-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, NNaanNr8kkzX4lIouVbDRVxn5sNHfvTjMlak+EPLqQxd9lFOm2L7wOd2Ck5Y3rZk h/ZgGx9glb6eX6Cxkwv2wQ== 0000834071-94-000058.txt : 19941223 0000834071-94-000058.hdr.sgml : 19941223 ACCESSION NUMBER: 0000834071-94-000058 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941222 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TOYOTA MOTOR CREDIT CORP CENTRAL INDEX KEY: 0000834071 STANDARD INDUSTRIAL CLASSIFICATION: PERSONAL CREDIT INSTITUTIONS [6141] IRS NUMBER: 953775816 STATE OF INCORPORATION: CA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-09961 FILM NUMBER: 94565893 BUSINESS ADDRESS: STREET 1: 19001 S WESTERN AVE CITY: TORRANCE STATE: CA ZIP: 90509-2958 BUSINESS PHONE: 3107153700 MAIL ADDRESS: STREET 1: 19001 S WESTERN AVE CITY: TORRANCE STATE: CA ZIP: 90509 10-K 1 SEPTEMBER 30, 1994 ANNUAL REPORT ON FORM 10-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended September 30, 1994 ------------------ OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from to -------- -------- Commission file number 1-9961 ---------- TOYOTA MOTOR CREDIT CORPORATION - --------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) California 95-3775816 - ---------------------------------------- ----------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 19001 S. Western Avenue Torrance, California 90509 - ---------------------------------------- ----------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (310) 787-1310 ----------------------- Securities registered pursuant to section 12(b) of the Act: Name of each exchange Title of each class on which registered ------------------- ------------------------ 5 3/4% Notes Due June 15, 1995 New York Stock Exchange - --------------------------------------- ------------------------ Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] As of November 30, 1994, the number of outstanding shares of capital stock, par value $10,000 per share, of the registrant was 86,500, all of which shares were held by Toyota Motor Sales, U.S.A., Inc. -1- PART I ITEM 1. BUSINESS. General Toyota Motor Credit Corporation ("TMCC") provides retail and wholesale financing, retail leasing and certain other financial services to authorized Toyota and Lexus vehicle and Toyota industrial equipment dealers and their customers in the United States (excluding Hawaii). TMCC is a wholly owned subsidiary of Toyota Motor Sales, U.S.A., Inc. ("TMS" or the "Parent"). TMS is primarily engaged in the wholesale distribution of automobiles, light 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 subsidiaries or are purchased from Toyota Motor Corporation ("TMC"), the parent of TMS, or its affiliates. TMCC was incorporated in California on October 4, 1982, and commenced operations in May 1983. TMCC currently has 34 branches in various locations in the United States. TMCC's retail and wholesale financing, and leasing programs are currently available in 44 states for Toyota vehicles and 49 states for Lexus vehicles. TMCC has five wholly owned subsidiaries, four of which are engaged in the insurance business and one limited purpose subsidiary formed primarily to acquire and securitize retail finance receivables. TMCC and its subsidiaries are collectively referred to as the "Company". An operating agreement between TMCC and TMS (the "Operating Agreement"), dated January 16, 1984, provides that TMCC will establish its own financing rates and is under no obligation to TMS to finance wholesale obligations from any dealers or retail obligations of any customers. In addition, pursuant to the Operating Agreement, TMS will arrange for the repurchase of new Toyota and Lexus vehicles financed at wholesale by TMCC at the aggregate cost financed in the event of dealer default. The Operating Agreement also specifies that TMS will retain 100% ownership of TMCC as long as TMCC has any funded debt outstanding and that TMS will make necessary equity contributions or provide other financial assistance TMS deems appropriate to ensure that TMCC maintains a minimum coverage on fixed charges of 1.25 times such fixed charges in any fiscal quarter. The Operating Agreement does not constitute a guarantee by TMS of any obligations of TMCC. The coverage provision of the Operating Agreement is solely for the benefit of the holders of TMCC's commercial paper, and the Operating Agreement may be amended or terminated at any time without notice to, or the consent of, holders of other TMCC obligations. Vehicle Retail Financing and Leasing Retail financing consists of purchasing installment contracts covering the sales of new Toyota and Lexus vehicles and certain used vehicles. TMCC acquires a security interest in the vehicles it finances and recovery of vehicles typically is permitted upon default, subject to various requirements of law. TMCC does not normally finance more than the dealer cost of a vehicle and accessories plus taxes, license fees and other fees, and premiums refundable to TMCC in the event of contract termination. Typically, contract terms range from 36 to 60 months for new vehicles and from 24 to 60 months for used vehicles depending on the age of the vehicle. TMCC has both recourse and non-recourse retail financing programs available to dealers. Dealers participating in the non-recourse program are charged a higher discount rate but do not have any financial responsibility for repossessions. As a result -2- of competitive market factors, substantially all of TMCC's retail financings have been non-recourse. TMCC requires retail financing customers to carry fire, theft and collision insurance on financed vehicles covering the interests of both TMCC and the customer. In the event the customer fails to maintain such insurance, TMCC has the right to obtain collateral protection insurance. New vehicle retail finance receivables constituted approximately 78% of all vehicle retail finance receivables at September 30, 1994. Vehicle retail finance receivables represented approximately 35% of total assets at September 30, 1994. Effective November 1, 1994, the Company discontinued the origination of retail finance receivables for Toyota vehicles through an independent finance company in five southeastern states. The existing portfolio that was originated on TMCC's behalf by the independent finance company will continue to be serviced by the independent finance company. The Company does not expect the discontinuation of Toyota retail installment contract originations in the five states to have an adverse effect on the Company's financial condition or results of operations. Leasing consists primarily of purchasing new vehicles leased to retail customers by Toyota and Lexus dealers and certain used vehicles. TMCC holds title to vehicles it leases and generally is permitted to take possession of a vehicle upon default by the lessee. TMCC does not normally finance more than 105% of the vehicle's Manufacturer Suggested Retail Price and accessories plus taxes, license fees and other fees. The present program is a closed-end program, with lease terms typically ranging from 24 to 60 months. Under the program, the lessee is granted an option to purchase the vehicle at lease termination, and the dealer is granted the same option if the lessee elects to return the vehicle. The purchase price is established at the beginning of the lease and is based upon the anticipated residual value of the vehicle. Off-leased vehicles returned to TMCC are transported to various auction sites throughout the United States and sold. The residual value risk on anticipated residual values of all Toyota vehicles leased after September 30, 1990 and all leased Lexus vehicles is directly assumed by TMCC. Anticipated residual values on almost all Toyota vehicles leased to customers prior to October 1, 1990 were insured with an independent insurer, with TMCC assuming 25% of the residual value risk on a last dollar basis. TMCC requires lessees to carry fire, theft and collision insurance on leased vehicles covering the interests of both TMCC and the lessee. In addition, TMCC requires lessees to carry specified levels of liability insurance. New vehicle leases constituted approximately 99% of all vehicle lease earning assets at September 30, 1994. Vehicle lease earning assets represented approximately 51% of total assets at September 30, 1994. -3- Summary of Vehicle Retail Installment Financing and Leasing Program Activity
Years Ended September 30, ------------------------------------------------ 1994 1993 1992 1991 1990 -------- -------- -------- -------- -------- Contracts booked: New vehicles......... 350,000 256,000 237,000 192,000 168,000 Used vehicles........ 64,000 56,000 56,000 52,000 44,000 -------- -------- -------- -------- -------- Total............. 414,000 312,000 293,000 244,000 212,000 ======== ======== ======== ======== ======== Average amount financed: New vehicles......... $19,900 $17,900 $16,700 $14,600 $13,300 Used vehicles........ $12,600 $10,400 $9,400 $8,500 $8,000 Outstanding portfolio at period end ($Millions): New vehicles...... $11,603 $8,167 $6,910 $5,285 $4,164 Used vehicles..... $1,128 $877 $837 $695 $563 Number of accounts 929,000 750,000 735,000 638,000 531,000
The outstanding balance of the sold retail finance receivables which TMCC continues to service (not included in the above table) totaled $251 million and $475 million, representing approximately 41,000 and 60,000 accounts, at September 30, 1994 and 1993, respectively. Vehicle Wholesale Financing TMCC provides wholesale financing through a floating interest rate program that assists Toyota and Lexus dealers, with approved lines of credit, in carrying inventories of new Toyota and Lexus vehicles. Typically, financing is provided for up to 100% of the dealer invoice value of new vehicles. Dealers are required to make principal reductions with respect to specific vehicles financed based on time in inventory or use as a customer demonstrator. Used vehicle inventory financing is also offered, but financing is subject to certain limitations. TMCC acquires security interests in the vehicles it finances at wholesale, and substantially all such financings are backed by corporate or individual guarantees from or on behalf of participating dealers. In the event of a dealer default, TMCC has the right to liquidate any assets acquired and seek legal remedies pursuant to the guarantees. TMCC has no right, however, to recover a vehicle sold by a dealer to a bona fide retail buyer and is limited to the remedies under its wholesale financing agreement with the dealer. Pursuant to the Operating Agreement, TMS will arrange for the repurchase of new Toyota and Lexus vehicles financed at wholesale by TMCC at the aggregate cost financed in the event of a dealer default. At September 30, 1994, finance receivables related to new vehicle inventory financing represented approximately 92% of TMCC's total vehicle wholesale finance receivables. As an accommodation to Toyota and Lexus vehicle dealers, TMCC, under certain circumstances and with certain restrictions, provides wholesale financing for new vehicles other than Toyota and Lexus. At September 30, 1994, finance receivables related to such vehicles represented approximately 2% of TMCC's total vehicle wholesale finance receivables. Vehicle wholesale finance receivables represented approximately 5% of total assets at September 30, 1994. -4- Summary of Vehicle Wholesale Financing Activity
Years Ended September 30, ------------------------------------------------ 1994 1993 1992 1991 1990 -------- -------- -------- -------- -------- Dealer loans ($Millions)....... $7,055 $6,378 $4,903 $3,409 $2,143 Dealer repayments ($Millions).. $7,032 $6,152 $4,745 $3,264 $2,105 Average amount financed per vehicle................. $17,530 $16,500 $15,400 $14,200 $14,300 Outstanding portfolio at period end ($Millions)...... $727 $703 $486 $339 $202
Credit Losses 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. TMCC's credit losses to date have been primarily from retail installment and lease contracts. Allowances for credit losses are established based primarily on historical loss experience. Other factors affecting collectibility are also evaluated in determining the amount to be provided. Upon repossession of the collateral for a delinquent account, losses are charged to the allowance for credit losses and the estimated realizable value of the asset is reclassified to Other Assets. When it has been determined that the collateral cannot be recovered, losses are charged to the allowance for credit losses. Recoveries are credited to the allowance for credit losses. -5- Analysis of the Allowance for Credit Losses
Years ended September 30, ------------------------------------ 1994 1993 1992 1991 1990 ---- ---- ---- ---- ---- (Dollars in Millions) Allowance for credit losses at beginning of period........ $121 $107 $ 89 $70 $56 Provision for credit losses...... 78 54 68 68 62 Charge-offs, net of recoveries... (35) (40) (50) (49) (48) ---- ---- ---- --- --- Allowance for credit losses at end of period.............. $164 $121 $107 $89 $70 ==== ==== ==== === === Allowance as percent of net receivables and net investments in operating leases outstanding............ 1.16% 1.17% 1.22% 1.31% 1.31% Losses as percent of average gross receivables and average net investments in operating leases outstanding............ .28% .37% .56% .69% .88% Aggregate balances at end of period for installments and lease rentals 60 or more days past due......... $16 $16 $23 $24 $18 Aggregate balances at end of period for installments and lease rentals 60 or more days past due as percent of gross receivables and net investments in operating leases outstanding............ .11% .14% .23% .31% .29%
Other Activities The Company considers its primary business to be the retail and wholesale financing and leasing of vehicles. During fiscal 1994, 1993 and 1992, the Company derived approximately 9%, 10% and 10%, respectively, of its total revenues from operations other than its primary business. TMCC has five wholly owned subsidiaries, Toyota Motor Insurance Services ("TMIS"), Toyota Motor Insurance Corporation of Vermont ("TMICV"), Toyota Motor Insurance Company ("TMIC"), Toyota Motor Life Insurance Company ("TLIC") and Toyota Motor Credit Receivables Corporation ("TMCRC"). The insurance subsidiaries provide certain insurance services along with certain insurance and contractual coverages related to the sale of vehicles. In addition, the insurance subsidiaries insure and reinsure certain TMS risks and provide insurance for Toyota and Lexus dealers' new vehicle inventories financed by -6- TMCC. Insurance operations represented approximately 4% of the Company's total revenues for the year ended September 30, 1994. See Item 13. TMCRC, a limited purpose subsidiary, was formed in June 1993 primarily to acquire retail finance receivables from TMCC for the purpose of securitizing such receivables. In the fourth quarter of fiscal 1993, the Company sold $521 million of retail finance receivables, subject to certain limited recourse provisions. Revenues from servicing and other income related to the sold finance receivables represented approximately 1% of the Company's total revenues for the year ended September 30, 1994. TMCC provides financing of new vehicles for daily rental fleets belonging to Toyota and Lexus dealers and independent fleet operators. TMCC also provides financing of new vehicles for retail leasing companies owned by Toyota and Lexus dealers. Revenues from finance receivables and vehicles under operating leases related to these programs represented approximately 1% of total revenues for the year ended September 30, 1994. TMCC also provides real estate and working capital loans to Toyota and Lexus vehicle dealers. Revenues from these finance receivables represented approximately 1% of total revenues for the year ended September 30, 1994. In addition, TMCC provides wholesale financing as well as retail installment financing and leasing to authorized Toyota industrial equipment dealers and their customers in the United States (excluding Hawaii). Revenues from finance receivables and equipment operating lease assets related to these programs represented approximately 2% of total revenues for the year ended September 30, 1994. Competition The automobile finance industry in the United States is very competitive. Commercial banks, savings and loan associations, credit unions, finance companies and other captive automobile finance companies provide retail installment financing and leasing for new and used vehicles. Commercial banks and captive automobile finance companies also provide wholesale financing for Toyota and Lexus dealers. TMCC's strategy is to supplement, with competitive financing programs, the overall commitment of TMS to offer a complete package of services to authorized Toyota and Lexus dealers and their customers. Employee Relations At September 30, 1994, the Company had approximately 1,885 full-time employees. The Company considers its employee relations to be satisfactory. Government Regulations The finance and insurance operations of the Company are regulated under both federal and state law. The degree and nature of regulation varies from state to state. A majority of the states have enacted legislation establishing licensing requirements to conduct retail and other finance and insurance activities. Most states also impose limits on the maximum rate of finance charges. In certain states, the margin between the present statutory maximum interest rates and borrowing costs is sufficiently narrow that, in periods of rapidly increasing or high interest rates, there could be an adverse effect on TMCC's operations in these states if TMCC is unable to pass on the increased interest costs to its customers. -7- The Company's operations are also subject to regulation under federal and state consumer protection statutes. The Company continually reviews its operations to comply with applicable law. Future administrative rulings, judicial decisions and legislation in this area may require modification of the Company's business practices and documentation. Toyota Motor Sales, U.S.A., Inc. TMS, a wholly owned subsidiary of TMC, was established in 1957 and is primarily engaged in the wholesale distribution of automobiles, light trucks, industrial equipment and related replacement parts and accessories throughout the United States (excluding Hawaii). Additionally, TMS exports automobiles and related replacement parts and accessories to Europe, Asia and U.S. territories. TMS also manufactures certain automobiles through Toyota Motor Manufacturing, U.S.A., Inc., a subsidiary owned 80% by TMS and 20% by TMC, and began truck manufacturing operations in the United States in 1991 through TABC, Inc., a wholly owned subsidiary. TMS's corporate headquarters are in Torrance, California, and it has port facilities, regional sales offices and parts distribution centers at other locations in the United States. Toyota vehicles are distributed in twelve regions, ten of which are operated by or through Toyota Motor Distributors, Inc., a wholly owned subsidiary of TMS. The remaining two regions are serviced by private distributors who purchase directly from TMS and distribute to Toyota dealers within their respective regions. For the year ended September 30, 1994, these two distributors--Gulf States Toyota, Inc. of Houston, Texas and Southeast Toyota Distributors, Inc. of Deerfield Beach, Florida--accounted for approximately 31% of the Toyota vehicles sold in the United States (excluding Hawaii). Lexus vehicles are directly distributed by TMS to Lexus dealers throughout the United States (excluding Hawaii). For the year ended September 30, 1994, TMS sold approximately 1,071,000 automobiles and light trucks in the United States (excluding Hawaii) and exported approximately 49,000 automobiles. TMS sales represented 26% of TMC's worldwide sales volume for the year ended June 30, 1994. For the years ended September 30, 1994 and 1993, Toyota and Lexus vehicles accounted for approximately 7.1% and 7.7%, respectively, of all retail automobile and light truck sales in the United States. Total revenues for TMS (together with its consolidated subsidiaries) for the fiscal years ended September 30, 1994, 1993 and 1992, aggregated approximately $23.3 billion, $20.9 billion and $18.4 billion, respectively, of which approximately $21.5 billion, $19.5 billion and $17.4 billion, respectively, were attributable to revenues other than those associated with financial services. At September 30, 1994, 1993 and 1992, TMS had total assets of approximately $19.5 billion, $15.8 billion and $13.6 billion, respectively, and net worth in excess of $4.3 billion, $4.1 billion and $3.7 billion, respectively. TMS had net income in excess of $250 million in each of its last three fiscal years. -8- ITEM 2. PROPERTIES. The headquarters of the Company is in Torrance, California and its 34 branch offices are located in various cities throughout the United States. At September 30, 1994, all of the Company's offices were in leased facilities and were occupied. The Company has periodically expanded or relocated existing offices to meet current or anticipated needs. The Company has also from time to time opened additional branch offices to better serve its customers. Management of the Company anticipates being able to continue to obtain adequate space to conduct its business. ITEM 3. LEGAL PROCEEDINGS. Various legal actions, governmental proceedings and other claims are pending or may be instituted or asserted in the future against TMCC and its subsidiaries with respect to matters arising from the ordinary course of business. Certain of these actions are or purport to be class action suits. Two such suits involve collateral protection practices and are similar to suits which have been filed against other financial institutions and captive finance companies. Court approval of a settlement agreement is pending as to both collateral protection practices suits. At this time, the Company believes any resulting liability from the above legal actions, proceedings and other claims will not materially affect its consolidated financial position or results of operations. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not applicable. -9- PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. All of TMCC's capital stock is owned by TMS and there is no trading market for such stock. No dividends have been declared or paid to date. -10- ITEM 6. SELECTED FINANCIAL DATA. The following selected financial data for the five years ended September 30, 1994 has been derived from financial statements audited by Price Waterhouse LLP, independent accountants. The following information should be read in conjunction with the audited financial statements and notes thereto included in Item 8 and with Item 7--Management's Discussion and Analysis of Financial Condition and Results of Operations.
Years Ended September 30, -------------------------------------- 1994 1993 1992 1991 1990 ------ ------ ------ ------ ------ (Dollars in Millions) INCOME STATEMENT DATA Financing Revenues: Retail financing.................. $ 413 $ 468 $485 $446 $371 Leasing........................... 1,230 747 447 216 119 Wholesale and other dealer financing............... 86 80 65 64 43 ------ ------ ---- ---- ---- Total financing revenues.......... 1,729 1,295 997 726 533 Interest expense.............. 486 454 450 390 317 Depreciation on operating leases.. 735 381 178 42 8 ------ ------ ---- ---- ---- Net financing revenues............ 508 460 369 294 208 Other revenues.................... 95 77 53 39 28 ------ ------ ---- ---- ---- Net Financing Revenues and Other Revenues............. 603 537 422 333 236 ------ ------ ---- ---- ---- Expenses: Operating and administrative...... 232 228 179 130 90 Provision for credit losses....... 78 54 68 68 62 ------ ------ ---- ---- ---- Total Expenses.................... 310 282 247 198 152 ------ ------ ---- ---- ---- Income before income taxes and Parent adjustment.......... 293 255 175 135 84 Parent adjustment............. - - - - 1 ------ ------ ---- ---- ---- Income before income taxes........ 293 255 175 135 85 Provision for income taxes........ 118 97 68 52 33 ------ ------ ---- ---- ---- Net Income........................ $ 175 $ 158 $107 $ 83 $ 52 ====== ====== ==== ==== ====
- ----------------- (Table Continued) -11-
September 30, ------------------------------------------------ 1994 1993 1992 1991 1990 ------- ------- ------ ------ ------ (Dollars in Millions) BALANCE SHEET DATA Finance receivables, net.. $7,776 $7,206 $6,983 $6,070 $5,160 Investments in operating leases, net............ $6,215 $3,050 $1,699 $604 $64 Total assets.............. $14,719 $11,159 $9,444 $7,138 $5,579 Notes and loans payable... $11,833 $8,833 $7,705 $5,816 $4,532 Payable to Parent......... - $48 - $20 - Capital stock......... $865 $680 $630 $550 $550 Retained earnings..... $662 $487 $329 $222 $139 RATIO OF EARNINGS TO FIXED CHARGES.. 1.60 1.56 1.39 1.34 1.27 - ---------------- To maintain fixed charge coverage at the level specified in the Operating Agreement, TMS from time to time has made noninterest-bearing advances and income maintenance payments to TMCC. No such noninterest-bearing advances and income maintenance payments were made in fiscal years 1994, 1993, 1992 and 1991. For financial statement presentation purposes, the imputed interest on noninterest-bearing advances are included as charges to interest expense. These charges and the income maintenance payments are offset in the income statement as "Parent adjustment". See Item 13. $10,000 par value per share. The Company has paid no dividends to date. The ratio of earnings to fixed charges was computed by dividing (i) the sum of income before income taxes and fixed charges by (ii) fixed charges. Fixed charges consist primarily of interest expense net of the effect of noninterest-bearing advances. Had the amount shown in "Parent adjustment" not been provided by TMS, the ratio of earnings to fixed charges for the Company would have been 1.60, 1.56, 1.39, 1.34, and 1.26 for the years ended September 30, 1994, 1993, 1992, 1991 and 1990, respectively. The ratio of earnings to fixed charges for TMS and subsidiaries was 1.90, 2.07, 1.83, 2.54 and 3.31 for the years ended September 30, 1994, 1993, 1992, 1991 and 1990, respectively. In March 1987, TMCC guaranteed payments of principal and interest on $58 million principal amount of bonds issued in connection with the Kentucky manufacturing facility of an affiliate. As of September 30, 1994, TMCC has not incurred any fixed charges in connection with such guarantee and no amount is included in any ratio of earnings to fixed charges. See Item 13.
-12- ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Introduction The earnings of TMCC are primarily affected by interest margins and the average outstanding balance of earning assets. The interest rates charged on retail finance receivables and implicit in leases are fixed at the time acquired. Yields on the majority of wholesale receivables and other loans to dealers vary with changes in short-term interest rates. Funding requirements are primarily met through net cash provided by operating activities, earning asset liquidations and the issuance of debt obligations of varying terms at both fixed and floating interest rates. TMCC utilizes interest rate exchange agreements and foreign currency exchange agreements in managing the cost of borrowed funds. The Company's business is substantially dependent upon the sale of Toyota and Lexus vehicles in the United States. Lower levels of sales of such vehicles resulting from governmental action, decline in demand, changes in pricing due to the appreciation of the Japanese yen against the United States dollar, or other events, could result in a reduction in the level of finance and insurance operations of the Company. To date, the level of the Company's operations has not been restricted by the level of sales of Toyota and Lexus vehicles. Financial Condition and Results of Operations TMCC's earning assets totaled $14.2 billion at September 30, 1994, compared to $10.4 billion at September 30, 1993. The increase in earning assets was primarily due to the growth in leasing. Retail finance receivables, net of unearned income, were $5.4 billion and $4.6 billion at September 30, 1994 and 1993, respectively. Retail finance receivables increased as a result of contract volume exceeding liquidations. Lease earning assets consisting of lease finance receivables, net of unearned income, and investments in operating leases, net of accumulated depreciation, totaled $7.7 billion and $4.8 billion at September 30, 1994 and 1993, respectively. The increase in lease earning assets reflected the continuation of significant growth in lease contract volume, primarily in operating leases. The growth in lease volume was primarily attributable to the effect of special lease programs sponsored by TMS and also to the broader acceptability of leasing in the vehicle retail sales market. Management of the Company anticipates further growth in lease earning assets as special lease programs continue and the broader acceptability of leasing as a financing option for retail consumers continues. Wholesale receivables and other dealer loans were $1.1 billion at September 30, 1994 and $1.0 billion at September 30, 1993. The increase in these receivables resulted primarily from the higher average wholesale receivables balance per dealer offset by a decrease in the number of active dealers. The number of active dealers participating in the Company's vehicle wholesale financing program at September 30, 1994 decreased as compared to September 30, 1993 primarily due to competitive reasons. Although further declines in the number of active dealers participating in the wholesale program is possible, management of the Company has taken various steps to enhance the program's competitive position. -13- Total financing revenues increased 34% in fiscal 1994 and 30% in fiscal 1993. The increases were primarily due to earning asset growth from higher contract volume and an increase in the average amount financed per contract. Contract volume and finance penetration related to TMCC's vehicle retail installment financing and leasing programs are summarized below:
Years Ended September 30, ----------------------------- 1994 1993 1992 ------- ------- ------- Contracts booked: Vehicle retail installment contracts.. 210,000 200,000 212,000 Vehicle lease contracts............... 204,000 112,000 81,000 ------- ------- ------- Total.............................. 414,000 312,000 293,000 ======= ======= ======= Finance penetration...................... 36.7% 27.1% 25.6%
In fiscal 1994 and 1993, the growth in total contract volume and finance penetration was due to the increased leasing of both Toyota and Lexus vehicles. Finance penetration represents the percentage of new Toyota and Lexus vehicle deliveries in the United States (excluding Hawaii) financed or leased by TMCC. The increases in lease contract volume were primarily attributable to the growth in special lease programs sponsored by TMS and also to the broader acceptability of leasing in the vehicle retail sales market. Under these special lease programs, TMCC offered reduced monthly payments on certain new vehicles to qualified lessees and received an amount from TMS for each vehicle leased. Amounts received approximate the balances required by TMCC to maintain revenues at standard program levels and are earned over the expected lease terms. The level of sponsored program activity varies based on TMS marketing strategies. TMCC recognized revenues related to all amounts received under various TMS programs of $54 million, $25 million and $16 million in fiscal 1994, 1993 and 1992, respectively. Retail financing revenues decreased 12% in fiscal 1994 and 4% in fiscal 1993. Retail financing revenues decreased in both fiscal 1994 and 1993 due to a continuing decline in portfolio yield resulting from lower yielding contracts replacing liquidating higher yielding contracts. The declines in yields reflected the effect of competitive market conditions. Management of the Company anticipates that the level of retail financing yields and revenues in fiscal 1995 will approximate those of fiscal 1994. During fiscal 1994 and 1993, TMCC's primary source of revenue and earning asset growth was leasing. Leasing revenues increased 65% and 67% in fiscal 1994 and 1993, respectively. The growth in leasing revenues was attributable to a 90% and 121% increase in average investments in operating leases in fiscal 1994 and 1993, respectively. Management of the Company anticipates continued growth in leasing revenues as special lease programs sponsored by TMS continue to contribute to increases in lease earning assets. Wholesale and other dealer financing revenues increased 8% in fiscal 1994 and 23% in fiscal 1993. The increased revenues in both fiscal 1994 and 1993 resulted primarily from higher average wholesale receivable balances. -14- Management of the Company anticipates that yields and revenues will increase in fiscal 1995 due to rising short-term market interest rates to which such financing is indexed and due to earning asset growth. Interest expense increased 7% in fiscal 1994, compared with a 1% increase in fiscal 1993. The increases in interest expense resulted from higher average borrowing levels required to fund the growth in earning assets which were substantially offset by decreases in market interest rates. The weighted average cost of borrowings was 4.94%, 5.57% and 6.92% for the years ended September 30, 1994, 1993 and 1992, respectively. Management anticipates that as a result of rising market interest rates, the weighted average cost of borrowings will increase in fiscal 1995 as compared to fiscal 1994. Depreciation on operating leases increased 93% in fiscal 1994, compared with an increase of 114% in fiscal 1993. Increases in both years were due to the growth in investments in operating leases. Management anticipates depreciation on operating leases to increase in fiscal 1995 due to anticipated growth in lease earning assets. Uninsured vehicle residual values were approximately $4.8 billion and $2.6 billion at September 30, 1994 and 1993, respectively. To date, TMCC has incurred no material losses as a result of residual value risk. Although TMCC's experience has been limited, management of the Company believes that the residual values of its leases reflected in the financial statements represent realizable values. The Company experienced continued growth in net financing revenues and other revenues during fiscal 1994 and 1993. Net financing revenues increased 10% and 25% in fiscal 1994 and 1993, respectively. The increase in fiscal 1994 was primarily attributable to the growth in the level of earning assets which was partially offset by declining interest margins. The increase in fiscal 1993 was primarily attributable to improved interest margins and growth in the level of earning assets. [Interest margin is the excess of the combined interest rate yield on finance receivables and implicit in leases over the effective interest rate cost of total borrowings.] Lower interest margins in fiscal 1994 were the result of portfolio yields on retail installment and lease contracts decreasing more rapidly than the decline in average borrowing costs. Improved interest margins in fiscal 1993 were the result of borrowing costs decreasing more rapidly than the decline in portfolio yields on retail installment and lease contracts. Management anticipates somewhat lower net financing revenues in fiscal 1995 due to an expected increase in the weighted average cost of borrowings. Other revenues increased 23% in fiscal 1994 and 45% in fiscal 1993. The increase in other revenues in fiscal 1994 resulted from the continued growth in the Company's insurance operations and from servicing and other income related to the retail finance receivables sold in fiscal 1993. The increase in other revenues in fiscal 1993 was primarily due to a $12 million pre-tax gain resulting from the sale of retail finance receivables in fiscal 1993 and from growth in the Company's insurance operations. Operating and administrative expenses increased 2% and 27% in fiscal 1994 and 1993, respectively. These increases reflected costs for additional personnel, facilities and other resources required to service the Company's growing customer base and for the growth in the Company's insurance operations. Increases in fiscal 1993 were also due to the establishment of reserves related to certain pending legal actions. -15- The provision for credit losses is largely a function of changes in the level and mix of earning assets. The provision for credit losses increased 44% in fiscal 1994 as a result of the increased growth in the level of earning assets in fiscal 1994, partially offset by favorable credit loss experience. The provision for credit losses decreased 21% in fiscal 1993 as the effect of the increase in the growth in earning assets was more than offset by favorable credit loss experience and the effect of the sale of retail finance receivables in fiscal 1993. The limited recourse loss provision for the sold receivables was excluded from the provision for credit losses and netted against the gain recognized on such sale. The favorable trend in credit loss experience is attributable, in part, to enhanced credit granting procedures, collection efforts and the mix in earning assets. The Company will continue to place emphasis on controlling its credit loss exposure; however, there are no assurances that this favorable trend will continue. Operating profits (reflected as "Income before income taxes") increased 15% in fiscal 1994 and 46% in fiscal 1993. The increase in operating profits and net income during fiscal 1994 was primarily the result of the growth in the level of earning assets, decreases in the average cost of borrowing and favorable credit loss experience. The increase in operating profits and net income during fiscal 1993 was primarily due to improved interest margins, growth in the level of earning assets and favorable credit loss experience. Management of the Company anticipates that fiscal 1995 operating profits may be somewhat lower than in fiscal 1994 due to an expected increase in the weighted average cost of borrowings. Financial support is provided by TMS, as necessary, to maintain TMCC's minimum fixed charge coverage at the level specified in the Operating Agreement. As a result of the favorable operating profits in both fiscal 1994 and 1993, TMCC did not receive any financial support from TMS. See Item 13. Liquidity and Capital Resources The Company requires, in the normal course of business, substantial funding to support the level of its earning assets. Significant reliance is placed on the Company's ability to obtain debt funding in the capital markets in addition to funding provided by earning asset liquidations, cash provided by operating activities, and growth in retained earnings. Debt funding has been obtained primarily from the issuance of debt securities in the European and United States capital markets. Debt issuances have generally been in the form of commercial paper, medium-term notes ("MTNs") and other debt securities. From time to time, this funding has been supplemented by loans and equity contributions from TMS. Commercial paper issuances and borrowings from TMS are specifically utilized to meet short-term funding needs. Commercial paper outstanding under TMCC's commercial paper program ranged from approximately $351 million to $1.4 billion at any month end during fiscal 1994, with an average outstanding balance of $894 million. The Company anticipates increased use of commercial paper during fiscal 1995. To support its commercial paper program, TMCC also maintains syndicated bank credit facilities with certain banks which aggregated $1.5 billion at September 30, 1994. No loans were outstanding under any of these bank credit facilities during fiscal 1994. TMCC also maintains uncommitted, unsecured lines of credit with banks totalling $300 million to facilitate issuances of letters of credit. At September 30, 1994, approximately $123 million in letters of credit had been issued, primarily related to the Company's insurance operations. -16- Borrowings from TMS ranged from zero to $161 million during fiscal 1994, with an average outstanding balance of $6 million. The interest rate charged by TMS to TMCC for these interest-bearing loans approximates the Federal Reserve Board's one-month commercial paper composite rate for firms whose bonds are rated AA. MTNs, with original terms ranging from nine months to ten years, have been issued in the European and United States capital markets to meet a portion of long-term and short-term funding requirements. During fiscal 1994, TMCC issued approximately $4.6 billion of MTNs of which approximately $3.9 billion had maturity dates on the date of issuance of more than one year. MTNs outstanding at September 30, 1994, including the effect of foreign currency translations at spot rates in effect at September 30, 1994, totaled approximately $7.0 billion. In March 1994, the Company expanded the maximum aggregate principal amount available for issuance under its United States public MTN program by an additional $4.0 billion. At November 30, 1994, approximately $2.7 billion under TMCC's United States public MTN program was available for issuance. In July 1994, the Company expanded the maximum aggregate principal amount authorized to be outstanding at any time under TMCC's Euro MTN program from $4.0 billion to $6.5 billion. As of November 30, 1994, $2.1 billion was available for issuance under the Euro MTN program, of which the Company has committed to issue approximately $250 million. The United States and Euro MTN programs may from time to time be expanded to allow for the continued use of these sources of funding. Long-term funding requirements have also been met through the issuance of other forms of debt securities underwritten in the European and United States capital markets. At September 30, 1994, approximately $3.5 billion of debt securities (excluding MTNs), including the effect of foreign currency translations at spot rates in effect at September 30, 1994, were outstanding in the European capital markets. At November 30, 1994, the Company has committed to issue an additional $98 million. Of the $3.5 billion in debt securities, $2.3 billion was denominated in foreign currencies. Underwritten debt securities outstanding in the United States public market, excluding MTNs, totaled approximately $300 million at September 30, 1994. At November 30, 1994, approximately $700 million of securities registered with the Securities and Exchange Commission ("SEC"), excluding MTNs, were available for issuance. TMCC utilizes a variety of financial instruments to manage its foreign currency exchange rate risk and interest rate risk. TMCC does not enter into these instruments for trading purposes. During the years ended September 30, 1994, 1993 and 1992, TMCC held its derivative financial instruments to maturity of the underlying debt instrument. Debt issued in foreign currencies is hedged by concurrently executed foreign currency exchange agreements. The mix of fixed and floating interest rates on TMCC's debt outstanding is periodically adjusted through the use of interest rate contracts, including interest rate exchange agreements and option related products. See Item 8-- Notes 2, 8, 9 and 10 to the Consolidated Financial Statements. From time to time, TMS has made equity contributions to maintain TMCC's equity capitalization at certain levels. Such levels have been periodically established by TMS as it deems appropriate. During the years ended September 30, 1994 and 1993, TMS made equity contributions to TMCC by purchasing, at par value, all newly issued shares of TMCC's capital stock in the amount of $185 million and $50 million, respectively. -17- Cash flows provided by operating, investing and financing activities have been used primarily to support earning asset growth. Cash provided by the liquidation of earning assets, totalling $10.8 billion and $9.4 billion during fiscal 1994 and 1993, respectively, was used to purchase additional finance receivables and investments in operating leases. Additionally, in the fourth quarter of fiscal 1993, the Company generated proceeds of $466 million from the sale of a pool of retail installment contract receivables. Investing activities resulted in a net use of cash in fiscal 1994 and 1993 as the growth in earning assets, primarily from leasing, exceeded the cash provided by the liquidation of earning assets. Net cash used in investing activities was $4.5 billion and $2.1 billion in fiscal 1994 and 1993, respectively. The higher level of cash used in investing activities resulted in a higher level of net cash required from financing activities to support the growth in earning assets. Net cash flows provided by financing activities totaled $3.0 billion in fiscal 1994, representing a $1.4 billion increase over the prior year. The growth in earning assets was also supported by net cash provided by operating activities which totaled $1.3 billion in fiscal 1994, representing a $409 million increase from fiscal 1993. Management of the Company believes that cash provided by operating, investing and financing activities will be sufficient to meet the Company's liquidity and capital resource needs in the future. Recently Enacted Accounting Standards In November 1992, the Financial Accounting Standards Board issued Statement No. 112, "Employers' Accounting for Postemployment Benefits" ("Statement No. 112"). Statement No. 112 requires accrual, during the years that the employee renders the necessary service or when it is probable that a liability has been incurred, of the expected cost of providing postemployment benefits to former or inactive employees, their beneficiaries, and covered dependents after employment but before retirement. The Company's current practice of accounting for these benefits is on a cash basis. Statement No. 112 is effective for fiscal years beginning after December 15, 1993. The Company plans to adopt Statement No. 112 in the first interim period of fiscal 1995. The impact of adoption on the financial position or results of operations is not expected to be material. The Financial Accounting Standards Board issued Statement No. 114, "Accounting by Creditors for Impairment of a Loan" ("Statement No. 114") in May 1993 which was amended by Statement No. 118, "Accounting by Creditors for Impairment of a Loan - Income Recognition and Disclosures" ("Statement No. 118") in October 1994. Statement No. 114 requires a creditor to evaluate the collectibility of both contractual interest and principal of certain impaired receivables when assessing the need for a loss accrual and to measure loans that are restructured in a troubled debt restructuring to reflect the time value of money. Statement No. 114 is not applicable to leases and large groups of smaller-balance homogeneous loans that are collectively evaluated for impairment. Statement No. 118, amends Statement No. 114, to allow a creditor to use existing methods for recognizing interest income on an impaired loan. Statement No. 118 also amends the disclosure requirements in Statement No. 114 to require information about the recorded investment in certain impaired loans and about how a creditor recognizes interest income related to those impaired loans. Statement No. 114, as amended by Statement No. 118, applies to financial statements for fiscal years beginning after December 15, 1994. The Company plans to adopt Statement No. 114, as amended by Statement No. 118, in the first interim period of fiscal 1995. The impact of adoption on the financial position or results of operations is not expected to be material. -18- In May 1993, the Financial Accounting Standards Board issued Statement No. 115, "Accounting for Certain Investments in Debt and Equity Securities" ("Statement No. 115"), which addresses the accounting and reporting for investments in equity securities that have readily determinable fair values and for all investments in debt securities. These investments will be categorized as held-to-maturity securities and reported at amortized cost; trading securities and reported at fair value, with unrealized gains and losses included in earnings; or available-for-sale securities and reported at fair value, with unrealized gains and losses excluded from earnings and reported in a separate component of shareholders' equity. Statement No. 115 is effective for fiscal years beginning after December 15, 1993. The Company plans to adopt Statement No. 115 in the first interim period of fiscal 1995. The estimated impact of adoption on the financial position or results of operation is not expected to be material. In October 1994, the Financial Accounting Standards Board issued Statement No. 119, "Disclosure about Derivative Financial Instruments and Fair Value of Financial Instruments" ("Statement No. 119"), which requires disclosures about derivative financial instruments and amends existing requirements of Statement No. 105, "Disclosure of Information about Financial Instruments with Off- Balance-Sheet Risk and Financial Instruments with Concentration of Credit Risk" ("Statement No. 105") and Statement of Financial Accounting Standards No. 107, "Disclosures about Fair Value of Financial Instruments" ("Statement No. 107"). Statement No. 119 applies to financial statements for fiscal years ending after December 15, 1994. The Company adopted Statement No. 119 in fiscal 1994. -19- ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. INDEX TO FINANCIAL STATEMENTS AND SCHEDULES Page ------- Report of Independent Accountants................................ 21 Consolidated Balance Sheet at September 30, 1994 and 1993........ 22 Consolidated Statement of Income for the years ended September 30, 1994, 1993 and 1992................. 23 Consolidated Statement of Shareholder's Equity for the years ended September 30, 1994, 1993 and 1992............. 24 Consolidated Statement of Cash Flows for the years ended September 30, 1994, 1993 and 1992................. 25 Notes to Consolidated Financial Statements....................... 26 - 46 Report of Independent Accountants on Financial Statement Schedules.............................. 47 Schedule VII - Guarantees of Securities of Other Issuers......... 48 Schedule IX - Short-term Borrowings.............................. 49 All other schedules have been omitted because they are not required, not applicable, or the information has been included elsewhere. -20- REPORT OF INDEPENDENT ACCOUNTANTS --------------------------------- To the Board of Directors and Shareholder of Toyota Motor Credit Corporation In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of income, of shareholder's equity and of cash flows present fairly, in all material respects, the financial position of Toyota Motor Credit Corporation (a wholly owned subsidiary of Toyota Motor Sales, U.S.A., Inc.) and its subsidiaries at September 30, 1994 and 1993, and the results of their operations and their cash flows for each of the three years in the period ended September 30, 1994, in conformity with generally accepted accounting principles. These financial statements are the responsibility of Toyota Motor Credit Corporation's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. /S/ PRICE WATERHOUSE LLP Los Angeles, California October 31, 1994 -21- TOYOTA MOTOR CREDIT CORPORATION CONSOLIDATED BALANCE SHEET (Dollars in Millions)
September 30, ----------------------- 1994 1993 -------- -------- ASSETS ------ Cash and cash equivalents................. $ 277 $ 574 Investments in marketable securities...... 102 138 Finance receivables, net.................. 7,776 7,206 Investments in operating leases, net...... 6,215 3,050 Receivable from Parent.................... 37 - Other receivables......................... 221 105 Deferred charges.......................... 36 44 Other assets.............................. 55 42 ------- ------- Total Assets..................... $14,719 $11,159 ======= ======= LIABILITIES AND SHAREHOLDER'S EQUITY ------------------------------------ Notes and loans payable................... $11,833 $ 8,833 Accrued interest.......................... 156 148 Accounts payable and accrued expenses..... 725 594 Unearned insurance premiums............... 61 74 Payable to Parent......................... - 48 Income taxes payable...................... 31 17 Deferred income taxes..................... 386 278 ------- ------- Total liabilities................... 13,192 9,992 ------- ------- Shareholder's Equity: Capital stock, $l0,000 par value (100,000 shares authorized; issued and outstanding 86,500 in 1994 and 68,000 in 1993)..................... 865 680 Retained earnings...................... 662 487 ------- ------- Total shareholder's equity.......... 1,527 1,167 ------- ------- Total Liabilities and Shareholder's Equity............. $14,719 $11,159 ======= =======
See Accompanying Notes to Consolidated Financial Statements. -22- TOYOTA MOTOR CREDIT CORPORATION CONSOLIDATED STATEMENT OF INCOME (Dollars in Millions)
Years ended September 30, ----------------------------------- 1994 1993 1992 ------ ------ ------ Financing Revenues: Retail financing........................ $ 413 $ 468 $485 Leasing................................. 1,230 747 447 Wholesale and other dealer financing.... 86 80 65 ------ ------ ---- Total financing revenues................... 1,729 1,295 997 Interest expense........................ 486 454 450 Depreciation on operating leases........ 735 381 178 ------ ------ ---- Net financing revenues..................... 508 460 369 Other revenues............................. 95 77 53 ------ ------ ---- Net Financing Revenues and Other Revenues.. 603 537 422 ------ ------ ---- Expenses: Operating and administrative............ 232 228 179 Provision for credit losses............. 78 54 68 ------ ------ ---- Total Expenses............................. 310 282 247 ------ ------ ---- Income before income taxes................. 293 255 175 Provision for income taxes................. 118 97 68 ------ ------ ---- Net Income................................. $ 175 $ 158 $107 ====== ====== ====
See Accompanying Notes to Consolidated Financial Statements. -23- TOYOTA MOTOR CREDIT CORPORATION CONSOLIDATED STATEMENT OF SHAREHOLDER'S EQUITY (Dollars in Millions)
Capital Retained Stock Earnings Total ------- -------- ------- Balance at September 30, 1991.......... $550 $222 $ 772 Issuance of capital stock.............. 80 - 80 Net income in 1992..................... - 107 107 ---- ---- ------ Balance at September 30, 1992.......... 630 329 959 Issuance of capital stock.............. 50 - 50 Net income in 1993..................... - 158 158 ---- ---- ------ Balance at September 30, l993.......... 680 487 1,167 Issuance of capital stock.............. 185 - 185 Net income in 1994..................... - 175 175 ---- ---- ------ Balance at September 30, 1994.......... $865 $662 $1,527 ==== ==== ======
See Accompanying Notes to Consolidated Financial Statements. -24- TOYOTA MOTOR CREDIT CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (Dollars in Millions)
Years ended September 30, --------------------------------- 1994 1993 1992 ------ ------ ------ Cash flows from operating activities: Net income.......................................... $ 175 $ 158 $ 107 ------ ------ ------ Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization.................. 743 382 184 Provision for credit losses.................... 78 54 68 Gain from sale of finance receivables.......... - (12) - Increase in accrued interest................... 8 24 11 Increase (decrease) in unearned insurance premiums.......................... (13) (21) 17 Increase (decrease) in deferred income taxes................................ 108 (1) 104 (Increase) decrease in other assets............ (24) 47 (22) Increase in other liabilities.................. 180 215 51 ------ ------ ------ Total adjustments................................... 1,080 688 413 ------ ------ ------ Net cash provided by operating activities.............. 1,255 846 520 ------ ------ ------ Cash flows from investing activities: Additions to investments in marketable securities....................................... (86) (174) (142) Disposition of investments in marketable securities....................................... 120 139 131 Purchase of finance receivables..................... (10,868) (9,936) (8,343) Liquidations of finance receivables................. 10,263 9,159 7,380 Proceeds from sale of finance receivables........... - 466 - Additions to investments in operating leases........ (4,468) (1,974) (1,360) Disposition of investments in operating leases...... 525 225 79 ------ ------ ------ Net cash used in investing activities.................. (4,514) (2,095) (2,255) ------ ------ ------ Cash flows from financing activities: Proceeds from issuance of capital stock............. 185 50 80 Proceeds from issuance of notes and loans payable.......................................... 5,150 2,848 3,111 Payments on notes and loans payable................. (2,955) (1,246) (1,336) Net increase (decrease) in commercial paper......... 582 (40) (52) ------ ------ ------ Net cash provided by financing activities.............. 2,962 1,612 1,803 ------ ------ ------ Net increase (decrease) in cash and cash equivalents... (297) 363 68 Cash and cash equivalents at the beginning of the period....................................... 574 211 143 ------ ------ ------ Cash and cash equivalents at the end of the period.............................................. $ 277 $ 574 $ 211 ====== ====== ====== Supplemental disclosures: Interest paid....................................... $475 $440 $440 Income taxes paid................................... $64 - -
See Accompanying Notes to Consolidated Financial Statements. -25- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 - Nature of Operations - ----------------------------- Toyota Motor Credit Corporation ("TMCC") provides retail and wholesale financing, retail leasing and certain other financial services to authorized Toyota and Lexus vehicle and Toyota industrial equipment dealers and their customers in the United States (excluding Hawaii). TMCC is a wholly owned subsidiary of Toyota Motor Sales, U.S.A., Inc. ("TMS" or the "Parent"). TMS is primarily engaged in the wholesale distribution of automobiles, 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 subsidiaries or are purchased from Toyota Motor Corporation (the parent of TMS) or its affiliates. TMCC has five wholly owned subsidiaries, Toyota Motor Insurance Services ("TMIS"), Toyota Motor Insurance Corporation of Vermont ("TMICV"), Toyota Motor Insurance Company ("TMIC"), Toyota Motor Life Insurance Company ("TLIC") and Toyota Motor Credit Receivables Corporation ("TMCRC"). TMCC and its wholly owned subsidiaries are collectively referred to as the "Company". The insurance subsidiaries provide certain insurance services along with certain insurance and contractual coverages related to the sale of vehicles. In addition, the insurance subsidiaries insure and reinsure certain TMS risks and provide insurance for Toyota and Lexus dealers' new vehicle inventories financed by TMCC. TMCRC, a limited purpose subsidiary, was formed in June 1993 primarily to acquire retail finance receivables from TMCC for the purpose of securitizing such receivables. The Company's business is substantially dependent upon the sale of Toyota and Lexus vehicles in the United States. Lower levels of sales of such vehicles resulting from governmental action, decline in demand, changes in pricing due to the appreciation of the Japanese yen against the United States dollar, or other events, could result in a reduction in the level of finance and insurance operations of the Company. Note 2 - Summary of Significant Accounting Policies - --------------------------------------------------- Principles of Consolidation --------------------------- The consolidated financial statements include the accounts of TMCC and its wholly owned subsidiaries. All significant intercompany transactions and balances have been eliminated. -26- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 2 - Summary of Significant Accounting Policies (Continued) - --------------------------------------------------- Revenue Recognition ------------------- Revenue from retail financing contracts and finance leases is recognized using the effective yield method. Revenue from operating leases is recognized on a straight-line basis over the lease term. Cash and Cash Equivalents ------------------------- Cash equivalents, consisting primarily of money market instruments, represent highly liquid investments with original maturities of three months or less. Investments in Marketable Securities ------------------------------------ Investments in marketable securities consist of debt and equity securities. Debt securities are carried at amortized cost and equity securities are carried at fair value. Investments in Operating Leases ------------------------------- Vehicle and equipment leases to third parties are originated by dealers and acquired by TMCC, which assumes ownership of the property. TMCC is also the lessor on certain property that it acquires directly. Investments in operating leases are recorded at cost and depreciated, primarily on a straight-line basis, over the lease term to the estimated residual value. Allowance for Credit Losses --------------------------- Allowances for credit losses are established based primarily on historical loss experience. Other factors affecting collectibility are also evaluated in determining the amount to be provided. Upon repossession of the collateral for a delinquent account, losses are charged to the allowance for credit losses and the estimated realizable value of the asset is reclassified to Other Assets. When it has been determined that the collateral cannot be recovered, losses are charged to the allowance for credit losses. Recoveries are credited to the allowance for credit losses. -27- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 2 - Summary of Significant Accounting Policies (Continued) - --------------------------------------------------- Deferred Charges ---------------- Deferred charges consist primarily of underwriters' commissions and other long-term debt issuance expenses, which are amortized over the life of the related debt instruments on a straight-line basis. Insurance Operations -------------------- Revenues from insurance premiums and from providing coverage under various contractual agreements are earned over the terms of the respective policies and agreements in proportion to estimated claims activity. Certain costs of acquiring new business, consisting of commissions, premium taxes and other costs, are deferred and amortized over the terms of the related policies on the same bases as revenues are earned. The liability for reported losses and the estimate of unreported losses is recorded in Accounts Payable and Accrued Expenses. Commission income and fee income are recognized in relation to the level of services performed. Interest Rate Exchange Agreements --------------------------------- TMCC utilizes interest rate exchange agreements and to a lesser extent corridors and other option-based products in managing its exposure to interest rate fluctuations. Interest rate exchange agreements are executed as an integral part of specific debt transactions and on a portfolio basis. The differential paid or received on such agreements is recorded as an adjustment to Interest Expense over the term of the underlying debt. Master netting agreements, with all interest rate exchange agreement counterparties, also exist allowing the net difference between counterparties to be exchanged in the event of default. Foreign Currency Transactions ----------------------------- TMCC's senior debt issued in foreign currencies is hedged by concurrently executed currency exchange agreements which convert these foreign currency obligations into fixed U.S. dollars. TMCC's foreign currency debt is translated into U.S. dollars in the financial statements at the various foreign currency spot rates in effect at the balance sheet date. The receivables or payables, arising as a result of the differences between the September 30, 1994 foreign currency spot rates and the contract rates applicable to the foreign currency exchange agreements, are classified in Other Receivables or Accounts Payable and Accrued Expenses, respectively. -28- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 2 - Summary of Significant Accounting Policies (Continued) - --------------------------------------------------- Income Taxes ------------ Effective October 1, 1993, the Company adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("Statement No. 109"). The adoption of Statement No. 109 changed the method of accounting for income taxes from a deferred method to a liability method. This method differs from the previously used method in that deferred tax assets and liabilities are adjusted to reflect changes in tax rates and laws in the period such changes are enacted resulting in adjustments to the current period's income statement. The cumulative effect of the change in accounting principle was not material to the Company. In addition, there was no material effect on the current year's income. Prior years' financial statements have not been restated. The Company joins with TMS in filing consolidated federal income tax returns and combined or consolidated income tax returns in certain states. Federal income tax is provided on a separate return basis. For states where a combined or consolidated income tax return is filed, state income taxes are allocated to the Company by TMS based upon the Company's apportionment factors and income in those states. Reclassifications ----------------- Certain 1993 and 1992 accounts have been reclassified to conform with the 1994 presentation. Note 3 - Finance Receivables - ---------------------------- Finance receivables, net consisted of the following:
September 30, --------------------- 1994 1993 ------ ------ (Dollars in Millions) Retail............................... $5,805 $5,103 Finance leases....................... 1,734 2,046 Wholesale and other dealer loans..... 1,054 1,025 ------ ------ 8,593 8,174 Unearned income...................... (716) (874) Allowance for credit losses.......... (101) (94) ------ ------ Finance receivables, net.......... $7,776 $7,206 ====== ======
-29- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 3 - Finance Receivables (Continued) - ---------------------------- The contractual maturities of retail receivables and wholesale and other dealer loans and the future minimum lease payments on finance leases at September 30, 1994 are summarized as follows:
Due in the Wholesale Years Ending Finance and Other September 30, Retail Leases Dealer Loans ------------- ---------- ---------- ------------ (Dollars in Millions) 1995.................. $2,005 $ 394 $ 831 1996.................. 1,580 303 76 1997.................. 1,225 215 65 1998.................. 719 108 54 1999.................. 266 20 16 Thereafter............ 10 - 12 ------ ------ ------ Total.............. $5,805 $1,040 $1,054 ====== ====== ======
Finance leases, net consisted of the following:
September 30, --------------------- 1994 1993 ------- ------- (Dollars in Millions) Minimum lease payments.................. $1,040 $1,337 Estimated unguaranteed residual values.. 694 709 ------ ------ Finance leases....................... 1,734 2,046 Unearned income......................... (302) (388) Allowance for credit losses............. (21) (22) ------ ------ Finance leases, net.................. $1,411 $1,636 ====== ======
The aggregate balances related to finance receivables 60 or more days past due totaled $15 million at September 30, 1994 and 1993. A substantial portion of TMCC's finance receivables is generally paid prior to maturity. Contractual maturities and future minimum lease payments as shown above should not be considered as necessarily indicative of future cash collections. The majority of retail and finance lease receivables does not involve recourse to the dealer in the event of customer default. -30- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 4 - Sale of Finance Receivables - ------------------------------------ In the fourth quarter of fiscal year 1993, the Company sold retail finance receivables aggregating $521 million, subject to certain limited recourse provisions. TMCC sold its receivables to TMCRC which in turn sold them to a trust. TMCC remains as servicer and is paid a servicing fee. In a subordinated capacity, TMCRC retains excess servicing cash flows, a limited interest in the trust and certain cash deposits. TMCRC's subordinated interests in excess servicing cash flows, limited interest in the trust, cash deposits and other related amounts are held as restricted assets which are subject to limited recourse provisions. These restricted assets are not available to satisfy any obligations of TMCC. The following is a summary of these amounts included in Other Receivables:
September 30, --------------------- 1994 1993 ---- ---- (Dollars in Millions) Excess servicing......................... $13 $31 Other restricted amounts: Limited interest in trust............. 16 29 Cash deposits......................... 4 3 Allowance for estimated credit losses on sold receivables............ (2) (2) --- --- Total.............................. $31 $61 === ===
