . . . . . . . . . . . . . . 37
SECTION 4.11 Annual Statement as to Compliance; Notice of Default . . . . . 38
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
SECTION 4.12 Annual Accountants' Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 4.13 Access to Certain Documentation and Information Regarding
SECTION 4.14 Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 4.15 Appointment of Subservicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 4.16 Amendments to Schedule of Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE V
DISTRIBUTIONS; RESERVE FUND; STATEMENTS TO CERTIFICATEHOLDERS AND NOTEHOLDERS
SECTION 5.01 Establishment of Trust Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 5.02 Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 5.03 Application of Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 5.04 Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 5.05 Additional Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 5.06 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 5.07 Reserve Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 5.08 Yield Maintenance Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
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
</TABLE>
<PAGE> 4
ARTICLE VIII
DEFAULT
<TABLE>
<S> <C> <C>
SECTION 8.01 Servicer Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 8.02 Appointment of Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
ARTICLE X
MISCELLANEOUS
SECTION 10.01 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 10.02 Protection of Title to Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 10.03 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 10.04 Assignment by the Seller or the Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 10.05 Limitations on Rights of Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 10.06 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 10.07 Separate Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 10.08 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 10.09 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 10.10 Assignment by Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 10.11 Nonpetition Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 10.12 Limitation of Liability of Owner Trustee and Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . 70
SCHEDULE A Schedule of Receivables
</TABLE>
EXHIBIT A Form of Servicer's Certificate
<PAGE> 5
SALE AND SERVICING AGREEMENT dated as of o, 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
<PAGE> 6
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
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 o, 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.
-2-
<PAGE> 7
"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.
"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/or 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
-3-
<PAGE> 8
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 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.
-4-
<PAGE> 9
"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"
"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 o,
will equal 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.
-5-
<PAGE> 10
"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.
"Class A-1 Final Scheduled Distribution Date" means the Distribution
Date in o.
"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 o.
"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.
-6-
<PAGE> 11
"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 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 o.
"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.
-7-
<PAGE> 12
"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 o.
"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 o, 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 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 o.
"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 o 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.
-8-
<PAGE> 13
"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.
"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
-9-
<PAGE> 14
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
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 o.
"DTC" means The Depository Trust Company, and its successors.
"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 o 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 AAA or better by Standard &
Poor's and A1 or better by Moody's or (B) a certificate of deposit rating of
A-1+ by Standard & Poor's and P-1 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 o may be considered an Eligible
Institution for the purposes of clause (b) of this definition.
-10-
<PAGE> 15
"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;
(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
-11-
<PAGE> 16
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 Aaa by Moody's (so long as Moody's is a Rating Agency) and
AAAm by Standard & Poor's (so long as Standard & Poor's is a Rating
Agency)], and any other fund for which 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 Aaa by Moody's (so long as Moody's is a Rating
Agency) and AAAm by Standard & Poor's (so long as Standard & Poor's is
a Rating Agency) and notwithstanding that (i) 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 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
-12-
<PAGE> 17
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.
"Final Scheduled Maturity Date" means the Distribution Date in o.
"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."
-13-
<PAGE> 18
"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 o, 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.
"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.
-14-
<PAGE> 19
"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 P-1 by
Moody's and A-1 by Standard & Poor's (so long as Moody's and Standard & Poor's
are Rating Agencies), or (b) certain arrangements are made that 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.
"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.
-15-
<PAGE> 20
"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.
"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,
-16-
<PAGE> 21
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 o% 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.
-17-
<PAGE> 22
"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" means an advance in respect of principal or
interest on a Precomputed Receivable in the amount determined as set forth in
Section o.
"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 $o.
"Rating Agency" means each of Moody's and Standard & Poor's.
-18-
<PAGE> 23
"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 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
-19-
<PAGE> 24
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 Prime-1 by Moody's and A-1+ 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 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 $o.
"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;
-20-
<PAGE> 25
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.
"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 o% 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
o.
"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 [o% 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 o% or (ii) the average of the Delinquency
Percentages for the preceding three Collection Periods exceeds o%, then the
Specified Reserve Fund Balance for such Distribution Date
-21-
<PAGE> 26
will be an amount equal to o% 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 $o 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 $o; 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.
"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.
-22-
<PAGE> 27
"Trust Agreement" means the Trust Agreement dated as of o, 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.
"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
-23-
<PAGE> 28
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 o, 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 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.
-24-
<PAGE> 29
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;
(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;
-25-
<PAGE> 30
(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.
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
-26-
<PAGE> 31
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 been subsequently sold by
-27-
<PAGE> 32
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.
-28-
<PAGE> 33
(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 o 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.
-29-
<PAGE> 34
(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 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 o months nor greater than o
months and, as of the Cutoff Date, a remaining maturity of not less
than o months nor greater than o months.
(v) Finance Charge. Each Receivable provides for an APR
equal to or greater than o% and equal to or less than o%.
-30-
<PAGE> 35
(w) Principal Balance. Each Receivable had an original
principal balance of not less than $o nor more than $o and an unpaid
principal balance, as of the Cutoff Date, of not less than $o nor more
than $o.
(x) No Overdue Payments. No Receivable shall have a
Scheduled Payment that is more than o 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.
(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 o.
(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
-31-
<PAGE> 36
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.
(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.
-32-
<PAGE> 37
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.
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
-33-
<PAGE> 38
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 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,
-34-
<PAGE> 39
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 and/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 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.
-35-
<PAGE> 40
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.
(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
-36-
<PAGE> 41
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).
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
-37-
<PAGE> 42
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 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
-38-
<PAGE> 43
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.
-39-
<PAGE> 44
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 Baa3 (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 o is the Indenture Trustee and the Indenture
Trustee is the Relevant Trustee, or o 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
-40-
<PAGE> 45
Account and the Reserve Fund to be moved to an institution or accounts
otherwise satisfying the requirements of Section 5.07(a)(i).
