-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JVtXXkRJsBk9GgHMslhOYoi56yh6AcIGfmjBPyd0av9WUEOCa6NI4mcSAW4dAKCu Htkms/qqP/9u4/r83nCMMg== 0000912057-97-030505.txt : 19970929 0000912057-97-030505.hdr.sgml : 19970929 ACCESSION NUMBER: 0000912057-97-030505 CONFORMED SUBMISSION TYPE: S-1/A PUBLIC DOCUMENT COUNT: 13 FILED AS OF DATE: 19970911 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TOYOTA AUTO LEASE TRUST 1997-A CENTRAL INDEX KEY: 0001038821 STANDARD INDUSTRIAL CLASSIFICATION: ASSET-BACKED SECURITIES [6189] FILING VALUES: FORM TYPE: S-1/A SEC ACT: SEC FILE NUMBER: 333-26717 FILM NUMBER: 97678959 BUSINESS ADDRESS: STREET 1: 19001 S WESTERN AVE CITY: TORRANCE STATE: CA ZIP: 90509 BUSINESS PHONE: 3107871310 MAIL ADDRESS: STREET 1: 19001 S WESTERN AVE CITY: TORRANCE STATE: CA ZIP: 90509 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: S-3/A SEC ACT: SEC FILE NUMBER: 333-26717-01 FILM NUMBER: 97678960 BUSINESS ADDRESS: STREET 1: 19001 S WESTERN AVE STREET 2: PO BOX 2958 FN12 CITY: TORRANCE STATE: CA ZIP: 90509-2958 BUSINESS PHONE: 800-392-2968 MAIL ADDRESS: STREET 1: 19001 S WESTERN AVE CITY: TORRANCE STATE: CA ZIP: 90509 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TOYOTA LEASING INC CENTRAL INDEX KEY: 0001038794 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-1/A SEC ACT: SEC FILE NUMBER: 333-26717-02 FILM NUMBER: 97678961 BUSINESS ADDRESS: STREET 1: 19001 S WESTERN AVE CITY: TORRANCE STATE: CA ZIP: 90509 BUSINESS PHONE: 3107871310 MAIL ADDRESS: STREET 1: 601 S FIGUEROA STE 4200 CITY: LOS ANGELES STATE: CA ZIP: 90017 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TOYOTA LEASE TRUST CENTRAL INDEX KEY: 0001044642 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 336191745 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: S-1/A SEC ACT: SEC FILE NUMBER: 333-26717-03 FILM NUMBER: 97678962 BUSINESS ADDRESS: STREET 1: 19001 S WESTERN AVENUE TMCC LEGAL DEPT CITY: TORRENCE STATE: CA ZIP: 90509 BUSINESS PHONE: 3107871310 MAIL ADDRESS: STREET 1: 19001 S WESTERN AVENUE STREET 2: ATTN TMCC LEGAL DEPT CITY: TORRENCE STATE: CA ZIP: 90509 S-1/A 1 FORM S-1/A AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 11, 1997 REGISTRATION NO. 333-26717 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ AMENDMENT NO. 4 TO REGISTRATION STATEMENT ON FORM S-3 (WITH RESPECT TO TOYOTA MOTOR CREDIT CORPORATION ONLY) AND FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 TOYOTA AUTO LEASE TRUST 1997-A TOYOTA MOTOR CREDIT CORPORATION (Issuer with respect to the Certificates) (Originator of Toyota Lease Trust, transferor of SUBI to Transferor and Issuer of TMCC Demand Notes) TOYOTA LEASING, INC. TOYOTA LEASE TRUST (Originator of, and Transferor of the SUBI to, the (Issuer with respect to the SUBI) Toyota Auto Lease Trust 1997-A)
(Exact name of Registrants as specified in its charter) CALIFORNIA 6146 33-0755530 (State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer of incorporation or Classification Code Number) Identification organization) No.)
------------------------------ 19001 SOUTH WESTERN AVENUE TORRANCE, CALIFORNIA 90509 (310) 618-4000 (Address, including zip code, and telephone number, including area code, of Originator's principal executive offices) ------------------------------ ALAN F. COHEN, ESQ. GENERAL COUNSEL TOYOTA MOTOR CREDIT CORPORATION 19001 SOUTH WESTERN AVENUE TORRANCE, CALIFORNIA 90509 (310) 787-1310 (Name, address, including zip code, and telephone number, including area code, of agent for service with respect to the Registrant) COPIES TO: DAVID J. JOHNSON, JR., ESQ. RENWICK D. MARTIN, ESQ. AND DANIEL F. PASSAGE, ESQ. Brown & Wood LLP Andrews & Kurth L.L.P. One World Trade Center, 58th Floor 601 S. Figueroa, Suite 4200 New York, New York 10048 Los Angeles, California 90017 ------------------------------ APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE. If the only securities being registered on this form are being offered pursuant to a dividend or interest reinvestment plan, please check the following box. / / If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. /X/ If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. / / If delivery of the prospectus is expected to be made pursuant to Rule 134, please check the following box. / / CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF PROPOSED TITLE OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE(2) Automobile Lease Asset Backed Certificates, Class A-1................................ 100% Automobile Lease Asset Backed Certificates, Class A-2................................ $1,146,000,000 100% $1,146,000,000 $347,272.73 Automobile Lease Asset Backed Certificates, Class A-3................................ 100% Special Unit of Beneficial Interest........ (3) (3) (3) (3) TMCC Demand Notes.......................... (4) (4) (4) (4)
(1) Estimated solely for the purpose of calculating the registration fee on the basis of the proposed maximum offering price per unit. (2) Previously paid. (3) The Special Unit of Beneficial Interest (the "SUBI") issued by Toyota Lease Trust will constitute a beneficial interest in certain specified assets of Toyota Lease Trust, including certain lease contracts and the automobile and light-duty trucks relating to such lease contracts. The SUBI is not being offered to investors hereunder but will be transferred by Toyota Motor Credit Corporation (the originator of Toyota Lease Trust) to Toyota Leasing, Inc. (the originator of Toyota Auto Lease Trust 1997-A), and (excluding certain insurance proceeds) from Toyota Leasing, Inc. to Toyota Auto Lease Trust 1997-A. (4) The TMCC Demand Notes represent investments by the Trust of Collections in demand notes issued from time to time by TMCC. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PROSPECTUS TOYOTA AUTO LEASE TRUST 1997-A $410,000,000 6.20% AUTO LEASE ASSET BACKED CERTIFICATES, CLASS A-1 $650,000,000 6.35% AUTO LEASE ASSET BACKED CERTIFICATES, CLASS A-2 $72,750,000 6.45% AUTO LEASE ASSET BACKED CERTIFICATES, CLASS A-3 TOYOTA LEASING, INC. TRANSFEROR TOYOTA MOTOR CREDIT CORPORATION SERVICER ------------------------ The Auto Lease Asset Backed Certificates (the "Certificates") will represent undivided interests in the Toyota Auto Lease Trust 1997-A (the "Trust") formed pursuant to a securitization trust agreement (the "Agreement") between Toyota Leasing, Inc. (the "Transferor") and U.S. Bank National Association (formerly known as First Bank National Association), as trustee (the "Trustee"). The property of the Trust will consist of a Special Unit of Beneficial Interest (the "SUBI") and the right to receive funds on deposit in the Reserve Fund. The SUBI, in turn, will evidence a beneficial interest in certain specified assets (the "SUBI Assets") of Toyota Lease Trust, a Delaware business trust (the "Titling Trust"), monies on deposit in certain accounts and certain other assets described more fully herein under "The Trust and the SUBI". The assets of the Titling Trust (the "Titling Trust Assets") will consist primarily of retail closed-end lease contracts and the automobiles and light duty trucks relating thereto and certain other assets described more fully herein. Toyota Motor Credit Corporation ("TMCC") will service the lease contracts included in the Titling Trust Assets. (CONTINUED ON NEXT PAGE) FOR A DISCUSSION OF MATERIAL RISKS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE CLASS A CERTIFICATES, SEE "RISK FACTORS" ON PAGE 20 HEREIN. THE CLASS A CERTIFICATES WILL REPRESENT BENEFICIAL INTERESTS IN THE TRUST AND WILL NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF TOYOTA MOTOR CREDIT CORPORATION, TOYOTA MOTOR SALES, U.S.A., INC., TOYOTA LEASING, INC., TOYOTA LEASE TRUST OR ANY OF THEIR RESPECTIVE AFFILIATES. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. APPLICATION WILL BE MADE TO LIST THE CLASS A CERTIFICATES ON THE LUXEMBURG STOCK EXCHANGE AND FOR LISTING AND PERMISSION TO DEAL IN THE CLASS A CERTIFICATES ON THE STOCK EXCHANGE OF HONG KONG LIMITED.
UNDERWRITING PROCEEDS TO THE PRICE TO PUBLIC(1) DISCOUNTS(2) TRANSFEROR(1)(2)(3) Per Class A-1 Certificate....................... 99.9375% .225% 99.7125% Per Class A-2 Certificate....................... 99.984375% .275% 99.709375% Per Class A-3 Certificate....................... 99.890625% .3% 99.590625% Total........................................... $1,132,312,617.19 $2,928,250.00 $1,129,384,367.19
(1) Plus accrued interest, if any, calculated at the related Certificate Rate from the date of initial issuance. (2) The Underwriting Discount will be 1.25% per Class A-1 Certificate and 1.55% per Class A-3 Certificate sold to certain noninstitutional investors. Therefore, to the extent of any such sales to such investors, the actual total Underwriting Discount will be more than, and the actual Proceeds to the Seller will be less than, the amounts indicated in this table. (3) Before deducting expenses payable by the Transferor estimated to be $1,450,000. ------------------------ The Class A Certificates are offered subject to prior sale, when, as and if issued to and accepted by the Underwriters and subject to their right to reject orders in whole or in part. It is expected that delivery of the Class A Certificates will be made in book-entry form only through the Same Day Funds Settlement System of The Depository Trust Company in the United States, and Cedel Bank, societe anonyme and the Euroclear System in Europe and Asia, on or about September 24, 1997, against payment therefor in immediately available funds. ------------------------ JOINT BOOKRUNNERS MERRILL LYNCH & CO. LEHMAN BROTHERS MORGAN STANLEY DEAN WITTER (GLOBAL COORDINATOR) CO-LEAD MANAGERS CREDIT SUISSE FIRST BOSTON GOLDMAN, SACHS & CO. J.P. MORGAN & CO. CO-MANAGERS BANCAMERICA SECURITIES, INC. SALOMON BROTHERS INC --------------------- The date of this Prospectus is September 11, 1997. (CONTINUED FROM FRONT COVER) From time to time until principal is first allocated or distributed to the holders of Certificates ("Certificateholders"), as described below, Principal Collections on or in respect of the SUBI Assets will be reinvested in additional lease contracts originated as described herein and assigned to the Titling Trust, together with the automobiles and light duty trucks relating thereto, which at the time of reinvestment will become SUBI Assets. The SUBI will not evidence a direct interest in the SUBI Assets, nor will it represent a beneficial interest in any of the Titling Trust Assets other than the SUBI Assets. Payments made on or in respect of the Titling Trust Assets not represented by the SUBI will not be available to make payments on the Certificates. The Certificates will consist of three classes of senior certificates (respectively, the "Class A-1 Certificates", the "Class A-2 Certificates" and the "Class A-3 Certificates", and collectively, the "Class A Certificates") and one class of subordinated certificates (the "Class B Certificates"). The Class A Certificates are the only Certificates offered hereby. The Initial Certificate Balance of the Class B Certificates will be $73,850,000, and the Class B Certificates will be subordinated to the Class A Certificates to the extent described herein. The Class A-1, Class A-2, Class A-3 and Class B Certificates will initially evidence in the aggregate approximately 33%, 53%, 6% and 6% undivided interests in the Trust, respectively. The Transferor will own the undivided interest in the Trust not represented by the Certificates (the "Transferor Interest"). The initial balance of the Transferor Interest will be $24,631,519.20. SEE "Description of the Certificates". Interest on the Certificates will accrue at the respective per annum interest rates specified above and, except upon the occurrence of a Monthly Payment Event, if any, or in the case of a Class of Certificates that is not fully paid on its Targeted Maturity Date, will be distributed to holders thereof semiannually on March 25 and September 25 of each year (or, if such day is not a Business Day, on the next succeeding Business Day), commencing on March 25, 1998. The Targeted Maturity Date for the Class A-1 Certificates will be September 27, 1999, for the Class A-2 Certificates will be September 25, 2000, for the Class A-3 Certificates will be March 26, 2001 and for the Class B Certificates will be September 25, 2001. In general, the Certificates will be "sequential pay" certificates meaning that no principal payments will be made on the Class A-2 Certificates until the Class A-1 Certificates have been paid in full, no principal payments will be made on the Class A-3 Certificates until the Class A-2 Certificates have been paid in full and no principal payments will be made on the Class B Certificates until the Class A-3 Certificates are paid in full. Except upon the occurrence of a Monthly Payment Event, principal in respect of a Class of Class A Certificates will not be distributed until its respective Targeted Maturity Date. Upon the occurrence of certain Monthly Payment Events, if any, or in the event the full amount of principal of any Class of Class A Certificates is not available on its Targeted Maturity Date, principal will be distributed to holders of the related Class of Class A Certificates to the extent and in the order of priority described herein on Certificate Payment Dates which will thereafter be monthly on each Monthly Allocation Date. A "Monthly Allocation Date" is the day on which Collections in respect of the Contracts and Leased Vehicles represented by the SUBI are allocated, and shall occur on the twenty-fifth day of each month (or, if such day is not a Business Day, on the next succeeding Business Day) commencing on September 25, 1997. Each Class of Certificates will also have a Stated Maturity Date on or before which payment in full is due. Certain persons participating in this offering may engage in transactions that stabilize, maintain or otherwise affect the price of the Class A Certificates. Such transactions may include stabilizing and the purchase of Class A Certificates to cover syndicate short positions. For a description of these activities, see "Underwriting". The Stock Exchange of Hong Kong Limited and the Luxembourg Stock Exchange take no responsibility for the contents of this Prospectus, make no representation as to their accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of its contents. ii The Transferor, having made all reasonable inquiries, confirms that this Prospectus is true and accurate in all material respects and is not misleading, that the opinions and intentions expressed herein are honestly held and that there are no other facts the omission of which makes this Prospectus, including any information incorporated by reference herein, as a whole, or any of such information or the expression of any such opinions or intentions misleading. The Transferor accepts responsibility accordingly. UNTIL DECEMBER 10, 1997, ALL DEALERS EFFECTING TRANSACTIONS IN THE CLASS A CERTIFICATES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS. UPON RECEIPT OF A REQUEST BY AN INVESTOR WHO HAS RECEIVED AN ELECTRONIC PROSPECTUS OR A REQUEST BY SUCH INVESTOR'S REPRESENTATIVE WITHIN THE PERIOD DURING WHICH THERE IS A PROSPECTUS DELIVERY OBLIGATION, THE TRANSFEROR OR THE UNDERWRITERS WILL PROMPTLY DELIVER, OR CAUSE TO BE DELIVERED, WITHOUT CHARGE, A PAPER COPY OF THE PROSPECTUS. iii AVAILABLE INFORMATION The Transferor, as originator of the Trust, and the Trust, as issuer of the Certificates, have filed with the Securities and Exchange Commission (the "Commission") a Registration Statement on Form S-1 (together with all amendments and exhibits thereto, the "Registration Statement") of which this Prospectus is a part, under the Securities Act of 1933, as amended (the "Securities Act"), with respect to the Class A Certificates. This Prospectus does not contain all of the information set forth in the Registration Statement, certain parts of which have been omitted in accordance with the rules and regulations of the Commission. For further information, reference is made to the Registration Statement, which is available for inspection without charge at the public reference facilities of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and the regional offices of the Commission at Suite 1400, Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661-2511 and Suite 1300, Seven World Trade Center, New York, New York 10048. Copies of such information can be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition, copies of the Registration Statement and all of the documents incorporated by reference herein (including the Titling Trust Agreement and the Agreement) may be obtained at no charge at the offices of Bankers Trust Luxembourg S.A., 14 Boulevard F.D. Roosevelt, L-2450, Luxembourg and at the offices of Merrill Lynch & Co. at Asia Pacific Financial, 3 Garden Road, Hong Kong. The Servicer, on behalf of the Trust, will also file or cause to be filed with the Commission such periodic reports as are required under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations of the Commission thereunder. Electronic filings made through the Electronic Data Gathering Analysis and Retrieval System are publicly available through the Commission's Website at http://www.sec.gov. DOCUMENTS INCORPORATED BY REFERENCE Certain documents with respect to Toyota Motor Credit Corporation ("TMCC") are incorporated herein. The documents incorporated by reference herein relate solely to TMCC as a registrant on the Registration Statement on Form S-3 with respect to the TMCC Demand Notes. The Certificates will represent beneficial interests in the Trust and will not represent interests in or obligations of TMCC or any of its affiliates. TMCC is subject to the informational requirements of the Exchange Act, and in accordance therewith files reports and other information with the Commission. Such reports and other information can be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the following regional offices of the Commission: New York Regional Office, 7 World Trade Center, 13th Floor, New York, New York 10048; and Chicago Regional Office, Citibank Center, Suite 1800, 500 West Madison Street, Chicago, Illinois 60611-2511. In addition, certain of TMCC's securities are listed on the New York Stock Exchange and the aforementioned material may also be inspected at the offices of such exchange. TMCC's Annual Report on Form 10-K for the year ended September 30, 1996, and TMCC's Quarterly Reports on Form 10-Q for the quarters ended December 31, 1996, March 31, 1997, and June 30, 1997, have been filed with the Commission and are made a part of this Registration Statement. All reports filed by TMCC pursuant to Sections 13(a) or 15(d) of the Exchange Act subsequent to the date of the Registration Statement and prior to the termination of the offering of the Class A Certificates and all supplements to the Registration Statement filed from time to time shall be deemed to be incorporated by reference into the Registration Statement to be a part hereof from the date of filing such documents. Copies of the incorporated documents will be obtainable at no charge at the offices of Bankers Trust Company Luxembourg S.A., 14 Boulevard F. D. Roosevelt, L-2450, Luxembourg. Any statement contained herein or made a part hereof, or contained in a document all or a portion of which is incorporated or deemed to be incorporated by reference herein, shall be deemed to be modified or superseded for the purposes of the Registration Statement to the extent that a statement contained iv therein (or in any subsequently filed document which is also incorporated or deemed to be incorporated by reference herein) modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of the Registration Statement. REPORTS TO CERTIFICATEHOLDERS U.S. Bank National Association, as Trustee, will provide to Certificateholders (which shall be Cede & Co. as the nominee of DTC unless Definitive Certificates are issued under the limited circumstances described herein) unaudited monthly and annual reports concerning the Contracts and Leased Vehicles. For so long as the Class A Certificates are outstanding, each such report (including a statement of the Class Certificate Balance of each Class of Certificates) also shall be delivered to the Luxembourg Stock Exchange and The Stock Exchange of Hong Kong Limited on the same date such reports are to be delivered to Certificateholders. Copies of such reports may be obtained at no charge at the offices of Bankers Trust Luxembourg S.A., 14 Boulevard F.D. Roosevelt, L-2450, Luxembourg and at the offices of Merrill Lynch & Co. at Asia Pacific Financial, 3 Garden Road, Hong Kong. v OVERVIEW OF TRANSACTION [GRAPH] vi SUMMARY THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE DETAILED INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS. CERTAIN CAPITALIZED TERMS USED HEREIN ARE DEFINED ELSEWHERE IN THIS PROSPECTUS ON THE PAGES INDICATED IN THE "INDEX OF CAPITALIZED TERMS" BEGINNING ON PAGE 101 HEREOF. OVERVIEW.......................... Certain motor vehicle dealers ("Dealers") whose dealerships are located in California, Florida, Michigan, Pennsylvania and Ohio (the "Trust States") have assigned and will assign retail closed- end automobile and light duty truck leases to the Titling Trust pursuant to their dealer agreements with the Titling Trust. The Titling Trust was created in October 1996 to avoid the administrative difficulty and expense associated with retitling leased vehicles in connection with the securitization of automobile and light duty truck leases. The Titling Trust has issued to TMCC an Undivided Trust Interest (the "UTI") representing the entire beneficial interest in the unallocated Titling Trust Assets. SEE "The Trust and the SUBI--The Trust". TMCC has instructed the trustee of the Titling Trust to allocate a separate portfolio of leases and leased vehicles from and among the Titling Trust Assets represented by the UTI and create a special unit of beneficial interest (the "SUBI") which represents the entire beneficial interest in such portfolio. Titling Trust Assets allocated to the SUBI will no longer be represented by the UTI. TMCC will sell the SUBI to the Transferor and the Transferor will contribute substantially all of the SUBI (excluding the related rights to proceeds of the Residual Value Insurance Policy described herein) to the Trust. In return, the Trust will issue the Class A Certificates offered hereby and the Class B Certificates, and will create the Transferor Interest for the benefit of the Transferor. The "Transferor Interest" is the undivided interest in the Trust not evidenced by the Certificates and will be permanently retained by the Transferor. TMCC, from time to time in the future, may cause the Titling Trust to allocate additional separate portfolios of leases and leased vehicles and to create additional special units of beneficial interest similar to the SUBI relating to such portfolios ("Other SUBIs") which may be sold to the Transferor or one or more other entities. The Trust and the Certificateholders will have no interest in the UTI, any Other SUBI or any Titling Trust Assets evidenced by the UTI or any Other SUBI. THE TRUST......................... The Trust was formed pursuant to the Agreement dated as of September 1, 1997 between the Transferor and U.S. Bank National Association (formerly known as First Bank National Association, "U.S. Bank"), as Trustee. The property of the Trust consists primarily of the SUBI and monies on deposit in certain accounts established as described herein. THE TITLING TRUST................. The Titling Trust is a Delaware business trust formed pursuant to the Titling Trust Agreement. The primary business purpose of the Titling Trust is to take assignments of and serve as holder of
1 title to substantially all of the lease contracts and the related leased vehicles originated by the Dealers beginning on dates prior to the execution of the SUBI Supplement. Pursuant to the Servicing Agreement, TMCC will service the lease contracts included in the Titling Trust Assets, including the Contracts. SEE "Additional Document Provisions--The Trust Agreement" and "--The Servicing Agreement" and "Certain Legal Aspects of the Titling Trust--The Titling Trust". The Titling Trust is governed by an Amended and Restated Trust and Servicing Agreement (the "Titling Trust Agreement") among TMCC, as grantor, initial beneficiary and Servicer, TMTT, Inc., as trustee (the "Titling Trustee"), and U.S. Bank, as trust agent (the "Trust Agent"). TMTT, Inc. is a Delaware corporation and a wholly owned, special purpose subsidiary of U.S. Bank that was organized solely for the purpose of acting as Titling Trustee. TMTT, Inc. is not affiliated with TMCC or any affiliate thereof. SEE "The Titling Trust-- The Titling Trustee". TITLING TRUST ASSETS ALLOCATED AS SUBI ASSETS........ The Titling Trust Assets consist primarily of retail closed-end lease contracts and the automobiles and light duty trucks relating thereto. The SUBI will evidence a beneficial interest in a specified portion of the Titling Trust Assets allocated to the SUBI. Certain lease contracts (the "Initial Contracts") originated by the Dealers, the automobiles and light duty trucks relating thereto (the "Initial Leased Vehicles") and certain monies due under or payable in respect of the Initial Contracts and the Initial Leased Vehicles on or after August 1, 1997 (the "Cutoff Date") will be allocated to the SUBI on the Closing Date. During the Revolving Period, payments made on or in respect of the SUBI Assets allocable to the Discounted Principal Balance thereof will be reinvested in additional retail closed-end lease contracts (the "Subsequent Contracts" and, together with the Initial Contracts, the "Contracts") assigned to the Titling Trust by Dealers and the related automobiles and light duty trucks (the "Subsequent Leased Vehicles" and, together with the Initial Leased Vehicles, the "Leased Vehicles"). At the time of such reinvestment, such Subsequent Contracts and Subsequent Leased Vehicles will be allocated to the SUBI and will no longer be UTI Assets. All such assets, together with certain other assets and rights, are the "SUBI Assets". SEE "Description of the Certificates--Allocations and Distributions on the Certificates--The Revolving Period" and "The Trust and the SUBI-- The SUBI". The SUBI will evidence an indirect beneficial interest, rather than a direct legal interest, in the SUBI Assets. The SUBI will not represent a beneficial interest in any Titling Trust Assets other than the SUBI Assets. Payments made on or in respect of the Titling Trust Assets other than the SUBI Assets will not be available to make payments on the Certificates.