A gain on the sale of the finance receivables was recognized in fiscal year 1993. In determining the gain, the book value of the sold receivable pool was allocated between the portion sold and the portion retained based on their relative fair values on the date of the sale. The pretax gain resulting from the sale totaled $12 million after providing for an allowance for estimated credit losses. The outstanding balance of the sold receivables which TMCC continues to service at September 30, 1994 and 1993 totaled $251 million and $475 million, respectively. -31- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 5 - Investments in Operating Leases - ----------------------------------------- Investments in operating leases, net consisted of the following:
September 30, --------------------- 1994 1993 ------ ------ (Dollars in Millions) Vehicles................................. $7,184 $3,494 Equipment, aircraft and other............ 148 107 ------ ------ 7,332 3,601 Accumulated depreciation................. (1,054) (524) Allowance for credit losses.............. (63) (27) ------ ------ Investments in operating leases, net.. $6,215 $3,050 ====== ======
Rental income from operating leases was $1,056 million, $572 million and $266 million for the years ended September 30, 1994, 1993 and 1992, respectively. Future minimum rentals on operating leases are due in installments as follows: years ending September 30, 1995 - $1,279 million; 1996 - $1,074 million; 1997 - $524 million; 1998 - $45 million; and 1999 - $2 million. The future minimum rentals as shown above should not be considered as necessarily indicative of future cash collections. Note 6 - Allowance for Credit Losses - ------------------------------------ An analysis of the allowance for credit losses follows:
Years ended September 30, ------------------------- 1994 1993 1992 ---- ---- ---- (Dollars in Millions) Allowance for credit losses at beginning of period......... $121 $107 $ 89 Provision for credit losses....... 78 54 68 Charge-offs, net of recoveries.... (35) (40) (50) ---- ---- ---- Allowance for credit losses at end of period............... $164 $121 $107 ==== ==== ====
-32- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 6 - Allowance for Credit Losses (Continued) - ------------------------------------ The Financial Accounting Standards Board issued Statement No. 114, "Accounting by Creditors for Impairment of a Loan" ("Statement No. 114") in May 1993 which was amended by Statement No. 118, "Accounting by Creditors for Impairment of a Loan - Income Recognition and Disclosures" ("Statement No. 118") in October 1994. Statement No. 114 requires a creditor to evaluate the collectibility of both contractual interest and principal of certain impaired receivables when assessing the need for a loss accrual and to measure loans that are restructured in a troubled debt restructuring to reflect the time value of money. Statement No. 114 is not applicable to leases and large groups of smaller-balance homogeneous loans that are collectively evaluated for impairment. Statement No. 118 amends Statement No. 114 to allow a creditor to use existing methods for recognizing interest income on an impaired loan. Statement No. 118 also amends the disclosure requirements in Statement No. 114 to require information about the recorded investment in certain impaired loans and about how a creditor recognizes interest income related to those impaired loans. Statement No. 114, as amended by Statement No. 118, applies to financial statements for fiscal years beginning after December 15, 1994. The Company plans to adopt Statement No. 114, as amended by Statement No. 118 in the first interim period of fiscal year 1995. The impact of adoption on the financial position or results of operations is not expected to be material. Note 7 - Transactions with Parent - --------------------------------- An operating agreement with TMS (the "Operating Agreement") provides that 100% ownership of TMCC will be retained by TMS as long as TMCC has any funded debt outstanding. Additionally, TMS will provide necessary equity contributions or other financial assistance it deems appropriate to ensure that TMCC maintains a minimum coverage on fixed charges of 1.25 times such charges in any fiscal quarter. Fixed charges are primarily interest on borrowed funds. To maintain such coverage, pursuant to the Operating Agreement, TMS from time to time has made noninterest-bearing advances and income maintenance payments to TMCC. No such noninterest-bearing advances and income maintenance payments were made in fiscal years 1994, 1993 and 1992. The coverage provision of the Operating Agreement is solely for the benefit of the holders of TMCC's commercial paper. The Operating Agreement does not constitute a guarantee by TMS of any obligations of TMCC. -33- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 7 - Transactions with Parent (Continued) - --------------------------------- In the second quarter of fiscal 1993, the Company began leasing its headquarters facility from TMS. The amount of rent expense paid to TMS totaled $3 million and $2 million for the years ended September 30, 1994 and 1993, respectively. TMS provides certain technical and administrative services and incurs certain expenses on the Company's behalf and, accordingly, allocates these charges to the Company. The charges, reimbursed by TMCC to TMS, totaled $7 million, $6 million and $5 million for the years ended September 30, 1994, 1993 and 1992, respectively. TMCC has an arrangement to borrow funds from TMS at rates which approximate commercial paper rates. For the years ended September 30, 1994, 1993 and 1992, the highest amounts of borrowings from TMS outstanding at any one time were $161 million, $117 million and $360 million, respectively, and the average amounts of borrowings from TMS were $6 million, $7 million and $56 million, respectively. Interest charges related to these interest-bearing borrowings from TMS amounted to $0.3 million, $0.2 million and $2.3 million for the years ended September 30, 1994, 1993 and 1992, respectively. The Operating Agreement provides that borrowings from TMS are subordinated to all other indebtedness of TMCC. TMIS and TMICV provide certain insurance services, and insurance and reinsurance coverages, respectively, to TMS. Insurance premiums, commissions and fees earned during the years ended September 30, 1994, 1993 and 1992 included $7 million, $9 million and $7 million, respectively, related to these services and coverages. TMCC provides financing and leasing services related to various programs sponsored from time to time by TMS for the sale and lease of Toyota and Lexus vehicles and Toyota industrial equipment. During the years ended September 30, 1994, 1993 and 1992, TMCC recognized revenue of $54 million, $25 million and $16 million, respectively, related to the amounts received from TMS for these programs. TMCC provides certain leasing and financing services to TMS. For the years ended September 30, 1994, 1993 and 1992, TMCC recognized revenue of $3 million, $3 million and $4 million, respectively, related to these services. -34- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 8 - Notes and Loans Payable - -------------------------------- Notes and loans payable at September 30, 1994 and 1993, which consisted of senior debt, were as follows:
September 30, ---------------------- 1994 1993 ------- ------ (Dollars in Millions) Commercial paper, net.................... $ 960 $ 350 ------- ------ Other senior debt, due: 1994.................................. - 2,847 1995.................................. 4,010 3,112 1996.................................. 2,405 1,185 1997.................................. 2,014 735 1998.................................. 985 367 1999.................................. 233 - Thereafter............................ 1,209 202 ------- ------ 10,856 8,448 Unamortized premium...................... 17 35 ------- ------ Other senior debt..................... 10,873 8,483 ------- ------ Notes and loans payable............ $11,833 $8,833 ======= ======
The weighted average remaining term of commercial paper was 43 days at September 30, 1994 and 28 days at September 30, 1993. The weighted average interest rate on commercial paper was 4.43% and 3.14% at September 30, 1994 and 1993, respectively. The weighted average interest rate on other senior debt was 4.84% and 4.92% at September 30, 1994 and 1993, respectively, including the effects of interest rate exchange agreements. The rates have been calculated on the basis of rates in effect at September 30, 1994 and 1993, some of which are floating rates that reset daily. Approximately 39% of other senior debt at September 30, 1994 had interest rates, including the effects of interest rate exchange agreements, that were fixed for a period of more than one year. The weighted average of these fixed interest rates was 5.02% at September 30, 1994. The mix of TMCC's fixed and floating rate debt changes from time to time as a result of interest rate risk management. -35- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 8 - Notes and Loans Payable (Continued) - -------------------------------- Included in Notes and Loans Payable at September 30, 1994 were unsecured notes payable in foreign currencies as follows: 190 billion in Japanese yen, 1 billion in Canadian dollars, 36 million in European currency units, 785 million in Swiss francs, 55 million in Dutch guilders, 110 million in Swedish kronor, 485 billion in Italian lire, 4 billion in French francs, 550 million in German deutsche marks and 125 million in Australian dollars. Concurrent with the issuance of these unsecured notes, TMCC entered into foreign currency exchange agreements to convert these foreign currency obligations into fixed U.S. dollar obligations for $4.9 billion. TMCC's foreign currency debt is translated into U.S. dollars in the financial statements at the various foreign currency spot rates in effect at September 30, 1994. The receivables or payables, arising as a result of the differences between the September 30, 1994 foreign currency spot rates and the contract rates applicable to the foreign currency exchange agreements, are classified in Other Receivables or Accounts Payable and Accrued Expenses, respectively, and would aggregate to a net receivable position of $37 million at September 30, 1994. Note 9 - Fair Value of Financial Instruments - -------------------------------------------- In accordance with the requirements of Statement of Financial Accounting Standards No. 107, "Disclosures about Fair Value of Financial Instruments" ("Statement No. 107"), the Company has provided the estimated fair value of financial instruments using available market information at September 30, 1994 and 1993, and the valuation methodologies as described below. However, considerable judgement was required in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Company could realize in a current market exchange. The use of different market assumptions or valuation methodologies may have a material effect on the estimated fair value amounts of such financial instruments. -36- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 9 - Fair Value of Financial Instruments (Continued) - -------------------------------------------- The carrying amounts and estimated fair values of the Company's financial instruments at September 30, 1994 and 1993 are as follows:
September 30, --------------------------------------------------- 1994 1993 ------------------------ ------------------------ Carrying Fair Carrying Fair Amount Value Amount Value ----------- ---------- ----------- ---------- (Dollars in Millions) Balance sheet financial instruments: Assets: Cash and cash equivalents........ $277 $277 $574 $574 Investments in marketable securities.................... $102 $102 $138 $138 Finance receivables, net......... $6,365 $6,395 $5,570 $5,659 Other receivables................ $39 $40 $70 $71 Receivables from foreign currency exchange agreements........... $182 $519 $35 $91 Liabilities: Notes and loans payable.......... $11,833 $12,040 $8,833 $9,074 Payables from foreign currency exchange agreements........... $145 $241 $226 $317 September 30, --------------------------------------------------- 1994 1993 ------------------------ ------------------------ Contract or Unrealized Contract or Unrealized Notional Gains/ Notional Gains/ Amount (Losses) Amount (Losses) ----------- ---------- ----------- ---------- (Dollars in Millions) Off-balance sheet financial instruments: Inventory lines of credit........ $736 - $640 - Foreign currency exchange agreements.................... $4,024 $249 $2,830 $(63) Interest rate exchange agreements.................... $8,113 $102 $6,398 $31 Indexed note swap agreements..... $2,407 $(162) $1,431 $60
The fair value estimates presented herein are based on pertinent information available to management as of September 30, 1994 and 1993. Although the Company is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively reevaluated for purposes of these financial statements since September 30, 1994 and 1993 and, therefore, current estimates of fair value may differ significantly from the amounts presented herein. -37- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 9 - Fair Value of Financial Instruments (Continued) - -------------------------------------------- The methods and assumptions used to estimate the fair value of financial instruments are summarized as follows: Cash and Cash Equivalents ------------------------- The carrying amount of cash and cash equivalents approximates market value due to the short maturity of these investments. Investments in Marketable Securities ------------------------------------ The fair value of marketable securities was estimated using quoted market prices as of September 30, 1994 and 1993. Finance Receivables ------------------- The carrying amount of finance receivables, net excludes $1.4 billion and $1.6 billion of direct finance leases at September 30, 1994 and 1993, respectively. The carrying amount of $1.1 billion and $1.0 billion of variable rate finance receivables was assumed to approximate fair value as they repriced at prevailing market rates at September 30, 1994 and 1993, respectively. The fair value of fixed rate finance receivables was estimated by discounting expected cash flows using the rates at which loans of similar credit quality and maturity would be made as of September 30, 1994 and 1993. Other Receivables ----------------- Other receivables are presented excluding the receivables arising from foreign currency exchange agreements. The fair value of excess servicing and the limited interest in the trust was estimated by discounting cash flows using quoted market interest rates as of September 30, 1994 and 1993. The carrying amount of the remaining other receivables approximates market value due to the short maturity of these instruments. -38- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 9 - Fair Value of Financial Instruments (Continued) - -------------------------------------------- Notes and Loans Payable ----------------------- The fair value of notes and loans payable was estimated using quoted market prices where available as of September 30, 1994 and 1993. The fair value of notes and loans payable where market prices were not available was estimated by discounting cash flows using the interest rates at which debt of similar credit quality and maturity would be made as of September 30, 1994 and 1993. The carrying amount of commercial paper was assumed to approximate fair value due to the short maturity of these instruments. Inventory Lines of Credit ------------------------- The contractual values of the unused portion of extended inventory floorplan lines of credit approximates market value since they reprice at prevailing market rates. Foreign Currency Exchange Agreements ------------------------------------ The estimated fair value of TMCC's existing foreign currency exchange agreements was derived by discounting expected cash flows over the remaining term of the agreements using quoted market exchange rates and quoted market interest rates as of September 30, 1994 and 1993. Interest Rate Exchange Agreements --------------------------------- The estimated fair value of TMCC's existing interest rate exchange agreements was derived by discounting expected cash flows using quoted market interest rates as of September 30, 1994 and 1993. Indexed Note Swap Agreements ---------------------------- The estimated fair value of TMCC's existing indexed note swap agreements was derived by discounting expected cash flows over the remaining term of the agreements using market exchange rates and market interest rates as of September 30, 1994 and 1993. -39- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 10 - Financial Instruments with Off-Balance Sheet Risk - ----------------------------------------------------------- Inventory Lines of Credit ------------------------- TMCC has extended inventory floorplan lines of credit to dealers, the unused portion of which amounted to $736 million and $640 million at September 30, 1994 and 1993, respectively. Security interests are acquired in the vehicles and equipment financed, and substantially all such financings are backed by corporate or individual guarantees from or on behalf of the participating dealers. Foreign Currency and Interest Rate Exchange Agreements ------------------------------------------------------ TMCC utilizes a variety of financial instruments to manage its foreign currency exchange rate risk and interest rate risk. TMCC does not enter into these instruments for trading purposes. TMCC utilizes foreign currency exchange agreements and interest rate exchange agreements to manage exposure to exchange rate fluctuations on principal and interest payments for borrowings denominated in foreign currencies. Notes and loans payable issued in foreign currencies are hedged by concurrently executed foreign currency exchange agreements. These exchange agreements involve agreements to exchange TMCC's foreign currency principal obligations for U.S. dollar obligations at agreed- upon currency exchange rates and to exchange fixed and floating interest rate obligations. The aggregate notional amounts of foreign currency exchange agreements at September 30, 1994 and 1993 were $4.0 billion and $2.8 billion, respectively. In the event that a counterparty fails to perform, TMCC's exposure is limited to the currency exchange and interest rate differential. TMCC does not anticipate nonperformance by any of its counterparties. TMCC utilizes interest rate exchange agreements and to a lesser extent corridors and other option-based products in managing its exposure to interest rate fluctuations. TMCC's interest rate exchange agreements involve agreements to pay fixed and receive a floating rate, or receive fixed and pay a floating rate, at specified intervals, calculated on an agreed-upon notional amount. Interest rate exchange agreements may also involve basis swap contracts, which are agreements to exchange the difference between certain floating interest amounts, such as the net payment based on the commercial paper rate and the London Interbank Offered Rate ("LIBOR"), calculated on an agreed-upon notional amount. TMCC also enters into corridor contracts where TMCC is a fixed rate payor when an underlying floating indice is within a prespecified range, and a floating rate payor otherwise. The underlying notional amounts are not exchanged and do not represent exposure to credit loss. In the event that a counterparty fails to perform, TMCC's exposure is limited to the interest rate differential. TMCC does not anticipate nonperformance by any of its counterparties. The aggregate notional amounts of interest rate exchange agreements outstanding at -40- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 10 - Financial Instruments with Off-Balance Sheet Risk (Continued) - ----------------------------------------------------------- Foreign Currency and Interest Rate Exchange Agreements (continued) ------------------------------------------------------ September 30, 1994 and 1993, were $8.1 billion and $6.4 billion, respectively. At September 30, 1994, TMCC was the fixed rate payor on $4.8 billion of interest rate exchange agreements, floating rate payor on $1.4 billion of such agreements, counterparty to $1.4 billion of basis swap contracts, and counterparty to $0.5 billion of corridor contracts. Interest rate exchange agreements and other option based products are executed as an integral part of specific debt transactions and on a portfolio basis. The differential paid or received on such agreements is recorded as an adjustment to Interest Expense over the term of the underlying debt. Master netting agreements, with all interest rate exchange agreement counterparties, also exist allowing the net difference between counterparties to be exchanged in the event of default. TMCC utilizes indexed note swap agreements in managing its exposure to indexed notes. Indexed notes are debt instruments whose interest rate and/or principal redemption amounts are derived from other underlying instruments. Indexed note swap agreements involve agreements to receive interest and/or principal amounts associated with the indexed notes, denominated in either U.S. dollars or a foreign currency, and to pay fixed or floating rates on fixed U.S. dollar liabilities. In the event that a counterparty fails to perform, TMCC's exposure is limited to the difference between the indexed amounts that should have been received and the amounts that should have been paid. TMCC does not anticipate nonperformance by any of its counterparties. At September 30, 1994, TMCC was the counterparty to $2.4 billion of indexed note swap agreements, of which $0.9 billion was denominated in foreign currencies and $1.5 billion was denominated in U.S. dollars. At September 30, 1993, TMCC was the counterparty to $1.4 billion of indexed note swap agreements, of which $0.2 billion was denominated in foreign currencies and $1.2 billion was denominated in U.S. dollars. For all of its derivative financial instruments, TMCC manages counterparty risk through the use of credit standard guidelines, counterparty diversification and financial condition monitoring. -41- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 11 - Pension and Other Benefit Plans - ----------------------------------------- All full-time employees of the Company are eligible to participate in the TMS pension plan commencing on the first day of the month following hire. Benefits payable under this non-contributory defined benefit pension plan are based upon the employees' years of credited service and the highest sixty consecutive months' compensation, reduced by a percentage of social security benefits. For the years ended September 30, 1994, 1993 and 1992, the Company's pension expense was $3 million, $3 million and $2 million, respectively. At September 30, 1994, 1993 and 1992, the accumulated benefit obligation and plan net assets for employees of the Company were not determined separately from TMS; however, the plan's net assets available for benefits exceeded the accumulated benefit obligation. TMS funding policy is to contribute annually the maximum amount deductible for federal income tax purposes. In November 1992, the Financial Accounting Standards Board issued Statement No. 112, "Employers' Accounting for Postemployment Benefits" ("Statement No. 112"). Statement No. 112 requires accrual, during the years that the employee renders the necessary service or when it is probable that a liability has been incurred, of the expected cost of providing postemployment benefits to former or inactive employees, their beneficiaries, and covered dependents after employment but before retirement. The Company's current practice of accounting for these benefits is on a cash basis. Statement No. 112 is effective for fiscal years beginning after December 15, 1993. The Company plans to adopt Statement No. 112 in the first interim period of fiscal year 1995. The impact of adoption on the financial position or results of operations is not expected to be material. -42- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 12 - Provision for Income Taxes - ------------------------------------ The provision for income taxes consisted of the following:
Years ended September 30, -------------------------- 1994 1993 1992 ---- ---- ---- (Dollars in Millions) Current Federal........................... $ 6 $ 94 $(38) State............................. 4 4 2 ---- ---- ---- Total current ................. 10 98 (36) ---- ---- ---- Deferred Federal........................... 86 (9) 97 State............................. 22 8 7 ---- ---- ---- Total deferred................. 108 (1) 104 ---- ---- ---- Provision for income taxes.. $118 $ 97 $ 68 ==== ==== ====
The deferred income tax liabilities by jurisdictions are as follows:
September 30, 1994 --------------------- (Dollars in Millions) Federal........................................ $340 State.......................................... 46 ---- Net deferred income tax liability........... $386 ====
-43- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 12 - Provision for Income Taxes (Continued) - ------------------------------------ The Company's deferred tax assets and liabilities consisted of the following:
September 30, 1994 -------------------- (Dollars in Millions) Assets: Alternative minimum tax....................... $248 Provision for losses.......................... 76 Deferred administrative fees.................. 41 NOL carryforwards............................. 27 Deferred acquisition costs.................... 10 Unearned insurance premiums................... 4 Revenue recognition........................... 3 Other......................................... 2 ---- 411 Valuation allowance........................... 0 ---- Deferred tax assets........................ 411 ---- Liabilities: Lease transactions............................ 740 State taxes................................... 57 ---- Deferred tax liabilities................... 797 ---- Net deferred income tax liability....... $386 ====
TMCC has state tax net operating loss carryforwards of $423 million expiring between fiscal years 1995 and 2008. -44- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 12 - Provision for Income Taxes (Continued) - ------------------------------------ A reconciliation between the provision for income taxes computed by applying the federal statutory tax rate to income before income taxes and actual income taxes provided is as follows:
Years ended September 30, ------------------------- 1994 1993 1992 ---- ---- ---- (Dollars in Millions) Provision for income taxes at federal statutory tax rate......... $103 $88 $60 State and local taxes (net of federal tax benefit)............... 17 8 6 Other................................. (2) 1 2 ---- --- --- Provision for income taxes......... $118 $97 $68 ==== === === Effective tax rate.................... 40.24% 38.01% 38.97%
Note 13 - Lines of Credit/Standby Letters of Credit - --------------------------------------------------- To support its commercial paper program, TMCC maintains syndicated bank credit facilities with certain banks which aggregated $1.5 billion at September 30, 1994. Interest is charged at certain market rates, at the option of TMCC. No loans were outstanding under any of these bank credit facilities. To facilitate and maintain letters of credit, TMCC maintains uncommitted, unsecured lines of credit with banks totalling $300 million. At September 30, 1994, approximately $123 million in letters of credit had been issued, primarily related to the Company's insurance operations. The letters of credit for the insurance companies are used to satisfy requirements of certain insurance carriers and state insurance regulatory agencies, consistent with insurance industry practices. -45- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 14 - Commitments and Contingent Liabilities - ------------------------------------------------ At September 30, 1994, the Company was a lessee under lease agreements for facilities which provide minimum annual rental as follows: years ending September 30, 1995 - $8 million; 1996 - $7 million; 1997 - $6 million; 1998 - $5 million; 1999 - $3 million; and thereafter - $8 million. TMCC has guaranteed payments of principal and interest on $58 million principal amount of flexible rate demand pollution control revenue bonds maturing in 2006, issued in connection with the Kentucky manufacturing facility of an affiliate. Various legal actions, governmental proceedings and other claims are pending or may be instituted or asserted in the future against TMCC and its subsidiaries with respect to matters arising from the ordinary course of business. Certain of these actions are or purport to be class action suits. Two such suits involve collateral protection practices and are similar to suits which have been filed against other financial institutions and captive finance companies. Court approval of a settlement agreement is pending as to both collateral protection practices suits. At this time, the Company believes any resulting liability from the above legal actions, proceedings and other claims will not materially affect the financial position or results of operations. Note 15 - Selected Quarterly Financial Data (Unaudited) - -------------------------------------------------------
Total Depreciation Financing Interest on Operating Net Revenues Expense Leases Income ---------- -------- ------------ -------- (Dollars in Millions) Year Ended September 30, 1994: First quarter............... $ 370 $110 $139 $ 46 Second quarter.............. 396 112 159 45 Third quarter............... 446 125 196 39 Fourth quarter.............. 517 139 241 45 ------ ---- ---- ---- Total.................... $1,729 $486 $735 $175 ====== ==== ==== ==== Year Ended September 30, 1993: First quarter............... $ 298 $114 $ 76 $ 35 Second quarter.............. 316 111 86 36 Third quarter............... 335 116 101 40 Fourth quarter.............. 346 113 118 47 ------ ---- ---- ---- Total.................... $1,295 $454 $381 $158 ====== ==== ==== ====
-46- REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULES To the Board of Directors and Shareholder of Toyota Motor Credit Corporation Our audits of the consolidated financial statements referred to in our report dated October 31, 1994 appearing on page 21 of this Form 10-K also included an audit of the Financial Statement Schedules listed in Item 14(a)(2) of this Form 10-K. In our opinion, these Financial Statement Schedules present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. /S/ PRICE WATERHOUSE LLP Los Angeles, California October 31, 1994 -47- SCHEDULE VII GUARANTEES OF SECURITIES OF OTHER ISSUERS
Column A Column B Column C Column D Column E Column F Column G -------- -------- -------- -------- -------- -------- -------- Nature of any default by issuer of securities guaranteed in principal, Name of issuer of interest, securities Amount owned by Amount in sinking fund guaranteed by Title of issue of person or persons treasury of or redemption person for which each class of Total amount for which issuer of provisions, or statement is securities guaranteed and statement is securities Nature of payment of filed guaranteed outstanding filed guaranteed guarantee dividends ----------------- ----------------- -------------- ----------------- ------------ ------------- -------------- Kentucky Flexible Rate $58,000,000 $0 $0 Guarantee of None Pollution Demand Pollution principal and applicable Abatement and Control Revenue interest Water Resources Bonds Finance Authority
-48- SCHEDULE IX SHORT-TERM BORROWINGS
Column A Column B Column C Column D Column E Column F -------- -------- -------- -------- -------- -------- Maximum Average Weighted Weighted amount amount average Balance average outstanding outstanding interest Category of aggregate at end interest during the during the rate during short-term borrowings of period rate period period the period --------------------------------- --------- -------- ----------- ----------- ----------- (Dollars in Millions) Fiscal 1994: Commercial paper program........ $962 4.43% $1,372 $894 3.84% Medium-term notes............... $622 4.77% $850 $691 3.77% Fiscal 1993: Commercial paper program........ $351 3.14% $531 $372 3.19% Medium-term notes............... $516 3.02% $536 $392 3.07% Fiscal 1992: Commercial paper program........ $390 3.38% $502 $395 4.21% Medium-term notes............... $205 3.35% $602 $353 5.34% Commercial paper-other.......... - - $250 $44 4.69% The commercial paper program and commercial paper-other are comprised of short-term, unsecured promissory notes with original maturities ranging from one day to nine months. The balance is shown gross of unamortized discount. Medium-term notes, shown at face value, have original maturities no less than nine months. The maximum amount outstanding at any month end during the period. The average amount outstanding during the period represents the daily average outstanding. The weighted average interest rate represents the effective rate based on a 360 day money market yield. The weighted average interest rate represents total actual short-term interest expense divided by the daily average debt outstanding.
-49- ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. There is nothing to report with regard to this item. -50- PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. The following table sets forth certain information regarding the directors and executive officers of TMCC. Name Age Position ---- --- -------- Shinji Sakai.............. 57 Director and President, TMCC; Director and President, TMS; Director, TMC Nobu Shigemi.............. 50 Director, Senior Vice President and Treasurer, TMCC; Group Vice President, TMS John McGovern............. 54 Director, Senior Vice President and Secretary, TMCC; Senior Vice President and Secretary, TMS Wolfgang Jahn............. 55 Director, Group Vice President and General Manager, TMCC; Group Vice President, TMS Robert Pitts.............. 46 Director and Assistant Secretary, TMCC; Group Vice President, TMS Yale Gieszl............... 52 Director, TMCC; Director and Executive Vice President, TMS Takashi Nishiyama......... 51 Director, TMCC; Senior Vice President and Treasurer, TMS Hiroshi Okuda............. 61 Director, TMCC; Director, TMS; Director and Executive Vice President, TMC All directors of TMCC are elected annually and hold office until their successors are elected and qualified. Officers are elected annually and serve at the pleasure of the Board of Directors. Mr. Sakai was named Director and President of TMCC in June 1992. He is also a Director and President of TMS, positions he has held since June 1992. In September 1988, Mr. Sakai was named a Director of TMC, and from September 1988 to May 1992, he was General Manager of the North American Division of TMC. Mr. Sakai has been employed with TMC, in various positions, since 1961. Mr. Shigemi was named Director, Senior Vice President and Treasurer of TMCC and a Group Vice President of TMS in September 1994. From January 1994 to August 1994, Mr. Shigemi was General Manager of TMC's Finance Division. From January 1993 to December 1993, he was the Project General Manager of the Accounting Division of TMC. From February 1982 to December 1992, he worked in the Tokyo Secretarial Division having been named a manager in February 1983 and Deputy General Manager in February 1990. Mr. Shigemi has been employed with TMC, in various positions, since 1968. -51- Mr. McGovern was named Director, Senior Vice President, and Secretary of TMCC in January 1993. He is also a Senior Vice President and Secretary of TMS, positions he has held since January 1993. From January 1987 to November 1989, he was a Vice President and a General Manager of TMS, and from December 1989 to December 1992, he was a Group Vice President of TMS. Mr. McGovern has been employed with TMS, in various positions, since 1970. Mr. Jahn was named Director and Group Vice President of TMCC in April 1993. In December 1994, Mr. Jahn was also named General Manager of TMCC and a Group Vice President of TMS. From January 1985 to March 1993, he was a Vice President of TMCC, and from September 1988 to March 1993, he was also the Assistant Secretary of TMCC. From January 1987 to March 1993, he held the position of Vice President of TMS. Mr. Jahn has been employed with TMS and TMCC, in various positions, since 1973. Mr. Pitts was named Director and Assistant Secretary of TMCC in April 1993. He is also a Group Vice President of TMS, a position he has held since April 1993. From January 1984 to March 1993, he was an executive with TMCC having been named General Manager in January 1984 and Vice President in April 1989. Mr. Pitts has been employed with TMS and TMCC, in various positions, since 1971. Mr. Gieszl was named Director of TMCC in September 1988. He is also a Director and Executive Vice President of TMS, positions he has held since December 1989 and June 1992, respectively. From January 1982 to May 1992, he was a Senior Vice President of TMS. From October 1982 to May 1992, he held the position of Senior Vice President of TMCC, and from September 1988 to May 1992, he also held the position of Secretary of TMCC. Mr. Gieszl has been employed with TMS, in various positions, since 1970. Mr. Nishiyama was named Director of TMCC in January 1994. He was also named a Senior Vice President and Treasurer of TMS in January 1994. From February 1989 to December 1993, he was General Manager of the Europe and Africa Project Division of TMC. From February 1986 to January 1989, he was Executive Vice President of Salvador Caetano S.A. Portugal. Mr. Nishiyama has been employed with TMC, in various positions, since 1965. Mr. Okuda was named Director of TMCC in March 1989 and Director of TMS in December 1988. He has served on TMC's Board of Directors since July 1982, named Managing Director in September 1987, Senior Managing Director in September 1988 and Executive Vice President in September 1992. Mr. Okuda has been employed with TMC, in various positions, since 1955. ITEM 11. EXECUTIVE COMPENSATION. Summary Compensation Table The following table sets forth all compensation awarded to, earned by, or paid to the Company's principal executive officer and the most highly compensated executive officers whose salary and bonus for the latest fiscal year exceeded $100,000, for services rendered in all capacities to the Company for the three years ended September 30, 1994, 1993 and 1992. -52-
Annual Compensation -------------------------------------------- All Other Annual Other Name and Fiscal Compensation Principal Position Year Salary ($) Bonus ($) ($) <$> - --------------------- ------ ---------- --------- ------------ ------------ Wolfgang Jahn 1994 $199,800 $91,300 $7,500 Group Vice President 1993 $123,900 $57,700 $7,000 1992 $57,400 $26,900 Takafumi Murai 1994 $124,900 $26,500 $22,500 Senior Vice President 1993 $126,700 $24,300 $28,600 1992 $129,700 $22,900 - ------------ Mr. Jahn has worked full-time for the Company since April 1993. Mr. Jahn's cash compensation for the periods prior to April 1993, included in the above table, represents an allocated amount of his total compensation based on his time spent working for the Company. Mr. Murai also worked for TMS, and the cash compensation included in the above table represents an allocated amount of his total compensation based on time spent working for the Company. Mr. Murai was transferred to TMC in September 1994. Under the SEC transition provisions in connection with adoption of the revised rules on disclosure of executive compensation, no disclosure is required with respect to Other Annual Compensation and All Other Compensation for fiscal 1992. This amount represents a housing allowance. The amounts in this column represent the Company's allocated contribution under the TMS Savings Plan. Mr. Jahn also receive contributions from TMS, no portion of which is attributable to the Company. Under the TMS Savings Plan, which is open to all eligible employees, eligible participants may elect, subject to applicable law, to have up to 6% of their base compensation paid to the plan on a pre-tax basis and the Company will make a matching contribution equal to two-thirds of the employee's contribution. Participants are vested 25% each year with respect to the Company's contribution. Participants are fully vested after four years. Subject to the limitations of the TMS Savings Plan, employee and Company contributions are invested at the discretion of the employee in various investment options.
Employee Benefit Plan All full-time employees of the Company are eligible to participate in the TMS Pension Plan commencing on the first day of the month following hire. Benefits payable under this non-contributory defined benefit pension plan are based upon final average compensation, final average bonus and years of credited service. Final average compensation is defined as the average of the participant's base rate of pay, plus overtime, during the highest-paid 60 consecutive months prior to the earlier of termination or normal retirement. Final average bonus is defined as the highest average of the participant's fiscal year bonus, and basic seniority-based cash bonus for non-managerial personnel, over a period of 60 consecutive months prior to the earlier of termination or normal retirement. A participant generally becomes eligible for the normal retirement benefit at age 62, and may be eligible for early retirement benefits starting at age 55. -53- The annual normal retirement benefit, payable monthly, is an amount equal to the number of years of credited service (up to 25 years) multiplied by the sum of (i) 2% of the participant's final average compensation less 2% of the estimated annual Social Security benefit payable to the participant at normal retirement and (ii) 1% of the participant's final average bonus. The normal retirement benefit is subject to reduction for certain benefits under any union-sponsored retirement plan and benefits attributable to employer contributions under any defined-contribution retirement plan maintained by TMS and its subsidiaries or any affiliate. The following pension plan table presents typical annual retirement benefits under the TMS Pension Plan for various combinations of compensation and years of credited service for participants who retire at age 62, assuming no final average bonus and excluding Social Security offset amounts. The amounts are subject to Federal statutory limitations governing pension calculations and benefits.
Annual Benefits for Final Average Years of Credited Service Annual -------------------------------------- Compensation 15 20 25 ------------ -------- -------- -------- $50,000 $15,000 $20,000 $25,000 $100,000 $30,000 $40,000 $50,000 $150,000 $45,000 $60,000 $75,000 $200,000 $60,000 $80,000 $100,000 $250,000 $75,000 $100,000 $125,000 $300,000 $90,000 $120,000 $150,000 $350,000 $105,000 $140,000 $175,000 $400,000 $120,000 $160,000 $200,000
Mr. Jahn is a participant in the TMS Pension Plan and has 21 years of credited service as of September 30, 1994. Based upon years of credited service and the portion of earnings allocable to the Company, Mr. Jahn would be entitled to receive approximately $19,000 in annual pension benefit payments at age 62. Mr. Jahn would also be entitled to receive pension benefits from TMS based upon services to and compensation by TMS, no portion of which is attributable to the Company. Compensation of Directors No fees are paid to members of the Board of Directors of TMCC for their services as directors. Compensation Committee Interlocks and Insider Participation Members of the Executive Committee of the Board of Directors, which consists of the directors of the Company other than Mr. Okuda, participate in decisions regarding the compensation of the executive officers of the Company. Certain of the members of the Executive Committee are current or former executive officers of the Company. Certain of the members of the Executive Committee are also current executive officers and directors of TMS and its affiliates and participate in compensation decisions for those entities. -54- ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. As of the date hereof, all of TMCC's capital stock is owned by TMS. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. The Company enters into various transactions with TMS as described below. Certain of the directors and executive officers of TMCC are also directors and executive officers of TMS. To maintain fixed charge coverage at the level specified in the Operating Agreement, TMS from time to time has made noninterest-bearing advances and income maintenance payments to TMCC. TMS also provides certain technical and administrative services and incurs certain expenses on the Company's behalf and, accordingly, allocates these charges to the Company. The following table summarizes all such support.
Years Ended September 30, -------------------------------- 1994 1993 1992 1991 1990 ---- ---- ---- ---- ---- (Dollars in Millions) Total technical and administrative expenses incurred by Parent............ $ 7 $ 6 $ 5 $ 4 $ 2 Total technical and administrative expenses reimbursed to Parent........... (7) (6) (5) (4) (2) Imputed interest on noninterest-bearing advances from Parent................... - - - - 1 Income maintenance payments from Parent.. - - - - - --- --- --- --- --- Parent adjustment........................ $ - $ - $ - $ - $ 1 === === === === ===
The Operating Agreement provides that TMCC will establish its own financing rates and is under no obligation to TMS to finance wholesale obligations from any dealers or retail obligations of any customers. TMCC may extend, reduce or cancel credit to dealers and to customers based upon TMCC's own credit criteria. Pursuant to the Operating Agreement, TMS will arrange for the repurchase of new Toyota and Lexus vehicles financed at wholesale by TMCC at the aggregate cost financed in the event of a dealer default. TMS made equity contributions to TMCC by purchasing at par value all of the newly issued shares of TMCC's capital stock in the amount of $185 million, $50 million, $80 million and $75 million for the years ended September 30, 1994, 1993, 1992 and 1990, respectively. TMS made no equity contributions to TMCC during fiscal 1991. TMCC has an arrangement to borrow funds from TMS at rates which approximate the Federal Reserve Board's one-month commercial paper composite rate for firms whose bonds are rated AA. For the years ended September 30, 1994, 1993, 1992, 1991 and 1990, the highest amounts of borrowings from TMS outstanding at any one time, including non-interest bearing advances, were $161 million, $117 million, $360 million, $81 million and $167 million, respectively and the average amount of borrowings from TMS, including noninterest-bearing advances, -55- were $6 million, $7 million, $56 million, $6 million and $42 million, respectively. Interest charges related to these interest-bearing borrowings from TMS for fiscal 1994, 1993, 1992, 1991 and 1990 were $0.3 million, $0.2 million, $2.3 million, $0.4 million and $3.2 million, respectively. The Operating Agreement provides that borrowings from TMS are subordinated to all other indebtedness of TMCC. In the second quarter of fiscal 1993, the Company began leasing its headquarters facility from TMS. The amount of rent expense paid to TMS totaled $3 million and $2 million for the years ended September 30, 1994 and 1993, respectively. TMIS and TMICV provide certain insurance services, and insurance and reinsurance coverages, respectively, to TMS. Insurance premiums, commissions and fees earned during the years ended September 30, 1994, 1993, 1992, 1991 and 1990 included $7 million, $9 million, $7 million, $5 million and $3 million, respectively, related to these services and coverages. TMCC provides financing and leasing services related to various programs sponsored from time to time by TMS for the sale and lease of Toyota and Lexus vehicles and Toyota industrial equipment. During the years ended September 30, 1994, 1993, 1992, 1991 and 1990, TMCC recognized revenue of $54 million, $25 million, $16 million, $7 million and $5 million, respectively, related to the amounts received from TMS for these programs. TMCC provides certain leasing and financing services to TMS. For the years ended September 30, 1994, 1993, 1992, 1991 and 1990, TMCC recognized revenue of $3 million, $3 million, $4 million, $7 million and $3 million, respectively, related to these services. TMCC has guaranteed payments of principal and interest on $58 million principal amount of flexible rate demand pollution control revenue bonds maturing in 2006, issued in connection with the Kentucky manufacturing facility of an affiliate. The Company joins with TMS in filing consolidated federal income tax returns and combined or consolidated income tax returns in certain states. See Item 8, Note 2. From time to time, the Company enters into various other transactions with TMS. Management of the Company believes that the terms of such transactions have been established as if negotiated on an "arms-length" basis, and that all such transactions are not, in the aggregate, material to either TMS or the Company. -56- PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. (a)(1)Financial Statements Included in Part II, Item 8 of this Form 10-K. See Index to Financial Statements and Schedules on page 20. (2)Financial Statement Schedules Included in Part II, Item 8 of this Form 10-K. See Index to Financial Statements and Schedules on page 20. (3)Exhibits The exhibits listed on the accompanying Exhibit Index, starting on page 59, are filed as part of, or incorporated by reference into, this Report. (b)Reports on Form 8-K There were no reports on Form 8-K filed by the registrant during the quarter ended September 30, 1994. -57- SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Torrance, State of California, on the 22nd day of December, 1994. TOYOTA MOTOR CREDIT CORPORATION By /S/ WOLFGANG JAHN ------------------------------ Wolfgang Jahn Group Vice President and General Manager Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities indicated on the 22nd day of December, 1994. Signature Title --------- ----- Group Vice President and General Manager and Director /S/ WOLFGANG JAHN (principal executive officer) - ------------------------------------ Wolfgang Jahn Senior Vice President/ Treasurer and Director /S/ NOBU SHIGEMI (principal financial officer) - ------------------------------------ Nobu Shigemi Corporate Manager - Finance and Administration /S/ PATRICK BREENE (principal accounting officer) - ------------------------------------ Patrick Breene /S/ SHINJI SAKAI Director - ------------------------------------ Shinji Sakai /S/ JOHN MCGOVERN Director - ------------------------------------ John McGovern /S/ TAKASHI NISHIYAMA Director - ------------------------------------ Takashi Nishiyama -58- EXHIBIT INDEX Method Exhibit of Number Description Filing - ------- ----------- -------- 3.1(a) Articles of Incorporation filed with the California Secretary of State on October 4, 1982. (1) 3.1(b) Certificate of Amendment of Articles of Incorporation filed with the California Secretary of State on January 24, 1984. (1) 3.1(c) Certificate of Amendment of Articles of Incorporation filed with the California Secretary of State on January 25, 1985. (1) 3.1(d) Certificate of Amendment of Articles of Incorporation filed with the California Secretary of State on September 6, 1985. (1) 3.1(e) Certificate of Amendment of Articles of Incorporation filed with the California Secretary of State on February 28, 1986. (1) 3.1(f) Certificate of Amendment of Articles of Incorporation filed with the California Secretary of State on December 3, 1986. (1) 3.1(g) Certificate of Amendment of Articles of Incorporation filed with the California Secretary of State on March 9, 1987. (1) 3.1(h) Certificate of Amendment of Articles of Incorporation filed with the California Secretary of State on December 20, 1989. (2) 3.2 Bylaws as amended through January 16, 1993. (11) 4.2 Issuing and Paying Agency Agreement dated August 1, 1990 between TMCC and Bankers Trust Company. (3) 4.3(a) Indenture dated as of August 1, 1991 between TMCC and The Chase Manhattan Bank, N.A. (4) - ----------------- (1) Incorporated herein by reference to the same numbered Exhibit filed with TMCC's Registration Statement on Form S-1, File No. 33-22440. (2) Incorporated herein by reference to the same numbered Exhibit filed with TMCC's Report on Form 10-K for the year ended September 30, 1989. (3) Incorporated herein by reference to the same numbered Exhibit filed with TMCC's Report on Form 10-K for the year ended September 30, 1990. (4) Incorporated herein by reference to Exhibit 4.1(a), filed with TMCC's Registration Statement on Form S-3, File No. 33-52359. (11) Incorporated herein by reference to the same numbered Exhibit filed with TMCC's Report on Form 10-K for the year ended September 30, 1993. -59- EXHIBIT INDEX Method Exhibit of Number Description Filing - ------- ----------- ------ 4.3(b) First Supplemental Indenture dated as of October 1, 1991 among TMCC, Bankers Trust Company and The Chase Manhattan Bank, N.A. (5) 4.4 Amended and Restated Agency Agreement dated as of Filed July 28, 1994, among TMCC, The Chase Manhattan Bank, Herewith N.A. and Chase Manhattan Bank Luxembourg S.A. 4.5 TMCC has outstanding certain long-term debt as set forth in Note 8 of the Notes to Consolidated Financial Statements. Not filed herein as an exhibit, pursuant to Item 601(b) (4)-(iii)(A) of Regulation S-K under the Securities Act of 1933, is any instrument which defines the rights of holders of such long-term debt where the total amount of securities authorized thereunder does not exceed 10% of the total assets of TMCC and its subsidiaries on a consolidated basis. TMCC agrees to furnish copies of all such instruments to the Securities and Exchange Commission upon request. 10.1 Operating Agreement dated January 16, 1984 between TMCC and TMS. (1) 10.2 Financial Service Agreement dated December 21, 1984 between TMCC and World Omni Financial Corporation, as amended June 6, 1988. (1) 10.2(a) Addendum to Financial Services Agreement dated January 1, 1991, between TMCC and World Omni Financial Corporation. (6) 10.2(b) Amendment to Financial Services Agreement dated March 1, 1992, between TMCC and World Omni Financial Corporation. (7) 10.2(c) Amendment to Financial Services Agreement dated Filed March 1, 1994, between TMCC and World Omni Financial Herewith Corporation - ----------------- (1) Incorporated herein by reference to the same numbered Exhibit filed with TMCC's Registration Statement on Form S-1, File No. 33-22440. (5) Incorporated herein by reference to Exhibit 4.1 filed with TMCC's Current Report on Form 8-K dated October 16, 1991. (6) Incorporated herein by reference to the same numbered Exhibit filed with TMCC's Report on Form 10-K for the year ended September 30, 1991. (7) Incorporated herein by reference to the same numbered Exhibit filed with TMCC's Report on Form 10-K for the year ended September 30, 1992. -60- EXHIBIT INDEX Method Exhibit of Number Description Filing - ------- ----------- ------ 10.4 TMS Pension Plan 1987 Restatement. (1) 10.5 TMS Savings Plan 1987 Restatement. (1) 10.6 Form of Indemnification Agreement between TMCC and its directors and officers. (1) 10.7 Form of Pooling and Servicing Agreement among Toyota Motor Credit Receivables Corporation, as Seller, Toyota Motor Credit Corporation as Servicer, and the Chase Manhattan Bank N.A. as Trustee (including forms of Class A and Class B Certificates). (8) 10.8 Form of Standard Terms and Conditions of Pooling and Servicing Agreement. (9) 10.9 Form of Receivables Purchase Agreement. (10) 10.10 Three-year Credit Agreement (the "Three-year Agreement") Filed dated as of September 29, 1994 among TMCC, Morgan Herewith Guaranty Trust Company of New York, as agent, and Bank of America National Trust and Savings Association, The Bank of Tokyo, Ltd., The Chase Manhattan Bank, N.A., Citicorp USA, Inc. and Credit Suisse, as Co-Agents. Not filed herein as an exhibit, pursuant to Instruction 2 to Item 601 of Regulation S-K under the Securities Act of 1933, is the 364-day Credit Agreement (the "364-day Agreement") among TMCC and the banks who are party to the Three-year Agreement. Filed herewith is a Schedule identifying the 364-day Agreement and setting forth the material details in which the 364-day Agreement differs from the Three-year Agreement. TMCC agrees to furnish a copy of the 364-day Agreement to the Securities and Exchange Commission upon request. - ---------------- (1) Incorporated herein by reference to the same numbered Exhibit filed with TMCC's Registration Statement on Form S-1, File No. 33-22440. (8) Incorporated herein by reference to Exhibit 4.1 filed with Toyota Auto Receivables 1993-A Grantor Trust's Registration Statement on Form S-1, File No. 33-65348. (9) Incorporated herein by reference to Exhibit 4.2 filed with Toyota Auto Receivables 1993-A Grantor Trust's Registration Statement on Form S-1, File No. 33-65348. (10) Incorporated herein by reference to Exhibit 10.1 filed with Toyota Auto Receivables 1993-A Grantor Trust's Registration Statement on Form S-1, File No. 33-65348. -61- EXHIBIT INDEX Method Exhibit of Number Description Filing - ------- ----------- ------ 12.1 Calculation of ratio of earnings to fixed charges. Filed Herewith 12.2 Calculation of ratio of earnings to fixed charges Filed excluding parent adjustment. Herewith 21.1 TMCC's list of subsidiaries. Filed Herewith 23.1 Consent of Independent Accountants Filed Herewith 27.1 Financial Data Schedule Filed Herewith -62- EX-4.4 2 EURO MEDIUM-TERM NOTE PROGRAM AGENCY AGREEMENT EXHIBIT 4.4 Dated as of July 28, 1994 ------------------------- TOYOTA MOTOR CREDIT CORPORATION as Issuer -and- The Chase Manhattan Bank, N.A. as Agent -and- Chase Manhattan Bank Luxembourg S.A. as Paying Agent ------------------------------------- AMENDED AND RESTATED AGENCY AGREEMENT in respect of a EURO MEDIUM-TERM NOTE PROGRAM ----------------------------- TABLE OF CONTENTS ----------------- Clause Page - ------ ---- 1. Definitions and interpretation.................................. 2 2. Appointment of Agent and Paying Agents.......................... 7 3. Issue of Temporary Global Notes................................. 8 4. Issue of Permanent Global Notes................................. 9 5. Issue of Definitive Notes....................................... 10 6. Exchanges....................................................... 10 7. Terms of Issue.................................................. 11 8. Payments........................................................ 13 9. Determinations and notifications in respect of Note............. 14 10. Notice of any withholding or deduction.......................... 16 11. Duties of the Agent in connection with early redemption.................................................... 16 12. Publication of notices.......................................... 17 13. Cancellation of Notes, Receipts, Coupons and Talons............. 17 14. Issue of replacement Notes, Receipts, Coupons and Talon......................................................... 19 15. Copies of this Agreement and each Pricing Supplement available for inspection........................... 20 16. Commissions and expenses........................................ 20 17. Indemnity....................................................... 21 18. Repayment by the Agent.......................................... 21 19. Conditions of appointment....................................... 22 20. Communication between the parties............................... 23 21. Changes in Agent and Paying Agents.............................. 23 22. Merger and consolidation........................................ 26 23. Notifications................................................... 26 24. Change of specified office...................................... 26 25. Notices......................................................... 26 26. Taxes and stamp duties.......................................... 27 27. Currency indemnity.............................................. 27 28. Amendments; Meetings of Holders................................. 28 29. Calculation Agency Agreement.................................... 30 30. Descriptive headings............................................ 30 31. Governing law................................................... 30 32. Counterparts.................................................... 31 i Appendices - ---------- APPENDIX A Terms and Conditions.................................................. A-1 APPENDIX B Forms of Global and Definitive Notes, Coupons, Receipts and Talons............................................................ B-1 APPENDIX C Form of Calculation Agency Agreement.................................. C-1 APPENDIX D Form of Operating & Administrative Procedures Memorandum.............. D-1 APPENDIX E Form of the Notes..................................................... E-1 ii AMENDED AND RESTATED AGENCY AGREEMENT in respect of a EURO MEDIUM-TERM NOTE Program ----------------------------- THIS AMENDED AND RESTATED AGENCY AGREEMENT (the "Agreement") is made as of July 28, 1994 BETWEEN: (1) Toyota Motor Credit Corporation of Torrance, California, U.S.A. (the "Company"); (2) The Chase Manhattan Bank, N.A. of London, England (the "Agent", which expression shall include any successor agent appointed in accordance with Clause 21); and (3) Chase Manhattan Bank Luxembourg S.A. of 5 Rue Plaetis, L-2338 Luxembourg (together with the Agent, the "Paying Agents", which expression shall include any additional or successor paying agent appointed in accordance with Clause 21 and "Paying Agent" shall mean any of the Paying Agents). WHEREAS:- (A) The Company has entered into a Program Agreement dated October 30, 1992 as amended by Amendment No. 1 dated as of July 26, 1993 and as amended and restated as of July 28, 1994 (the "Program Agreement") with Banque Paribas (formerly Paribas Limited) CS First Boston Limited (formerly, Credit Suisse First Boston Limited), J.P. Morgan Securities Ltd., Lehman Brothers International (Europe), Merrill Lynch International Limited, Merrill Lynch Finance S.A., Nomura International plc, Swiss Bank Corporation and UBS Limited (formerly, UBS Phillips & Drew Securities Limited) (the "Dealers") pursuant to which the Company may issue notes (the "Notes") in an aggregate principal amount of up to U.S. $6,500,000,000 (or its equivalent in other currencies or currency units) outstanding at any time. (B) The Company has entered into an Agency Agreement dated October 30, 1992 with the Agent and the Paying Agent, as amended by Amendment No. 1 dated as of July 26, 1993 (the "Amended Agency Agreement"). (C) As permitted by Clause 28 of the Amended Agency Agreement, the parties desire to further amend and restate in its entirety the Amended Agency Agreement by this Agreement without the consent of the Holder of any Note, Receipt or Coupons for the purpose of, among other things, facilitating the issuance of Notes denominated in, or linked, directly or indirectly, to French Francs. (D) The Notes will be issued subject to, and with the benefit of, this Agreement. NOW, THEREFORE, IT IS HEREBY AGREED that the Amended Agency Agreement is hereby amended and restated in its entirety to read as follows:- 1. Definitions and interpretation ------------------------------ (1) the following expressions shall have the following meanings: "BALO" means the Bulletin des Annonces Legales Obligatoires; "CBV" means the Conseil des Bourses de Valeurs; "CEDEL" means Cedel S.A.; "COB" means the Commission des Operations de Bourse; "CONDITIONS" means, in respect of any Series of Notes, the terms and conditions of the Notes of such Series, such terms and conditions being in the form or substantially in the form set out in Appendix A hereto or in such other form, having regard to the terms of the relevant Series, as may be agreed between the Company, the Agent and the relevant Purchaser or Purchasers as from time to time; "DEALER" means Banque Paribas, CS First Boston Limited, J.P. Morgan Securities Ltd., Lehman Brothers International (Europe), Merrill Lynch International Limited, Merrill Lynch Finance S.A., Nomura International plc, Swiss Bank Corporation and UBS Limited and any other entities appointed as dealers from time to time pursuant to the Program Agreement; "DEFINITIVE NOTE" means a Note in definitive form substantially in the form set out in Part 3 of Appendix B hereto (or in such other form as may be agreed between the Company, the Agent and the relevant Purchaser or Purchasers) issued or to be issued by the Company pursuant to this Agreement in exchange for the whole or part of a Permanent Global Note; "DUAL CURRENCY NOTES" means Notes in respect of which principal and/or interest is payable in one or more Specified Currencies other than the Specified Currency in which they are denominated. "ECU SETTLEMENT DAY" means any day that (a) is not either (i) a Saturday or Sunday or (ii) a day which appears as an ECU Non-Settlement Day on the display designated as page "ISDE" on the Reuter Monitor Money Rates Service (or a day so designated by the ECU Banking Association, if ECU Non-Settlement Days do not appear on that page) and, if ECU Non- Settlement Days do not appear on that page (and are not so designated), a day on which payments in the European Currency Unit cannot be settled in the international interbank market and (b) is a day on which payments in the European 2 Currency Unit can be settled by commercial banks and in foreign exchange markets in the place in which the relevant account for payment is located. "EUROCLEAR" means Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear System; "FRENCH FRANC" means the lawful currency for the time being of the Republic of France. "FRENCH FRANC NOTE" means a Note denominated in French Francs or denominated in another currency or currencies but linked directly or indirectly to French Francs. "FSA" means the Financial Services Act 1986; "GLOBAL NOTE" means a Temporary Global Note or a Permanent Global Note; "ISSUE DATE" means, in respect of any Note, the date of issue and purchase of such Note pursuant to Clause 2, being in the case of any Note in the form of a Definitive Note, the same date as the date of issue of the Global Note which initially represented such Note; "LISTING PARTICULARS" means any listing particulars with regard to the issue by the Company of Notes (other than unlisted Notes) approved under the Listing Rules by the Council of the London Stock Exchange (or such other body to which its functions have been transferred under section 157 of the FSA) in accordance with the provisions of section 144 of the FSA (including any supplementary listing particulars published in accordance with the provisions of this Agreement or otherwise); "LISTING AGENT" means Merrill Lynch International Limited of Ropemaker Place, 25 Ropemaker Street, London EC2Y 9LY (in the case of Notes listed on the London Stock Exchange) or Merrill Lynch Finance S.A. of 96, avenue d'lena, 75016, Paris, France (in the case of Notes listed on the Paris Bourse) or such other listing agent as the Company may from time to time appoint for the purposes of liaising with any Stock Exchange; "LISTING RULES" means: a. in the case of Notes which are, or are to be, listed on the London Stock Exchange, the listing rules made by the London Stock Exchange (or such other body to which 3 its functions have been transferred under section 157 of the FSA) under section 142 of the FSA; and b. in case of Notes which are, or are to be, listed on the Paris Bourse, the listing requirements made by the COB and the CBV. c. in the case of Notes which are, or are to be, listed on a Stock Exchange other than the London Stock Exchange, the listing rules and regulations for the time being in force for such Stock Exchange; "LONDON STOCK EXCHANGE" means The International Stock Exchange of the United Kingdom and the Republic of Ireland Limited; "NOTE" means any note issued or to be issued by the Company pursuant to the Program Agreement, which Note may be represented by a Global Note or a Definitive Note; "NOTEHOLDERS" means the several persons who are for the time being holders of outstanding Notes save that for so long as any of the Notes are represented by a Global Note, each person who is for the time being shown in the records of Euroclear and/or Cedel as the holder of a particular principal amount of such Notes (other than Cedel if Cedel shall be an account holder of Euroclear and other than Euroclear if Euroclear shall be an account holder of Cedel) (in which regard any certificate or other document issued by Euroclear and/or Cedel as to the principal amount of such Notes standing to the account of any person shall be conclusive and binding for all purposes save in the case of manifest error) shall be treated by the Company, the Agent and any other Paying Agent as a holder of such principal amount of such Notes for all purposes other than for the payment of principal and interest on such Notes, the right to which shall be vested, as against the Company, the Agent and any other Paying Agent, solely in the bearer of the Global Note in accordance with and subject to its terms (and the expressions "Noteholder", "holder of Notes" and related expressions shall be construed accordingly); "OFFERING CIRCULAR" means the Offering Circular relating to the Program as revised, supplemented, amended or updated, including in relation to each Series of Notes, the Pricing Supplement relating to such Series and such other documents as are from time to time incorporated therein by reference; "OUTSTANDING" means, in relation to the Notes, all the Notes issued other than (a) those which have been redeemed in full in accordance with this Agreement or the Conditions, (b) those in respect of which the date for redemption in accordance with the Conditions has occurred and the 4 redemption moneys wherefor (including all interest (if any) accrued thereon to the date for such redemption and any interest (if any) payable under the Conditions after such date) have been duly paid to the Agent as provided herein (and, where appropriate, notice has been given to the Noteholders in accordance with Condition 16) and remain available for payment against presentation of Notes, (c) those which have become void under Condition 15, (d) those which have been purchased and cancelled as provided in Condition 5, (e) those mutilated or defaced Notes which have been surrendered in exchange for replacement Notes pursuant to Condition 14, (f) (for the purposes only of determining how many Notes are outstanding and without prejudice to their status for any other purpose) those Notes alleged to have been lost, stolen or destroyed and in respect of which replacement Notes have been issued pursuant to Condition 14 and (g) Temporary Global Notes to the extent that they shall have been duly exchanged in whole for Permanent Global Notes or Definitive Notes and Permanent Global Notes to the extent that they shall have been duly exchanged in whole for Definitive Notes, in each case pursuant to their respective provisions; "PERMANENT GLOBAL NOTE" means a Global Note substantially in the form set out in Part 2 of Appendix B hereto (or in such other form as may be agreed between the Company, the Agent and the relevant Purchaser or Purchasers) comprising Notes issued or to be issued by the Company in exchange for the whole or part of a Temporary Global Note issued in respect of the Notes of the same Series; "PRICING SUPPLEMENT" means the pricing supplement issued in relation to each Series of Notes (substantially in the form of Annex D to the Procedures Memorandum) as a supplement to the Offering Circular and giving details of that Tranche; "PROGRAM" means the Euro Medium-Term Note Program established by the Program Agreement; "PROGRAM AGREEMENT" means the Amended and Restated Program Agreement of even date herewith between the Company and the Dealers concerning the purchase of Notes to be issued by the Company and includes any subsequent amendment or supplement thereto; "PURCHASER" means a Dealer or any third party other than a dealer (as defined in Section 2(12) of the United States Securities Act of 1933), who agrees to purchase Notes pursuant to the Program Agreement and references to a relevant Purchaser or Purchasers mean in relation to any Note, the Purchaser or Purchasers to whom the Company has agreed to issue and sell such Note; 5 "SERIES" means all Notes which are denominated in the same currency and which have the same Maturity Date or Redemption Month (as the case may be) and Interest/Payment Basis and interest payment dates (if any) (all as indicated in the applicable Pricing Supplement) and the terms of which (except for the Issue Date or Interest Commencement Date (as the case may be) and/or the Issue Price (all as indicated as aforesaid)) are otherwise identical (including whether or not the Notes are listed); and the expressions "Notes of the relevant Series" and "holders of Notes of the relevant Series" and related expressions shall be construed accordingly; "SICOVAM" means "Societe Interprofessionelle pour la Compensation des Valeurs Mobilieres and the Intermediaries financiers habilites authorized to maintain accounts therein. "SPECIFIED CURRENCY" means the currency (which expression shall include European Currency Units ("ECUs")) in which Notes are denominated and, in the case of Dual Currency Notes, the currency or currencies in which payment in respect of the Notes is to be made; "STOCK EXCHANGE" means the London Stock Exchange, the Paris Bourse or any other or further stock exchange(s) on which any Notes may from time to time be listed and reference in this Agreement to the "relevant Stock Exchange" shall, in relation to any Notes, be references to the Stock Exchange on which such Notes are from time to time, or will be, listed; "TEMPORARY GLOBAL NOTE" means a Global Note substantially in the form set out in Part 1 of Appendix B hereto (or in such other form as may be agreed between the Company, the Agent and the relevant Purchaser or Purchasers) comprising Notes issued or to be issued by the Company pursuant to the Program Agreement and issued in respect of the Notes of the same Series; "TRANCHE" means all Notes of the same Series with the same Issue Date; and "U.S.