(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
-41-
<PAGE> 46
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" 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 P-1 by Moody's and A-1 by Standard & Poor's (so long as Moody's
and Standard & Poor's are Rating Agencies), or (b) certain arrangements are
made that 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
-42-
<PAGE> 47
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 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
-43-
<PAGE> 48
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.
(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,
-44-
<PAGE> 49
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, 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
-45-
<PAGE> 50
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.
(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;
-46-
<PAGE> 51
(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 o, 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;
(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, 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 (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
-47-
<PAGE> 52
(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.
(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)
-48-
<PAGE> 53
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
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.
-49-
<PAGE> 54
(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 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)(i) 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.
-50-
<PAGE> 55
(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 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
-51-
<PAGE> 56
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 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.
-52-
<PAGE> 57
(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;
(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;
-53-
<PAGE> 58
(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.
(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
-54-
<PAGE> 59
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
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.
-55-
<PAGE> 60
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.
(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
-56-
<PAGE> 61
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 or Notes with
-57-
<PAGE> 62
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
-58-
<PAGE> 63
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, 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.
-59-
<PAGE> 64
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 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
-60-
<PAGE> 65
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 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;
-61-
<PAGE> 66
(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
(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.
-62-
<PAGE> 67
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 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
-63-
<PAGE> 68
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.
(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 Baa3, 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
-64-
<PAGE> 69
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 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
-65-
<PAGE> 70
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 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
-66-
<PAGE> 71
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
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.
-67-
<PAGE> 72
(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 (1) 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 (2) 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 (1) 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 (2) 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 &
-68-
<PAGE> 73
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.
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.
-69-
<PAGE> 74
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 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 o, 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.
-70-
<PAGE> 75
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-
<PAGE> 76
SCHEDULE A
Schedule of Receivables
(To be Delivered to the Trust at Closing and supplemented
on each Subsequent Transfer Date for Subsequent Receivables)
-1-
<PAGE> 77
EXHIBIT A
Form of Servicer's Certificate
TOYOTA AUTO RECEIVABLES _______
GRANTOR TRUST
Servicer's Certificate
For the Month of _____, ____
<TABLE>
<CAPTION>
Principal and Interest Collections
- ----------------------------------
<S> <C>
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)
</TABLE>
-1-
<PAGE> 78
TOYOTA AUTO RECEIVABLES ______ GRANTOR TRUST
Servicer's Certificate
For the Month of _____, _____
<TABLE>
<CAPTION>
Distributions:
- -------------
Class A Class B Total
<S> <C> <C> <C>
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
------------ ------------ ----------
</TABLE>
-2-
<PAGE> 79
TOYOTA AUTO RECEIVABLES ______ GRANTOR TRUST
Servicer's Certificate
For the Month of ______, ____
<TABLE>
<CAPTION>
Reconciliation of the Reserve Fund
- ----------------------------------
<S> <C>
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)
</TABLE>
-3-
<PAGE> 80
TOYOTA AUTO RECEIVABLES ______ GRANTOR TRUST
Servicer's Certificate
For the Month of ________, ____
<TABLE>
<CAPTION>
Delinquent Accounts
- -------------------
Period of Delinquency Units Amount Percent of Pool
<S> <C> <C> <C> <C>
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)] %
-----
</TABLE>
<TABLE>
<CAPTION>
Realized Loss Analysis (Section 5.02)
- ----------------------
Quarter
Month Month Month Total
<S> <C> <C> <C> <C>
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 $_____
</TABLE>
-4-
<PAGE> 1
EXHIBIT 4.4
FORM OF POOLING AND SERVICING AGREEMENT
TOYOTA MOTOR CREDIT RECEIVABLES CORPORATION,
Seller
and
TOYOTA MOTOR CREDIT CORPORATION,
Servicer
and
_________________________________,
Trustee
Dated as of o
<PAGE> 2
TABLE OF CONTENTS
ARTICLE ONE
DEFINITIONS
<TABLE>
<S> <C> <C>
Section 1.01. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE TWO
CREATION OF TRUST; CONVEYANCE OF RECEIVABLES;
CUSTODY OF RECEIVABLE FILES
Section 2.01. Creation of Trust; Conveyance of Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 2.02. Custody of Receivable Files. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 2.03. Acceptance by Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 2.04. Representations and Warranties of Seller as to the Receivables . . . . . . . . . . . . . . . . . . . . . . . 22
Section 2.05. Repurchase of Receivables Upon Breach. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 2.06. Duties of Servicer as Custodian. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 2.07. Instructions; Authority to Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 2.08. Indemnification of Custodian. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 2.09. 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 THREE
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 3.01. Duties of Servicer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 3.02. Collection of Receivable Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 3.03. Rebates on Full Prepayments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 3.04. Realization Upon Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 3.05. Maintenance of Physical Damage Insurance Policies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 3.06. Maintenance of Security Interests in Financed Vehicles. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 3.07. Covenants of Servicer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 3.08. Purchase of Receivables Upon Breach. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 3.09. Total Servicing Fee; Payment of Certain Expenses by Servicer. . . . . . . . . . . . . . . . . . . . . . . . 31
Section 3.10. Servicer's Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 3.11. Annual Statement as to Compliance; Notice of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 3.12. Annual Accountants' Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 3.13. Access to Certain Documentation and Information Regarding Receivables. . . . . . . . . . . . . . . . . . . . 33
Section 3.14. Amendments to Schedule of Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
</TABLE>
ii
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 3.15. Reports to Certificateholders and Rating Agencies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE FOUR
ACCOUNTS; DISTRIBUTIONS;
STATEMENTS TO CERTIFICATEHOLDERS
Section 4.01. Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 4.02. Collections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 4.03. Application of Collections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 4.04. Advances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 4.05. Additional Deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 4.06. Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 4.07. Reserve Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 4.08. Yield Maintenance Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 4.09. Net Deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 4.10. Statements to Certificateholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE FIVE
THE CERTIFICATES
Section 5.01. The Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 5.02. Authentication and Delivery of Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 5.03. Registration of Transfer and Exchange of Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 5.04. Registration of Transfer and Exchange of Class B Certificates. . . . . . . . . . . . . . . . . . . . . . . 49