2 THE TRANSFEROR.................... Toyota Leasing, Inc. is a California corporation which is a wholly owned, special purpose subsidiary of TMCC. SEE "The Transferor". TMCC.............................. TMCC is a California corporation that has 34 branches in various locations in the United States and one branch in the Commonwealth of Puerto Rico. TMCC's primary business is providing retail leasing, retail and wholesale financing and certain other financial services to authorized Toyota and Lexus vehicle and Toyota industrial equipment dealers and their customers in the United States (excluding Hawaii) and Puerto Rico. TMCC is a wholly owned subsidiary of Toyota Motor Sales, U.S.A., Inc. ("TMS"), which is primarily engaged in the wholesale distribution of automobiles, light duty trucks, industrial equipment and related replacement parts and accessories throughout the United States (excluding Hawaii). TMS is a wholly-owned subsidiary of Toyota Motor North America, Inc. ("TMA"). Substantially all of TMS's products are either manufactured by its affiliates or are purchased from Toyota Motor Corporation ("TMC"), which wholly owns TMA, or affiliates of TMC. Pursuant to the Agreement and the Series 1997-A SUBI Servicing Supplement to the Titling Trust Agreement dated as of September 1, 1997, among TMCC, the Titling Trustee and the Transferor (the "Servicing Supplement" and, together with the Titling Trust Agreement, the "Servicing Agreement"), TMCC will act as the initial servicer of the Titling Trust Assets, including the SUBI Assets (in such capacity, the "Servicer"). Pursuant to the terms of the Servicing Agreement, the Trustee is a third party beneficiary thereof. SECURITIES OFFERED A. GENERAL........................ The Certificates will represent fractional undivided beneficial interests in the Trust. The Certificates will consist of three classes of senior certificates (the Class A-1, Class A-2 and Class A-3 Certificates) and one class of subordinated certificates (the Class B Certificates). Only the Class A Certificates are being offered hereby. Each Certificate will represent the right to receive semiannual payments of interest at the related Certificate Rate and, to the extent described herein, payments of principal during the Amortization Period. It is expected that repayment of principal on each Class of Certificates will be made on the related Targeted Maturity Date. Payments on the Certificates will be funded from payments received by the Trust on or in respect of the SUBI and, in certain circumstances, from monies on deposit in the Reserve Fund, from earnings in respect of monies, if any, on deposit in the Certificateholders' Account, and monies that otherwise would be distributable in respect of the Transferor Interest. Interests in
3 the assets of the Trust will be allocated among the Class A-1 Certificateholders, the Class A-2 Certificateholders, the Class A-3 Certificateholders and the Class B Certificateholders (collectively, the "Investor Interest") and the Transferor Interest. In general, the Certificates will be "sequential pay" certificates, meaning that no principal payments will be made on the Class A-2 Certificates until the Class A-1 Certificates have been paid in full, no principal payments will be made on the Class A-3 Certificates until the Class A-2 Certificates have been paid in full and no principal payments will be made on the Class B Certificates until the Class A-3 Certificates are paid in full. The Class B Certificates will be subordinated to the Class A Certificates to the extent described herein. SEE "Description of the Certificates--Allocations and Distributions on the Certificates". The Transferor Interest also will be subordinated to the Certificates, as described herein. Payments will be made to Certificateholders of record as of the day immediately preceding each relevant Certificate Payment Date or, if Definitive Certificates are issued, as of the last Business Day of the preceding month (each, a "Record Date"). A "Business Day" is a day other than a Saturday, a Sunday or a day on which banking institutions in New York, New York, Chicago, Illinois, or Los Angeles, California are authorized or obligated by law, regulation, executive order or decree to be closed; provided that, solely for purposes of identifying any Certificate Payment Date with respect to the making of payments on the Class A Certificates in Luxembourg or Hong Kong by a paying agent there located, "Business Day" shall also exclude any day on which banking institutions located in that jurisdiction are authorized by law, regulation, governmental order or decree to be closed, whether or not payments are made with respect to such Certificates in any other jurisdiction on such date, but such definition shall not be used for making any other calculation. On the date of initial issuance of the Certificates (the "Closing Date"), the Trust will issue $410,000,000 aggregate initial Certificate Balance of Class A-1 Certificates (the "Initial Class A-1 Certificate Balance"), $650,000,000 aggregate initial Certificate Balance of Class A-2 Certificates (the "Initial Class A-2 Certificate Balance"), $72,750,000 aggregate initial Certificate Balance of Class A-3 Certificates (the "Initial Class A-3 Certificate Balance" and, together with the Initial Class A-1 Certificate Balance and the Initial Class A-2 Certificate Balance, the "Initial Class A Certificate Balance") and $73,850,000 aggregate initial Certificate Balance of Class B Certificates (the "Initial Class B Certificate Balance" and, together with the Initial Class A Certificate Balance, the "Initial Certificate Balance"). Such Class Certificate Balances will remain fixed at the indicated Initial Certificate Balances during the Revolving Period and until the
4 related Targeted Maturity Date, except that such Class Certificate Balances may decline in connection with the allocation of Loss Amounts thereto or, commencing upon the occurrence of a Monthly Payment Event, in connection with distributions thereto in respect of principal to the extent described herein. The "Class Certificate Balance" of any Class of Certificates on any day will equal the Initial Certificate Balance thereof, reduced by the sum of all distributions made in respect of principal of such Class (including any distributions in respect of Loss Amounts and Certificate Principal Loss Amounts allocable to such Class) on or prior to such day and any unreimbursed Certificate Principal Loss Amounts in respect of such Class (and in the case of the Class B Certificates, minus the aggregate amount of unreimbursed Class B Available Principal applied to cover interest shortfalls and reimburse Loss Amounts and Certificate Principal Loss Amounts allocated to the Class A Certificates), as described herein. The "Class A Certificate Balance" will mean the sum of the Class A-1, Class A-2 and Class A-3 Class Certificate Balances. The "Certificate Balance" with respect to the Certificates will mean the sum of the Class A Certificate Balance and the Class B Certificate Balance. The Transferor Interest will represent the interest in the Trust not represented by the Investor Interest. The Transferor Interest will initially equal $24,631,519.20 (2% of the Aggregate Net Investment Value as of the Cutoff Date) and on any day will equal the difference between the Aggregate Net Investment Value and the Adjusted Certificate Balance, calculated as described below. SEE "Summary--The SUBI--1. The Contracts". As more fully described herein, the Aggregate Net Investment Value can change daily and the Transferor Interest can decrease daily as the Aggregate Net Investment Value decreases. The Transferor Interest may increase on a Monthly Allocation Date as the Adjusted Certificate Balance declines. SEE "Description of the Certificates--General". B. DISTRIBUTIONS.................. INTEREST. Payments of interest on each Class of Certificates will be made, to the extent funds are allocated and are available therefor as described herein, (i) on each Monthly Allocation Date in March and September, commencing in March 1998, as well as on the Targeted Maturity Date for such Class and (ii) for any Class of Certificates not paid in full on the related Targeted Maturity Date, on any subsequent Certificate Payment Date until such Class is paid in full. In addition, after the occurrence of any Monthly Payment Event, payments of interest on each Class of Certificates will be made monthly, to the extent funds are allocated and are available therefor as described herein, on each Monthly Allocation Date (and each such subsequent Monthly Allocation Date will be a Certificate Payment Date). PRINCIPAL. Principal of each Class of Certificates will be payable in full on the related Targeted Maturity Date. If Principal Collections during the Collection Periods preceding such date (but
5 commencing after the end of the Revolving Period) that are allocable to such Class of Certificates, together with amounts allocated thereto from amounts on deposit in the Reserve Fund, through subordination or from any related Maturity Advance, are insufficient to make such payment in full, all such amounts available will be paid to the related Certificateholders on the related Targeted Maturity Date and, thereafter, payment of all Principal Collections in respect of the related Collection Period allocable to the Investor Interest will be paid on each related Certificate Payment Date on a monthly basis until such Class of Class A Certificates has been paid in full. In addition, after the occurrence of any Monthly Payment Event, payments of principal of the Certificates will be made monthly, sequentially as described herein to the extent funds are allocated and are available therefor as described herein, on each Certificate Payment Date (and each such subsequent Monthly Allocation Date will be a Certificate Payment Date). Each Monthly Allocation Date on which any such distribution of interest or principal is required to be made with respect to any Class of Certificates is a "Certificate Payment Date" with respect to such Class. The Targeted Maturity Date for each Class of Certificates is as follows:
CLASS TARGETED MATURITY DATE - ----------- ---------------------- Class A-1 September 27, 1999 Class A-2 September 25, 2000 Class A-3 March 26, 2001 Class B September 25, 2001
The Stated Maturity Date for each Class of Certificates (the date on which ultimate payment thereof in full is due) is April 26, 2004. C. INTEREST....................... Interest will accrue on the Certificates at the following rates (the "Certificate Rates"): (i) Class A-1 Certificates, 6.20% per annum (the "Class A-1 Rate"), (ii) Class A-2 Certificates, 6.35% per annum (the "Class A-2 Rate"), (iii) Class A-3 Certificates, 6.45% per annum (the "Class A-3 Rate") and (iv) Class B Certificates, 6.75% per annum (the "Class B Rate"). Interest will accrue on the Class Certificate Balance of each Class of Certificates and on Certificate Principal Loss Amounts allocated thereto at the applicable Certificate Rate during each Interest Period. The "Interest Period" with respect to each related Cer- tificate Payment Date for a Class of Certificates will be the period from and including the twenty-fifth day of the month of the preceding Certificate Payment Date, to but excluding the twenty-fifth day of the month of such current Certificate Payment Date. However, the first Interest Period for any Class of Certificates will be the period from and including the Closing Date, to but excluding the twenty-fifth day of the month of the related first Certificate Payment Date. Interest will be calculated
6 on the basis of a 360-day year consisting of twelve 30-day months. Interest allocations and distributions on all Classes of Class A Certificates will have the same priority. Under certain circumstances, the amount available for interest allocations or distributions could be less than the amount of interest allocable to or distributable on the Class A Certificates on any Monthly Allocation Date, in which case each Class of Class A Certificates will be allocated or paid its ratable share (based upon the aggregate amount of interest due thereon) of the aggregate amount available to be allocated or paid in respect of interest on the Class A Certificates. D. PRINCIPAL, REVOLVING PERIOD AND AMORTIZATION PERIOD......... Unless a Monthly Payment Event has occurred, principal will be paid to the holders of each Class of Certificates on the related Targeted Maturity Date in an amount equal to the lesser of (i) the related Class Certificate Balance plus Certificate Principal Loss Amounts allocated thereto (I.E., such Class is paid in full), and (ii) the sum of (x) all amounts allocated for distributions in respect of principal of the Certificates then on deposit in the Certificateholders' Account and (y) any Maturity Advance. SEE "--Maturity Advances". To the extent that a Class is not paid in full on the related Targeted Maturity Date, distributions of principal in respect of the related Class of Certificates will be made on each Certificate Payment Date commencing in the month immediately following such Targeted Maturity Date, and shall continue on a monthly basis until such Class is paid in full. Interest at the related Certificate Rate will continue to accrue on the outstanding Certificate Balance of each Class of Certificates (and on unreimbursed Certificate Principal Loss Amounts allocated thereto) and will be distributable on each such Certificate Payment Date. SEE "--Interest". Failure to pay in full a Class of Certificates on its Targeted Maturity Date because Collections and other amounts allocable thereto are insufficient therefor will not constitute a Monthly Payment Event or an Event of Servicing Termination. However, failure by the Servicer to deliver required amounts to the Trustee on or within three Business Days of a relevant Certificate Payment Date, or failure to pay in full any Class of Certificates on or before its Stated Maturity Date, will constitute an Event of Servicing Termination. SEE "Additional Document Provisions-- The Servicing Agreement-- Events of Servicing Termination" and "--Rights Upon Event of Servicing Termination." THE REVOLVING PERIOD. No principal will be allocable or distributable on the Certificates until the Monthly Allocation Date (the "First Principal Monthly Allocation Date") in the month commencing after the earlier to occur of October 1, 1998 (the "Amortization Date") or an Early Amortization Event. From the
7 Closing Date and through the Business Day preceding the commencement of the Amortization Period (I.E., the earlier of October 1, 1998, or the date of an Early Amortization Event) (the "Revolving Period"), all Principal Collections and amounts otherwise distributable to Certificateholders as reimbursements of Loss Amounts and Certificate Principal Loss Amounts will be reinvested in Subsequent Contracts and Subsequent Leased Vehicles so as to maintain the Certificate Balance at a constant level during the Revolving Period; provided that during the Revolving Period the Certificate Balance of a Class of Certificates will decrease to the extent Certificate Principal Loss Amounts are allocated thereto and not reimbursed. Early Amortization Events are described under "Description of the Certificates--Early Amortization Events". While any Early Amortization Event will terminate the Revolving Period, only certain Early Amortization Events (which are Monthly Payment Events) will cause monthly distributions in respect of principal to commence. During the Revolving Period, on one or more Business Days selected by the Servicer each month (each, a "Transfer Date"), the Servicer will direct the Titling Trustee to reinvest Principal Collections and certain reimbursed Loss Amounts in Subsequent Contracts and Subsequent Leased Vehicles. Upon such reinvestment, such Subsequent Contracts and Subsequent Leased Vehicles will become SUBI Assets. If on the last Business Day of any month during the Revolving Period commencing in October 1997 the Servicer determines that the amount of Principal Collections and reimbursed Loss Amounts and Certificate Principal Loss Amounts for the preceding Collection Period not reinvested in Subsequent Contracts and Subsequent Leased Vehicles as of the first day of such month exceeds $1,000,000, an Early Amortization Event will be deemed to have occurred, the Revolving Period will terminate as of such day and all Principal Collections and reimbursed Loss Amounts not reinvested as of such day will then be allocable or distributable to Certificateholders on the succeeding Monthly Allocation Date. SEE "Description of the Certificates--Allocations and Distributions on the Certificates--Revolving Period". During the Revolving Period, Subsequent Contracts and Subsequent Leased Vehicles will be selected from the Titling Trust's portfolio of lease contracts and related vehicles not allocated to any Other SUBI, based on the criteria specified in the Titling Trust Agreement and Servicing Supplement as described under the "The Contracts--Representations, Warranties and Covenants". Reinvestment of Principal Collections and reimbursed Loss Amounts and Certificate Principal Loss Amounts will be in the lease contracts having the earliest origination dates and the related vehicles and Titling Trust Assets (excluding those previously allocated to any Other SUBI). If any Other SUBI is created and allocations are being made in respect of such Other
8 SUBI at the same time out of the Titling Trust's general pool of unallocated lease contracts, reinvestment in respect of the SUBI will be given priority. SEE "The Contracts". "Principal Collections" will mean, with respect to any Collection Period, all Collections allocable to the principal component of any Contract, discounted to the extent described below. With respect to any Monthly Allocation Date, the related "Collection Period" will be the preceding calendar month. For purposes of determining Principal Collections, the principal component of all payments made on or in respect of a Contract (or the related Leased Vehicle) with a Lease Rate less than 9.75% per annum (each, a "Discounted Contract") will be discounted at a per annum rate of 9.75%, thereby effectively reallocating a portion of the payments received in respect of the principal component of the Contracts to Interest Collections and providing additional credit enhancement for the benefit of the Certificateholders. With respect to any Collection Period, "Collections" will include all net collections received in respect of the Contracts and Leased Vehicles during such Collection Period, such as Monthly Payments (including previously collected Payments Ahead that represent Monthly Payments due during such Collection Period), Prepayments, Advances, Net Matured Leased Vehicle Proceeds, Net Repossessed Vehicle Proceeds and other Net Liquidation Proceeds, less (i) amounts representing Payments Ahead with respect to future Collection Periods and (ii) Additional Loss Amounts in respect of such Collection Period. In addition, for each Collection Period during the Revolving Period, amounts otherwise allocable or distributable to the Certificateholders on the related Monthly Allocation Date as reimbursement of Loss Amounts or Certificate Principal Loss Amounts allocable to the Investor Interest will be treated as Principal Collections and reinvested in Subsequent Contracts and Subsequent Leased Vehicles. SEE "Description of the Certif- icates--Allocations and Distributions on the Certificates--Allocations and Distributions of Collections". With respect to any Collection Period "Interest Collections" generally will equal the amount by which Collections exceed Principal Collections. "Net Repossessed Vehicle Proceeds" will equal Repossessed Vehicle Proceeds net of Repossessed Vehicle Expenses, and "Net Liquidation Proceeds" will equal Liquidation Proceeds net of Liquidation Expenses. AMORTIZATION PERIOD. The "Amortization Period" shall commence on the earlier of the Amortization Date or the day on which an Early Amortization Event occurs, and will end when (i) each Class of Certificates has been paid in full, or (ii) the Trust otherwise terminates. During the Amortization Period, Principal Collections and reimbursed Loss Amounts and Certificate Principal Loss Amounts will no longer be reinvested in Subsequent Contracts and Subsequent Leased Vehicles.
9 During the Amortization Period, the amount of Principal Collections allocable to the Investor Interest in respect of a Collection Period (the "Principal Allocation") generally will mean the Principal Collections in respect of such Collection Period alloca- ble to the SUBI multiplied by the Investor Percentage for such Principal Collections. The "Investor Percentage" for purposes of the Principal Allocation will equal the percentage equivalent of a fraction (not to exceed 100%), the numerator of which is the Adjusted Certificate Balance and the denominator of which is the Aggregate Net Investment Value, calculated as of the last day of the Collection Period (i) preceding the Amortization Date or (ii) preceding the month, if any, during which an Early Amortization Event occurs. The "Adjusted Certificate Balance" for any Class of Certificates is the Initial Certificate Balance thereof reduced by the sum of all amounts deposited into the Certificateholders' Account in respect of principal on such Class plus the amount of all unreimbursed Loss Amounts and Certificate Principal Loss Amounts allocated thereto (and in the case of the Class B Certificates, minus the aggregate amount of unreimbursed Class B Available Principal applied to cover interest shortfalls and reimburse Loss Amounts and Certificate Principal Loss Amounts allocated to the Class A Certificates). SEE "Description of the Certificates--Calculation of Investor Percentage and Transferor Percentage." Following the occurrence of a Monthly Payment Event, if any, allocations based upon the Principal Allocation may result in allocations or distributions to Certificateholders of Principal Collections in amounts that are greater relative to the declining Certificate Balances than would be the case if no fixed Investor Percentage were used. To the extent that on any Monthly Allocation Date during the Amortization Period any portion of the Investor Percentage of Interest Collections in respect of the related Collection Period remains after required allocations and distributions have been made, such excess interest will be deposited into the Reserve Fund until the amount on deposit therein equals the Specified Reserve Fund Balance. Any remaining excess interest, up to but not exceeding the product of (i) one-twelfth of 0.25% and (ii) the Aggregate Net Investment Value as of the last day of such Collection Period will constitute the "Accelerated Principal Distribution Amount". The Accelerated Principal Distribution Amount will be allocable or distributable to the Certificateholders (or for reimbursements of Maturity Advances) in addition to (and in the same manner and priority as) ordinary allocations and distributions of principal in respect of the Certificates. SEE "Description of the Certificates--Allocations and Distributions on the Certificates--Allocations and Distributions of Collections" and "Assets of the Trust--The Accounts; Collections--The SUBI Collection Account" and "-- Certain Withdrawals from the SUBI Collection Account".