$" and "U.S. DOLLARS" means the lawful currency for the time being of the United States. (2) Terms and expressions (including the definitions of currencies or composite currencies) defined in the Conditions or Appendix E or used in the applicable Pricing Supplement shall have the same meanings in this Agreement, except where the context requires otherwise. 6 (3) Any references to Notes shall, unless the context otherwise requires, include any Temporary Global Notes, Permanent Global Notes and Definitive Notes. 2. Appointment of Agent and Paying Agents -------------------------------------- (1) The Agent is hereby appointed as agent of the Company, to act as issuing and principal paying agent, upon the terms and subject to the conditions set out below, for the purposes of, inter alia: (a) completing, authenticating and issuing Notes; (b) exchanging Temporary Global Notes for Permanent Global Notes or Definitive Notes and in the case where Temporary Global Notes are initially exchanged for Permanent Global Notes, exchanging Permanent Global Notes for Definitive Notes in accordance with the terms of such Global Notes; (c) paying sums due on Global Notes and Definitive Notes, Receipts and Coupons; (d) determining the interest and/or other amounts payable in respect of the Notes in accordance with the Conditions; (e) arranging on behalf of the Company for notices to be communicated to the Noteholders and the relevant Stock Exchanges; (f) ensuring that all necessary action is taken to comply with the periodic reporting and notification requirements of the Bank of England, the German Central Bank (including the monthly notification as to the amounts, issue dates and other terms of each Tranche of DM-denominated Notes issued by the Company during such month), the Ministry of Finance of Japan (including any monthly reports as to the amounts, issue dates and other terms of each Tranche of Yen-denominated Notes) and other applicable Japanese authorities, the Director du Tresor of France or any other competent authority of any relevant currency with respect to the Notes to be issued under the Program; (g) receiving notice from Euroclear and/or Cedel relating to the certificates of non-U.S. beneficial ownership of the Notes; (h) performing all other obligations and duties imposed upon it by the Conditions and this Agreement. 7 (2) Each Paying Agent is hereby appointed as paying agent of the Company, upon the terms and subject to the conditions set out below, for the purposes of paying sums due on Notes, Receipts and Coupons. 3. Issue of Temporary Global Notes ------------------------------- (1) Subject to subclause (2), following receipt of confirmation (the "Confirmation") from the Company in respect of an issue of Notes in accordance with the provisions of the Procedures Memorandum set out in Appendix D hereto (as from time to time varied, with the prior approval of the Agent, by the Company and the relevant Purchaser or Purchasers of the Notes of such issue) the Agent will take the steps required of the Agent in the Procedures Memorandum. For this purpose the Agent is authorized on behalf of the Company: (a) to prepare a Temporary Global Note or Temporary Global Notes containing the relevant Conditions and to complete, in accordance with such Confirmation, the necessary details on such Temporary Global Note(s); (b) to authenticate such Temporary Global Note(s); and (c) to deliver such Temporary Global Note(s) to the specified common depositary of Euroclear and Cedel in accordance with the Confirmation against receipt from the common depositary of confirmation that such common depositary is holding the Temporary Global Note(s) in safe custody for the account of Euroclear and/or Cedel in accordance with the terms of the relevant Letters of Undertaking and to instruct Euroclear or Cedel or both of them (as the case may be) to credit the Notes represented by such Temporary Global Note(s), unless otherwise agreed in writing between the Agent and the Company, to the Agent's distribution account (or in the case of a syndicated bond issue, the lead manager's account). For the purposes of this Clause 3 the term "Letters of Undertaking" means the letters of undertaking dated October 30, 1992 from Euroclear and Cedel to the Company or such other letters of undertaking that may be substituted therefor with the Company's prior consent. (2) The Agent shall only be required to perform its obligations under subclause (1) if it holds a master Temporary Global Note duly executed by a person or persons authorized to execute the same on behalf of the Company, which may be used by the Agent for the purpose of preparing Temporary Global Note(s) in accordance with paragraph (a) of that subclause. 8 (3) The Agent shall provide Euroclear and/or Cedel with the notifications, instructions or other information to be given by the Agent to Euroclear and/or Cedel in accordance with, and at the times provided in, the Letters of Undertaking. 4. Issue of Permanent Global Notes ------------------------------- (1) Subject to subclause (2), upon the occurrence of any event which pursuant to the terms of a Temporary Global Note requires the issue of a Permanent Global Note or Definitive Notes, the Agent shall issue a Permanent Global Note or Definitive Notes, as the case may be, in accordance with the terms of the Temporary Global Note. For this purpose the Agent is authorized on behalf of the Company: (a) to prepare a Permanent Global Note containing the relevant Conditions and to complete, in accordance with the terms of the Temporary Global Note, the necessary details on such Permanent Global Note and attach a copy of the applicable Pricing Supplement to such Permanent Global Note; (b) to authenticate such Permanent Global Note; and (c) to deliver such Permanent Global Note to the specified common depositary that is holding the Temporary Global Note for the time being on behalf of Euroclear and/or Cedel in exchange for such Temporary Global Note or, in the case of a partial exchange, after noting the details of such exchange in the appropriate spaces on both the Temporary Global Note and the Permanent Global Note, and in either case against receipt from the common depositary of confirmation that such common depositary is holding the Permanent Global Note in safe custody for the account of Euroclear and/or Cedel inaccordance with the terms of the relevant Letters of Undertaking. For the purposes of this Clause 4 the term "Letters of Undertaking" means the letters of undertaking dated October 30, 1992 from Euroclear and Cedel to the Company or such other letters of undertaking that may be substituted therefor with the Company's prior consent. (2) The Agent shall only be required to perform its obligations under subclause (1) if it holds a master Permanent Global Note duly executed by a person or persons authorized to execute the same on behalf of the Company, which may be used by the Agent for the purpose of preparing Permanent Global Notes(s) in accordance with paragraph (a) of that subclause. 9 (3) The Agent shall provide Euroclear and/or Cedel with the notifications, instructions or other information to be given by the Agent to Euroclear and/or Cedel in accordance with, and at the times provided in, the Letters of Undertaking. 5. Issue of Definitive Notes ------------------------- (1) Upon notice from Euroclear or Cedel pursuant to the terms of a Temporary Global Note or Permanent Global Note, as the case may be, requiring the issue of one or more Definitive Note(s), the Agent shall deliver the relevant Definitive Note(s) in accordance with the terms of the relevant Global Note. For this purpose the Agent is hereby authorized on behalf of the Company: (a) to authenticate or arrange for authentication on its behalf (if so instructed by the Company) such Definitive Note(s); and (b) to deliver such Definitive Note(s) to or to the order of Euroclear and/or Cedel either in exchange for such Global Note or, in the case of a partial exchange, on entering details of any partial exchange of the Global Note in the relevant space in Schedule Two of such Global Note; provided that the Agent shall only permit a partial exchange of Notes represented by a Permanent Global Note for Definitive Notes if the Notes which continue to be represented by such Permanent Global Note are regarded as fungible by Euroclear and/or Cedel with the Definitive Notes issued in partial exchange therefor. The Agent shall notify the Company forthwith upon receipt of a request for issue of (a) Definitive Note(s) in accordance with the provisions of a Global Note (and the aggregate principal amount of such Temporary Global Note or Permanent Global Note, as the case may be, to be exchanged in connection therewith). (2) The Company undertakes to deliver to the Agent, pursuant to a request for the issue of Definitive Notes under the terms of the relevant Global Note, sufficient numbers of executed Definitive Notes to enable the Agent to comply with its obligations under this Clause 5. 6. Exchanges --------- Upon any exchange of all or a portion of an interest in a Temporary Global Note for an interest in a Permanent Global Note or for Definitive Notes or upon any exchange of all or a portion of an interest in a Permanent Global Note for 10 Definitive Notes, the Global Note shall be endorsed to reflect the reduction of its principal amount by the aggregate principal amount so exchanged. Until exchanged in full, the holder of an interest in any Global Note shall in all respects be entitled to the same benefits as the holder of Notes, Receipts and Coupons authenticated and delivered hereunder, subject as set out in the Conditions. The Agent is hereby authorized on behalf of the Company (i) to endorse or to arrange for the endorsement of the relevant Global Note to reflect the reduction in the principal amount represented thereby by the amount so exchanged and, if appropriate, to endorse the Permanent Global Note to reflect any increase in the principal amount represented thereby, and in either case, to sign in the relevant space on the relevant Global Note recording such exchange or increase and (ii) in the case of a total exchange, to cancel or arrange for the cancellation of the relevant Global Note. 7. Terms of Issue -------------- (1) The Agent shall cause all Temporary Global Notes, Permanent Global Notes and Definitive Notes delivered to and held by it under this Agreement to be maintained in safe custody and shall ensure that such Notes are issued only in accordance with the provisions of this Agreement and the relevant Global Note and Conditions. (2) Subject to the procedures set out in the Procedures Memorandum, for the purposes of subclause (1) the Agent is entitled to treat a telephone, telex or facsimile communication from a person purporting to be (and who the Agent, after making reasonable investigation, believes in good faith to be) the authorized representative of the Company named in the list referred to in, or notified pursuant to, Clause 19(7) as sufficient instructions and authority of the Company for the Agent to act in accordance with subclause (1). (3) In the event that a person who has signed on behalf of the Company a master Temporary Global Note, a master Permanent Global Note or Definitive Notes not yet issued but held by the Agent in accordance with Clause 5(2) ceases to be authorized as described in Clause 19(7), the Agent shall (unless the Company gives notice to the Agent that Notes signed by that person do not constitute valid and binding obligations of the Company or otherwise until replacements have been provided to the Agent) continue to have authority to issue any such Notes, and the Company hereby warrants to the Agent that such Notes shall, unless notified as aforesaid, be valid and binding obligations of the Company. Promptly upon such person ceasing to be authorized, the Company shall provide the Agent with replacement master 11 Temporary Global Notes, master Permanent Global Notes and Definitive Notes and the Agent shall cancel and destroy the master Temporary Global Notes, master Permanent Global Notes and Definitive Notes held by it which are signed by such person and shall provide to the Company a confirmation of destruction in respect thereof specifying the Notes so cancelled and destroyed. (4) Unless otherwise agreed in writing between the Company and the Agent, each Note credited to the Agent's distribution account with Euroclear or Cedel following the delivery of a Temporary Global Note or Permanent Global Note to a common depositary pursuant to Clause 3(1)(c) or 4(1)(c), respectively, shall be held to the order of the Company. The Agent shall procure that the principal amount of Notes which the relevant Purchaser has agreed to purchase is: (a) debited from the Agent's distribution account; and (b) credited to the securities account of such Purchaser with Euroclear or Cedel (as specified in the Confirmation), in each case only upon receipt by the Agent on behalf of the Company of the purchase price due from the relevant Purchaser in respect of such Notes. (5) If on the relevant Issue Date a Purchaser does not pay the full purchase price due from it in respect of any Note (the "Defaulted Note") and, as a result, the Defaulted Note remains in the Agent's distribution account with Euroclear and/or Cedel after such Issue Date, the Agent will continue to hold the Defaulted Note to the order of the Company. The Agent shall notify the Company forthwith of the failure ofthe Purchaser to pay the full purchase price due from it in respect of any Defaulted Note and, subsequently, shall notify the Company forthwith upon receipt from the Purchaser of the full purchase price in respect of such Defaulted Note. (6) If the Agent pays an amount (the "Advance") to the Company on the basis that a payment (the "Payment") will be received from a Purchaser and if the Payment is not received by the Agent on the date the Agent pays the Company, the Agent shall notify the Company by tested telex or facsimile that the Payment has not been received and the Company shall repay to the Agent the Advance and shall pay interest on the Advance (or the unreimbursed portion thereof) from (and including) the date such Advance is made to (but excluding) the earlier of repayment of the Advance and receipt by the Agent of the Payment (at a rate quoted at that time by the Agent as its cost of funding the Advance). 12 (7) In the event of an issue of Notes and subject to receipt of a Confirmation from the Company in accordance with the terms of the Procedures Memorandum, the Agent will promptly, and in any event prior to the Issue Date in respect of such issue, send the Pricing Supplement to the Company, relevant Stock Exchange and the relevant Dealers. 8. Payments -------- (1) The Agent shall advise the Company, no later than ten Business Days (as defined below) immediately preceding the date on which any payment is to be made to the Agent pursuant to this subclause (1), of the payment amount, value date and payment instructions and the Company shall on each date on which any payment in respect of any Notes becomes due, transfer to an account specified by the Agent not later than the Payment Time such amount in the relevant currency as shall be sufficient for the purposes of such payment in funds settled through such payment system as the Agent and the Company may agree. As used in this subclause (1), the term "Payment Time" means 2:00 p.m. local time in the principal financial center of the country of the currency in which the payment falls is to be made (which in the case of payment in ECU is Brussels). (2) The Agent shall advise the Company, no later than ten Business Days immediately preceding the date on which any payment is to be made to the Agent pursuant to subclause (1), of the payment amount, value date and payment instructions and the Company shall ensure that, no later than the third Business Day immediately preceding the date on which any payment is to be made to the Agent pursuant to subclause (1), the Agent shall receive a confirmation from the Company that payment will be made. For the purposes of this Clause 8, "Business Day" means a day which is: (a) a day (other than a Saturday or a Sunday) on which commercial banks and foreign exchange markets are open for business in London; (b) either (i) in relation to a payment to be made in a Specified Currency other than ECU, a day on which commercial banks and foreign exchange markets settle payments in the principal financial center of the country of the relevant Specified Currency (if other than London) or (ii) in relation to a payment to be made in ECU, an ECU Settlement Day (as defined herein); and (c) a day (other than a Saturday or Sunday) on which banks are open for business in the relevant place of business of the Agent. 13 (3) Subject to the Agent being satisfied in its sole discretion that payment will be duly made as provided in subclause (1), the Agent or the relevant Paying Agent shall pay or cause to be paid all amounts due in respect of the Notes on behalf of the Company in the manner provided in the Conditions. If any payment provided for in subclause (1) is made late but otherwise in accordance with the provisions of this Agreement, the Agent and each Paying Agent shall nevertheless make payments in respect of the Notes as aforesaid following receipt by it of such payment. (4) If for any reason the Agent considers in its sole discretion that the amounts to be received by the Agent pursuant to subclause (1) will be, or the amounts actually received by it pursuant thereto are, insufficient to satisfy all claims in respect of all payments then falling due in respect of the Notes, the Agent shall then forthwith notify the Company of such insufficiency and, until such time as the Agent has received the full amount of all such payments, neither the Agent nor any Paying Agent shall be obliged to pay any such claims. (5) Without prejudice to subclauses (3) and (4), if the Agent pays any amounts to the holders of Notes, Receipts or Coupons or to any Paying Agent at a time when it has not received payment in full in respect of the relevant Notes in accordance with subclause (1) (the excess of the amounts so paid over the amounts so received being the "Shortfall"), the Company shall, in addition to paying amounts due under subclause (1), pay to the Agent on demand interest (at a rate which represents the Agent's actual overnight cost of funding the Shortfall) on the Shortfall (or the unreimbursed portion thereof) until the receipt in full by the Agent of the Shortfall. The Agent shall notify the Company by tested telex or facsimile as soon as practicable, it being understood that the Company shall have the right to make such payment subsequently with good value as of such Business Day. (6) The Agent shall on demand promptly reimburse each Paying Agent for payments in respect of Notes properly made by such Paying Agent in accordance with this Agreement and the Conditions unless the Agent has notified the Paying Agent, prior to the opening of business in the location of the office of the Paying Agent through which payment in respect of the Notes can be made on the due date of a payment in respect of the Notes, that the Agent does not expect to receive sufficient funds to make payment of all amounts falling due in respect of such Notes. 14 9. Determinations and notifications in respect of Notes ---------------------------------------------------- (1) The Agent shall make all such determinations and calculations (howsoever described) as it is required to do under the Conditions, all subject to and in accordance with the Conditions provided that certain calculations with respect to the Notes shall be made by an agent (the "Calculation Agent") appointed by the Company and acceptable to the Agent. (2) The Agent shall not be responsible to the Company or to any third party (except in the event of negligence, wilful default or bad faith) as a result of the Agent having acted on any quotation given by any Reference Bank which subsequently may be found to be incorrect. (3) The Agent shall promptly notify the Company, the other Paying Agents and (in respect of a Series of Notes listed on a Stock Exchange) the relevant Stock Exchange of, inter alia, each Rate of Interest, Interest Amount and Interest Payment Date and all other amounts, rates and dates which it is obliged to determine or calculate under the Conditions as soon as practicable after the determination thereof (and in any event no later than the tenth Business Day (as defined in Clause 8) immediately preceding the date on which any payment is to be made to the Agent pursuant to subclause 8(1)) and of any subsequent amendment thereto pursuant to the Conditions. (4) The Agent shall use its best efforts to cause each Rate of Interest, Interest Amount and Interest Payment Date and all other amounts, rates and dates which it is obliged to determine or calculate under the Conditions to be published as required in accordance with the Conditions as soon as possible after their determination or calculation. (5) If the Agent does not at any material time for any reason determine and/or calculate and/or publish the Rate of Interest, Interest Amount and/or Interest Payment Date in respect of any Interest Period or any other amount, rate or date as provided in this Clause 9, it shall forthwith notify the Company and the other Paying Agents of such fact. (6) The Agent shall provide to the German Central Bank, at the end of each calendar month, information on the amount, interest rate and other terms of each issue of Deutsche Mark denominated Notes during the month, and such other information as the German Central Bank may require from time to time. (7) The Agent shall comply with the reporting procedures and requirements from time to time of the Director du Tresor, COB, CBV and the Comite des Emissions relating to the 15 "Marche de l'Euro-Franc" with respect to issues of Notes denominated in, or directly or indirectly linked with, the French Franc. (8) The Agent shall provide to the Dealer or Dealers with respect to any Series of Notes certification as to the completion of distribution of such Series of Notes. (9) For purposes of monitoring the aggregate principal amount of Notes issued under the Program, the Agent shall determine the U.S. dollar equivalent of the principal amount of each issue of Notes denominated in another currency, each issue of Dual Currency Notes and each issue of Indexed Notes as follows: (a) the U.S. dollar equivalent of Notes denominated in a currency other than U.S. dollars shall be determined by the Agent as of 2:30 p.m. London time on the Issue Date for such Notes by reference to a page being displayed on the Reuter Monitor Money Rates Service or the appropriate Associated Press-Dow Jones Telerate Service or such other service as is agreed between the Agent and the Company from time to time; (b) the U.S. dollar equivalent of Dual Currency Notes and Indexed Notes shall be determined in the manner specified above by reference to the original principal amount of such Notes; (c) the principal amount of Zero Coupon Notes and other Notes issued at a discount shall be deemed to be the net proceeds received by the Company for the relevant issue; and (d) the U.S. dollar equivalent of Partly Paid Notes shall be the principal amount regardless of the amount paid up on such Notes. The Agent shall promptly notify the Company of each determination made as aforesaid. 10. Notice of any withholding or deduction -------------------------------------- If the Company is, in respect of any payments, compelled to withhold or deduct any amount for or on account of taxes, duties, assessments or governmental charges as specifically contemplated under the Conditions, the Company shall give notice thereof to the Agent as soon as it becomes aware of the requirement to make such withholding or deduction and shall give to the Agent such information as it shall require to enable it to comply with such requirement. 16 11. Duties of the Agent in connection with early redemption ------------------------------------------------------- (1) If the Company decides to redeem any Notes for the time being outstanding prior to their Maturity Date or the Interest Payment Date falling in the Redemption Month (as the case may be) in accordance with the Conditions, the Company shall give notice of such decision to the Agent not less than 40 days before the relevant redemption date. (2) If only some of the Notes of like tenor and of the same Series are to be redeemed on such date the Agent shall make the required drawing in accordance with the Conditions. (3) The Agent shall publish the notice required in connection with any such redemption and shall at the same time also publish a separate list of serial numbers of any Notes previously drawn and not presented for redemption. Such notice shall specify the date fixed for redemption, the redemption amount, the manner in which redemption will be effected and, in the case of a partial redemption, the serial numbers of the Notes to be redeemed. Such notice will be published in accordance with the Conditions. 12. Publication of notices ---------------------- On behalf of and at the request and expense of the Company, the Agent shall cause to be published all notices required to be given by the Company in accordance with the Conditions. Forthwith upon the receipt by the Agent of a demand or notice from any Noteholder in accordance with the Conditions, the Agent shall forward a copy thereof to the Company. 13. Cancellation of Notes, Receipts, Coupons and Talons --------------------------------------------------- (1) All Notes which are purchased pursuant to the Conditions by or on behalf of the Company, together (in the case of Definitive Notes) with all unmatured Receipts, Coupons or Talons (if any) attached thereto or surrendered therewith, shall be cancelled by the Company. Where any Notes, Receipts, Coupons or Talons are purchased and cancelled as aforesaid, the Company shall procure that all relevant details are promptly given to the Agent and that all Notes, Receipts, Coupons or Talons so cancelled are delivered to the Agent. All Notes which are redeemed, all Receipts or Coupons which are paid and all Talons which are exchanged shall be cancelled by the Agent or Paying Agent by which they are redeemed, paid or exchanged. Each of the Paying Agents shall give to the Agent details of all payments made by it and shall deliver all cancelled Notes, Receipts, Coupons and Talons to the Agent or to any Paying Agent 17 authorized from time to time in writing by the Agent to accept delivery of cancelled Notes, Receipts, Coupons and Talons (an "Authorized Agent"). (2) A certificate stating: (a) the aggregate principal amount of Notes which have been redeemed and the aggregate amount paid in respect thereof; (b) the number of Notes cancelled together (in the case of Definitive Notes) with details of all unmatured Receipts, Coupons or Talons (if any) attached thereto or delivered therewith; (c) the aggregate amount paid in respect of interest on the Notes; (d) the total number by maturity date of Receipts, Coupons and Talons so cancelled; and (e) (in the case of Definitive Notes) the serial numbers of such Notes, shall be given to the Company by the Agent as soon as reasonably practicable and in any event within 30 days after the date of such repayment or, as the case may be, payment or exchange. (3) Subject to being duly notified in due time, the Agent shall give a certificate to the Company, within three months of the date of purchase and cancellation of Notes as aforesaid, stating: (a) the principal amount of Notes so purchased and cancelled; (b) the serial numbers of such Notes; and (c) the total number by maturity date of the Receipts, Coupons and Talons (if any) appertaining thereto and surrendered therewith or attached thereto. (4) The Agent shall destroy all cancelled Notes, Receipts, Coupons and Talons (unless otherwise instructed by the Company) and, forthwith upon destruction, furnish the Company with a certificate of the serial numbers of the Notes and the number by maturity date of Receipts, Coupons and Talons so destroyed. (5) Without prejudice to the obligations of the Agent pursuant to subclause (2), the Agent shall keep a full and complete record of all Notes, Receipts, Coupons and Talons (other 18 than serial numbers of Coupons, except those which have been replaced pursuant to Condition 14) and of all replacement Notes, Receipts, Coupons or Talons issued in substitution for mutilated, defaced, destroyed, lost or stolen Notes, Receipts, Coupons or Talons. The Agent shall at all reasonable time make such record available to the Company and any person authorized by the Company for inspection and for the taking of copies thereof or extracts therefrom. (6) All records and certificates made or given pursuant to this Clause 13 and Clause 14 shall make a distinction between Notes, Receipts, Coupons and Talons of each Series. 14. Issue of replacement Notes, Receipts, Coupons and Talons -------------------------------------------------------- (1) The Company will cause a sufficient quantity of additional forms of Notes, Receipts, Coupons and Talons to be available, upon request, to the Agent at its specified office for the purpose of issuing replacement Notes, Receipts, Coupons and Talons as provided below. (2) The Agent will, subject to and in accordance with the Conditions and the following provisions of this Clause 14, cause to be delivered any replacement Notes, Receipts, Coupons and Talons which the Company may determine to issue in place of Notes, Receipts, Coupons and Talons which have been lost, stolen, mutilated, defaced or destroyed. (3) In the case of a mutilated or defaced Note, the Agent shall ensure that (unless otherwise covered by such indemnity as the Company may require) any replacement Note will only have attached to it Receipts, Coupons and Talons corresponding to those (if any) attached to the mutilated or defaced Note which is presented for replacement. (4) The Agent shall not issue any replacement Note, Receipt, Coupon or Talon unless and until the applicant therefor shall have: (a) paid such costs as may be incurred in connection therewith; (b) furnished it with such evidence (including evidence as to the serial number of such Note, Receipt, Coupon or Talon) and indemnity (which may include a bank guarantee and/or security) as the Company and the Agent may reasonably require; and (c) in the case of any mutilated or defaced Note, Receipt, Coupon or Talon, surrendered the same to the Agent. 19 (5) The Agent shall cancel any mutilated or defaced Notes, Receipts, Coupons and Talons in respect of which replacement Notes, Receipts, Coupons and Talons have been issued pursuant to this Clause 14 and shall furnish the Company with a certificate stating the serial numbers of the Notes, Receipts, Coupons and Talons so cancelled and, unless otherwise instructed by the Company in writing, shall destroy such cancelled Notes, Receipts, Coupons and Talons and furnish the Company with a destruction certificate containing the information specified in Clause 13(3). (6) The Agent shall, on issuing any replacement Note, Receipt, Coupon or Talon, forthwith inform the Company and the Paying Agents of the serial number of such replacement Note, Receipt, Coupon or Talon issued and (if known) of the serial number of the Note, Receipt, Coupon or Talon in place of which such replacement Note, Receipt, Coupon or Talon has been issued. Whenever replacement Receipts, Coupons or Talons are issued pursuant to the provisions of this Clause 14, the Agent shall also notify the Paying Agents of the maturity dates of the lost, stolen, mutilated, defaced or destroyed Receipts, Coupons or Talons and of the replacement Receipts, Coupons or Talons issued. (7) The Agent shall keep a full and complete record of all replacement Notes, Receipts, Coupons and Talons issued and shall make such record available all at reasonable times to the Company and any persons authorized by the Company for inspection and for the taking of copies thereof or extracts therefrom. (8) Whenever any Note, Receipt, Coupon or Talon for which a replacement Note, Receipt, Coupon or Talon has been issued and in respect of which the serial number is known is presented to the Agent or any of the Paying Agents for payment, the Agent or, as the case may be, the relevant Paying Agent shall immediately send notice thereof to the Company and the Agent. (9) Notwithstanding any of the foregoing in this Clause 14, no issue of replacement Notes, Receipts, Coupons and Talons shall be made or delivered in the United States. 15. Copies of this Agreement and each Pricing Supplement available for ------------------------------------------------------------------ inspection ---------- The Agent and the Paying Agents shall, for as long as any Note remains outstanding, hold copies of this Agreement, each Pricing Supplement, the Company's Articles of Incorporation as amended and restated from time to time and the latest annual and any interim reports of the Company available for inspection. For this purpose, the Company 20 shall furnish the Agent and the Paying Agents with sufficient copies of each of such documents. 16. Commissions and expenses ------------------------ (1) The Company shall pay to the Agent such fees and commissions as the Company and the Agent may separately agree in respect of the services of the Agent and the Paying Agents hereunder together with any reasonable out-of-pocket expenses (including legal, printing, postage, tax, cable and advertising expenses required in connection with the Notes issued hereunder) incurred by the Agent and the Paying Agents in connection with their said services. (2) The Agent shall make payment of the fees and commissions due hereunder to the Paying Agents and shall reimburse their expenses promptly after the receipt of the relevant moneys from the Company. The Company shall not be responsible for any such payment or reimbursement by the Agent to the Paying Agents. 17. Indemnity --------- (1) The Company shall indemnify the Agent and each of the Paying Agents against any direct losses, liabilities, costs, claims, actions, demands or expenses (including, but not limited to, all reasonable costs, charges and expenses paid or incurred in disputing or defending any of the foregoing but excluding loss of profits) which it may incur or which may be made against the Agent or any Paying Agent as a result of or in connection with its appointment by the Company or the exercise of its powers and duties hereunder except such as may result from its own wilful default, negligence or bad faith or that of its officers, directors or employees or the breach by it of the terms of this Agreement. (2) The Agent and the Paying Agents shall not be liable for any action taken or omitted hereunder except for their own wilful default, negligence or bad faith or that of their respective officers, directors or employees or the breach by any of them of the terms of this Agreement. (3) Neither the Agent nor any of the Paying Agents shall be responsible for the acts or failure to act of any other of them and each of the Agent and the Paying Agents shall indemnify the Company against any loss, liability, cost, claim, action, demand or expense (including, but not limited to, all reasonable costs, legal fees, charges and expenses paid or incurred in disputing or defending any of the foregoing) which the Company may incur or which may be made 21 against it as a result of the breach by the Agent or such Paying Agents of the terms of this Agreement or its wilful default, negligence or bad faith or that of its officers, directors or employees. 18. Repayment by the Agent ---------------------- The Agent shall, forthwith on demand, upon the Company being discharged from its obligation to make payments in respect of any Notes under the Conditions, provided that there is no outstanding, bona fide and proper claim in respect of any such payments, pay to the Company sums equivalent to any amounts paid to it by the Company in respect of such Notes. 19. Conditions of appointment ------------------------- (1) The Agent shall be entitled to deal with money paid to it by the Company for the purpose of this Agreement in the same manner as other money paid to a banker by its customers except: (a) that it shall not exercise any right of set-off, lien or similar claim in respect thereof; (b) as provided in subclause (2) below; and (c) that it shall not be liable to account to the Company for any interest thereon except as otherwise agreed between the Company and the Agent. (2) In acting hereunder and in connection with the Notes, the Agent and the Paying Agents shall act solely as agents of the Company and will not thereby assume any obligations towards or relationship of agency or trust for or with any of the owners or holders of the Notes, Receipts, Coupons or Talons, except that all funds held by the Agent or the Paying Agents for payment to the Noteholders shall be held in trust, to be applied as set forth herein, but need not be segregated from other funds except as required by law; provided, however, that monies paid by the Company to the Agent for the payment of principal or interest on Notes remaining unclaimed at the end of one year after such principal or interest shall become due and payable shall be repaid to the Company as provided and in the manner set forth in the Notes whereupon all liability of the Agent with respect thereto shall cease. (3) The Agent and the Paying Agents hereby undertake to the Company to perform such obligations and duties, and shall be obliged to perform such duties and only such duties, as are herein, in the Conditions and in the Procedures Memorandum 22 specifically set forth, and no implied duties or obligations shall be read into this Agreement or the Notes against the Agent and the Paying Agents. (4) The Agent may consult with legal and other professional advisers and the opinion of such advisers shall be full and complete protection in respect of any action taken, omitted or suffered hereunder in good faith and in accordance with the opinion of such advisers. (5) Each of the Agent and the Paying Agents shall be protected and shall incur no liability for or in respect of any action taken, omitted or suffered in reliance upon any instruction, request or order from the Company or any notice, resolution, direction, consent, certificate, affidavit, statement, cable, telex or other paper or document which it reasonably believes to be genuine and to have been delivered, signed or sent by the proper party or parties or upon written instructions from the Company. (6) Any of the Agent and the Paying Agents and their officers, directors and employees may become the owner of, or acquire any interest in, any Notes, Receipts, Coupons or Talons with the same rights that it or he would have if the Agent or the relevant Paying Agent, as the case may be, concerned were not appointed hereunder, and may engage or be interested in any financial or other transaction with the Company and may act on, or as depositary, trustee or agent for, any committee or body of holders of Notes or Coupons or in connection with any other obligations of the Company as freely as if the Agent or the relevant Paying Agent, as the case may be, were not appointed hereunder. (7) The Company shall provide the Agent with a certified copy of the list of persons authorized to execute documents and take action on behalf of the Company in connection with this Agreement and shall notify the Agent immediately in writing if any of such persons ceases to be so authorized or if any additional person becomes so authorized together, in the case of an additional authorized person, with evidence satisfactory to the Agent that such person has been so authorized. 20. Communication between the parties --------------------------------- A copy of all communications relating to the subject matter of this Agreement between the Company and any holders of Notes, Receipts or Coupons and any of the Paying Agents shall be sent to the Agent by the relevant Paying Agent and the Agent shall forthwith promptly deliver a copy of any such communication to the Company. 23 21. Changes in Agent and Paying Agents ---------------------------------- (1) The Company agrees that, until no Note is outstanding or until moneys for the payment of all amounts in respect of all outstanding Notes have been made available to the Agent (whichever is the later): (a) so long as any Notes are listed on the London Stock Exchange, the Paris Bourse or any other Stock Exchange there will at all times be a Paying Agent (or the Agent) having a specified office in London, Paris or in any such location as may be required by the rules and regulations of the relevant Stock Exchange; (b) there will at all times be a Paying Agent (or the Agent) with a specified office in a city approved by the Company and the Agent in continental Europe; and (c) there will at all times be an Agent. In addition, the Company shall appoint a Paying Agent having a specified office in New York City in the circumstances described in the final paragraph of Condition 6(b). Any variation, termination, appointment or change shall only take effect (other than in the case of insolvency, when it shall be of immediate effect) after not less than 30 nor more than 45 days prior notice thereof shall have been given to the Noteholders in accordance with Condition 16. (2) The Agent may (subject as provided in subclause (4)) at any time resign as Agent by giving written notice to the Company of such intention on its part, specifying the date on which its desired resignation shall become effective; provided that such date shall never be less than three months after the receipt of such notice by the Company unless the Company agrees to accept less notice. (3) The Agent may (subject as provided in subclause (4)) be removed at any time by the filing with it of an instrument in writing signed on behalf of the Company specifying such removal and the date when it shall become effective. (4) Any resignation under subclause (2) or removal under subclause (3) shall only take effect upon the appointment by the Company of a successor Agent and (other than in cases of insolvency of the Agent) on the expiry of the notice to be given under Clause 23. If, by the day falling 10 days before the expiry of any notice under subclause (2), the Company has not appointed a successor Agent, then the Agent shall be entitled, on behalf of the Company, to appoint as a successor Agent in its place such reputable financial institution of good standing as it may reasonably determine 24 to be capable of performing the duties of the Agent hereunder. (5) In case at any time the Agent resigns, or is removed, or becomes incapable of action or is adjudged bankrupt or insolvent, or files a voluntary petition in bankruptcy or makes an assignment for the benefit of its creditors or consents to the appointment of an administrator, liquidator or administrative or other receiver of all or a substantial part of its property, or if an administrator, liquidator or administrative or other receiver of it or all or a substantial part of its property is appointed, or it admits in writing its inability to pay or meet its debts as they become due, or if an order of any court is entered approving any petition filed by or against it under the provisions of any applicable bankruptcy or insolvency law or if any officer takes charge or control of it or of its property or affairs for the purpose of rehabilitation, administration or liquidation, a successor Agent may be appointed by the Company by an instrument in writing filed with the successor Agent. Upon the appointment as aforesaid of a successor Agent and acceptance by the latter of such appointment and (other than in case of insolvency of the Agent) upon expiry of the notice to be given under Clause 23 the Agent so superseded shall cease to be the Agent hereunder. (6) Subject to subclause (1), the Company may, after prior consultation with the Agent, terminate the appointment of any of the Paying Agents at any time and/or appoint one or more further Paying Agents located outside the United States by giving to the Agent, and to the relevant Paying Agent, at least 45 days notice in writing to that effect. (7) Subject to subclause (1), all or any of the Paying Agents may resign their respective appointments hereunder at any time by giving the Company and the Agent at least 45 days written notice to that effect. (8) Upon its resignation or removal becoming effective, the Agent or the relevant Paying Agent: (a) shall, in the case of the Agent, forthwith transfer all moneys held by it hereunder and the records referred to in Clauses 13(5) and 14(7) to the successor Agent hereunder; and (b) shall be entitled to the payment by the Company of its commissions and fees for the services theretofore rendered hereunder in accordance with the terms of Clause 16 and to the reimbursement of all reasonable out-of-pocket expenses (including legal fees and together with any applicable value added tax or similar tax thereon) incurred in connection therewith. 25 (9) Upon its appointment becoming effective, a successor Agent and any new Paying Agent shall, without further act, deed or conveyance, become vested with all the authority, rights, powers, trust, immunities, duties and obligations of such predecessor with like effect as if originally named as Agent or (as the case may be) a Paying Agent hereunder. 22. Merger and consolidation ------------------------ Any corporation into which the Agent or any Paying Agent may be merged, or any corporation with which the Agent or any of the Paying Agents may be consolidated, or any corporation resulting from any merger or consolidation to which the Agent or any of the Paying Agents shall be a party, or any corporation to which the Agent or any of the Paying Agents shall sell or otherwise transfer all or substantially all the assets of the Agent or any Paying Agent shall, on the date when such merger, consolidation or transfer becomes effective and to the extent permitted by any applicable laws, become the successor Agent or, as the case may be, Paying Agent under this Agreement without the execution or filing of any paper or any further act on the part of the parties hereto, unless otherwise required by the Company, and after the said effective date all references in this Agreement to the Agent or, as the case may be, such Paying Agent shall be deemed to be references to such corporation. Notice of any such merger, consolidation or transfer shall forthwith be given to the Company by the relevant Agent or Paying Agent. 23. Notifications ------------- Following receipt of notice of resignation from the Agent or any Paying Agent and forthwith upon appointing a successor Agent or, as the case may be, further or other Paying Agents or on giving notice to terminate the appointment of any Agent or, as the case may be, Paying Agent, the Company shall give or cause to be given not more than 45 days nor less than 30 days notice thereof to the Noteholders in accordance with the Conditions. 24. Change of specified office -------------------------- If the Agent or any Paying Agent determines to change its specified office it shall give to the Company and (if applicable) the Agent written notice of such determination giving the address of the new specified office which shall be in the same city and stating the date on which such change is to take effect, which shall not be less than 45 days thereafter. The Agent (on behalf of the Company) shall 26 within 15 days of receipt of such notice (unless the appointment of the Agent or the relevant Paying Agent, as the case may be, is to terminate pursuant to Clause 21 on or prior to the date of such change) give or cause to be given not more than 45 days nor less than 30 days notice thereof to the Noteholders in accordance with the Conditions. 25. Notices ------- Any notice or communication given hereunder shall be sufficiently given or served: (a) if delivered in person to the relevant address specified on the signature pages hereof and, if so delivered, shall be deemed to have been delivered at time of receipt; (b) if sent by facsimile or telex to the relevant number specified on the signature pages hereof and, if so sent, shall be deemed to have been delivered upon transmission provided such transmission is confirmed by the answer back of the recipient (in the case of telex) or when an acknowledgement of receipt is received (in the case of facsimile). 26. Taxes and stamp duties ---------------------- The Company agrees to pay any and all stamp and other documentary taxes or duties (other than any interest or penalties arising as a result of a failure by any other person to account promptly to the relevant authorities for any such duties or taxes after such person shall have received from the Company the full amount payable in respect thereof) which may be payable in connection with the execution, delivery, performance and enforcement of this Agreement. 27. Currency indemnity ------------------ If, under any applicable law and whether pursuant to a judgment being made or registered against the Company or for any other reason, any payment under or in connection with this Agreement is made or is to be satisfied in a currency (the "other currency") other than that in which the relevant payment is expressed to be due (the "required currency") under this Agreement, then, to the extent that the payment (when converted into the required currency at the rate of exchange on the date of payment or, if it is not practicable for the Agent or the relevant Paying Agent to purchase the required currency with the other currency on the date of 27 payment, at the rate of exchange as soon thereafter as it is practicable for it to do so or, in the case of a liquidation, insolvency or analogous process at the rate of exchange on the latest date permitted by applicable law for the determination of liabilities in such liquidation, insolvency or analogous process) actually received by the Agent or the relevant Paying Agent falls short of the amount due under the terms of this Agreement, the Company shall, as a separate and independent obligation, indemnify and hold harmless the Agent against the amount of such shortfall. For the purposes of this Clause 27, "rate of exchange" means the rate at which the Agent is able on the relevant date to purchase the required currency with the other currency and shall take into account any premium and other costs of exchange. 28. Amendments; Meetings of Holders ------------------------------- (1) This Agreement, the Notes and any Receipts and Coupons attached to the Notes may be amended by the Company and the Agent, without consent of the Holder of any Note, Receipt or Coupons (i) for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained herein or therein, or to evidence the succession of another corporation to the Company as provided in Condition 11, (ii) to make any further modifications of the terms of this Agreement necessary or desirable to allow for the issuance of any additional Notes (which modifications shall not be materially adverse to holders of outstanding Notes) or (iii) in any manner which the Company (and, in the case of this Agreement, the Agent) may deem necessary or desirable and which shall not materially adversely affect the interests of the holders of the Notes, Receipts and Coupons. In addition, with the consent of the holders of not less than a majority in aggregate principal amount of the Notes then outstanding affected thereby, or by a resolution adopted by a majority in aggregate principal amount of such outstanding Notes affected thereby present or represented at a meeting of such holders at which a quorum is present, this Agreement and the terms and conditions of the Notes, Receipts and Coupons may be modified or amended by the parties hereto, and future compliance and past defaults waived, in each case as provided in Conditions 12 and 13 and subject to the limitations therein provided. (2) A meeting of holders of Notes may be called by the holders of at least 10 per cent in principal amount of the Outstanding Notes at any time and from time to time to make, give or take any request, demand authorization, direction, notice, consent, waiver or other action provided by this 28 Agreement or the Notes to be made, given or taken by holders of Notes. (3) The Agent may at any time call a meeting of holders of Notes for any purpose specified in subclause (1) to be held at such time and at such place in The City of New York or in London, as the Agent and the Company shall determine. Notice of every meeting of holders of Notes, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting, shall be given by the Agent to the Company and to the holders of the Notes, in the same manner as provided in Condition 16, not less than 21 nor more than 180 days prior to the date fixed for the meeting. In the case at any time the Company or the holders of at least 10 per cent in principal amount of the outstanding Notes shall have requested the Agent to call a meeting of the holders to take any action authorized in subclause (1), by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Agent shall not have given notice of such meeting within 21 days after receipt of such request or shall not thereafter proceed to cause the meeting to be held as provided herein, then the Company, or the holders of Notes in the amount above-specified, as the case may be, may determine the time and the place in The City of New York or London for such meeting and may call such meeting by giving notice thereof as provided in this subclause (3). (4) To be entitled to vote at any meeting of holders of Notes, a person shall be a holder of outstanding Notes at the time of such meeting, or a person appointed by an instrument in writing as proxy for such holder. (5) The persons entitled to vote a majority in principal amount of the outstanding Notes shall constitute a quorum. In the absence of a quorum, within 30 minutes of the time appointed for any such meeting, the meeting may be adjourned for a period of not less than 10 days as determined by the chairman of the meeting prior to the adjournment of such meeting. In the absence of a quorum at any such adjourned meeting, such adjourned meeting may be further adjourned for a period of not less than 10 days as determined by the chairman of the meeting prior to the adjournment of such adjourned meeting. Notice of the reconvening of any adjourned meeting shall be given as provided in subclause (3) except that such notice need be given not less than five days prior to the date on which the meeting is scheduled to be reconvened. Notice of the reconvening of an adjourned meeting shall state expressly the percentage of the principal amount of the outstanding Notes which shall constitute a quorum. 29 Subject to the foregoing, at the reconvening of any meeting adjourned for a lack of a quorum, the persons entitled to vote 25 per cent. in principal amount of the outstanding Notes shall constitute a quorum for the taking of any action set forth in the notice of the original meeting. Any meeting of holders of Notes at which a quorum is present may be adjourned from time to time by vote of a majority in principal amount of the outstanding Notes represented at the meeting, and the meeting may be held as so adjourned without further notice. At a meeting or an adjourned meeting duly reconvened and at which a quorum is present as aforesaid, any resolution and all matters shall be effectively passed and decided if passed or decided by the persons entitled to vote a majority in principal amount of the outstanding Notes represented and voting at such meeting, provided that such amount approving such resolution shall be not less than 25 per cent. in principal amount of the outstanding Notes. (6) The Agent may make such reasonable regulations as it may deem advisable for any meeting of holders of Notes in regard to proof of the holding of Notes and of the appointment of proxies and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall deem appropriate. The Agent shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or holders of Notes as provided above, in which case the Company or the holders of Notes calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by vote of the persons entitled to vote a majority in principal amount of the outstanding Notes represented at the meeting. The chairman of the meeting shall have no right to vote, except as a holder of Notes or proxy. A record, at least in triplicate, of the proceedings of each meeting of holders of Notes shall be prepared, and one such copy shall be delivered to the Company and another to the Agent to be preserved by the Agent. 29. Calculation Agency Agreement ---------------------------- A form of calculation agency agreement is annexed to this Agreement as Appendix C. Where the Conditions require functions to be carried out by a calculation agent, the Company may execute such an agreement or an agreement in such form as the Company and the calculation agent may agree. 30 30. Descriptive headings -------------------- The descriptive headings in this Agreement are for convenience of reference only and shall not define or limit the provisions hereof. 31. Governing law ------------- This Agreement is governed by, and shall be construed in accordance with, the laws of the State of New York, United States of America, applicable to agreements made and to be performed wholly within such jurisdiction. 32. Counterparts ------------ This Agreement may be executed in one or more counterparts all of which shall constitute one and the same agreement. 