Section 5.05. Mutilated, Destroyed, Lost or Stolen Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 5.06. Persons Deemed Owners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 5.07. Access to List of Certificateholders' Names and Addresses. . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 5.08. Maintenance of Office or Agency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 5.09. Temporary Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 5.10. Book-Entry Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 5.11. Notices to Clearing Agency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 5.12. Definitive Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE SIX
THE SELLER
Section 6.01. Representations of Seller. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 6.02. Liability of Seller; Indemnities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 6.03. Merger or Consolidation of, or Assumption
of the Obligations of, Seller; Certain Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 6.04. Limitation on Liability of Seller and Others. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 6.05. Seller May Own Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
</TABLE>
iii
<PAGE> 4
<TABLE>
<S> <C> <C>
Section 6.06. No Transfer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE SEVEN
THE SERVICER
Section 7.01. Representations of Servicer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 7.02. Liability of Servicer; Indemnities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 7.03. Merger or Consolidation of, or Assumption
of the Obligations of, the Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 7.04. Limitation on Liability of Servicer and Others. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 7.05. Servicer Not to Resign. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE EIGHT
EVENTS OF DEFAULT
Section 8.01. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 8.02. Consequences of an Event of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 8.03. Trustee to Act; Appointment of Successor Servicer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 8.04. Notification to Certificateholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 8.05. Waiver of Past Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 8.06. Repayment of Advances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
ARTICLE NINE
THE TRUSTEE
Section 9.01. Duties of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 9.02. Trustee's Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 9.03. Trustee's Assignment of Administrative
Receivables and Warranty Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 9.04. Certain Matters Affecting the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 9.05. Limitation on Trustee's Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 9.06. Trustee May Own Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 9.07. Trustee's Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 9.08. Indemnity of Trustee and Successor Servicer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 9.09. Eligibility Requirements for Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 9.10. Resignation or Removal of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 9.11. Successor Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 9.12. Merger or Consolidation of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
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
</TABLE>
iv
<PAGE> 5
<TABLE>
<S> <C> <C>
Section 9.17. Suit for Enforcement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 9.18. Rights of Certificateholders to Direct Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
ARTICLE TEN
TERMINATION
Section 10.01. Termination of the Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 10.02. Optional Purchase of All Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
ARTICLE ELEVEN
MISCELLANEOUS PROVISIONS
Section 11.01. Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 11.02. Protection of Title to Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 11.03. Limitation on Rights of Certificateholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 11.04. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 11.05. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 11.06. Severability of Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 11.07. Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 11.08. Certificates Nonassessable and Fully Paid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 11.09. No Petition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
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-7
EXHIBIT E Form of Transferee Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-1
EXHIBIT F Form of Letter of Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
</TABLE>
v
<PAGE> 6
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:
"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.
1
<PAGE> 7
"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
2
<PAGE> 8
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, 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
3
<PAGE> 9
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 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 o, 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,
4
<PAGE> 10
at the Class A 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 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 o% per annum.
"Class A Percentage" means o%.
"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.
5
<PAGE> 11
"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 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 o% per annum.
"Class B Percentage" means o%.
"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
6
<PAGE> 12
Distribution Date or Distribution Date and allocable to principal) to reduce
the Class B Certificate Balance to zero.
"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 o.
"Code" means the Internal Revenue Code of 1986, as amended.
["Collateral Security Agreement" means the Collateral Security
Agreement dated o, 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 o.
"Current Receivable" means each Receivable that is not a Defaulted
Receivable or a Liquidated Receivable.
"Cutoff Date" means o.
"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.
7
<PAGE> 13
"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 o 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" 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
8
<PAGE> 14
to Section 4.07, 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 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 o.
"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,
9
<PAGE> 15
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;
(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 VISTA(SM) Money Market Funds, so long as such funds
are rated Aaa by Moody's (so long as Moody's is a Rating Agency) and
AAAm by Standard & Poor's (so long as Standard & Poor's is a Rating
Agency), and any other fund for which 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 Aaa by
Moody's (so long as Moody's is a Rating Agency) and AAAm by Standard &
Poor's (so long as Standard & Poor's is a Rating Agency) and
notwithstanding that (i) 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;
10
<PAGE> 16
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 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.
11
<PAGE> 17
"FNMA" means the Federal National Mortgage Association, and its
successors.
"Final Scheduled Distribution Date" shall mean o.
"Final Scheduled Maturity Date" shall mean o.
"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.
12
<PAGE> 18
"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" 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 $o.
"Original Class B Certificate Balance" means $o.
"Original Pool Balance" means $o.
"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.
13
<PAGE> 19
"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).
"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.
14
<PAGE> 20
"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.
"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].
15
<PAGE> 21
"Required Rating" means a rating of Prime-1 by Moody's and A-1+ 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 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 $o.
"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.
16
<PAGE> 22
"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.
"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 o% 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 [o% 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 o% or (ii) the average of the
Delinquency Percentages for the preceding three Collection Periods exceeds o%,
then the Specified Reserve Fund Balance for such Distribution Date will be an
amount equal to o% 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 $o 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 $o; 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.
17
<PAGE> 23
"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 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 o 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
18
<PAGE> 24
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 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].
19
<PAGE> 25
"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.
20
<PAGE> 26
ARTICLE II
CREATION OF TRUST; CONVEYANCE OF RECEIVABLES;
CUSTODY OF RECEIVABLE FILES
SECTION 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 and the beneficial
21
<PAGE> 27
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.
SECTION 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
(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.
22
<PAGE> 28
SECTION 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.
SECTION 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 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
23
<PAGE> 29
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.