10 The "Aggregate Net Investment Value" as of any date will equal the sum of (i) the Discounted Principal Balance of all Contracts other than Charged-off, Liquidated, Matured and Additional Loss Contracts, (ii) the aggregate Residual Value of all Leased Vehicles to the extent that the related Contracts have reached their scheduled maturities and been terminated (each, a "Matured Contract") within the three immediately preceding Collection Periods but which Leased Vehicles as of the last day of the most recent Collection Period have remained unsold and not otherwise disposed of by the Servicer for no more than three full Collection Periods (the "Matured Leased Vehicle Inventory") plus certain related charges and (iii) during the Revolving Period, the amount of unreinvested Principal Collections and reimbursed Loss Amounts and Certificate Principal Loss Amounts. The "Discounted Principal Balance" for each Contract with a Lease Rate less than 9.75% will be its Outstanding Principal Balance discounted by 9.75% (each such Contract, a "Discounted Contract"), and for each Contract with a Lease Rate at least equal to 9.75% will be its Outstanding Principal Balance. As of the Cutoff Date, the Aggregate Net Investment Value equaled the aggregate Discounted Principal Balance of the Initial Contracts or $1,231,231,519.20. E. INVESTMENT OF COLLECTIONS PRIOR TO MONTHLY PAYMENT EVENT........ So long as a Monthly Payment Event has not occurred, and so long as the Certificates of any Class are outstanding, amounts allocated to interest on the Certificates during the Revolving Period, and amounts allocated to interest or principal in respect of the Certificates during the Amortization Period, in each case on Monthly Allocation Dates that are not relevant Certificate Payment Dates, will be deposited into the Certificateholders' Account and invested in Permitted Investments maturing prior to the succeeding relevant Certificate Payment Date or Targeted Maturity Date, as appropriate, and bearing rates of interest equal to the related Required Rates. Such Permitted Investments are expected to include one or more demand obligations issued by TMCC (each a "TMCC Demand Note"). SEE "Addi- tional Document Provisions--TMCC Demand Notes". From and after the occurrence of a Monthly Payment Event, payments of interest on, and payments of principal of each Class of Certificates in the sequential order described herein, will instead be made monthly on each subsequent relevant Certificate Payment Date. "Monthly Payment Events", the occurrence of which will terminate the investment of amounts held in the Certificateholders' Account and will cause payments of interest on and principal of the Certificates to be made monthly thereafter, will include (a) the occurrence of any of the Early Amortization Events described in clauses (ii) through (vi) and (viii) of the definition thereof or (b) the downgrade by Standard & Poor's of TMCC's short-term debt to a rating less than A-1+, or the downgrade by
11 Moody's of TMCC's short term debt to a rating less than P-1 or TMCC's long term debt to a rating less than Aa3, unless within ten Business Days of such event alternative arrangements satisfactory to the Rating Agencies are made with respect to the investment of Collections to be invested. The Trustee is expected to exercise the demand feature of the TMCC Demand Notes only at the direction of the Certificateholders, although pursuant to the Indenture the Trustee may exercise such feature at any time after the occurrence of a Monthly Payment Event. The exercise of such feature by the Trustee will not of itself constitute a Monthly Payment Event. F. PRIORITY OF MONTHLY ALLOCATIONS AND DISTRIBUTIONS................ On each Monthly Allocation Date, the Trustee will make allocations, payments and distributions with respect to the related Collection Period in accordance with the priorities set forth herein. SEE "Description of the Certificates--Allocations and Distributions on the Certificates". G. OPTIONAL PURCHASE.............. The Transferor will have an option to purchase the SUBI Certificate on any Monthly Allocation Date on or after the Class A-3 Targeted Maturity Date if, either before or after giving effect to any payment of principal required to be made on the related Certificate Payment Date, the Adjusted Certificate Balance has been reduced to an amount less than or equal to $123,123,151.92 (10% of the Aggregate Net Investment Value as of the Cutoff Date) or amounts sufficient to effectively reduce the Certificate Balance to such amount have been deposited in the Collection Account on such date. Such a purchase would result in the retirement of the Certificates of each outstanding Class. SEE "Description of the Certificates--Termination of the Trust; Retirement of the Certificates". H. FORM, DENOMINATIONS AND REGISTRATION OF THE CLASS A CERTIFICATES............ Except under limited circumstances, the Class A Certificates will be available only in book-entry form in minimum denominations of $1,000. Persons acquiring beneficial ownership interests in the Class A Certificates ("Certificate Owners") will hold their Cer- tificates through The Depository Trust Company ("DTC"), in the United States, or Cedel Bank, societe anonyme ("Cedel Bank") or the Euroclear System ("Euroclear") in Europe or Asia. SEE "Description of the Certificates--Book-Entry Registration" and "ANNEX I: Global Clearance, Settlement and Tax Documentation Procedures". I. LISTING........................ Application has been made for listing of the Class A Certificates on the Luxembourg Stock Exchange and for listing of and permission to deal in the Class A Certificates on The Stock Exchange of Hong Kong Limited. The Trust has requested that such permission be made effective on September 25, 1997. THE SUBI.......................... The SUBI will be evidenced by a certificate (the "SUBI Certificate") evidencing a 100% beneficial interest in the SUBI Assets
12 and will not evidence an interest in any Titling Trust Assets other than the SUBI Assets. Payments made on or in respect of any other Titling Trust Assets (and proceeds of the Residual Value Insurance Policy) will not be available to make payments on the Certificates. The Titling Trust Assets evidenced by the SUBI will primarily include the Contracts and Leased Vehicles allocated to the SUBI. SEE "The Trust and the SUBI" and "The Titling Trust". 1. THE CONTRACTS................ The Contracts will consist of retail closed-end lease contracts originated by the Dealers in California, Florida, Michigan, Ohio and Pennsylvania (the "Trust States") having original terms of not more than 60 months. Each Contract will be a finance lease for accounting purposes and will have been written for a "capitalized cost" (which may exceed the manufacturer's suggested retail price and may include certain origination fees), plus a lease charge which is based on an imputed interest rate (the "Lease Rate"). Each Contract will provide for equal monthly payments (each, a "Monthly Payment") that when allocated between principal and the lease charge at the Lease Rate on a constant yield basis, will be sufficient to amortize the capitalized cost over the term of the lease to an amount equal to the Residual Value. A Residual Value is established at the origination of a lease contract (based on documentation provided to the Dealers by TMCC) and represents the estimated wholesale market value at the end of the lease term, as such estimated value may be reduced in connection with payments received in respect of principal due during the period of any extension granted as described herein ("Residual Value"). The amount to which the capitalized cost of a Contract has been amortized at any point in time is referred to herein as its "Outstanding Principal Balance". The Initial Contracts consist of 56,340 lease contracts. As of the Cutoff Date, the Initial Contracts had Lease Rates ranging from 0.254% to 13.653% and a weighted average Lease Rate of 7.655%. As of the Cutoff Date, the Initial Contracts had an aggregate Outstanding Principal Balance of $1,287,004,969.02, an Aggregate Net Investment Value of $1,231,231,519.20 (of which amount approximately 69.35% represented Residual Values), a weighted average original term of 39.8 months and a weighted average remaining term to scheduled maturity of 35.8 months. SEE "The Contracts". 2. THE LEASED VEHICLES.......... The Leased Vehicles will be comprised of automobiles and light duty trucks. As of the times of origination of the Contracts, the related Leased Vehicles will include new vehicles, including dealer demonstrator vehicles driven fewer than 20,000 miles, or used vehicles up to four model years old at the time of origination of the related Contract, including certified used vehicles and vehicles previously sold under manufacturer's programs. Certified used vehicles are Toyota or Lexus vehicles that are
13 purchased by dealers, reconditioned and certified to meet certain Toyota/Lexus required standards and sold or leased with an extended warranty from the manufacturer. Manufacturer's program vehicles are Toyota or Lexus vehicles that have been sold to rental car companies, repurchased by the manufacturer and subsequently purchased by the dealer to sell or lease as current year and one year old used vehicles with 20,000 miles or less. SEE "The Contracts--General". The certificates of title to the Initial Leased Vehicles are, and the certificates of title to all Leased Vehicles will be, registered at all times prior to liquidation in the name of the Titling Trust. The certificates of title will not reflect the indirect interest of the Trustee in the Leased Vehicles by virtue of its beneficial interest in the SUBI. Therefore, if the Class A Certificates were recharacterized as secured loans, the Trustee would have a perfected security interest in the SUBI Certificate (excluding rights to proceeds of the Residual Value Insurance Policy retained by the Transferor), Contracts and Contract Rights but not in the Leased Vehicles. SEE "Certain Legal Aspects of the Titling Trust--Structural Considerations" and "--Back-up Security Interests". THE SUBI COLLECTION ACCOUNT; COLLECTIONS..................... The Titling Trustee will maintain the SUBI Collection Account for the benefit of the holders of interests in the SUBI. Except under certain limited circumstances, the Servicer will be permitted to deposit amounts collected in respect of payments made on or in respect of the Contracts or the Leased Vehicles during each Collection Period into the SUBI Collection Account on the Business Day preceding the related Monthly Allocation Date (the related "Deposit Date") rather than when received. Such payments will include, but will not be limited to, (i) Monthly Payments, not including Monthly Payments (or portions thereof) determined by the Servicer to be due in one or more future Collection Periods, (each, a "Payment Ahead") until the Collection Period during which such Payment Ahead is due, (ii) Prepayments, (iii) proceeds from the sale or other disposition of Leased Vehicles under Matured Contracts, including payments for excess mileage and excess wear and tear ("Matured Leased Vehicle Proceeds"), (iv) proceeds received in connection with the sale or other disposition of Leased Vehicles that have been repossessed ("Repossessed Vehicle Proceeds") and (v) other amounts received in connection with the realiza- tion of the amounts due under any Contract (together with Matured Leased Vehicle Proceeds and Repossessed Vehicle Proceeds, "Liquidation Proceeds"). The Servicer will be entitled to reimbursement for expenses incurred in connection with the realization of Matured Leased Vehicle Proceeds ("Matured Leased Vehicle Expenses"), Repossessed Vehicle Proceeds ("Repossessed Vehicle Expenses") and other Liquidation Proceeds (such expenses, together with
14 Matured Leased Vehicle Expenses and Repossessed Vehicle Expenses, "Liquidation Expenses"), to be netted from proceeds or Collections in respect of such payments (including other Liquidation Proceeds), whether or not on deposit in the SUBI Collection Account. The Servicer also will be entitled to reimbursement of certain payments made and expenses and charges incurred by it in the ordinary course of servicing the Contracts (including payments it makes on behalf of the related lessees in connection with the payment of taxes, vehicle registration, clearance of parking tickets and similar items) from Collections with respect to the related Contracts, separate payment thereof by the related lessees or from amounts realized upon the final disposition of the related Leased Vehicle. To the extent such amounts are reimbursed prior to or at the final disposition of the related leased vehicle but remain unpaid by the related lessee, such unreimbursed amounts (together with any unpaid Monthly Payments under the related Contract) will be treated as Matured Leased Vehicle Expenses or Liquidation Expenses, as the case may be, and will therefore reduce Matured Leased Vehicle Proceeds or Liquidation Proceeds, as the case may be. On each Deposit Date, the following additional amounts also will be deposited into the SUBI Collection Account: (i) Advances by the Servicer, (ii) any Maturity Advances by the Transferor and (iii) Reallocation Payments by TMCC (together with, under certain circumstances during the Amortization Period, Reallocation Deposit Amounts) in respect of certain Contracts as to which an uncured breach of certain representations and warranties or certain servicing covenants has occurred. In addition, to the extent set forth herein, amounts will be withdrawn from the Reserve Fund and deposited into the SUBI Collection Account on each Deposit Date to cover certain Loss Amounts or shortfalls in Collections. Thereafter, the Interest Collections (and, with respect to the Deposit Date in any month following the month during which the Amortization Period commences, the Principal Collections) on deposit in the SUBI Col- lection Account in respect of the related Collection Period will be available for allocation or distribution of required amounts to Certificateholders and the Transferor. SEE "Assets of the Trust-- The Accounts; Collections--The SUBI Collection Account". The Certificateholders and the Transferor (as holder of the Transferor Interest) are entitled on any Monthly Allocation Date to be allocated or to receive Matured Leased Vehicle Proceeds up to, but not in excess of, the aggregate of the Residual Values of Leased Vehicles sold or otherwise disposed of from Matured Leased Vehicle Inventory during the related Collection Period. It is possible that in any Collection Period the Servicer could incur Matured Lease Vehicle Expenses that, if reimbursed from collections in respect of Matured Leased Vehicle Proceeds, would result in Net Matured Leased Vehicle Proceeds being less than the sum of the Residual Values of all
15 Leased Vehicles so sold or otherwise disposed. Any such shortfall will result in the realization of Residual Value Loss Amounts. On each Deposit Date on which Matured Leased Vehicle Proceeds received during the related Collection Period net of related Matured Leased Vehicle Expenses incurred during such Collection Period ("Net Matured Leased Vehicle Proceeds") exceed the aggregate Residual Value of the related Leased Vehicles (the "Residual Value Surplus"), such excess will be released to the Transferor and neither the Trust nor the Certificateholders will have any further claim thereto or interest therein. THE RESERVE FUND.................. A Reserve Fund will be maintained with the Trustee for the benefit of the Certificateholders and the Transferor. The Reserve Fund is designed to provide additional funds for the benefit of the Certificateholders in the event that on any Monthly Allocation Date Interest and Principal Collections allo- cable to the Investor Interest for the related Collection Period are insufficient to allocate for or make distributions in respect of, among other things, (i) accrued interest, (ii) overdue interest (with interest thereon at the applicable Interest Rate, to the extent lawful) and (iii) Loss Amounts allocable to the Investor Interest and unreimbursed Certificate Principal Loss Amounts, together with interest thereon at the applicable Certificate Rate (the aggregate amount of such deficiency, the "Required Amount"). A portion of the amounts on deposit in the Reserve Fund (the Class B Interest Reserve Amount) will be available only to cover interest shortfalls with respect to the Class B Certificates, and will not be available to cover interest shortfalls, Loss Amounts or Certificate Principal Loss Amounts allocated to the Class A Certificates. Monies on deposit in the Reserve Fund also will be available to Certificateholders should Collec- tions ultimately be insufficient to pay in full any Class of Certificates at the Stated Maturity Date. The Reserve Fund will not be an asset of the Trust. SEE "Assets of the Trust--The Accounts; Collections-- The Reserve Fund". The Reserve Fund will be created with an initial deposit (the "Initial Deposit") by the Transferor of $30,780,787.98 (2.50% of the Aggregate Net Investment Value as of the Cutoff Date). On each Monthly Allocation Date, the Reserve Fund will be supplemented by Interest Collections and Principal Collections that would otherwise be released to the Transferor after making all required allocations and distributions to Certificateholders, until the amount on deposit therein equals the applicable Specified Reserve Fund Balance. After giving effect to all payments from the Reserve Fund on a Monthly Allocation Date, monies on deposit therein in excess of the Specified Reserve Fund Balance will be paid to the Transferor, free and clear of any interest of the Trust. SEE "Description of the Certificates--Allocations and Distributions on the Certificates--Allocations and Distributions
16 of Collections" and "Assets of the Trust--The Accounts; Collections--The Reserve Fund--The Specified Reserve Fund Balance". Under certain circumstances it is possible that, as of any Monthly Allocation Date, the amount of funds actually on deposit in the Reserve Fund could be less than the Specified Reserve Fund Balance. Moreover, pursuant to the Agreement, the Specified Reserve Fund Balance may, under certain circumstances, be reduced on one or more Monthly Allocation Dates to the extent approved by each Rating Agency. SUBORDINATION..................... The Class B Certificates will be subordinated to the Class A Certificates so that on any Certificate Payment Date (i) interest payments generally will not be made in respect of the Class B Certificates until interest on the Class Certificate Balance of each Class of Class A Certificates and on Certificate Principal Loss Amounts previously allocated thereto has been paid on such Certificate Payment Date and (ii) principal payments generally will not be made in respect of the Class B Certificates until all of the Class A Certificates have been paid in full. To provide additional credit enhancement for the Certificates, payments will not be made to the Transferor in respect of the Transferor Interest on any Monthly Allocation Date until all allocations or distributions required to be made with respect to the Certificates on such date have been made as described under "Description of the Certificates--Allocations and Distributions on the Certificates--Allocations and Distributions of Collections" and the amount on deposit in the Reserve Fund on such Monthly Allocation Date equals the Specified Reserve Fund Balance. SEE "Description of the Certificates--Certain Payments to the Transferor". ADVANCES.......................... On each Deposit Date, the Servicer will be obligated to make an Advance with respect to each outstanding delinquent Contract and certain Contracts as to which payments have been deferred that have not been reallocated to the UTI with an accompanying Reallocation Payment as described herein, provided that the Servicer will not be required to make any Advance to the extent that it determines such Advance may not be ultimately recoverable from Net Liquidation Proceeds or otherwise. Each such Advance will be made by deposit into the SUBI Collection Account of an amount equal to the aggregate amount of Monthly Payments due but not received during the related Collection Period (each, an "Advance"). SEE "Additional Document Provisions--The Servicing Agreement--Collections" and "--Advances". MATURITY ADVANCES................. Pursuant to the Agreement, on the Targeted Maturity Date for any Class of Class A Certificates on which the aggregate of amounts available to be paid as principal thereof (including any amount of Interest Collections or net investment income applied to cover such shortfall on such date) are insufficient to pay in
17 full the related Class of Certificates, the Transferor will have the option to make an advance (a "Maturity Advance") in any amount up to the amount of such shortfall. All such amounts advanced by the Transferor will be reimbursable to the Transferor from the Investor Percentage of Principal Collections on subsequent Monthly Allocation Dates as described herein. SERVICING COMPENSATION............ The Servicer will be entitled to receive a monthly fee with respect to the SUBI Assets (the "Servicing Fee"), payable on each Monthly Allocation Date, equal to one-twelfth of 1% of the Aggregate Net Investment Value as of the first day of the related Collection Period (or, in the case of the first Monthly Allocation Date, as of the Cutoff Date). The Servicer also will be entitled to additional servicing compensation in the form of, among other things, late fees, Deferral Fees and other administrative fees or similar charges under the Contracts. SEE "Additional Document Provisions--The Servicing Agreement--Servicing Compensation". TAX STATUS........................ Andrews & Kurth L.L.P., special federal income tax counsel to the Transferor, is of the opinion that the Class A Certificates will be characterized as indebtedness for federal income tax purposes. Each Class A Certificateholder, by its acceptance of a Class A Certificate, and each Certificate Owner by its acquisi- tion of an interest in the Class A Certificates, will agree to treat the Class A Certificates as indebtedness for federal, state and local income tax purposes. SEE "Material Federal Income Tax Considerations". ERISA CONSIDERATIONS.............. Subject to considerations described below, the Class A-1, Class A-2 and Class A-3 Certificates are eligible for purchase by employee benefit plan investors as of the Closing Date. Under a regulation issued by the Department of Labor, the Trust's assets would not be deemed "plan assets" of an employee benefit plan holding Class A Certificates if certain conditions are met, including that Certificates of each such Class must be held, upon completion of the public offering made hereby, by at least 100 investors who are independent of the Transferor and of one another and that such Certificates are registered under the Exchange Act. Although no assurances can be given, and no monitoring or other measures will be taken to ensure, that such condition will be met, the Underwriters expect that the Class A-1, Class A-2 and Class A-3 Certificates will be held by at least 100 independent investors at the conclusion of the offering. The Transferor anticipates that the other conditions of the regulation will be met. The Transferor has applied to the DOL for the Requested Exemption described herein pursuant to which the Class A-1, Class A-2 and Class A-3 Certificates would be eligible to be held by employee benefit plan investors meeting the conditions specified therein as of the effective date of the Requested Exemption. In the event the Requested Exemption is granted substantially in
18 the form for which such application was made, the Transferor intends to deregister the Class A Certificates under the Exchange Act as soon as permitted by law. As a result, the Class A Certificates may no longer be eligible to be held by Benefit Plans that did not meet the eligibility criteria for the Requested Exemption, even if more than 100 other qualified investors continued to hold securities of each such Class. The Transferor anticipates that all of the conditions of the Requested Exemption that are within its control will be satisfied if and when the Requested Exemption is granted. Accordingly, Benefit Plans intending to purchase any Class A Certificates should confirm that they meet the conditions specified in the Requested Exemption. There can be no assurance that the Requested Exemption will be granted, or the date on which the Requested Exemption might be granted. If the Trust's assets were deemed to be "plan assets" of an employee benefit plan investor (e.g., if the 100 independent investor criterion is not satisfied and any of the conditions upon which the Requested Exemption is contingent are not satisfied), violations of the "prohibited transaction" rules of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), could result and generate excise tax and other liabilities under ERISA and section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"), unless another statutory, regulatory or administrative exemption is available. It is uncertain whether existing exemptions from the "prohibited transaction" rules of ERISA would apply to all transactions involving the Trust's assets if such assets were treated for ERISA purposes as "plan assets" of employee benefit plan investors. SEE "ERISA Considerations". RATINGS........................... It is a condition of issuance that each of Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's Ratings Service, a division of The McGraw-Hill Companies, Inc. ("Standard & Poor's" and, together with Moody's, the "Rating Agencies") rate each Class of Class A Certificates in its highest rating category. The ratings of the Class A Certificates should be evaluated independently from similar ratings on other types of securities. A security rating is not a recommendation to buy, sell or hold a security. The ratings of each Class of Class A Certificates address the likelihood of the payment of principal of and interest on such Certificates in accordance with their terms and may be subject to revision or withdrawal at any time by the assigning Rating Agency. SEE "Ratings of the Class A Certificates".
19 RISK FACTORS RISK OF LIMITED LIQUIDITY FOR THE CLASS A CERTIFICATES; ABSENCE OF SECONDARY MARKET FOR THE CLASS A CERTIFICATES There is currently no market for the Class A Certificates. The Underwriters currently intend to make a market in each Class of Class A Certificates but are under no obligation to do so. There can be no assurance that a secondary market for any Class of Class A Certificates will develop or, if one does develop, that it will provide the related Certificateholders with liquidity of investment or will continue for the life of the related Class of Class A Certificates. RISK OF ABSENCE OF FUNDS FOR REIMBURSEMENT OF CERTAIN LOSSES In the event that Loss Amounts are incurred in respect of the Contracts and the Leased Vehicles during a Collection Period relating to a Monthly Allocation Date during the Revolving Period, an amount equal to the Investor Percentage of such Loss Amounts, to the extent reimbursed out of Collections available therefor or otherwise, will be treated as Principal Collections received during the succeeding Collection Period and will be available for reinvestment in Subsequent Contracts and Subsequent Leased Vehicles. If the related Monthly Allocation Date occurs during the Amortization Period, reimbursements of Loss Amounts will be distributed or allocated to the Class A Certificateholders (pro rata, based on their Class Certificate Balances as of the last day of the related Collection Period, in an amount equal to the Investor Percentage of such Loss Amounts), as a distribution or allocation of principal from, to the extent available therefor, the Investor Percentage of Interest Collections remaining after certain other applications thereof, amounts on deposit in the Reserve Fund available therefor, Transferor Amounts and Class B Available Principal. Loss Amounts (including Certificate Principal Loss Amounts) will be allocated first to the Class B Certificates and then to the Class A Certificates on a pro rata basis as described above. Reimbursements of Loss Amounts realized during the Amortization Period may accelerate the rate of return of principal on the Certificates. To the extent that Principal Collections and reimbursements of Loss Amounts are reinvested in Subsequent Contracts during the Revolving Period, the aggregate Residual Value of the Leased Vehicles as a percentage of the Aggregate Net Investment Value may increase, thereby increasing the exposure of the Certificates of each Class to the risk of being allocated Residual Value Loss Amounts. Furthermore, to the extent that Loss Amounts (including Residual Value Loss Amounts) ultimately exceed the sources available for repayment thereof, such Loss Amounts will be allocated to the Certificates as Certificate Principal Loss Amounts, temporarily or permanently reducing the Class Certificate Balances of each Class to which they are allocated. "Loss Amounts" will include Charged-off Amounts, Residual Value Loss Amounts and Additional Loss Amounts. The "Residual Value Loss Amount" for any Collection Period generally will represent the aggregate net losses on dispositions of Matured Leased Vehicle Inventory, and will be equal to the sum of (a) the aggregate of the Residual Values of all those Leased Vehicles that were included in Matured Leased Vehicle Inventory but that had remained unsold and not otherwise disposed of by the Servicer for at least three full Collection Periods as of the last day of such Collection Period and (b) the excess, if any, of (i) the aggregate of the Residual Values of all Leased Vehicles previously included in Matured Leased Vehicle Inventory that were sold or otherwise disposed of during such Collection Period over (ii) Net Matured Vehicle Proceeds for such Collection Period. SEE "TMCC--Delinquency, Repossession and Loss Data". Residual Value Loss Amounts experienced will depend on a variety of factors, including the effect of TMCC's active encouragement of lessees under lease contracts with remaining terms of less than one year to buy, trade in or refinance the related vehicles, and the supply of, and demand for, vehicles similar to the Leased Vehicles in the used car market. Uncollected payments for excess mileage or excess wear and use also could affect the related proceeds. No assurance can be given as to the likely Residual Value Loss Amounts allocated to the Investor Interest over the life of the Certificates. 