31 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. The Company - ----------- TOYOTA MOTOR CREDIT CORPORATION 19001 South Western Avenue Torrance, California 90509 Telephone: (310) 715-3700 Fax: (310) 618-7804 Attention: Funding Manager By: /S/: Wolfgang Jahn ------------------- Wolfgang Jahn Group Vice President The Agent - --------- The Chase Manhattan Bank, N.A. Woolgate House Coleman Street P.O. Box 16 London EC2P 2HD Telephone: 0202 347430 Fax: 0202 347438 Telex: 8954681 CMB G Attention: Manager, Corporate Trust Operations By: /S/: Sally P. Easton -------------------- 32 The Other Paying Agent - ---------------------- The Chase Manhattan Bank Luxembourg S.A. 5 Rue Plaetis L-2338 Luxembourg Telephone: 010 352 4626851 Fax: 010 352 462685380 Telex: 1223 CHAS LU Attention: Manager, Corporate Trust Operations By: /S/ Sally P. Easton ------------------- 33 APPENDIX A ---------- Terms and Conditions A-1 FORM OF THE NOTES Each Tranche of Notes will initially be represented by one or more temporary global Notes, without receipts, interest coupons or talons, which will be delivered to a common depositary for Euroclear and Cedel. If an interest payment date for any Notes occurs while such Notes are represented by a temporary global Note, the related interest payment will be made against presentation of the temporary global Note only to the extent that certification of non-U.S. beneficial ownership (in the form set out in the temporary global Note) has been received by Euroclear or Cedel. Interests in the temporary global Note will be exchangeable for interests in a permanent global Note or for security printed definitive Notes (as indicated in the applicable Pricing Supplement and subject, in the case of definitive Notes, to such notice period as is specified in the Pricing Supplement) not earlier than the date (the "Exchange Date") which is 40 days after the date on which the temporary global Note is issued, provided that certification of non-U.S. beneficial ownership has been received. No interest payments will be made on a temporary global Note after the Exchange Date. Payments of principal or interest (if any) in respect of a permanent global Note will be made through Euroclear and Cedel against presentation or surrender, as the case may be, of the permanent global Note without any requirement for further certification. A permanent global Note will be exchangeable, in whole or (subject to the Notes which continue to be represented by the global Note being regarded as fungible by Euroclear and Cedel with the definitive Notes issued in partial exchange for such global Note) in part, for security printed definitive Notes with, where applicable, receipts, interest coupons and talons attached, either at the option of TMCC not earlier than the Exchange Date or upon 60 days written notice expiring at least 30 days after the Exchange Date from Euroclear or Cedel (as the case may be) acting on instructions of the holders of interests in the permanent global Note. As of the date hereof, neither Euroclear nor Cedel regard Notes in global form as fungible with Notes in definitive form. If a portion of the Notes continue to be represented by the temporary global Note after the issuance of definitive Notes, the temporary global Note shall thereafter be exchangeable for definitive Notes, subject to certification of non-U.S. beneficial ownership. No definitive Note delivered in exchange for a portion of a permanent or temporary global Note shall be mailed or otherwise delivered to any locations in the United States of America in connection with such exchange. Temporary and permanent global Notes and definitive Notes will be issued by The Chase Manhattan Bank, N.A., London Office, as issuing and principal paying agent and, if so specified in the applicable Pricing Supplement, as calculation agent (the "Agent", which expression includes any successor agents or any other calculation agent specified in the applicable Pricing Supplement) pursuant to an Amended and Restated Agency Agreement (the "Agency Agreement") dated as of July 28, 1994, and made between TMCC, the Agent and the other paying agents named therein (together with the Agent, the "Paying Agents", which expression includes any additional or successor paying agents). Until exchanged in full, the holder of an interest in any global Note shall in all respects be entitled to the same benefits as the holder of Notes, receipts and interest coupons, except as set out in the terms and conditions applicable thereto. A-2 If specified in the applicable Pricing Supplement, other clearance systems (including in the case of Notes listed on the Paris Bourse, Societe Interprofessionnelle pour la Compensation des Valeurs Mobilieres and the Intermediaries financiers habilites authorized to maintain accounts therein (together "SICOVAM")) capable of complying with the certification requirements set forth in the temporary global Note may be used in addition to or in lieu of Euroclear and Cedel. Temporary and permanent global Notes and definitive Notes will be issued in bearer form only. The following legend will appear on all global Notes, definitive Notes, receipts and interest coupons: "Any United States person (as defined in the Internal Revenue Code of the United States) who holds this obligation will be subject to limitations under the United States income tax laws, including the limitations provided in sections 165(j) and 1287(a) of the Internal Revenue Code." The sections referred to provide that United States holders, with certain exceptions, will not be entitled to deduct any loss on Notes, receipts or interest coupons and will not be entitled to capital gains treatment of any gain on any sale, disposition or payment of principal in respect of Notes, receipts or interest coupons. The Pricing Supplement relating to each Tranche will contain such of the following information as is applicable in respect of such Notes (all references to numbered Conditions being to the Terms and Conditions of the relevant Notes): (i) the Series number; (ii) if not a new Series, the date from which the Tranche of Notes being issued is to form a single series with the other Notes comprising that Series; (iii) the currency (which expression shall include ECU and other currency units) in which the Notes are denominated and, in the case of Dual Currency Notes (as defined below), the currency or currencies in which payment in respect of the Notes is to be made (each a "Specified Currency"); (iv) the aggregate principal amount of the Notes to be issued; (v) the interest and/or payment basis (the "Interest/ Payment Basis") of the Notes, which may be one or more of the following: (a) Notes bearing interest on a fixed rate basis ("Fixed Rate Notes"); (b) Notes bearing interest on a floating rate basis ("Floating Rate Notes"); (c) Notes issued on a non-interest bearing basis ("Zero Coupon Notes"); A-3 (d) Notes with respect to which principal and/or interest is calculated by reference to an index and/or a formula ("Indexed Notes"); and/or (e) Notes with respect to which principal and/or interest is payable in one or more Specified Currencies other than the Specified Currency in which they are denominated ("Dual Currency Notes"); (vi) if the Notes are not to have a single specified Interest/Payment Basis continuously from the Issue Date to the stated maturity thereof, the dates from (and including) and to (but excluding) which such Notes will have each specified Interest/Payment Basis; (vii) the date on which the Notes will be issued (the "Issue Date"); (viii) the denomination(s) of such Notes (each a "Specified Denomination"); (ix) the price (generally expressed as a percentage of the principal amount of the Notes) at which the Notes will be issued (the "Issue Price"); (x) in the case of Notes which are to be issued on a partly paid basis ("Partly Paid Notes"), the amount of each installment comprising the Issue Price and the date on which each payment is to be made and the consequences (if any) of failure to make any such payment; (xi) in the case of interest-bearing Notes, the date from which such Notes bear interest (the "Interest Commencement Date"), which may or may not be the Issue Date; (xii) in the case of Notes other than Floating Rate Notes, the date on which such Notes (unless previously redeemed or purchased and cancelled) will be redeemed (the "Maturity Date"); (xiii) in the case of Floating Rate Notes, the month and year in which the Notes (unless previously redeemed or purchased and cancelled) will be redeemed (the "Redemption Month"); (xiv) the amount at which each Note will be redeemed under (xii) and (xiii) above (the "Final Redemption Amount"), generally expressed as a percentage of the principal amount of the Notes and/or, in the case of Indexed Notes or Dual Currency Notes, as specified in accordance with (xix) or (xx) below; (xv) in the case of Notes redeemable in installments: (a) the date on which each installment is payable (each an "Installment Date"); and A-4 (b) the amount, generally expressed as a percentage of the principal amount of the Notes, of each such installment (each an "Installment Amount"); (xvi) in the case of Fixed Rate Notes: (a) the rate, generally expressed as a percentage rate per annum, at which the Notes bear interest (the "Fixed Rate of Interest"), which may remain the same throughout the life of the Notes or increase and/or decrease; (b) the date(s) in each year on which interest is payable throughout the life of the Notes (each a "Fixed Interest Date"); (c) where the period from the Interest Commencement Date to the next Fixed Interest Date differs from the period between subsequent Fixed Interest Dates, the amount of the first payment of interest (the "Initial Broken Amount"); (d) where the Maturity Date is not a Fixed Interest Date, the amount of the final payment of interest (the "Final Broken Amount"); and (e) any other terms relating to the particular method of calculating interest for such Notes; (xvii) in the case of Floating Rate Notes: (a) the number of months or other period from (and including) the Interest Commencement Date to (but excluding) the first Interest Payment Date (as defined in Condition 4(b)(i)) and from (and including) that and each successive Interest Payment Date thereafter to (but excluding) the next following Interest Payment Date (each an "Interest Period"), which may or may not be the same number of months or other period throughout the life of the Notes; (b) the manner in which the rate of interest (the "Rate of Interest") is to be determined, including: (1) the date(s) on which the interest rate is to be reset (the "Reset Date"); (2) where the Rate of Interest is to be determined by reference to the ISDA Agreement and Confirmation (as defined and described respectively in Condition 4(b)(iii)) and Condition 4(b)(iii) applies, the margin (the "Margin") (which Margin may remain the same throughout the life of the Notes or increase and/or decrease); (3) where the Rate of Interest is to be determined as provided in Condition 4(b)(iv) ("Screen Rate Determination"): A-5 (A) the reference rate (the "Reference Rate") by which the Rate of Interest is to be determined; (B) the Margin, if any, (expressed as a percentage rate per annum) over or under the Reference Rate by which the Rate of Interest is to be determined (which Margin may remain the same throughout the life of the Notes or increase and/or decrease) specifying whether any such Margin is to be added to, or subtracted from, the Reference Rate; and (C) the page, whatever its designation, on which the Reference Rate is for the time being displayed on the Reuters Monitor Money Rates Service or the appropriate Associated Press-Dow Jones Telerate Service or such other service as is indicated in the applicable Pricing Supplement; and (4) where the Rate of Interest is to be calculated otherwise than by reference to (1) or (2) above, details of the basis for determination of the Rate of Interest and any alternative fall-back provisions; (c) the applicable definition of "Reference Banks" (if different from that set forth in Condition 4(b)(iv)(E)); and (d) the applicable definition of "Interest Determination Date" (if different from that set out in Condition 4(b)(iv)(F)); (e) the applicable definition of "Business Day" (if different from that set out in Condition 4(b)(i)); (f) the minimum Rate of Interest, if any, at which the Notes will bear interest, which may remain the same throughout the life of the Notes or increase and/or decrease; (g) the maximum Rate of Interest, if any, at which the Notes will bear interest, which may remain the same throughout the life of the Notes or increase and/or decrease; and (h) if different from the Agent, details of the agent responsible for calculating (xvii)(b) above; (xviii) in the case of Zero Coupon Notes: (a) the accrual yield in respect of such Notes (the "Accrual Yield") expressed as a percentage rate per annum; (b) the reference price attributed to the Notes on issue (the "Reference Price"); and A-6 (c) any other formula or basis for determining the amount payable, in each case for the purposes of Condition 5(f)(iii); (xix) in the case of Indexed Notes: (a) the index (the "Index") to which amounts payable in respect of principal and/or interest are linked and/or the formula (the "Formula") to be used in determining the amounts of principal and/or interest due; (b) the agent responsible for calculating the amount of principal and/or interest due; and (c) the provisions regarding calculation of principal and/or interest in circumstances where such calculation by reference to the Index and/or the Formula is impossible and/or impracticable; (xx) in the case of Dual Currency Notes: (a) the exchange rate(s) or basis of calculating the exchange rate(s) to be used in determining the amounts of principal and/or interest payable in the Specified Currencies (the "Rate(s) of Exchange"); (b) the agent, if any, responsible for calculating the amount of principal and/or interest payable in the Specified Currencies; (c) the provisions regarding calculation of principal and/or interest in circumstances where such calculation by reference to the Rate(s) of Exchange is impossible and/or impracticable; and (d) the person at whose option any Specified Currency or Currencies is or are to be or may be payable; (xxi) in the case of Partly Paid Notes: (a) the amount of each installment (expressed as a percentage of the principal amount of each Note) of the Issue Price for such Notes; (b) the due date(s) for any subsequent installments of the Issue Price; (c) the date (if any) after which a holder shall forfeit any relevant Partly Paid Notes should payment of any subsequent installment(s) not be made on or prior to such date together with accrued interest; (d) the rate(s) of interest to accrue on the first and any subsequent installment(s) after the due date for payment of such installment(s); and A-7 (e) any other relevant information; (xxii) whether the Notes are to be redeemable at the option of TMCC (other than for taxation reasons) and/or the Noteholders and, if so: (a) each date upon which redemption may occur (each an "Optional Redemption Date") which, in the case of Notes denominated in Yen or sterling or French Franc Notes, may not be prior to one year and in the case of Notes denominated in DM, may not be prior to two years from the Issue Date; (b) each redemption amount for the Notes (each an "Optional Redemption Amount") and/or the method, if any, of calculating the same; and (c) in the case of Notes redeemable by TMCC in part, the minimum principal amount of the Notes permitted to be so redeemed at any time (the "Minimum Redemption Amount") and any greater principal amount of the Notes permitted to be so redeemed at any time (each a "Higher Redemption Amount"), if any; (xxiii) the redemption amount (the "Early Redemption Amount") with respect to the Notes payable on redemption for taxation reasons or following an Event of Default and/or method, if any, of calculating the same if required to be specified by, or if different from that set out in, Condition 5(f); (xxiv) whether talons for future coupons or receipts are to be attached to definitive Notes on issue and, if so, the date on which such talons mature; (xxv) details of the relevant stabilizing manager (if any); (xxvi) any additional selling restrictions which are required; (xxvii) details of any other relevant terms of such Notes or special conditions not inconsistent with the provisions of the Agency Agreement; (xxviii) the relevant Euroclear and Cedel Common Code and ISIN Number; (xxix) details of any additional or alternative clearance system (including, if applicable, SICOVAM) approved by TMCC and the Agent; (xxx) whether or not the Notes are to be listed on the London Stock Exchange, the Paris Bourse or any other agreed stock exchange; (xxxi) whether the Notes are convertible automatically or at the option of TMCC and/or the holders of Notes into Notes of another Interest/Payment Basis, the date(s) upon which such conversion will occur or such option(s) may be exercised and the Interest/Payment Basis and other relevant terms; A-8 (xxxii) the cost, if any, to be borne by the holders of Notes in connection with exchanges for security printed definitive Notes; (xxxiii) whether the temporary global Note initially representing the Notes will be exchangeable for a permanent global Note and/or definitive Notes and any notice period applicable to an exchange for definitive Notes; (xxxiv) method of distribution: (a) if syndicated, the names of the relevant managers; (b) if non-syndicated, the name of the relevant dealer; (xxxv) whether TMCC may from time to time without the consent of the Noteholders create and issue further securities having the same terms and conditions as the Notes described in the Pricing Supplement so that the same shall be consolidated and form a single series with such Notes; and (xxxvi) in the case of any Notes listed on the Paris Bourse: (a) the number of Notes to be issued in each Specified Denomination; (b) the SICOVAM number or, in the case of Partly Paid Notes, SICOVAM numbers, if any; (c) the name and specified office of any paying agent in France; (d) the address in Paris where any relevant documents will be available for inspection and a list of such documents; (e) the specialist broker in the case of an issue of French Franc Notes; (f) a statement in French signed manually or in facsimile by a person duly authorized on behalf of TMCC and the relevant Purchaser or, in the case of a syndicated issue of Notes, the relevant lead manager accepting responsibility for the information contained in the Pricing Supplement, in the following form: PERSONNES QUI ASSUMENT LA RESPONSABILITE DE LA NOTE D'INFORMATION COMPOSEE DE LA PRESENTE NOTE D'OPERATION (PRICING SUPPLEMENT) (DE LA NOTE D'INFORMATION AYANT RECU DE LA COB LE VISA NO......../DU.........) ET DU DOCUMENT DE BASE (OFFERING CIRCULAR) A-9 1. Au nom de l'emetteur A la connaissance de l'emetteur, les donnees de la presente Note d'Information sont conformes a la realite et ne comportent pas d'omission de nature a en alterer la portee. Aucun element nouveau, (autres que ceux mentionnes dans la presente Note d'Operation), intervenu depuis: - le 27 Juillet 1994, date du visa no. 94-424 appose par la Commission des Operations de Bourse sur le Document de Base (Prospectus), - (le [ ], date du visa no. [ ] appose par la Commission des Operations de Bourse sur la Note d'Information), n'est susceptible d'affecter de maniere significative la situation financiere de l'emetteur dans le contexte de la presente emission. Toyota Motor Credit Corporation ............................................................. [Name and title of signatory] 2. Au nom de la banque presentatrice Personne assumant la responsabilite de la Note d'Information, composee du Document de Base, et de la presente Note d'Operation. (Name of relevant Dealer/lead manager) ............................................................. [Name and title of signatory] (g) a statement in French in respect of the Pricing Supplement in the following form: La notice legale sera publiee au Bulletin des Annonces Legales Obligatoires (BALO) du (date). La presente "Note d'Information" ne peut etre distribuee en France avant la date effective de cotation de l'emprunt a la Bourse de Paris et la publicite legale au BALO; and (h) the visa numbers allocated by the COB in respect of the Offering Circular and the Pricing Supplement in the following form: VISAS DE LA COMMISSION DES OPERATIONS DE BOURSE En vue de la cotation a Paris des obligations, et par application des articles 6 et 7 de l'ordonnance no. 67-833 du 28 septembre 1967, la Commission des Operations de Bourse a enregistre le Document de Base sous le visa no. 94-424 du 27 Juillet 1994 et a appose sur la presente "Note d'Information" la visa no. ( ) du (date). A-10 If the applicable Pricing Supplement specifies any modifications to the Terms and Conditions of the Notes in relation to a particular issue as described below, it is expected that, to the extent that such modifications (not being significant for the purposes of section 147 of the Financial Services Act 1986) relate only to Conditions 1, 3, 4, 5 (except Condition 5(b)), 6, 14 and 16, they will not necessitate the preparation and issue of a supplementary Offering Circular or listing particulars. If the Terms and Conditions of the Notes are to be modified in any other respect (as would be the case, for example, for an issue of subordinated Notes), it is expected that a supplementary Offering Circular or listing particulars or, if appropriate, further listing particulars describing the modifications will be prepared and issued. TERMS AND CONDITIONS OF THE NOTES The following are the Terms and Conditions of the Notes which (subject to completion and amendment) will be attached to or incorporated by reference into each global Note and which will be incorporated by reference or endorsed upon each definitive Note. The applicable Pricing Supplement in relation to any Notes may specify other terms and conditions which shall, to the extent so specified or to the extent inconsistent with the following Terms and Conditions, replace or modify the following Terms and Conditions for the purpose of such Notes. This Note is one of a Series (as defined below) of Notes (the "Notes," which expression shall mean (i) in relation to any Notes represented by a global Note, units of the lowest Specified Denomination in the Specified Currency of the relevant Notes, (ii) definitive Notes issued in exchange (or partial exchange) for a temporary or permanent global Note, and (iii) any global Note) issued subject to, and with the benefit of, an Amended and Restated Agency Agreement (the "Agency Agreement") dated as of July 28, 1994, and made between Toyota Motor Credit Corporation ("TMCC", which reference does not include the subsidiaries of TMCC) and The Chase Manhattan Bank, N.A., London Office, as issuing agent and principal paying agent and, if so specified in the applicable Pricing Supplement, as calculation agent (the "Agent", which expression shall include any successor agent or any other calculation agent specified in the applicable Pricing Supplement) and the other paying agents named therein (together with the Agent, the "Paying Agents", which expression shall include any additional or successor paying agents). Interest-bearing definitive Notes will (unless otherwise indicated in the applicable Pricing Supplement) have interest coupons ("Coupons") and, if indicated in the applicable Pricing Supplement, talons for further Coupons ("Talons") attached on issue. Any reference herein to Coupons or coupons shall, unless the context otherwise requires, be deemed to include a reference to Talons or talons. Definitive Notes repayable in installments will have receipts ("Receipts") for the payment of the installments of principal (other than the final installment) attached on issue. A-11 As used herein, "Series" means all Notes which are denominated in the same currency and which have the same Maturity Date or Redemption Month, as the case may be, Interest/Payment Basis and interest payment dates (if any) (all as indicated in the applicable Pricing Supplement) and the terms of which (except for the Issue Date or the Interest Commencement Date (as the case may be) and/or the Issue Price (as indicated as aforesaid)) are otherwise identical (including whether or not the Notes are listed) and the expressions "Notes of the relevant Series" and "holders of Notes of the relevant Series" and related expressions shall be construed accordingly. As used herein, "Tranche" means all Notes of the same Series with the same Issue Date and Interest Commencement Date (if applicable). The Pricing Supplement applicable to any particular Note or Notes is attached hereto or endorsed hereon and supplements these Terms and Conditions and may specify other terms and conditions which shall, to the extent so specified or to the extent inconsistent with these Terms and Conditions, replace or modify these Terms and Conditions for the purposes of such Note or Notes. References herein to the "applicable Pricing Supplement" shall mean the Pricing Supplement attached hereto or endorsed hereon. Copies of the Agency Agreement (which contains the form of Pricing Supplement) and the Pricing Supplement applicable to any particular Note or Notes (if listed) are available for inspection at the specified offices of the Agent and each of the other Paying Agents. The holders of the Notes (the "Noteholders"), which expression shall, in relation to any Notes represented by a global Note, be construed as provided in Condition 1, the holders of the Coupons (the "Couponholders") and the holders of Receipts (the "Receiptholders") are deemed to have notice of, and are entitled to the benefit of, all the provisions of the Agency Agreement and the applicable Pricing Supplement, which are binding on them. Words and expressions defined in the Agency Agreement, defined elsewhere in the Offering Circular or used in the applicable Pricing Supplement shall have the same meanings where used in these Terms and Conditions unless the context otherwise requires or unless otherwise stated. 1. FORM, DENOMINATION AND TITLE The Notes in this Series are in bearer form and, in the case of definitive Notes, serially numbered in the Specified Currency and in the Specified Denomination(s) specified in the applicable Pricing Supplement. This Note is a Fixed Rate Note, a Floating Rate Note, a Zero Coupon Note, a Dual Currency Note or an Indexed Note or any combination of the foregoing, depending upon the Interest/Payment Basis specified in the applicable Pricing Supplement. It is also a Partly Paid Note and/or an Indexed Note (where payment with respect to principal is linked to an Index and/or formula) if, in each case, the applicable Pricing Supplement so indicates and the appropriate provisions of these Terms and Conditions will apply accordingly. Notes in definitive form are issued with Coupons attached, unless they are Zero Coupon Notes in which case references to interest (other than interest due after the Maturity Date), Coupons and Couponholders in these Terms and Conditions are not applicable. A-12 Except as set out below, title to the Notes, Receipts and Coupons will pass by delivery. TMCC and any Paying Agent may deem and treat the bearer of any Note, Receipt or Coupon as the absolute owner thereof (whether or not overdue and notwithstanding any notice of ownership or writing thereon or notice of any previous loss or theft thereof) for all purposes but, in the case of any global Note, without prejudice to the provisions set out in the next succeeding paragraph. For so long as any of the Notes are represented by a global Note, each person who is for the time being shown in the records of Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear System ("Euroclear") or of CedelS.A. ("Cedel") and any other additional or alternative clearance system, including SICOVAM, as the holder of a particular principal amount of Notes (in which regard any certificate or other document issued by Euroclear or Cedel as to the principal amount of such Notes standing to the account of any person shall be conclusive and binding for all purposes except in the case of manifest error) shall be treated by TMCC, the Agent and any other Paying Agent as the holder of such principal amount of such Notes for all purposes other than with respect to the payment of principal or interest on the Notes, the right to which shall be vested, as against TMCC, the Agent and any other Paying Agent solely in the bearer of the relevant global Note in accordance with and subject to its terms (and the expressions "Noteholder" and "holder of Notes" and related expressions shall be construed accordingly). Notes which are represented by a global Note will be transferable only in accordance with the rules and procedures for the time being of Euroclear or of Cedel, as the case may be. Any reference herein to Euroclear and/or Cedel shall, whenever the context so permits, be deemed to include a reference to any additional or alternative clearance system (including, if applicable, SICOVAM) approved by TMCC and the Agent. 2. STATUS OF NOTES The Notes will be unsecured general obligations of TMCC and will rank pari passu with all other unsecured and unsubordinated indebtedness for borrowed money of TMCC from time to time outstanding. 3. COMPOSITION OF THE ECU Subject to the provisions of Condition 6(c), the value and composition of the ECU in which any Notes are denominated, or, in the case of Dual Currency Notes payable in ECU, in which any such Notes are payable, as the case may be, will be the same as the composition of the European Currency Unit that is from time to time used as the unit of account of the European Communities (the "EC"). Pursuant to Council Regulation (EEC) No. 1971/89 of 19th June, 1989 the ECU is at present defined as the sum of the following components: 0.6242 German mark 0.130 Luxembourg franc 0.08784 Pound sterling 0.1976 Danish krone 1.332 French francs 0.008552 Irish pound 151.8 Italian lire 1.440 Greek drachmas 0.2198 Dutch guilder 6.885 Spanish pesetas 3.301 Belgian francs 1.393 Portuguese escudos A-13 4. INTEREST (a) INTEREST ON FIXED RATE NOTES (i) Each Fixed Rate Note bears interest on its principal amount from (and including) the Interest Commencement Date which is specified in the applicable Pricing Supplement at the rate(s) per annum equal to the Fixed Rate(s) of Interest specified in the applicable Pricing Supplement payable in arrears on the Fixed Interest Date(s) in each year and on the Maturity Date so specified if it does not fall on a Fixed Interest Date. The first payment of interest shall be made on the Fixed Interest Date next following the Interest Commencement Date and, if the first anniversary of the Interest Commencement Date is not a Fixed Interest Date, will amount to the Initial Broken Amount specified in the applicable Pricing Supplement. If the Maturity Date is not a Fixed Interest Date, interest from (and including) the preceding Fixed Interest Date (or the Interest Commencement Date) to (but excluding) the Maturity Date will amount to the Final Broken Amount specified in the applicable Pricing Supplement. (ii) If interest is required to be calculated for a period of less than a full year, such interest shall be calculated on the basis of a 360-day year consisting of 12 months of 30 days each and, in the case of an incomplete month, the number of days elapsed or as otherwise specified in the applicable Pricing Supplement. (b) INTEREST ON FLOATING RATE NOTES (i) Interest Payment Dates Each Floating Rate Note bears interest on its principal amount (or, if it is a Partly Paid Note, the amount paid up) from (and including) the Interest Commencement Date specified in the applicable Pricing Supplement and such interest will be payable in arrears on each interest payment date (each an "Interest Payment Date") which (except as otherwise specified in these Terms and Conditions or the applicable Pricing Supplement) falls the number of months or other period specified as the Interest Period in the applicable Pricing Supplement after the preceding Interest Payment Date or, in the case of the first Interest Payment Date, after the Interest Commencement Date. Unless otherwise specified in the applicable Pricing Supplement, if any Interest Payment Date would otherwise fall on a day which is not a Business Day (as defined below), it shall be postponed to the next day which is a Business Day unless it would thereby fall into the next calendar month in which event the Interest Payment Date shall be brought forward to the immediately preceding Business Day and, thereafter, each subsequent Interest Payment Date shall be the last Business Day of the last month of each subsequent Interest Period. In this Condition 4, "Business Day" means (unless otherwise stated in the applicable Pricing Supplement) a day which is both: (A) a day (other than a Saturday or a Sunday) on which commercial banks and foreign exchange markets settle payments in London and/or any other location specified in the applicable Pricing Supplement; and A-14 (B) either (1) in relation to Notes denominated in a Specified Currency other than ECU, a day on which commercial banks and foreign exchange markets settle payments in the principal financial center of the country of the relevant Specified Currency (if other than London) or (2) in relation to Notes denominated in ECU, an ECU Settlement Date (as defined in the 1991 ISDA Definitions, as amended and updated as of the Issue Date of this Note, published by the International Swap and Derivatives Association, Inc. (the "ISDA Definitions")). Unless otherwise provided in the applicable Pricing Supplement, the principal financial center of any country for the purpose of these Terms and Conditions shall be as provided in the ISDA Definitions (except in the case of New Zealand and Luxembourg, where the principal financial center will be as specified in the Pricing Supplement). (ii) Rate of Interest The Rate of Interest payable from time to time in respect of each Series of Floating Rate Notes shall be determined in the manner specified in the applicable Pricing Supplement. (iii) ISDA Determination (A) Where ISDA Determination is specified in the applicable Pricing Supplement as the manner in which the Rate of Interest is to be determined, the Rate of Interest shall be determined on such dates and at such rates as would have been determined by TMCC if it had entered into an interest rate swap transaction governed by an agreement (regardless of any event of default or termination event thereunder) in the form of the 1992 ISDA Master Agreement (Multicurrency - Cross Border) (the "ISDA Agreement") (copyright 1992) and evidenced by a Confirmation (as defined in the ISDA Agreement) incorporating the ISDA Definitions with the holder of the relevant Note under which: (1) the manner in which the Rate of Interest is to be determined is the "Floating Rate Option"; (2) TMCC is the "Floating Rate Payer"; (3) the Agent or other person specified in the applicable Pricing Supplement is the "Calculation Agent"; (4) the Interest Commencement Date is the "Effective Date"; (5) the aggregate principal amount of the Series is the " Notional Amount"; (6) the relevant Interest Period is the "Designated Maturity"; (7) the Interest Payment Dates are the "Floating Rate Payer Payment Dates"; (8) the Margin is the "Spread"; and A-15 (9) all other terms are as specified in the applicable Pricing Supplement. (B) When Condition 4(b)(iii)(A) applies, with respect to each relevant Interest Payment Date: (1) the amount of interest determined for such Interest Payment Date shall be the Interest Amount for the relevant Interest Period for the purposes of these Terms and Conditions as though calculated under Condition 4(b)(vi) below; and (2) the Rate of Interest for such Interest Period shall be the Floating Rate (as defined in the ISDA Definitions) determined by the Agent (or such other agent specified in the applicable Pricing Supplement) in accordance with Condition 4(b)(iii)(A), plus or minus (as indicated in the applicable Pricing Supplement), the applicable Margin (if any). (iv) Screen Determination Screen Rate Determination: Where Screen Rate Determination is specified in the applicable Pricing Supplement as the manner in which the Rate of Interest is to be determined, the Rate of Interest for each Interest Period will be either: (x) the quotation; or (y) the arithmetic mean (rounded, if necessary, to the fourth decimal place with 0.00005 being rounded upwards) of the offered quotations, (expressed as a percentage rate per annum), for deposits in the Specified Currency for that Interest Period which appears or appear, as the case may be, on the appropriate page of the Screen as at 11:00 a.m. (London time) on the Interest Determination Date (as defined below) in question plus or minus (as specified in the applicable Pricing Supplement) the Margin (if any), all as determined by the Agent; (A) if, in the case of (x) above, no such rate appears or, in the case of (y) above, fewer than two of such offered rates appear at such time or if the offered rate or rates which appears or appear, as the case may be, as at such time do not apply to a period of a duration equal to the relevant Interest Period, the Rate of Interest for such Interest Period shall, subject as provided below, be the arithmetic mean (rounded, if necessary, to the fourth decimal place with 0.00005 being rounded upwards) of the offered quotations (expressed as a percentage rate per annum), of which the Agent is advised by all Reference Banks (as defined below) as at 11:00 a.m. (London time) on the Interest Determination Date plus or minus (as specified in the applicable Pricing Supplement) the Margin (if any), all as determined by the Agent; A-16 (B) if on any Interest Determination Date to which Condition 4(b)(iv)(A) applies two or three only of the Reference Banks advise the Agent of such offered quotations, the Rate of Interest for the next Interest Period shall, subject as provided below, be determined as in Condition 4(b)(iv)(A) on the basis of the rates of those Reference Banks advising such offered quotations; (C) if on any Interest Determination Date to which Condition 4(b)(iv)(A) applies one only or none of the Reference Banks advises the Agent of such rates, the Rate of Interest for the next Interest Period shall, subject as provided below, be whichever is the higher of: (1) the Rate of Interest in effect for the last preceding Interest Period to which Condition 4(b)(iv)(A) shall have applied (plus or minus (as specified in the applicable Pricing Supplement), where a different Margin is to be applied to the next Interest Period than that which applied to the last preceding Interest Period, the Margin relating to the next Interest Period in place of the Margin relating to the last preceding Interest Period); or (2) the reserve interest rate (the "Reserve Interest Rate") which shall be the rate per annum which the Agent determines to be either (x) the arithmetic mean (rounded, if necessary, to the fourth decimal place with 0.00005 being rounded upwards) of the lending rates for the Specified Currency which banks selected by the Agent in the principal financial center of the country of the Specified Currency (which, if Australian dollars, shall be Sydney) are quoting on the relevant Interest Determination Date for the next Interest Period to the Reference Banks or those of them (being at least two in number) to which such quotations are, in the opinion of the Agent, being so made plus or minus (as specified in the applicable Pricing Supplement) the Margin (if any), or (y) in the event that the Agent can determine no such arithmetic mean, the lowest lending rate for the Specified Currency which banks selected by the Agent in the principal financial center of the country of the Specified Currency (which, if Australian dollars, shall be Sydney) are quoting on such Interest Determination Date to leading European banks for the next Interest Period plus or minus (as specified in the applicable Pricing Supplement) the Margin (if any), provided that if the banks selected as aforesaid by the Agent are not quoting as mentioned above, the Rate of Interest shall be the Rate of Interest specified in (1) above; (D) the expression "the appropriate page of the Screen" means such page, whatever its designation, on which London Interbank Offered Rates or, if there is only one such rate, that rates for deposits in the Specified Currency of prime banks are for the time being displayed on the Reuters Monitor Money Rates Service or the appropriate Associated Press-Dow Jones Tele-rate Service, as specified in the applicable Pricing Supplement; A-17 (E) unless otherwise specified in the applicable Pricing Supplement, the Reference Banks will be the principal London offices of The Chase Manhattan Bank, N.A., National Westminster Bank PLC, Swiss Bank Corporation and The Bank of Tokyo, Ltd. TMCC shall procure that, so long as any Floating Rate Note to which Condition 4(b)(iv)(A) is applicable remains outstanding, in the case of any bank being unable or unwilling to continue to act as a Reference Bank, TMCC shall specify the London office of some other leading bank engaged in the Eurodollar market to act as such in its place; (F) the expression "Interest Determination Date" means, unless otherwise specified in the applicable Pricing Supplement, (x) other than in the case of Condition 4(b)(iv)(A), with respect to Notes denominated in any Specified Currency other than sterling, the second Banking Day in London prior to the commencement of the relevant Interest Period and, in the case of Condition4(b)(iv)(A), the second Banking Day in the principal financial center of the country of the Specified Currency (which, if Australian dollars, shall be Sydney) prior to the commencement of the relevant Interest Period and (y) with respect to Notes denominated in sterling, the first Banking Day in London of the relevant Interest Period; and (G) the expression "Banking Day" means, in respect of any place, any day on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) in that place or, as the case may be, as indicated in the applicable Pricing Supplement. (v) Minimum and/or maximum Rate of Interest If the applicable Pricing Supplement specifies a minimum Rate of Interest for any Interest Period, then in no event shall the Rate of Interest for such period be less than such minimum Rate of Interest. If the applicable Pricing Supplement specifies a maximum Rate of Interest for any Interest Period, then in no event shall the Rate of Interest for such Interest Period be greater than such maximum Rate of Interest. (vi) Determination of Rate of Interest and calculation of Interest Amount The Agent will, at or as soon as practicable after each time at which the Rate of Interest is to be determined, determine the Rate of Interest (subject to any minimum or maximum Rate of Interest specified in the applicable Pricing Supplement) and calculate the amount of interest (the "Interest Amount") payable on the Floating Rate Notes in respect of each Specified Denomination for the relevant Interest Period. Each Interest Amount shall be calculated by applying the Rate of Interest to the Specified Denomination, multiplying such sum by the actual number of days in the Interest Period concerned divided by 360 (or 365/366 in the case of Floating Rate Notes denominated in sterling), or such other denominator determined by the Agent to be customary for such calculation, and rounding the result and figure to the nearest cent (or its approximate equivalent in the relevant A-18 other Specified Currency), half a cent (or its approximate equivalent in the relevant other Specified Currency) being rounded upwards. Without prejudice to subparagraph (viii) below, the determination of the Rate of Interest and calculation of each Interest Amount by the Agent shall (in the absence of manifest error) be binding on all parties. (vii) Notification of Rate of Interest and Interest Amount The Agent will notify or cause to be notified TMCC and any stock exchange on which the relevant Floating Rate Notes are listed of the Rate of Interest and each Interest Amount for each Interest Period and the relevant Interest Payment Date and will cause the same to be published in accordance with Condition 16 as soon as possible after their determination but in no event later than the fourth London Business Day thereafter. Each Interest Amount and Interest Payment Date so notified may subsequently be amended (or appropriate alternative arrangements made by way of adjustment) without publication as aforesaid in the event of an extension or shortening of the Interest Period in accordance with the provisions hereof. Each stock exchange on which the relevant Floating Rate Notes are for the time being listed will be promptly notified of any such amendment. For the purposes of this subparagraph (vii), the expression "London Business Day" means a day (other than a Saturday or a Sunday) on which banks and foreign exchange markets are open for business in London. (viii) Certificates to be final All certificates, communications, opinions, determinations, calculations, quotations and decisions given, expressed, made or obtained for the purposes of the provisions of this paragraph (b), by the Agent, shall (in the absence of manifest error) be binding on TMCC, the Agent, the other Paying Agents and all Noteholders, Receiptholders and Couponholders and (in the absence as aforesaid) no liability to TMCC, the Noteholders, the Receiptholders or the Couponholders shall attach to the Agent in connection with the exercise or non-exercise by it of its powers, duties and discretions pursuant to such provisions. (ix) Limitations on Interest In addition to any maximum Rate of Interest which may be applicable to any Floating Rate Note pursuant to Condition 4(b)(v) above, the interest rate on Floating Rate Notes shall in no event be higher than the maximum rate permitted by New York law, as the same may be modified by United States law of general application. (c) INDEXED NOTES AND DUAL CURRENCY NOTES In the case of Indexed Notes or Dual Currency Notes, if the Rate of Interest or amount of interest fails to be determined by reference to an index and/or a formula or, as the case may be, an exchange rate, such Rate of Interest or amount of interest payable shall be determined in the manner specified in the applicable Pricing Supplement. A-19 (d) ZERO COUPON NOTES When a Zero Coupon Note becomes due and repayable prior to the Maturity Date and is not paid when due, the amount due and repayable shall be the Amortized Face Amount of such Note as determined in accordance with Condition 5(f)(iii). As from the Maturity Date, any overdue principal of such Note shall bear interest at a rate per annum equal to the Accrual Yield set forth in the applicable Pricing Supplement. (e) PARTLY PAID NOTES In the case of Partly Paid Notes (other than Partly Paid Notes which are Zero Coupon Notes), interest will accrue as aforesaid on the paid up principal amount of such Notes and otherwise as specified in the applicable Pricing Supplement. (f) ACCRUAL OF INTEREST Each Note (or in the case of the redemption in part only of a Note, such part to be redeemed) will cease to bear interest (if any) from the due date for its redemption unless, upon due presentation thereof, payment of principal is improperly withheld or refused. In such event, interest will continue to accrue (as well after as before judgment) until whichever is the earlier of (i) the day on which all sums due in respect of such Note up to that day are received by or on behalf of the holder of such Note; and (ii) the day on which the Agent has notified the holder thereof (either in accordance with Condition 16 or individually) of receipt of all sums due in respect thereof up to that date. 5. REDEMPTION AND PURCHASE (a) AT MATURITY Unless previously redeemed or purchased and cancelled as specified below, Notes will be redeemed by TMCC at their Final Redemption Amount in the relevant Specified Currency on the Maturity Date specified in the applicable Pricing Supplement (in the case of a Note other than a Floating Rate Note) or on the Interest Payment Date falling in the Redemption Month specified in the applicable Pricing Supplement (in the case of a Floating Rate Note). (b) REDEMPTION FOR TAX REASONS TMCC may redeem the Notes of this Series as a whole but not in part at any time at their Early Redemption Amount, together, if appropriate, with accrued interest to but excluding the date fixed for redemption, if TMCC shall determine that as a result of any change in or amendment to the laws (or any regulations or rulings promulgated thereunder) of the United States of America or of any political subdivision or taxing authority thereof or therein affecting taxation, or any change in application or official interpretation of such laws, regulations or rulings, which amendment or change is effective on or after the latest Issue Date of the Notes of this Series, TMCC would be required to pay Additional Amounts, as provided in Condition 9, on the occasion of the next payment due in respect of the Notes of this Series. The Notes of this Series are also subject to redemption as a whole but not in part in the other circumstances described in Condition 9. A-20 Notice of intention to redeem Notes will be given at least once in accordance with Condition 16 not less than 30 days nor more than 60 days prior to the date fixed for redemption, provided that no such notice of redemption shall be given earlier than 90 days prior to the effective date of such change or amendment and that at the time notice of such redemption is given, such obligation to pay such Additional Amounts remains in effect. From and after any redemption date, if monies for the redemption of Notes shall have been made available for redemption on such redemption date, such Notes shall cease to bear interest, if applicable, and the only right of the holders of such Notes and any Receipts or Coupons appertaining thereto shall be to receive payment of the Early Redemption Amount and, if appropriate, all unpaid interest accrued to such redemption date. (c) PRICING SUPPLEMENT The Pricing Supplement applicable to the Notes of this Series shall indicate either: (i) that the Notes of this Series cannot be redeemed prior to their Maturity Date or, if the Notes of this Series are Floating Rate Notes, the Interest Payment Date falling in the relevant Redemption Month (in each case except as otherwise provided in paragraph (b) above and in Condition 13); or (ii) that such Notes will be redeemable at the option of TMCC and/or the holders of the Notes prior to such Maturity Date or, as the case may be, the Interest Payment Date falling in the relevant Redemption Month in accordance with the provisions of paragraphs (d) and/or (e) below on the date or dates and at the amount or amounts indicated in the applicable Pricing Supplement. (d) REDEMPTION AT THE OPTION OF TMCC If so specified in the applicable Pricing Supplement, TMCC may, having (unless otherwise specified in the applicable Pricing Supplement) given not more than 60 nor less than 30 days notice to the holders of the Notes of this Series in accordance with Condition 16 (which notice shall be irrevocable), repay all or some only of the Notes of this Series then outstanding on the Optional Redemption Date(s) and at the Optional Redemption Amount(s) indicated in the applicable Pricing Supplement together, if appropriate, with accrued interest. In the event of a redemption of some only of such Notes of this Series, such redemption must be for an amount being the Minimum Redemption Amount or a Higher Redemption Amount, as indicated in the applicable Pricing Supplement. In the case of a partial redemption of definitive Notes of this Series, the Notes of this Series to be repaid will be selected individually by lot not more than 60 days prior to the date fixed for redemption and a list of the Notes of this Series called for redemption will be published in accordance with Condition 16 not less than 30 days prior to such date. In the case of a partial redemption of Notes which are represented by a global Note, the relevant Notes will be redeemed in accordance with the rules of Euroclear and/or Cedel. Notes denominated in sterling or Yen or French Franc Notes may not be redeemed pursuant to this paragraph prior to one year from the Issue Date. Notes denominated in Deutsche Marks may not be redeemed pursuant to this paragraph prior to two years from the Issue Date. A-21 (e) REDEMPTION AT THE OPTION OF THE NOTEHOLDERS Unless otherwise specified in the applicable Pricing Supplement, the Notes will not be subject to repayment at the option of the Noteholders. Notes denominated in sterling or Yen or French Franc Notes may not be redeemed pursuant to this paragraph prior to one year from the Issue Date. Notes denominated in Deutsche Marks may not be redeemed pursuant to this paragraph prior to two years from the Issue Date. (f) EARLY REDEMPTION AMOUNTS For the purposes of paragraph (b) above and Condition 13, Notes will be redeemed at an amount (the "Early Redemption Amount") calculated as follows: (i) in the case of Notes with a Final Redemption Amount equal to the Issue Price, at the Final Redemption Amount thereof; or (ii) in the case of Notes (other than Zero Coupon Notes) with a Final Redemption Amount which is or may be greater or less than the Issue Price or which is payable in a Specified Currency other than that in which the Notes are denominated, at the amount set out in the applicable Pricing Supplement, or if no such amount or manner is set out in the applicable Pricing Supplement, at their principal amount; or (iii) in the case of Zero Coupon Notes, at an amount (the "Amortized Face Amount") equal to: (A) the sum of (x) the Reference Price specified in the applicable Pricing Supplement and (y) the product of the Accrual Yield specified in the applicable Pricing Supplement (compounded annually) being applied to the Reference Price from (and including) the Issue Date to (but excluding) the date fixed for redemption or (as the case may be) the date upon which such Note becomes due and repayable; or (B) if the amount payable in respect of any Zero Coupon Note upon redemption of such Zero Coupon Note pursuant to paragraph (b) above or upon its becoming due and repayable as provided in Condition 13 is not paid or available for payment when due, the amount due and repayable in respect of such Zero Coupon Note shall be the Amortized Face Amount of such Zero Coupon Note calculated as provided above as though the references in sub-paragraph (A) to the date fixed for redemption or the date upon which the Zero Coupon Note becomes due and repayable were replaced by references to the date (the "Reference Date") which is the earlier of: (1) the date on which all amounts due in respect of the Note have been paid; (2) the date on which the full amount of the moneys repayable has been received by the Agent and notice to that effect has been given in accordance with Condition 16. A-22 The calculation of the Amortized Face Amount in accordance with this sub-paragraph (B) will continue to be made, after as well as before judgment, until the Reference Date unless the Reference Date falls on or after the Maturity Date, in which case the amount due and repayable shall be the principal amount of such Note together with interest at a rate per annum equal to the Accrual Yield. Unless specified otherwise in the applicable Pricing Supplement, where any such calculation is to be made for a period of less than a full year, it shall be made on the basis of a 360-day year consisting of 12 months of 30 days each (or 365/366 days in the case of Notes denominated in sterling) and, in the case of an incomplete month, the number of days elapsed. (g) INSTALLMENTS Any Note which is repayable in installments will be redeemed in the Installment Amounts and on the Installment Dates specified in the applicable Pricing Supplement. (h) PARTLY PAID NOTES If the Notes are Partly Paid Notes, they will be redeemed, whether at maturity, early redemption or otherwise in accordance with the provisions of this Condition 5 as amended or varied by the applicable Pricing Supplement. (i) PURCHASES TMCC may at any time purchase Notes of this Series (provided that, in the case of definitive Notes, all unmatured Receipts and Coupons appertaining thereto are surrendered therewith) in the open market at any price. If purchases are made by tender, tenders must be available to all holders of Notes of this Series alike. (j) CANCELLATION All Notes redeemed or purchased as aforesaid will be cancelled forthwith, together with all unmatured Receipts and Coupons attached thereto or surrendered or purchased therewith, and may not be resold or reissued. 6. PAYMENTS (a) METHOD OF PAYMENT Subject as provided below, payments in a currency other than ECU will be made by transfer to an account in the Specified Currency (which, in the case of a payment in Yen to a non- resident of Japan, shall be a non-resident account) maintained by the payee with, or by a check in the Specified Currency drawn on, a bank (which, in the case of a payment in Yen to a non-resident of Japan, shall be an authorized foreign exchange bank) in the principal financial center of the country of such Specified Currency; provided, however, a check may not be delivered to an address in, and an amount may not be transferred to an account at a bank located in, the United States of America or its possessions by any office or agency of TMCC, the Agent or any Paying Agent, except as provided in Condition 6(b). A-23 Payments in ECU will be made by credit or transfer to an ECU account specified by the payee. Payments will be subject in all cases to any fiscal or other laws and regulations applicable thereto in the place of payment, but without prejudice to the provisions of Condition 9. (b) PRESENTATION OF NOTES, RECEIPTS, COUPONS AND TALONS Payments of principal in respect of definitive Notes will (subject as provided below) be made in the Specified Currency against surrender of definitive Notes and payments of interest in respect of the definitive Notes will (subject as provided below) be made in the Specified Currency against surrender of Coupons, in each case at the specified office of any Paying Agent outside the United States of America and its possessions. In the case of definitive Notes, payments of principal with respect to installments (if any), other than the final installment, will (subject as provided below) be made against presentation and surrender of the relevant Receipt. Each Receipt must be presented for payment of the relevant installment together with the relevant definitive Note against which the amount will be payable with respect to that installment. If any definitive Note is redeemed or becomes repayable prior to the stated Maturity Date (in the case of a Note other than a Floating Rate Note) or prior to the Interest Payment Date falling in the Redemption Month (in the case of a Floating Rate Note) in respect thereof, principal will be payable on surrender of such definitive Note together with all unmatured Receipts appertaining thereto. Receipts presented without the definitive Note to which they appertain and unmatured Receipts do not constitute valid obligations of TMCC. Fixed Rate Notes in definitive form (other than Dual Currency Notes or Indexed Notes) should be presented for payment together with all unmatured Coupons appertaining thereto failing which the amount of any missing unmatured Coupon (or, in the case of payment not being made in full, the same proportion of the aggregate amount of such missing unmatured Coupon as the sum so paid bears to the sum due) will be deducted from the sum due for payment. Each amount of principal so deducted will be paid in the manner mentioned above against surrender of the relative missing Coupon at any time before the expiry of five years after the Relevant Date (as defined in Condition 15) in respect of such principal (whether or not such Coupon would otherwise have become void under Condition 15). Upon any Fixed Rate Note becoming due and repayable prior to its Maturity Date, all unmatured Talons (if any) appertaining thereto will become void and no further Coupons will be issued in respect thereof. Upon the date on which any Floating Rate Note, Dual Currency Note or Indexed Note in definitive form becomes due and repayable, all unmatured Coupons and Talons (if any) relating thereto (whether or not attached) shall become void and no payment shall be made in respect thereof. If the due date for redemption of any Note in definitive form is not a Fixed Interest Date or an Interest Payment Date, interest (if any) accrued with respect to such Note from and including the preceding Fixed Interest Date or Interest Payment Date or, as the case may be, the Interest Commencement Date shall be payable only against surrender of the relevant definitive Note. A-24 Payments of principal and interest (if any) in respect of Notes of this Series represented by any global Note will (subject as provided below) be made in the manner specified above (except in the case of Notes denominated or payable in ECU, when payments will be made as provided in Condition 6(c)) and otherwise in the manner specified in the relevant global Note against presentation or surrender, as the case may be, of such global Note at the specified office of the Agent. A record of each payment made against presentation or surrender of such global Note, distinguishing between any payment of principal and any payment of interest, will be made on such global Note by the Agent and such record shall be prima facie evidence that the payment in question has been made. The holder of the relevant global Note shall be the only person entitled to receive payments in respect of Notes represented by such global Note and TMCC will be discharged by payment to, or to the order of, the holder of such global Note with respect to each amount so paid. Each of the persons shown in the records of Euroclear or Cedel as the holder of a particular principal amount of Notes must look solely to Euroclear and/or Cedel, as the case may be, for his share of each payment so made by TMCC to, or to the order of, the holder of the relevant global Note. No person other than the holder of the relevant global Note shall have any claim against TMCC in respect of payments due on that global Note. Notwithstanding the foregoing, payments in respect of the Notes denominated in U.S. dollars will only be made at the specified office of a Paying Agent in the United States (which expression, as used herein, means the United States of America (including the States and the District of Columbia), its territories, its possessions and other areas subject to its jurisdiction) if: (i) TMCC has appointed Paying Agents with specified offices outside the United States with the reasonable expectation that such Paying Agents would be able to make payment at such specified offices outside the United States of the full amount owing in respect of the Notes in the manner provided above when due; (ii) payment of the full amount owing in respect of the Notes at such specified offices outside the United States is illegal or effectively precluded by exchange controls or other similar restrictions; and (iii) such payment is then permitted under United States law without involving, in the opinion of TMCC, adverse tax consequences to TMCC. (c) PAYMENT IN A COMPONENT CURRENCY If any payment of principal or interest in respect of a Note is to be made in ECU and, on the relevant due date, the ECU is neither used as the unit of account of the EC nor as the currency of the European Union, the Agent shall, without liability on its part and without having regard to the interests of individual Noteholders, Receiptholders or Couponholders and after consultation with TMCC if practicable, choose a currency which was a component of the ECU when the ECU was most recently used as the unit of account of the EC (the "Chosen Currency") in which all payments due on that due date with respect to such Notes, Receipts and Coupons shall be made. Notice of the A-25 Chosen Currency selected by the Agent shall, where practicable, be published in accordance with Condition 16. The amount of each payment in such Chosen Currency shall be computed on the basis of the equivalent of the ECU in that currency, determined as set out in this paragraph (c), as of the fourth London Business Day (as defined in Condition 4(b)(vii)) prior to the date on which such payment is due. Without prejudice to the preceding paragraph, on the first London Business Day from which the ECU ceases to be used as the unit of account of the EC or as the currency of the European Union, the Agent shall, without liability on its part and without having regard to the interests of individual Noteholders, Receiptholders or Couponholders and after consultation with TMCC if practicable, choose a currency which was a component of the ECU when the ECU was most recently used as the unit of account of the EC (also, the "Chosen Currency") in which all payments with respect to Notes, Receipts and Coupons having a due date prior thereto but not yet presented for payment are to be made. The amount of each payment in such Chosen Currency shall be computed on the basis of the equivalent of the ECU in that currency, determined as set out in this paragraph (c), as of such first London Business Day. The equivalent of the ECU in the relevant Chosen Currency as of any date (the "Day of Valuation") shall be determined on the following basis by the Agent. The component currencies of the ECU for this purpose (the "Components") shall be the currency amounts which were components of the ECU as of the last date on which the ECU was used as a unit of account of the EC. The equivalent of the ECU in the Chosen Currency shall be calculated by, first, aggregating the U.S. dollar equivalents of the Components, and then, using the rate used for determining the U.S. dollar equivalents of the Components in the Chosen Currency as set forth below, calculating the equivalent in the Chosen Currency of such aggregate amount in U.S. dollars. The U.S. dollar equivalent of each of the Components shall be determined by the Agent on the basis of the middle spot delivery quotations prevailing at 11:00 a.m. (London time) on the Day of Valuation, as obtained by the Agent from one or more leading banks as selected by the Agent in the country of issue of the Component in question. If the official unit of any Component is altered by way of combination or subdivision, the number of units of that Component shall be divided or multiplied in the same proportion. If two or more Components are consolidated into a single currency, the amounts of those Components shall be replaced by an amount in such single currency equal to the sum of the amounts of the consolidated Components expressed in such single currency. If any Component is divided into two or more currencies, the amount of that Component shall be replaced by amounts of such two or more currencies each of which shall be equal to the amount of the former Component divided by the number of currencies into which that currency was divided. If no direct quotations are available for a Component as of a Day of Valuation from any of the banks selected by the Agent for this purpose because foreign exchange markets are closed in the country of issue of that currency or for any other reason, the most recent direct quotations for that currency obtainable by the Agent shall be used in computing the equivalents of the ECU on such Day of Valuation; provided, however, that such most recent quotations may be used only if they were prevailing in the country of issue of such Component not more than two London Business Days before such Day of Valuation. A-26 If the most recent quotations obtained by the Agent are those which were so prevailing more than two London Business Days before such Day of Valuation, the Agent shall determine the U.S. dollar equivalent of such Component on the basis of cross rates derived from the middle spot delivery quotations for such Component and for the U.S. dollar prevailing at 11:00 a.m. (London time) on such Day of Valuation, as obtained by the Agent from one or more leading banks, as selected by the Agent, in a country other than the country of issue of such Component. If such most recent quotations obtained by the Agent are those which were so prevailing not more than two London Business Days before such Day of Valuation, the Agent shall determine the U.S. dollar equivalent of such Component on the basis of such cross rates if the Agent judges that the equivalent so calculated is more representative than the U.S. dollar equivalent calculated on the basis of such most recent direct quotations. Unless otherwise determined by the Agent, if there is more than one market for dealing in any Component by reason of foreign exchange regulations or for any other reason, the market to be referred to in respect of such currency shall be that upon which a non- resident issuer of securities denominated in such currency would purchase such currency in order to make payments in respect of such securities. All choices and determinations made by the Agent for the purposes of this paragraph (c) shall be at its sole discretion (after consultation with TMCC) and shall, in the absence of manifest error, be conclusive for all purposes and binding on TMCC and all Noteholders, Receiptholders and Couponholders. Whenever a payment is to be made in a Chosen Currency as provided in this paragraph (c), such Chosen Currency shall be deemed to be the Specified Currency for the purposes of the other provisions of this Condition 6. (d) PAYMENT BUSINESS DAY If the date for payment of principal with respect to a Floating Rate Note or principal or interest with respect to a Fixed Rate Note is not a Payment Business Day in a place of presentation, the holder thereof shall not be entitled to payment until the next following Payment Business Day in the relevant place and shall not be entitled to further interest or other payment in respect of such delay. For these purposes, unless otherwise specified in the applicable Pricing Supplement, "Payment Business Day" means any day which is a day (other than a Saturday or Sunday) on which commercial banks are open for business and foreign exchange markets settle payments in the relevant place of presentation and a Business Day as defined in Condition 4. (e) INTERPRETATION OF PRINCIPAL AND INTEREST Any reference in these Terms and Conditions to principal in respect of the Notes shall be deemed to include, as applicable: (i) any Additional Amounts which may be payable under Condition 9 in respect of principal; (ii) the Final Redemption Amount of the Notes; (iii) the Early Redemption Amount of the Notes; A-27 (iv) in relation to Notes redeemable in installments, the Installment Amounts; (v) any premium and any other amounts which may be payable under or in respect of the Notes; (vi) in relation to Zero Coupon Notes, the Amortized Face Amount; and (vii) the Optional Redemption Amount(s) (if any) of the Notes. Any reference in these Terms and Conditions to interest in respect of the Notes shall be deemed to include, as applicable, any Additional Amounts which may be payable under Condition 9. 7. AGENT AND PAYING AGENTS The names of the initial Agent and the other initial Paying Agents and their initial specified offices are set out on the back cover page of the Offering Circular. In acting under the Agency Agreement, the Agent and the Paying Agents will act solely as agents of TMCC and do not assume any obligations or relationships of agency or trust to or with the Noteholders, Receiptholders or Couponholders, except that (without affecting the obligations of TMCC to the Noteholders, Receiptholders and Couponholders to repay Notes and pay interest thereon) funds received by the Agent for the payment of the principal of or interest on the Notes shall be held by it for the Noteholders and/or Receiptholders and/or Couponholders until the expiration of the relevant period of prescription under Condition 15. TMCC agrees to perform and observe the obligations imposed upon it under the Agency Agreement and to cause the Agent and the Paying Agents to perform and observe the obligations imposed upon them under the Agency Agreement. The Agency Agreement contains provisions for the indemnification of the Paying Agents and for relief from responsibility in certain circumstances, and entitles any of them to enter into business transactions with TMCC without being liable to account to the Noteholders, Receiptholders or the Couponholders for any resulting profit. TMCC is entitled to vary or terminate the appointment of any Paying Agent or any other paying agent appointed under the terms of the Agency Agreement and/or appoint additional or other paying agents and/or approve any change in the specified office through which any paying agent acts, provided that: (i) so long as the Notes of this Series are listed on any stock exchange, there will at all times be a Paying Agent with a specified office in each location required by the rules and regulations of the relevant stock exchange; (ii) there will at all times be a Paying Agent with a specified office in a city approved by the Agent in continental Europe; and (iii) there will at all times be an Agent. A-28 In addition, with respect to Notes denominated in U.S. dollars TMCC shall forthwith appoint a Paying Agent having a specified office in New York City in the circumstances described in the final paragraph of Condition 6(b). Any variation, termination, appointment or change shall only take effect (other than in the case of insolvency, when it shall be of immediate effect) after not less than 30 nor more than 45 days prior notice thereof shall have been given to the Agent and the Noteholders in accordance with Condition 16. 8. EXCHANGE OF TALONS On and after the Fixed Interest Date or the Interest Payment Date, as appropriate, on which the final Coupon comprised in any Coupon sheet matures, the Talon (if any) forming part of such Coupon sheet may be surrendered at the specified office of the Agent or any other Paying Agent in exchange for a further Coupon sheet including (if such further Coupon sheet does not include Coupons to, and including, the final date for the payment of interest due in respect of the Note to which it appertains) a further Talon, subject to the provisions of Condition 15. Each Talon shall, for the purposes of these Terms and Conditions, be deemed to mature on the Fixed Interest Date or the Interest Payment Date (as the case may be) on which the final Coupon comprised in the relative Coupon sheet matures. 