24
<PAGE> 30
(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 o 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.
25
<PAGE> 31
(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 o months nor greater than o
months and, as of the Cutoff Date, a remaining maturity of not less
than o months nor greater than o months.
(v) Finance Charge. Each Receivable provides for an APR
equal to or greater than o% and equal to or less than o%.
(w) Principal Balance. Each Receivable had an original
principal balance of not less than $o nor more than $o and an unpaid
principal balance, as of the Cutoff Date, of not less than $o nor more
than $o.
(x) No Overdue Payments. No Receivable shall have a
Scheduled Payment that is more than o 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 o.
(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 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
26
<PAGE> 32
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 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.
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 accounts, records and
computer systems as herein provided and promptly take appropriate
action to remedy any such failure.
27
<PAGE> 33
(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.
SECTION 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.
SECTION 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.
SECTION 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 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
28
<PAGE> 34
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.
SECTION 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."
SECTION 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.
SECTION 2.12 Section References. All section references shall be to
Sections in this Agreement.
SECTION 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
SECTION 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 own name or in the
29
<PAGE> 35
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.
SECTION 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.
SECTION 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 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
30
<PAGE> 36
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.
SECTION 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.
SECTION 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.
SECTION 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.
SECTION 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.
31
<PAGE> 37
(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.
SECTION 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.
SECTION 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
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).
32
<PAGE> 38
SECTION 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).
SECTION 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 December 3, 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 September 30 (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.
SECTION 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 December 31
of each year, beginning with beginning with December 3, 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 September 30 (or other
applicable period in the case of the first such report or letter) to the effect
that such accountants have reviewed certain records and documents relating to
the servicing of the 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
33
<PAGE> 39
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.
SECTION 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.
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.
SECTION 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.
34
<PAGE> 40
ARTICLE IV
ACCOUNTS; DISTRIBUTIONS;
STATEMENTS TO CERTIFICATEHOLDERS
SECTION 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 Baa3
(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 o 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).
35
<PAGE> 41
SECTION 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 P-1 by Moody's and A- 1 by
Standard & Poor's (so long as Moody's and Standard & Poor's are Rating
Agencies), or (b) certain arrangements are made that have been
approved in writing by each Rating Agency 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 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
36
<PAGE> 42
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.
SECTION 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.
SECTION 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
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
37
<PAGE> 43
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 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
38
<PAGE> 44
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.
SECTION 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.
SECTION 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.
(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.
39
<PAGE> 45
(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
insufficient, the Class A Certificateholders will receive such
shortfall first, from Available Interest (after giving effect
to the reduction in Available Interest described
40
<PAGE> 46
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.
SECTION 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 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
41
<PAGE> 47
as Moody's is a Rating Agency) of at least Baa3 (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 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
42
<PAGE> 48
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.
Effective upon Delivery of the Reserve Fund property in the
form of Physical Property, book-entry securities or
uncertificated securities, the Trustee shall be
43
<PAGE> 49
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.
SECTION 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 unsecured debt obligations of which shall have the Required Rating,
or (2) a segregated trust account bearing a
44
<PAGE> 50
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
Baa3 (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.
(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
45
<PAGE> 51
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 the term "Delivery" and shall be
maintained by the Trustee, as collateral agent, pending
maturity or disposition, through continued book-entry
46
<PAGE> 52
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.
47
<PAGE> 53
(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].
SECTION 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.
SECTION 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;
48
<PAGE> 54
(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;
(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.
49
<PAGE> 55
ARTICLE V
THE CERTIFICATES
SECTION 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.
SECTION 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 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.
SECTION 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.
50
<PAGE> 56
(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.
(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) Any Plan as defined in Section 5.04(a)(i) that
purchases a Class A Certificate or a beneficial interest therein shall
be deemed to have represented and warranted, by acceptance of such
Certificate or beneficial interest, that such purchaser is an
"accredited investor" as defined in Rule 501(a) under the Securities
Act.
SECTION 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
51
<PAGE> 57
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 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.
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 a 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 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.
(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.
SECTION 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.
52
<PAGE> 58
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.
SECTION 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, and neither the Trustee, the Certificate Registrar nor any of their
respective agents shall be affected by any notice to the contrary.
SECTION 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.
SECTION 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.
SECTION 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
53
<PAGE> 59
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.
SECTION 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
54
<PAGE> 60
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.
SECTION 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.
SECTION 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.
55
<PAGE> 61
ARTICLE VI
THE SELLER
SECTION 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 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,
56
<PAGE> 62
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.
SECTION 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.
SECTION 6.03 Merger or Consolidation of, or Assumption of the
Obligations of, Seller; Certain Limitations.
(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
57
<PAGE> 63
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 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;
58
<PAGE> 64
(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, 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)).
SECTION 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.
SECTION 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.
SECTION 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
59
<PAGE> 65
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).
60
<PAGE> 66
ARTICLE VII
THE SERVICER
SECTION 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 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,
61
<PAGE> 67
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.
SECTION 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
62
<PAGE> 68
(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.
(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.
SECTION 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.
SECTION 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.
63
<PAGE> 69
(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 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 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.
64
<PAGE> 70
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 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 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
65
<PAGE> 71
statute, make an assignment for the benefit of its creditors, or
voluntarily suspend payment of its obligations.
SECTION 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.
SECTION 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
66
<PAGE> 72
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.
SECTION 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.
SECTION 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.
SECTION 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.
67
<PAGE> 73
ARTICLE IX
THE TRUSTEE
SECTION 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;
(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
68
<PAGE> 74
(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.
SECTION 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
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.
SECTION 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
69
<PAGE> 75
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.
SECTION 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 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
70
<PAGE> 76
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.
SECTION 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 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
71
<PAGE> 77
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.
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.
SECTION 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.
SECTION 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
72
<PAGE> 78
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.
SECTION 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.