20 MATURITY AND PREPAYMENT CONSIDERATIONS No principal will be paid to the Certificateholders until the first Certificate Payment Date that is a Targeted Maturity Date or, following the occurrence of a Monthly Payment Event, each subsequent Certificate Payment Date. During the Revolving Period, Principal Collections will be reinvested in Subsequent Contracts and Subsequent Leased Vehicles. The continuation of the Revolving Period will be dependent upon, among other things, the continued origination and assignment to the Titling Trust of lease contracts and leased vehicles meeting the eligibility criteria described herein in amounts corresponding to Principal Collections and reimbursed Loss Amounts and Certificate Principal Loss Amounts to be reinvested. An unexpectedly high rate of Principal Collections (including Prepayments) received during any Collection Period or a significant decline in the number of qualifying lease contracts available to be assigned to the Titling Trust could result in the occurrence of an Early Amortization Event and the commencement of the Amortization Period prior to the Amortization Date. The retail automobile and light duty truck leasing business in the United States or in one or more of the Trust States may be affected by a variety of social, economic and geographic factors. Economic factors include interest rates, unemployment levels, the rate of inflation and consumer perception of economic conditions. However, it is not possible to determine or predict whether or to what extent economic, geographic or social factors will affect retail automobile and light duty truck leasing in general, or that of the Dealers in particular. As a result, there can be no assurance that the Revolving Period will not terminate prior to the Amortization Date, possibly shortening the final maturities and weighted average lives of and affecting the yields on one or more Classes of Certificates. SEE "Description of the Certificates--Early Amortization Events". The payment, prepayment, loss and liquidation experience with respect to the Contracts, which cannot be predicted, will affect the weighted average lives of each Class of Certificates then outstanding if a Monthly Payment Event occurs, and will affect the weighted average life of any Class of Certificates as to which the related Class Certificate Balance is not reduced to zero on the related Targeted Maturity Date. If on any Monthly Allocation Date during the Amortization Period the amount on deposit in the Reserve Fund is at least equal to the Specified Reserve Fund Balance and the Investor Percentage of Collections exceeds the aggregate of amounts required to be allocated or distributed to Certificateholders as described herein, the related Accelerated Principal Distribution Amount will be allocated or distributed as additional principal to Certificateholders. SEE "Description of the Certificates--Allocations and Distributions on the Certificates--Allocations and Distributions of Collections". A substantial increase in the rate of payments on or in respect of the Contracts and Leased Vehicles (including prepayments and liquidations of the Contracts) after the occurrence of a Monthly Payment Event may shorten the final maturity and weighted average lives of, and may significantly affect the yields on, each then-outstanding Class of Certificates. The rate of payment of principal of the Certificates may also be affected (i) during such period by payment by TMCC of Reallocation Payments (and under certain circumstances during the Amortization Period, Reallocation Deposit Amounts) in respect of Contracts as to which an uncured breach of certain representations and warranties or certain servicing covenants has occurred and (ii) by the exercise by the Transferor of its right to purchase the SUBI Certificate under certain circumstances, thereby retiring the Certificates. SEE "Description of the Certificates--Termination of the Trust; Retirement of the Certificates", "The Contracts--Representations, Warranties and Covenants" and "Additional Document Provisions--The Servicing Agreement--Collections". Each of the Contracts may be prepaid by the related lessee without penalty in full or in part at any time. TMCC actively encourages lessees under lease contracts with remaining terms of less than one year to either buy, trade in or refinance the related leased vehicles prior to their scheduled maturities. TMCC estimates that, of the retail automobile and light duty truck lease contracts in its portfolio that were scheduled to mature during fiscal year 1996 or during the nine-month period ended June 30, 1997, approximately 52% and 49%, respectively, were purchased by the related lessee or a dealer prior to the scheduled maturity date specified in the related lease contract. Such early terminations primarily were due to voluntary prepayments. No assurance can be given that the Contracts will experience the same rate of 21 prepayment or default or any greater or lesser rate than TMCC's historical rate for the retail automobile and light duty truck lease contracts in its portfolio. SEE "Maturity, Prepayment and Yield Considerations". Because the Certificates have Targeted Maturity Dates prior to which principal thereof will not be paid unless a Monthly Payment Event occurs or the Transferor exercises its option to repurchase the SUBI, the weighted average life of any such Class of Certificates will not be reduced by prepayments prior to the occurrence of a Monthly Payment Event. Moreover, there can be no assurance as to whether a Maturity Advance will be made or, if made, will be sufficient to pay in full the Class of Certificates on the related Targeted Maturity Date and, therefore, any such Class may mature significantly later than its Targeted Maturity Date. In addition, earlier collections in respect of interest on, or the Discounted Principal Balance of, the Contracts due to full or partial prepayments may result in increased amounts of collections being held in the Certificateholder's Account, and then invested in Permitted Investments at any given time than would otherwise be the case. Irrespective of the rate of payments on the Contracts, because the Certificateholders generally will receive payments only on Certificate Payment Dates, more collections will be invested in Permitted Investments at any given time than would be the case in a securitization in which all securities are entitled to monthly distributions of interest and principal. Because it is anticipated that such investments will include one or more TMCC Demand Notes, the effect of an increased rate of prepayment will be to expose significant portions of the amounts allocable, payable and distributable to Certificateholders to risk of default by TMCC on such obligations. RISKS ASSOCIATED WITH SEQUENTIAL PAYMENT OF PRINCIPAL ON THE CERTIFICATES In general, the Certificates will be "sequential pay" certificates meaning that no principal payments will be made on the Class A-2 Certificates until the Class A-1 Certificates have been paid in full, no principal payments will be made on the Class A-3 Certificates until the Class A-2 Certificates have been paid in full and no principal payments will be made on the Class B Certificates until the Class A-3 Certificates are paid in full. During the Amortization Period, reimbursements of Loss Amounts will be distributed or allocated to the Certificateholders (first to the Class A Certificates pro rata, based on their Class Certificate Balances as of the last day of the related Collection Period, and then to the Class B Certificates up to the Investor Percentage of such Loss Amounts), as a distribution or allocation of principal from, to the extent available therefor, the Investor Percentage of Interest Collections remaining after certain other applications thereof, amounts on deposit in the Reserve Fund available therefor and Transferor Amounts (and, in the case of the Class A Certificates, from Class B Available Principal). SEE "Description of the Certificates-- Allocations and Distributions on the Certificates--Allocations and Distributions of Collections". Certificate Principal Loss Amounts will be allocated first to the Class B Certificates and then to the Class A Certificates on a pro rata basis as described above. To the extent net proceeds of any sale or other disposition of the SUBI, the SUBI Certificate or other property of the Trust constitute Principal Collections, which may occur under certain circumstances involving an Insolvency Event of the Transferor (as described under "Description of the Certificates--Early Amortization Events"), they will be distributed first, on a pro rata basis, to the Class A Certificateholders based on their respective Class Certificate Balances until the Class A Certificates have been paid in full, and second, to the Class B Certificateholders until the Class B Certificates have been paid in full. Sequential payment of the Certificates is also likely to cause Classes of Certificates that pay later than other Classes to be outstanding during periods when an increasingly large percentage of the Aggregate Net Investment Value will be represented by Residual Values as opposed to unpaid Monthly Payments, thereby increasing the exposure of such Certificates to the risk of being allocated Residual Value Loss Amounts. As a result, Class A Certificates that have lower sequential principal payment priority may be allocated more Loss Amounts (including Residual Value Loss Amounts) and Certificate Principal Loss Amounts than Class A Certificates with higher payment priority as a relative percentage of their respective Initial Certificate Balances, primarily because Loss Amounts and Certificate Principal Loss Amounts will be 22 allocated thereto on each Monthly Allocation Date based on the outstanding Class Certificate Balances thereof as of the last day of the related Collection period, which will be relatively higher as the Class Certificate Balances of the higher priority Class A Certificates decrease during the Amortization Period. However, any portion of Principal Collections comprised of the Investor Percentage of the net proceeds of any sale or other disposition of the SUBI Interest, the SUBI Certificate or other property of the Trust (which may occur under certain circumstances involving an Insolvency Event with respect to the Transferor as described under "Description of the Certificates--Early Amortization Events") will not be distributed to the Class A Certificateholders sequentially, but instead will be distributed to the holders of each Class of Class A Certificates pro rata, based on the respective Class A Certificate Balances, until all Class A Certificates have been paid in full, and then to the Class B Certificateholders. RISKS ASSOCIATED WITH GEOGRAPHIC, ECONOMIC AND OTHER FACTORS The Dealers which originated and will originate the Contracts are located in California, Florida, Michigan, Ohio and Pennsylvania (the "Trust States") and the Contracts and Leased Vehicles generally are and will be located in the Trust States. However, a significant number of lessees may live in or relocate to other states and may register and/or operate Leased Vehicles in other states. For a breakdown of the percentage of Initial Contracts originated in each of the Trust States, see "The Contracts--Characteristics of Contracts--Distribution of the Initial Contracts by State". Due to the geographic concentration of Contracts in the Trust States, adverse economic conditions in one or more of the Trust States may have a significant impact on the performance of the SUBI Assets. Approximately 58% of the Initial Contracts, based on outstanding Principal Balance as of the Cutoff Date, were originated in the State of California. TMCC's loss experience for retail automobile and light-duty truck lease contracts originated by branches serving California has been an average of approximately 60% higher than TMCC's loss experience with respect to its entire lease contract portfolio over the past five years. However, TMCC's loss experience for lease contracts originated through branches serving all of the Trust States considered as one pool over the same period has been only slightly higher than its loss experience with respect to its entire lease contract portfolio. Branches serving each Trust State also serve other states that are not Trust States, and therefore information available and provided herein with respect to loss experience for the Trust States is influenced by the inclusion of contracts originated in states other than the Trust States, but serviced by a branch that also serves the Trust States (although such contracts represent a relatively small percentage of total contracts serviced by such branches). Economic factors such as unemployment, interest rates, the rate of inflation and consumer perceptions of the economy may affect the rate of prepayment and defaults on the Contracts and the ability to sell or otherwise dispose of Leased Vehicles relating to Matured Contracts for an amount at least equal to their respective Residual Values. These economic factors, as well as other factors such as consumer perceptions of used vehicle values, also may affect the ability to realize the Residual Values of Leased Vehicles upon sale. RISKS ASSOCIATED WITH VEHICLES RETURNED AT THE TERMINATION OF THE LEASE The number of leased vehicles returned to TMCC (as opposed to the number being purchased by the related lessee or a dealer) at the termination of the related lease contracts as a percentage of the number of leased vehicles scheduled to terminate during the related period (the "Full Term Ratio") can be affected by a variety of factors including new and used car markets which may influence the related vehicles' market values at the related termination date relative to their contractual residual values, the duration of the lease (leased vehicles that have shorter term leases have a greater likelihood of being returned rather than purchased) and other factors. TMCC's Full Term Ratio has generally increased during the year ended September 30, 1996 as compared to the same period for the previous year and again for the nine month period ended June 30, 1997, and is expected to increase in the future. SEE "TMCC's Leasing Operations-- 23 Delinquency, Repossession and Loss Data". A higher rate of return at the termination of a lease exposes the lessor to a higher risk of loss on such vehicles since the related vehicle will not be purchased by the lessee or a dealer and must be disposed of through means that may result in a purchase price which may be lower than the related residual value. RISKS ASSOCIATED WITH CONCENTRATIONS OF VEHICLE TYPES The Full Term Ratio for Lexus vehicles has increased for each of the past five years, and has historically been significantly higher than the Full Term Ratio for Toyota leased vehicles. Of the Lexus leased vehicles scheduled to terminate during the nine months ended June 30, 1997, 41.4% were returned to TMCC. The Full Term Ratio for Toyota leased vehicles has generally decreased for each of the past five years, but increased to 10.3% for the nine months ended June 30, 1997. SEE "TMCC's Leasing Operations-- Delinquency, Repossession and Loss Data". A higher Full Term Ratio exposes the lessor to a higher risk of loss on such vehicles since the related vehicles will not have been purchased by the related lessees or dealers and must be disposed of through means that may result in purchase prices which may be lower than the related residual value. Although approximately 19.27% of the leased vehicles in TMCC's entire portfolio as of June 30, 1997 were Lexus vehicles, only approximately 12.47% of the Initial Contracts relate to Lexus leased vehicles, based on number of vehicles. The used car market for any particular model type could be adversely affected by factors not affecting other model types, such as changes in consumer tastes or discovery of defects in respect of such model type. TMCC tracks twenty-five model types in its lease portfolio, of which twenty-one model types initially will be included as SUBI Assets. By number of vehicles, the Camry, Corolla, 4Runner and Tacoma pick-up represent approximately 26.4%, 15.6%, 11.1% and 8.2%, respectively, of the Initial Leased Vehicles as compared to approximately 27.1%, 16.2%, 8.4% and 3.6%, respectively, of leased vehicles included in TMCC's entire lease portfolio as of June 30, 1997. Any such adverse change with respect to a specific model type could result in less proceeds upon the liquidation or other disposition of Leased Vehicles of such model type, and therefore could result in increased Residual Value Losses. RISKS ASSOCIATED WITH CONSUMER PROTECTION LAWS Numerous federal and state consumer protection laws, including the federal Consumer Leasing Act of 1976 and Regulation M promulgated by the Board of Governors of the Federal Reserve System, impose requirements upon lessors and servicers of retail lease contracts such as the Contracts. Each of California and Florida have enacted comprehensive vehicle leasing statutes that, among other things, regulate the disclosures to be made at the time a vehicle is leased. These laws apply to the Titling Trust as the lessor under the Contracts and may also apply to the Trust as owner of the SUBI Certificate. Failure by the Titling Trust or the Servicer to comply with such requirements may give rise to liabilities on the part of the Titling Trust, and enforcement of the Contracts by the Titling Trust may be subject to set-off as a result of such noncompliance. Many states, including each of the Trust States, have adopted Lemon Laws that provide vehicle users certain rights in respect of substandard vehicles. A successful claim under a Lemon Law could result in, among other things, the termination of the Contract relating to a substandard Leased Vehicle and/or require the refund of all or a portion of payments previously paid thereon. TMCC will make representations and warranties that each Contract complies with all requirements of law in all material respects. If any such representation and warranty proves incorrect, has certain material adverse effects and is not timely cured, TMCC will be required to make a Reallocation Payment (together with, under certain circumstances during the Amortization Period, Reallocation Deposit Amounts) into the SUBI Collection Account and reallocate the related Contract and Leased Vehicle out of the SUBI, as described under "The Contracts--Representations, Warranties and Covenants" and "Description of the Certificates--Reallocation Payments and Reallocation Deposit Amounts". SEE "Certain Legal Aspects of the Contracts and the Leased Vehicles--Consumer Protection Laws". 24 RISKS ASSOCIATED WITH ERISA LIABILITIES It is possible that the Titling Trust Assets, including the SUBI Assets, could become subject to liens in favor of the Pension Benefit Guaranty Corporation to satisfy unpaid ERISA obligations of any member of an "affiliated group" that includes TMCC, TMS, Toyota Leasing, Inc. and their respective affiliates. However, the Transferor believes that the likelihood of any such liability being asserted against the Titling Trust Assets, including the SUBI Assets, or being successfully pursued is remote. In particular, the Transferor believes that the Titling Trust should, as a legal matter, be treated as a distinct entity separate and apart from such affiliated group, under ERISA's "common control" provisions. All such plans maintained by such affiliated group historically have had assets that significantly exceeded their liabilities. However, no assurance can be given that any of these conditions will continue in the future. RISKS ASSOCIATED WITH VICARIOUS TORT LIABILITY WITH RESPECT TO LEASED VEHICLES Although the Titling Trust will own the Leased Vehicles and the Trust will have an interest therein, they will be controlled and operated by the related lessees and their invitees. State laws differ as to whether anyone suffering injury to person or property involving a leased vehicle may bring an action against the owner of the vehicle merely by virtue of that ownership. To the extent that applicable state law permits such an action, the Titling Trust and the Titling Trust Assets, including the SUBI Assets, may be subject to liability to such an injured party. However, the laws of most states, including the Trust States, either do not permit such suits or limit the lessor's liability to the amount of any liability insurance that the lessee was required under applicable law to maintain (or in the case of Florida, the lessor was permitted to maintain), but failed to maintain. Notwithstanding the foregoing, in the event that vicarious liability is imposed on the Titling Trust as owner of a Leased Vehicle and the coverage provided by the Contingent and Excess Liability Insurance Policies is insufficient to cover such loss, including in certain circumstances with respect to a leased vehicle that is an Other SUBI Asset or a UTI Asset, investors in the Class A Certificates could incur a loss on their investments. SEE "Certain Legal Aspects of the Contracts and the Leased Vehicles-- Vicarious Tort Liability", "Certain Legal Aspects of the Titling Trust--Structural Considerations--Allocation of Titling Trust Liabilities", "--Third-Party Liens on SUBI Assets" and "Assets of the Trust--The Contingent and Excess Liability Insurance Policies". All of the Contracts will contain provisions requiring the lessees to maintain levels of insurance satisfying applicable state law. Such policies may lapse, be terminated or otherwise not be maintained properly by a lessee. It is the practice of TMCC not to obtain insurance on behalf of and at the expense of the related lessee. TMCC's central insurance tracking unit, which monitors compliance with such lease contract provisions, will initiate follow-up procedures, including the telephone and mail contact with the related lessee, upon being alerted by the tracking system that any lessee has not obtained or is not maintaining required insurance. Typically, if such default is not cured within 70 days from the date TMCC's central insurance tracking unit becomes aware of such default, the related lease contract is forwarded to the appropriate TMCC branch for follow-up handling, including possible repossession of the related Leased Vehicles if the related lessee does not timely obtain a satisfactory replacement policy. Moreover, the policies issued with respect to a significant number of the Initial Contracts name TMCC rather than the Titling Trust as additional loss payee. If a primary insurer makes payment under such a policy to TMCC, TMCC will apply such amounts or forward such amounts to the Titling Trust for application as appropriate. If a primary insurer failed to make payments under a policy to the lessee and also to TMCC and the Titling Trust, losses could be experienced by the Certificateholders. However, the Transferor has been advised by the primary provider of the Contingent and Excess Liability Policies described herein that such provider will not refuse any claim under the Contingent and Excess Liability Policies solely because a primary policy names TMCC or an approved TMCC affiliate, rather than the Titling Trust, as additional loss payee (although under such circumstances, if the primary insurer denies a claim on such basis, a deductible of $250,000 (rather than the standard deductible of $125,000) will be payable by TMCC, as to which TMCC will indemnify the Trust). 25 Actions by third parties might exceed the limits of the policies maintained by lessees or claims might arise based on legal theories other than negligence, such as a product defect or improper vehicle preparation prior to the origination of the related lease contract that are not covered thereby. The Titling Trust will be the beneficiary of the Contingent and Excess Liability Insurance Policies which will cover certain claims in excess of the limits of the lessees' policies. Such Contingent and Excess Liability Insurance Policy will be subject to significant per occurrence deductibles in respect of which TMCC will indemnify the Trust. SEE "Assets of the Trust--The Contingent and Excess Liability Insurance Policies". Although the insurance coverage required to be maintained by the Titling Trust is substantial, in the event that all such insurance coverage were exhausted and/or TMCC did not satisfy its indemnity obligations such that damages were assessed against the Titling Trust, various claims could be imposed against the Titling Trust Assets, including the SUBI Assets. If any such claims are imposed against any SUBI Assets or, in certain limited circumstances, any Other SUBI Assets or UTI Assets, investors in the Class A Certificates could incur a loss on their investment. SEE "Certain Legal Aspects of the Titling Trust-- Structural Considerations-- Allocation of Titling Trust Liabilities", "--Third-Party Liens on SUBI Assets" and "Certain Legal Aspects of the Contracts and the Leased Vehicles--Vicarious Tort Liability". RISKS ASSOCIATED WITH POSSIBLE FUTURE INSOLVENCY OF TMCC; SUBSTANTIVE CONSOLIDATION WITH TMCC The Transferor has taken steps in structuring the transactions contemplated hereby intended to ensure that the voluntary or involuntary application for relief under the United States Bankruptcy Code or similar applicable state laws ("Insolvency Laws") by TMCC will not result in the consolidation of the assets and liabilities of the Transferor, the Titling Trust or the Trust with those of TMCC. With respect to the Transferor, these steps include its creation as a separate, special purpose finance subsidiary of TMCC pursuant to articles of incorporation containing certain limitations (including the requirement that it must have at all times at least one "independent director" and restrictions on the nature of its businesses and on its ability to commence a voluntary case or proceeding under any Insolvency Law without the affirmative vote of a majority of its directors including the independent director). Reallocation Payments or deposits of Reallocation Deposit Amounts made by TMCC and unreimbursed Advances made by TMCC, as Servicer, may be recoverable by TMCC as debtor-in-possession or by a creditor or a trustee in bankruptcy of TMCC as a preferential transfer from TMCC if such payments were made within one year prior to the filing of a bankruptcy case in respect of TMCC. In addition, the insolvency of TMCC could result in the replacement of TMCC as Servicer, which could result in a temporary interruption of payments on the Certificates. If prior to the Amortization Date a conservator, receiver or bankruptcy trustee were appointed by the Transferor, or if certain other events relating to the bankruptcy or insolvency of the Transferor were to occur (each, an "Insolvency Event"), the Amortization Period would commence and the Trustee may, and upon receipt of written instructions from holders of Certificates evidencing Voting Interests of not less than 51% of the Class A Certificates (voting together as a single class) or 51% of the Class A Certificates and the Class B Certificates (voting together as a single class) will, attempt to sell the SUBI, the SUBI Certificate and the other property of the Trust. The consummation of such sale would result in an early termination of the Trust and a pro rata loss to the Class A Certificateholders if the Investor Percentage of the net proceeds of such sale were insufficient to pay in full the Class A Certificate Balance, together with any unreimbursed Certificate Principal Loss Amounts, with accrued and unpaid interest thereon at the related Certificate Rates, respectively. 26 On the Closing Date, Andrews & Kurth L.L.P., special counsel to the Transferor and TMCC, will render an opinion based on a reasoned analysis of analogous case law (although there is no precedent based on directly similar facts) subject to certain facts, assumptions and qualifications specified therein, that, under applicable statutes and precedent, if TMCC were to become a debtor in a case under the Bankruptcy Code, it would not be a proper exercise by a federal bankruptcy court of its equitable discretion to disregard the separate legal forms so as to substantively consolidate the assets and liabilities of the Transferor, the Titling Trust or the Trust with those of TMCC. In addition, on the Closing Date, Andrews & Kurth L.L.P. will render an opinion to the effect that (i) the transfer of the SUBI Certificate by the Transferor to the Trust constitutes a sale of the SUBI Certificate and the SUBI Assets evidenced thereby, subject in each case to the rights of the Transferor as the holder of the Transferor Interest, or (ii) if such transfer does not constitute a sale, then the Agreement creates a valid perfected security interest, for the benefit of Certificateholders, in the Transferor's right, title and interest in the SUBI Certificate. SEE "Certain Legal Aspects of the Titling Trust--Insolvency Related Matters". The Titling Trust may be subject to the Insolvency Laws, and claims against the Titling Trust Assets could have priority over the beneficial interest therein represented by the SUBI. In addition, claims of a third party against the Titling Trust Assets, including the SUBI Assets, to the extent such claims are not covered by insurance, would take priority over the holders of beneficial interests in the Titling Trust, such as the Trustee. SEE "Assets of the Trust--The Contingent and Excess Liability Insurance Policies" and "Certain Legal Aspects of the Contracts and Leased Vehicles--Vicarious Tort Liability". RISKS ASSOCIATED WITH LEGAL PROCEEDINGS RELATING TO LEASED VEHICLES The Transferor is not a party to any legal proceeding. Neither the Titling Trust, nor the Titling Trustee on behalf of the Titling Trust, has been named as a defendant in any material legal proceeding. TMCC is a party to, and is vigorously defending, several legal proceedings, all of which it believes constitute ordinary routine litigation incidental to the business and activities conducted by TMCC. Certain of the actions naming TMCC are or purport to be class action suits. The amount of liability on pending claims and actions as of the date of this Prospectus were not determinable; however, in the opinion of management of TMCC, the ultimate liability resulting therefrom should not have a material adverse effect on TMCC's consolidated financial position or results of operations, or on the Titling Trust Assets, the SUBI or on the Dealers' or the Titling Trust's ability to originate sufficient new leases to satisfy reinvestment obligations under the Titling Trust Agreements, the SUBI Supplement and the Servicing Supplement. However, there can be no assurance in this regard. THE TRUST AND THE SUBI GENERAL The Trust and the Certificateholders will have no interest in the UTI, any Other SUBI or any Titling Trust Assets evidenced by the UTI or any Other SUBI. Payments made on or in respect of the Titling Trust Assets not represented by the SUBI will not be available to make payments on the Certificates. SEE "The Titling Trust". THE TRUST Pursuant to the Agreement, the Transferor will establish the Trust by transferring and assigning the SUBI and the SUBI Certificate (excluding proceeds of the Residual Value Insurance Policy) to the Trustee in exchange for the Certificates and a certificate evidencing the Transferor Interest. The property of the Trust will primarily include (i) the SUBI, which evidences a beneficial interest in certain specified Titling Trust Assets (i.e., the SUBI Assets), (ii) such amounts as from time to time may be held in the SUBI Collection Account and the Certificateholders' Account, and investments of amounts on deposit in the SUBI Collection Account and (iii) the Trustee's rights as a third-party beneficiary to the Servicing 27 Agreement and the SUBI Supplement. The Trust also will have a beneficial interest in such amounts as from time to time may be held in the SUBI Collection Account and investments of such amounts. Because of the administrative difficulty and expense associated with retitling leased vehicles, including federal and state regulatory requirements to obtain odometer readings and to pay vehicle transfer fees and taxes, the Trust will only have an interest in the portion of the SUBI transferred to it by the Transferor, and will not have a direct ownership interest in any Leased Vehicles. Except for the protection provided to the Class A Certificateholders by the Reserve Fund, the Class A Certificateholders ultimately will have to look to payments made on or in respect of the Contracts and the Leased Vehicles (including under certain related insurance policies) to make distributions on the SUBI Certificate, which in turn will be distributed to the Certificateholders. In such event, certain factors, such as the fact that the Trust will not have a direct ownership interest in the Contracts or the Leased Vehicles or a perfected security interest in the Leased Vehicles (which will be titled in the name of the Titling Trust) may limit the amount realized to less than the amount due from the related lessees. Investors in the Class A Certificates may thus be subject to delays in payment and may incur losses on their investment in the Class A Certificates as a result of defaults or delinquencies by lessees and because of depreciation in the value of the related Leased Vehicles. SEE "Certain Legal Aspects of the Titling Trust--Structural Considerations", "Assets of the Trust--The Accounts; Collections--The Reserve Fund", "Additional Document Provisions--The Servicing Agreement--Insurance on Leased Vehicles" and "Certain Legal Aspects of the Contracts and the Leased Vehicles". THE SUBI The SUBI will be issued pursuant to the Series 1997-A Supplement to the Titling Trust Agreement (the "SUBI Supplement") and will evidence a beneficial interest in certain specified Titling Trust Assets allocated to the SUBI consisting of (i) the Contracts, the Leased Vehicles and all proceeds or payments related thereto received or due on or after the related Cutoff Date; (ii) certain monies in the Reserve Fund, and (iii) all other related Titling Trust Assets allocated to the SUBI, including (A) the SUBI Collection Account (to the extent of funds therein relating to the Contracts and Leased Vehicles), (B) the right to receive payments made to TMCC, the Titling Trust or the Titling Trustee under certain insurance policies relating to the Contracts, the related lessees or the Leased Vehicles, (C) the right to receive the proceeds of any Dealer repurchase obligations in respect of the Contracts or Leased Vehicles, and (D) all proceeds of the foregoing. During the Revolving Period, Principal Collections and reimbursement of Loss Amounts will be reinvested in Subsequent Contracts and Subsequent Leased Vehicles which will become SUBI Assets at the time of such reinvestment. Pursuant to the SUBI Supplement, on the Closing Date the Titling Trustee will issue the SUBI Certificate, which will evidence the SUBI, to the Transferor, and the Transferor will transfer and assign the SUBI Certificate to the Trustee pursuant to the Agreement. THE TITLING TRUST GENERAL The Titling Trust is a Delaware business trust formed as of October 1, 1996 pursuant to the Titling Trust Agreement. The primary business purpose of the Titling Trust is to take assignments of and serve as holder of title to substantially all of the lease contracts and the related leased vehicles originated by the Dealers beginning on dates prior to the execution of the SUBI Supplement. Pursuant to the Servicing Agreement, TMCC will service the lease contracts included in the Titling Trust Assets, including the Contracts. SEE "Additional Document Provisions--The Trust Agreement" and "--The Servicing Agreement" and "Certain Legal Aspects of the Titling Trust--The Titling Trust". Except as otherwise described under "Additional Document Provisions--The Titling Trust Agreement", pursuant to the Titling Trust Agreement the Titling Trust has not and will not (i) issue interests 28 therein or securities thereof other than the SUBI, the SUBI Certificate, Other SUBIs representing divided interests in Other SUBI Assets and certificates (the "Other SUBI Certificates") representing Other SUBIs or portions thereof, and one or more certificates (the "UTI Certificates") representing the UTI or portions thereof; (ii) borrow money (except from TMCC or as described in (vi) below) in connection with funds used to acquire lease contracts and the related leased vehicles; (iii) make loans; (iv) invest in or underwrite securities, other than Permitted Investments or as otherwise permitted by the Titling Trust Agreement or the SUBI Supplement; (v) offer securities in exchange for property (other than the SUBI Certificate, the Other SUBI Certificates and the UTI Certificates); or (vi) repurchase or otherwise reacquire its securities except in connection with financing or refinancing the acquisition of lease contracts and the related leased vehicles or as otherwise permitted by each such financing or refinancing. The Titling Trust will not be permitted to acquire lease contracts other than through the Dealers. The Titling Trust Agreement will permit the Titling Trust, in the course of its activities, to incur certain liabilities relating to its assets other than the SUBI Assets, or relating to its assets generally, and to which, in certain circumstances, the SUBI Assets may be subject. SEE "Certain Legal Aspects of the Titling Trust--Structural Considerations", "-- Allocation of Titling Trust Liabilities" and "--Third-Party Liens on SUBI Assets". However, the Titling Trust Agreement will require the holders of Other SUBI Certificates and UTI Certificates to waive any claim that they might otherwise have with respect to the SUBI Assets and to fully subordinate any claims to the SUBI Assets in the event that this waiver is not given effect. Similarly, by virtue of holding Certificates or a beneficial interest in the Certificates, Certificateholders and Certificate Owners will be deemed to have waived any claim that they might otherwise have with respect to Other SUBI Assets and the UTI Assets and to subordinate their interests therein. ALLOCATION OF TITLING TRUST LIABILITIES The Titling Trust Assets may be comprised of several portfolios of assets other than the SUBI Assets, including portfolios of Other SUBI Assets and the remaining portfolio of UTI Assets. The Titling Trust Agreement permits the Titling Trust, in the course of its activities, to incur certain liabilities relating to its assets other than the SUBI Assets, or relating to its assets generally, and to which, in certain circumstances, the SUBI Assets may be subject. Pursuant to the Titling Trust Agreement, as among the beneficiaries of the Titling Trust, liabilities relating to a particular Titling Trust Asset will be allocated to and charged against the allocated portfolio of Titling Trust Assets to which it belongs. Titling Trust liabilities that are incurred with respect to the Titling Trust Assets generally will be borne pro rata among all portfolios of Titling Trust Assets in proportion to the value of the lease contracts and vehicles in each portfolio. The Titling Trustee and the beneficiaries of the Titling Trust (including the Trustee and the Certificateholders) will be bound by this allocation. In particular, the Titling Trust Agreement will require the holders from time to time of Other SUBI Certificates and any UTI Certificates to waive any claim that they might otherwise have with respect to the SUBI Assets and to fully subordinate any claims to the SUBI Assets in the event that this waiver is not given effect. Similarly, by virtue of holding Certificates or a beneficial interest in the Certificates, Certificateholders and Certificate Owners will be bound by this allocation. Similarly, by virtue of holding Certificates or a beneficial interest in the Certificates, Certificateholders and Certificate Owners will be deemed to have waived any claim that they might otherwise have with respect to Other SUBI Assets and the UTI Assets. THE TITLING TRUSTEE The Titling Trustee is a wholly owned, special purpose subsidiary of U.S. Bank that was organized in 1996 solely for the purpose of acting as Titling Trustee. U.S. Bank, as Trust Agent, serves as agent for the Titling Trustee to perform certain functions of the Titling Trustee pursuant to the Titling Trust Agreement. The Titling Trust Agreement provides that in the event that U.S. Bank no longer can be the Trust Agent, a designee of TMCC (which may not be TMCC or any affiliate thereof) will have the option to purchase the stock of the Titling Trustee for a nominal amount. If TMCC's designee does not timely exercise this option, then the Titling Trustee will appoint a new trust agent, and that new trust agent (or its designee) will next 29 have the option to purchase the stock of the Titling Trustee. If none of these options is timely exercised, U.S. Bank may sell the stock of the Titling Trustee to another party. PROPERTY OF THE TITLING TRUST The property of the Titling Trust consists of (i) fixed rate retail closed-end lease contracts originated in the Trust States and assigned to the Titling Trust by the Dealers since November 1996, all rights thereunder including the right to receive proceeds of Dealer repurchase obligations under the related Dealer agreement, and all monies due from lessees thereunder; (ii) the automobiles and light duty trucks leased pursuant thereto and all proceeds thereof; (iii) the rights to proceeds from physical damage, credit life, disability and all other insurance policies, if any, covering the lease contracts, the related lessees or the leased vehicles, including, but not limited to, the Contingent and Excess Liability Insurance Policies; (v) all security deposits with respect to such lease contracts (to the extent applied to cover excess wear and tear charges or treated as Liquidation Proceeds as described herein and as provided in the contracts), and (vi) all proceeds of the foregoing (collectively, the "Titling Trust Assets"). From time to time after the date of this Prospectus, TMCC will cause Dealers to originate additional retail closed-end lease contracts and assign them to the Titling Trust and, as described below, title the related leased vehicles in the name of the Titling Trust. CONTRACT ORIGINATION; TITLING OF LEASED VEHICLES All lease contracts originated by the Dealers and assigned to the Titling Trust have been, or will be, underwritten by TMCC personnel using the underwriting criteria described under "TMCC--Lease Contract Underwriting Procedures". In connection with the origination of each lease contract, the Titling Trust will be listed as the owner of the related leased vehicle on the related certificate of title. Liens will not be placed on such certificates of title, and new certificates of title will not be issued, to reflect the interest of the Trustee, as holder of the SUBI Certificate, in the Leased Vehicles. Pursuant to agreements between the Titling Trust and the Dealers, each Dealer is obligated, after origination of lease contracts of the Titling Trust, to repurchase such lease contracts which do not meet certain representations and warranties made by such Dealer. These representations and warranties relate primarily to the origination of the lease contracts and the titling of the related leased vehicles, and do not typically relate to the creditworthiness of the related lessees or the collectibility of such lease contracts. The Dealer agreements do not generally provide for recourse to the Dealer for unpaid amounts in respect of a defaulted lease contract, other than in connection with the breach of such representations and warranties. The rights of the Titling Trust to receive proceeds of such Dealer repurchase obligations will constitute Titling Trust Assets (and SUBI Assets, to the extent they relate to the Contracts and Leased Vehicles), although the related Dealer agreements will not constitute Titling Trust Assets. USE OF PROCEEDS The net proceeds from the sale of the Class A Certificates (i.e., the proceeds of the public offering of the Class A Certificates minus expenses relating thereto) will be applied by the Transferor to purchase the SUBI Certificate and to make the Initial Deposit into the Reserve Fund. THE TRANSFEROR The Transferor is a wholly owned, special purpose finance subsidiary of TMCC and was incorporated under the laws of California in April 1997. TMCC may not transfer its ownership interest in the Transferor except to an affiliate of TMCC so long as any financings involving interests in the Titling Trust (including the transaction described herein) are outstanding. TMCC is the sole shareholder of the Transferor. The principal office of the Transferor is located at 19001 South Western Avenue, Torrance, California 90509 and its telephone number is (310) 787-1310. 30 The Transferor was organized solely for the purpose of acquiring interests in the SUBI and the Other SUBIs, causing the issuance of certificates similar to the Certificates and engaging in related transactions. The certificate of incorporation of the Transferor limits its activities to the foregoing purposes and to any activities incidental to and necessary for such purposes. TMCC Toyota Motor Credit Corporation ("TMCC") was incorporated in California on October 4, 1982, and commenced operations in May 1983. At December 31, 1996, TMCC had 34 branches in various locations in the United States and one branch in the Commonwealth of Puerto Rico. In addition to the Transferor, TMCC has four wholly owned subsidiaries engaged in the insurance business, a wholly owned subsidiary that provides retail and wholesale financing and certain other financial services to authorized Toyota and Lexus vehicle dealers and their customers in Puerto Rico and a wholly owned subsidiary through which TMCC securitizes retail installment sales contracts. TMCC's primary business is providing retail leasing, retail and wholesale financing and certain other financial services to authorized Toyota and Lexus vehicle and Toyota industrial equipment dealers and their customers in the United States (excluding Hawaii) and Puerto Rico. TMCC is a wholly owned subsidiary of TMS, which is primarily engaged in the wholesale distribution of automobiles, light duty trucks, industrial equipment and related replacement parts and accessories throughout the United States (excluding Hawaii). Substantially all of TMS's products are either manufactured by its affiliates or are purchased from TMC or its affiliates. As of September 30, 1996, September 30, 1995 and September 30, 1994, TMCC had approximately 624,000, 438,000 and 387,000 retail lease contracts outstanding (including retail lease contracts that were assigned to the Titling Trust and are still being serviced by TMCC), respectively. Aggregate net outstanding principal balances of retail lease contracts at such dates, were approximately $12.0 billion, $9.4 billion and $7.6 billion, respectively. The principal executive offices of TMCC are located at 19001 South Western Avenue, Torrance, California and its telephone number is (310) 787-1310. TMCC'S LEASING OPERATIONS LEASE CONTRACT UNDERWRITING PROCEDURES TMCC's underwriting standards are intended to evaluate a prospective lessee's credit standing and ability to make payments. Each prospective lessee is required by the Dealer to complete a credit application on a form prepared or approved by TMCC. As part of the description of the applicant's financial condition, the applicant is required to provide information demonstrating, among other things, employment history, residential status, bank account information, annual income and credit references. The Dealer then transmits the completed application to the appropriate branch office. Upon receipt, income and employment data generally are verified by a credit investigator within the branch office and certain data is obtained through an independent credit bureau report that is combined with data from the application and certain calculations made by a credit analyst within the branch office. Such data is entered into a centralized computer network (owned and maintained by TMCC) and weighted by a statistically validated credit scoring process which "scores" the application with the use of a scorecard. The scorecard enables TMCC to review an application and establish the probability that the proposed lease contract will be paid in accordance with its terms. The credit scores rank-order applications according to credit risk, which is the likelihood that the lessee will make all payments when due. TMCC actively monitors and regulates the volume of lease contracts that it acquires of any given credit grade in its efforts to maintain a portfolio it deems to contain an appropriate mix. 31 INSURANCE Each lease contract requires the lessee to maintain automobile bodily injury and property damage liability insurance which must name TMCC or, with respect to the Contracts, the Titling Trust, as an additional insured. Each lease contract further requires the lessee to maintain (all risks) comprehensive and collision insurance covering damage to the leased vehicle and naming TMCC or, with respect to the Contracts, the Titling Trust, as loss payee. COLLECTION, REPOSSESSION AND DISPOSITION PROCEDURES Collection efforts are performed through the applicable branch office. TMCC considers a lease to be past due when a borrower fails to make at least 90% of a scheduled monthly payment by the due date. TMCC automatically reviews all past due accounts for action every three working days. The account is placed in an on-line collection system for branch office follow up (prioritized by degree of delinquency) if payment is not received by the date such payment is 26 days past due. Occasionally, situations occur in the collection process when a lessee has become delinquent and is willing but unable to bring the related account current (i.e., where a deferred payment is deemed reasonably likely to be followed by subsequent performance). In this situation, at the discretion of collection department management, but subject to extensive guidelines, one or more payments under the lease contract may be deferred, provided that the lessee pays a deferral fee (each, a "Deferral Fee"). Deferral Fees relating to the Contracts will not be deposited into the SUBI Collection Account, but will be treated as additional servicing compensation. The Servicing Agreement will provide that a Contract may not be deferred more than four times in the aggregate, and that the Servicer will be required to make Advances with respect to the related Contracts as set forth herein. Deferral of payments has the practical effect of extending the maturity date of a lease contract. The Servicing Agreement will provide that Advances be made with respect to Contracts as to which payments are deferred to the extent such deferrals would diminish the amount of Collections received in connection therewith relative to the originally scheduled Monthly Payments. The Servicing Agreement will also provide for the reallocation to the UTI from the SUBI (accompanied by an appropriate Reallocation Payment by TMCC) of each Contract as to which more than four deferrals are made or as to which, through deferrals or extensions, the maturity date is extended beyond the last day of the Collection Period relating to the Stated Maturity Date. Upon any such reallocation, such Contract and the related Leased Vehicle and other related assets and rights will be UTI Assets and will no longer constitute SUBI Assets. SEE "Additional Document Provisions--The Servicing Agreement--Collections". Occasionally a lessee requests an extension of a lease contract for one or more months during the period of time between the original specified maturity of such lease and the time such lessee negotiates a new lease contract or sales contract with respect to a different vehicle. Any such extension is effected by the modification of the related lease contract to provide for an additional number of Monthly Payments with a continuation of the appropriate lease charge and a corresponding reduction in the related Residual Value to reflect receipt of additional amortizing payments. The Servicing Agreement will require that Contracts not be extended by more than twelve months in the aggregate or to a date later than the last day of the month immediately preceding the month in which the Stated Maturity Date in respect of the Class B Certificates occurs. Generally, TMCC collectors make every effort to preserve a lease as a performing lease. However, if a delinquency cannot be satisfactorily resolved through deferrals or otherwise, the decision to repossess a leased vehicle will be made before a payment is more than 60 days past due. Lessees are typically notified on the day of or within two days after repossession of any right they may have under applicable state law to redeem their vehicles. TMCC attempts to sell all repossessed vehicles within 30 days of repossession. TMCC disposes of off-lease and repossessed vehicles not purchased by the related lessee or the dealer to whom the vehicle is returned through regional automobile auctions. 32 DELINQUENCY, REPOSSESSION AND LOSS DATA The following tables set forth certain delinquency, repossession and loss data with respect to TMCC's entire retail automobile and light duty truck lease contract portfolio, including those Contracts originated in the Trust States during the periods shown, as of and for the periods shown. The data presented in the following tables are for illustrative purposes only. Delinquency, repossession and loss experience may be influenced by a variety of economic, social, geographic and other factors. There is no assurance that the Trust's delinquency, repossession and loss experience with respect to its retail automobile and light duty truck lease contracts and the related leased vehicles in the future, or the experience with respect to the Contracts and the Leased Vehicles, will be similar to that set forth below. ENTIRE PORTFOLIO RETAIL VEHICLE LEASE CONTRACT DELINQUENCY EXPERIENCE (DOLLARS IN THOUSANDS)
AT OR FOR THE NINE MONTHS ENDED AT OR FOR THE FISCAL YEAR ENDED SEPTEMBER 30, -------------------------- ----------------------------------------------------------------------- JUNE 30, 1997 1996 1995 1994 -------------------------- ----------------------- ---------------------- ---------------------- UNITS % UNITS % UNITS % UNITS % --------------- --------- ------------ --------- ----------- --------- ----------- --------- Dollar Amount of Lease Contracts(1)............. $ 12,579,533 100.0% $ 12,358,716 100.0% $ 9,692,671 100.0% $ 7,934,817 100.0% Ending Number of Lease Contracts................ 637,966 100.0% 624,184 100.0% 483,178 100.0% 387,066 100.0% Number of Delinquent Lease Contracts(2)(3) 0-59 Days................ 7,870 1.23% 7,000 1.12% 3,865 0.80% 1,880 0.49% 60-89 Days............... 635 0.10% 497 0.08% 199 0.04% 113 0.03% 90 Days or More.......... 182 0.03% 134 0.02% 66 0.01% 41 0.01% --------------- --------- ------------ --------- ----------- --------- ----------- --------- TOTAL.................. 8,687 1.36% 7,631 1.22% 4,130 0.85% 2,034 0.53% --------------- --------- ------------ --------- ----------- --------- ----------- --------- --------------- --------- ------------ --------- ----------- --------- ----------- --------- 1993 1992 ---------------------- ---------------------- UNITS % UNITS % ----------- --------- ----------- --------- Dollar Amount of Lease Contracts(1)............. $ 5,017,258 100.0% $ 3,542,506 100.0% Ending Number of Lease Contracts................ 243,742 100.0% 173,667 100.0% Number of Delinquent Lease Contracts(2)(3) 0-59 Days................ 1,238 0.51% 883 0.51% 60-89 Days............... 75 0.03% 78 0.04% 90 Days or More.......... 29 0.01% 20 0.01% ----------- --------- ----------- --------- TOTAL.................. 1,342 0.55% 981 0.56% ----------- --------- ----------- --------- ----------- --------- ----------- ---------
- ------------------------------ (1) Based on the sum of all principal amounts outstanding under finance lease contracts and net investment in leased assets under operating lease contracts originated by TMCC in the United States (inclusive of the residual values of the related leased vehicles). (2) Excludes lease contracts the related lessees of which are bankrupt or have commenced bankruptcy proceedings. As of July 24, 1997, approximately 184 lease contracts involving bankrupt lessees were delinquent for at least 60 days. (3) The period of delinquency is based on the number of days payments are contractually past due. 33 ENTIRE PORTFOLIO RETAIL VEHICLE LEASE CONTRACT REPOSSESSION AND LOSS EXPERIENCE (DOLLARS IN THOUSANDS, EXCEPT AS NOTED)
AT OR FOR THE NINE MONTHS ENDED AT OR FOR THE FISCAL YEAR ENDED SEPTEMBER 30, JUNE 30, ------------------------------------------------------ 1997 1996 1995 1994 1993 1992 ------------ ---------- --------- --------- --------- --------- Ending Number of Lease Contracts Outstanding......................... 637,966 624,184 483,178 387,066 243,742 173,667 Average Number of Lease Contracts Outstanding......................... 631,075 553,681 435,122 315,404 208,705 146,092 Repossessions: Number of Repossessions............. 8,968 8,440 6,149 3,758 3,236 2,683 Number of Repossessions as a Percentage of Lease Contracts Outstanding....................... 1.87%(5) 1.35% 1.27% 0.97% 1.33% 1.54% Number of Repossessions as a Percentage of Average Lease Contracts Outstanding............... 1.89%(5) 1.52% 1.41% 1.19% 1.55% 1.84% Losses: Dollar Amount of Net Receivables Outstanding(1).................... $12,579,533 $12,023,192 $9,382,655 $7,597,071 $4,616,064 $3,145,687 Average Dollar Amount of Net Receivables Outstanding(2)........ $12,301,363 $10,702,924 $8,489,863 $6,106,568 $3,880,876 $2,515,159 Net Repossession Losses(3).......... $ 41,246 $ 34,389 $ 23,592 $ 13,103 $ 11,132 $ 10,118 Average Net Repossession Loss per Liquidated Contract(1)(4)......... $ 4,599 $ 4,075 $ 3,837 $ 3,487 $ 3,440 $ 3,771 Net Repossession Losses as a Percentage of Average Net Receivables Outstanding(2)........ 0.45%(5) 0.32% 0.28% 0.21% 0.29% 0.40%
- ------------------------------ (1) Based on the sum of all principal amounts outstanding under finance lease contracts and net investment in leased assets under operating lease contracts originated by TMCC in the United States (inclusive of the residual values of the related leased vehicles) as of period end. (2) Average Net Receivables Outstanding is calculated as the average of the sum of all principal amounts outstanding under finance lease contracts and net investment in operating leases as of the beginning and the end of the indicated period. (3) Losses include expenses incurred to dispose of vehicles. (4) Dollars not in thousands. (5) Annualized. ENTIRE PORTFOLIO RESIDUAL VALUE LOSS EXPERIENCE(1) (DOLLARS IN THOUSANDS, EXCEPT AS NOTED)
AT OR FOR THE NINE MONTHS ENDED AT OR FOR THE FISCAL YEAR ENDED SEPTEMBER 30, JUNE 30, ----------------------------------------------------- 1997 1996 1995 1994 1993 1992 ------------ --------- --------- --------- --------- --------- Total Number of Leased Vehicles Scheduled to Terminate.......................................... 180,643 95,401 54,258 34,298 27,762 13,785 Number of Leased Vehicles Returned to TMCC........... 28,900 13,162 5,787 3,950 4,086 2,229 Full Term Ratio(2)................................... 16.0% 13.8% 10.7% 11.5% 14.7% 16.2% Total Losses on Vehicles that Reached Scheduled Term(3)............................................ $ 53,461 $ 29,368 $ 9,492 $ 2,005 $ 2,137 $ 1,526 Average Loss Per Returned Unit(4).................... $ 1,850 $ 2,231 $ 1,640 $ 508 $ 523 $ 685
- ------------------------------ (1) Because the terms of the retail closed-end lease contracts originated by TMCC have gradually shifted from five years to three years since 1991, the residual value loss experience for the periods in the table may not be fully comparable. (2) The ratio of line 2 over line 1 expressed as a percentage. (3) Losses include expenses incurred to dispose of vehicles. (4) Dollars not in thousands. 34 THE CONTRACTS GENERAL The Initial Contracts will consist of a pool of 56,340 closed-end retail lease contracts, having an aggregate Outstanding Principal Balance as of the Cutoff Date of $1,287,004,969.02, and an aggregate Discounted Principal Balance as of such date of $1,231,231,519.20, selected from the Titling Trust's portfolio of retail closed-end automobile and light duty truck lease contracts. During the Revolving Period, Principal Collections (and reimbursements of Loss Amounts) will be reinvested in Subsequent Contracts and Subsequent Leased Vehicles, which at the time of such reinvestment will become SUBI Assets. SEE "Description of the Certificates--Allocations and Distributions on the Certificates--Revolving Period". The Initial Contracts were, and the Subsequent Contracts will be, originated by the Dealers in the Trust States and assigned to the Titling Trust in accordance with TMCC's underwriting procedures and underwriting criteria. The Initial Contracts have been selected, and the Subsequent Contracts will be selected, based upon the criteria specified in the Titling Trust Agreement and SUBI Supplement. SEE "The Contracts--Characteristics of the Contracts--General" and "--Representations, Warranties and Covenants". Subsequent Contracts may be originated by TMCC using different underwriting criteria than those which were applied to the Initial Contracts (but which criteria will be those that TMCC then applies to the origination of lease contracts for its own account) which may cause the characteristics of the Subsequent Contracts to vary from those of the Initial Contracts, and will be selected from among Titling Trust Assets not allocated or reserved for allocation to any Other SUBI. Principal Collections (and reimbursements of Loss Amounts) will first be reinvested in the eligible lease contract with the earliest origination date, then with the eligible lease contract with the next earliest origination date and so forth. To the extent that reinvestment of such amounts from the SUBI are being made out of the Titling Trust's general pool of available lease contracts at any time after the creation of one or more Other SUBIs, such reinvestment will first be made with respect to the SUBI. TMCC will represent and warrant that no adverse selection procedures were employed or will be employed in selecting the Initial Contracts or the Subsequent Contracts for inclusion in the SUBI Assets and that it is not aware of any bias in the selection of such Contracts that would cause the delinquencies or losses on such Contracts to be worse than other retail closed-end automobile and light duty truck lease contracts held in the Titling Trust's portfolio, although there can be no assurance in this regard. Each Contract will have been written for an original term of not more than 60 months, and will have been written for a "capitalized cost" (which may exceed the manufacturer's suggested retail price), plus a lease charge which is based on the imputed Lease Rate. Each Contract will provide for equal monthly payments that when allocated between principal and the lease charge at the Lease Rate on a constant yield basis, will be sufficient to amortize the capitalized cost over the term of the lease to an amount equal to the Residual Value. Each Residual Value is established at the origination of the lease (based on documentation provided to the Dealers by TMCC) and represents the estimated wholesale market value at the end of the lease term. At the times of origination of the related Contracts, the Leased Vehicles were, in the case of the Initial Contracts, or will be, in the case of the Subsequent Contracts, new vehicles, including dealer demonstrator vehicles driven fewer than 20,000 miles, or used vehicles up to four model years old at the time of origination of the related Contract, including certified used vehicles and vehicles previously sold under manufacturer's programs. Certified used vehicles are Toyota or Lexus vehicles that are purchased by dealers, reconditioned and certified to meet certain Toyota/Lexus required standards and sold or leased with an extended warranty from the manufacturer. Manufacturer's program vehicles are Toyota or Lexus vehicles that have been sold to rental car companies, repurchased by the manufacturer and subsequently purchased by the dealer to sell or lease as current year and one year old used vehicles with 20,000 miles or less. Although there will be no limit on the number of used Leased Vehicles included as SUBI Assets, TMCC will represent and warrant that no adverse selection procedures were employed or will be employed in selecting the Initial Contracts or the Subsequent Contracts for inclusion in the SUBI Assets and that it is 35 not aware of any bias in the selection of such Contracts that would cause the delinquencies or losses on such Contracts to be worse than other retail closed-end automobile and light duty truck lease contracts held in the Titling Trust's portfolio, although there can be no assurance in this regard. All of the Contracts will be closed-end leases. Under a "closed-end lease", at the end of its term, if the lessee does not elect to purchase the related leased vehicle by exercise of the purchase option contained in such lease contract, the lessee is required to return the leased vehicle to or upon the order of the lessor, at which time the lessee will then owe only incidental charges for excess mileage, excessive wear and use and other items as may be due under such lease. In contrast, under an "open-end lease", the lessee is also obligated to pay at the end of the lease term any deficit between the fair market value of the leased vehicle at that time and the residual value established at the time of origination of such lease. Each lessee will be permitted to purchase the Leased Vehicle at the end of the term of the related Contract. The purchase price will be a fixed dollar amount equal to the Residual Value plus any applicable taxes and all other incidental charges which may be due under the Contract. In addition, each Contract will allow the related lessee voluntarily to terminate such Contract by paying certain miscellaneous charges and the Payoff Amount described below. Each Contract will provide that the lessor may terminate such Contract and repossess the Leased Vehicle in the event of a default by the lessee. Events of default