9. PAYMENT OF ADDITIONAL AMOUNTS TMCC will, subject to certain limitations and exceptions (set forth below), pay to a Noteholder, Receiptholder or Couponholder who is a United States Alien (as defined below) such amounts ("Additional Amounts") as may be necessary so that every net payment of principal or interest in respect of the Notes, Receipts or Coupons after deduction or withholding for or on account of any present or future tax, assessment or other governmental charge imposed upon such Noteholder, Receiptholder or Couponholder, or by reason of the making of such payment, by the United States or any political subdivision or taxing authority thereof or therein, will not be less than the amount provided for in the Notes, Receipts or Coupons. However, TMCC shall not be required to make any payment of Additional Amounts for or on account of: (a) any tax, assessment or other governmental charge which would not have been imposed but for (i) the existence of any present or former connection between such Noteholder, Receiptholder or Couponholder (or between a fiduciary, settlor, beneficiary, member or shareholder of, or possessor of a power over, such Noteholder, Receiptholder or Couponholder, if such Noteholder, Receiptholder or Couponholder is an estate, trust, partnership or corporation) and the United States, including, without limitation, such Noteholder, Receiptholder or Couponholder (or such fiduciary, settlor, beneficiary, member, shareholder or possessor) being or having been a citizen or resident thereof or being or having been present or engaged in trade or business therein or having or having had a permanent establishment therein, or (ii) such Noteholder's, Receiptholder's or Couponholder's past or present status as a personal holding company, foreign personal holding company or controlled foreign corporation or a private foundation (as those terms are defined for United States tax purposes) or as a corporation which accumulates earnings to avoid United States federal income tax; A-29 (b) any estate, inheritance, gift, sales, transfer, personal property or similar tax, assessment or other governmental charge; (c) any tax, assessment or other governmental charge that would not have been so imposed but for the presentation of a Note, Receipt or Coupon for payment on a date more than 15 days after the date on which such payment became due and payable or the date on which payment thereof is duly provided for, whichever occurs later; (d) any tax, assessment or other governmental charge which is payable otherwise than by withholding from payments of principal or interest in respect of the Notes, Receipts or Coupons; (e) any tax, assessment or other governmental charge imposed on interest received by (i) a 10 percent shareholder of TMCC within the meaning of Internal Revenue Code Section 871(h)(3)(b) or Section 881(c)(3)(b) or (ii) a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business; (f) any tax, assessment or other governmental charge required to be withheld by any Paying Agent from any payment of principal or interest in respect of any Note, Receipt or Coupon, if such payment can be made without such withholding by any other Paying Agent with respect to the Notes in a Western European city; (g) any tax, assessment or other governmental charge which would not have been imposed but for the failure to comply with certification, information of other reporting requirements concerning the nationality, residence, identity or connection with the United States of the Noteholder, Receiptholder or Couponholder or of the beneficial owner of such Note, Receipt or Coupon, if such compliance is required by stature or by regulation of the United States Treasury Department as a precondition to relief or exemption from such tax, assessment or other governmental charge; or (h) any combination of items (a), (b), (c), (d), (e), (f) and (g); nor shall Additional Amounts be paid to any Noteholder, Receiptholder or Couponholder who is a fiduciary or partnership or other than the sole beneficial owner of the Note, Receipt or Coupon to the extent a beneficiary or settlor with respect to such fiduciary or a member of such partnership or a beneficial owner of the Note, Receipt or Coupon would not have been entitled to payment of the Additional Amounts had such beneficiary, settlor, member or beneficial owner been the holder of the Note, Receipt or Coupon. The term "United States Alien" means any corporation, individual, fiduciary or partnership that for United States federal income tax purposes is a foreign corporation, nonresident alien individual, nonresident alien fiduciary of a foreign estate or trust, or foreign partnership one or more members of which is a foreign corporation, nonresident alien individual or nonresident alien fiduciary of a foreign estate or trust. A-30 If TMCC shall determine that any payment made outside the United States by TMCC or any of its Paying Agents of the full amount of the next scheduled payment of either principal or interest due in respect of any Note, Receipt or Coupon of this Series would, under any present or future laws or regulations of the United States affecting taxation or otherwise, be subject to any certification, information or other reporting requirements of any kind, the effect of which requirements is the disclosure to TMCC, any of its Paying Agents or any governmental authority of the nationality, residence or identity (as distinguished from status as a United States Alien) of a beneficial owner of such Note, Receipt or Coupon who is a United States Alien (other than such requirements which (i) would not be applicable to a payment made to a custodian, nominee or other agent of the beneficial owner, or which can be satisfied by such a custodian, nominee or other agent certifying to the effect that such beneficial owner is a United States Alien; provided, however, in each case that payment by such custodian, nominee or agent to such beneficial owner is not otherwise subject to any requirements referred to in this sentence, (ii) are applicable only to payment by a custodian, nominee or other agent of the beneficial owner to or on behalf of such beneficial owner, or (iii) would not be applicable to a payment made by any other paying agent of TMCC), TMCC shall redeem the Notes of this Series as a whole but not in part at a redemption price equal to the Early Redemption Amount together, if appropriate, with accrued interest to, but excluding, the date fixed for redemption, such redemption to take place on such date not later than one year after the publication of notice of such determination. If TMCC becomes aware of an event that might give rise to such certification, information or other reporting requirements, TMCC shall, as soon as practicable, solicit advice of independent counsel selected by TMCC to establish whether such certification, information or other reporting requirements will apply and, if such requirements will apply, TMCC shall give prompt notice of such determination (a "Tax Notice") in accordance with Condition 16 stating in such notice the effective date of such certification, information or other reporting requirements and, if applicable, the date by which the redemption shall take place. Notwithstanding the foregoing, TMCC shall not redeem Notes if TMCC shall subsequently determine not less than 30 days prior to the date fixed for redemption that subsequent payments would not be subject to any such requirements, in which case TMCC shall give prompt notice of such determination in accordance with Condition 16 and any earlier redemption notice shall thereby be revoked and of no further effect. Notwithstanding the foregoing, if and so long as the certification, information or other reporting requirements referred to in the preceding paragraph would be fully satisfied by payment of a backup withholding tax or similar charge, TMCC may elect prior to publication of the Tax Notice to have the provisions described in this paragraph apply in lieu of the provisions described in the preceding paragraph, in which case the Tax Notice shall state the effective date of such certification, information or reporting requirements and that TMCC has elected to pay Additional Amounts rather than redeem the Notes. In such event, TMCC will pay as Additional Amounts such amounts as may be necessary so that every net payment made following the effective date of such certification, information or reporting requirements outside the United States by TMCC or any of its Paying Agents of principal or interest due in respect of a Note, Receipt or Coupon to a holder who certifies to the effect that the beneficial owner of such Note, Receipt or Coupon is a United States Alien (provided that such certification shall not have the effect of communicating to TMCC or any of its Paying Agents or any governmental authority the nationality, residence or identity of such A-31 beneficial owner) after deduction or withholding for or on account of such backup withholding tax or similar charge (other than a backup withholding tax or similar charge which (i) is imposed as a result of certification, information or other reporting requirements referred to in the second parenthetical clause of the first sentence of the preceding paragraph, or (ii) is imposed as a result of the fact that TMCC or any of its Paying Agents has actual knowledge that the holder or beneficial owner of such Note, Receipt or Coupon is not a United States Alien but is within the category of persons, corporations or other entities described in clause (a)(i) of the third preceding paragraph, or (iii) is imposed as a result of presentation of such Note, Receipt or Coupon for payment more than 15 days after the date on which such payment becomes due and payable or on which payment thereof is duly provided for, whichever occurs later), will not be less than the amount provided for in such Note, such Receipt or such Coupon to be then due and payable. In the event TMCC elects to pay such Additional Amounts, TMCC will have the right, at its sole option, at any time, to redeem the Notes of this Series, as a whole but not in part at a redemption price equal to their Early Redemption Amount, together, if appropriate, with accrued interest to the date fixed for redemption including any Additional Amounts required to be paid under this paragraph. If TMCC has made the determination described in the preceding paragraph with respect to certification, information or other reporting requirements applicable to interest only and subsequently makes a determination in the manner and of the nature referred to in such preceding paragraph with respect to such requirements applicable to principal, TMCC will redeem the Notes of this Series in the manner and on the terms described in the preceding paragraph (except as provided below), unless TMCC elects to have the provisions of this paragraph apply rather than the provisions of the immediately preceding paragraph. If in such circumstances the Notes are to be redeemed, TMCC will be obligated to pay Additional Amounts with respect to interest, if any, accrued to the date of redemption. If TMCC has made the determination described in the preceding paragraph and subsequently makes a determination in the manner and of the nature referred to in such preceding paragraph that the level of withholding applicable to principal or interest has been increased, TMCC will redeem the Notes of this Series in the manner and on the terms described in the preceding paragraph (except as provided below), unless TMCC elects to have the provisions of this paragraph apply rather than the provisions of the immediately preceding paragraph. If in such circumstances the Notes are to be redeemed, TMCC will be obligated to pay Additional Amounts with respect to the original level of withholding on principal and interest, if any, accrued to the date of redemption. 10. NEGATIVE PLEDGE The Notes will not be secured by any mortgage, pledge or other lien. TMCC shall not pledge or otherwise subject to any lien any property or assets of TMCC unless the Notes are secured by such pledge or lien equally and ratably with all other obligations secured thereby so long as such obligations shall be so secured; provided, however, that such covenant will not apply to liens securing obligations which do not in the aggregate at any one time outstanding exceed 5% of Consolidated Net Tangible Assets (as defined below) of TMCC and its consolidated subsidiaries and also will not apply to: A-32 (a) the pledge of any assets of TMCC to secure any financing by TMCC of the exporting of goods to or between, or the marketing thereof in, countries other than the United States in connection with which TMCC reserves the right, in accordance with customary and established banking practice, to deposit, or otherwise subject to a lien, cash, securities or receivables, for the purpose of securing banking accommodations or as the basis for the issuance of bankers' acceptances or in aid of other similar borrowing arrangements; (b) the pledge of receivables payable in currencies other than United States dollars to secure borrowings in countries other than the United States; (c) any deposit of assets of TMCC with any surety company or clerk of any court, or in escrow, as collateral in connection with, or in lieu of, any bond on appeal by TMCC from any judgment or decree against it, or in connection with other proceedings in actions at law or in equity by or against TMCC or in favor of any governmental bodies to secure progress, advance or other payments in the ordinary course of TMCC's business; (d) any lien or charge on any property of TMCC, tangible or intangible, real or personal, existing at the time of acquisition or construction of such property (including acquisition through merger or consolidation) or given to secure the payment of all or any part of the purchase or construction price thereof or to secure any indebtedness incurred prior to, at the time of, or within one year after, the acquisition or completion of construction thereof for the purpose of financing all or any part of the purchase or construction price thereof; (e) any lien in favor of the United States of America or any state thereof or the District of Columbia, or any agency, department or other instrumentality thereof, to secure progress, advance or other payments pursuant to any contract or provisions of any statute; (f) any lien securing the performance of any contract or undertaking not directly or indirectly in connection with the borrowing of money, obtaining of advances or credit or the securing of debt, if made and continuing in the ordinary course of business; (g) any lien to secure non-recourse obligations in connection with TMCC's engaging in leveraged or single- investor lease transactions; and (h) any extension, renewal or replacement (or successive extensions, renewals or replacements), in whole or in part, of any l lien, charge or pledge referred to in clauses (a) through (g) above; provided, however, that the amount of any and all obligations and indebtedness secured thereby will not exceed the amount thereof so secured immediately prior to the time of such extension, renewal or replacement, and that such extension, renewal or replacement will be limited to all or a part of the property which secured the charge or lien so extended, renewed or replaced (plus improvements on such property). A-33 "Consolidated Net Tangible Assets" means the aggregate amount of assets (less applicable reserves and other properly deductible items) after deducting therefrom (i) all current liabilities and (ii) all goodwill, trade names, trademarks, patents, unamortized debt discount and expense and other like intangibles of TMCC and its consolidated subsidiaries, all as set forth on the most recent balance sheet of TMCC and its consolidated subsidiaries prepared in accordance with generally accepted accounting principles as practiced in the United States. 11. CONSOLIDATION OR MERGER TMCC may consolidate with, or sell, lease or convey all or substantially all of its assets as an entirety to, or merge with or into any other corporation provided that in any such case, (i) either TMCC shall be the continuing corporation, or the successor corporation shall be a corporation organized and existing under the laws of the United States of America or any state thereof and such successor corporation shall expressly assume the due and punctual payment of the principal of and interest (including Additional Amounts as provided in Condition 9) on all the Notes, Receipts and Coupons, according to their tenor, and the due and punctual performance and observance of all of the covenants and conditions of this Note to be performed by TMCC by an amendment to the Agency Agreement executed by such successor corporation, TMCC and the Agent, and (ii) immediately after giving effect to such transaction, no Event of Default under Condition 13, and no event which, with notice or lapse of time or both, would become such an Event of Default shall have happened and be continuing. In case of any such consolidation, merger, sale, lease or conveyance and upon any such assumption by the successor corporation, such successor corporation shall succeed to and be substituted for TMCC, with the same effect as if it had been named herein as TMCC, and the predecessor corporation, except in the event of a conveyance by way of lease, shall be relieved of any further obligation under this Note and the Agency Agreement. 12. MEETINGS, MODIFICATIONS AND WAIVERS The Agency Agreement contains provisions, which, unless otherwise provided in the Pricing Supplement, are binding on TMCC, the Noteholders, the Receiptholders and the Couponholders, for convening meetings of holders of Notes, Receipts and Coupons to consider matters affecting their interests, including the modification or waiver of the Terms and Conditions applicable to the Notes. The Agency Agreement, the Notes and any Receipts and Coupons attached to the Notes may be amended by TMCC (and, in the case of the Agency Agreement, the Agent) (i) for the purpose of curing any ambiguity, or for curing, correcting or supplementing any defective provision contained therein, or to evidence the succession of another corporation to TMCC as provided in Condition 11, (ii) to make any further modifications of the terms of the Agency Agreement necessary or desirable to allow for the issuance of any additional Notes (which modifications shall not be materially adverse to holders of outstanding Notes) or (iii) in any manner which TMCC (and, in the case of the Agency Agreement, the Agent) may deem necessary or desirable and which shall not materially adversely affect the interests of the holders of the Notes, Receipts and Coupons, to all of which each holder of Notes, Receipts and Coupons shall, by acceptance thereof, consent. In addition, with A-34 the written consent of the holders of not less than a majority in aggregate principal amount of the Notes then outstanding affected thereby, or by a resolution adopted by a majority in aggregate principal amount of such outstanding Notes affected thereby present or represented at a meeting of such holders at which a quorum is present, as provided in the Agency Agreement (provided that such resolution shall be approved by the holders of not less than 25 percent of the aggregate principal amount of Notes affected thereby then outstanding), TMCC and the Agent may from time to time and at any time enter into agreements modifying or amending the Agency Agreement or the terms and conditions of the Notes, Receipts and Coupons for the purpose of adding any provisions to or changing in any manner or eliminating any provisions of the Agency Agreement or of modifying in any manner the rights of the holders of Notes, Receipts and Coupons; provided, however, that no such agreement shall, without the consent or the affirmative vote of the holder of each Note affected thereby, (i) change the stated maturity of the principal of or any installment of interest on any Note, (ii) reduce the principal amount of or interest on any Note, (iii) change the obligation of TMCC to pay Additional Amounts as provided in Condition 9, (iv) reduce the percentage in principal amount of outstanding Notes the consent of the holders of which is necessary to modify or amend the Agency Agreement or the terms and conditions of the Notes or to waive any future compliance or past default, or (v) reduce the percentage in principal amount of outstanding Notes the consent of the holders of which is required at any meeting of holders of Notes at which a resolution is adopted. The quorum at any meeting called to adopt a resolution will be persons holding or representing a majority in aggregate principal amount of the Notes at the time outstanding affected thereby and at any adjourned meeting will be one or more persons holding or representing 25 percent in aggregate principal amount of such Notes at the time outstanding affected thereby. Any instrument given by or on behalf of any holder of a Note in connection with any consent to any such modification, amendment or waiver will be irrevocable once given and will be conclusive and binding on all subsequent holders of such Note. Any modifications, amendments or waivers to the Agency Agreement or to the terms and conditions of the Notes, Receipts and Coupons will be conclusive and binding on all holders of Notes, Receipts and Coupons, whether or not they have given such consent or were present at any meeting, and whether or not notation of such modifications, amendments or waivers is made upon the Notes, Receipts and Coupons. It shall not be necessary for the consent of the holders of Notes under this Condition 12 to approve the particular form of any proposed amendment, but it shall be sufficient if such consent shall approve the substance thereof. Notes authenticated and delivered after the execution of any amendment to the Agency Agreement, Notes, Receipts or Coupons may bear a notation in form approved by the Agent as to any matter provided for in such amendment to the Agency Agreement. New Notes so modified as to conform, in the opinion of the Agent and TMCC, to any modification contained in any such amendment may be prepared by TMCC, authenticated by the Agent and delivered in exchange for the Notes then outstanding. For the purposes of this Condition 12 and Condition 13 below, the term "outstanding" means, in relation to the Notes, all Notes issued under the Agency Agreement other than (i) those which have been redeemed in full in accordance with the Agency Agreement or these Terms and Conditions, (ii) those in respect of which the date for redemption in accordance with these Terms and A-35 Conditions has occurred and the redemption moneys therefor (including all interest (if any) accrued thereon to the date for such redemption and any interest (if any) payable under these Terms and Conditions after such date) have been duly paid to the Agent as provided in the Agency Agreement (and, where appropriate, notice has been given to the Noteholders in accordance with Condition 16) and remain available for payment against presentation of the Notes, (iii) those which have become void under Condition 15, (iv) those which have been purchased and cancelled as provided in Condition 5, (v) those mutilated or defaced notes which have been surrendered in exchange for replacement Notes pursuant to Condition 14, (vi) (for the purposes only of determining how many Notes are outstanding and without prejudice to their status for any other purpose) those Notes alleged to have been lost, stolen or destroyed and in respect of which replacement Notes have been issued pursuant to Condition 14 and (vii) temporary global Notes to the extent that they shall have been duly exchanged in whole for permanent global Notes or definitive Notes and permanent global Notes to the extent that they shall have been duly exchanged in whole for definitive Notes, in each case pursuant to their respective provisions. 13. DEFAULT AND ACCELERATION (a) In the event that (each an "Event of Default"): (i) default shall be made in the payment when due of any installment of interest or any Additional Amounts on any of the Notes continued for a period of 30 days after the date when due; or (ii) default shall be made for more than three days in the payment when due of the principal of any Note (whether at maturity or upon redemption or otherwise); or (iii) default in the deposit of any sinking fund payment with respect to any Note when and as due; or (iv) TMCC shall fail to perform or observe any other term, covenant or agreement contained in the Terms and Conditions applicable to any of the Notes or in the Agency Agreement for a period of 60 days after the date on which written notice of such failure, requiring TMCC to remedy the same, first shall have been given to the Agent and TMCC by the holders of at least 25 percent in aggregate principal amount of the Notes then outstanding; or (v) there is an acceleration of, or failure to pay when due and payable, any indebtedness for money borrowed of TMCC exceeding $10,000,000 and such acceleration is not rescinded or annulled, or such indebtedness is not discharged, within 10 days after written notice thereof has first been given to TMCC and the Agent by the holders of not less than 10 percent in aggregate principal amount of Notes then outstanding; or (vi) the entry by a court having competent jurisdiction of (a) a decree or order granting relief in respect of TMCC in an involuntary proceeding under any applicable bankruptcy, insolvency reorganization or other similar law and such decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or (b) a decree or order adjudging TMCC to be insolvent, or approving a petition seeking A-36 reorganization, arrangement, adjustment or composition of TMCC and such decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or (c) a final and non-appealable order appointing a custodian, receiver, liquidator, assignee, trustee or other similar official of TMCC or of any substantial part of the property of TMCC, or ordering up the winding up or liquidation of the offices of TMCC; or (vii) the commencement by TMCC of a voluntary proceeding under any applicable bankruptcy, insolvency, reorganization or other similar law or of a voluntary proceeding seeking to be adjudicated insolvent or the consent of TMCC to the entry of a decree or order for relief in an involuntary proceeding under any applicable bankruptcy, insolvency, reorganization or other similar law or to the commencement of any insolvency proceedings against it, or the filing by TMCC of a petition or answer or consent seeking reorganization or relief under any applicable law, or the consent by TMCC to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee or similar official of TMCC or any substantial part of the property of TMCC or the making by TMCC of an assignment for the benefit of creditors, or the taking of corporate action by TMCC in furtherance of any such action; then the holder of any Note may, at its option, declare the principal of such Note and the interest, if any, accrued thereon to be due and payable immediately by written notice to TMCC and the Agent at its main office in London, and unless all such defaults shall have been cured by TMCC prior to receipt of such written notice, the principal of such Note and the interest, if any, accrued thereon shall become and be immediately due and payable. At any time after such a declaration of acceleration with respect to the Notes has been made and before a judgment or decree for payment of the money due with respect to any Note has been obtained by any Noteholder, such declaration and its consequences may be rescinded and annulled upon the written consent of holders of a majority in aggregate principal amount of the Notes then outstanding, or by resolution adopted by a majority in aggregate principal amount of the Notes present or represented at a meeting of holders of the Notes at which a quorum is present, as provided in the Agency Agreement, if: (1) TMCC has paid or deposited with the Agent a sum sufficient to pay (A) all overdue installments of interest on the Notes, (B) the principal of Notes which has become due otherwise than by such declaration of acceleration; and (2) all Events of Default with respect to the Notes, other than the non-payment of the principal of such Notes which has become due solely by such declaration of acceleration, have been cured or waived as provided in paragraph (b) below. No such rescission shall affect any subsequent default or impair any right consequent thereon. A-37 (b) Any Events of Default by TMCC, other than the events described in paragraph (a)(i) or (a)(ii) above or in respect of a covenant or provision which cannot be modified and amended without the written consent of the holders of all outstanding Notes, may be waived by the written consent of holders of a majority in aggregate principal amount of the Notes then outstanding affected thereby, or by resolution adopted by the holders of a majority in aggregate principal amount of such Notes then outstanding present or represented at a meeting of holders of the Notes affected thereby at which a quorum is present, as provided in the Agency Agreement. 14. REPLACEMENT OF NOTES, RECEIPTS, COUPONS AND TALONS Should any Note, Receipt, Coupon or Talon be mutilated, defaced or destroyed or be lost or stolen, it may be replaced at the specified office of the Agent in London (or such other place outside the United States as may be notified to the Noteholders), in accordance with all applicable laws and regulations, upon payment by the claimant of the expenses incurred by TMCC and the Agent in connection therewith and on such terms as to evidence, indemnity, security or otherwise as TMCC and the Agent may require. Mutilated or defaced Notes, Receipts, Coupons or Talons must be surrendered before replacements will be issued. 15. PRESCRIPTION The Notes, Receipts and Coupons will become void unless presented for payment within a period of five years from the Relevant Date (as defined below) relating thereto. Any moneys paid by TMCC to the Agent for the payment of principal or interest in respect of the Notes and remaining unclaimed for a period of one year shall forthwith be repaid to TMCC and holders shall thereafter look only to TMCC for payment thereof. All liability with respect thereto shall cease when the Notes, Receipts and Coupons become void. As used herein, the "Relevant Date" means: (A) the date on which such payment first becomes due; or (B) if the full amount of the moneys payable has not been received by the Agent on or prior to such due date, the date on which, the full amount of such moneys having been so received, notice to that effect shall have been given to the Noteholders in accordance with Condition 16. 16. NOTICES All notices regarding the Notes shall be published in one leading English language daily newspaper with circulation in London (which is expected to be the Financial Times in London) or, if this is not practicable, one other such English language newspaper as TMCC, in consultation with the Agent, shall decide. In addition, with respect to any Notes quoted on the Paris Bourse, and so long as that exchange so requires, any notice to the holder of such Notes or the Coupons relating thereto will be validly given if published in a daily newspaper of general circulation in Paris (which is expected to be l'Agence Economique et Financiere), or if this is not practicable, in a newspaper of general circulation in France as determined by TMCC, in consultation with A-38 the Agent. TMCC shall also ensure that notices are duly published in a manner which complies with the rules and regulations of any stock exchange on which the Notes are for the time being listed. Any such notice shall be deemed to have been given on the date of the first publication. Until such time as any definitive Notes are issued, there may, so long as the global Notes for this Series are held in their entirety on behalf of Euroclear and Cedel, be substituted for such publication in such newspaper the delivery of the relevant notice to Euroclear and Cedel for communication by them to the holders of the Notes of this Series. Any such notice shall be deemed to have been given to the holders of the Notes of this Series on the seventh day after the day on which the said notice was given to Euroclear and Cedel. Notices to be given by any holder of the Notes of this Series shall be in writing and given by lodging the same, together with the relevant Note or Notes, with the Agent. While any of the Notes of this Series are represented by a global Note, such notice may be given by any holder of a Note of this Series to the Agent via Euroclear and/or Cedel, as the case may be, in such manner as the Agent and Euroclear and/or Cedel, as the case may be, may approve for this purpose. 17. GOVERNING LAW The Agency Agreement and the Notes, the Receipts and the Coupons are governed by, and shall be construed in accordance with, the laws of the State of New York, United States of America, applicable to agreements made and to be performed wholly within such jurisdiction. USE OF PROCEEDS Unless otherwise specified in an applicable Pricing Supplement, the net proceeds from the sale of the Notes will be added to TMCC's general funds and will be available for the purchase of earning assets and for the retirement of debt. Such proceeds initially may be used to reduce short-term borrowings or may be invested in short-term securities. A-39 APPENDIX B ---------- FORMS OF GLOBAL AND DEFINITIVE NOTES, COUPONS, ---------------------------------------------- RECEIPTS AND TALONS ------------------- PART 1 ------ FORM OF TEMPORARY GLOBAL NOTE OF -------------------------------- TOYOTA MOTOR CREDIT CORPORATION ------------------------------- [THE ISSUER IS NOT AN INSTITUTION AUTHORIZED UNDER THE BANKING ACT 1987 AND THIS IS A MEDIUM-TERM NOTE ISSUED IN ACCORDANCE WITH REGULATIONS MADE UNDER SECTION 4 OF THE BANKING ACT 1987. REPAYMENT OF THE PRINCIPAL AND THE PAYMENT OF ANY INTEREST IN CONNECTION WITH THIS MEDIUM-TERM NOTE HAVE NOT BEEN GUARANTEED]. ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE. TOYOTA MOTOR CREDIT CORPORATION (Incorporated under the laws of the State of California, U.S.A.) TEMPORARY GLOBAL NOTE representing [Specified Currency and Principal Amount of Series] EURO MEDIUM-TERM NOTES DUE [Year of Maturity] Series No. [ ] Serial No. [ ] The Notes represented by this Temporary Global Note are listed on The International Stock Exchange of the United Kingdom and the Republic of Ireland Limited (the "London Stock Exchange") - -------------------- Delete in the case of all Notes other than Notes denominated in sterling. Delete in the case of a Series of unlisted Notes or add reference to other stock exchange, if applicable. B-1 This Note is a Temporary Global Note in respect of a duly authorized issue of [Specified Currency and Principal Amount of Series] Euro Medium-Term Notes Due [Year of Maturity] (the "Notes") of [Specified Currency and Specified Denomination] each of Toyota Motor Credit Corporation (the "Company"). References herein to the Conditions shall be to the Terms and Conditions of the Notes (the "Conditions") as set out in Appendix A to the Agency Agreement (as defined below) as modified and supplemented by the information set out in the Pricing Supplement (the "Pricing Supplement") (which is attached hereto), provided that, in the event of any conflict between the provisions of the Conditions and the information set out in the Pricing Supplement, the latter shall prevail. Words and expressions defined in the Conditions and the Pricing Supplement and not otherwise defined herein shall have the same meanings when used herein. This Temporary Global Note is issued subject to, and with the benefit of, the Conditions and an Amended and Restated Agency Agreement (the "Agency Agreement", which expression shall be construed as a reference to that agreement as the same may be amended or supplemented from time to time) dated July , 1994, between the Company and The Chase Manhattan Bank, N.A. (the -- "Agent") and the other agents named therein. This Temporary Global Note is to be held by a common depositary for Morgan Guaranty Trust Company of New York, Brussels Office, as operator of the Euroclear System ("Euroclear"), and Cedel S.A. ("Cedel") on behalf of account holders which have the Notes represented by this Temporary Global Note credited to their respective securities accounts with Euroclear or Cedel from time to time. For value received, the Company, subject to and in accordance with the Conditions, promises to pay to the bearer hereof on [each Installment Date the relevant Installment Amount] the [Maturity Date] [Interest Payment Date falling in the Redemption Month], or on such earlier date as the Notes may become due and repayable in accordance with the Conditions, the amount payable under the Conditions on redemption of the Notes then represented by this Temporary Global Note and to pay interest (if any) on the principal amount of the Notes from time to time represented by this Temporary Global Note calculated and payable as provided in the Conditions together with any other sums payable under the Conditions, upon presentation and, at maturity, surrender of this Temporary Global Note at the principal office of the Agent in London, England, or at the offices of any of the other paying agents located outside the United States (as defined below) (except as provided in the Conditions) from time to time appointed by the Company in respect of the Notes, but in each case subject to the requirements as to certification provided herein. Any monies paid by the Company to B-2 the Agent for the payment of or interest on any Notes and remaining unclaimed at the end of one year after such principal or interest shall have become due and payable (whether at maturity, upon call for redemption or otherwise) shall then be repaid to the Company and upon such repayment all liability of the Agent with respect thereto shall thereupon cease, without, however, limiting in any way any obligation the Company may have to pay the principal of or interest on this Note as the same shall become due. On any payment of an instalment or interest being made details of such payment shall be entered by or on behalf of the Company in Schedule One hereto and the relevant space in Schedule One hereto recording any such payment shall be signed by or on behalf of the Company. On any redemption or purchase and cancellation of any of the Notes represented by this Temporary Global Note, details of such redemption or purchase and cancellation shall be entered by or on behalf of the Company in Schedule Two hereto and the relevant space in Schedule Two hereto recording any such redemption or purchase and cancellation shall be signed by or on behalf of the Company. Upon any such redemption or purchase and cancellation, the principal amount of this Temporary Global Note and the Notes represented by this Temporary Global Note shall be reduced by the principal amount so redeemed or purchased and cancelled. Prior to the Exchange Date (as defined below), all payments (if any) on this Temporary Global Note will only be made to the bearer hereof to the extent that there is presented to the Agent by Euroclear or Cedel a certificate, substantially in the form set out in Schedule Three hereto, to the effect that it has received from or in respect of a person entitled to a particular principal amount of the Notes (as shown by its records) a certificate from such person in or substantially in the form of Certificate "A" as set out in Schedule Three hereto. After the Exchange Date the holder of this Temporary Global Note will not be entitled to receive any payment of interest hereon. On or after the date which is 40 days after the Issue Date (the "Exchange Date"), this Temporary Global Note may be exchanged, in whole or in part (free of charge) for, as specified in the Pricing Supplement, either Definitive Notes and (if applicable) Receipts, Coupons and Talons in or substantially in the forms set out in Parts 3, 4, 5 and 6, respectively, of Appendix B of the Agency Agreement (on the basis that all appropriate details have been included on the face of such Definitive Notes and (if applicable) Receipts, Coupons and Talons and the Pricing Supplement (or the relevant provisions of the Pricing Supplement) have either been endorsed on or attached to such Definitive Notes) or, a Permanent Global Note in the form set out in Part 2 of Appendix B to the Agency Agreement (together with the Pricing Supplement attached thereto) upon presentation B-3 of this Temporary Global Note by the bearer hereof at the offices of the Agent in London, England (or at such other place outside the United States of America, its territories and possessions, any State of the United States and the District of Columbia (the "United States") as the Agent may agree). Definitive Notes or the Permanent Global Note shall be so issued and delivered in exchange for only that portion of this Temporary Global Note in respect of which there shall have been presented to the Agent by Euroclear or Cedel a certificate, substantially in the form set out in Schedule Three hereto, to the effect that it has received from or in respect of a person entitled to a particular principal amount of the Notes (as shown by its records) a certificate from such person in or substantially in the form of Certificate "A" as set out in Schedule Three hereto and, in the case of Definitive Notes, subject to such notice period as may be specified in the Pricing Supplement. If Definitive Notes and (if applicable) Receipts, Coupons and Talons have already been issued in exchange for all the Notes represented for the time being by the Permanent Global Note, then this Temporary Global Note may only thereafter be exchanged for Definitive Notes and (if applicable) Receipts, Coupons and Talons pursuant to the terms hereof. On an exchange of the whole of this Temporary Global Note, this Temporary Global Note shall be surrendered to the Agent. On an exchange of part only of this Temporary Global Note, details of such exchange shall be entered by or on behalf of the Company in Schedule Two hereto and the relevant space in Schedule Two hereto recording such exchange shall be signed by or on behalf of the Company. If, following the issue of a Permanent Global Note in exchange for some of the Notes represented by this Temporary Global Note, further Notes represented by this Temporary Global Note are to be exchanged pursuant to this paragraph, such exchange may be effected, without the issue of a new Permanent Global Note, by the Company or its agent endorsing Schedule Two of the Permanent Global Note previously issued to reflect an increase in the aggregate principal amount of the Permanent Global Note which would otherwise have been issued on such exchange. Until the exchange of the whole of this Temporary Global Note as aforesaid, the bearer hereof shall in all respects (except as otherwise provided herein) be entitled to the same benefits as if it were the bearer of Definitive Notes, Receipts and Coupons in the form set out in Part 3, Part 4 and Part 5, respectively, of Appendix B to the Agency Agreement. [The Company has complied with its obligations under any rules (the "listing rules") made under Section 142(6) of the Financial Services Act 1986 in respect of its debt securities listed on The International Stock Exchange of the United Kingdom and the Republic of Ireland Limited. Since information was last B-4 provided in compliance with those obligations, the Company, having made all reasonable enquiries, has not become aware of any change in circumstances which could reasonably be regarded as significantly and adversely affecting its ability to meet its obligations in respect hereof as they fall due.] This Temporary Global Note is governed by, and shall be construed in accordance with, the laws of the State of New York, United States of America, applicable to agreements made and to be performed wholly within such jurisdiction. This Temporary Global Note shall not be valid unless authenticated by the Agent. This Temporary Global Note may be duly executed on behalf of the Company by manual or facsimile signature. - ----------------- Delete in the case of all Notes Other than Notes denominated in sterling. B-5 IN WITNESS WHEREOF, the Company has caused this Temporary Global Note to be duly executed on its behalf. TOYOTA MOTOR CREDIT CORPORATION Dated: By: --------------------------- John McGovern Senior Vice President FISCAL AGENT'S CERTIFICATE OF ATTEST: AUTHENTICATION This is one of the Temporary --------------------------- Global Notes described in the Wolfgang Jahn within mentioned Agency Agree- Group Vice President ment. By or on behalf of The Chase Manhattan Bank, N.A. as Fiscal Agent By: --------------------------- (Authorized Signatory) B-6 Schedule One ------------ PART I ------ INTEREST PAYMENTS ----------------- Confirmation of Total Amount payment by or Interest Date of of Interest Amount of on behalf of Payment Date Payment Payable Interest Paid the Company - --------------------------------------------------------------------------- First -------- ------------ -------------- --------------- Second -------- ------------ -------------- --------------- [continue numbering until the appropriate number of interest payment dates for the particular Series of Notes is reached] B-7 PART II ------- INSTALLMENT PAYMENTS -------------------- Confirmation of Total Amount Amount of payment by or Interest Date of of Installments Installments on behalf of Payment Date Payment Payable Paid the Company - --------------------------------------------------------------------------- First -------- --------------- ------------ ---------------- Second -------- --------------- ------------ ---------------- [continue numbering until the appropriate number of instalment payment dates for the particular Series of Notes is reached] B-8
Schedule Two ------------ SCHEDULE OF EXCHANGES --------------------- FOR NOTES REPRESENTED BY A PERMANENT GLOBAL NOTE OR --------------------------------------------------- DEFINITIVE NOTES, OR REDEMPTIONS OR PURCHASES AND CANCELLATIONS --------------------------------------------------------------- The following exchanges of a part of this Temporary Global Note for Notes represented by a Permanent Global Note or Definitive Notes or redemptions or purchases and cancellation of this Temporary Global Note have been made: Part of principal amount of this Temporary Remaining Remaining Global Note principal amount payable exchanged for amount of this under this Notes represented Temporary Temporary by a Permanent Global Note Global Note Date of Global Note or following such following such exchange, or Definitive Notes exchange, or exchange, or redemption or or redeemed or redemption or redemption or Notation made purchase and purchased and purchase and purchase and by or on behalf cancellation cancelled cancellation cancellation of the Company - ----------------------------------------------------------------------------------- - ------------ ----------------- -------------- -------------- ---------------- - ------------ ----------------- -------------- -------------- ---------------- - ------------ ----------------- -------------- -------------- ---------------- - ------------ ----------------- -------------- -------------- ----------------
B-9 Schedule Three -------------- FORM OF CERTIFICATE TO BE PRESENTED BY EUROCLEAR OR CEDEL ------------------ TOYOTA MOTOR CREDIT CORPORATION [Title of Notes] (the "Securities") This is to certify that, based solely on certifications we have received in writing, by telex or by electronic transmission from member organizations appearing in our records as persons being entitled to a portion of the principal amount set forth below (our "Member Organizations") substantially to the effect set forth in the Agency Agreement, as of the date hereof, [ ] principal amount of above-captioned Securities (i) is owned by persons that are not citizens or residents of the United States, partnerships, corporations or other entities created or organized under the laws of the United States or any estate or trust the income of which is subject to United States federal income taxation regardless of its source ("United States persons"), (ii) is owned by United States persons that (a) are foreign branches of United States financial institutions (as defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(v)) ("financial institutions") purchasing for their own account or for resale, or (b) acquired the Securities through foreign branches of United States financial institutions and who hold the securities through such United States financial institutions on the date hereof (and in either case (a) or (b), each such United States financial institution has agreed, on its own behalf, or through its agent, that we may advise the Company or the Company's agent that it will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder), or (iii) is owned by the United States or foreign financial institutions for purposes of resale during the restricted period (as defined in U.S. Treasury Regulations Section 1.163- 5(c)(2)(i)(D)(7)), and to the further effect that United States or foreign financial institutions described in clause (iii) (whether or not also described in clause (i) or (ii)) have certified that they have not acquired the Securities for purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions. As used herein, "United States" means the United States of America (including the States and the District of Columbia); and its "possessions" include Puerto Rico, the U.S. Virgin Islands, B-10 Guam, American Samoa, Wake Island and the Northern Mariana Islands. We further certify (i) that we are not making available herewith for exchange (or, if relevant, exercise of any rights or collection of any interest) any portion of the temporary global Security excepted in such Member Organization certifications and (ii) that as of the date hereof we have not received any notification from any of our Member Organizations to the effect that the statements made by such Member Organizations with respect to any portion of the part submitted herewith for exchange (or, if relevant, exercise of any rights or collection of any interest) are no longer true and cannot be relied upon at the date hereof. We will retain all certificates received from Member Organizations for the period specified in U.S. Treasury Regulation Section 1.163- 5(c)(2)(i)(D)(3)(i)(C). We understand that this certification is required in connection with certain tax laws of the Unites States. In connection therewith, if administrative and legal proceedings are commenced or threatened in connection with which this certification is or would be relevant, we irrevocably authorize you to produce this certification to any interested party in such proceedings. Dated: , 199 *. Yours faithfully, [MORGAN GUARANTY TRUST COMPANY OF NEW YORK, Brussels office, as operator of the Euroclear System] or [Cedel S.A.] By: ------------------------------ * This certificate is not to be dated earlier than five days prior to the Exchange Date or relevant payment date, as applicable. B-11 CERTIFICATE "A" FORM OF CERTIFICATE TO BE PRESENTED TO EUROCLEAR OR CEDEL ------------------ TOYOTA MOTOR CREDIT CORPORATION [Title of Notes] (the "Securities") This is to certify that as of the date hereof, and except as set forth below, the above-captioned Securities held by you for our account (i) are owned by person(s) that are not citizens or residents of the United States, partnerships, corporations or other entities created or organized under the laws of the United States or any estate or trust the income of which is subject to United States federal income taxation regardless of its source ("United States person(s)"), (ii) are owned by United States person(s) that (a) are foreign branches of United States financial institutions (as defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(v)) ("financial institutions") purchasing for their own account or for resale, or (b) acquired the Securities through foreign branches of United States financial institutions and who hold the Securities through such United States financial institutions on the date hereof (and in either case (a) or (b), each such United States financial institution hereby agrees, on its own behalf or through its agent, that you may advise the Company or the Company's agent that it will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder), or (iii) are owned by United States or foreign financial institutions for purposes of resale during the restricted period (as defined in U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)), and in addition if the owner of the Securities is a United States or foreign financial institution described in clause (iii) (whether or not also described in clause (i) or (ii)) this is further to certify that such financial institution has not acquired the Securities for purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions. As used herein, "United States" mean the United States of America (including the States and the District of Columbia); and its "possessions" include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands. B-12 We undertake to advise you promptly by tested telex or facsimile on or prior to the date on which you intend to submit your certification relating to the Securities held by you for our account in accordance with your documented procedures if any applicable statement herein is not correct on such date, and in the absence of any such notification it may be assumed that this certification applies as of such date. This certification excepts and does not relate to [ ] of such interest in the above Securities in respect of which we are not able to certify and as to which we understand exchange and delivery of definitive Securities and/or an interest in a Permanent Global Note (or, if relevant, exercise of any right or collection of any interest) cannot be made until we do so certify. We understand that this certification is required in connection with certain tax laws of the United States. In connection therewith, if administrative and legal proceedings are commended or threatened in connection with which this certification is or would be relevant, we irrevocably authorize you to produce this certification to any interested party in such proceedings. Dated: , 199 * Yours faithfully, Name of Person Making Certification By: ------------------------------ - ----------------------- * This certificate is not to be dated earlier than fifteen days prior to the Exchange Date or relevant payment date, as applicable. B-13 PART 2 ------ FORM OF PERMANENT GLOBAL NOTE OF --------------------------------- TOYOTA MOTOR CREDIT CORPORATION ------------------------------- [THE ISSUER IS NOT AN INSTITUTION AUTHORIZED UNDER THE BANKING ACT OF 1987 AND THIS IS A MEDIUM-TERM NOTE ISSUED IN ACCORDANCE WITH REGULATIONS MADE UNDER SECTION 4 OF THE BANKING ACT OF 1987. REPAYMENT OF THE PRINCIPAL AND THE PAYMENT OF ANY INTEREST IN CONNECTION WITH THIS MEDIUM-TERM NOTE HAVE NOT BEEN GUARANTEED.] ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE. TOYOTA MOTOR CREDIT CORPORATION (Incorporated under the laws of the State of California, U.S.A.) PERMANENT GLOBAL NOTE representing [Specified Currency and Principal Amount of Series] EURO MEDIUM-TERM NOTES DUE [Year of Maturity] Series No. [ ] Serial No. [ ] The Note represented by this Permanent Global Note are listed on The International Stock Exchange of the United Kingdom and the Republic of Ireland Limited (the "London Stock Exchange") This Note is a Permanent Global Note in respect of a duly authorized issue of [Specified Currency and Principal Amount of Series] Euro Medium-Term Notes Due [Year of Maturity] (the "Notes") of [Specified Currency and Specified Denomination] each of Toyota Motor Credit Corporation (the "Company"). References herein to the Conditions shall be to the Terms and Conditions of the Notes (the "Conditions") as set out in Appendix A to the Agency Agreement (as defined below) as modified and supplement by - --------------- Delete in the case of all Notes other than Notes denominated in sterling. Delete in the case of a Series of unlisted Notes or add reference to other stock exchange, if applicable. B-14 the information set out in the Pricing Supplement (the "Pricing Supplement") (which is attached hereto) and, in the event of any conflict between the provisions of the Conditions and the information set out in the Pricing Supplement, the latter shall prevail. Words and expressions defined in the Conditions and the Pricing Supplement and not otherwise defined herein shall have the same meanings when used herein. This Permanent Global Note is issued subject to, and with the benefit of, the Conditions and an Amended and Restated Agency Agreement (the "Agency Agreement", which expression shall be construed as a reference to that agreement as the same may be amended or supplemented from time to time) dated July , 1994, between the Company and The Chase Manhattan Bank, N.A. (the -- "Agent") and the other agents named therein. This Permanent Global Note is to be held by a common depositary for Morgan Guaranty Trust Company of New York, Brussels Office, as operator of the Euroclear System ("Euroclear"), and Centrale de Livraison de Valeurs Mobilieres S.A. ("Cedel") on behalf of account holders which have the Notes represented by this Permanent Global Note credited to their respective securities accounts with Euroclear or Cedel from time to time. For value received, the Company, subject to and in accordance with the Conditions, promises to pay to the bearer hereof on [each Installment Date the relevant Installment Amount] the [Maturity Date] [Interest Payment Date falling in the Redemption Month], or on such earlier date as the Notes may become due and repayable in accordance with the Conditions, the amount payable under the Conditions on redemption of the Notes then represented by this Permanent Global Note and to pay interest (if any) on the principal amount of the Notes from time to time represented by this Permanent Global Note calculated and payable as provided in the Conditions together with any other sums payable under the Conditions, upon presentation and, at maturity, surrender of this Permanent Global Note at the principal office of the Agent in London, England, or at the offices of any of the other paying agents located outside the United States (as defined below) (except as provided in the Conditions) from time to time appointed by the Company in respect of the Notes. Any monies paid by the Company to the Agent for the payment of or interest on any Notes and remaining unclaimed at the end of one year after such principal or interest shall have become due and payable (whether at maturity, upon call for redemption or otherwise) shall then be repaid to the Company and upon such repayment all liability of the Agent with respect thereto shall thereupon cease, without, however, limiting in any way any obligation the Company may have to pay the principal of or interest on this Note as the same shall become due. On any B-15 payment of an instalment or interest being made details of such payment shall be entered by or on behalf of the Company in Schedule One hereto and the relevant space in Schedule One hereto recording any such payment shall be signed by or on behalf of the Company. On any redemption or purchase and cancellation of any of the Notes represented by this Permanent Global Note, details of such redemption or purchase and cancellation shall be entered by or on behalf of the Company in Schedule Two hereto and the relevant space in Schedule Two hereto recording any such redemption or purchase and cancellation shall be signed by or on behalf of the Company. Upon any such redemption or purchase and cancellation, the principal amount of this Permanent Global Note and the Notes represented by this Permanent Global Note shall be reduced by the principal amount so redeemed or purchased and cancelled. The Notes represented by this Permanent Global Note were originally represented by a Temporary Global Note. Unless such Temporary Global Note was exchanged in whole on the issue hereof, such Temporary Global Note may be further exchanged, on the terms and conditions set out therein, for this Permanent Global Note. If any such exchange occurs following the issue hereof, the Company or its agent shall endorse Schedule Two hereto to reflect the increase in the aggregate principal amount of this Permanent Global Note due to each such exchange, whereupon the principal amount hereof shall be increased for all purposes by the amount so exchanged and endorsed. This Permanent Global Note may be exchanged, in whole or (subject to such Notes which continue to be represented by this Permanent Global Note being regarded as fungible by Euroclear and Cedel with the Definitive Notes issued in partial exchange for such Permanent Global Note (hereinafter "Clearing Agency Fungibility")) in part (free of charge), for security-printed Definitive Notes and (if applicable) Receipts, Coupons and Talons in or substantially in the forms set out in Parts 3, 4, 5 and 6, respectively, of Appendix B of the Agency Agreement (on the basis that all appropriate details have been included on the face of such Definitive Notes and (if applicable) Receipts, Coupons and Talons and the Pricing Supplement (or the relevant provisions of the Pricing Supplement) have been either endorsed on or attached to such Definitive Notes) in denominations of [Specified Currency and Specified Denomination] each. Subject as aforesaid to Clearing Agency Fungibility, either at the option of the Company not earlier than the Exchange Date or upon at least 60 days written notice expiring at least 30 days after the Exchange Date (as defined in the Temporary Global Note referred to above) being given to the Agent by Euroclear or Cedel, such exchange will be made upon presentation of this Permanent Global Note by the bearer hereof on any day (other than a Saturday or a Sunday) on B-16 which banks are open for business in London at the principal office of the Agent in London, England; provided, however, subject as aforesaid to Clearing Agency Fungibility, the first notice given to the Agent by Euroclear or Cedel shall give rise to the issue of Definitive Notes for the total amount of Notes represented by this Global Note. The aggregate principal amount of Definitive Notes issued upon an exchange of this Permanent Global Note will be equal to the aggregate principal amount of this Permanent Global Note submitted by the bearer hereof for exchange (to the extent that such principal amount does not exceed the aggregate principal amount of this Permanent Global Note, as adjusted, as shown in Schedule Two hereto). On an exchange of the whole of this Permanent Global Note, this Permanent Global Note shall be surrendered to the Agent. On an exchange of part only of this Permanent Global Note, details of such exchange shall be entered by or on behalf of the Company in Schedule Two hereto and the relevant space in Schedule Two hereto recording such exchange shall be signed by or on behalf of the Company whereupon the principal amount of this Permanent Global Note and the Notes represented by this Permanent Global Note shall be reduced by the principal amount of this Permanent Global Note so exchanged. Until the exchange of the whole of this Permanent Global Note as aforesaid, the bearer hereof shall in all respects be entitled to the same benefits as if it were the bearer of Definitive Notes, Receipts, Coupons and Talons in the form set out in Parts 3, 4, 5 and 6, respectively, of Appendix B to the Agency Agreement. [The Company has complied with its obligations under any rules (the "listing rules") made under Section 142(6) of the Financial Services Act 1986 in respect of its debt securities listed on The International Stock Exchange of the United Kingdom and the Republic of Ireland Limited. Since information was last provided in compliance with those obligations, the Company, having made all reasonable enquiries, has not become aware of any change in circumstances which could reasonably be regarded as significantly and adversely affecting its ability to meet its obligations in respect hereof as they fall due.] This Permanent Global Note is governed by, and shall be construed in accordance with, the laws of the State of New York, United States of America, applicable to agreements made and to be performed wholly within such jurisdiction. - -------------------- Delete in the case of all Notes other than Notes denominated in sterling and listed on the London Stock Exchange. B-17 This Permanent Global Note shall not be valid unless authenticated by the Agent. This Permanent Global Note may be duly executed on behalf of the Company by manual or facsimile signature. B-18 IN WITNESS WHEREOF, the Company has caused this Permanent Global Note to be duly executed on its behalf. TOYOTA MOTOR CREDIT CORPORATION Dated: By: --------------------------- John McGovern Senior Vice President FISCAL AGENT'S CERTIFICATE OF ATTEST: AUTHENTICATION This is one of the Permanent Global Notes described in the --------------------------- within mentioned Agency Agreement Wolfgang Jahn Group Vice President By or on behalf of THE CHASE MANHATTAN BANK, N.A., as Fiscal Agent By: --------------------------- (Authorized Signatory) B-19 Schedule One ------------ PART I ------ INTEREST PAYMENTS ----------------- Confirmation of Total Amount payment by or Interest Date of of Interest Amount of on behalf of Payment Date Payment Payable Interest Paid the Company - --------------------------------------------------------------------------- First -------- ------------- ------------- --------------- Second -------- ------------- ------------- --------------- [continue numbering until the appropriate number of interest payment dates for the particular Series of Notes is reached] B-20 PART II ------- INSTALLMENT PAYMENTS -------------------- Confirmation of Total Amount Amount of payment by or on Installment Date of of Installments Installments behalf of the Date Payment Payable Paid Company - --------------------------------------------------------------------------- First ------- --------------- ------------ ---------------- Second ------- --------------- ------------ ---------------- [continue numbering until the appropriate number of instalment payment dates for the particular Series of Notes is reached] B-21
Schedule Two ------------ SCHEDULE OF EXCHANGES OF A TEMPORARY ------------------------------------ GLOBAL NOTE AND FOR DEFINITIVE NOTES ------------------------------------ OR REDEMPTIONS OR PURCHASES AND CANCELLATIONS --------------------------------------------- The following increases of this Permanent Global Note, exchanges of a part of this Permanent Global Note for Definitive Notes or redemptions or purchases and cancellations of this Permanent Global Note have been made: Increase in principal Remaining Remaining amount of this principal amount payable Permanent amount under this Global Note Part of principal of this Permanent due to amount of this Permanent Global Note exchanges of Permanent Global Global Note following Date of a Temporary Note exchanged following such such exchange, Notation exchange, Global Note for Definitive exchange, or or redemption by or on or redemption for this Notes or redeemed redemption or or purchase behalf or purchase and Permanent or purchased and purchase and and of the cancellation Global Note cancelled cancellation cancellation Company - -------------------------------------------------------------------------------------------------------- - --------------- ---------------- ---------------- -------------- --------------- -------------- - --------------- ---------------- ---------------- -------------- --------------- -------------- - --------------- ---------------- ---------------- -------------- --------------- -------------- - --------------- ---------------- ---------------- -------------- --------------- --------------