SECTION 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
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 Baa3 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
73
<PAGE> 79
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.
SECTION 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.
SECTION 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 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
74
<PAGE> 80
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.
SECTION 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.
SECTION 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.
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;
75
<PAGE> 81
(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.
SECTION 9.14 Representations and Warranties of Trustee. The Trustee
shall make the following representations and warranties on which the Seller and
Certificateholders may rely:
(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
76
<PAGE> 82
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.
SECTION 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.
SECTION 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 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.
SECTION 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.
SECTION 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
77
<PAGE> 83
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.
78
<PAGE> 84
ARTICLE X
TERMINATION
SECTION 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
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
79
<PAGE> 85
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.
SECTION 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 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 Baa3, 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.
80
<PAGE> 86
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 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), 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.
81
<PAGE> 87
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.
SECTION 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.
(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
82
<PAGE> 88
(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 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.
SECTION 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
83
<PAGE> 89
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 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.
SECTION 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.
SECTION 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
84
<PAGE> 90
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.
SECTION 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.
SECTION 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 51% of the Voting Interests of the Class A Certificates and the Class
B Certificates, voting together as a single Class.
SECTION 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.
SECTION 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.
* * * *
85
<PAGE> 91
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:
86
<PAGE> 92
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 _____, ____
<TABLE>
<CAPTION>
Principal and Interest Collections
- ----------------------------------
<S> <C>
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)
</TABLE>
A-1
<PAGE> 93
TOYOTA AUTO RECEIVABLES ______ GRANTOR TRUST
Servicer's Certificate
For the Month of _____, _____
<TABLE>
<CAPTION>
Distributions:
- -------------
Class A Class B Total
- -------------------------------------------------------------- ----------------------------
<S> <C> <C> <C><C> <C> <C> <C>
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
------------ ------------ ------------------
</TABLE>
A-2
<PAGE> 94
TOYOTA AUTO RECEIVABLES ______ GRANTOR TRUST
Servicer's Certificate
For the Month of ______, ____
<TABLE>
<CAPTION>
Reconciliation of the Reserve Fund
- ----------------------------------
<S> <C>
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)
</TABLE>
A-3
<PAGE> 95
TOYOTA AUTO RECEIVABLES ______ GRANTOR TRUST
Servicer's Certificate
For the Month of ________, ____
<TABLE>
<CAPTION>
Delinquent Accounts
- -------------------
Period of Delinquency Units Amount Percent of Pool
<S> <C> <C> <C>
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)] %
-----
</TABLE>
<TABLE>
<CAPTION>
Realized Loss Analysis (Section 5.02)
- ----------------------
Quarter
Month Month Month Total
<S> <C> <C> <C> <C>
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 $
--------
</TABLE>
A-4
<PAGE> 96
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> 97
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
o% 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 o
NUMBER R-A1
$o
THIS CERTIFIES THAT CEDE & CO. is the registered owner of a o ($o)
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 o (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 o% Asset Backed Certificates, Class A" (the "Class A Certificates").
Also issued under the Agreement are Certificates designated as "Toyota Auto
Receivables 199_-_ Grantor Trust o% Asset Backed Certificates, Class B" (the
"Class B Certificates" and, together with the Class A Certificates, the
"Certificates"). The Class B
C-1
<PAGE> 98
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 o%. 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 o day of each
month or, if such day is not a Business Day, the next succeeding Business Day
(each, a "Distribution Date"), commencing on o, 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 o 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 o, 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 o in the
Agreement is made on the part of the Trust and intended not as a
representation, undertaking or agreement by o 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,]
C-2
<PAGE> 99
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.
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,
C-3
<PAGE> 100
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> 101
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: o TOYOTA AUTO RECEIVABLES 199_-_
GRANTOR TRUST
By: o,
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.
o,
as Trustee
By:
--------------------------------
Authorized Officer
C-5
<PAGE> 102
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> 103
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 TRANSFER OR (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 A PERSON ACTING ON BEHALF OF A PLAN OR USING THE ASSETS OF A PLAN TO
EFFECT SUCH TRANSFER OR TO THE CODE 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> 104
TOYOTA AUTO RECEIVABLES 199_-_ GRANTOR TRUST
o% 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 o
$o
THIS CERTIFIES THAT CEDE & CO. is the registered owner of a o ($o)
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 o (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 o% Asset Backed Certificates, Class B" (the "Class B Certificates").
Also issued under the Agreement are Certificates designated as "Toyota Auto
Receivables 199_-_ Grantor Trust o% 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 o%. 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-1
<PAGE> 105
Under the Agreement, there will be distributed on the o day of each
month or, if such day is not a Business Day, the next succeeding Business Day
(each, a "Distribution Date"), commencing ono, 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 o 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 o, 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 o in the
Agreement is made on the part of the Trust and intended not as a
representation, undertaking or agreement by o 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 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.
D-2
<PAGE> 106
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" (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 Class B
Certificate with funds contained in an insurance company general
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 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 to an
insurance company purchasing with funds from a general 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.