under the Contracts will include, but will not be limited to, failure to make payment when due, certain events of bankruptcy or insolvency, failure to maintain the insurance required by the Contract, failure to maintain or repair the Leased Vehicle as required or to comply with any other term or condition of the Contract and the making of a material misrepresentation by the lessee in the lease application. TMCC regularly tracks lessees' compliance with their payment obligations and monitors the related leases for noncompliance. SEE "TMCC--Insurance" and "--Collection, Repossession and Disposition Procedures". In the forms of contract used to originate Contracts, upon termination at or before maturity where the lessee is not in default and does not exercise its option to purchase the Leased Vehicle, the amount owed by the lessee (the "Payoff Amount") will be determined by adding (i) unpaid Monthly Payments and any incidental charges owing under the Contract, less unearned lease charges and (ii) the Residual Value, subtracting the "Realized Value" (as described below), from the sale or other disposition of the related Leased Vehicle and applying the Security Deposit, if any, to reduce any deficiency. In calculating the amount of unearned lease charges under clause (i) above, the Contracts will provide that the constant yield method will be used, in which lease charges are earned on a daily basis through the payment date immediately following the date of early termination. If, instead, there is an early termination and the lessee is in default, the amount owed by a lessee in default will be determined by adding (i) the Payoff Amount, (ii) payments accrued under the Contract through the date of termination, (iii) collection, repossession, storage, preparation and sale expenses and (iv) attorneys' fees and disbursements incurred after default. The "Realized Value" of a Leased Vehicle is the actual wholesale price or the wholesale price otherwise determined by TMCC in a commercially reasonable manner. However, each Contract provides that the lessee has the right to obtain from an independent third party acceptable to the lessor a professional appraisal of the wholesale value of the Leased Vehicle that could be realized at sale. This appraised value then would be used as the wholesale value for purposes of calculating sums due from the lessee. In the event of early termination of a Contract where the lessee is in default, the amounts collected with respect to such Contract and the related Leased Vehicle (after deducting the costs and other sums retained by the Servicer in connection therewith) may be less than the Outstanding Principal Balance (and therefore less than the outstanding Discounted Principal Balance) of such Contract. In the event that a Contract reaches the date on which the last Monthly Payment is due, as such date may have been extended (the "Maturity Date"), but the related Leased Vehicle cannot be sold or otherwise disposed of for a net amount at least equal to its Residual Value, there may be an additional shortfall in amounts otherwise 36 expected to be received in respect of the SUBI. In the event that any such shortfalls allocable to the Certificates are not covered by the Investor Percentage of certain excess Interest Collections, available monies on deposit in the Reserve Fund available therefor, Net Insurance Proceeds or Net Liquidation Proceeds, amounts otherwise payable to the Transferor in respect of the Transferor Interest (or as Excess Amounts) and the subordination of amounts otherwise payable to the Class B Certificateholders, in each case to the extent described herein, investors in the Class A Certificates could suffer a loss on their investments. CHARACTERISTICS OF THE CONTRACTS GENERAL The Initial Contracts were, and the Subsequent Contracts will be, selected by reference to several criteria, including, as of the related Cutoff Date, that each Contract (i) is written with respect to a Leased Vehicle that was at the time of the origination of the related lease contract a new or used vehicle, (ii) was originated in the United States, after October 31, 1996 in the case of the Initial Contracts, and on or before October 1, 1998 in the case of the Subsequent Contracts; (iii) has a Maturity Date on or after January 1, 1998 and no later than July 31, 2002 in the case of the Initial Contracts, and no later than October 1, 2003 in the case of the Subsequent Contracts; (iv) fully amortizes to an amount equal to the Residual Value of the related Leased Vehicle based on a fixed Lease Rate calculated on a constant yield basis and provides for level payments over its term (except for payment of the Residual Value); (v) was not more than 60 days past due as of the Cutoff Date or the related Transfer Date, as the case may be; and (vi) has not been deferred more than four times or extended by more than twelve months in the aggregate. 37 COMPOSITION OF INITIAL CONTRACTS Aggregate Outstanding Principal Balance as of Cutoff Date........... $1,287,004,969.02 Aggregate Discounted Principal Balance as of Cutoff Date............ $1,231,231,519.20 Aggregate Net Investment Value as of Cutoff Date.................... $1,231,231,519.20 Number of Initial Contracts......................................... 56,340 Average Outstanding Principal Balance as of Cutoff Date(2).......... $22,843.54 Average Discounted Principal Balance as of Cutoff Date.............. $21,853.59 $8,339.00 to Range of Original Principal Balances of Initial Contracts(2)........ $69,476.03 Weighted Average Lease Rate(1)...................................... 7.655% Range of Lease Rates(2)............................................. 0.254% to 13.653% Weighted Average Original Number of Monthly Payments(1)............. 39.8 months Range of Original Number of Monthly Payments........................ 12 months to 60 months Weighted Average Remaining Number of Monthly Payments(1)............ 35.8 months Range of Remaining Number of Monthly Payments....................... 5 months to 59 months Average Original Residual Value(2).................................. $15,155.98 $1,277.25 to Range of Original Residual Values(2)................................ $42,382.00 Aggregate of Residual Values as a Percentage of Aggregate Net Investment Value as of Cutoff Date................................ 69.35% Percentage of Lease Contracts for Lexus Vehicles (by Discounted Principal Balance as of the Cutoff Date).......................... 20.52% Percentage of Lease Contracts for Toyota Vehicles (by Discounted Principal Balance as of the Cutoff Date).......................... 79.48% Percentage of Lease Contracts for New Vehicles (by Outstanding Principal Balance)(2)............................................. 96.95% Percentage of Lease Contracts for Used Vehicles (by Outstanding Principal Balance)(2)............................................. 3.05%
- ------------------------ (1) Weighted by Outstanding Principal Balance as of the Cutoff Date. (2) Without giving effect to discounting for calculation of Discounted Principal Balances. INITIAL CONTRACTS
AVERAGE MINIMUM MAXIMUM ------------- ------------ ------------- Original Principal Balance........................................... $ 23,608.29 $ 8,339.00 $ 69,476.03 Outstanding Principal Balance(1)..................................... $ 22,843.54 $ 8,157.24 $ 66,296.80 Residual Value(1)(2)................................................. $ 15,155.98 $ 1,277.25 $ 42,382.00 Lease Rate(1)(2)..................................................... 7.655% 0.254% 13.653% Seasoning (months)(1)(3)............................................. 3.96 0 9 Remaining Term (months)(1)(3)........................................ 35.79 5 59
- ------------------------ (1) As of the Cutoff Date. (2) Without giving effect to discounting for calculation of Discounted Principal Balances. (3) Weighted by Outstanding Principal Balance as of the Cutoff Date. 38 DISTRIBUTION OF THE INITIAL CONTRACTS BY LEASE RATE The distribution of the Initial Contracts as of the Cutoff Date by Lease Rate was as follows:
PERCENTAGE OF PERCENTAGE OF AGGREGATE NUMBER OF NUMBER OF INITIAL CUTOFF DATE CUTOFF DATE INITIAL INITIAL OUTSTANDING OUTSTANDING LEASE RATE RANGE CONTRACTS CONTRACTS PRINCIPAL BALANCE PRINCIPAL BALANCE - ------------------------------------------ ------------ --------------- ------------------- ----------------- less than 2.00%........................... 21 0.04% $ 732,294.45 0.06% 2.00% to 2.99%............................ 189 0.34 4,652,479.21 0.36 3.00% to 3.99%............................ 735 1.30 20,041,121.32 1.56 4.00% to 4.99%............................ 3,792 6.73 66,575,084.03 5.17 5.00% to 5.99%............................ 6,036 10.71 132,994,786.81 10.33 6.00% to 6.99%............................ 1,880 3.34 50,446,770.99 3.92 7.00% to 7.99%............................ 12,621 22.40 329,367,995.06 25.59 8.00% to 8.99%............................ 27,744 49.24 607,537,073.77 47.21 9.00% to 9.99%............................ 1,432 2.54 32,998,762.77 2.56 10.00% to 10.99%.......................... 750 1.33 16,878,442.99 1.31 11.00% to 11.99%.......................... 451 0.80 10,114,477.40 0.79 12.00% to 12.99%.......................... 387 0.69 8,189,007.78 0.64 13.00% to 13.99%.......................... 302 0.54 6,476,672.44 0.50 ------------ ------ ------------------- ------ Total................................. 56,340 100.00% $ 1,287,004,969.02 100.00% ------------ ------ ------------------- ------ ------------ ------ ------------------- ------
DISTRIBUTION OF THE INITIAL CONTRACTS BY MATURITY The distribution of the Initial Contracts as of the Cutoff Date by year of maturity was as follows:
PERCENTAGE OF PERCENTAGE OF AGGREGATE CUTOFF NUMBER OF NUMBER OF CUTOFF DATE DATE INITIAL INITIAL OUTSTANDING OUTSTANDING YEARS OF MATURITY CONTRACTS CONTRACTS PRINCIPAL BALANCE PRINCIPAL BALANCE - -------------------------------------------- ----------- --------------- ------------------- ----------------- 1998........................................ 323 0.57% $ 6,136,293.06 0.48% 1999........................................ 9,145 16.23 178,137,161.35 13.84 2000........................................ 33,927 60.22 778,534,934.93 60.49 2001........................................ 5,073 9.00 129,203,254.65 10.04 2002........................................ 7,872 13.97 194,993,325.03 15.15 ----------- ------ ------------------- ------ Total(1)................................ 56,340 100.00% $ 1,287,004,969.02 100.00% ----------- ------ ------------------- ------ ----------- ------ ------------------- ------
- ------------------------ (1) Percentages may not add to 100% due to rounding. 39 DISTRIBUTION OF THE INITIAL CONTRACTS BY STATE
PERCENTAGE OF PERCENTAGE OF NUMBER OF NUMBER OF CUTOFF DATE AGGREGATE CUTOFF INITIAL INITIAL OUTSTANDING DATE OUTSTANDING STATE OF ORIGINATION(1) CONTRACTS CONTRACTS PRINCIPAL BALANCE PRINCIPAL BALANCE - -------------------------------------------- ----------- --------------- ------------------- ----------------- California.................................. 32,422 57.55% $ 751,267,173.73 58.37% Ohio........................................ 9,128 16.20 185,627,593.15 14.42 Pennsylvania................................ 6,874 12.20 145,319,401.76 11.29 Michigan.................................... 5,875 10.43 125,963,096.95 9.79 Florida..................................... 2,041 3.62 78,827,703.43 6.12 ----------- ------ ------------------- ------ Total(2)................................ 56,340 100.00% $ 1,287,004,969.02 100.00% ----------- ------ ------------------- ------ ----------- ------ ------------------- ------
- ------------------------ (1) by Dealer location. (2) Percentages may not add to 100% due to rounding. REPRESENTATIONS, WARRANTIES AND COVENANTS The Initial Contracts and Initial Leased Vehicles will be described in a schedule appearing as an exhibit to the SUBI Supplement, which schedule will be amended from time to time as Subsequent Contracts and Subsequent Leased Vehicles become SUBI Assets during the Revolving Period (collectively, the "Schedule of Contracts and Leased Vehicles"). The Schedule of Contracts and Leased Vehicles will identify each Contract by identification number, will identify each Leased Vehicle by its vehicle identification number and will set forth as to each such Contract, among other things, its: (i) date of origination; (ii) Maturity Date; (iii) Monthly Payment; (iv) original capitalized cost; (v) Outstanding Principal Balance and Discounted Principal Balance as of the related Cutoff Date; and (vi) Residual Value. In the Servicing Agreement, representations and warranties will be made with respect to each Contract and Leased Vehicle to the effect described under "The Contracts--Characteristics of the Contracts--General", and that, among other things, each such Contract, and, to the extent applicable, the related Leased Vehicle or lessee: (a) was originated by a Dealer located in the United States in the ordinary course of its business and in compliance with TMCC's normal credit and underwriting policies and practices; (b) is owned by the Titling Trust, free of all liens, encumbrances or rights of others; (c) was originated in compliance with, and complies with, all material applicable legal requirements; (d) all material consents, licenses, approvals or authorizations of, or registrations or declarations with, any governmental authority required to be obtained, effected or given by the originator of such Contract and the Titling Trustee in connection with (i) the origination of such Contract, (ii) the execution, delivery and performance by such originator of the Contract and (iii) the acquisition by the Titling Trust of such Contract and Leased Vehicle, have been duly obtained, effected or given and are in full force and effect as of such date of creation or acquisition; (e) is the legal, valid and binding obligation of the lessee; (f) to the knowledge of TMCC, is not subject to any right of rescission, setoff, counterclaim or any other defense of the related lessee to pay the Outstanding Principal Balance due under such Contract and no such right of rescission, setoff, counterclaim or other defense has been asserted or threatened; (g) the related Dealer, the Servicer and the Titling Trust have each satisfied all obligations required to be fulfilled on its part with respect thereto; (h) is payable solely in United States dollars in the United States; (i) the lessee thereunder is located in the United States and is not TMCC, the Transferor or any of their respective affiliates; (j) requires the lessee to maintain insurance against loss or damage to the related Leased Vehicle under an insurance policy that names the Titling Trust as loss payee; (k) the related certificate of title is registered in the name of the Titling Trust (or a properly completed application for such title has been submitted to the appropriate titling authority); (l) is a closed-end lease that requires equal monthly payments to be made within 60 months of the date of origination of such Contract; (m) is fully assignable and does not require the consent of the lessee as a condition to any transfer, sale or 40 assignment of the rights of the originator; (n) has a Residual Value that does not exceed an amount reasonably established by the Servicer consistent with its policies and practices; (o) has not been deferred more than four times or extended by more than twelve months in the aggregate or otherwise modified except in accordance with TMCC's normal credit and collection policies and practices; (p) is not an Other SUBI Asset; (q) to the knowledge of TMCC, the lessee thereunder is not bankrupt or currently the subject of a bankruptcy proceeding; (r) is not more than 60 days past due; (s) is a finance lease for accounting purposes; and (t) is a "true lease" for applicable state law purposes relating to the perfection of security interests. The Servicing Agreement will provide that the reinvestment of Principal Collections (and Loss Amounts otherwise reimbursable to Certificateholders) in Subsequent Contracts and Subsequent Leased Vehicles during the Revolving Period will be subject to the satisfaction of certain conditions precedent including, among other things, that after giving effect to such reinvestment, (i) each Subsequent Contract will be allocated as a SUBI Asset based upon its Discounted Principal Balance as of the relevant Transfer Date, (ii) the weighted average remaining term of the Contracts (including the Subsequent Contracts) is not greater than 39 months and (iii) the weighted average Residual Value of the Leased Vehicles relating to the Contracts (including the Subsequent Contracts), as a percentage of the aggregate Outstanding Principal Balance of the Contracts (including the Subsequent Contracts), in each case as of the related dates of origination, is not greater than 68%. The foregoing criteria may be changed without the consent of any Certificateholder if the Trustee receives notice from each Rating Agency to the effect that the use of such changed criteria will not result in the reduction, withdrawal or qualification of its then current rating of any Certificates. The Servicing Agreement will provide that upon the discovery by the Titling Trustee, TMCC, the Trustee or the Transferor of a breach of any representation, warranty or covenant referred to in the second preceding paragraph that materially and adversely affects the owners of interests in the SUBI or the Certificateholders in the related Contract or Leased Vehicle, which breach is not cured in all material respects within 60 days after TMCC discovers such breach or is given notice thereof, such Contract and Leased Vehicle (and the related SUBI Assets) will be reallocated to the UTI and TMCC will be required to deposit (or cause to be deposited) into the SUBI Collection Account an amount (the "Reallocation Payment") equal to the Discounted Principal Balance of such Contract as of the last day of the Collection Period during which the related cure period ended, plus an amount equal to any imputed lease charge on such Contract at the related Lease Rate that was delinquent as of the end of such Collection Period. The foregoing payment obligation will survive any termination of TMCC as Servicer under the Servicing Agreement. MATURITY, PREPAYMENT AND YIELD CONSIDERATIONS All of the Contracts will be prepayable, in whole or in part, at any time without penalty. The prepayment experience with respect to the Contracts will affect the weighted average lives of each Class of Certificates then outstanding if a Monthly Payment Event occurs, and will affect the weighted average life of any Class of Certificates as to which the related Class Certificate Balance is not reduced to zero on the related Targeted Maturity Date. In general, the rate of prepayments on the Contracts may be influenced by a variety of economic, social, geographic and other factors. The Titling Trust was formed and began to accept assignments of lease contracts in November 1996. All of the lease contracts assigned to the Titling Trust since that time have been, and all of the lease contracts to be assigned to the Titling Trust will be, assigned by Dealers using TMCC's underwriting standards. TMCC actively encourages lessees under lease contracts with remaining terms of less than one year to either buy, trade in or refinance the related leased vehicles prior to the related scheduled maturities of such lease contracts. TMCC estimates that, of the retail automobile 41 and light duty truck lease contracts in its portfolio that were scheduled to mature during fiscal year 1996 or during the nine-month period ended June 30, 1997, approximately 52% and 49%, respectively, terminated prior to maturity, either because of voluntary prepayments or repossession of the leased vehicles due to default by the lessees under the related lease contracts. No assurance can be given that the Contracts will experience the same rate of prepayment or default or any greater or lesser rate than TMCC's historical rate, or that the Residual Value experience of Leased Vehicles related to Contracts that have reached their Maturity Dates will be the same as or higher or lower than from TMCC's historical residual value loss experience with respect to lease contracts in its portfolio. Moreover, there can be no assurance as to whether a Maturity Advance will be made or, if made, will be sufficient to pay in full any Class on the related Targeted Maturity Date and, therefore, any Class may mature significantly later than its Targeted Maturity Date. The effective yield on, and weighted average life of, each Class of Certificates will depend upon, among other things, whether or not an Early Amortization Event occurs, whether or not a Monthly Payment Event occurs, whether or not a Maturity Advance sufficient to pay in full the related Class on the related Targeted Maturity Date is made, the amount of scheduled and unscheduled payments on or in respect of the Contracts and the Leased Vehicles and the rate at which such payments are paid through to the Certificateholders pursuant to the payment priorities described herein. In the event of prepayments of the Contracts (including liquidations of the Contracts and payment of the Residual Value of the related Leased Vehicles) or payment of any Accelerated Principal Distribution Amount during the Amortization Period, Certificateholders who receive such amounts may not be able to reinvest the related payments of principal received on the Certificates at yields as high as the related Certificate Rate. Under such circumstances, the timing of changes in the rate of prepayments on the Contracts and payments in respect of the Leased Vehicles may also affect significantly an investor's actual yield to maturity and the weighted average life of the related Class of Certificates. In the event of a Monthly Payment Event, a substantial increase in the rate of payments on or in respect of the Contracts and Leased Vehicles during the Amortization Period may shorten the final maturity and weighted average lives of the Certificates. In the case of Certificates purchased at a discount to their principal amounts, a slower than anticipated rate of principal payments is likely to result in a lower than anticipated yield to the investor. In the case of Certificates purchased at a premium to their principal amounts, a faster than anticipated rate of principal payments is likely to result in a lower than anticipated yield to the investor. Additionally, although monies on deposit in the Accounts and Principal Collections (and reimbursed Loss Amounts) that have not been reinvested in Subsequent Contracts and Subsequent Leased Vehicles during the Revolving Period will be invested in Permitted Investments, and all gain or other income from such investments will be available for making distributions on the Certificates, no assurance can be made as to the rate of return that will be realized on such Permitted Investments. Any reinvestment risk resulting from the rate of prepayment of the Contracts (and payment of the Residual Value of the related Leased Vehicles) and the making of the foregoing investments will be borne by the Certificateholders. The Investor Percentage of Loss Amounts as to which no funds are available for reimbursement on any Monthly Allocation Date (I.E. Certificate Principal Loss Amounts) will be allocated first to the Class B Certificates and then among the Class A Certificateholders on a pro rata basis, based on the outstanding Class A Certificate Balances thereof as of the last day of the related Collection Period, and then reimbursed out of funds available therefor, if any, until the date on which the related Class is paid in full in the amounts and order of priority described in "Description of the Certificates--Allocations and Distributions on the Certificates--Allocations and Distributions of Collections". In addition, the Investor Percentage of the net proceeds of any sale or other disposition of the SUBI, the SUBI Certificate and other property of the Trust, which may occur under certain circumstances involving an Insolvency Event with respect to the Transferor, to the extent constituting Principal Collections, will be distributed first, on a pro rata basis, to the Class A Certificateholders based on their respective Class Certificate Balances until the Class A Certificates have been paid in full, and second, to the Class B Certificateholders. 42 CLASS A CERTIFICATE FACTORS AND TRADING INFORMATION; REPORTS TO CLASS A CERTIFICATEHOLDERS The "Certificate Factor" for each Class of Certificates will be a seven-digit decimal that the Servicer will compute each month indicating the related Class Certificate Balance, as the case may be, as of the close of business on the Monthly Allocation Date in such month as a fraction of the Initial Certificate Balance of the related Class of Class A Certificates. Each Certificate Factor will initially be 1.0000000 and will remain unchanged during the Revolving Period, except in certain limited circumstances where there are unreimbursed Certificate Principal Loss Amounts allocated to such Class, and during the Amortization Period until the related Targeted Maturity Date or the occurrence of a Monthly Payment Event, after which each Certificate Factor will decline to reflect reductions in the related Certificate Balance resulting from distributions of principal and such previously unreimbursed Certificate Principal Loss Amounts, if any. A Class A Certificateholder can determine the outstanding balance of the Certificate held thereby by multiplying the original denomination of the holder's Class A Certificate by the related Certificate Factor for such month. Pursuant to the Agreement, U.S. Bank, as Trustee, will provide to the Class A Certificateholders (which shall be Cede & Co. as the nominee of DTC unless Definitive Certificates are issued under the limited circumstances described herein) unaudited monthly reports concerning payments received on or in respect of the Contracts and the Leased Vehicles, the Aggregate Net Investment Value, the Investor Percentage, the Certificate Factors for each Class and various other items of information. Certificate Owners may obtain copies of such reports upon a request in writing to the Trustee. In addition, Class A Certificateholders during each calendar year will be furnished information for tax reporting purposes not later than the latest date permitted by law. SEE "Description of the Certificates--Statements to Certificateholders" and "--Book-Entry Registration". DESCRIPTION OF THE CERTIFICATES The Certificates will be issued pursuant to the Agreement which, together with the Titling Trust Agreement, the SUBI Supplement and the Servicing Supplement, has been filed as an exhibit to the Registration Statement of which this Prospectus is a part. The following summaries of material provisions of the foregoing documents as well as the summaries included elsewhere in this Prospectus do not purport to be complete and are subject to, and qualified in their entirety by reference to, the actual provisions of such documents. GENERAL The Class A Certificates will be issued in minimum denominations of $1,000 and integral multiples thereof in book-entry form. The Class A Certificates will initially be represented by global certificates registered in the name of Cede & Co., the nominee of DTC. No Certificate Owner will be entitled to receive a certificate representing such owner's Certificate, except as set forth below. Unless and until Definitive Class A Certificates are issued under the limited circumstances described below, all references herein to distributions, notices, reports and statements to Class A Certificateholders will refer to the same actions made with respect to DTC or Cede & Co., as the case may be, for the benefit of Certificate Owners in accordance with DTC procedures. SEE "Description of the Certificates--Book-Entry Registration" and "--Definitive Certificates". Each Certificate will represent the right to receive semi-annual payments of interest at the related Interest Rate and, to the extent described herein, payments in respect of principal thereof during the Amortization Period funded from Available Interest, Principal Collections allocable to the SUBI, Accelerated Principal Distribution Amounts, amounts on deposit in the Reserve Fund available therefor, amounts otherwise payable to the Transferor in respect of the Transferor Interest and, in the case of the Class A Certificates, Class B Available Principal, in each case to the extent described herein. Distributions of 43 interest and principal on the Class B Certificates will be subordinated to the right of the Class A Certificates to receive such payments to the extent provided herein. Interest will be calculated on the basis of a 360-day year consisting of twelve 30-day months. Because the Interest Period with respect to each related Certificate Payment Date for a Class of Certificates will be the period from and including the twenty-fifth day of the month of the preceding Certificate Payment Date, to but excluding the twenty-fifth day of the month of such current Certificate Payment Date, if the 25th day of the month of a Certificate Payment Date is not a Business Day, the distribution of interest on such Certificate Payment Date will not include interest accrued from such twenty-fifth day to such Certificate Payment Date. SEE "Description of the Certificates--Allocations and Distributions on the Certificates". The Transferor will permanently retain the Transferor Interest, which will represent the interest in the Trust not represented by the Certificates, including the right to receive the Transferor Percentage of Interest Collections and Principal Collections. SEE "Description of the Certificates--Calculation of Investor Percentage and Transferor Percentage". The Transferor Interest will be subordinated to the Certificates to the extent described herein, and on any day will equal the difference between the Aggregate Net Investment Value and the Adjusted Certificate Balance. SEE "Description of the Certificates--Certain Payments to the Transferor". The Class Certificate Balances of the Certificates of each Class will remain constant, except to the extent there are unreimbursed Certificate Principal Loss Amounts or unreimbursed Class B Available Principal Amounts previously applied to fund interest shortfalls, Loss Amounts or Certificate Principal Loss Amounts with respect to the Class A Certificates, until the earlier of its Targeted Maturity Date or the occurrence, if any, of a Monthly Payment Event. However, during the Amortization Period, the Adjusted Certificate Balance will decline, to the extent described herein, as the Investor Percentage of Principal Collections allocable to the SUBI and Accelerated Principal Distribution Amounts are deposited into the Certificateholders' Account and the Certificate Balance and Adjusted Certificate Balance will decline as (a) Certificate Principal Loss Amounts are incurred and not reimbursed or (b) Class B Available Principal Amounts are applied to cover interest shortfalls, Loss Amounts and Certificate Principal Loss Amounts allocable to the Class A Certificates and not reimbursed. TRANSFER OF THE SUBI On the Closing Date, the Transferor will deliver the SUBI Certificate to the Trustee and transfer and assign to the Trustee, without recourse, all of its right, title and interest in and to the SUBI (excluding the right to proceeds of the Residual Value Insurance Policy represented thereby). Concurrently therewith, the Trustee will execute, authenticate and deliver the Certificates to or upon the order of the Transferor. Pursuant to the Agreement, the Transferor will represent and warrant that, immediately prior to the transfer and assignment of the SUBI Certificate to the Trustee, it had good title to and was the sole legal and beneficial owner of the SUBI Certificate, free and clear of liens and claims. REALLOCATION PAYMENTS AND REALLOCATION DEPOSIT AMOUNTS Under certain circumstances TMCC will be required to make Reallocation Payments in respect of certain Contracts (and the related Leased Vehicles) discovered not to be in compliance with TMCC's representations or warranties or Contracts as to which certain servicing procedures have not been followed, in either case that materially and adversely affects the interests of the Transferor or the Certificateholders