PART 3 ------ (FACE OF NOTE) FORM OF DEFINITIVE NOTE OF -------------------------- TOYOTA MOTOR CREDIT CORPORATION ------------------------------- [THE ISSUER IS NOT AN INSTITUTION AUTHORIZED UNDER THE BANKING ACT 1987 AND THIS IS A MEDIUM-TERM NOTE ISSUED IN ACCORDANCE WITH REGULATIONS MADE UNDER SECTION 4 OF THE BANKING ACT 1987. REPAYMENT OF THE PRINCIPAL AND THE PAYMENT OF ANY INTEREST OR PREMIUM IN CONNECTION WITH THIS MEDIUM-TERM NOTE HAVE NOT BEEN GUARANTEED.] ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE. TOYOTA MOTOR CREDIT CORPORATION (Incorporated under the laws of the State of California, U.S.A.) representing [Specified Currency and Principal Amount of Series] EURO MEDIUM-TERM NOTES DUE [Year of Maturity] Series No. [ ] Serial No. [ ] The Notes represented by this Definitive Note are listed on The International Stock Exchange of the United Kingdom and the Republic of Ireland Limited (the "London Stock Exchange") This Note is one of a series of notes of [Specified Currency and Principal Amount of Series] ("Notes") each of Toyota Motor Credit Corporation (the "Company"). References herein to the Conditions shall be to the Terms and Conditions of the Notes (the "Conditions") as set out in Appendix A to the Agency Agreement (as defined below) as modified and supplemented by the information set out in the Pricing Supplement (the "Pricing - ------------ Delete in the case of all Notes other than Notes denominated in sterling. Delete in the case of a Series of unlisted Notes or add reference to other stock, if applicable. B-23 Supplement") (which is attached hereto) and, in the event of any conflict between the provisions of the Conditions and the information set out in the Pricing Supplement, the latter shall prevail. Words and expressions defined in the Conditions and the Pricing Supplement and not otherwise defined herein shall have the same meanings when used herein. This Note is issued subject to, and with the benefit of, the Conditions and an Amended and Restated Agency Agreement (the "Agency Agreement", which expression shall be construed as a reference to that agreement as the same may be amended or supplemented from time to time) dated July , 1994, between the -- Company and The Chase Manhattan Bank, N.A. (the "Agent") and the other agents named therein. For value received, the Company, subject to and in accordance with the Conditions, promises to pay to the bearer hereof on [each Installment Date the relevant Installment Amount] the [Maturity Date] [Interest Payment Date falling in the Redemption Month], or on such earlier date as the Notes may become due and repayable in accordance with the Conditions, the amount payable on redemption of this Note and to pay interest (if any) on the principal amount of this Note calculated and payable as provided in the Conditions. Title to this Note and to any Coupon, Talon or Receipt appertaining hereto shall pass by delivery. The Company may treat the bearer hereof as the absolute owner of this Note for all purposes (whether or not this Note shall be overdue and notwithstanding any notation of ownership or writing hereof or notice of any previous loss or theft thereof). [The Company has complied with its obligations under any rules (the "listing rules") made under Section 142(6) of the Financial Services Act 1986 in respect of its debt securities listed on The International Stock Exchange of the United Kingdom and the Republic of Ireland Limited. Since information was last provided in compliance with those obligations, the Company, having made all reasonable enquiries, has not become aware of any change in circumstances which could reasonably be regarded as significantly and adversely affecting its ability to meet its obligations in respect hereof as they fall due.] This Note is governed by, and shall be construed in accordance with, the laws of the State of New York, United States of America, applicable to agreements made and to be performed wholly within such jurisdiction. - -------------------- Delete in the case of all Notes other than Notes denominated in sterling and listed on the London Stock Exchange. B-24 This Note may be duly executed on behalf of the Company by manual or facsimile signature. B-25 IN WITNESS WHEREOF, the Company has caused this Note to be duly executed on its behalf. Dated: TOYOTA MOTOR CREDIT CORPORATION [SEAL] By: --------------------------- John McGovern Senior Vice President FISCAL AGENT'S CERTIFICATE OF ATTEST: AUTHENTICATION This is one of the Notes described in the within --------------------------- mentioned Agency Agreement Wolfgang Jahn Group Vice President By or on behalf of THE CHASE MANHATTAN BANK, N.A. as Fiscal Agent By: --------------------------- (Authorized Signatory) [REVERSE OF NOTE - TERMS AND CONDITIONS OF THE NOTES] B-26 PART 4 ------ FORM OF COUPON -------------- (Face of Coupon) TOYOTA MOTOR CREDIT CORPORATION (Incorporated under the laws of the State of California, U.S.A.) [Specified Currency and Principal Amount of Series] EURO MEDIUM-TERM NOTES DUE [Year of Maturity] Series No. [ ] Serial No. [ ] Part A ------ (Reverse of Coupon) For Fixed Rate Notes: - --------------------- Coupon No. F This Coupon is payable to bearer, separately Coupon for negotiable and subject to the Terms and [ ] Conditions of the Note to which it appertains due on [ ] [19[ ]/20[ ]] [SEAL] ATTEST: TOYOTA MOTOR CREDIT CORPORATION By: By: --------------------------- --------------------------- Authorized Officer Authorized Officer ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES TAX LAWS INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE. B-27 Part B ------ (Reverse of Coupon) For Floating Rate, Dual Currency and Indexed Notes: - -------------------------------------------------- Coupon No. F Coupon for the amount due in accordance with Coupon due the Terms and Conditions of the said Notes. in [ ] This Coupon is payable to bearer, separately [19[ ]/20[ ]] negotiable and subject to such Terms and Conditions of the Note to which it appertains, under which it may become void before its due date. [SEAL] ATTEST: TOYOTA MOTOR CREDIT CORPORATION By: By: -------------------------- -------------------------- Authorized Officer Authorized Officer ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES TAX LAWS INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE. B-28 (Reverse of Coupon) ISSUING AND PRINCIPAL PAYING AGENT ---------------------------------- The Chase Manhattan Bank, N.A. Woolgate House Coleman Street P.O. Box 16 London EC2P 2HD PAYING AGENT ------------ Chase Manhattan Bank Luxembourg S.A. 5 Rue Plaetis L-2338 Luxembourg and/or such other or further Agent and other or further Paying Agents and/or specified offices as may from time to time be duly appointed by the Company and notice of which has been given to the Noteholders. B-29 (On the front) PART 5 ------ FORM OF RECEIPT --------------- ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE. TOYOTA MOTOR CREDIT CORPORATION (Incorporated under the laws of the State of California, U.S.A.) [Specified Currency and Principal Amount of Series] EURO MEDIUM-TERM NOTES DUE [Year of Maturity] Series No. [ ] Serial No. [ ] Receipt for the sum of [ ] being the instalment of principal payable in accordance with the Terms and Conditions endorsed on the Note to which this Receipt appertains (the "Conditions") on [ ]. This Receipt is issued subject to and in accordance with the Conditions which shall be binding upon the holder of this Receipt (whether or not it is for the time being attached to such Note) and is payable at the specified office of any of the Paying Agents set out on the reverse of the Note to which this Receipt appertains (and/or any other or further Paying Agents and/or specified offices as may from time to time be duly appointed and notified to the Noteholders). B-30 This Receipt must be represented for payment together with the Note to which it appertains. The Company shall have no obligation in respect of any Receipt presented without the Note to which it appertains or any unmatured Receipts. [SEAL] ATTEST: TOYOTA MOTOR CREDIT CORPORATION By: By: --------------------------- --------------------------- Authorized Officer Authorized Officer B-31 PART 6 ------ FORM OF TALON ------------- (On the front) ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE. TOYOTA MOTOR CREDIT CORPORATION (Incorporated under the laws of the State of California, U.S.A) [Specified Currency and Principal Amount of Series] EURO MEDIUM-TERM NOTES DUE [Year of Maturity] Series No. [ ] Serial No. [ ] On and after [ ] further Coupons [and a further Talon] appertaining to the Note to which this Talon appertains will be issued at the specified office of any of the Paying Agents set out on the reverse hereof (and/or any other or further Paying Agents and/or specified offices as may from time to time be duly appointed and notified to the Noteholders) upon production and surrender of this Talon. This Talon may, in certain circumstances, become void under the Terms and Conditions endorsed on the Notes to which this Talon appertains. [SEAL] ATTEST: TOYOTA MOTOR CREDIT CORPORATION By: By: --------------------------- --------------------------- Authorized Officer Authorized Officer B-32 (Reverse of Talon) ISSUING AND PRINCIPAL PAYING AGENT ---------------------------------- The Chase Manhattan Bank, N.A. Woolgate House Coleman Street P.O. Box 16 London EC2P 2HD PAYING AGENTS ------------- Chase Manhattan Bank Luxembourg S.A. 5 Rue Plaetis L-2338 Luxembourg and/or such other or further Agent and other or further Paying Agents and/or specified offices as may from time to time be duly appointed by the Company and notice of which has been given to the Noteholders. B-33 APPENDIX C ---------- FORM OF CALCULATION AGENCY AGREEMENT ------------------------------------ Dated , 1994 ---------------------- TOYOTA MOTOR CREDIT CORPORATION U.S.$6,500,000,000 EURO MEDIUM-TERM NOTES ----------------------------------- CALCULATION AGENCY AGREEMENT ----------------------------------- TOYOTA MOTOR CREDIT CORPORATION U.S.$6,500,000,000 EURO MEDIUM-TERM NOTES ---------------------- CALCULATION AGENCY AGREEMENT ---------------------------- THIS AGREEMENT is made on , 1994 BETWEEN: -------- (1) TOYOTA MOTOR CREDIT CORPORATION of Torrance, California, U.S.A. (the "Company"); and (2) The Chase Manhattan Bank, N.A. (London Office) (the "Calculation Agent", which expression shall include its successor or successors for the time being as calculation agent hereunder). WHEREAS: - -------- (A) The Company has entered into a Euro Medium-Term Note Program Agreement with Banque Paribas, CS First Boston Limited, J.P. Morgan Securities Ltd., Lehman Brothers International (Europe), Merrill Lynch International Limited, Merrill Lynch Finance S.A., Nomura International plc, Swiss Bank Corporation and UBS Limited dated July 28, 1994, under which up to U.S.$6,500,000,000 (or its equivalent in other currencies or currency units) in aggregate principal amount of Notes ("Notes") may be issued. (B) The Notes will be issued subject to and with the benefit of an Amended and Restated Agency Agreement (the "Agency Agreement") dated July 28, 1994 and entered into between the Company and The Chase Manhattan Bank, N.A. as Agent (the "Agent", which expression shall include its successor or successors for the time being under the Agency Agreement) and the other parties named therein. NOW IT IS HEREBY AGREED that: - ----------------------- (1) Appointment of the Calculation Agent ------------------------------------ The Company hereby appoints The Chase Manhattan Bank, N.A. (London Office) as Calculation Agent in respect of the Notes listed in the Schedule hereto which are for the time being outstanding (the "Relevant Notes") for the purposes set out in Clause 2 below, all upon terms and conditions hereinafter mentioned. C-2 (2) Duties of Calculation Agent --------------------------- The Calculation Agent shall in relation to each series of Relevant Notes (each a "Series") perform all the functions and duties imposed on the Calculation Agent by the terms and conditions of the relevant Series (the "Conditions"). (3) Expenses --------- Except as provided in Clause 4 below, the Calculation Agent shall bear all expenses incurred by it in connection with its said services. (4) Indemnity ---------- (a) The Company shall indemnify and keep indemnified the Calculation Agent against any losses, liabilities, reasonable costs, claims, actions or demands which it may incur or which may be made against it (excluding consequential losses and losses of profit) as a result of or in connection with its appointment or the exercise of its powers and duties under this Agreement except such as may result from its own willful default, negligence or bad faith or that of its officers or employees or any of them, or breach by it of the terms of this Agreement. (b) The Calculation Agent shall indemnify the Company against any direct loss, liability, cost, claim, action, demand or expense (including, but not limited to, all reasonable costs, legal fees, charges and expenses paid or incurred in disputing or defending any of the foregoing) which the Company may incur or which may be made against it as a result of the breach by the Calculation Agent of the terms of this agreement or its willful default, negligence or bad faith or that of its officers, directors or employees. (5) Conditions of Appointment -------------------------- (a) In acting hereunder in connection with the Relevant Notes, the Calculation Agent shall not act as agent of the Company and shall not thereby assume any obligations towards or relationship of agency or trust for or with any of the owners or holders of the Relevant Notes or the coupons (if any) appertaining thereto (the "Coupons"). (b) In relation to each Series, the Calculation Agent shall be obliged to perform such duties and only such duties as are herein and in the Conditions specifically set forth and no implied duties or obligations shall be read into the Agreement or the Conditions against the Calculation Agent. C-3 (c) The Calculation Agent may consult with legal and other professional advisers and the opinion of such advisers shall be full and complete protection in respect of any action taken, omitted or suffered hereunder in good faith and in accordance with the opinion of such advisers. (d) The Calculation Agent shall be protected and shall incur no liability for or in respect of any action taken, omitted or suffered in reliance for or in respect of any action taken, omitted or suffered in reliance upon any instruction, request or order from the Company or the Agent, or any notice, resolution, direction, consent, certificate, affidavit, statement, cable, telex or other paper or document which it reasonably believes, after making reasonable investigation of the same, to be genuine and to have been delivered, signed or sent by the proper party or parties or upon written instructions from the Company. (e) The Calculation Agent, and any of its officers, directors and employees, may become the owner of, or acquire any interest in, any Notes or Coupons (if any) with the same rights that it or he or she would have if the Calculation Agent were not appointed hereunder, and may engage or be interested in any financial or other transaction with the Company and may act on, or as depositary, trustee or agent for, any committee or body of holders of Notes or Coupons (if any) or other obligations of the Company as freely as if the Calculation Agent were not appointed hereunder. (6) Termination of Appointment -------------------------- (a) The Company may terminate the appointment of the Calculation Agent at any time by giving to the Calculation Agent and the Agent at least 90 days prior written notice to that effect, provided that, so long as any of the Relevant Notes is outstanding, (i) such notice shall not expire less than 45 days before any date upon which any payment is due in respect of any Relevant Notes and (ii) notice shall be given in accordance with Condition 16 at least 30 days prior to any removal of the Calculation Agent. (b) Notwithstanding the provisions of sub-clause (a) above, if at any time (i) the Calculation Agent becomes incapable of action, or is adjudged bankrupt or insolvent, or files a voluntary petition in bankruptcy or makes an assignment for the benefit of its creditors or consents to the appointment of an administrator, liquidator or administrative or other receiver of all or a substantial part of its property, or if an administrator, liquidator or administrative or other receiver of it or of all or a substantial part of its property is appointed, or it admits in writing its inability C-4 to pay or meet its debts as they may become due or suspends payment thereof or if any order of any court is entered approving any petition filed by or against it under the provisions of any applicable bankruptcy or insolvency law or if any public officer takes charge or control of the Calculation Agent or of its property or affairs for the purpose of rehabilitation, administration or liquidation or (ii) the Calculation Agent fails duly to perform any function or duty imposed on it by the Conditions and this Agreement, the Company may forthwith without notice terminate the appointment of the Calculation Agent, in which event notice thereof shall be given to the holders of the Relevant Notes in accordance with Condition 16 of the Relevant Notes as soon as practicable thereafter. (c) The termination of the appointment pursuant to sub-clause (a) or (b) above of the Calculation Agent hereunder shall not entitle the Calculation Agent to any amount by way of compensation but will be without prejudice to any amount then accrued and due. (d) The Calculation Agent may resign its appointment hereunder at any time by giving to the Company and the Agent at least 90 days prior written notice to that effect. Following receipt of a notice of resignation from the Calculation Agent, the Company shall promptly give notice thereof to the holders of the Relevant Notes in accordance with Condition 16 of the Relevant Notes. (e) Notwithstanding the provisions of sub-clauses (a), (b) and (d) above, so long as any of the Notes is outstanding, the termination of the appointment of the Calculation Agent (whether by the Company or by the resignation of the Calculation Agent) shall not be effective unless upon the expiry of the relevant notice a successor Calculation Agent has been appointed. (f) Any successor Calculation Agent appointed hereunder shall execute and deliver to its predecessor and the Company an instrument accepting appointment hereunder, and thereupon such successor Calculation Agent, without further act, deed or conveyance, shall become vested with all the authority, rights, powers, trusts, immunities, duties and obligations of such predecessor with like effect as if originally named as the Calculation Agent hereunder. (g) If the appointment of the Calculation Agent hereunder is terminated (whether by the Company or by the resignation of the Calculation Agent), the Calculation Agent shall on the date of which such termination takes effect deliver to the successor Calculation Agent all records concerning the Notes C-5 maintained by it (except such documents and records as it is obliged by law or regulation to retain or not to release), but shall have no other duties or responsibilities hereunder. (h) Any corporation into which the Calculation Agent for the time being may be merged or converted or any corporation with which the Calculation Agent may be consolidated or any corporation resulting from any merger, conversion or consolidation to which the Calculation Agent shall be a party shall, to the extent permitted by applicable law, be the successor Calculation Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto. Notice of any such merger, conversion or consolidation shall forthwith be given to the Company and the Agent. (i) Upon the termination of the appointment of the Calculation Agent, the Company shall make all reasonable efforts to appoint a further bank or investment bank as successor Calculation Agent. (7) Notices ------- Any notice or communication given hereunder shall be sufficiently given or served: (a) if delivered in person to the relevant address specified below and, if so delivered, shall be deemed to have been delivered at time of receipt; or (b) if sent by facsimile or telex to the relevant number specified below, shall be deemed to have been delivered upon transmission provided such transmission is confirmed by the answerback of the recipient (in the case of telex) or when an acknowledgment of receipt is received (in the case of facsimile): The Company: TOYOTA MOTOR CREDIT CORPORATION 19001 South Western Avenue A105 Torrance, California 90509 Telephone No: (310) 787-6195 Fax No: (310) 787-6194 Attention: Funding Manager The Agent: THE CHASE MANHATTAN BANK, N.A. Woolgate House Coleman Street P.O. Box 16 London EC2P 2HD C-6 Telephone No: 0202 347430 Fax No: 0202 347438 Telex No: 8954681 CMB G Attention: Manager, Corporate Trust Operations The Calculation Agent: THE CHASE MANHATTAN BANK, N.A. Woolgate House Coleman Street P.O. Box 16 London Ec2P 2HD Telephone No: 0202 347430 Fax No: 0202 347438 Telex No: 8954681 CMB G Attention: Manager, Corporate Trust Operations or to such other address and/or telex number of which notice in writing has been given to the parties hereto in accordance with the provisions of this Clause 7. (8) The descriptive headings in this Agreement are for convenience of reference only and shall not define or limit the provisions hereof. (9) Counterparts ------------ This Agreement may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute one instrument. (10) Governing Law ------------- This Agreement is governed by, and shall be construed in accordance with, the laws of the State of New York, United States of America, applicable to agreements made and to be performed wholly within such jurisdiction. C-7 IN WITNESS WHEREOF, this Agreement has been entered into as of the day and year first above written. TOYOTA MOTOR CREDIT CORPORATION BY: --------------------------- Wolfgang Jahn Vice President THE CHASE MANHATTAN BANK, N.A. BY: --------------------------- C-8 SCHEDULE OF RELEVANT NOTES -------------------------- Annotation by Series Maturity Principal Calculation Number Issue Date Date Amount Agent - --------------------------------------------------------------------------- - ------ ---------- --------- --------- ----------- - ------ ---------- --------- --------- ----------- - ------ ---------- --------- --------- ----------- - ------ ---------- --------- --------- ----------- - ------ ---------- --------- --------- ----------- - ------ ---------- --------- --------- ----------- - ------ ---------- --------- --------- ----------- - ------ ---------- --------- --------- ----------- - ------ ---------- --------- --------- ----------- - ------ ---------- --------- --------- ----------- - ------ ---------- --------- --------- ----------- - ------ ---------- --------- --------- ----------- C-9 APPENDIX D ---------- FORM OF OPERATING & ADMINISTRATIVE PROCEDURES MEMORANDUM ---------------------------------- Purchasers must confirm all trades directly with Toyota Motor Credit Corporation (the "Company") and the Agent. RESPONSIBILITIES OF THE AGENT ----------------------------- The Agent will be responsible for the following: (i) preparing a Pricing Supplement (substantially in the form of Annex D hereto) to the Offering Circular giving details of the Notes to be issued; (ii) in the case of Notes which are to be listed on a stock exchange (the "relevant Stock Exchange"), distributing to the relevant Stock Exchange such number of copies of the Pricing Supplement as it may reasonably require; (iii) providing to the German Central Bank, at the end of each calendar month, information on the amount, interest rate and other terms of each issue of Deutsche Mark denominated Notes during the month, and such other information as the German Central Bank may require from time to time; and (iv) providing the Director du Tresor with notification of the amount, interest rate and other terms of each issue of French Franc Notes and such other information as the Director du Tresor may require from time to time. RESPONSIBILITIES OF THE LISTING AGENT OR LEAD MANAGER ----------------------------------------------------- In the case of Notes to be listed on a Stock Exchange, the Listing Agent or Lead Manager will be responsible for the following: (i) For Notes (including French Franc Notes) to be listed on the Paris Bourse, (a) obtaining the approval of the CBV to such listing, (b) obtaining the approval of the COB to the Pricing Supplement relating to such Notes and (c) publishing the notice legale relating to such Notes in the BALO; and (ii) in the case of all other Notes to be listed on a Stock Exchange, ensuring compliance with the D-1 Listing Rules and obtaining all necessary approvals for listing the Notes on the relevant Stock Exchange. The Company recognizes with respect to this clause (ii) its continuing obligation so long as any Notes under the Program are outstanding to apprise the applicable Dealers of any material adverse change in its consolidated financial position or its business operations. SETTLEMENT ---------- The settlement procedures set out in Annex A shall apply to each issue of Notes, unless otherwise agreed between the Company and the relevant Purchaser(s); with issues of Dual Currency or Indexed Notes more time may be felt to be required to settle documentation which is not specifically included in the Agency Agreement. A Trading Desk Information list is set out in Annex E. D-2 ANNEX A ------- SETTLEMENT PROCEDURES* ---------------------- Day Latest Time Action - --- ----------- ------ No later 4:00 p.m. The Company or its designated agent may agree than issue to terms with one or more of the Purchasers Date minus for the issue and purchase of Notes. Once 3 agreement is reached, the Company or its designated agent telephones the Agent (to be confirmed by the telex or facsimile referred to below) to instruct it to prepare, complete, authenticate and issue a Temporary Global Note for each Series of Notes which are to be purchased by the relevant Purchaser(s), giving details of such Notes. 4:30 p.m. If a Purchaser has reached agreement with the Company by telephone, such Purchaser confirms the terms of the agreement to the Company by telex or facsimile (substantially in the form set out in Annex B) and copies the telex or facsimile to the Agent. The details set out in this telex or facsimile shall be conclusive evidence of the agreement (except in the case of manifest error). 5:00 p.m. The Company or its designated agent confirms its instructions to the Agent (including, in the case of Floating Rate Notes, for the purposes of rate fixing) by tested telex or facsimile (substantially in the form set out in Annex C). The Company or its designated agent also sends this telex or facsimile to the relevant Purchaser. The Agent telephones each of Euroclear and Cedel with a request - ------------ * In the case of a syndicated bond issue, certain of the Settlement Procedures set forth below will be revised as appropriate. D-3 for a common code and ISIN number, ifapplicable, for each Series of Notes agreed to be issued, which Common Code and ISIN numbers, if applicable, are notified by the Agent by telephone to the Company or its designated agent and each Purchaser which has reached agreement with the Issuer. The Agent also notifies the relevant Stock Exchange by telex, facsimile or by hand of the details of the Notes to be issued by sending the Pricing Supplement to the relevant Stock Exchange. The Agent also sends copies of the Pricing Supplement to the Company. Issue Date 3:00 p.m. In the case of Floating Rate Notes, the Agent minus 2 notifies Euroclear, Cedel, the Company, the relevant Purchaser(s) and the relevant Stock Exchange by telex or facsimile of the interest rate for the first interest period (if already determined). Where the interest has not yet been determined, this will be notified in accordance with this paragraph as soon as it has been determined. The relevant Purchaser(s) instruct(s) Euroclear and/or Cedel to debit its account and pay the subscription price, against delivery of the Notes, to the Agent's account with Euroclear and/or Cedel on the Issue Date and copies the instructions to the Agent. Issue Date 3:00 p.m. The Agent prepares and authenticates a minus 1 Temporary Global Note for each Series of Notes which are to be purchased by the relevant Purchaser(s) on the Issue Date. All Temporary Global Notes are then delivered by the Agent to a common depositary for Euroclear and Cedel and instructions are given by the Agent to Euroclear or, as the case may be, Cedel, to credit the Notes represented by such Temporary Global D-4 Notes to the Agent's distribution account. The Agent further instructs Euroclear or, as the case may be, Cedel to debit from the distribution account the principal amount of Notes of each Series which each Purchaser has agreed to purchase and to credit such principal amount to the account of such Purchaser with Euroclear or Cedel against payment to the account of the Agent of the subscription price for the relevant Notes for value on the Issue Date. The Company, the Purchaser(s) and the Agent may agree to arrange for "free delivery" to be made through the relevant clearing system if specified in the relevant Pricing Supplement. Issue Date Euroclear and Cedel debit and credit accounts in accordance with instructions received by them. The Agent pays to the Issuer the aggregate subscription moneys received by it to such account of the Company as shall have been notified to the Agent from time to time. On or sub- The Agent notifies the Company of the issue sequent to of Notes giving details of each Temporary the the Issue Global Note and the principal sum represented Date thereby. Explanatory Notes ----------------- (a) Each day is a day on which banks and foreign exchange markets are open for business in London, counted in reverse order from the proposed Issue Date. (b) The Issue Date must be a Business Day. For the purposes of this Memorandum, "Business Day" means a day which is both: a day (other than a Saturday or a Sunday) on which commercial banks and foreign exchange markets are open for business in London; and either (1) in relation to Deposits denominated in a Specified Currency other than ECU, a day on which commercial banks and foreign exchange markets settle D-5 payments in the financial center of the country of the relevant Specified Currency (if other than London) or (2) in relation to Notes denominated in ECU, an ECU Settlement Day (as defined in the 1991 ISDA Definitions, as amended and updated from time to time, published by the International Swap and Derivatives Association, Inc.). (c) Times given are the approximate times for the taking of the action in question and are references to London time. Such times can be modified upon the mutual agreement of the Purchaser, the Agent and the Company. (d) If at any time the Agent is notified by the Sponsor or the relevant Stock Exchange that the listing of a Series of Notes has been refused or otherwise will not take place, the Agent shall immediately notify the Company, the Dealer and all the relevant Purchaser(s) (if not the Dealer). D-6 ANNEX B ------- FORM OF PURCHASER'S CONFIRMATION TO COMPANY ------------------------------------------- To: TOYOTA MOTOR CREDIT CORPORATION 19001 South Western Avenue Torrance, California 90509 Attention: Funding Manager c.c. The Chase Manhattan Bank, N.A. Woolgate House Coleman Street P.O. Box 16 London EC2P 2HD Attention: Manager, Corporate Trust Operations TOYOTA MOTOR CREDIT CORPORATION - EMTN Program ---------------------------------------------- We hereby confirm the following agreement for the issue to us of Notes: (Terms used have the same meanings as set out in the Offering Circular). [Include whichever of the following apply.] 1. Series no. and, if not a new Series, the date from which the Tranche being issued is to form a single series with the other Notes comprising the Series: [ ] 2. Specified Currency (or Currencies in the case of Dual Currency Notes): [ ] 3. Aggregate Principal Amount: [ ] 4. Interest/Payment Basis; and if [Fixed Rate/Floating Rate/ more than one, the dates during Zero Coupon/Index which each Interest/Payment Basis Linked/Dual Currency] will apply: 5. Issue Date: [ ] D-7 6. Specified Denomination(s): [ ] 7. Issue Price: [ ] 8. Details relating to partly paid Notes; amount of each payment comprising the Issue Price and date on which each payment is to be made: [ ] 9. Interest Commencement Date: [ ] 10. Maturity Date (Fixed Rate, Zero Coupon, Dual Currency and Indexed Notes): [ ] 11. Redemption Month (Floating Rate Note): [month and year] 12. Final Redemption Amount: [ ]% 13. Installment Dates (Installment Note): [ ] 14. Installment Amounts [ ]% per [ ] (Installment Note): in principal amount 15. Fixed Rate of Interest (Fixed Rate Note): [ ] per cent. per annum 16. Fixed Interest Date(s) (Fixed Rate Note): [ ] 17. Initial Broken Amount [ ]% per [ ] (Fixed Rate Note): in principal amount 18. Final Broken Amount (Fixed Rate Note [ ]% per [ ] in principal amount 19. Interest Period(s) or Specified [ ] Interest Payment Dates (Floating Rate Note): 20. Reset Date(s) (Floating Rate Note): [ ] D-8 21. Manner in which the Rate of Interest is to be determined (Floating Rate Note): [ ] 22. Spread/Margin (Floating Rate Note): [+/-][ ] percent per annum 23. Applicable "Interest Determination Date" definition (if different from that in Condition 4(b)(iv)(F) (Floating Rate Note): [ ] 24. Applicable "Business Day Convention" (if different from that in Condition 4(b)(i)) (Floating Rate Note): [ ] 25. Applicable Reference Banks (if different from that in Condition 4(b)(iv) (E)) (Floating Rate Note): [ ] 26. Minimum Rate of Interest (Floating Rate Note): [ ] percent per annum 27. Maximum Rate of Interest (Floating Rate Note): [ ] percent per annum 28. Agent responsible for determining Rate of Interest (Floating Rate Note): [ ] 29. Accrual Yield (Zero Coupon Note): [ ] percent per annum 30. Reference Price (Zero Coupon Note): [ ] 31. Index (Indexed Notes): [give details] 32. Formula (Indexed Notes): [give details] 33. (a) Agent responsible for calculating the principal/interest due (Indexed Notes): [ ] D-9 (b) Provisions where calculation by reference to Index and/or Formula is impossible or impracticable: [ ] 34. (a) Rate(s) of Exchange/method of calculating Rate(s) of Exchange (Dual Currency Note): [give details] (b) Agent, if any, responsible for calculating the principal and/or interest payable (Dual Currency Note): [ ] (c) Provisions where calculation by reference to Rate(s) of Exchange is impossible or impracticable Dual Currency Note): [ ] (d) Person at whose option any Specified Currency or Currencies is or are to be or may be payable (Dual Currency Note): [ ] 35. Company's Optional Redemption - [Yes/No] if yes, (a) Optional Redemption Date(s) [ ] (b) Optional Redemption Amount(s) and method, if any, of calculation of such amount(s) [ ] (c) If redeemable in part, i) Minimum Redemption Amount [ ] ii) Higher Redemption Amount [ ] 36. Redemption at the option of the Noteholders - [Yes/No] if yes, (a) Optional Redemption Date(s) [ ] (b) Optional Redemption Amount(s) D-10 and/or method, if any, of calculation of such amounts [ ] 37. Early Redemption Amount(s) payable on redemption for taxation reasons or on event of default and/or the method, if any, of calculating the same (if required or if different from that set out in Condition 5(f)): [ ] 38. Talons for future Coupons to be attached to definitive Notes (and dates on which such Talons mature): [Yes/No. If yes give details] 39. Additional selling restrictions: [give details] 40. Other terms or special conditions: [ ] 41. The relevant Euroclear and Cedel Common Code and ISIN Numbers: [ ] 42. Details of SICOVAM or any other additional/alternative clearance system approved by the Company and the Agent: [ ] 43. Notes to be listed on the London Stock Exchange, the Paris Bourse or other stock exchange: [Yes (give details)/No] 44. Whether interests in the Temporary Global Note are exchangeable for interests in the Permanent Global Note and/or Definitive Notes and in the case of Definitive Notes, the notice period required: [ ] 45. Method of Distribution [Syndicated/non-syndicated] 46. If syndicated, names of Managers and, if non-syndicated, name of Dealer. [give details] D-11 47. Details of relevant stabilizing manager, if any: [ ] 48. Cost, if any, to be borne by Noteholder in connection with exchanges for security printed Definitive Notes: [ ] 49. Purchaser's account number with [Euroclear/Cedel] to which the Notes are to be credited: [ ] 50. Further Issues: [The Company may from time to time without the consent of the Noteholders create and issue further securities having the same terms and conditions as the Notes so that the same shall be consolidated and form a single series with such Notes and references in these conditions to "Notes" shall be considered accordingly.] 51. In the case of Notes listed on the Paris Bourse: (a) Number of Notes to be issued in each Specified Denomination: [ ] (b) SICOVAM number or, in the case of Partly Paid Notes, SICOVAM numbers, if any: [ ] (c) Paying agent in France (if any): [name and address] (d) (i) address in Paris where documents incorporated by reference (or otherwise to be made available for inspection may be inspected): [address] D-12 (e) Specialist broker: (f) Responsibility statement for Pricing Supplement, in the required form duly completed to meet listing requirements on the Paris Bourse. [ ] [Note: The following paragraph is to be added where the Purchaser is not the Dealer under the Program Agreement.] [In connection with our purchase of such Notes, we: (i) agree with the Company, for itself and as agent for the Dealer (as defined in the Amended and Restated Program Agreement (the "Program Agreement") dated as of July , 1994 entered into in respect of the above Program), that we will be bound by the provisions of the Program Agreement (a copy of which has been supplied to us), with the exception of Clauses 3 to 8 and 10 to 13 inclusive thereof, as if we had been named as a Dealer therein; and (ii) confirm that, where the Company authorizes us to provide copies of documents and to make representations and statements in connection with the issue of Notes, such authorization relates only to the documents, statements and representations in Clause 8 of the Program Agreement, subject to the limitations contained in that Clause.] [Name of Purchaser] By: --------------------------- (Authorized Signatory) D-13 ANNEX C ------- FORM OF COMPANY'S CONFIRMATION TO AGENT AND PURCHASERS ------------------------------------------------------ [Date] To: The Chase Manhattan Bank, N.A. Woolgate House Coleman Street P.O. Box 16 London EC2P 2HD Attention: Manager - Corporate Trust Operations] and: [Name of Purchaser] TOYOTA MOTOR CREDIT CORPORATION - EMTN Program ---------------------------------------------- We hereby confirm our telephone instruction to The Chase Manhattan Bank, N.A., as Agent, to prepare, complete, authenticate and issue Temporary Global Notes in accordance with the terms of the Procedures Memorandum relating to the above Program and to give instructions to Euroclear or Cedel as follows: Credit account number [ ] of [name of Purchaser] with [Euroclear/Cedel]* with the following Notes: [Include whichever of the following apply] 1. Series no. and, if not a new Series, the date from which the Tranche being issued is to form a single series with the other Notes comprising the Series: [ ] 2. Specified Currency (or Currencies in the case of Dual Currency Notes): [ ] 3. Aggregate Principal Amount: [ ] 4. Interest/Payment Basis; and if [Fixed Rate/Floating more than one, the dates during Rate/Zero Coupon/Index which each Interest/Payment Basis Linked/Dual Currency] will apply: D-14 5. Issue Date: [ ] 6. Specified Denomination(s): [ ] 7. Issue Price: [ ] 8. Details relating to partly paid Notes; amount of each payment comprising the Issue Price and date on which each payment is to be made: [ ] 9. Interest Commencement Date: [ ] 10. Maturity Date (Fixed Rate, Zero Coupon, Dual Currency and Indexed Notes): [ ] 11. Redemption Month (Floating Rate Note): [month and year] 12. Final Redemption Amount: [ ]% 13. Installment Dates (Installment Note): [ ] 14. Installment Amounts (Installment Note): [ ]% per [ ] in principal amount 15. Fixed Rate of Interest (Fixed Rate Note): [ ] per cent. per annum 16. Fixed Interest Date(s) (Fixed Rate Note): [ ] 17. Initial Broken Amount (Fixed Rate Note): [ ]% per [ ] in principal amount 18. Final Broken Amount (Fixed Rate Note): [ ]% per [ ] in principal amount 19. Interest Period(s) or Specified Interest Payment Dates (Floating Rate Note): [ ] 20. Reset Date(s) (Floating Rate Note): [ ] D-15 21. Manner in which the Rate of Interest is to be determined (Floating Rate Note): [ ] 22. Spread/Margin (Floating Rate Note): [+/-][ ] per cent. per annum 23. Applicable "Interest Determination Date" definition (if different from that in Condition 4(b)(iv)(F) (Floating Rate Note): [ ] 24. Applicable "Business Day Convention" (if different from that in Condition 4(b)(i)) (Floating Rate Note): [ ] 25. Applicable Reference Banks (if different from that in Condition 4(b)(iv)(E)) (Floating Rate Note): [ ] 26. Minimum Rate of Interest (Floating Rate Note): [ ] per cent. per annum 27. Maximum Rate of Interest (Floating Rate Note): [ ] per cent. per annum 28. Agent responsible for determining Rate of Interest (Floating Rate Note): [ ] 29. Accrual Yield (Zero Coupon Note): [ ] per cent. per annum 30. Reference Price (Zero Coupon Note): [ ] 31. Index (Indexed Notes): [ give details ] 32. Formula (Indexed Notes): [ give details ] 33. (a) Agent responsible for calculating the principal/interest due (Indexed Notes): [ ] D-16 (b) Provisions where calculation by reference to Index and/or Formula is impossible or impracticable: [ ] 34. (a) Rate(s) of Exchange/method of calculating Rate(s) of Exchange (Dual Currency Note): [ give details ] (b) Agent, if any, responsible for calculating the principal and/or interest payable (Dual Currency Note): [ ] (c) Provisions where calculation by reference to Rate(s) of Exchange is impossible or impracticable (Dual Currency Note): [ ] (d) Person at whose option any Specified Currency or Currencies is or are to be or may be payable (Dual Currency Note): [ ] 35. Company's Optional Redemption - [Yes/No] if yes, (a) Optional Redemption Date(s) [ ] (b) Optional Redemption Amount(s) and method, if any, of calculation of such amount(s) [ ] (c) If redeemable in part, (i) Minimum Redemption Amount [ ] (ii) Higher Redemption Amount [ ] 36. Redemption at the option of the Noteholders - [Yes/No] if yes, (a) Optional Redemption Date(s) [ ] (b) Optional Redemption Amount(s) D-17 and/or method, if any, of calculation of such amounts [ ] 37. Early Redemption Amount(s) payable on redemption for taxation reasons or on event of default and/or the method, if any, of calculating the same (if required or if different from that set out in Condition 5(f)): [ ] 38. Talons for future Coupons to be attached to definitive Notes (and dates on which such Talons mature): [Yes/No. If yes, give details] 39. Additional selling restrictions: [ give details ] 40. Other terms or special conditions: [ ] 41. The relevant Euroclear and Cedel Common Code and ISIN Numbers: [ ] 42. Details of SICOVAM or any other additional/alternative clearance system approved by the Company and the Agent: [ ] 43. Notes to be listed on the London Stock Exchange, the Paris Bourse or other stock exchange: [Yes (give details)/No] 44. Whether interests in the Temporary Global Note are exchangeable for interests in the Permanent Global Note and/or Definitive Notes and in the case of Definitive Notes, the notice period required: [ ] 45. Method of Distribution [Syndicated/non- syndicated] 46. If syndicated, names of Managers and, if non-syndicated, name of Dealer. [give details] D-18 47. Details of relevant stabilizing manager, if any: [ ] 48. Cost, if any, to be borne by Noteholder in connection with exchanges for security printed Definitive Notes: [ ] 49. Purchaser's account number with [Euroclear/Cedel] to which the Notes are to be credited: [ ] 50. Further Issues: [The Company may from time to time without the consent of the Noteholders create and issue further securities having the same terms and conditions as the Notes so that the same shall be consolidated and form a single service with such Notes and references in these conditions to "Notes" shall be considered accordingly.] 51. In the case of Notes listed on the Paris Bourse: [ ] (a) Number of Notes to be issued in each Specified Denomination: (b) SICOVAM number or, in the case of Partly Paid Notes, SICOVAM [ ] numbers, if any: (c) Paying agent in France (if any): [name and address] (d) (i) address in Paris where documents incorporated by reference (or otherwise to be made available for inspection may be inspected): [address] D-19 (e) Specialist broker: (f) Responsibility statement for Pricing Supplement, in the required form duly completed to meet listing requirements on the Paris Bourse. D-20 ANNEX D ------- FORM OF PRICING SUPPLEMENT --------------------------- (to be completed by the Agent) [Date] TOYOTA MOTOR CREDIT CORPORATION - EMTN Program ---------------------------------------------- We are instructed to confirm the following agreement for the issue of Notes: [Include whichever of the following apply] 1. Series no. and, if not a new Series, the date from which the Tranche being issued is to form a single series with the other Notes comprising the Series: [ ] 2. Specified Currency (or Currencies in the case of Dual Currency Notes): [ ] 3. Aggregate Principal Amount: [ ] 4. Interest/Payment Basis; and if more than one, the dates during which each Interest/Payment Basis will apply: [Fixed Rate/Floating Rate/Zero Coupon/Index Linked/Dual Currency] 5. Issue Date: [ ] 6. Specified Denomination(s): [ ] 7. Issue Price: [ ] 8. Details relating to partly paid Notes; amount of each payment comprising the Issue Price and date on which each payment is to be made: [ ] 9. Interest Commencement Date: [ ] 10. Maturity Date (Fixed Rate, Zero D-21 Coupon, Dual Currency and Indexed Notes): [ ] 11. Redemption Month (Floating Rate Note): [month and year] 12. Final Redemption Amount: [ ]% 13. Installment Dates (Installment Note): [ ] 14. Installment Amounts (Installment Note): [ ]% per [ ] in principal amount 15. Fixed Rate of Interest (Fixed Rate Note): [ ] per cent. per annum 16. Fixed Interest Date(s) (Fixed Rate Note): [ ] 17. Initial Broken Amount (Fixed Rate Note): [ ]% per [ ] in principal amount in principal amount 18. Final Broken Amount (Fixed Rate Note): [ ]% per [ ] in principal amount 19. Interest Period(s) or Specified Interest Payment Dates (Floating Rate Note): [ ] 20. Reset Date(s) (Floating Rate Note): [ ] 21. Manner in which the Rate of Interest is to be determined (Floating Rate Note): [ ] 22. Spread/Margin (Floating Rate Note): [+/-][ ] per cent. per annum 23. Applicable "Interest Determination Date" definition (if different from that in Condition 4(b)(iv)(F) (Floating Rate Note): [ ] 24. Applicable "Business Day D-22 Convention" (if different from that in Condition 4(b)(i)) (Floating Rate Note): [ ] 25. Applicable Reference Banks (if different from that in Condition 4(b)(iv)(E)) (Floating Rate Note): [ ] 26. Minimum Rate of Interest (Floating Rate Note): [ ] per cent. per annum 27. Maximum Rate of Interest (Floating Rate Note): [ ] per cent. per annum 28. Agent responsible for determining Rate of Interest (Floating Rate Note): [ ] 29. Accrual Yield (Zero Coupon Note): [ ] per cent. per annum 30. Reference Price (Zero Coupon Note): [ ] 31. Index (Indexed Notes): [ give details ] 32. Formula (Indexed Notes): [ give details ] 33. (a) Agent responsible for calculating the principal/interest due (Indexed Notes): [ ] (b) Provisions where calculation by reference to Index and/or Formula is impossible or impracticable: [ ] 34. (a) Rate(s) of Exchange/method of calculating Rate(s) of Exchange (Dual Currency Note): [ give details ] (b) Agent, if any, responsible for calculating the principal and/or interest payable (Dual Currency Note): [ ] (c) Provisions where calculation by reference to Rate(s) of Exchange is impossible or D-23 impracticable (Dual Currency Note): [ ] (d) Person at whose option any Specified Currency or Currencies is or are to be or may be payable (Dual Currency Note): [ ] 35. Company's Optional Redemption - [Yes/No] if yes, (a) Optional Redemption Date(s) [ ] (b) Optional Redemption Amount(s) and method, if any, of calculation of such amount(s) [ ] (c) If redeemable in part, (i) Minimum Redemption Amount [ ] (ii) Higher Redemption Amount [ ] 36. Redemption at the option of the Noteholders - [Yes/No] if yes, (a) Optional Redemption Date(s) [ ] (b) Optional Redemption Amount(s) and/or method, if any, of calculation of such amounts [ ] 37. Early Redemption Amount(s) payable on redemption for taxation reasons or on event of default and/or the method, if any, of calculating the same (if required or if different from that set out in Condition 5(f)): [ ] 38. Talons for future Coupons to be attached to definitive Notes (and dates on which such Talons mature): [Yes/No. If yes, give details] 39. Additional selling restrictions: [ give details ] D-24 40. Other terms or special conditions: [ ] 41. The relevant Euroclear and Cedel Common Code and ISIN Numbers: [ ] 42. Details of SICOVAM or any other additional/alternative clearance system approved by the Company and the Agent: [ ] 43. Notes to be listed on the London Stock Exchange, the Paris Bourse or other stock exchange: [Yes (give details)/No] 44. Whether interests in the Temporary Global Note are exchangeable for interests in the Permanent Global Note and/or Definitive Notes and in the case of Definitive Notes, the notice period required: [ ] 45. Method of Distribution [Syndicated/non- syndicated] 46. If syndicated, names of Managers and, if non-syndicated, name of Dealer. [give details] 47. Details of relevant stabilizing manager, if any: [ ] 48. Cost, if any, to be borne by Noteholder in connection with exchanges for security printed Definitive Notes: [ ] 49. Purchaser's account number with [Euroclear/Cedel] to which the Notes are to be credited: [ ] 50. Further Issues: [The Company may from time to time without the consent of the Noteholders create and issue further securities having the same terms and D-25 conditions as the Notes so that the same shall be consolidated and form a single service with such Notes and references in these conditions to "Notes" shall be considered accordingly.] 51. In the case of Notes listed on the Paris Bourse: (a) Number of Notes to be issued [ ] in each Specified Denomination: (b) SICOVAM number or, in the case of Partly Paid Notes, SICOVAM [ ] numbers, if any: (c) Paying agent in France (if any): [name and address] (d) (i) address in Paris where documents incorporated by reference (or otherwise to be made available for inspection may be inspected): [address] (e) Specialist broker: (f) Responsibility statement for Pricing Supplement, in the following form. PERSONNES QUI ASSUMENT LA RESPONSABILITE DE LA NOTE D'INFORMATION COMPOSE DE LA PRESENTE NOTE D'OPERATION (PRICING SUPPLEMENT) (DE LA NOTE D'OPERATION AYANT RECU DE LA COB LE VISA NO. . . DU . . .) ET DU DOCUMENT DE BASE (OFFERING CIRCULAR) 1. Au nom de l'emetteur A la connaissance de l'emetteur, les donnees de la presente Note d'Information sont conforme a la realite et ne comportent pas d'omission de nature a en alterer la portee. D-26 Aucun element nouveau, (autres que ceux mentionnes dans la presente Note d'Operation), intervenu depuis. le , 1994, date du visa no. appose par la Commission des --- --------- --- Operations de Bourse sur le Document de Base (Prospectus). (le [ ] date du visa no [ ]appose par la Commission des --- Operations de Bourse sur la Note d'Information), n'est susceptible d'affecter de maniere significative la situation financiere de l'emetteur dans le contexte de la presente emission. Toyota Motor Credit Corporation (Name of relevant Dealer/lead manager/other Paris listing agent) - ----------------------------- [Name and title of signatory] 2. Au nom de la banque presentatrice Personne assumant la responsabilite de la Note d'Information, composee du Document de Base, (de la Note d'Information . . .) et de la presente Note d'Operation. - ----------------------------- [Name and title of signatory] (g) a statement that a notice legale in respect of the Prospectus has been published in the Bulletin des Annonces Legales Obligatoires (BALO), specifying the date of such publication and, in addition, a statement in French in respect of the Pricing Supplement in the following form: La notice legale sera publiee au Bulletin des Annonces Legales Obligatoires (BALO) du (date). La presente "Note d'Information" ne peut etre distribuee en France avant la date effective de cotation de l'emprunt a la Bourse de Paris et la publicite legale au BALO, and (h) the visa numbers allocated by the COB in respect of the Prospectus and the Pricing Supplement: D-27 VISAS DE LA COMMISSION DES OPERATIONS DE BOURSE En vue de la cotation a Paris des obligations, et par application des articles 6 et 7 de l'ordonnance no. 67-833 du 28 septembre 1967, la Commission des Operations de Bourse a enregistre le Document de Base sous le visa no. (*) du (date) et a appose sur la presente "Note d'Information" la visa no. (*) du (date). - --------------------------------------------------------------------------- Euroclear and Cedel Common Code: ISIN: [SICOVAM Code (if applicable:] - ---------------------------------------------------------------------------- The following information is to be included only in the version of the Pricing Supplement which is submitted to the London Stock Exchange in the case of Notes to be listed on such London Stock Exchange: Application is hereby made to list this issue of Notes pursuant to the listing of the U.S.$6,500,000,000 Euro Medium Term Note Programme of Toyota Motor Credit Corporation (as from [insert date of or prior to settlement date for the issue of the Notes]). THE CHASE MANHATTAN BANK, N.A. (as Agent) By: ---------------------------- D-28 ANNEX E TRADING DESK INFORMATION ------------------------ The Company ----------- TOYOTA MOTOR CREDIT CORPORATION 19001 South Western Avenue A105 Torrance, California 90509 Telephone No: (310) 715-3700 Fax No: (310) 618-7804 Attention: Funding Manager The Dealers - ----------- BANQUE PARIBAS CS FIRST BOSTON LIMITED 33 Wigmore Street One Cabot Square London W1H OBN London E14 4QJ Telephone: 071 355 2000 Telephone: 010 516 4021 Telefax: 071 895 2555 Telefax: 010 516 3719 Telex: 296723 PBRCA Telex: 892132 CSFB G Attention: Euro Medium Term Note Desk Attention: MTN Trading Desk LEHMAN BROTHERS INTERNATIONAL (EUROPE) MERRILL LYNCH FINANCE S.A. 1 Broadgate 96 avenue d'Iena London EC2M 7HA 75016 Paris, France Telephone: 071 601 0011 Telephone: 331-4069 Telefax: 071 260 2999 Telefax: 605-985 Telex: 888881 SLHLOW G Telex: 33149520502 Attention: EMTN Trading Desk Attention: EMTN Trading and Distribution Desk MERRILL LYNCH INTERNATIONAL LIMITED J.P. MORGAN SECURITIES LTD. Ropemaker Place 60 Victoria Embankment 25 Ropemaker Street London EC4Y 0JP London EC2Y 9LY Telephone: 071 867 3995 Telephone: 071 779 3469 Telefax: 071 867 4327 Telefax: 071 325 8255 Telex: 8811047 MERLYN G Telex: 8954804 MGLTD G Attention: EMTN Trading and Attention: Euro Medium Term Note Distribution Desk NOMURA INTERNATIONAL PLC SWISS BANK CORPORATION Nomura House Swiss Bank House 1 St. Martin's-le-Grand 1 High Timber Street London EC1A 4NP London EC4V 35B Telephone: 071 936 2827 Telephone: 071 711 2479 Telefax: 071 583 1832 Telefax: 071 711 2411 Telex: 883119 NOMURA G Telex: 887434 SBCO G Attention: Fixed Income Trading Attention: MTN Group UBS LIMITED 100 Liverpool Street London EC2M 2RH Telephone: 071 901 4253 Telefax: 071 901 3795 Telex: 923333 UBSLTD G Attention: Euro Medium Term Note Desk D-29 EX-10.2 3 AMENDMENT TO WORLD OMNI FINANCIAL CORP. AGREEMENT EXHIBIT 10.2(c) AMENDMENT TO FINANCIAL SERVICE AGREEMENT This AMENDMENT TO FINANCIAL SERVICE AGREEMENT (this "Amendment") is entered into as of March 1, 1994 between TOYOTA MOTOR CREDIT CORPORATION, a California Corporation ("TMCC"), and WORLD OMNI FINANCIAL CORP., a Florida Corporation ("WOFCO"), and is made with reference to the following facts: RECITALS A. TMCC and WOFCO are parties to that certain Financial Service Agreement dated December 21, 1994, as amended from time to time (as amended, the "Agreement"); and B. TMCC and WOFCO desire to amend, effective as of the date hereof, certain terms and provisions of the Agreement. AGREEMENTS NOW,THEREFORE, in consideration of the mutual covenants and agreements herein contained and to induce the parties to enter into this Amendment, the parties hereto agree as follows: 1. The fifth sentence of the third subparagraph of Paragraph 6(g) of the Agreement is hereby amended in its entirety to read as follows: "Rather, TMCC will pay to WOFCO a fee of $425.00 for each repossessed vehicle sold during such month." 2. The first subparagraph of Paragraph 9(a) is hereby amended in its entirety to read as follows: "In consideration of the due performance by WOFCO of its duties and obligations hereunder, TMCC will pay to WOFCO (which, except as otherwise provided in Paragraph 9(b) hereof, shall constitute full compensation to WOFCO for services under the Program) a fee of $106.00 for each Contract purchased by TMCC during such month plus a fee of $7.00 per Contract serviced during each month subsequent to the month in which purchased. The foregoing compensation applicable to WOFCO shall be payable by TMCC monthly within ten (10) business days after the receipt of an invoice therefor. TMCC shall allocate to itself on a monthly basis and as a deduction from Profit of the Program (as hereinafter defined) a fee of $.25 per Contract serviced during each month in order to defray certain administrative costs which it will experience with respect to such Contract." 3. The following language is hereby added to end of the last sentence of Paragraph 9(b), subparagraph (ii): ",plus the Cost of Equity Funds (as hereinafter defined) incurred in such month." 4. Paragraph 9(b), subparagraph (vi) is hereby amended in its entirety to read as follows: "(vi) The term "Cost of Variable Rate Funds" shall mean, in respect to any month, eight-ninths (8/9ths) of the average daily cash employed for all Contracts serviced by WOFCO hereunder at any time during such month, minus the average daily balance of Dedicated Fixed Rate Funds outstanding during such month, times the "Variable Rate" (as hereinafter defined) for such month in conjunction with the requirements of this Agreement." 5. The following subparagraphs shall be added to Paragraph 9(b): (viii) The term "Cost of Equity Funds" shall mean, in respect of any month, one-ninth (1/9th) of the average daily cash employed for all Contracts serviced by WOFCO hereunder at any time during such month times the "Equity Fee" (as hereinafter defined), divided by 12 for such month. (ix) The "Equity Fee" shall be an annual fixed rate of 10.5%. 6. Paragraph 20 of the Agreement, in regard to the address for notices to TMCC, is hereby amended to read as follows: "Toyota Motor Credit Corporation 19001 S. Western Avenue P. O. Box 2958 Torrance, CA 90509-2958 Attention: Wolfgang G. Jahn Group Vice President" 7. Except as modified herein, the terms and conditions of the Agreement remain unchanged. In the event of a conflict between the terms and conditions of this Amendment and of the Agreement, the terms and conditions of this amendment shall govern. 8. All capitalized terms used herein and not separately defined shall have the meaning ascribed thereto in the Agreement. TOYOTA MOTOR CREDIT WORLD OMNI FINANCIAL CORPORATION, a California CORP., a Florida corporation corporation By /S/WOLFGANG G. JAHN By /S/MICHAEL NIXON --------------------------- -------------------------- Wolfgang G. Jahn Michael Nixon Group Vice President President EX-10.10 4 SEPTEMBER 29, 1994 THREE-YEAR CREDIT AGREEMENT EXHIBIT 10.10 THREE-YEAR CREDIT AGREEMENT dated as of September 29, 1994 among Toyota Motor Credit Corporation The Banks Listed Herein and Morgan Guaranty Trust Company of New York, as Agent ------------- Bank of America National Trust & Savings Association, The Bank of Tokyo, Ltd., The Chase Manhattan Bank N.A., Citicorp USA, Inc. and Credit Suisse, Co-Agents TABLE OF CONTENTS* ARTICLE I DEFINITIONS SECTION 1.01. Definitions.............................................. 1 SECTION 1.02. Accounting Terms and Determinations........................................ 10 SECTION 1.03. Types of Borrowings...................................... 10 ARTICLE II THE CREDITS SECTION 2.01. Commitments to Lend...................................... 11 SECTION 2.02. Notice of Committed Borrowing............................ 11 SECTION 2.03. Money Market Borrowings.................................. 12 SECTION 2.04. Notice to Banks; Funding of Loans........................ 16 SECTION 2.05. Notes.................................................... 17 SECTION 2.06. Maturity of Loans........................................ 17 SECTION 2.07. Interest Rates........................................... 18 SECTION 2.08. Facility Fee............................................. 21 SECTION 2.09. Optional Termination or Reduction of Commitments........................................ 22 SECTION 2.10. Scheduled Termination of Commitments........................................... 22 SECTION 2.11. Optional Prepayments..................................... 22 SECTION 2.12. General Provisions as to Payments........................ 23 SECTION 2.13. Funding Losses........................................... 24 SECTION 2.14. Computation of Interest and Fees......................... 24 ARTICLE III CONDITIONS SECTION 3.01 Effectiveness.. ......................................... 24 SECTION 3.02. Borrowings............................................... 26 ARTICLE IV REPRESENTATIONS AND WARRANTIES SECTION 4.01. Corporate Existence and Power............................ 26 SECTION 4.02. Corporate and Governmental Authorization; No Contravention....................... 26 - --------------- *The Table of Contents is not a part of this Agreement i Page ---- SECTION 4.03. Binding Effect........................................... 27 SECTION 4.04. Financial Information.................................... 27 SECTION 4.05. Litigation............................................... 28 SECTION 4.06. Compliance with ERISA.................................... 28 SECTION 4.07. Environmental Matters.................................... 28 SECTION 4.08. Taxes.................................................... 28 SECTION 4.09. Subsidiaries............................................. 29 SECTION 4.10. Not an Investment Company................................ 29 SECTION 4.11. Full Disclosure.......................................... 29 ARTICLE V COVENANTS SECTION 5.01. Information.............................................. 29 SECTION 5.02. Maintenance of Property; Insurance............................................. 31 SECTION 5.03. Conduct of Business and Maintenance of Existence. .........................................31 SECTION 5.04. Compliance with Laws..................................... 32 SECTION 5.05. Negative Pledge.......................................... 32 SECTION 5.06. Consolidations, Mergers and Sales of Assets............................................. 34 SECTION 5.07. Use of Proceeds.......................................... 35 ARTICLE VI DEFAULTS SECTION 6.01. Events of Default........................................ 36 SECTION 6.02. Notice of Default........................................ 38 ARTICLE VII THE AGENT SECTION 7.01. Appointment and Authorization......................................... 38 SECTION 7.02. Agent and Affiliates..................................... 38 SECTION 7.03. Action by Agent.......................................... 39 SECTION 7.04. Consultation with Experts................................ 39 SECTION 7.05. Liability of Agent....................................... 39 SECTION 7.06. Indemnification.......................................... 39 SECTION 7.07. Credit Decision.......................................... 40 SECTION 7.08. Successor Agent.......................................... 40 SECTION 7.09. Agent's Fee.............................................. 40 ii ARTICLE VIII CHANGE IN CIRCUMSTANCES Page ---- SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair...................................41 SECTION 8.02. Illegality............................................... 41 SECTION 8.03. Increased Cost and Reduced Return........................ 42 SECTION 8.04. Taxes.................................................... 44 SECTION 8.05. Base Rate Loans Substituted for Affected Fixed Rate Loans............................. 46 SECTION 8.06. Substitution of Bank..................................... 46 SECTION 8.07. Consultation............................................. 47 ARTICLE IX MISCELLANEOUS SECTION 9.01. Notices.................................................. 47 SECTION 9.02. No Waivers............................................... 47 SECTION 9.03. Expenses; Indemnification................................ 48 SECTION 9.04. Sharing of Set-Offs...................................... 49 SECTION 9.05. Amendments and Waivers................................... 49 SECTION 9.06. Successors and Assigns................................... 50 SECTION 9.07. Collateral............................................... 51 SECTION 9.08. Governing Law; Submission to Jurisdiction.......................................... 52 SECTION 9.09. Counterparts; Integration................................ 52 SECTION 9.10. WAIVER OF JURY TRIAL..................................... 52 Schedule I - Designated Credit Facilities Exhibit A - Note Exhibit B - Money Market Quote Request Exhibit C - Invitation for Money Market Quotes Exhibit D - Money Market Quote Exhibit E - Opinion of Counsel for the Borrower Exhibit F - Opinion of Special Counsel for the Agent Exhibit G - Assignment and Assumption Agreement iii THREE-YEAR CREDIT AGREEMENT AGREEMENT dated as of September 29, 1994 among TOYOTA MOTOR CREDIT CORPORATION, the BANKS listed on the signature pages hereof and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent. The parties hereto agree as follows: ARTICLE I DEFINITIONS SECTION 1.01. DEFINITIONS. The following terms, as used herein, have the following meanings: "Absolute Rate Auction" means a solicitation of Money Market Quotes setting forth Money Market Absolute Rates pursuant to Section 2.03. "Adjusted CD Rate" has the meaning set forth in Section 2.07(b). "Adjusted London Interbank Offered Rate" has the meaning set forth in Section 2.07(c). "Administrative Questionnaire" means, with respect to each Bank, an administrative questionnaire in the form prepared by the Agent and submitted to the Agent (with a copy to the Borrower) duly completed by such Bank. "Agent" means Morgan Guaranty Trust Company of New York in its capacity as agent for the Banks hereunder, and its successors in such capacity. "Applicable Lending Office" means, with respect to any Bank, (i) in the case of its Domestic Loans, its Domestic Lending Office, (ii) in the case of its Euro-Dollar Loans, its Euro-Dollar Lending Office and (iii) in the case of its Money Market Loans, its Money Market Lending Office. "Assessment Rate" has the meaning set forth in Section 2.07(b). 1 "Assignee" has the meaning set forth in Section 9.06(c). "Bank" means each bank listed on the signature pages hereof, each Assignee which becomes a Bank pursuant to Section 9.06(c), and their respective successors. "Base Rate" means, for any day, a rate per annum equal to the higher of (i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the Federal Funds Rate for such day. "Base Rate Loan" means a Committed Loan to be made by a Bank as a Base Rate Loan in accordance with the applicable Notice of Committed Borrowing or pursuant to Article VIII. "Benefit Arrangement" means at any time an employee benefit plan within the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan and which is maintained or otherwise contributed to by any member of the ERISA Group. "Borrower" means Toyota Motor Credit Corporation, a California corporation, and its successors. "Borrower's 1993 Form 10-K" means the Borrower's annual report on Form 10-K for 1993, as filed with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934. "Borrower's Latest Form 10-Q" means the Borrower's quarterly report on Form 10-Q for the quarter ended June 30, 1994, as filed with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934. "Borrowing" has the meaning set forth in Section 1.03. "CD Base Rate" has the meaning set forth in Section 2.07(b). "CD Loan" means a Committed Loan to be made by a Bank as a CD Loan in accordance with the applicable Notice of Committed Borrowing. "CD Margin" has the meaning set forth in Section 2.07(b). "CD Reference Banks" means Credit Suisse, Deutsche Bank AG and Morgan Guaranty Trust Company of New York. 2 "Commitment" means, with respect to each Bank, the amount set forth opposite the name of such Bank on the signature pages hereof, as such amount may be reduced from time to time pursuant to Section 2.09. "Committed Loan" means a loan made by a Bank pursuant to Section 2.01. "Consolidated Subsidiary" means at any date any Subsidiary or other entity the accounts of which would be consolidated with those of the Borrower in its consolidated financial statements if such statements were prepared as of such date. "Default" means any condition or event which constitutes an Event of Default or which with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default. "Designated Credit Facility" means a credit facility identified on Schedule I hereto. "Domestic Business Day" means any day except a Saturday, Sunday or other day on which commercial banks in New York City are authorized by law to close. "Domestic Lending Office" means, as to each Bank, its office located at its address set forth in its Administrative Questionnaire (or identified in its Administrative Questionnaire as its Domestic Lending Office) or such other office as such Bank may hereafter designate as its Domestic Lending Office by notice to the Borrower and the Agent; PROVIDED that any Bank may so designate separate Domestic Lending Offices for its Base Rate Loans, on the one hand, and its CD Loans, on the other hand, in which case all references herein to the Domestic Lending Office of such Bank shall be deemed to refer to either or both of such offices, as the context may require. "Domestic Loans" means CD Loans or Base Rate Loans or both. "Domestic Reserve Percentage" has the meaning set forth in Section 2.07(b). "Effective Date" means the date this Agreement becomes effective in accordance with Section 3.01. "Environmental Laws" means any and all federal, state, local and foreign statutes, laws, judicial decisions, regulations, ordinances, rules, judgments, orders, decrees, 3 plans, injunctions, permits, concessions, grants, franchises, licenses, agreements and other governmental restrictions relating to the environment, the effect of the environment on human health or to emissions, discharges or releases of pollutants, contaminants, hazardous substances or wastes into the environment including, without limitation, ambient air, surface water, ground water, or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, hazardous substances or wastes or the clean-up or other remediation thereof. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, or any successor statute. "ERISA Group" means the Borrower, any Subsidiary and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Borrower or any Subsidiary, are treated as a single employer under Section 414 of the Internal Revenue Code. "Euro-Dollar Business Day" means any Domestic Business Day on which commercial banks are open for international business (including dealings in dollar deposits) in London. "Euro-Dollar Lending Office" means, as to each Bank, its office, branch or affiliate located at its address set forth in its Administrative Questionnaire (or identified in its Administrative Questionnaire as its Euro-Dollar Lending Office) or such other office, branch or affiliate of such Bank as it may hereafter designate as its Euro-Dollar Lending Office by notice to the Borrower and the Agent. "Euro-Dollar Loan" means a Committed Loan to be made by a Bank as a Euro-Dollar Loan in accordance with the applicable Notice of Committed Borrowing. "Euro-Dollar Margin" has the meaning set forth in Section 2.07(c). "Euro-Dollar Reference Banks" means the principal London offices of Credit Suisse, Deutsche Bank AG and Morgan Guaranty Trust Company of New York. "Euro-Dollar Reserve Percentage" has the meaning set forth in Section 2.07(c). 4 "Event of Default" has the meaning set forth in Section 6.01. "Federal Funds Rate" means, for any day, the rate per annum (rounded upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Domestic Business Day next succeeding such day, PROVIDED that (i) if such day is not a Domestic Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Domestic Business Day as so published on the next succeeding Domestic Business Day, and (ii) if no such rate is so published on such next succeeding Domestic Business Day, the Federal Funds Rate for such day shall be the average rate quoted to Morgan Guaranty Trust Company of New York on such day on such transactions as determined by the Agent. "Fixed Rate Loans" means CD Loans or Euro-Dollar Loans or Money Market Loans (excluding Money Market LIBOR Loans bearing interest at the Base Rate pursuant to Section 8.01(a)) or any combination of the foregoing. "Indemnitee" has the meaning set forth in Section 9.03(b). "Interest Period" means: (1) with respect to each Euro-Dollar Borrowing, the period commencing on the date of such Borrowing and ending one, two, three or six months thereafter, as the Borrower may elect in the applicable Notice of Borrowing; PROVIDED that: (a) any Interest Period which would otherwise end on a day which is not a Euro-Dollar Business Day shall, subject to clause (c) below, be extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Euro-Dollar Business Day; (b) any Interest Period which begins on the last Euro-Dollar Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to clause (c) below, end on the last Euro-Dollar Business Day of a calendar month; and 5 (c) any Interest Period which would otherwise end after the Termination Date shall end on the Termination Date. (2) with respect to each CD Borrowing, the period commencing on the date of such Borrowing and ending 30, 60, 90 or 180 days thereafter, as the Borrower may elect in the applicable Notice of Borrowing; PROVIDED that: (a) any Interest Period which would otherwise end on a day which is not a Euro-Dollar Business Day shall, subject to clause (b) below, be extended to the next succeeding Euro-Dollar Business Day; and (b) any Interest Period which would otherwise end after the Termination Date shall end on the Termination Date. (3) with respect to each Base Rate Borrowing, the period commencing on the date of such Borrowing and ending 30 days thereafter; PROVIDED that: (a) any Interest Period which would otherwise end on a day which is not a Euro-Dollar Business Day shall, subject to clause (b) below, be extended to the next succeeding Euro-Dollar Business Day; and (b) any Interest Period which would otherwise end after the Termination Date shall end on the Termination Date. (4) with respect to each Money Market LIBOR Borrowing, the period commencing on the date of such Borrowing and ending such whole number of months thereafter as the Borrower may elect in accordance with Section 2.03; PROVIDED that: (a) any Interest Period which would otherwise end on a day which is not a Euro-Dollar Business Day shall, subject to clause (c) below, be extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Euro-Dollar Business Day; (b) any Interest Period which begins on the last Euro-Dollar Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to clause (c) below, end on the last Euro-Dollar Business Day of a calendar month; and 6 (c) any Interest Period which would otherwise end after the Termination Date shall end on the Termination Date. (5) with respect to each Money Market Absolute Rate Borrowing, the period commencing on the date of such Borrowing and ending such number of days thereafter (but not less than 14 days) as the Borrower may elect in accordance with Section 2.03; PROVIDED that: (a) any Interest Period which would otherwise end on a day which is not a Euro-Dollar Business Day shall, subject to clause (b) below, be extended to the next succeeding Euro-Dollar Business Day; and (b) any Interest Period which would otherwise end after the Termination Date shall end on the Termination Date. "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended, or any successor statute. "LIBOR Auction" means a solicitation of Money Market Quotes setting forth Money Market Margins based on the London Interbank Offered Rate pursuant to Section 2.03. "Loan" means a Domestic Loan or a Euro-Dollar Loan or a Money Market Loan and "Loans" means Domestic Loans or Euro-Dollar Loans or Money Market Loans or any combination of the foregoing. "London Interbank Offered Rate" has the meaning set forth in Section 2.07(c). "Material Plan" means at any time a Plan or Plans having aggregate Unfunded Liabilities in excess of $25,000,000. "Money Market Absolute Rate" has the meaning set forth in Section 2.03(d). "Money Market Absolute Rate Loan" means a loan to be made by a Bank pursuant to an Absolute Rate Auction. "Money Market Lending Office" means, as to each Bank, its Domestic Lending Office or such other office, branch or affiliate of such Bank as it may hereafter designate as its Money Market Lending Office by notice to the Borrower and the Agent; PROVIDED that any Bank may from time to time by notice to the Borrower and the Agent designate separate Money Market Lending Offices for its 7 Money Market LIBOR Loans, on the one hand, and its Money Market Absolute Rate Loans, on the other hand, in which case all references herein to the Money Market Lending Office of such Bank shall be deemed to refer to either or both of such offices, as the context may require. "Money Market LIBOR Loan" means a loan to be made by a Bank pursuant to a LIBOR Auction (including such a loan bearing interest at the Base Rate pursuant to Section 8.01(a)). "Money Market Loan" means a Money Market LIBOR Loan or a Money Market Absolute Rate Loan. "Money Market Margin" has the meaning set forth in Section 2.03(d). "Money Market Quote" means an offer by a Bank to make a Money Market Loan in accordance with Section 2.03. "Multiemployer Plan" means at any time an employee pension benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any member of the ERISA Group is then making or accruing an obligation to make contributions or has within the preceding five plan years made contributions, including for these purposes any Person which ceased to be a member of the ERISA Group during such five year period. "Notes" means promissory notes of the Borrower, substantially in the form of Exhibit A hereto, evidencing the obligation of the Borrower to repay the Loans, and "Note" means any one of such promissory notes issued hereunder. "Notice of Borrowing" means a Notice of Committed Borrowing (as defined in Section 2.02) or a Notice of Money Market Borrowing (as defined in Section 2.03(f)). "Parent" means, with respect to any Bank, any Person controlling such Bank. "Participant" has the meaning set forth in Section 9.06(b). "PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA. "Person" means an individual, a corporation, a partnership, an association, a trust or any other entity or 8 organization, including a government or political subdivision or an agency or instrumentality thereof. "Plan" means at any time an employee pension benefit plan (other than a Multiemployer Plan) which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Internal Revenue Code and either (i) is maintained, or contributed to, by any member of the ERISA Group for employees of any member of the ERISA Group or (ii) has at any time within the preceding five years been maintained, or contributed to, by any Person which was at such time a member of the ERISA Group for employees of any Person which was at such time a member of the ERISA Group. "Prime Rate" means the rate of interest publicly announced by Morgan Guaranty Trust Company of New York in New York City from time to time as its Prime Rate. "Reference Banks" means the CD Reference Banks or the Euro-Dollar Reference Banks, as the context may require, and "Reference Bank" means any one of such Reference Banks. "Refunding Borrowing" means a Committed Borrowing which, after application of the proceeds thereof, results in no net increase in the outstanding principal amount of Committed Loans made by any Bank. "Regulation U" means Regulation U of the Board of Governors of the Federal Reserve System, as in effect from time to time. "Regulatory Change" has the meaning set forth in Section 8.03(a). "Required Banks" means at any time Banks having at least 66 2/3% of the aggregate amount of the Commitments or, if the Commitments shall have been terminated, holding Notes evidencing at least 66 2/3% of the aggregate unpaid principal amount of the Loans. "Significant Subsidiary" means any Subsidiary which would meet the definition of "Significant Subsidiary" contained in Regulation S-X (or similar successor provision) of the Securities and Exchange Commission. "Subsidiary" means, as to any Person, any corporation or other entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or 9 indirectly owned by such Person; unless otherwise specified, "Subsidiary" means a Subsidiary of the Borrower. "Termination Date" means September 29, 1997 or, if such day is not a Euro-Dollar Business Day, the next preceding Euro-Dollar Business Day. "TMC Consolidated Subsidiary" means at any date a Subsidiary or other entity the accounts of which would be consolidated with those of Toyota Motor Corporation in its consolidated financial statements if such statements were prepared as of such date. "Unfunded Liabilities" means, with respect to any Plan at any time, the amount (if any) by which (i) the value of all benefit liabilities under such Plan, determined on a plan termination basis using the assumptions prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market value of all Plan assets allocable to such liabilities under Title IV of ERISA (excluding any accrued but unpaid contributions), all determined as of the then most recent valuation date for such Plan, but only to the extent that such excess represents a potential liability of a member of the ERISA Group to the PBGC or any other Person under Title IV of ERISA. "United States" means the United States of America, including the States and the District of Columbia, but excluding its territories and possessions. SECTION 1.02. ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with generally accepted accounting principles as in effect from time to time, applied on a basis consistent (except for changes concurred in by the Borrower's independent public accountants) with the most recent audited consolidated financial statements of the Borrower and its Consolidated Subsidiaries delivered to the Banks. SECTION 1.03. TYPES OF BORROWINGS. The term "Borrowing" denotes the aggregation of Loans of one or more Banks to be made to the Borrower pursuant to Article II on a single date and for a single Interest Period. Borrowings are classified for purposes of this Agreement either by reference to the pricing of Loans comprising such Borrowing (e.g., a "Euro-Dollar Borrowing" is a Borrowing comprised of Euro-Dollar Loans) or by reference to the provisions of 10 Article II under which participation therein is determined (i.e., a "Committed Borrowing" is a Borrowing under Section 2.01 in which all Banks participate in proportion to their Commitments, while a "Money Market Borrowing" is a Borrowing under Section 2.03 in which the Bank participants are determined on the basis of their bids in accordance therewith). ARTICLE II THE CREDITS SECTION 2.01. COMMITMENTS TO LEND. From time to time prior to the Termination Date, each Bank severally agrees, on the terms and conditions set forth in this Agreement, to make loans to the Borrower pursuant to this Section from time to time in amounts such that the aggregate principal amount of Committed Loans by such Bank at any one time outstanding shall not exceed the amount of its Commitment. Each Borrowing under this Section shall be in an aggregate principal amount of $50,000,000 or any larger multiple of $5,000,000 (except that any such Borrowing may be in the aggregate amount available in accordance with Section 3.02(b)) and shall be made from the several Banks ratably in proportion to their respective Commitments. Within the foregoing limits, the Borrower may borrow under this Section, repay, or to the extent permitted by Section 2.11, prepay Loans and reborrow at any time prior to the Termination Date under this Section. SECTION 2.02. NOTICE OF COMMITTED BORROWING. The Borrower shall give the Agent notice (a "Notice of Committed Borrowing") not later than 10:30 A.M. (New York City time) on (x) the date of each Base Rate Borrowing, (y) the second Domestic Business Day before each CD Borrowing and (z) the third Euro-Dollar Business Day before each Euro-Dollar Borrowing, specifying: (a) the date of such Borrowing, which shall be a Domestic Business Day in the case of a Domestic Borrowing or a Euro-Dollar Business Day in the case of a Euro-Dollar Borrowing, (b) the aggregate amount of such Borrowing, (c) whether the Loans comprising such Borrowing are to be CD Loans, Base Rate Loans or Euro-Dollar Loans, and 11 (d) in the case of a Fixed Rate Borrowing, the duration of the Interest Period applicable thereto, subject to the provisions of the definition of Interest Period. SECTION 2.03. MONEY MARKET BORROWINGS. (a) The MONEY MARKET OPTION. In addition to Committed Borrowings pursuant to Section 2.01, the Borrower may, as set forth in this Section, request the Banks prior to the Termination Date to make offers to make Money Market Loans to the Borrower. The Banks may, but shall have no obligation to, make such offers and the Borrower may, but shall have no obligation to, accept any such offers in the manner set forth in this Section. (b) MONEY MARKET QUOTE REQUEST. When the Borrower wishes to request offers to make Money Market Loans under this Section, it shall transmit to the Agent by telex or facsimile transmission a Money Market Quote Request substantially in the form of Exhibit B hereto so as to be received no later than 10:30 A.M. (New York City time) on (x) the fourth Euro-Dollar Business Day prior to the date of Borrowing proposed therein, in the case of a LIBOR Auction or (y) the Domestic Business Day next preceding the date of Borrowing proposed therein, in the case of an Absolute Rate Auction (or, in either case, such other time or date as the Borrower and the Agent shall have mutually agreed and shall have notified to the Banks not later than the date of the Money Market Quote Request for the first LIBOR Auction or Absolute Rate Auction for which such change is to be effective) specifying: (i) the proposed date of Borrowing, which shall be a Euro-Dollar Business Day in the case of a LIBOR Auction or a Domestic Business Day in the case of an Absolute Rate Auction, (ii) the aggregate amount of such Borrowing, which shall be $50,000,000 or a larger multiple of $5,000,000, (iii) the duration of the Interest Period applicable thereto, subject to the provisions of the definition of Interest Period, and (iv) whether the Money Market Quotes requested are to set forth a Money Market Margin or a Money Market Absolute Rate. 12 The Borrower may request offers to make Money Market Loans for more than one Interest Period in a single Money Market Quote Request. No Money Market Quote Request shall be given within five Euro-Dollar Business Days (or such other number of days as the Borrower and the Agent may agree) of any other Money Market Quote Request. (c) INVITATION FOR MONEY MARKET QUOTES. Promptly upon receipt of a Money Market Quote Request, the Agent shall send to the Banks by telex or facsimile transmission an Invitation for Money Market Quotes substantially in the form of Exhibit C hereto, which shall constitute an invitation by the Borrower to each Bank to submit Money Market Quotes offering to make the Money Market Loans to which such Money Market Quote Request relates in accordance with this Section. (d) SUBMISSION AND CONTENTS OF MONEY MARKET QUOTES. (i) Each Bank may submit a Money Market Quote containing an offer or offers to make Money Market Loans in response to any Invitation for Money Market Quotes. Each Money Market Quote must comply with the requirements of this subsection (d) and must be submitted to the Agent by telex or facsimile transmission at its offices specified in or pursuant to Section 9.01 not later than (x) 4:00 P.M. (New York City time) on the fourth Euro-Dollar Business Day prior to the proposed date of Borrowing, in the case of a LIBOR Auction or (y) 9:30 A.M. (New York City time) on the proposed date of Borrowing, in the case of an Absolute Rate Auction (or, in either case, such other time or date as the Borrower and the Agent shall have mutually agreed and shall have notified to the Banks not later than the date of the Money Market Quote Request for the first LIBOR Auction or Absolute Rate Auction for which such change is to be effective); PROVIDED that Money Market Quotes submitted by the Agent (or any affiliate of the Agent) in the capacity of a Bank may be submitted, and may only be submitted, if the Agent or such affiliate notifies the Borrower of the terms of the offer or offers contained therein not later than 15 minutes prior to the deadline for the other Banks. Subject to Articles III and VI, any Money Market Quote so made shall be irrevocable except with the written consent of the Agent given on the instructions of the Borrower. (ii) Each Money Market Quote shall be in substantially the form of Exhibit D hereto and shall in any case specify: (A) the proposed date of Borrowing, 13 (B) the principal amount of the Money Market Loan for which each such offer is being made, which principal amount (w) may be greater than or less than the Commitment of the quoting Bank, (x) must be $5,000,000 or a larger multiple of $1,000,000, (y) may not exceed the principal amount of Money Market Loans for which offers were requested and (z) may be subject to an aggregate limitation as to the principal amount of Money Market Loans for which offers being made by such quoting Bank may be accepted, (C) in the case of a LIBOR Auction, the margin above or below the applicable London Interbank Offered Rate (the "Money Market Margin") offered for each such Money Market Loan, expressed as a percentage (specified to the nearest 1/10,000th of 1%) to be added to or subtracted from such base rate, (D) in the case of an Absolute Rate Auction, the rate of interest per annum (specified to the nearest 1/10,000th of 1%) (the "Money Market Absolute Rate") offered for each such Money Market Loan, and (E) the identity of the quoting Bank. A Money Market Quote may set forth up to five separate offers by the quoting Bank with respect to each Interest Period specified in the related Invitation for Money Market Quotes. (iii) Any Money Market Quote shall be disregarded if it: (A) is not substantially in conformity with Exhibit D hereto or does not specify all of the information required by subsection (d)(ii); (B) contains qualifying, conditional or similar language; (C) proposes terms other than or in addition to those set forth in the applicable Invitation for Money Market Quotes; or (D) arrives after the time set forth in subsection (d)(i). (e) NOTICE TO BORROWER. The Agent shall promptly notify the Borrower of the terms (x) of any Money Market Quote submitted by a Bank that is in accordance with subsection (d) and (y) of any Money Market Quote that 14 amends, modifies or is otherwise inconsistent with a previous Money Market Quote submitted by such Bank with respect to the same Money Market Quote Request. Any such subsequent Money Market Quote shall be disregarded by the Agent unless such subsequent Money Market Quote is submitted solely to correct a manifest error in such former Money Market Quote. The Agent's notice to the Borrower shall specify (A) the aggregate principal amount of Money Market Loans for which offers have been received for each Interest Period specified in the related Money Market Quote Request, (B) the respective principal amounts and Money Market Margins or Money Market Absolute Rates, as the case may be, so offered and (C) if applicable, limitations on the aggregate principal amount of Money Market Loans for which offers in any single Money Market Quote may be accepted. (f) ACCEPTANCE AND NOTICE BY BORROWER. Not later than 10:30 A.M. (New York City time) on (x) the third Euro-Dollar Business Day prior to the proposed date of Borrowing, in the case of a LIBOR Auction or (y) the proposed date of Borrowing, in the case of an Absolute Rate Auction (or, in either case, such other time or date as the Borrower and the Agent shall have mutually agreed and shall have notified to the Banks not later than the date of the Money Market Quote Request for the first LIBOR Auction or Absolute Rate Auction for which such change is to be effective), the Borrower shall notify the Agent of its acceptance or non-acceptance of the offers so notified to it pursuant to subsection (e). In the case of acceptance, such notice (a "Notice of Money Market Borrowing") shall specify the aggregate principal amount of offers for each Interest Period that are accepted. The Borrower may accept any Money Market Quote in whole or in part; PROVIDED that: (i) the aggregate principal amount of each Money Market Borrowing may not exceed the applicable amount set forth in the related Money Market Quote Request, (ii) the principal amount of each Money Market Borrowing must be $50,000,000 or a larger multiple of $5,000,000, and (iii) acceptance of offers may only be made on the basis of ascending Money Market Margins or Money Market Absolute Rates, as the case may be. (g) ALLOCATION BY AGENT. If offers are made by two or more Banks with the same Money Market Margins or Money Market Absolute Rates, as the case may be, for a greater aggregate principal amount than the amount in respect of which such offers are accepted for the related 15 Interest Period, the principal amount of Money Market Loans in respect of which such offers are accepted shall be allocated by the Agent among such Banks as nearly as possible (in multiples of $1,000,000, as the Agent may deem appropriate) in proportion to the aggregate principal amounts of such offers. Determinations by the Agent of the amounts of Money Market Loans shall be conclusive in the absence of manifest error. SECTION 2.04. NOTICE TO BANKS; FUNDING OF LOANS. (a) Upon receipt of a Notice of Borrowing, the Agent shall promptly notify each Bank of the contents thereof and of such Bank's share (if any) of such Borrowing and such Notice of Borrowing shall not thereafter be revocable by the Borrower. (b) Not later than 1:30 P.M. (New York City time) on the date of each Borrowing, each Bank participating therein shall (except as provided in subsection (c) of this Section) make available its share of such Borrowing, in Federal or other funds immediately available in New York City, to the Agent at its address referred to in Section 9.01. Unless the Agent determines that any applicable condition specified in Article III has not been satisfied, the Agent will make the funds so received from the Banks available to the Borrower at the Agent's aforesaid address. (c) If any Bank makes a new Loan hereunder on a day on which the Borrower is to repay all or any part of an outstanding Loan from such Bank, such Bank shall apply the proceeds of its new Loan to make such repayment and only an amount equal to the difference (if any) between the amount being borrowed and the amount being repaid shall be made available by such Bank to the Agent as provided in subsection (b), or remitted by the Borrower to the Agent as provided in Section 2.12, as the case may be. (d) Unless the Agent shall have received notice from a Bank prior to the date of any Borrowing (or, in the case of a Base Rate Borrowing or a Money Market Absolute Rate Borrowing, prior to 1:30 P.M. (New York City time) on the date of such Borrowing) that such Bank will not make available to the Agent such Bank's share of such Borrowing, the Agent may assume that such Bank has made such share available to the Agent on the date of such Borrowing in accordance with subsections (b) and (c) of this Section 2.04 and the Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent that such Bank shall not have so made such share available to the Agent, such Bank and the 16 Borrower severally agree to repay to the Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Agent, at the Federal Funds Rate. If such Bank shall repay to the Agent such corresponding amount, such amount so repaid shall constitute such Bank's Loan included in such Borrowing for purposes of this Agreement. SECTION 2.05. NOTES. (a) The Loans of each Bank shall be evidenced by a single Note payable to the order of such Bank for the account of its Applicable Lending Office in an amount equal to the aggregate unpaid principal amount of such Bank's Loans. (b) Each Bank may, by notice to the Borrower and the Agent, request that its Loans of a particular type be evidenced by a separate Note in an amount equal to the aggregate unpaid principal amount of such Loans. Each such Note shall be in substantially the form of Exhibit A hereto with appropriate modifications to reflect the fact that it evidences solely Loans of the relevant type. Each reference in this Agreement to the "Note" of such Bank shall be deemed to refer to and include any or all of such Notes, as the context may require. (c) Upon receipt of each Bank's Note pursuant to Section 3.01(b), the Agent shall forward such Note to such Bank. Each Bank shall record the date, amount, type and maturity of each Loan made by it and the date and amount of each payment of principal made by the Borrower with respect thereto, and may, if such Bank so elects in connection with any transfer or enforcement of its Note, endorse on the schedule forming a part thereof appropriate notations to evidence the foregoing information with respect to each such Loan then outstanding; PROVIDED that the failure of any Bank to make any such recordation or endorsement shall not affect the obligations of the Borrower hereunder or under the Notes. Each Bank is hereby irrevocably authorized by the Borrower so to endorse its Note and to attach to and make a part of its Note a continuation of any such schedule as and when required. (d) The Agent will upon request of the Borrower from time to time furnish information to the Borrower as to the types and amounts of Loans outstanding hereunder. SECTION 2.06. MATURITY OF LOANS. Each Loan included in any Borrowing shall mature, and the principal amount thereof shall be due and payable, on the last day of the Interest Period applicable to such Borrowing. 17 SECTION 2.07. INTEREST RATES. (a) Each Base Rate Loan shall bear interest on the outstanding principal amount thereof, for each day from the date such Loan is made until it becomes due, at a rate per annum equal to the Base Rate for such day. Such interest shall be payable for each Interest Period on the last day thereof. Any overdue principal of or interest on any Base Rate Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the sum of 2% plus the rate otherwise applicable to Base Rate Loans for such day. (b) Each CD Loan shall bear interest on the outstanding principal amount thereof, for each day during the Interest Period applicable thereto, at a rate per annum equal to the sum of the CD Margin plus the Adjusted CD Rate applicable to such Interest Period; PROVIDED that if any CD Loan shall, as a result of clause (2)(b) of the definition of Interest Period, have an Interest Period of less than 30 days, such CD Loan shall bear interest during such Interest Period at the rate applicable to Base Rate Loans during such period. Such interest shall be payable for each Interest Period on the last day thereof and, if such Interest Period is longer than 90 days, at intervals of 90 days after the first day thereof. Any overdue principal of or interest on any CD Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the sum of 2% plus the higher of (i) the sum of the CD Margin plus the Adjusted CD Rate applicable to the Interest Period for such Loan and (ii) the rate applicable to Base Rate Loans for such day. "CD Margin" means 0.2375% per annum. The "Adjusted CD Rate" applicable to any Interest Period means a rate per annum determined pursuant to the following formula: [ CDBR ]* ACDR = [ ---------- ] + AR [ 1.00 - DRP ] ACDR = Adjusted CD Rate CDBR = CD Base Rate DRP = Domestic Reserve Percentage AR = Assessment Rate - ---------- * The amount in brackets being rounded upward, if necessary, to the next higher 1/100 of 1% 18 The "CD Base Rate" applicable to any Interest Period is the rate of interest determined by the Agent to be the average (rounded upward, if necessary, to the next higher 1/100 of 1%) of the prevailing rates per annum bid at 10:00 A.M. (New York City time) (or as soon thereafter as practicable) on the first day of such Interest Period by two or more New York certificate of deposit dealers of recognized standing for the purchase at face value from each CD Reference Bank of its certificates of deposit in an amount comparable to the principal amount of the CD Loan of such CD Reference Bank to which such Interest Period applies and having a maturity comparable to such Interest Period. "Domestic Reserve Percentage" means for any day that percentage (expressed as a decimal) which is in effect on such day, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including without limitation any basic, supplemental or emergency reserves) for a member bank of the Federal Reserve System in New York City with deposits exceeding five billion dollars in respect of new non-personal time deposits in dollars in New York City having a maturity comparable to the related Interest Period and in an amount of $100,000 or more. The Adjusted CD Rate shall be adjusted automatically on and as of the effective date of any change in the Domestic Reserve Percentage. "Assessment Rate" means for any day the annual assessment rate in effect on such day which is payable by a member of the Bank Insurance Fund classified as adequately capitalized and within supervisory subgroup "A" (or a comparable successor assessment risk classification) within the meaning of 12 C.F.R. section 327.3(e) (or any successor provision) to the Federal Deposit Insurance Corporation (or any successor) for such Corporation's (or such successor's) insuring time deposits at offices of such institution in the United States. The Adjusted CD Rate shall be adjusted automatically on and as of the effective date of any change in the Assessment Rate. (c) Each Euro-Dollar Loan shall bear interest on the outstanding principal amount thereof, for each day during the Interest Period applicable thereto, at a rate per annum equal to the sum of the Euro-Dollar Margin plus the Adjusted London Interbank Offered Rate applicable to such Interest Period. Such interest shall be payable for each Interest Period on the last day thereof and, if such Interest Period is longer than three months, at intervals of three months after the first day thereof. 19 "Euro-Dollar Margin" means 0.1125% per annum. The "Adjusted London Interbank Offered Rate" applicable to any Interest Period means a rate per annum equal to the quotient obtained (rounded upward, if necessary, to the next higher 1/100 of 1%) by dividing (i) the applicable London Interbank Offered Rate by (ii) 1.00 minus the Euro-Dollar Reserve Percentage. The "London Interbank Offered Rate" applicable to any Interest Period means the average (rounded upward, if necessary, to the next higher 1/16 of 1%) of the respective rates per annum at which deposits in dollars are offered to each of the Euro-Dollar Reference Banks in the London interbank market at approximately 11:00 A.M. (London time) two Euro-Dollar Business Days before the first day of such Interest Period in an amount approximately equal to the principal amount of the Euro-Dollar Loan of such Euro-Dollar Reference Bank to which such Interest Period is to apply and for a period of time comparable to such Interest Period. "Euro-Dollar Reserve Percentage" means for any day that percentage (expressed as a decimal) which is in effect on such day, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement for a member bank of the Federal Reserve System in New York City with deposits exceeding five billion dollars in respect of "Eurocurrency liabilities" (or in respect of any other category of liabilities which includes deposits by reference to which the interest rate on Euro-Dollar Loans is determined or any category of extensions of credit or other assets which includes loans by a non-United States office of any Bank to United States residents). The Adjusted London Interbank Offered Rate shall be adjusted automatically on and as of the effective date of any change in the Euro-Dollar Reserve Percentage. (d) Any overdue principal of or interest on any Euro-Dollar Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the higher of (i) the sum of 2% plus the Euro-Dollar Margin plus the Adjusted London Interbank Offered Rate applicable to the Interest Period for such Loan and (ii) the sum of 2% plus the Euro-Dollar Margin plus the quotient obtained (rounded upward, if necessary, to the next higher 1/100 of 1%) by dividing (x) the average (rounded upward, if necessary, to the next higher 1/16 of 1%) of the respective rates per annum at which one day (or, if such amount due remains unpaid more than three Euro-Dollar Business Days, then for such other period of time not longer than six months as the 20 Agent may select) deposits in dollars in an amount approximately equal to such overdue payment due to each of the Euro-Dollar Reference Banks are offered to such Euro-Dollar Reference Bank in the London interbank market for the applicable period determined as provided above by (y) 1.00 minus the Euro-Dollar Reserve Percentage (or, if the circumstances described in clause (a) or (b) of Section 8.01 shall exist, at a rate per annum equal to the sum of 2% plus the rate applicable to Base Rate Loans for such day). (e) Subject to Section 8.01(a), each Money Market LIBOR Loan shall bear interest on the outstanding principal amount thereof, for the Interest Period applicable thereto, at a rate per annum equal to the sum of the London Interbank Offered Rate for such Interest Period (determined in accordance with Section 2.07(c) as if the related Money Market LIBOR Borrowing were a Committed Euro-Dollar Borrowing) plus (or minus) the Money Market Margin quoted by the Bank making such Loan in accordance with Section 2.03. Each Money Market Absolute Rate Loan shall bear interest on the outstanding principal amount thereof, for the Interest Period applicable thereto, at a rate per annum equal to the Money Market Absolute Rate quoted by the Bank making such Loan in accordance with Section 2.03. Such interest shall be payable for each Interest Period on the last day thereof and, if such Interest Period is longer than three months, at intervals of three months after the first day thereof. Any overdue principal of or interest on any Money Market Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the sum of 2% plus the Base Rate for such day. (f) The Agent shall determine each interest rate applicable to the Loans hereunder. The Agent shall give prompt notice to the Borrower and the participating Banks of each rate of interest so determined, and its determination thereof shall be conclusive in the absence of manifest error. (g) Each Reference Bank agrees to use its best efforts to furnish quotations to the Agent as contemplated by this Section. If any Reference Bank does not furnish a timely quotation, the Agent shall determine the relevant interest rate on the basis of the quotation or quotations furnished by the remaining Reference Bank or Banks or, if none of such quotations is available on a timely basis, the provisions of Section 8.01 shall apply. SECTION 2.08. FACILITY FEE. The Borrower shall pay to the Agent for the account of the Banks ratably a facility fee at the rate of 0.0625% per annum. Such 21 facility fee shall accrue (i) from and including the Effective Date to but excluding the Termination Date (or earlier date of termination of the Commitments in their entirety), on the daily aggregate amount of the Commitments (whether used or unused) and (ii) from and including the Termination Date or such earlier date of termination to but excluding the date the Loans shall be repaid in their entirety, on the daily aggregate outstanding principal amount of the Loans. Accrued fees under this Section shall be payable quarterly on each March 31, June 30, September 30 and December 31 and upon the date of termination of the Commitments in their entirety (and, if later, the date the Loans shall be repaid in their entirety). SECTION 2.09. OPTIONAL TERMINATION OR REDUCTION OF COMMITMENTS. The Borrower may, upon at least three Domestic Business Days' notice to the Agent, (i) terminate the Commitments at any time, if no Loans are outstanding at such time or (ii) ratably reduce from time to time by an aggregate amount of $25,000,000 or any larger multiple of $5,000,000, the aggregate amount of the Commitments in excess of the aggregate outstanding principal amount of the Loans. SECTION 2.10. SCHEDULED TERMINATION OF COMMITMENTS. The Commitments shall terminate on the Termination Date, and any Loans then outstanding (together with accrued interest thereon) shall be due and payable on such date. SECTION 2.11. OPTIONAL PREPAYMENTS. (a) The Borrower may, upon at least one Domestic Business Day's notice to the Agent, prepay any Base Rate Borrowing (or any Money Market Borrowing bearing interest at the Base Rate pursuant to Section 8.01(a)), in whole at any time, or from time to time in part in amounts aggregating $50,000,000 or any larger multiple of $5,000,000, by paying the principal amount to be prepaid together with accrued interest thereon to the date of prepayment. Each such optional prepayment shall be applied to prepay ratably the Loans of the several Banks included in such Borrowing. (b) Except as provided in Section 2.11(a), the Borrower may not prepay all or any portion of the principal amount of any Money Market Loan prior to the maturity thereof. (c) Subject to Section 2.13, the Borrower may, upon at least three Euro-Dollar Business Days' notice to the Agent, prepay any Euro-Dollar Borrowing, or upon at least three Domestic Business Days' notice to the Agent, prepay 22 any CD Borrowing, in each case in whole at any time, or from time to time in part in amounts aggregating $50,000,000 or any larger multiple of $5,000,000, by paying the principal amount to be prepaid together with accrued interest thereon to the date of prepayment. Each such optional prepayment shall be applied to prepay ratably the Loans of the several Banks included in such Borrowing. (d) Upon receipt of a notice of prepayment pursuant to this Section, the Agent shall promptly notify each Bank of the contents thereof and of such Bank's ratable share (if any) of such prepayment and such notice shall not thereafter be revocable by the Borrower. SECTION 2.12. GENERAL PROVISIONS AS TO PAYMENTS. (a) The Borrower shall make each payment of principal of, and interest on, the Loans and of fees hereunder, not later than 1:30 P.M. (New York City time) on the date when due, in Federal or other funds immediately available in New York City, to the Agent at its address referred to in Section 9.01. The Agent will promptly distribute to each Bank its ratable share of each such payment received by the Agent for the account of the Banks. Whenever any payment of principal of, or interest on, the Domestic Loans or of fees shall be due on a day which is not a Domestic Business Day, the date for payment thereof shall be extended to the next succeeding Domestic Business Day. Whenever any payment of principal of, or interest on, the Euro-Dollar Loans shall be due on a day which is not a Euro-Dollar Business Day, the date for payment thereof shall be extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another calendar month, in which case the date for payment thereof shall be the next preceding Euro-Dollar Business Day. Whenever any payment of principal of, or interest on, the Money Market Loans shall be due on a day which is not a Euro-Dollar Business Day, the date for payment thereof shall be extended to the next succeeding Euro-Dollar Business Day. If the date for any payment of principal is extended by operation of law or otherwise, interest thereon shall be payable for such extended time. (b) Unless the Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Banks hereunder that the Borrower will not make such payment in full, the Agent may assume that the Borrower has made such payment in full to the Agent on such date and the Agent may, in reliance upon such assumption, cause to be distributed to each Bank on such due date an amount equal to the amount then due such Bank. If and to the extent that the Borrower shall not have so made such payment, each Bank shall repay to the Agent forthwith on demand such amount 23 distributed to such Bank together with interest thereon, for each day from the date such amount is distributed to such Bank until the date such Bank repays such amount to the Agent, at the Federal Funds Rate. SECTION 2.13. FUNDING LOSSES. If the Borrower makes any payment of principal with respect to any Fixed Rate Loan (pursuant to Article II, VI or VIII or otherwise, except pursuant to Section 8.02) on any day other than the last day of the Interest Period applicable thereto, or the last day of an applicable period fixed pursuant to Section 2.07(d), or if the Borrower fails to borrow or prepay any Fixed Rate Loans after notice has been given to any Bank in accordance with Section 2.04(a) or 2.11(c), the Borrower shall reimburse each Bank within 15 days after demand for any resulting loss or expense incurred by it (or by an existing or, in the case of a Money Market Loan, prospective Participant in the related Loan), including (without limitation) any loss incurred in obtaining, liquidating or employing deposits from third parties, but excluding loss of margin for the period after any such payment or failure to borrow or prepay, PROVIDED that such Bank shall have delivered to the Borrower a certificate as to the amount of such loss or expense, setting forth in reasonable detail the calculation of such amount, which certificate shall be conclusive if prepared reasonably and in good faith. SECTION 2.14. COMPUTATION OF INTEREST AND FEES. Interest based on the Prime Rate hereunder shall be computed on the basis of a year of 365 days (or 366 days in a leap year) and paid for the actual number of days elapsed (including the first day but excluding the last day). All other interest and all facility fees shall be computed on the basis of a year of 360 days and paid for the actual number of days elapsed (including the first day but excluding the last day). ARTICLE III CONDITIONS SECTION 3.01. EFFECTIVENESS. This Agreement shall become effective on the date that each of the following conditions shall have been satisfied: (a) receipt by the Agent of counterparts hereof signed by each of the parties hereto (or, in the case of any party as to which an executed counterpart shall not have been received, receipt by the Agent in form satisfactory to it of telegraphic, telex or other 24 written confirmation from such party of execution of a counterpart hereof by such party); (b) receipt by the Agent of a duly executed Note for the account of each Bank dated on or before the Effective Date complying with the provisions of Section 2.05; (c) receipt by the Agent of an opinion of the General Counsel of the Borrower, substantially in the form of Exhibit E hereto and covering such additional matters relating to the transactions contemplated hereby as the Required Banks may reasonably request; (d) receipt by the Agent of an opinion of Davis Polk & Wardwell, special counsel for the Agent, substantially in the form of Exhibit F hereto and covering such additional matters relating to the transactions contemplated hereby as the Agent or the Required Banks may reasonably request; (e) receipt by the Agent of all documents the Agent may reasonably request relating to the existence of the Borrower, the corporate authority for and the validity of this Agreement and the Notes, and any other matters relevant hereto, all in form and substance satisfactory to the Agent; (f) receipt by the Agent of a certificate, signed by the chief financial officer or the chief accounting officer of the Borrower, to the effect that no loans are outstanding under any Designated Credit Facility and that interest (if any) and commitment and facility fees thereunder accrued to the Effective Date and all other amounts payable thereunder have been paid or duly provided for by the Borrower; and (g) receipt by the Agent of evidence satisfactory to it of the effectiveness of the Three-Year Credit Agreement of even date herewith among Toyota Motor Sales, U.S.A., Inc., the banks listed therein and Morgan Guaranty Trust Company of New York, as agent for such banks; PROVIDED that this Agreement shall not become effective or be binding on any party hereto unless all of the foregoing conditions are satisfied not later than October 3, 1994. The Agent shall promptly notify the Borrower and the Banks of the Effective Date, and such notice shall be conclusive and binding on all parties hereto. The Borrower and each of the Banks which is a party to a Designated Credit Facility, 25 hereby agree that each Designated Credit Facility shall terminate on and as of the Effective Date, without further action by any party to any Designated Credit Facility. SECTION 3.02. BORROWINGS. The obligation of any Bank to make a Loan on the occasion of any Borrowing is subject to the satisfaction of the following conditions: (a) receipt by the Agent of a Notice of Borrowing as required by Section 2.02 or 2.03, as the case may be; (b) the fact that, immediately after such Borrowing, the aggregate outstanding principal amount of the Loans will not exceed the aggregate amount of the Commitments; (c) the fact that, immediately before and after such Borrowing, no Default shall have occurred and be continuing; and (d) the fact that the representations and warranties of the Borrower contained in this Agreement (except, in the case of a Refunding Borrowing, the representations and warranties set forth in Sections 4.04(c) and 4.05 as to any matter which has theretofore been disclosed in writing by the Borrower to the Banks) shall be true on and as of the date of such Borrowing. Each Borrowing hereunder shall be deemed to be a representation and warranty by the Borrower on the date of such Borrowing as to the facts specified in clauses (b), (c) and (d) of this Section. ARTICLE IV REPRESENTATIONS AND WARRANTIES The Borrower represents and warrants that: SECTION 4.01. CORPORATE EXISTENCE AND POWER. The Borrower is a corporation duly incorporated, validly existing and in good standing under the laws of California, and has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted. SECTION 4.02. CORPORATE AND GOVERNMENTAL AUTHORIZATION; NO CONTRAVENTION. The execution, delivery 26 and performance by the Borrower of this Agreement and the Notes are within the Borrower's corporate powers, have been duly authorized by all necessary corporate action, require no action by or in respect of, or filing with, any governmental body, agency or official and do not contravene, or constitute a default under, any provision of applicable law or regulation or of the articles of incorporation or bylaws of the Borrower or of any agreement, judgment, injunction, order, decree or other instrument binding upon the Borrower or any of its Subsidiaries. SECTION 4.03. BINDING EFFECT. This Agreement constitutes a valid and binding agreement of the Borrower and each Note, when executed and delivered in accordance with this Agreement, will constitute a valid and binding obligation of the Borrower, in each case enforceable in accordance with its terms. SECTION 4.04. FINANCIAL INFORMATION. (a) The consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of September 30, 1993 and the related consolidated statements of income and cash flows for the fiscal year then ended, reported on by independent public accountants and set forth in the Borrower's 1993 Form 10-K, a copy of which has been delivered to each of the Banks, fairly present, in conformity with generally accepted accounting principles, the consolidated financial position of the Borrower and its Consolidated Subsidiaries as of such date and their consolidated results of operations and cash flows for such fiscal year. (b) The unaudited consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of June 30, 1994 and the related unaudited consolidated statements of income and cash flows for the nine months then ended, set forth in the Borrower's Latest Form 10-Q, a copy of which has been delivered to each of the Banks, fairly present, in conformity with generally accepted accounting principles applied on a basis consistent with the financial statements referred to in subsection (a) of this Section, except as stated therein, the consolidated financial position of the Borrower and its Consolidated Subsidiaries as of such date and their consolidated results of operations and cash flows for such nine-month period (subject to normal year-end adjustments). (c) Since June 30, 1994 there has been no material adverse change in the business, financial position, 27 results of operations or prospects of the Borrower and its Consolidated Subsidiaries, considered as a whole. SECTION 4.05. LITIGATION. There is no action, suit or proceeding pending against, or to the knowledge of the Borrower threatened against or affecting, the Borrower or any of its Subsidiaries before any court or arbitrator or any governmental body, agency or official in which there is a reasonable possibility of an adverse decision which could materially adversely affect the business, consolidated financial position or consolidated results of operations of the Borrower and its Consolidated Subsidiaries, considered as a whole, or which in any manner draws into question the validity of this Agreement or the Notes. SECTION 4.06. COMPLIANCE WITH ERISA. Each member of the ERISA Group has fulfilled its obligations under the minimum funding standards of ERISA and the Internal Revenue Code with respect to each Plan and is in compliance in all material respects with the presently applicable provisions of ERISA and the Internal Revenue Code with respect to each Plan. No member of the ERISA Group has (i) sought a waiver of the minimum funding standard under Section 412 of the Internal Revenue Code in respect of any Plan, (ii) failed to make any contribution or payment to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement, which has resulted or could result in the imposition of a Lien or the posting of a bond or other security under ERISA or the Internal Revenue Code or (iii) incurred any liability under Title IV of ERISA other than a liability to the PBGC for premiums under Section 4007 of ERISA. SECTION 4.07. ENVIRONMENTAL MATTERS. In the ordinary course of its business, the Borrower conducts a review of the effect of Environmental Laws on the business, operations and properties of the Borrower and its Subsidiaries. On the basis of this review, the Borrower has reasonably concluded that the costs of compliance with Environmental Laws, including associated liabilities, are unlikely to have a material adverse effect on the business, financial condition, results of operations or prospects of the Borrower and its Consolidated Subsidiaries, considered as a whole. SECTION 4.08. TAXES. The Borrower and its Subsidiaries have filed all United States Federal income tax returns and all other material tax returns which are required to be filed by them and have paid all taxes due pursuant to such returns or pursuant to any assessment received by the Borrower or any Subsidiary. The charges, 28 accruals and reserves on the books of the Borrower and its Subsidiaries in respect of taxes or other governmental charges are, in the opinion of the Borrower, adequate. SECTION 4.09. SUBSIDIARIES. Each of the Borrower's corporate Subsidiaries is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation, and has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted. SECTION 4.10. NOT AN INVESTMENT COMPANY. The Borrower is not an "investment company" within the meaning of the Investment Company Act of 1940, as amended. SECTION 4.11. FULL DISCLOSURE. All information heretofore furnished by the Borrower to the Agent or any Bank for purposes of or in connection with this Agreement or any transaction contemplated hereby is, and all such information hereafter furnished by the Borrower to the Agent or any Bank will be, true, accurate and complete in all material respects on the date as of which such information is stated or certified. ARTICLE V COVENANTS The Borrower agrees that, so long as any Bank has any Commitment hereunder or any amount payable under any Note remains unpaid: SECTION 5.01. INFORMATION. The Borrower will deliver to each of the Banks: (a) as soon as available and in any event within 120 days after the end of each fiscal year of the Borrower, a consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of such fiscal year and the related consolidated statements of income and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on in a manner acceptable to the Securities and Exchange Commission by independent public accountants of nationally recognized standing; 29 (b) as soon as available and in any event within 60 days after the end of each of the first three quarters of each fiscal year of the Borrower, a consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of such quarter and the related consolidated statements of income and cash flows for such quarter and for the portion of the Borrower's fiscal year ended at the end of such quarter, setting forth in the case of such statements of income and cash flows in comparative form the figures for the corresponding quarter and the corresponding portion of the Borrower's previous fiscal year; (c) simultaneously with the delivery of each set of financial statements referred to in clause (a) above, a certificate of the chief financial officer or the chief accounting officer of the Borrower stating whether any Default exists on the date of such certificate and, if any Default then exists, setting forth the details thereof and the action which the Borrower is taking or proposes to take with respect thereto; (d) within five days after any officer of the Borrower obtains knowledge of any Default, if such Default is then continuing, a certificate of the chief financial officer or the chief accounting officer of the Borrower setting forth the details thereof and the action which the Borrower is taking or proposes to take with respect thereto; (e) promptly upon the filing thereof, copies of all registration statements (other than exhibits thereto, pricing supplements and any registration statements on Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or their equivalents) which the Borrower shall have filed with the Securities and Exchange Commission; (f) if and when any member of the ERISA Group (i) gives or is required to give notice to the PBGC of any "reportable event" (as defined in Section 4043 of ERISA) with respect to any Plan which might constitute grounds for a termination of such Plan under Title IV of ERISA, or knows that the plan administrator of any Plan has given or is required to give notice of any such reportable event, a copy of the notice of such reportable event given or required to be given to the PBGC; (ii) receives notice of complete or partial withdrawal liability under Title IV of ERISA or notice 30 that any Multiemployer Plan is in reorganization, is insolvent or has been terminated, a copy of such notice; (iii) receives notice from the PBGC under Title IV of ERISA of an intent to terminate, impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or appoint a trustee to administer any Plan, a copy of such notice; (iv) applies for a waiver of the minimum funding standard under Section 412 of the Internal Revenue Code, a copy of such application; (v) gives notice of intent to terminate any Plan under Section 4041(c) of ERISA, a copy of such notice and other information filed with the PBGC; (vi) gives notice of withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such notice; or (vii) fails to make any payment or contribution to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement or makes any amendment to any Plan or Benefit Arrangement which has resulted or could result in the imposition of a Lien or the posting of a bond or other security, a certificate of the chief financial officer or the chief accounting officer of the Borrower setting forth details as to such occurrence and action, if any, which the Borrower or applicable member of the ERISA Group is required or proposes to take; and (g) from time to time such additional information regarding the financial position or business of the Borrower and its Subsidiaries as the Agent, at the request of any Bank, may reasonably request. SECTION 5.02. MAINTENANCE OF PROPERTY; INSURANCE. (a) The Borrower will keep, and will cause each Significant Subsidiary to keep, all material property useful and necessary in its business in good working order and condition, ordinary wear and tear excepted. (b) The Borrower will maintain, and will cause each Significant Subsidiary to maintain with financially sound and reputable insurance companies, insurance in at least such amounts and against at least such risks (and with such risk retention) as are usually insured against by companies of established repute engaged in the same or similar business as the Borrower or such Significant Subsidiary, and the Borrower will promptly furnish to the Banks such information as to insurance carried as may be reasonably requested in writing by the Agent. SECTION 5.03. CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. The Borrower will continue, and will cause each Significant Subsidiary to continue, to engage in 31 business of the same general type as now conducted by the Borrower and its Subsidiaries, and will preserve, renew and keep in full force and effect, and will cause each Significant Subsidiary to preserve, renew and keep in full force and effect their respective corporate existence and their respective rights, privileges and franchises necessary or desirable in the normal conduct of business; PROVIDED that nothing in this Section 5.03 shall prohibit (i) any merger or consolidation involving the Borrower which is permitted by Section 5.06, (ii) the merger of a Significant Subsidiary into the Borrower or the merger or consolidation of a Significant Subsidiary with or into another Person if the corporation surviving such consolidation or merger is a Significant Subsidiary and if, in each case, after giving effect thereto, no Default shall have occurred and be continuing or (iii) the termination of the corporate existence of any Significant Subsidiary if the Borrower in good faith determines that such termination is in the best interest of the Borrower and is not materially disadvantageous to the Banks. SECTION 5.04. COMPLIANCE WITH LAWS. The Borrower will comply, and cause each Significant Subsidiary to comply, in all material respects with all applicable laws, ordinances, rules, regulations, and requirements of governmental authorities (including, without limitation, Environmental Laws and ERISA and the rules and regulations thereunder) except where the necessity of compliance therewith is contested in good faith by appropriate proceedings. SECTION 5.05. NEGATIVE PLEDGE. The Borrower will not pledge or otherwise subject to any lien any property or assets of the Borrower unless the Notes and the obligations of the Borrower under this Agreement are secured by such pledge or lien equally and ratably with all other obligations secured thereby so long as such other obligations shall be so secured; PROVIDED, HOWEVER, that such covenant will not apply to liens securing obligations which do not in the aggregate at any one time outstanding exceed 5% of Consolidated Net Tangible Assets (as defined below) of the Borrower and its Consolidated Subsidiaries and also will not apply to: (a) the pledge of any assets of the Borrower to secure any financing by the Borrower of the exporting of goods to or between, or the marketing thereof in, countries other than the United States in connection with which the Borrower reserves the right, in accordance with customary and established banking practice, to deposit, or otherwise subject to a lien, 32 cash, securities or receivables, for the purpose of securing banking accommodations or as the basis for the issuance of bankers' acceptances or in aid of other similar borrowing arrangements; (b) the pledge of receivables of the Borrower payable in currencies other than United States dollars to secure borrowings in countries other than the United States; (c) any deposit of assets of the Borrower with any surety company or clerk of any court, or in escrow, as collateral in connection with, or in lieu of, any bond on appeal by the Borrower from any judgment or decree against it, or in connection with other proceedings in actions at law or in equity by or against the Borrower or in favor of any governmental bodies to secure progress, advance or other payments in the ordinary course of the Borrower's business; (d) any lien or charge on any property of the Borrower, tangible or intangible, real or personal, existing at the time of acquisition or construction of such property (including acquisition through merger or consolidation) or given to secure the payment of all or any part of the purchase or construction price thereof or to secure any indebtedness incurred prior to, at the time of, or within one year after, the acquisition or completion of construction thereof for the purpose of financing all or any part of the purchase or construction price thereof; (e) any lien in favor of the United States of America or any State thereof or the District of Columbia, or any agency, department or other instrumentality thereof, to secure progress, advance or other payments pursuant to any contract or provision of any statute; (f) any lien securing the performance of any contract or undertaking not directly or indirectly in connection with the borrowing of money, obtaining of advances or credit or the securing of debt, if made and continuing in the ordinary course of business; (g) any lien to secure nonrecourse obligations in connection with the Borrower's engaging in leveraged or single-investor lease transactions; and (h) any extension, renewal or replacement (or successive extensions, renewals or replacements), in 33 whole or in part, of any lien, charge or pledge referred to in the foregoing clauses (a) to (g), inclusive, of this Section 5.05; provided, however, that the amount of any and all obligations and indebtedness secured thereby shall not exceed the amount thereof so secured immediately prior to the time of such extension, renewal or replacement and that such extension, renewal or replacement shall be limited to all or a part of the property which secured the charge or lien so extended, renewed or replaced (plus improvements on such property). "Consolidated Net Tangible Assets" means the aggregate amount of assets (less applicable reserves and other properly deductible items) after deducting therefrom (i) all current liabilities and (ii) all goodwill, trade names, trademarks, patents, unamortized debt discount and expense and other like intangibles of the Borrower and its Consolidated Subsidiaries all as set forth on the most recent balance sheet of the Borrower and its Consolidated Subsidiaries prepared in accordance with generally accepted accounting principles as practiced in the United States. SECTION 5.06. CONSOLIDATIONS, MERGERS AND SALES OF ASSETS. (a) The Borrower shall not consolidate with or merge into any other corporation or convey, transfer or lease its properties and assets substantially as an entirety to any Person, unless: (i) the corporation formed by such consolidation or into which the Borrower is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Borrower substantially as an entirety shall be a corporation or entity organized and existing under the laws of the United States of America, any State thereof or the District of Columbia (the "Successor Corporation") and shall expressly assume, by an amendment or supplement to this Agreement, signed by the Borrower and such Successor Corporation and delivered to the Agent, the Borrower's obligation with respect to the due and punctual payment of the principal of and interest on all the Notes and the due and punctual payment of all other amounts payable by the Borrower hereunder and the performance or observance of every covenant herein on the part of the Borrower to be performed or observed; (ii) immediately after giving effect to such transaction and treating any indebtedness which becomes an obligation of the Borrower as a result of such transaction as having been incurred by the Borrower at 34 the time of such transaction, no Default shall have happened and be continuing; (iii) if, as a result of any such consolidation or merger or such conveyance, transfer or lease, properties or assets of the Borrower would become subject to a mortgage, pledge, lien, security interest or other encumbrance which would not be permitted by Section 5.05 hereof, the Borrower or the Successor Corporation, as the case may be, take such steps as shall be necessary effectively to secure the Notes and the obligations of the Borrower under this Agreement equally and ratably with (or prior to) all indebtedness secured thereby; and (iv) the Borrower has delivered to the Agent a certificate signed by an executive officer and a written opinion or opinions of counsel satisfactory to the Agent (who may be counsel to the Borrower), each stating that such amendment or supplement to this Agreement complies with this Section 5.06 and that all conditions precedent herein provided for relating to such transaction have been complied with. (b) Upon any consolidation or merger or any conveyance, transfer or lease of the properties and assets of the Borrower substantially as an entirety in accordance with Section 5.06 (a), the Successor Corporation shall succeed to, and be substituted for, and may exercise every right and power of, the Borrower under this Agreement and the Notes with the same effect as if the Successor Corporation had been named as the Borrower therein and herein, and thereafter, the Borrower, except in the case of a lease of the Borrower's properties and assets, shall be released from its liability as obligor on any of the Notes and under this Agreement. SECTION 5.07. USE OF PROCEEDS. The proceeds of the Loans made under this Agreement will be used by the Borrower for its general corporate purposes. None of such proceeds will be used, directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of buying or carrying any "margin stock" within the meaning of Regulation U. 35 ARTICLE VI DEFAULTS SECTION 6.01. EVENTS OF DEFAULT. If one or more of the following events ("Events of Default") shall have occurred and be continuing: (a) the Borrower shall fail to pay when due any principal of any Loan or shall fail to pay within five days of the due date thereof any interest on any Loan, any fees or any other amount payable hereunder; (b) the Borrower shall fail to observe or perform any covenant contained in Section 5.05, 5.06 or 5.07; (c) the Borrower shall fail to observe or perform any covenant or agreement contained in this Agreement (other than those covered by clause (a) or (b) above) for 30 days after notice thereof has been given to the Borrower by the Agent at the request of any Bank; (d) any representation, warranty, certification or statement made by the Borrower in this Agreement or in any certificate, financial statement or other document delivered pursuant to this Agreement shall prove to have been incorrect in any material respect when made (or deemed made); (e) a default under any bond, debenture, note or other evidence of indebtedness for money borrowed by the Borrower or any Subsidiary or under any mortgage, indenture, fiscal agency agreement or instrument under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the Borrower or any Subsidiary and owing to a Person other than the Borrower or a Subsidiary, whether such indebtedness now exists or shall hereafter be created, which default shall constitute a failure to pay any portion of the indebtedness when due and payable after the expiration of the greater of five days or any applicable grace period with respect thereto or shall have resulted in indebtedness becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable, and the amount of such indebtedness in the aggregate exceeds $10,000,000; (f) the Borrower or any Significant Subsidiary shall commence a voluntary case or other proceeding 36 seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate action to authorize any of the foregoing; (g) an involuntary case or other proceeding shall be commenced against the Borrower or any Significant Subsidiary seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 60 days; or an order for relief shall be entered against the Borrower or any Significant Subsidiary under the federal bankruptcy laws as now or hereafter in effect; (h) any member of the ERISA Group shall fail to pay when due an amount or amounts aggregating in excess of $10,000,000 which it shall have become liable to pay under Title IV of ERISA; or notice of intent to terminate a Material Plan shall be filed under Title IV of ERISA by any member of the ERISA Group, any plan administrator or any combination of the foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to terminate, to impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or to cause a trustee to be appointed to administer any Material Plan; or a condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any Material Plan must be terminated; or there shall occur a complete or partial withdrawal from, or a default, within the meaning of Section 4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans which could cause one or more members of the ERISA Group to incur a current payment obligation in excess of $25,000,000; 37 (i) judgments or orders for the payment of money in excess of $10,000,000 in the aggregate shall be rendered against the Borrower or any Significant Subsidiary and such judgments or orders shall continue unsatisfied and unstayed for a period of 30 days; or (j) the Borrower shall cease to be a TMC Consolidated Subsidiary; then, and in every such event, the Agent shall (i) if requested by Banks having more than 50% in aggregate amount of the Commitments, by notice to the Borrower terminate the Commitments and they shall thereupon terminate, and (ii) if requested by Banks holding Notes evidencing more than 50% in aggregate principal amount of the Loans, by notice to the Borrower declare the Notes (together with accrued interest thereon) to be, and the Notes shall thereupon become, immediately due and provided without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; PROVIDED that in the case of any of the Events of Default specified in clause (f) or (g) above with respect to the Borrower, without any notice to the Borrower or any other act by the Agent or the Banks, the Commitments shall thereupon terminate and the Notes (together with accrued interest thereon) shall become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower. SECTION 6.02. NOTICE OF DEFAULT. The Agent shall give notice to the Borrower under Section 6.01(c) promptly upon being requested to do so by any Bank and shall thereupon notify all the Banks thereof. ARTICLE VII THE AGENT SECTION 7.01. APPOINTMENT AND AUTHORIZATION. Each Bank irrevocably appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under this Agreement and the Notes as are delegated to the Agent by the terms hereof or thereof, together with all such powers as are reasonably incidental thereto. SECTION 7.02. AGENT AND AFFILIATES. Morgan Guaranty Trust Company of New York shall have the same rights and powers under this Agreement as any other Bank and may exercise or refrain from exercising the same as though 38 it were not the Agent, and Morgan Guaranty Trust Company of New York and its affiliates may accept deposits from, lend money to, and generally engage in any kind of business with the Borrower or any Subsidiary or affiliate of the Borrower as if it were not the Agent hereunder. SECTION 7.03. ACTION BY AGENT. The obligations of the Agent hereunder are only those expressly set forth herein. Without limiting the generality of the foregoing, the Agent shall not be required to take any action with respect to any Default, except as expressly provided in Article VI. SECTION 7.04. CONSULTATION WITH EXPERTS. The Agent may consult with legal counsel (who may be counsel for the Borrower), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts. SECTION 7.05. LIABILITY OF AGENT. Neither the Agent nor any of its affiliates nor any of their respective directors, officers, agents or employees shall be liable for any action taken or not taken by it in connection herewith (i) vis-a-vis any Bank, with the consent or at the request of the Required Banks or (ii) vis-a-vis any Person, in the absence of its own gross negligence or willful misconduct. Neither the Agent nor any of its affiliates nor any of their respective directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into or verify (i) any statement, warranty or representation made in connection with this Agreement or any borrowing hereunder; (ii) the performance or observance of any of the covenants or agreements of the Borrower; (iii) the satisfaction of any condition specified in Article III, except receipt of items required to be delivered to the Agent; or (iv) the validity, effectiveness or genuineness of this Agreement, the Notes or any other instrument or writing furnished in connection herewith. The Agent shall not incur any liability by acting in reliance upon any notice, consent, certificate, statement, or other writing (which may be a bank wire, telex, facsimile transmission or similar writing) believed by it to be genuine or to be signed by the proper party or parties. SECTION 7.06. INDEMNIFICATION. Each Bank shall, ratably in accordance with its Commitment, indemnify the Agent, its affiliates and their respective directors, officers, agents and employees (to the extent not reimbursed by the Borrower) against any cost, expense (including 39 counsel fees and disbursements), claim, demand, action, loss or liability (except such as result from such indemnitees' gross negligence or willful misconduct) that such indemnitees may suffer or incur in connection with this Agreement or any action taken or omitted by such indemnitees hereunder. SECTION 7.07. CREDIT DECISION. Each Bank acknowledges that it has, independently and without reliance upon the Agent or any other Bank, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Bank also acknowledges that it will, independently and without reliance upon the Agent or any other Bank, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking any action under this Agreement. SECTION 7.08. SUCCESSOR AGENT. The Agent may resign at any time by giving notice thereof to the Banks and the Borrower. Upon any such resignation, the Required Banks shall have the right to appoint a successor Agent with the written consent of the Borrower, which shall not be unreasonably withheld. If no successor Agent shall have been so appointed by the Required Banks with the consent of the Borrower, and shall have accepted such appointment, within 30 days after the retiring Agent gives notice of resignation, then the retiring Agent may, on behalf of the Banks, appoint a successor Agent, which shall be a commercial bank organized or licensed under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $1,000,000,000. Upon the acceptance of its appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder. After any retiring Agent's resignation hereunder as Agent, the provisions of this Article shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent. SECTION 7.09. AGENT'S FEE. The Borrower shall pay to the Agent for its own account fees in the amounts and at the times previously agreed upon between the Borrower and the Agent. 