D-3
<PAGE> 107
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-4
<PAGE> 108
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: o TOYOTA AUTO RECEIVABLES 199_-_
GRANTOR TRUST
By: o,
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.
o,
as Trustee
By:
---------------------------------
Authorized Officer
D-5
<PAGE> 109
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-6
<PAGE> 110
EXHIBIT E
FORM OF
TRANSFEREE CERTIFICATE
Toyota Auto Receivables 199_-_ Grantor Trust
o% Asset Backed Certificates, Class B
I, [Name], hereby represent and warrant to o, 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 o, 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 "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> 111
[ ] 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 insurance
company 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> 112
EXHIBIT F
FORM OF LETTER OF REPRESENTATIONS
[Omitted]
F-1
<PAGE> 1
EXHIBIT 4.5
FORM OF RECEIVABLES PURCHASE AGREEMENT
TOYOTA MOTOR CREDIT CORPORATION,
as Seller
and
TOYOTA MOTOR CREDIT RECEIVABLES CORPORATION,
as Purchaser
Dated as of o
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE ONE
DEFINITIONS
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE TWO
CONVEYANCE OF RECEIVABLES
Section 2.01. Conveyance of Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.02. Representations and Warranties of the Seller and the Purchaser . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.03. Representations and Warranties of the Seller as to the Receivables . . . . . . . . . . . . . . . . . . . . 6
Section 2.04. Covenants of the Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE THREE
PAYMENT OF RECEIVABLES PURCHASE PRICE
Section 3.01. Payment of Receivables Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE FOUR
TERMINATION
Section 4.01. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE FIVE
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 5.07. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 5.08. No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 5.09. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 5.10. Third-Party Beneficiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 5.11. Merger and Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 5.12. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 5.13. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 5.14. Merger or Consolidation of, or Assumption of the Obligations of, the Seller . . . . . . . . . 14
Schedule A - Schedule of Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
</TABLE>
ii
<PAGE> 4
RECEIVABLES PURCHASE AGREEMENT, dated as of o, 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
SECTION 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 o.
"Cutoff Date" shall mean o.
"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 o 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 $o.
"Released Administrative Amount" means, with respect to a Distribution
Date and to an Administrative Receivable, the Deferred Prepayment, if any, for
such Administrative Receivable.
1
<PAGE> 5
"Released Warranty Amount" means, with respect to a Distribution Date
and to a Warranty Receivable, the Deferred Prepayment, if any, for such
Warranty Receivable.
["Sale and Servicing Agreement" shall mean the Sale and Servicing
Agreement dated as of o 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 o by and
between Toyota Motor Receivables Corporation, as seller, and o, as trustee.]
"Trustee" shall mean o, 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).
SECTION 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
SECTION 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):
2
<PAGE> 6
(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;
(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
3
<PAGE> 7
incorporated into and made a part of this Agreement and (iii) to deliver the
Receivable Files to or upon the order of the Purchaser.
SECTION 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:
(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;
4
<PAGE> 8
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.
(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
5
<PAGE> 9
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 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.
SECTION 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
6
<PAGE> 10
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 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
7
<PAGE> 11
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 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 o 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
8
<PAGE> 12
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
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 o months nor greater than o months and a remaining
maturity of not less than o months nor greater than o months;
(B) each Receivable provides for the payment of a finance
charge based on an APR ranging from o% to o%%; (C) each
Receivable shall have had an original principal balance of not
less than $o nor more than $o and, as of the Cutoff Date, an
unpaid principal balance of not less than $o and not more than
$o; (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 o 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.
9
<PAGE> 13
(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 [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.
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.
10
<PAGE> 14
(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 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
SECTION 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) $o, 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) $o evidenced by a
non-recourse promissory subordinated note.
ARTICLE IV
TERMINATION
SECTION 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].
11
<PAGE> 15
ARTICLE V
MISCELLANEOUS PROVISIONS
SECTION 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.
SECTION 5.02 Protection of Right, Title and Interest to Receivables.
(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.
12
<PAGE> 16
(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.
SECTION 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.
SECTION 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.
SECTION 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 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.
SECTION 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.
SECTION 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
13
<PAGE> 17
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.
SECTION 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.
SECTION 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.
SECTION 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.
SECTION 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.
SECTION 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.
SECTION 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].
14
<PAGE> 18
(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.
SECTION 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.
(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> 19
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:
o,
not in its individual capacity
but solely as Trustee
By:
----------------------------------
Name:
Title:
16
<PAGE> 20
SCHEDULE A
SCHEDULE OF RECEIVABLES
Omitted -- originals on file at the offices
of the Seller, the Purchaser and the Trustee
A-1
<PAGE> 1
EXHIBIT 4.6
FORM OF ADMINISTRATION AGREEMENT
among
TOYOTA AUTO RECEIVABLES 199_-_ OWNER TRUST,
as Issuer
TOYOTA MOTOR CREDIT CORPORATION,
as Administrator
and
o,
as Indenture Trustee
Dated as of o
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Duties of the Administrator. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4. Additional Information to be Furnished to the Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5. Independence of the Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6. No Joint Venture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
7. Other Activities of Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
8. Term of Agreement; Resignation and Removal of Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
9. Action upon Termination, Resignation or Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
10. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
11. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
12. Successor and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
13. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
14. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
15. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
16. Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
17. Not Applicable to TMCC in Other Capacities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
18. Limitation of Liability of Owner Trustee and Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 10
19. Third-Party Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
i
<PAGE> 3
ADMINISTRATION AGREEMENT dated as of o, 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 o, 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 o% Asset Backed Certificates
(the "Certificates") have been issued in connection with the formation of the
Issuer pursuant to the Trust Agreement dated as of o (the "Trust Agreement"),
between Toyota Motor Credit Receivables Corporation ("TMCRC"), a California
corporation, as depositor, and o, 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-1o% Asset Backed Notes, the Toyota Auto Receivables 199_-_ Owner
Trust Class A-2 o% Asset Backed Notes and the Toyota Auto Receivables 199_-_
Owner Trust Class A-3 o% Asset Backed Notes (collectively, the "Notes") pursuant
to the Indenture dated as of o (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 o, 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;
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
1
<PAGE> 4
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) ;
(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
2
<PAGE> 5
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);
(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);
3
<PAGE> 6
(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);
(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
4
<PAGE> 7
(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.
(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 o, 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.
5
<PAGE> 8
(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:
(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 $o
per month which shall be solely an obligation of the Servicer.
6
<PAGE> 9
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.
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 o 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
7
<PAGE> 10
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 o 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, 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.