in the related Contract or Leased Vehicle. Upon any such payment during the Amortization Period (but not during the Revolving Period), the Aggregate Net Investment Value will decline by an amount equal to the Discounted Principal Balance of such Contract, and such Contract and the related Leased Vehicle will no longer constitute SUBI Assets as they will be reallocated and become UTI Assets. If such deduction would cause the Transferor Interest to become less than zero, TMCC will be required to deposit (or cause to be deposited) in the SUBI Collection Account the amount (the "Reallocation Deposit Amount") by which the Transferor Interest would be reduced to less than zero. 44 Notwithstanding the foregoing, in the event a Reallocation Deposit Amount is required to be made, reallocation of the related Contract (and the related Leased Vehicle) will not be considered to have occurred unless such deposit is actually made. SEE "The Contracts--Representations, Warranties and Covenants" and "Additional Document Provisions--The Servicing Agreement--Collections" CALCULATION OF INVESTOR PERCENTAGE AND TRANSFEROR PERCENTAGE Pursuant to the Servicing Agreement, to the extent allocable to the SUBI, the Servicer will allocate between the Investor Interest and the Transferor Interest, based on the applicable Investor Percentage and the Transferor Percentage for the related Collection Period, all Interest Collections and Principal Collections collected or received in respect of the related Collection Period. In addition, similar allocations will be made by the Servicer at the end of each Collection Period in respect of (i) an amount equal to the Discounted Principal Balance of any Contract that became a Charged-off Contract during such Collection Period (the aggregate of such amounts in any Collection Period, the "Charged-off Amount"), (ii) the Residual Value Loss Amount for such Collection Period and (iii) any Additional Loss Amounts incurred during such Collection Period. A "Charged-off Contract" will be a Contract (a) with respect to which the related Leased Vehicle has been repossessed and sold or otherwise disposed of or (b) which has been written off by the Servicer in accordance with its normal policies for writing off lease contracts other than with respect to repossession. The Investor Percentage in respect of any Collection Period will mean, with respect to (i) Charged-off Amounts, Residual Value Loss Amounts and Additional Loss Amounts (collectively, "Loss Amounts") and Interest Collections, in each case that are allocable to the SUBI, the percentage equivalent of a fraction (not to exceed 100%) the numerator of which is the Adjusted Certificate Balance on the last day of the immediately preceding Collection Period (or, in the case of the first Collection Period, the Initial Certificate Balance) and the denominator of which is the Aggregate Net Investment Value on the last day of the immediately preceding Collection Period (or, in the case of the first Collection Period, as of the Cutoff Date) and (ii) Principal Collections, the percentage equivalent of a fraction (not to exceed 100%) the numerator of which is the Adjusted Certificate Balance and the denominator of which is the Aggregate Net Investment Value, in each case as of the last day of the last Collection Period preceding (a) the Amortization Date or (b) the date on which an Early Amortization Event occurs. The "Transferor Percentage" will in all cases, be equal to 100% minus the applicable Investor Percentage. As a result of the calculations described above, Interest Collections allocable to the SUBI in each Collection Period will be allocated to the Certificateholders based on the relationship of the Adjusted Certificate Balance to the Aggregate Net Investment Value (which may change from Collection Period to Collection Period). As described above, the Investor Percentage applied when allocating Principal Collections allocable to the SUBI may vary monthly during the Revolving Period, because the Adjusted Certificate Balance as a percentage of the Aggregate Net Investment Value may fluctuate monthly. During the Amortization Period, however, the Principal Allocation will be determined by reference to a fixed percentage which will equal the Investor Percentage with respect to Principal Collections allocable to the SUBI as of the last day of the Revolving Period. CERTAIN PAYMENTS TO THE TRANSFEROR On each Monthly Allocation Date, the Trustee will pay to the Transferor, from amounts on deposit in the SUBI Collection Account in respect of the related Collection Period that are allocable to the SUBI, the following amounts (the "Transferor Amounts"): (i) if such Monthly Allocation Date is prior to the First Principal Monthly Allocation Date, the Transferor Percentage of Interest Collections and (ii) if such Monthly Allocation Date is on or after the First Principal Monthly Allocation Date, the Transferor Percentage of Interest Collections and, to the extent that the Transferor Interest is equal to or greater than zero, the Transferor Percentage of Principal Collections. Amounts to be released to the Transferor pursuant to clause (13) under "--Allocations and Distributions on the Certificates--Allocations and 45 Distributions of Collections" will also be considered Transferor Amounts, but will not offset or reduce amounts allocable to the Transferor Interest as described in the preceding sentence. Notwithstanding the foregoing, no Transferor Amounts will be paid to the Transferor on a Monthly Allocation Date unless (i) the amounts required to be allocated or distributed to Certificateholders as described under "Description of the Certificates--Allocations and Distributions on the Certificates" have been allocated or distributed in full and (ii) the amount on deposit in the Reserve Fund, after giving effect to all withdrawals therefrom and other deposits thereto on such Monthly Allocation Date, is at least equal to the Specified Reserve Fund Balance. The principal portion of any Transferor Amounts not paid to the Transferor because the Transferor Interest is less than or equal to zero ("Unallocated Principal Collections") will be retained in the SUBI Collection Account until (a) applied to cover interest shortfalls, Loss Amounts or Certificate Principal Loss Amounts allocable to the Certificates, (b) the Certificates are paid in full (in which case such amounts will be released to the Transferor) or (c) the Transferor Interest again exceeds zero (in which case such amounts will again be releasable as Transferor Amounts). ALLOCATIONS AND DISTRIBUTIONS ON THE CERTIFICATES GENERAL On the second Business Day prior to each Monthly Allocation Date (each, a "Determination Date"), the Servicer will inform the Trustee of, among other things, the amount of Interest Collections and Principal Collections allocable to the SUBI, the Investor Percentage, the Transferor Percentage, the Certificate Factor for each Class, the amount of Advances and Maturity Advances, if any, to be made by or reimbursed to the Servicer, the aggregate amount, if any, to be withdrawn from the Reserve Fund and the Servicing Fee and other servicing compensation payable to the Servicer with respect to the related Collection Period. On or prior to each Determination Date, the Servicer shall also determine the Specified Reserve Fund Balance and the amounts to be distributed to the Certificateholders and to the Transferor in respect of the Transferor Interest and in respect of other amounts released from the Trust. ALLOCATIONS AND DISTRIBUTIONS OF COLLECTIONS On each Monthly Allocation Date, the Trustee will make the following allocations, payments and distributions in accordance with the following priorities from Available Interest (to the extent sufficient therefor): (1) in the event of an Early Amortization Event involving an Insolvency Event as a result of the Trustee having elected or received written instructions from holders of Certificates evidencing Voting Interests of not less than 51% of the Class A Certificates (voting together as a single class) or 51% of the Class A Certificates and Class B Certificates (voting together as a single class) to sell or dispose of the SUBI, to the Trustee, the Investor Percentage of Capped Trust Administrative Expenses; (2) to or for the benefit of the Class A Certificateholders, the amount of interest accrued on the Class Certificate Balances of the Class A Certificates and unreimbursed Certificate Principal Loss Amounts previously allocated thereto during the period from and including the immediately preceding Monthly Allocation Date to but excluding the related Monthly Allocation Date at the related Class A Rates, plus any Class A Interest Carryover Shortfall; (3) to or for the benefit of the Class B Certificateholders, the amount of interest accrued on the Class B Certificate Balance during the period from and including the immediately preceding Monthly Allocation Date to but excluding the related Monthly Allocation Date, plus any Class B Interest Carryover Shortfall; (4) to the Servicer, the Investor Percentage of the Servicing Fee for such Collection Period and the aggregate of the Investor Percentage of accrued but unpaid Servicing Fees in respect of prior Collection Periods; 46 (5) to the Servicer, the Investor Percentage of Capped Contingent and Excess Liability Premiums that have not yet been reimbursed to the Servicer; (6) to the Titling Trustee, the Investor Percentage of Capped Titling Trust Administration Expenses; (7) in circumstances other than as set forth in clause (1) above, to the Trustee, the Investor Percentage of Capped Trust Administration Expenses; (8) to or for the benefit of the Class A Certificateholders the aggregate amount of Loss Amounts allocable to the Class A Certificateholders on such Monthly Allocation Date as described below plus the aggregate amount of Certificate Principal Loss Amounts allocated thereto on any prior Monthly Allocation Date (pro rata, based on the Loss Amounts and Certificate Principal Loss Amounts so allocated to each such Class), in each case to the extent not previously reimbursed pursuant to this clause or through the application of amounts withdrawn from the Reserve Fund, Transferor Amounts and Class B Available Principal; (9) to or for the benefit of the Class B Certificateholders, (a) the amount, if any, of (i) accrued and unpaid interest on the Class B Certificates to but excluding the related Monthly Allocation Date at the Class B Rate on any Certificate Principal Loss Amounts previously allocated thereto and then (ii) the aggregate amount of Loss Amounts allocable to the Class B Certificateholders on such Monthly Allocation Date as described below plus the aggregate amount of Certificate Principal Loss Amounts allocated thereto on any prior Monthly Allocation Date, in each case to the extent not previously reimbursed pursuant to this clause or through the application of amounts withdrawn from the Reserve Fund and Transferor Amounts, and (b) the amount, if any, of Class B Available Principal applied to fund interest shortfalls, Loss Amounts or Certificate Principal Loss Amounts allocated to the Class A Certificates on any Monthly Allocation Date and not previously reimbursed pursuant to this clause or through the application of amounts withdrawn from the Reserve Fund or Transferor Amounts; (10) for deposit into the Reserve Fund, until the amount on deposit therein equals the Specified Reserve Fund Balance; (11) to the Titling Trustee, the Investor Percentage of Uncapped Titling Trust Administration Expenses; (12) to the Trustee, the Investor Percentage of Uncapped Trust Administration Expenses; and (13) except as described below, to the Transferor, all remaining Interest Collections, which shall for all purposes thereupon be deemed to have been released from the Trust. Payments of interest on each Class of Certificates will be made, to the extent funds are allocated and are available therefor as described above, (i) on each Monthly Allocation Date in March and September, commencing in March 1998, as well as on the Targeted Maturity Date for such Class and (ii) for any Class of Certificates not paid in full on the related Targeted Maturity Date, on any subsequent Certificate Payment Date until the related Class is paid in full. In addition, after the occurrence of any Monthly Payment Event, payments of interest on each Class of Certificates will be made monthly, to the extent funds are allocated and are available therefor as described above, on each Monthly Allocation Date (and each such subsequent Monthly Allocation Date will be a Certificate Payment Date). Interest amounts allocable or distributable to Holders of Class A Certificates will be allocated or distributed on a pro rata basis, based on the interest accrued thereon during the related Interest Period plus the aggregate amount of unreimbursed Class A Interest Carryover Shortfalls allocated thereto on all prior Monthly Allocation Dates. The amount of funds to be withdrawn from the Reserve Fund on a Monthly Allocation Date and applied to payments to be made as described above will equal the lesser of (i) the amount on deposit in the Reserve Fund on the related Deposit Date and available therefor and (ii) the amount, if any, by which the aggregate of amounts allocable or distributable pursuant to clauses (2), (3), (8) or (9) exceeds the amount 47 of Available Interest available to make such allocation or distribution based on the foregoing priorities. SEE "Assets of the Trust--The Accounts; Collections--The Reserve Fund". To the extent Available Interest is insufficient therefor, the amount of any deficiency in amounts allocable or distributable pursuant to clauses (1) through (9) will be covered, first, from amounts withdrawn from the Reserve Fund, to the extent set forth in the preceding paragraph, that are available therefor and, second, from Transferor Amounts. If any Transferor Amounts are required to be applied to make any of the allocations or distributions described in clauses (1) through (10) above, the Interest Collections that are part of the Transferor Amounts will be applied before any Principal Collections that are part of the Transferor Amounts are so applied. To the extent a deficiency in the amounts to be allocated or distributed pursuant to clause (2) or clause (8) remains after application of all of the foregoing amounts, such deficiency will be covered by application of Class B Available Principal, if any. Notwithstanding the foregoing, Available Interest, amounts withdrawn from the Reserve Fund, Transferor Amounts and Class B Available Principal allocated to Certificateholders to reimburse Loss Amounts or Certificate Principal Loss Amounts pursuant to clauses (8) and (9) above on a Monthly Allocation Date that is during the Revolving Period will be treated as Principal Collections for the Collection Period in which such Monthly Allocation Date occurs and, unless an Early Amortization Event happens prior to the related Transfer Date, will be available to be reinvested in Subsequent Contracts and Subsequent Leased Vehicles. The Investor Percentage of Loss Amounts will be allocable to the Certificates. Loss Amounts allocated to the Certificates on any Monthly Allocation Date will be allocated first to the Class B Certificates and then, on any Monthly Allocation Date on which the Class B Certificate Balance is reduced to zero, to the Class A Certificates. A "Certificate Principal Loss Amount" with respect to any Monthly Allocation Date and Class of Certificates will equal the Loss Amounts allocated to such Class of Certificates on such date less any reimbursement thereof from Available Interest, amounts withdrawn from the Reserve Fund that are available therefor, Transferor Amounts and Class B Available Principal (in the case of the Class A Certificates only). Loss Amounts allocated to the Class A Certificates will be allocated thereto on a pro rata basis, based on their respective outstanding Class Certificate Balances as of the end of the related Collection Period. Loss Amounts and Certificate Principal Loss Amounts allocated to the Class A Certificates will be reimbursable thereto on a pro rata basis, based on the aggregate amount of all unreimbursed Loss Amounts and Certificate Principal Loss Amounts allocated thereto on such Monthly Allocation Date and all prior Monthly Allocation Dates; provided, however, that no such reimbursements will be made to any Class of Class A Certificates after the Certificate Payment Date on which the related Class is paid in full. Loss Amounts and Certificate Principal Loss Amounts allocated to the Class B Certificates will be reimbursable as described above until the Monthly Allocation Date on which the Class B Certificates have been paid in full. Certificate Principal Loss Amounts allocable to a Class of Certificates which are not reimbursed as provided herein will reduce the Certificate Balance of such Class of Certificates, but will bear interest at the related Certificate Rate until reimbursed or until the related Class has been paid in full. On each Monthly Allocation Date, Principal Collections (and if Principal Collections are insufficient therefor, Interest Collections) will be applied to reimburse the Servicer for the principal portion of unreimbursed Advances and Nonrecoverable Advances. Thereafter, the Investor Percentage of remaining Principal Collections plus any Accelerated Principal Distribution Amount will be applied first to reimburse the Transferor for unreimbursed Maturity Advances and second, for deposit into the Certificateholders' Account in respect of principal on the Certificates or, on any Monthly Allocation Date on which principal is distributable to the Holders of any Class of Certificates, as described below, for distribution to such Holders until the related Class has been paid in full. On each Monthly Allocation Date that coincides with or follows a Targeted Maturity Date for a Class of Class A Certificates, the Trustee will distribute all amounts on deposit in the Collection Account and the Certificateholders' Account in respect of principal (after giving effect to any application of amounts withdrawn from the Reserve Fund and available for such application and Transferor Amounts described 48 above) to the Holders of such Class of Class A Certificates until such Class has been paid in full. To the extent such amounts are insufficient to reduce the related Class Certificate Balance to zero, the Transferor will have the option to make a Maturity Advance in any amount up to the amount of such deficiency. On each Monthly Allocation Date that follows a Monthly Payment Event, the Trustee will distribute all amounts on deposit in the Collection Account and the Certificateholders' Account in respect of principal (after giving effect to any application of amounts withdrawn from the Reserve Fund and available for such application and Transferor Amounts described above) to the Holders of each outstanding Class of Class A Certificates sequentially until each such Class has been paid in full, and then to the Class B Certificateholders until the Class B Certificates have been paid in full. "Available Interest" with respect to any Monthly Allocation Date is an amount equal to the sum of (i) the Investor Percentage of Interest Collections for the related Collection Period less any portion of such Interest Collections used to reimburse Advances and any Nonrecoverable Advances plus (ii) investment income (net of investment losses) on Permitted Investments of amounts in the Certificateholders' Account from the prior Monthly Allocation Date to, but not including, the current Monthly Allocation Date. The "Class A Interest Carryover Shortfall" with respect to any Monthly Allocation Date will equal the excess, if any, of (x) the aggregate amount of interest accrued on the Class A Certificate Balances and unreimbursed Certificate Principal Loss Amounts previously allocated thereto at the related Certificate Rates during the period from the prior Monthly Allocation Date to but not including the current Monthly Allocation Date, plus any outstanding Class A Interest Carryover Shortfall from the immediately preceding Monthly Allocation Date, plus interest on such outstanding Class A Interest Carryover Shortfall, to the extent permitted by law, at the weighted average of the Class A Certificate Rates for such period, over (y) Available Interest allocated or distributed to Class A Certificateholders in respect of interest on such Monthly Allocation Date. The "Class B Interest Carryover Shortfall" with respect to any Monthly Allocation Date will equal the excess, if any, of (x) the aggregate amount of interest accrued on the Class B Certificates at the Class B Rate during the period from the prior Monthly Allocation Date to but not including the current Monthly Allocation Date, plus any outstanding Class B Interest Carryover Shortfall from the immediately preceding Monthly Allocation Date, plus interest on such outstanding Class B Interest Carryover Shortfall, to the extent permitted by law, at the Class B Rate for such period, over (y) Available Interest allocated or distributed to Class B Certificateholders in respect of interest on such Monthly Allocation Date. "Capped Titling Trust Administrative Expenses" with respect to any Monthly Allocation Date will equal one twelfth of the aggregate amounts sufficient to pay specified administrative costs and expenses of the Titling Trust that are allocable to the SUBI up to but not exceeding $100,000 in any calendar year. "Uncapped Titling Trust Administrative Expenses" with respect to any Monthly Allocation Date will equal one twelfth of the aggregate amounts sufficient to pay specified administrative costs and expenses of the Titling Trust that are allocable to the SUBI not subject to the limitations set forth in the preceding sentence. "Capped Trust Administrative Expenses" will equal the amounts sufficient to pay specified administrative costs and expenses associated with the Certificates such as the Trustee's compensation, the reasonable fees and disbursements of the Transferor's accountants and attorneys up to but not exceeding $75,000 in any calendar year (or $125,000 in a calendar year in which an Early Amortization Event occurs with respect to which the Trustee sells or otherwise disposes of the SUBI). "Uncapped Trust Administrative Expenses" will equal the amounts sufficient to pay specified administrative costs and expenses associated with the Certificates such as the Trustee's compensation, the reasonable fees and disbursements of the Transferor's accountants and attorneys not subject to the limitations set forth in the preceding sentence. 49 "Capped Contingent and Excess Liability Premiums" with respect to any Monthly Allocation Date will equal the amounts sufficient to pay or reserve for payment one-twelfth of the portion of the annual premium payable on the Contingent and Excess Liability Insurance Policies allocable to the SUBI, up to but not exceeding $300,000 in any calendar year. "Class B Available Principal" with respect to any Monthly Allocation Date means the portion of Principal Collections derived by multiplying (i) a fraction, the numerator of which is the Class B Adjusted Certificate Balance, and the denominator of which is the Adjusted Certificate Balance as of such Monthly Allocation Date, by (ii) the Investor Percentage, and by (iii) Principal Collections plus any Accelerated Principal Distribution Amount for such Monthly Allocation Date. "Excess Amounts" with respect to any Monthly Allocation Date are the sum of the Interest Collections distributable to the Transferor pursuant to clause (13) above. REVOLVING PERIOD No principal will be allocable or distributable on the Certificates until the First Principal Monthly Allocation Date. On each Transfer Date, the Servicer will identify lease contracts and the related leased vehicles of the Titling Trust that meet the eligibility criteria described under "The Contracts" and are not evidenced by the SUBI or any Other SUBI and, on behalf of the Titling Trustee, will allocate lease contracts and related leased vehicles having an aggregate Discounted Principal Balance as of the related Transfer Date approximately equal to, but not greater than, all Principal Collections collected or received since the Cutoff Date (together with amounts used to fund or reimburse Loss Amounts allocated to any Certificates) that have not yet been so reinvested. Upon such allocation, the related lease contracts and leased vehicles will become Subsequent Contracts and Subsequent Leased Vehicles and accordingly will become SUBI Assets. No partial interest in lease contracts (and the related leased vehicles) will be so allocated. Coincident with such allocation, the Servicer, acting on behalf of the Titling Trustee, will withdraw from the SUBI Collection Account (or apply from its own funds if the Servicer is not then subject to the requirement to make deposits therein prior to the Deposit Date) an amount of unreinvested Principal Collections (together with amounts applied to reimburse Loss Amounts) equal to the aggregate Discounted Principal Balance of such Subsequent Contracts to make such reinvestment. Principal Collections and reimbursements of Loss Amounts allocated to Certificates and not previously reinvested may be reinvested in additional Subsequent Contracts and Subsequent Leased Vehicles on one or more subsequent Transfer Dates each month prior to the end of the Revolving Period. During the Revolving Period, if the Servicer determines on the last day of any calendar month commencing in October 1997 that the amount of Principal Collections and reimbursed Loss Amounts and Certificate Principal Loss Amounts for the preceding Collection Period that have not been reinvested in Subsequent Contracts and Subsequent Leased Vehicles as of the first day of such month exceeds $1,000,000, an Early Amortization Event will occur, the Revolving Period will terminate and all unreinvested Principal Collections and reimbursements of Loss Amounts will be allocated or distributed as principal to the Trust and then to Certificateholders on succeeding Monthly Allocation Dates. SEE "--Early Amortization Events" below. AMORTIZATION PERIOD On each Monthly Allocation Date beginning with the First Principal Monthly Allocation Date and ending on the Monthly Allocation Date on which all Classes of Certificates have been paid in full (or monies sufficient to pay each outstanding Class of Certificates in full and reimburse Certificate Principal Loss Amounts have been allocated as principal and deposited into the Certificateholders' Account), the Trustee will deposit into the Certificateholders' Account and/or distribute to the Certificateholders then entitled to receive distributions in respect of principal, an amount equal to the Investor Percentage of all Principal Collections collected or received in respect of the related Collection Period, less amounts applied in reimbursement of Advances, Nonrecoverable Advances or Maturity Advances, together with any 50 portion of Available Interest, amounts withdrawn from the Reserve Fund and available therefor, Transferor Amounts or Class B Available Principal allocable or distributable in respect of principal on such Monthly Allocation Date, rather than reinvesting such amounts in Subsequent Contracts and Subsequent Leased Vehicles. On the First Principal Monthly Allocation Date, the Trustee will also allocate or distribute to Certificateholders as a portion of Principal Collections, following the priorities described above, the Investor Percentage of any Principal Collections and reimbursements of Loss Amounts allocable to the SUBI that were not reinvested in Subsequent Contracts and Subsequent Leased Vehicles as of the end of the Revolving Period. The aggregate distributions of principal to the Holders of Certificates of any Class will not exceed the related Initial Certificate Balance thereof. The Class Certificate Balance of each Class of Certificates will be payable in full on the related Targeted Maturity Date. If the aggregate of amounts allocated to cover such principal payment during the Collection Periods from the end of the Revolving Period through such date (whether from Principal Collections, Transferor Amounts, Available Interest or a Maturity Advance) are insufficient to make such payment in full, all such amounts available will be paid to the related Certificateholders on the related Targeted Maturity Date and, thereafter, payments of principal and interest will be made to the related Holders to the extent described below on a monthly basis on each subsequent Monthly Allocation Date until the related Class of Certificates has been paid in full. In addition, after the occurrence of any Monthly Payment Event, payments of principal will be made monthly to the Holders of each Class of Certificates sequentially, to the extent funds are allocated and are available therefor as described above, on each Monthly Allocation Date (and each such subsequent Monthly Allocation Date will be a Certificate Payment Date). The Investor Percentage of the net proceeds of any sale or other disposition of the SUBI, the SUBI Certificate or other property of the Trust, to the extent such net proceeds constitute Principal Collections, will be distributed first, to the Class A Certificateholders on a pro rata basis, based on their respective Class Certificate Balances as of the last day of the preceding Collection Period, until the Class A Certificates have been paid in full and, second, to the Class B Certificateholders. INVESTMENT OF AVAILABLE AMOUNTS During the Revolving Period, Available Interest not paid out to the Trustee or Servicer and not released to the Transferor or distributed to Certificateholders will be deposited into the Certificateholders' Account on such Monthly Allocation Date and invested in Permitted Investments maturing prior to the succeeding relevant Certificate Payment Date and bearing interest at the related Required Rates. Following the termination of the Revolving Period, so long as any Certificates are outstanding, such amounts of unreleased and undistributed Available Interest and the Investor Percentage of Principal Collections with respect to any Monthly Allocation Date that is not a Certificate Payment Date will be deposited into the Certificateholders' Account on such Monthly Allocation Date and invested in Permitted Investments maturing prior to the succeeding relevant Certificate Payment Date or Targeted Maturity Date, as appropriate, and bearing interest at the related Required Rates. Such Permitted Investments are expected to include one or more TMCC Demand Notes. TMCC Demand Notes will be unsecured general obligations of TMCC and will rank pari passu with all other unsecured and unsubordinated indebtedness of TMCC outstanding from time to time. Each Demand Note will mature on the earlier of the Deposit Date prior to the next succeeding Certificate Payment Date or Targeted Maturity Date, as the case may be, and the Certificate Payment Date following the occurrence of a Monthly Payment Event. Pursuant to the terms of the TMCC Demand Notes, the Trustee will be entitled to demand payment of the principal amount of the TMCC Demand Notes, together with accrued interest thereon, on any date after the occurrence of a Monthly Payment Event. 