40 ARTICLE VIII CHANGE IN CIRCUMSTANCES SECTION 8.01. BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR UNFAIR. If on or prior to the first day of any Interest Period for any Fixed Rate Borrowing: (a) the Agent is advised by the Reference Banks that deposits in dollars (in the applicable amounts) are not being offered to the Reference Banks in the relevant market for such Interest Period, or (b) in the case of a Committed Borrowing, Banks having 50% or more of the aggregate amount of the Commitments advise the Agent that the Adjusted CD Rate or the Adjusted London Interbank Offered Rate, as the case may be, as determined by the Agent will not adequately and fairly reflect the cost to such Banks of funding their CD Loans or Euro-Dollar Loans, as the case may be, for such Interest Period, the Agent shall forthwith give notice thereof to the Borrower and the Banks, whereupon until the Agent notifies the Borrower that the circumstances giving rise to such suspension no longer exist (which notice the Agent shall promptly give at such time), the obligations of the Banks to make CD Loans or Euro-Dollar Loans, as the case may be, shall be suspended. Unless the Borrower notifies the Agent at least one Domestic Business Day before the date of any Fixed Rate Borrowing for which a Notice of Borrowing has previously been given that it elects not to borrow on such date, (i) if such Fixed Rate Borrowing is a Committed Borrowing, such Borrowing shall instead be made as a Base Rate Borrowing and (ii) if such Fixed Rate Borrowing is a Money Market LIBOR Borrowing, the Money Market LIBOR Loans comprising such Borrowing shall bear interest for each day from and including the first day to but excluding the last day of the Interest Period applicable thereto at the Base Rate for such day. SECTION 8.02. ILLEGALITY. If, on or after the date of this Agreement, any Regulatory Change shall make it unlawful or impossible for any Bank (or its Euro-Dollar Lending Office) to make, maintain or fund its Euro-Dollar Loans and such Bank shall so notify the Agent, the Agent shall give notice thereof to the other Banks and the Borrower, whereupon until such Bank notifies the Borrower and the Agent that the circumstances giving rise to such suspension no longer exist (which notice such Bank shall 41 promptly give at such time), the obligation of such Bank to make Euro-Dollar Loans shall be suspended. Before giving any notice to the Agent pursuant to this Section, such Bank shall designate a different Euro-Dollar Lending Office if such designation will avoid the need for giving such notice and will not, in the judgment of such Bank, be otherwise disadvantageous to such Bank. If such Bank shall determine that it may not lawfully continue to maintain and fund any of its outstanding Euro-Dollar Loans to maturity and shall so specify in such notice, the Borrower shall immediately prepay in full the then outstanding principal amount of each such Euro-Dollar Loan, together with accrued interest thereon. Concurrently with prepaying each such Euro-Dollar Loan, the Borrower shall borrow a Base Rate Loan in an equal principal amount from such Bank (on which interest and principal shall be payable contemporaneously with the related Euro-Dollar Loans of the other Banks), and such Bank shall make such a Base Rate Loan. SECTION 8.03. INCREASED COST AND REDUCED RETURN. (a) If on or after (x) the date hereof, in the case of any Committed Loan or any obligation to make Committed Loans or (y) the date of the related Money Market Quote, in the case of any Money Market Loan, the adoption of any applicable law, rule or regulation, or any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Bank (or its Applicable Lending Office) with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency (a "Regulatory Change") shall impose, modify or deem applicable any reserve (including, without limitation, any such requirement imposed by the Board of Governors of the Federal Reserve System, but excluding (i) with respect to any CD Loan any such requirement included in an applicable Domestic Reserve Percentage and (ii) with respect to any Euro-Dollar Loan any such requirement included in an applicable Euro-Dollar Reserve Percentage), special deposit, insurance assessment (excluding, with respect to any CD Loan, any such requirement reflected in an applicable Assessment Rate) or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Bank (or its Applicable Lending Office) or shall impose on any Bank (or its Applicable Lending Office) or on the United States market for certificates of deposit or the London interbank market any other condition affecting its Fixed Rate Loans, its Note or its obligation to make Fixed Rate Loans and the result of any of the foregoing is to increase the cost to such Bank (or its Applicable Lending Office) of making or 42 maintaining any Fixed Rate Loan, or to reduce the amount of any sum received or receivable by such Bank (or its Applicable Lending Office) under this Agreement or under its Note with respect thereto, by an amount deemed by such Bank to be material, then, within 15 days after demand by such Bank (with a copy to the Agent), the Borrower shall pay to such Bank such additional amount or amounts as will compensate such Bank for such increased cost or reduction. (b) If any Bank shall have determined that, after the date hereof, the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change in any such law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on capital of such Bank (or its Parent) as a consequence of such Bank's Commitment hereunder to a level below that which such Bank (or its Parent) could have achieved but for such adoption, change, request or directive (taking into consideration its policies with respect to capital adequacy) by an amount deemed by such Bank to be material, then from time to time, within 15 days after demand by such Bank (with a copy to the Agent), the Borrower shall pay to such Bank such additional amount or amounts as will compensate such Bank (or its Parent) for such reduction. (c) Each Bank will promptly notify the Borrower and the Agent of any event of which it has knowledge, occurring after the date hereof, which will entitle such Bank to compensation pursuant to this Section and will designate a different Applicable Lending Office if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the judgment of such Bank, be otherwise disadvantageous to such Bank. A certificate of any Bank claiming compensation under this Section and setting forth the additional amount or amounts to be paid to it hereunder and the calculation thereof in reasonable detail shall be conclusive if prepared reasonably and in good faith. In determining such amount, such Bank may use any reasonable averaging and attribution methods. Notwithstanding the foregoing subsections (a) and (b) of this Section 8.03, the Borrower shall only be obligated to compensate any Bank for any amount arising or accruing during (i) subject to clause (ii) below, any time or period commencing not more than 180 days prior to the date on which such Bank notifies the Agent and the Borrower that it 43 proposes to demand such compensation and identifies to the Agent and the Borrower the statute, regulation or other basis upon which the claimed compensation is or will be based and (ii) any time or period during which, because of the retroactive application of such statute, regulation or other basis, such Bank did not know that such amount would arise or accrue. SECTION 8.04. TAXES. (a) For purposes of this Section 8.04, the following terms have the following meanings: "Taxes" means any and all present or future taxes, duties, levies, imposts, deductions, charges or withholdings with respect to any payment by the Borrower pursuant to this Agreement or under any Note, and all liabilities with respect thereto, EXCLUDING (i) in the case of each Bank and the Agent, taxes imposed on its income, and franchise or similar taxes imposed on it, by a jurisdiction under the laws of which such Bank or the Agent (as the case may be) is organized or in which its principal executive office is located or, in the case of each Bank, in which its Applicable Lending Office is located and (ii) in the case of each Bank, any United States withholding tax imposed on such payments but only to the extent that such Bank is subject to United States withholding tax (x) as to amounts payable in respect of any Money Market Loan, at the date of the related Money Market Quote and (y) as to any other amounts payable hereunder or under the Notes, at the time such Bank first becomes a party to this Agreement. "Other Taxes" means any present or future stamp or documentary taxes and any other excise or property taxes, or similar charges or levies, which arise from any payment made pursuant to this Agreement or under any Note or from the execution or delivery of, or otherwise with respect to, this Agreement or any Note; PROVIDED that any such taxes applicable to a Money Market Loan shall constitute Other Taxes only to the extent attributable to a Regulatory Change on or after the date of the related Money Market Quote. (b) Any and all payments by the Borrower to or for the account of any Bank or the Agent hereunder or under any Note shall be made without deduction for any Taxes or Other Taxes; PROVIDED that, if the Borrower shall be required by law to deduct any Taxes or Other Taxes from any such payments, (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 8.04) such Bank or the Agent (as the case may be) receives an amount equal to the sum it would have 44 received had no such deductions been made, (ii) the Borrower shall make such deductions, (iii) the Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law and (iv) the Borrower shall furnish to the Agent, at its address referred to in Section 9.01, the original or a certified copy of a receipt evidencing payment thereof. (c) The Borrower agrees to indemnify each Bank and the Agent for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section 8.04) paid by such Bank or the Agent (as the case may be) and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto. This indemnification shall be paid within 15 days after such Bank or the Agent (as the case may be) makes demand therefor. (d) Each Bank organized under the laws of a jurisdiction outside the United States, on or prior to the date of its execution and delivery of this Agreement in the case of each Bank listed on the signature pages hereof and on or prior to the date on which it becomes a Bank in the case of each other Bank, and from time to time thereafter as required by law (but only so long as such Bank remains lawfully able to do so), shall provide the Borrower with Internal Revenue Service form 1001 or 4224, as appropriate, or any successor form prescribed by the Internal Revenue Service, certifying that such Bank is entitled to benefits under an income tax treaty to which the United States is a party which exempts the Bank from United States withholding tax or reduces the rate of withholding tax on payments of interest for the account of such Bank or certifying in conformity with applicable legal requirements that the income receivable pursuant to this Agreement is effectively connected with the conduct of a trade or business in the United States. (e) For any period with respect to which a Bank has failed to provide the Borrower with the appropriate form pursuant to Section 8.04(d) (unless such failure is due to a change in treaty, law or regulation occurring subsequent to the date on which such form originally was required to be provided), such Bank shall not be entitled to indemnification under Section 8.04(b) or (c) with respect to Taxes imposed by the United States; PROVIDED that if a Bank, which is otherwise exempt from or subject to a reduced rate of withholding tax, becomes subject to Taxes because of its failure to deliver a form required hereunder, the Borrower shall take such steps as such Bank shall reasonably request 45 (at the expense of such Bank) to assist such Bank to recover such Taxes. (f) If the Borrower is required to pay additional amounts to or for the account of any Bank pursuant to this Section 8.04, then such Bank will change the jurisdiction of its Applicable Lending Office if, in the judgment of such Bank, such change (i) will eliminate or reduce any such additional payment which may thereafter accrue and (ii) is not otherwise disadvantageous to such Bank. SECTION 8.05. BASE RATE LOANS SUBSTITUTED FOR AFFECTED FIXED RATE LOANS. If (i) the obligation of any Bank to make Euro-Dollar Loans has been suspended pursuant to Section 8.02 or (ii) any Bank has demanded compensation under Section 8.03 or 8.04 with respect to its CD Loans or Euro-Dollar Loans and the Borrower shall, by at least five Euro-Dollar Business Days' prior notice to such Bank through the Agent, have elected that the provisions of this Section shall apply to such Bank, then, unless and until such Bank notifies the Borrower that the circumstances giving rise to such suspension or demand for compensation no longer exist: (a) all Loans which would otherwise be made by such Bank as CD Loans or Euro-Dollar Loans, as the case may be, shall be made instead as Base Rate Loans (on which interest and principal shall be payable contemporaneously with the related Fixed Rate Loans of the other Banks), and (b) after each of its CD Loans or Euro-Dollar Loans, as the case may be, has been repaid, all payments of principal which would otherwise be applied to repay such Fixed Rate Loans shall be applied to repay its Base Rate Loans instead. SECTION 8.06. SUBSTITUTION OF BANK. If any Bank (i) has demanded compensation or other payment pursuant to Section 8.03 or 8.04 or (ii) has determined that the making, maintenance or funding of any Euro-Dollar Rate Loan has become unlawful or impermissible pursuant to Section 8.02 and, in the case of clause (i), similar demand for compensation or payment has not been made by all of the Banks, the Borrower shall have the right to designate an Assignee to purchase for cash, pursuant to an Assignment and Assumption Agreement in substantially the form of Exhibit G hereto, the outstanding Loans and Commitment of such Bank and to assume all of such Bank's other rights and obligations hereunder without recourse to or warranty by, or expense to, such Bank, for a purchase price equal to the principal amount of all of such Bank's outstanding Loans 46 plus any accrued but unpaid interest thereon and the accrued but unpaid facility fees in respect of such Bank's Commitment hereunder plus such amount, if any, as would be payable pursuant to Section 2.13 if the outstanding Loans of such Bank were prepaid in their entirety on the date of consummation of such assignment. SECTION 8.07. CONSULTATION. Prior to giving notice pursuant to Section 8.02 or to demanding compensation or other payment pursuant to Section 8.03 or 8.04, each Bank shall consult with the Borrower and the Agent with reference to the circumstances giving rise thereto; PROVIDED that nothing in this Section 8.07 shall limit the right of any Bank to require full performance by the Borrower of its obligations under such Sections. ARTICLE IX MISCELLANEOUS SECTION 9.01. NOTICES. All notices, requests and other communications to any party hereunder shall be in writing (including bank wire, telex, facsimile transmission or similar writing) and shall be given to such party: (x) in the case of the Borrower or the Agent, at its address, facsimile number or telex number set forth on the signature pages hereof, (y) in the case of any Bank, at its address, facsimile number or telex number set forth in its Administrative Questionnaire or (z) in the case of any party, such other address, facsimile number or telex number as such party may hereafter specify for the purpose by notice to the Agent and the Borrower. Each such notice, request or other communication shall be effective (i) if given by telex, when such telex is transmitted to the telex number specified in this Section and the appropriate answerback is received, (ii) if given by facsimile transmission, when transmitted to the facsimile number specified in this Section and confirmation of receipt is received, (iii) if given by mail, 72 hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid or (iv) if given by any other means, when delivered at the address specified in this Section; PROVIDED that notices to the Agent under Article II or Article VIII shall not be effective until received. SECTION 9.02. NO WAIVERS. No failure or delay by the Agent or any Bank in exercising any right, power or privilege hereunder or under any Note shall operate as a 47 waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. SECTION 9.03. EXPENSES; INDEMNIFICATION. (a) The Borrower shall pay (i) all out-of-pocket expenses of the Agent, including fees and disbursements of special counsel for the Agent, in connection with the preparation and administration of this Agreement, any waiver or consent hereunder or any amendment hereof or any Default or alleged Default hereunder and (ii) if an Event of Default occurs, all out-of-pocket expenses incurred by the Agent and each Bank, including (without duplication, but subject to Section 9.03(c)) the fees and disbursements of outside counsel and the allocated cost of inside counsel, in connection with such Event of Default and collection, bankruptcy, insolvency and other enforcement proceedings resulting therefrom. (b) Subject to Section 9.03(c), the Borrower agrees to indemnify the Agent and each Bank, their respective affiliates and the respective directors, officers, agents and employees of the foregoing (each an "Indemnitee") and hold each Indemnitee harmless from and against any and all liabilities, losses, damages, costs and expenses of any kind, including, without limitation, the reasonable fees and disbursements of counsel, which may be incurred by such Indemnitee in connection with any investigative, administrative or judicial proceeding (whether or not such Indemnitee shall be designated a party thereto) brought or threatened relating to or arising out of this Agreement or any actual or proposed use of proceeds of Loans hereunder; provided that no Indemnitee shall have the right to be indemnified hereunder for such Indemnitee's own gross negligence or willful misconduct as determined by a court of competent jurisdiction. (c) The Borrower shall not, in connection with any single proceeding or series of related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all Indemnitees, such firm to be selected by the Agent; PROVIDED that if the an Indemnitee shall have reasonably concluded that (i) there may be legal defenses available to it which are different from or additional to those available to other Indemnitees and may conflict therewith or (ii) the representation of such Indemnitee and the other Indemnitees by the same counsel would otherwise be inappropriate under applicable principles of professional responsibility, such Indemnitee shall have the right to 48 select and retain separate counsel to represent such Indemnitee in connection with such proceeding(s) at the expense of the Borrower. SECTION 9.04. SHARING OF SET-OFFS. Each Bank agrees that if it shall, by exercising any right of set-off or counterclaim or otherwise, receive payment of a proportion of the aggregate amount of principal and interest due with respect to any Note held by it which is greater than the proportion received by any other Bank in respect of the aggregate amount of principal and interest due with respect to any Note held by such other Bank, the Bank receiving such proportionately greater payment shall purchase such participations in the Notes held by the other Banks, and such other adjustments shall be made, as may be required so that all such payments of principal and interest with respect to the Notes held by the Banks shall be shared by the Banks pro rata; PROVIDED that nothing in this Section shall impair the right of any Bank to exercise any right of set-off or counterclaim it may have and to apply the amount subject to such exercise to the payment of indebtedness of the Borrower other than its indebtedness hereunder. The Borrower agrees, to the fullest extent it may effectively do so under applicable law, that any holder of a participation in a Note, whether or not acquired pursuant to the foregoing arrangements, may exercise rights of set-off or counterclaim and other rights with respect to such participation as fully as if such holder of a participation were a direct creditor of the Borrower in the amount of such participation. SECTION 9.05. AMENDMENTS AND WAIVERS. Any provision of this Agreement or the Notes may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by the Borrower and the Required Banks (and, if the rights or duties of the Agent are affected thereby, by the Agent); PROVIDED that no such amendment or waiver shall, unless signed by all the Banks, (i) increase or decrease the Commitment of any Bank (except for a ratable decrease in the Commitments of all Banks) or subject any Bank to any additional obligation, (ii) reduce the principal of or rate of interest on any Loan or any fees hereunder, (iii) postpone the date fixed for any payment of principal of or interest on any Loan or any fees hereunder or for any reduction or termination of any Commitment or (iv) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Notes, or the number of Banks, which shall be required for the Banks or any of them to take any action under this Section or any other provision of this Agreement. 49 SECTION 9.06. SUCCESSORS AND ASSIGNS. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that the Borrower may not assign or otherwise transfer any of its rights under this Agreement without the prior written consent of all Banks. (b) Subject to any limitations imposed by applicable law, any Bank may at any time grant to one or more banks or other institutions (each a "Participant") participating interests in its Commitment or any or all of its Loans. In the event of any such grant by a Bank of a participating interest to a Participant, whether or not upon notice to the Borrower and the Agent, such Bank shall remain responsible for the performance of its obligations hereunder, and the Borrower and the Agent shall continue to deal solely and directly with such Bank in connection with such Bank's rights and obligations under this Agreement. Any agreement pursuant to which any Bank may grant such a participating interest shall provide that such Bank shall retain the sole right and responsibility to enforce the obligations of the Borrower hereunder including, without limitation, the right to approve any amendment, modification or waiver of any provision of this Agreement; PROVIDED that such participation agreement may provide that such Bank will not agree to any modification, amendment or waiver of this Agreement described in clause (i), (ii), (iii) or (iv) of Section 9.05 without the consent of the Participant. The Borrower agrees that each Participant shall, to the extent provided in its participation agreement, be entitled to the benefits of Article VIII with respect to its participating interest; PROVIDED that no Participant shall be entitled to receive any greater payment under Section 8.03 or 8.04 than the grantor Bank would have been entitled to receive. An assignment or other transfer which is not permitted by subsection (c) or (d) below shall be given effect for purposes of this Agreement only to the extent of a participating interest granted in accordance with this subsection (b). (c) Any Bank may at any time assign to one or more banks or other institutions (each an "Assignee") all, or a proportionate part (equivalent to an initial Commitment of not less than $25,000,000) of all, of its rights and obligations under this Agreement and the Notes, and such Assignee shall assume such rights and obligations, pursuant to an Assignment and Assumption Agreement in substantially the form of Exhibit G hereto executed by such Assignee and such transferor Bank, with (and subject to) the subscribed consent of the Borrower, which shall not be unreasonably withheld, and the Agent; PROVIDED that if an Assignee is an 50 affiliate of such transferor Bank or was a Bank immediately prior to such assignment, no such consent shall be required; and PROVIDED FURTHER that such assignment may, but need not, include rights of the transferor Bank in respect of outstanding Money Market Loans. Upon execution and delivery of such instrument and payment by such Assignee to such transferor Bank of an amount equal to the purchase price agreed between such transferor Bank and such Assignee, such Assignee shall be a Bank party to this Agreement and shall have all the rights and obligations of a Bank with a Commitment as set forth in such instrument of assumption, and the transferor Bank shall be released from its obligations hereunder to a corresponding extent, and no further consent or action by any party shall be required. Upon the consummation of any assignment pursuant to this subsection (c), the transferor Bank, the Agent and the Borrower shall make appropriate arrangements so that, if required, a new Note is issued to the Assignee. In connection with any such assignment, the transferor Bank shall pay to the Agent an administrative fee for processing such assignment in the amount of $2,500. If the Assignee is not incorporated under the laws of the United States of America or a state thereof, it shall deliver to the Borrower and the Agent certification as to exemption from deduction or withholding of any United States federal income taxes in accordance with Section 8.04. (d) Any Bank may at any time assign all or any portion of its rights under this Agreement and its Note to a Federal Reserve Bank. No such assignment shall release the transferor Bank from its obligations hereunder. (e) No Assignee or other transferee of any Bank's rights shall be entitled to receive any greater payment under Section 8.03 or 8.04 than such Bank would have been entitled to receive with respect to the rights transferred, unless such transfer is made with the Borrower's prior written consent (with disclosure to the Borrower at the time of the transfer of any greater payment which the transferee would then be entitled to demand under either Section 8.03 or 8.04) or by reason of the provisions of Section 8.02, 8.03 or 8.04 requiring such Bank to designate a different Applicable Lending Office under certain circumstances. SECTION 9.07. COLLATERAL. Each of the Banks represents to the Agent and each of the other Banks that it in good faith is not relying upon any "margin stock" (as defined in Regulation U) as collateral in the extension or maintenance of the credit provided for in this Agreement. 51 SECTION 9.08. GOVERNING LAW; SUBMISSION TO JURISDICTION. This Agreement and each Note shall be governed by and construed in accordance with the laws of the State of New York. The Borrower hereby submits to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York State court sitting in New York City for purposes of all legal proceedings arising out of or relating to this Agreement or the transactions contemplated hereby. The Borrower irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. SECTION 9.09. COUNTERPARTS; INTEGRATION. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement constitutes the entire agreement and understanding among the parties hereto and supersedes any and all prior agreements and understandings, oral or written, relating to the subject matter hereof. SECTION 9.10. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE AGENT AND -------------------- THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. 52 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. TOYOTA MOTOR CREDIT CORPORATION By /S/ Wolfgang Jahn ------------------------------- Title: Group Vice President 19001 South Western Avenue P.O. Box 2991 Torrance, CA 90509-2991 Telex number: 37719707 Facsimile number: 310-787-6194 53 Commitments - ----------- $75,000,000 MORGAN GUARANTY TRUST COMPANY OF NEW YORK By /S/ Kevin J. O'Brien --------------------------------- Title: Vice President $75,000,000 BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION By /S/ Viswanathan Shanker --------------------------------- Title: Senior Vice President $75,000,000 THE BANK OF TOKYO, LTD. By /S/ Yasuharu Kawasoe ---------------------------------- Title: Deputy General Manager $75,000,000 THE CHASE MANHATTAN BANK N.A. By /S/ Richard A. Bonomo --------------------------------- Title: Vice President $75,000,000 CITICORP USA, INC. By /S/ Barbara A. Cohen -------------------------------- Title: Vice President 54 $75,000,000 CREDIT SUISSE By /S/ Stephen M. Flynn --------------------------------- Title: Member of St. Management By /S/ David J. Worthington --------------------------------- Title: Member of Senior Management $30,000,000 ABN AMRO BANK N.V. By /S/ J. Alexander Pruijs --------------------------------- Title: Vice President By /S/ Ellen M. Coleman ---------------------------------- Title: Assistant Vice President $30,000,000 BANQUE PARIBAS By /S/ Steve Y. Li --------------------------------- Title: Associate By /S/ John N. Cate ---------------------------------- Title: Regional Credit Officer $30,000,000 BARCLAYS BANK PLC By /S/ Timothy L. Harrington ---------------------------------- Title: Associate Director 55 $30,000,000 DEUTSCHE BANK AG LOS ANGELES AND/OR CAYMAN ISLANDS BRANCHES By /S/ David Wagstaff ---------------------------------- Title: Vice President By /S/ Christine Lane --------------------------------- Title: Assistant Vice President $30,000,000 THE LONG-TERM CREDIT BANK OF JAPAN, LTD. By /S/ Sadao Muraoka --------------------------------- Title: Deputy General Manager $30,000,000 THE SAKURA BANK, LIMITED LOS ANGELES AGENCY By /S/Kazuo Gejo ---------------------------------- Title: General Manager and Agent $30,000,000 THE SANWA BANK, LIMITED By /S/ Koichi Ueno ---------------------------------- Title: Assistant Vice President 56 $30,000,000 SWISS BANK CORPORATION, NEW YORK BRANCH By /S/ Stephanie W. Kim ---------------------------------- Title: Associate Director Merchant Banking By /S/ Michael T. Fabiano ---------------------------------- Title: Associate Director Merchant Banking $30,000,000 THE TOKAI BANK, LIMITED By /S/ Takashi Kawaguchi ---------------------------------- Title: Assistant General Manager $30,000,000 UNION BANK OF SWITZERLAND By /S/ James I. Chu --------------------------------- Title: Assistant Vice President By /S/ Patrick J. Mckenna --------------------------------- Title: Vice President - ----------------- Total Commitments $ 750,000,000 57 MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent By /S/ Kevin J. O'Brien ---------------------------------- Title: Vice President Attention: William Wood c/o J.P. Morgan Services Inc. 500 Stanton Christiana Road Newark, DE 19713 Telex number: 177425 MBDEL UT Facsimile number: 302-634-4267 58 SCHEDULE I Designated Credit Facilities 1. $300,000,000 line of credit provided by Bank of America National Trust & Savings Association to Toyota Motor Sales, U.S.A., Inc. and Toyota Motor Credit Corporation pursuant to a letter agreement dated April 14, 1994. 2. $200,000,000 line of credit provided by The Bank of Tokyo, Ltd. to Toyota Motor Sales, U.S.A., Inc. and Toyota Motor Credit Corporation pursuant to a letter agreement dated September 1, 1993. 3. $150,000,000 line of credit provided by The Chase Manhattan Bank, N.A. to Toyota Motor Sales, U.S.A., Inc. and Toyota Motor Credit Corporation pursuant to a letter agreement dated September 15, 1993. 59 EXHIBIT A NOTE New York, New York , 19 For value received, Toyota Motor Credit Corporation, a California corporation (the "Borrower"), promises to pay to the order of (the "Bank"), for the account of its Applicable Lending Office, the unpaid principal amount of each Loan made by the Bank to the Borrower pursuant to the Credit Agreement referred to below on the last day of the Interest Period relating to such Loan. The Borrower promises to pay interest on the unpaid principal amount of each such Loan on the dates and at the rate or rates provided for in the Credit Agreement. All such payments of principal and interest shall be made in lawful money of the United States in Federal or other immediately available funds at the office of Morgan Guaranty Trust Company of New York, 60 Wall Street, New York, New York. All Loans made by the Bank, the respective types and maturities thereof and all repayments of the principal thereof shall be recorded by the Bank and, if the Bank so elects in connection with any transfer or enforcement hereof, appropriate notations to evidence the foregoing information with respect to each such Loan then outstanding may be endorsed by the Bank on the schedule attached hereto, or on a continuation of such schedule attached to and made a part hereof; provided that the failure of the Bank to make any such recordation or endorsement shall not affect the obligations of the Borrower hereunder or under the Credit Agreement. This note is one of the Notes referred to in the Three-Year Credit Agreement dated as of September 29, 1994 among the Borrower, the banks listed on the signature pages thereof and Morgan Guaranty Trust Company of New York, as Agent (as the same may be amended from time to time, the "Credit Agreement"). Terms defined in the Credit Agreement are used herein with the same meanings. Reference is made to the Credit Agreement for provisions for the prepayment hereof and the acceleration of the maturity hereof. TOYOTA MOTOR CREDIT CORPORATION By ----------------------------- Title: 2 Note (cont'd) LOANS AND PAYMENTS OF PRINCIPAL ------------------------------------------------------------------ Amount of Amount of Type of Principal Maturity Notation Date Loan Loan Repaid Date Made By ------------------------------------------------------------------ ------------------------------------------------------------------ ------------------------------------------------------------------ ------------------------------------------------------------------ ------------------------------------------------------------------ ------------------------------------------------------------------ ------------------------------------------------------------------ ------------------------------------------------------------------ ------------------------------------------------------------------ ------------------------------------------------------------------ ------------------------------------------------------------------ ------------------------------------------------------------------ 3 EXHIBIT B Form of Money Market Quote Request ---------------------------------- [Date] To: Morgan Guaranty Trust Company of New York (the "Agent") From: Toyota Motor Credit Corporation Re: Three-Year Credit Agreement (the "Credit Agreement") dated as of September 29, 1994 among the Borrower, the Banks listed on the signature pages thereof and the Agent We hereby give notice pursuant to Section 2.03 of the Credit Agreement that we request Money Market Quotes for the following proposed Money Market Borrowing(s): Date of Borrowing: -------------------- Principal Amount* Interest Period** - ----------------- ----------------- $ Such Money Market Quotes should offer a Money Market [Margin] [Absolute Rate]. [The applicable base rate is the London Interbank Offered Rate.] - ----------------- *Amount must be $50,000,000 or a larger multiple of $5,000,000. **Not less than one month (LIBOR Auction) or not less than 14 days (Absolute Rate Auction), subject to the provisions of the definition of Interest Period. Terms used herein have the meanings assigned to them in the Credit Agreement. TOYOTA MOTOR CREDIT CORPORATION By ---------------------------- Title: 2 EXHIBIT C Form of Invitation for Money Market Quotes ------------------------------------------ To: [Name of Bank] Re: Invitation for Money Market Quotes to Toyota Motor Credit Corporation (the "Borrower") Pursuant to Section 2.03 of the Three-Year Credit Agreement dated as of September 29, 1994 among the Borrower, the Banks parties thereto and the undersigned, as Agent, we are pleased on behalf of the Borrower to invite you to submit Money Market Quotes to the Borrower for the following proposed Money Market Borrowing(s): Date of Borrowing: ------------------- Principal Amount Interest Period - ---------------- --------------- $ Such Money Market Quotes should offer a Money Market [Margin] [Absolute Rate]. [The applicable base rate is the London Interbank Offered Rate.] Please respond to this invitation by no later than [4:00 P.M.] [9:30 A.M.] (New York City time) on [date]. MORGAN GUARANTY TRUST COMPANY OF NEW YORK By -------------------------- Authorized Officer EXHIBIT D Form of Money Market Quote -------------------------- To: Morgan Guaranty Trust Company of New York, as Agent Re: Money Market Quote to Toyota Motor Credit Corporation (the "Borrower") In response to your invitation on behalf of the Borrower dated 19 , we hereby make the following Money Market ------------, ----- Quote on the following terms: 1. Quoting Bank: ---------------------------------------- 2. Person to contact at Quoting Bank: ---------------------------------- 3. Date of Borrowing: * ------------------------------------- 4. We hereby offer to make Money Market Loan(s) in the following principal amounts, for the following Interest Periods and at the following rates: Principal Interest Money Market Amount** Period** [Margin****] [Absolute Rate*****] - ------------ ------------ --------------------------------------- $ $ [Provided, that the aggregate principal amount of Money Market Loans for which the above offers may be accepted shall not exceed $ .]** -------- - ---------------- * As specified in the related Invitation. ** Principal amount bid for each Interest Period may not exceed principal amount requested. Specify aggregate limitation if the sum of the individual offers exceeds the amount the Bank is willing to lend. Bids must be made for $5,000,000 or a larger multiple of $1,000,000. (notes continued on following page) We understand and agree that the offer(s) set forth above, subject to the satisfaction of the applicable conditions set forth in the Three-Year Credit Agreement dated as of September 29, 1994 among the Borrower, the Banks listed on the signature pages thereof and yourselves, as Agent, irrevocably obligates us to make the Money Market Loan(s) for which any offer(s) are accepted, in whole or in part. Very truly yours, [NAME OF BANK] Dated: By: ------------------------------- ---------------------------- Authorized Officer - --------------- *** Not less than one month or not less than 14 days, as specified in the related Invitation. No more than five bids are permitted for each Interest Period. **** Margin over or under the London Interbank Offered Rate determined for the applicable Interest Period. Specify percentage (to the nearest 1/10,000 of 1%) and specify whether "PLUS" or "MINUS". ***** Specify rate of interest per annum (to the nearest 1/10,000th of 1%). 2 EXHIBIT E OPINION OF COUNSEL FOR THE BORROWER ------------------------ To the Banks and the Agent Referred to Below c/o Morgan Guaranty Trust Company of New York, as Agent 60 Wall Street New York, New York 10260 Re: Credit Agreement ---------------- Ladies and Gentlemen: I and my staff have acted as counsel for Toyota Motor Credit Corporation (the "Borrower") in connection with the Three-Year Credit Agreement (the "Credit Agreement") dated as of September 29, 1994 among the Borrower, the banks listed on the signature pages thereof and the Morgan Guaranty Trust Company of New York, as Agent. Terms defined in the Credit Agreement are used herein as therein defined. This opinion is being rendered to you pursuant to Section 3.01(c) of the Credit Agreement. I am General Counsel of the Borrower and as such I, or members of my staff, have participated in the negotiation of the Credit Agreement. I, or members of my staff, have examined originals or copies, certified or otherwise identified to our satisfaction, of such documents, corporate records, certificates of public official and other instruments and have conducted such other investigations of fact and law as we have deemed necessary or advisable for purposes of this opinion. Upon the basis of the foregoing and in reliance thereon, I am of the opinion, subject to the assumptions and limitations set forth herein, that: 1. The Borrower is a corporation duly incorporated, validly existing and in good standing under the laws of California, and has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted. 2. The execution, delivery and performance by the Borrower of the Credit Agreement and the Notes are within the Borrower's corporate powers, have been duly authorized by all necessary corporate action, require no action by or in respect of, or filing with, any governmental body, agency or official and do not contravene, or constitute a default under, any provision of applicable law or regulation or of the articles of incorporation or bylaws of the Borrower or of any debt instrument or any other material agreement, judgment, injunction, order, decree or other instrument binding upon the Borrower or any of its Subsidiaries. 3. The Credit Agreement and the Notes are governed, by their terms, by New York law. I express no opinion on the enforceability of the Loan Documents under New York law. If California law were to apply, the Credit Agreement would constitute a valid and binding agreement of the Borrower and each Note would constitute a valid and binding obligation of the Borrower, in each case enforceable in accordance with its terms. 4. There is no action, suit or proceeding pending against, or to the best of my knowledge threatened against or affecting, the Borrower or any of its Subsidiaries before any court or arbitrator or any governmental body, agency or official, in which there is a reasonable possibility of an adverse decision which could materially adversely affect the business, consolidated financial position or consolidated results of operations of the Borrower and its consolidated Subsidiaries, considered as a whole or which in any manner draws into question the validity of the Credit Agreement or the Notes. 5. Each of the Borrower's corporate Subsidiaries is a corporation validly existing and in good standing under the laws of its jurisdiction of incorporation, and has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted. The opinion set forth in paragraph 3 is subject to: (i) the effect of applicable bankruptcy, reorganization, insolvency, moratorium, fraudulent conveyance or other similar laws of general application relating to or affecting the enforcement of creditors' rights generally, (ii) limitations on the remedy of specific performance and injunctive and other forms of equitable 2 relief due to the possible existence of equitable defenses or due to the discretion of the court before which any proceeding therefor may be brought, (iii) the unenforceability under certain circumstances of provisions to the effect that failure to exercise, or delay in exercising, rights or remedies will not operate as a waiver of any such right or remedy, (iv) limitations based upon statutes or upon public policy limiting a person's right to waive the benefits of statutory provisions or of a common law right, (v) limitations on the right of a lender to exercise remedies or impose penalties for late payments or other defaults by a borrower, if it is determined that (a) either the defaults are not material, such penalties bear no reasonable relation to the damage suffered by the lender as a result of such delinquencies or defaults, or it cannot be demonstrated that the enforcement of such restrictions or burdens is reasonably necessary for the protection of the creditor, or (b) the creditor's enforcement of such covenants or provisions under the circumstances would violate the creditor's implied covenant of good faith and fair dealing, (vi) the unenforceability under certain circumstances, under California or federal law or court decisions, of provisions releasing a party from, or indemnifying a party against, liability for its own wrongful or negligent acts or where such release or indemnification is contrary to public policy, (vii) the effect of California law, which provides that a court may refuse to enforce, or may limit the application of, a contract or any clause of a contract which the court finds to have been unconscionable at the time it was made, or an unfair portion of an adhesion contract, (viii) the effect of California law, which provides that when a contract permits one party to a contract to recover attorneys' fees, the prevailing party in any action to enforce any provision of the contract shall be entitled to recover its reasonable attorneys' fees, (ix) compliance with, and limitations imposed by, procedural requirements of state law, including California Commercial Code Sections 951 et seq., relating to the exercise of remedies by a lender; and (x) limitations under California law as to the right to retain or collect unearned interest. The foregoing limitations, however, do not render the Credit Agreement and the Notes invalid as a whole, and there exists, in the Credit Agreement and the Notes or pursuant to applicable law, legally adequate remedies for the realization of the principal benefits intended to be provided by the Credit Agreement and the Notes. I am a member of the Bar of the State of California and the foregoing opinion is limited to the laws of the State of California and the federal laws of the United States of America. In giving the foregoing opinion, 3 (i) I express no opinion as to the effect (if any) of any law of any jurisdiction (except the State of California) in which any Bank is located which limits the rate of interest that such Bank may charge or collect; (ii) I have assumed, without independent investigation, that the execution, delivery and performance by the Banks of the Credit Agreement and the Notes are within the Bank's corporate powers and have been duly authorized by all necessary corporate action; and (iii) I have assumed, without independent investigation, that each of the Banks is a "bank" within the meaning of Article XV, Section 1 of the Constitution of the State of California. The references in this opinion to facts based on the "best of my knowledge" refer only to my own actual, present knowledge and the knowledge of the members of my staff who have given substantive consideration to the matters referred to herein. This opinion is furnished by me as General Counsel for the Borrower to you in connection with the Credit Agreement, is solely for your benefit and may not be relied upon by any other person without my prior written consent. Respectfully submitted, William A. Plourde, Jr. General Counsel 4 EXHIBIT F OPINION OF DAVIS POLK & WARDWELL, SPECIAL COUNSEL FOR THE AGENT -------------------------------------- To the Banks and the Agent Referred to Below c/o Morgan Guaranty Trust Company of New York, as Agent 60 Wall Street New York, New York 10260 Dear Sirs: We have participated in the preparation of the Three-Year Credit Agreement (the "Credit Agreement") dated as of September 29, 1994 among Toyota Motor Credit Corporation, a California corporation (the "Borrower"), the banks listed on the signature pages thereof (the "Banks") and Morgan Guaranty Trust Company of New York, as Agent (the "Agent"), and have acted as special counsel for the Agent for the purpose of rendering this opinion pursuant to Section 3.01(d) of the Credit Agreement. Terms defined in the Credit Agreement are used herein as therein defined. We have examined originals or copies, certified or otherwise identified to our satisfaction, of such documents, corporate records, certificates of public officials and other instruments and have conducted such other investigations of fact and law as we have deemed necessary or advisable for purposes of this opinion. Upon the basis of the foregoing, we are of the opinion that the Credit Agreement constitutes a valid and binding agreement of the Borrower and each Note constitutes a valid and binding obligation of the Borrower, in each case enforceable in accordance with its terms, except as the same may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights generally and by general principles of equity. 1 We are members of the Bar of the State of New York and the foregoing opinion is limited to the laws of the State of New York and the federal laws of the United States of America. In giving the foregoing opinion, (i) we express no opinion as to the effect (if any) of any law of any jurisdiction (except the State of New York) in which any Bank is located which limits the rate of interest that such Bank may charge or collect and (ii) we have assumed, without independent investigation, that the execution, delivery and performance by the Borrower of the Credit Agreement and the Notes are within the Borrower's corporate powers and have been duly authorized by all necessary corporate action. This opinion is rendered solely to you in connection with the above matter. This opinion may not be relied upon by you for any other purpose or relied upon by any other person without our prior written consent. Very truly yours, EXHIBIT G ASSIGNMENT AND ASSUMPTION AGREEMENT AGREEMENT dated as of , 19 among [ASSIGNOR] (the "Assignor"), --------- -- [ASSIGNEE] (the "Assignee"), TOYOTA MOTOR CREDIT CORPORATION (the "Borrower") and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent (the "Agent"). W I T N E S S E T H - - - - - - - - - - WHEREAS, this Assignment and Assumption Agreement (the "Agreement") relates to the Three-Year Credit Agreement dated as of September 29, 1994 among the Borrower, the Assignor and the other Banks party thereto, as Banks, and the Agent (the "Credit Agreement"); WHEREAS, as provided under the Credit Agreement, the Assignor has a Commitment to make Loans to the Borrower in an aggregate principal amount at any time outstanding not to exceed $ ; ---------- WHEREAS, Committed Loans made to the Borrower by the Assignor under the Credit Agreement in the aggregate principal amount of $ are ---------- outstanding at the date hereof; and WHEREAS, the Assignor proposes to assign to the Assignee all of the rights of the Assignor under the Credit Agreement in respect of a portion of its Commitment thereunder in an amount equal to $ (the "Assigned ---------- Amount"), together with a corresponding portion of its outstanding Committed Loans, and the Assignee proposes to accept assignment of such rights and assume the corresponding obligations from the Assignor on such terms; NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, the parties hereto agree as follows: SECTION 1. DEFINITIONS. All capitalized terms not otherwise defined herein shall have the respective meanings set forth in the Credit Agreement. SECTION 2. ASSIGNMENT. The Assignor hereby assigns and sells to the Assignee all of the rights of the Assignor under the Credit Agreement to the extent of the Assigned Amount, and the Assignee hereby accepts such assignment from the Assignor and assumes all of the obligations of the Assignor under the Credit Agreement to the extent of the Assigned Amount, including the purchase from the Assignor of the corresponding portion of the principal amount of the Committed Loans made by the Assignor outstanding at the date hereof. Upon the execution and delivery hereof by the Assignor, the Assignee[, the Borrower and the Agent] and the payment of the amounts specified in Section 3 required to be paid on the date hereof (i) the Assignee shall, as of the date hereof, succeed to the rights and be obligated to perform the obligations of a Bank under the Credit Agreement with a Commitment in an amount equal to the Assigned Amount, and (ii) the Commitment of the Assignor shall, as of the date hereof, be reduced by a like amount and the Assignor released from its obligations under the Credit Agreement to the extent such obligations have been assumed by the Assignee. The assignment provided for herein shall be without recourse to the Assignor. SECTION 3. PAYMENTS. As consideration for the assignment and sale contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on the date hereof in Federal funds the amount heretofore agreed between them.* It is understood that commitment and/or facility fees accrued to the date hereof are for the account of the Assignor and such fees accruing from and including the date hereof are for the account of the Assignee. Each of the Assignor and the Assignee hereby agrees that if it receives any amount under the Credit Agreement which is for the account of the other party hereto, it shall receive the same for the account of such other party to the extent of such other party's interest therein and shall promptly pay the same to such other party. SECTION 4. CONSENT OF THE BORROWER AND THE AGENT. This Agreement is conditioned upon the consent of the Borrower and the Agent pursuant to Section 9.06(c) of the Credit Agreement. The execution of this Agreement by the Borrower and the Agent is evidence of this consent. - ------------------ *Amount should combine principal together with accrued interest and breakage compensation, if any, to be paid by the Assignee, net of any portion of any upfront fee to be paid by the Assignor to the Assignee. It may be preferable in an appropriate case to specify these amounts generically or by formula rather than as a fix sum. 2 Pursuant to Section 9.06(c) the Borrower agrees to execute and deliver a Note payable to the order of the Assignee to evidence the assignment and assumption provided for herein.] SECTION 5. NON-RELIANCE ON ASSIGNOR. The Assignor makes no representation or warranty in connection with, and shall have no responsibility with respect to, the solvency, financial condition, or statements of the Borrower, or the validity and enforceability of the obligations of the Borrower in respect of the Credit Agreement or any Note. The Assignee acknowledges that it has, independently and without reliance on the Assignor, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and will continue to be responsible for making its own independent appraisal of the business, affairs and financial condition of the Borrower. SECTION 6. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. SECTION 7. COUNTERPARTS. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered by their duly authorized officers as of the date first above written. [ASSIGNOR] By ------------------------------- Title: [ASSIGNEE] By ------------------------------- Title: 3 TOYOTA MOTOR CREDIT CORPORATION By ------------------------------- Title: MORGAN GUARANTY TRUST COMPANY OF NEW YORK By ------------------------------- Title: 4 SCHEDULE RE: 364-DAY CREDIT AGREEMENT On September 29, 1994, the Registrant entered into two credit Agreements, one with a term of three years (the "Three-year Agreement") and one with a term of 364-days (the "364-day Agreement"). Each of these agreements provided for a $750,000,000 syndicated credit facility. The banks participating in each facility are the same, and the banks' commitments under each facility are for the same amounts. The Three-year Agreement is filed herewith as Exhibit 10.10. The 364-day Agreement is substantially identical in all material respects to the Three- year Agreement, except as follows: 1. The "Termination Date" for the facility is September 28, 1995. (Section 1.01) 2. The "CD Margin" is 0.25% per annum. (Section 2.07(b)) 3. The "Euro-Dollar Margin" is 0.1250% per annum. (Section 2.07(c)) 4. The Facility Fee is 0.05% per annum. (Section 2.08) 5. A condition for the effectiveness of the facility is receipt by the agent of evidence of the effectiveness of the Three-year Agreement. (Section 3.01(g)) 6. The 364-day Agreement contains a specific reference that any determination by a governmental authority, central bank or comparable agency that, for purposes of capital adequacy requirements, the commitments under the facility do not constitute commitments with an original maturity of one year or less, will be deemed to be a change within the contemplation of Section 8.03(b). In accordance with Instruction 2 to Item 601 of Regulation S-K, the Registrant is filing this Schedule in lieu of filing the 364-day Agreement. The Registrant undertakes to file the 364-day Agreement if required by the Securities and Exchange Commission. EX-12.1 5 RATIO OF EARNINGS TO FIXED CHARGES EXHIBIT 12.1 TOYOTA MOTOR CREDIT CORPORATION CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
Years Ended September 30, ---------------------------------------- 1994 1993 1992 1991 1990 ---- ---- ---- ---- ---- (Dollars in Millions) Consolidated income before income taxes...... $293 $255 $175 $135 $ 85 ---- ---- ---- ---- ---- Fixed Charges Interest............. 486 454 450 390 317 Portion of rent expense representative of the interest factor (deemed to be one-third)....... 3 3 2 2 1 ---- ---- ---- ---- ---- Total fixed charges........ 489 457 452 392 318 ---- ---- ---- ---- ---- Earnings available for fixed charges........ $782 $712 $627 $527 $403 ==== ==== ==== ==== ==== Ratio of earnings to fixed charges........ 1.60 1.56 1.39 1.34 1.27 ==== ==== ==== ==== ==== - ----------------- Includes reduction for noninterest-bearing advances from TMS. In March 1987, TMCC guaranteed payments of principal and interest on $58 million principal amount of bonds issued in connection with the Kentucky manufacturing facility of an affiliate. As of September 30, 1994, TMCC has not incurred any fixed charges in connection with such guarantee and no amount is included in any ratio of earnings to fixed charges. The ratio of earnings to fixed charges for TMS and subsidiaries was 1.90, 2.07, 1.83, 2.54 and 3.31 for the years ended September 30, 1994, 1993, 1992, 1991 and 1990, respectively.
EX-12.2 6 RATIO OF EARNINGS TO FIXED CHGS. EXCL. PARENT ADJ. EXHIBIT 12.2 TOYOTA MOTOR CREDIT CORPORATION CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES Excluding Parent Adjustment
Years Ended September 30, ---------------------------------------- 1994 1993 1992 1991 1990 ---- ---- ---- ---- ---- (Dollars in Millions) Consolidated income before income taxes and Parent adjustment..... $293 $255 $175 $135 $ 84 ---- ---- ---- ---- ---- Fixed Charges Interest.................. 486 454 450 390 317 Portion of rent expense representative of the interest factor (deemed to be one-third)........ 3 3 2 2 1 ---- ---- ---- ---- ---- Total fixed charges......... 489 457 452 392 318 ---- ---- ---- ---- ---- Earnings available for fixed charges......... $782 $712 $627 $527 $402 ==== ==== ==== ==== ==== Ratio of earnings to fixed charges......... 1.60 1.56 1.39 1.34 1.26 ==== ==== ==== ==== ==== - ------------------ In March 1987, TMCC guaranteed payments of principal and interest on $58 million principal amount of bonds issued in connection with the Kentucky manufacturing facility of an affiliate. As of September 30, 1994, TMCC has not incurred any fixed charges in connection with such guarantee and no amount is included in any ratio of earnings to fixed charges. The ratio of earnings to fixed charges for TMS and subsidiaries was 1.90, 2.07, 1.83, 2.54 and 3.31 for the years ended September 30, 1994, 1993, 1992, 1991 and 1990, respectively.
EX-21.1 7 LIST OF SUBSIDIARIES EXHIBIT 21.1 TOYOTA MOTOR CREDIT CORPORATION LIST OF SUBSIDIARIES State of Subsidiary Incorporation - ---------- ------------- Toyota Motor Insurance Services California Toyota Motor Insurance Agency of Ohio, Inc. Ohio Toyota Motor Insurance Services of Kentucky, Inc. Kentucky Toyota Motor Insurance Services of Rhode Island, Inc. Rhode Island Toyota Motor Insurance Services of Wyoming, Inc. Wyoming Toyota Motor Insurance Corporation of Vermont Vermont Toyota Motor Insurance Company Iowa Toyota Motor Life Insurance Company Iowa Toyota Motor Credit Receivables Corporation California EX-23.1 8 CONSENT OF INDEPENDENT ACCOUNTANTS EXHIBIT 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS ---------------------------------- We hereby consent to the incorporation by reference in the Prospectus constituting part of the Registration Statement on Form S-3 (No. 33-52359) of Toyota Motor Credit Corporation of our report dated October 31, 1994 appearing on page 21 of this Form 10-K. We also consent to the incorporation by reference of our report on the Financial Statement Schedules, which appears on page 47 of this Form 10-K. /S/ PRICE WATERHOUSE LLP Los Angeles, California December 22, 1994 EX-27.1 9 SEPTEMBER 30, 1994 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM TOYOTA MOTOR CREDIT CORPORATION'S SEPTEMBER 30, 1994 FINANCIAL STATEMENTS AND NOTES THERETO AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000,000 YEAR SEP-30-1994 SEP-30-1994 277 102 14,155 164 0 0 0 0 14,719 0 11,833 865 0 0 662 14,719 0 1,824 0 1,221 232 78 0 293 118 175 0 0 0 175 0 0 Receivables include Investments in Operating Leases net of Accumulated Depreciation and Finance Receivables net of Unearned Income. Toyota Motor Credit Corporation's Balance Sheet is not classified into Current and Long-Term Assets and Liabilities. Total Costs includes Interest Expense and Depreciation on Operating Leases.
-----END PRIVACY-ENHANCED MESSAGE-----