8
<PAGE> 11
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
Toyota Auto Receivables 199_-_ Owner Trust
In care of _______________________________
__________________________________________
__________________________________________
Attention: _______________________________
(b) if to the Administrator, to
Toyota Motor Credit Corporation
19001 South Western Avenue
Torrence, 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.
9
<PAGE> 12
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 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.
10
<PAGE> 13
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.
11
<PAGE> 14
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:
[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:
12
<PAGE> 1
Exhibit 5.1(a)
[LETTERHEAD OF ANDREWS & KURTH, L.L.P.]
July 3, 1996
Toyota Motor Credit Receivables Corporation
19001 South Western Avenue
Torrance, California 90509
Re: Toyota Motor Credit Receivables Corporation
Registration Statement on Form S-3
Registration No. 333-4336
Dear Gentlemen:
We have acted as special counsel for Toyota Motor Credit
Receivables Corporation, a corporation organized under the laws of the State of
California (the "Company"), and certain trusts, all of the beneficial ownership
of which will be initially owned by the Company (together with the Company,
each an "Issuer"), in connection with the proposed issuance by each Issuer of
its Asset Backed Notes (the "Notes"). The Notes are to be issued pursuant to
the Indenture for each series, each between the applicable Issuer and the
Indenture Trustee (as defined therein). The Indenture, in the form filed with
the Securities and Exchange Commission on July 3, 1996 as an exhibit to
Amendment No. 1 to the Company's Registration Statement (as so amended, the
"Registration Statement") on Form S-3 (File No. 333-4336) under the Securities
Act of 1933, as amended (the "1933 Act"), is herein referred to as the
"Indenture."
We have examined originals or copies, certified or otherwise
to our satisfaction, of the Issuers' organizational documents, the form of
Indenture and form of Notes included therein and such other documents, records,
certificates of the Issuer and public officials and other instruments as we
have deemed necessary for the purposes of rendering this opinion. In addition,
we have assumed that the Indenture as completed for each series will be duly
executed and delivered by each of the parties thereto; that the Notes as
completed for each series will be duly executed and delivered substantially in
the forms contemplated by the Indenture; and that the Notes for each series
will be sold as described in the Registration Statement.
Based upon the foregoing and subject to the limitations and
qualifications set forth below, we are of the opinion that the Notes are in due
and proper form and, assuming the due authorization, execution and delivery of
the Indenture of each series by the applicable Issuer and the Indenture Trustee
and the due authorization of the Notes for each series by all necessary action
on the part of the applicable Issuer, when the Notes for each series have been
validly executed, authenticated and issued in accordance with the applicable
Indenture and delivered against payment therefor, the Notes for each series
will be valid and binding obligations of the applicable Issuer,
<PAGE> 2
Toyota Motor Credit Receivables Corporation
July 3, 1996
Page 2
enforceable against the applicable Issuer in accordance with their terms,
except that the enforceability thereof may be subject to (a) bankruptcy,
insolvency, reorganization, arrangement, moratorium, fraudulent or preferential
conveyance or other similar laws now or hereinafter in effect relating to
creditors' rights generally, and (b) general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at
law) and to the discretion of the court before which any proceeding therefor
may be brought.
The opinion expressed above is subject to the qualification
that we do not purport to be experts as to the laws of any jurisdiction other
than the federal laws of the United States of America and the laws of the
States of California and New York, and we express no opinion herein as to the
effect that the laws and decisions of courts of any such other jurisdiction may
have upon such opinions.
We consent to the use and filing of this opinion as Exhibit
5.1(a) to the Registration Statement and to the reference to our firm under the
caption "Legal Matters" in the Prospectus Supplement and the Prospectus
contained therein. In giving such consent we do not imply or admit that we are
within the category of persons whose consent is required under Section 7 of the
1933 Act or the rules and regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
/s/ Andrews & Kurth L.L.P.
<PAGE> 1
Exhibit 5.1(b)
[LETTERHEAD OF ANDREWS & KURTH L.L.P.]
July 3, 1996
Toyota Motor Credit Receivables Corporation
19001 South Western Avenue
Torrance, California 90509
Re: Toyota Motor Credit Receivables Corporation
Registration Statement on Form S-3
Registration No. 333-4336
Ladies and Gentlemen:
We have acted as special counsel for Toyota Motor Credit Receivables
Corporation, a corporation organized under the laws of the State of California
(the "Company"), and certain trusts, all of the beneficial ownership of which
will be initially owned by the Company (together with the Company, each an
"Issuer"), in connection with the proposed issuance by the Issuer of its
pass-through certificates (the "Pass-Through Certificates"). The Pass-Through
Certificates of a series are to be issued pursuant to a Pooling and Servicing
Agreement or Sale and Servicing Agreement, between the Issuer, the
administrator (the "Administrator") and the trustee (the "Trustee") authorizing
such series. The Pooling and Servicing Agreement and the Sale and Servicing
Agreement, each in the form filed with the Securities and Exchange Commission
on July 3, 1996 as an exhibit to Amendment No. 1 to the Company's registration
statement (the "Registration Statement") on Form S-3 (File No. 333-4336) under
the Securities Act of 1933, as amended (the "1933 Act"), are herein referred to
collectively as the "Agreement."
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of the Issuer's organizational documents, the
form of Agreement and the form of Pass-Through Certificates included therein
and such other documents, records, certificates of the Company and public
officials and other instruments as we have deemed necessary for the purposes of
rendering this opinion. In addition, we have assumed that the Agreement as
completed for each series will be duly executed and delivered by each of the
parties thereto; that the Pass-Through Certificates as completed for each
series will be duly executed and delivered substantially in the forms
contemplated by the Agreement; and that the Pass-Through Certificates for each
series will be sold as described in the Registration Statement.
<PAGE> 2
Toyota Motor Credit Receivables Corporation
July 3, 1996
Page 2
Based upon the foregoing and subject to the limitations and
qualifications set forth below, we are of the opinion that the Pass-Through
Certificates are in due and proper form and, assuming the due authorization,
execution and delivery of the Agreement for each series by the applicable
Issuer, the Administrator and the Trustee and the due authorization of the
Pass-Through Certificates for each series by all necessary action on the part
of the applicable Issuer, when the Pass-Through Certificates for each series
have been validly executed, authenticated and issued in accordance with the
applicable Agreement and delivered against payment therefor, the Pass-Through
Certificates for each series will be validly issued and outstanding, fully paid
and non-assessable, and entitled to the benefits of the related Agreement in
accordance with their terms, except that the enforceability thereof may be
subject to (a) bankruptcy, insolvency, reorganization, arrangement, moratorium,
fraudulent or preferential conveyance or other similar laws now or hereinafter
in effect relating to creditors' rights generally, and (b) general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law) and to the discretion of the court before which
any proceeding therefor may be brought.
The opinion expressed above is subject to the qualification that we do
not purport to be experts as to the laws of any jurisdiction other than the
federal laws of the United States of America and the laws of the States of
California and New York, and we express no opinion herein as to the effect that
the laws and decisions of courts of any such other jurisdiction may have upon
such opinions.
We consent to the use and filing of this opinion as Exhibit 5.1(b) to
the Registration Statement and to the reference to our firm under the caption
"Legal Matters" in the Prospectus Supplement and Prospectus contained therein.
In giving such consent we do not imply or admit that we are within the
category of persons whose consent is required under Section 7 of the 1933 Act
or the rules and regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
/s/ Andrews & Kurth L.L.P.
<PAGE> 1
Exhibit 8.1
[LETTERHEAD OF ANDREWS & KURTH L.L.P.]
July 3, 1996
Toyota Motor Credit Receivables Corporation
19001 South Western Avenue
Torrance, California 90509
Re: Toyota Motor Credit Receivables Corporation
Registration Statement on Form S-3
Registration No. 333-4336
Ladies and Gentlemen:
We have acted as counsel for Toyota Motor Credit Receivables
Corporation, a corporation organized under the laws of the State of California
(the "Company"), and certain trusts, all of the beneficial ownership of which
will be initially owned by the Company (together with the Company, each an
"Issuer"), in connection with the proposed issuance by the Issuer of its
Pass-Through Certificates (the "Pass-Through Certificates") or its Asset Backed
Notes (the "Notes"). The Pass-Through Certificates of a series are to be issued
pursuant to a Pooling and Servicing Agreement or a Sale and Servicing
Agreement, between the Issuer, the administrator (the "Administrator") and the
trustee (the "Trustee") authorizing such series. The Pooling and Servicing
Agreement and the Sale and Servicing Agreement, each in the form filed with the
Securities and Exchange Commission on July 3, 1996 as an exhibit to Amendment
No. 1 to the Company's registration statement (as so amended, the "Registration
Statement") on Form S-3 (File No. 333-4336) under the Securities Act of 1933,
as amended (the "1933 Act"), are herein referred to as the "Agreement." The
Notes are to be issued pursuant to the Indenture for each series, each between
the applicable Issuer and the Indenture Trustee (as defined therein). The form
of the Indenture filed with the Securities and Exchange Commission on July 3,
1996 as an exhibit to the Registration Statement is herein referred to as the
"Indenture."
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of the Issuer's organizational documents, the
form of Agreement and the form of Pass-Through Certificates included therein,
the form of Indenture and form of Notes included therein and such other
documents, records, certificates of the Issuer and public officials and other
instruments as we have deemed necessary for the purposes of rendering this
opinion. In addition, we have assumed that the Agreement as completed for each
series will be duly executed and delivered by each of the parties thereto; that
the Pass-Through Certificates as completed for each series will be duly
executed and delivered substantially in the forms contemplated by the
Agreement; and that the Pass-Through
<PAGE> 2
Toyota Motor Credit Receivables Corporation
July 3, 1996
Page 2
Certificates for each series will be sold as described in the Registration
Statement. We have also assumed that the Indenture as completed for each
series will be duly executed and delivered by each of the parties thereto; that
the Notes as completed for each series will be duly executed and delivered
substantially in the forms contemplated by the Indenture; and that the Notes
for each series will be sold as described in the Registration Statement.
On the basis of the foregoing and subject to the limitations and
qualifications set forth below, we are of the opinion that the description of
federal income tax consequences appearing under the heading "Certain Federal
Income Tax Consequences" in the prospectus contained in the Registration
Statement accurately describes the material federal income tax consequences to
holders of Pass-Through Certificates or Notes, as applicable, under existing
law and subject to the qualifications and assumptions stated therein.
The opinion herein is based upon our interpretations of current law,
including court authority and existing Final and Temporary Regulations, which
are subject to change both prospectively and retroactively, and upon the facts
and assumptions discussed herein. This opinion letter is limited to the
matters set forth herein, and no opinions are intended to be implied or may be
inferred beyond those expressly stated herein. Our opinion is rendered as of
the date hereof and we assume no obligation to update or supplement this
opinion or any matter related to this opinion to reflect any change of fact,
circumstances, or law after the date hereof. In addition, our opinion is based
on the assumption that the matter will be properly presented to the applicable
court. Furthermore, our opinion is not binding on the Internal Revenue Service
or a court. In addition, we must note that our opinion represents merely our
best legal judgment on the matters presented and that others may disagree with
our conclusion. There can be no assurance that the Internal Revenue Service
will not take a contrary position or that a court would agree with our opinion
if litigated.
We consent to the use and filing of this opinion as Exhibit 8.1 to the
Registration Statement and to the reference to our firm under the caption
"Legal Matters" in the Prospectus Supplement and Prospectus contained therein.
In giving such consent we do not imply or admit that we are within the
category of persons whose consent is required under Section 7 of the 1933 Act
or the rules and regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
/s/ Andrews & Kurth L.L.P.