51 EARLY AMORTIZATION EVENTS As described above, the Amortization Period will commence on the earlier of the Amortization Date or the occurrence of an Early Amortization Event and continue until each Class of Certificates is paid in full. An "Early Amortization Event" will mean any of the following events: (i) failure by the Servicer (a) to make any payment or deposit required with respect to the SUBI, the SUBI or the Certificates under the Agreement or the Servicing Agreement, within five Business Days after the date the payment or deposit is required to be made, or (b) to deliver a Servicer's Certificate within ten Business Days after any Determination Date which failure continues unremedied for three Business Days; (ii) failure by the Transferor or the Servicer duly to observe or perform in any material respect any other of its covenants or agreements in the Agreement (other than those described in clause (i) above) or the Servicing Agreement, which failure materially and adversely affects the rights of holders of the SUBI or Certificateholders and which continues unremedied for 60 days after the giving of written notice of such failure (a) to the Transferor or the Servicer, as the case may be, by the Trustee or the Titling Trustee or (b) to the Transferor or the Servicer, as the case may be, and to the Trustee by holders of Certificates evidencing not less than 25% of the Voting Interests of the Class A Certificates and the Class B Certificates, voting together as a single class; (iii) failure to cure the inaccuracy of certain representations, warranties and certificates of the Transferor or the Servicer in the Agreement or the Servicing Agreement, which failure materially and adversely affects the rights of holders of the Transferor or Certificateholders and which continues uncured for 60 days after notice is given as described in clause (ii) above; provided that an Early Amortization Event pursuant to this subparagraph (iii) will not be deemed to occur if a related Reallocation Payment is due in connection with such breach and has been paid by the Servicer in accordance with the Servicing Agreement; (iv) the occurrence of certain Insolvency Events relating to the Transferor; (v) creation of any lien or encumbrance not otherwise permitted by the Agreement or the Servicing Agreement on the SUBI Assets, which lien or encumbrance is not released within 60 days of its creation; (vi) the Transferor, the Trust or the Titling Trust becomes subject to registration as an "investment company" for purposes of the Investment Company Act of 1940, as amended; (vii) if the Servicer determines on the last day of any calendar month commencing in October 1997 that the amount of Principal Collections and reimbursed Loss Amounts and Certificate Principal Loss Amounts for the preceding Collection Period that have not been reinvested in Subsequent Contracts and Subsequent Leased Vehicles as of the first day of such month exceeds $1,000,000; (viii) an Event of Servicing Termination occurs; or (ix) if on any Monthly Allocation Date the aggregate amount withdrawn from the Reserve Fund and deposited into the SUBI Collection Account or the Certificateholders' Account on or prior to such Monthly Allocation Date (without giving effect to any deposits into the Reserve Fund) exceeds $3,078,079 (I.E., 0.25% of the Aggregate Net Investment Value as of the Cutoff Date). If, because of the occurrence of an Early Amortization Event, the Amortization Period begins earlier than the Amortization Date, Certificateholders may (and if a Monthly Payment Event occurs, will) begin receiving distributions of principal earlier than they would otherwise have under the Agreement, which may shorten the final maturity and the weighted average life of any such Class of Certificates. In addition, if an Insolvency Event with respect to the Transferor were to occur during the Revolving Period, the Agreement will require the Transferor promptly to give notice of such Insolvency Event to the 52 Trustee. Pursuant to the Agreement, within 15 days of such notice, the Trustee may, and upon receipt of written instructions from holders of Certificates evidencing Voting Interests of not less than 51% of the Class A Certificates (voting together as a single class) or 51% of the Class A Certificates and Class B Certificates (voting together as a single class) shall, publish a notice of the Insolvency Event stating that the Trustee intends to sell or dispose of the SUBI and the SUBI Certificate and the other property of the Trust in a commercially reasonable manner. Following such publication, unless otherwise prohibited by applicable law, the Trustee will sell or otherwise dispose of the SUBI, the SUBI Certificate and such other property in a commercially reasonable manner and on commercially reasonable terms; provided that such sale shall not be made without the consent of all the Certificateholders if a net loss would be realized as a result of such sale. Proceeds of the sale or disposition of the SUBI, the SUBI Certificate and such other property, net of related Trust Administrative Expenses, will be deposited into the SUBI Collection Account and treated as Collections on or in respect of the SUBI Assets. The interest portion of the Investor Percentage of such proceeds will be distributed to the Certificateholders in the priority provided for herein, and the principal portion of the Investor Percentage of such proceeds will be distributed first, on a pro rata basis, to the Class A Certificateholders based on their respective Class Certificate Balances until each such Class of Certificates has been paid in full, and second, to the Class B Certificateholders. If such proceeds, together with all amounts on deposit in the Accounts and on deposit in the Reserve Fund and available therefor, amounts otherwise payable to the Transferor in respect of the Transferor Interest and certain amounts otherwise distributable in respect of the Class B Certificates, are insufficient to pay in full the Certificate Balance of a Class of Class A Certificates and any accrued and unpaid interest thereon, the related Class A Certificateholders will suffer a corresponding loss. The "Voting Interests" of the (i) Class A Certificates will be allocated among the Class A Certificateholders or Certificate Owners, as the case may be, in accordance with their respective Class Certificate Balances, and (ii) Class B Certificates will be allocated among the Class B Certificateholders in accordance with the Class B Certificate Balance represented thereby. Notwithstanding the foregoing, in certain circumstances, any Class A Certificates or Class B Certificates held or beneficially owned by the Transferor, TMCC or any of their respective affiliates shall be excluded from such determination. STATEMENTS TO CERTIFICATEHOLDERS On each Monthly Allocation Date, the Trustee will include with each distribution to each Certificateholder a statement, setting forth with respect to such Monthly Allocation Date or the related Collection Period, among other things, the following: (i) the Investor Percentage and Transferor Percentage in effect with respect to the related Collection Period; (ii) the amount being allocated or distributed to each Class of Certificateholders (the "Certificate Distribution Amount"); (iii) the amount of the Certificate Distribution Amount allocable to interest on and principal of each Class of Certificates, separately identifying any Maturity Advances; (iv) the amount of the Certificate Distribution Amount allocable to any Class A or Class B Interest Carryover Shortfall; (v) the amount, if any, of any unpaid Class A or Class B Interest Carryover Shortfall, after giving effect to the allocation or distribution of the Certificate Distribution Amount; (vi) the Certificate Balance, the Class Certificate Balance of each Class and the Certificate Factor with respect to each Class , in each case as of such Monthly Allocation Date and after giving effect to the allocation and/or distribution of the Certificate Distribution Amount; 53 (vii) the aggregate amount, if any, of the reimbursement of Loss Amounts included in distribution of the Certificate Distribution Amount and the amount thereof allocated to each Class of Certificateholders; (viii) the amount of the Certificate Distribution Amount allocable to reimbursement of previous Certificate Principal Loss Amounts for each Class, in each case together with the amount of accrued interest thereon included in such distribution; (ix) the amount, if any, of the aggregate unreimbursed Certificate Principal Loss Amounts for each Class, after giving effect to the allocation or distribution of the Certificate Distribution Amount; (x) the amount of any Class B Available Principal and unreimbursed Class B Available Principal, after giving effect to distribution of the Certificate Distribution Amount; (xi) the Investor Percentage of the Servicing Fee; (xii) the amount of any Required Amount included in the Certificate Distribution Amount and the balance on deposit in the Reserve Fund and the Class B Interest Reserve Amount on such Monthly Allocation Date, after giving effect to withdrawals therefrom and deposits thereto on such Monthly Allocation Date, the change in such balance from the immediately preceding Monthly Allocation Date and the Specified Reserve Fund Balance; (xiii) the amount of Transferor Amounts, if any, included in the Certificate Distribution Amount; (xiv) the Aggregate Net Investment Value as of the end of such Collection Period; (xv) the aggregate amount of Payments Ahead received by the Servicer and being held thereby or on deposit in the SUBI Collection Account in respect of future Collection Periods and the change in such amount from the immediately preceding Monthly Allocation Date; (xvi) the amount of Advances and Maturity Advances made, and the amount of unreimbursed Advances and Maturity Advances outstanding after giving effect to the allocation or distribution of the Certificate Distribution Amount; and (xvii) certain information used in determining the Specified Reserve Fund Balance. Copies of such statements may be obtained by Certificateholders or Certificate Owners by a request in writing addressed to the Trustee. In addition, within the prescribed period of time for tax reporting purposes after the end of each calendar year during the term of the Agreement, the Trustee will mail to each person who at any time during such calendar year shall have been a Class A or Class B Certificateholder or a Certificate Owner, a statement containing the sum of the amounts described in clauses (ii) through (xi) above for the purpose of preparing such person's federal income tax return. NOTICES For so long as any Class A Certificates are listed on the Luxembourg Stock Exchange, notices to Certificateholders will be given by publication in a leading daily newspaper of general circulation in Luxembourg or, if publication in Luxembourg is not practical, in Europe. Such publication is expected to be made in the LUXEMBOURG WORT. For so long as the Class A Certificates are listed on The Stock Exchange of Hong Kong Limited, notices to Certificateholders will be given by publication in a leading daily newspaper of general circulation in the English language in Hong Kong. Such publication is expected to be made in the SOUTH CHINA MORNING POST. In addition, if Definitive Certificates are issued, such notices will be mailed to the addresses of holders thereof at the addresses therefor as they appear in the register maintained by the Trustee prior to such mailing. Such notices will be deemed to have been given on the date of such publication or mailing. 54 TERMINATION OF THE TRUST; RETIREMENT OF THE CERTIFICATES The respective obligations and responsibilities of the Transferor and the Trustee created by the Agreement will terminate upon the earliest to occur of (i) the maturity, sale or other liquidation, as the case may be, of the last outstanding Contract and Leased Vehicle evidenced by the SUBI and the distribution of all proceeds thereof, together with all amounts on deposit in the Accounts and the Reserve Fund, in the manner to be prescribed in the Agreement, (ii) the day following the Monthly Allocation Date on which each Class of Certificates has been paid in full, (iii) the Transferor's optional repurchase of the SUBI Certificate as described below and (iv) the expiration, disposition or termination of the SUBI. In order to avoid excessive administrative expenses, the Transferor will be permitted at its option to purchase the SUBI Certificate from the Trust on any Monthly Allocation Date on or after the Class A-3 Targeted Maturity Date if, either before or after giving effect to any payment of principal required to be made on such Monthly Allocation Date, the Certificate Balance is less than or equal to $123,123,151.92 (10% of the Aggregate Net Investment Value as of the Cutoff Date) or amounts sufficient to effectively reduce the Certificate Balance to such amount have been deposited in the Collection Account on such date. The purchase price will be equal to the greater of (i) the sum of the Class A Certificate Balance and the Class B Certificate Balance, in each case plus accrued and unpaid interest thereon and on all unreimbursed Certificate Principal Loss Amounts at the related Certificate Rate, plus certain other accrued and unpaid amounts, if any, due to the Investor Certificateholders or the Servicer, and (ii) the Aggregate Net Investment Value as of the last day of the preceding Collection Period. The Trustee will give written notice of termination of the Trust to each Certificateholder. In connection with any such termination, except as otherwise provided in the Agreement, the Transferor will be deemed to relinquish all claims it may have against the assets of the Trust in respect of Transferor Amounts that were not paid to the Transferor. The final distribution to any Certificateholder will be made only upon surrender and cancellation of such Certificateholder's Certificate at an office or agency of the Trustee specified in the notice of termination. PRESCRIPTION In the event that any Certificateholder shall not surrender its Certificates for retirement within six months after the date specified in written notice given by the Trustee of the date for final payment thereof, the Trustee shall give a second written notice to the remaining Certificateholders to surrender their Certificates for retirement and receive the final distribution with respect thereto. If within one year after such second notice any Certificates shall not have been surrendered, the Trustee may take appropriate steps, or may appoint an agent to take appropriate steps, to contact the remaining Certificateholders concerning surrender of their Certificates, and the cost thereof shall be paid out of the funds and other assets that remain subject to this Agreement. Any funds remaining in the Trust after exhaustion of such remedies shall be distributed by the Trustee to a charity specified in the Agreement. BOOK-ENTRY REGISTRATION Unless and until Definitive Certificates are issued with respect to the Certificates or any Class of Certificates, each Class of Certificates offered hereby will be represented by one or more certificates registered in the name of Cede & Co., as nominee of DTC. Until then, Certificate Owners will hold beneficial interests in Certificates through DTC (in the United States) or Cedel Bank or Euroclear (in Europe or Asia) directly if they are participants of such systems, or indirectly through organizations which are participants in such systems. All references herein to actions by Certificateholders shall refer to actions taken by DTC upon instructions from DTC Participants, and all references herein to distributions, notices, reports and statements to Certificateholders shall refer to distributions, notices, reports and statements to Cede & Co., as the registered holder of the Securities, for distribution to Certificateholders in accordance with DTC procedures. As such, it is anticipated that the only Certificateholder will be Cede & Co., as nominee of DTC. Certificate Owners will not be recognized by the Trustee as Certificateholders as such term is used in the Agreement or Servicing Supplement, and Certificate Owners will only be permitted to exercise their rights as such indirectly through DTC and DTC Participants, as further described below. 55 Cedel Bank and Euroclear will hold omnibus positions on behalf of their participants through customers' securities accounts in their respective names on the books of their respective Depositaries which in turn will hold such positions in customers' securities accounts in the Depositaries' names on the books of DTC. Transfers between DTC Participants will occur in accordance with DTC rules. Transfers between Cedel Bank Participants and Euroclear Participants will occur in accordance with their applicable rules and operating procedures. Cross-market transfers between persons holding directly or indirectly through DTC, on the one hand, and directly or indirectly through Cedel Bank or Euroclear Participants, on the other, will be effected in DTC in accordance with DTC rules on behalf of the relevant international clearing system by its Depositary. However, each such cross-market transaction will require delivery of instructions to the relevant international clearing system by the counterparty in such system in accordance with its rules and procedures and within its established deadlines. The relevant international clearing system will, if the transaction meets its settlement requirements, deliver instructions to its Depositary to take action to effect final settlement on its behalf by delivering or receiving securities in DTC, and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Cedel Bank Participants and Euroclear Participants may not deliver instructions directly to the Depositaries. Because of time-zone differences, credits of Certificates received in Cedel Bank or Euroclear as a result of a transaction with a DTC Participant will be made during subsequent securities settlement processing and dated the Business Day following the DTC settlement date. Such credits or any transactions in such Certificates settled during such processing will be reported to the relevant Euroclear or Cedel Bank Participant on such Business Day. Cash received in Cedel Bank or Euroclear as a result of sales of Certificates by or through a Cedel Bank Participant or a Euroclear Participant to a DTC Participant will be received with value on the DTC settlement date but will be available in the relevant Cedel Bank or Euroclear cash account only as of the Business Day following settlement in DTC. As used in this paragraph, "Business Day" means a Business Day on which Cedel Bank and Euroclear are also transacting settlements in securities. DTC is a limited purpose trust company organized under the laws of the State of New York, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York UCC and a "clearing agency" registered pursuant to Section 17A of the Exchange Act. DTC was created to hold securities for its participating members ("DTC Participants") and to facilitate the clearance and settlement of securities transactions between DTC Participants through electronic book-entries, thereby eliminating the need for physical movement of certificates. DTC Participants include securities brokers and dealers, banks, trust companies and clearing corporations which may include underwriters, agents or dealers with respect to the Certificates of any class or series. Indirect access to the DTC system also is available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a DTC Participant, either directly or indirectly (the "Indirect DTC Participants"). The rules applicable to DTC and DTC Participants are on file with the Commission. Certificate Owners that are not DTC Participants or Indirect DTC Participants but desire to purchase, sell or otherwise transfer ownership of, or other interests in, Certificates may do so only through DTC Participants and Indirect DTC Participants. DTC Participants will receive a credit for the Certificates on DTC's records. The ownership interest of each Certificate Owner will in turn be recorded on respective records of the DTC Participants and Indirect DTC Participants. Certificate Owners will not receive written confirmation from DTC of their purchase, but Certificate Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the DTC Participant or Indirect DTC Participant through which the Certificate Owner entered into the transaction. Transfers of ownership interests in the Certificates of any Class will be accomplished by entries made on the books of DTC Participants acting on behalf of Certificate Owners. 56 The deposit of Certificates with DTC and their registration in the name of Cede & Co. will effect no change in Certificate ownership. DTC will have no knowledge of the identities of Certificate Owners and its records will reflect only the identity of the DTC Participants to whose accounts such Certificates are credited, which may or may not be the Certificate Owners. DTC Participants and Indirect DTC Participants will remain responsible for keeping account of their holdings on behalf of their customers. While the Certificates are held in book-entry form, Certificate Owners will not have access to the list of Certificate Owners, which may impede the ability of Certificate Owners to communicate with each other. Conveyance of notices and other communications by DTC to DTC Participants, by DTC Participants to Indirect DTC Participants and by DTC Participants and Indirect DTC Participants to Certificate Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Under the rules, regulations and procedures creating and affecting DTC and its operations, DTC is required to make book-entry transfers among DTC Participants on whose behalf it acts with respect to the Certificates and is required to receive and transmit distributions of principal of and interest on the Certificates. DTC Participants and Indirect DTC Participants with which Certificate Owners have accounts with respect to the Certificates similarly are required to make book-entry transfers and receive and transmit such payments on behalf of their respective Certificate Owners. DTC's practice is to credit DTC Participants' accounts on each Certificate Payment Date in accordance with their respective holdings shown on its records, unless DTC has reason to believe that it will not receive payment on such Certificate Payment Date. Payments by DTC Participants and Indirect DTC Participants to Certificate Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name", and will be the responsibility of such DTC Participant and not of DTC, the Trustee or Titling Trustee (or any paying agent appointed thereby), the Transferor or the Servicer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal of and interest on each class of Certificates to DTC will be the responsibility of the Trustee, disbursement of such payments to DTC Participants will be the responsibility of DTC and disbursement of such payments to the related Certificate Owners will be the responsibility of DTC Participants and Indirect DTC Participants. As a result, under the book-entry format, Certificate Owners may experience some delay in their receipt of payments. DTC will forward such payments to its DTC Participants which thereafter will forward them to Indirect DTC Participants or Certificate Owners. The ability of a Certificate Owner to pledge Certificates to persons or entities that do not participate in the DTC system, or otherwise take actions with respect to such Certificates, may be limited due to the lack of a physical certificate for such Certificates. DTC has advised the Transferor that it will take any action permitted to be taken by a Certificateholder only at the direction of one or more DTC Participants to whose account with DTC the Certificates are credited. Additionally, DTC has advised the Transferor that it will take such actions with respect to specified percentages of the Certificateholders' interest only at the direction of and on behalf of DTC Participants whose holdings include undivided interests that satisfy such specified percentages. DTC may take conflicting actions with respect to other undivided interests to the extent that such actions are taken on behalf of DTC Participants whose holdings include such undivided interests. Neither DTC nor Cede & Co. will consent or vote with respect to the Certificates. Under its usual procedures, DTC will mail an "Omnibus Proxy" to the Trustee as soon as possible after any applicable Record Date for such a consent or vote. The Omnibus Proxy will assign Cede & Co.'s consenting or voting rights to those DTC Participants to whose accounts the related Certificates are credited on that record date (which record date will be identified in a listing attached to the Omnibus Proxy). Cedel Bank is incorporated under the laws of Luxembourg as a professional depository. Cedel Bank holds securities for its participating organizations ("Cedel Bank Participants") and facilitates the clearance 57 and settlement of securities transactions between Cedel Bank Participants through electronic book entry changes in accounts of Cedel Bank Participants, thereby eliminating the need for physical movement of certificates. Transactions may be settled in Cedel Bank in any of 28 currencies, including United States dollars. Cedel Bank provides to Cedel Bank Participants, among other things, services for safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Cedel Bank interfaces with domestic markets in several countries. As a professional depository, Cedel Bank is subject to regulation by the Luxembourg Monetary Institute. Cedel Bank Participants are recognized financial institutions around the world including underwriters, securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations and may include any underwriters, agents or dealers with respect to any Class A Certificates offered hereby. Indirect access to Cedel Bank is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Cedel Bank Participant, either directly or indirectly. The Euroclear System was created in 1968 to hold securities for participants of the Euroclear System ("Euroclear Participants") and to clear and settle transactions between Euroclear Participants through simultaneous electronic book-entry delivery against payment, thereby eliminating the need for physical movement of certificates and any risk from lack of simultaneous transfers of securities and cash. Transactions may now be settled in any of 27 currencies, including United States dollars. The Euroclear System includes various other services, including securities lending and borrowing, and interfaces with domestic markets in several countries generally similar to the arrangements for cross-market transfers with DTC described above. The Euroclear System is operated by Morgan Guaranty Trust Company of New York, Brussels, Belgium office (the "Euroclear Operator"), under contract with Euroclear Clearance System S.C., a Belgian cooperative corporation (the "Cooperative"). All operations are conducted by the Euroclear Operator, and all Euroclear securities clearance accounts and Euroclear cash accounts are accounts with the Euroclear Operator, not the Cooperative. The Cooperative establishes policy for the Euroclear System on behalf of Euroclear Participants. Euroclear Participants include banks (including central banks), securities brokers and dealers and other professional financial intermediaries and may include any underwriters, agents or dealers with respect to any Class A Certificates offered hereby. Indirect access to the Euroclear System is also available to other firms that clear through or maintain a custodial relationship with a Euroclear Participant, either directly or indirectly. The Euroclear Operator is the Belgian branch of a New York banking corporation which is a member Bank of the Federal Reserve System. As such, it is regulated and examined by the Board of Governors of the Federal Reserve System and the New York State Banking Department, as well as the Belgian Banking Commission. Securities clearance accounts and cash accounts with the Euroclear Operator are governed by the Terms and Conditions Governing Use of Euroclear and the related Operating Procedures of the Euroclear System and applicable Belgian law (collectively, the "Terms and Conditions"). The Terms and Conditions govern transfers of securities and cash within the Euroclear System, withdrawals of securities and cash from the Euroclear System and receipts of payments with respect to securities in the Euroclear System. All securities in the Euroclear System are held on a fungible basis without attribution of specific certificates to specific securities clearance accounts. The Euroclear Operator acts under the Terms and Conditions only on behalf of Euroclear Participants, and has no record of or relationship with persons holding through Euroclear Participants. Distributions with respect to Certificates held through Cedel Bank or Euroclear will be credited to the cash accounts of Cedel Bank Participants or Euroclear Participants in accordance with the relevant system's rules and procedures, to the extent received by its Depositary. Such distributions will be subject to tax withholding in accordance with relevant United States tax laws and regulations. SEE "Material Income Tax Considerations" and "Annex I--Global Clearance, Settlement and Tax Documentation Procedures-- Certain U.S. Federal Tax Documentation Requirements". Cedel Bank or the Euroclear Operator, as the case may be, will take any other action permitted to be taken by a Certificateholder on behalf of a Cedel 58 Bank Participant or Euroclear Participant only in accordance with its relevant rules and procedures and subject to its Depositary's ability to effect such actions on its behalf through DTC. Although DTC, Cedel Bank and Euroclear have agreed to the foregoing procedures in order to facilitate transfers of Certificates among participants of DTC, Cedel Bank and Euroclear, they are under no obligation to perform or continue to perform such procedures and such procedures may be discontinued at any time. DEFINITIVE CERTIFICATES Definitive Certificates will be issued to Certificate Owners rather than to DTC only if (i) DTC is no longer willing or able to discharge its responsibilities with respect to the Class A Certificates, and neither the Trustee nor the Transferor is able to locate a qualified successor, (ii) the Transferor, at its option, elects to terminate the book-entry system through DTC or (iii) after an Early Amortization Event, Certificate Owners representing in the aggregate not less than 51% of the Voting Interests of the Class A Certificates (voting together as a single class) advise the Trustee through DTC or its successor in writing that the continuation of a book-entry system through DTC or its successor is no longer in the best interest of Certificate Owners. Upon the occurrence of any of the events described in the immediately preceding paragraph, the Trustee will be required to notify all Certificate Owners, through Participants, of the availability through DTC of Definitive Certificates. Upon surrender by DTC of the certificates representing the related Class A Certificates and the receipt of instructions for re-registration, the Trustee will issue Definitive Certificates to Certificate Owners, who thereupon will become Certificateholders for all purposes of the Agreement. Payments on the related Class A Certificates will thereafter be made by the Trustee directly to holders of such Class A Certificates in accordance with the procedures set forth herein and to be set forth in the Agreement. Interest payments and any principal payments on the Definitive Certificates on each Certificate Payment Date will be made to holders in whose names the Definitive Certificates were registered at the close of business on the related Record Date. Payments will be made by check mailed to the address of such holders as they appear on the Certificate Register or, under the circumstances to be provided by the Agreement, by wire transfer to a bank or depository institution located in the United States and having appropriate facilities therefor. The final payment on any Class A Certificates, however, will be made only upon presentation and surrender of such Definitive Certificates or global certificates at the office or agency specified in the notice of final distribution to Class A Certificateholders. Definitive Certificates will be transferable and exchangeable at the offices of the Trustee or the Certificate Registrar to be set forth in the Agreement. No service charge will be imposed for any registration of transfer or exchange, but the Trustee may require payment of a sum sufficient to cover any tax or other governmental charge imposed in connection therewith. Bankers Trust Company Luxembourg S.A., 14 Boulevard F.D. Roosevelt, L-2450, Luxembourg, has been appointed as paying agent and transfer agent in Luxembourg in relation to the Class A Certificates. The Transferor will maintain a paying agent and transfer agent in relation to the Class A Certificates in Luxembourg for so long as any Class A Certificates are listed on the Luxembourg Stock Exchange. Payments and transfers of the Class A Certificates will be made at the offices of the paying agent and transfer agent in Luxembourg. 59 ASSETS OF THE TRUST GENERAL The property of the Trust will primarily consist of the SUBI evidenced by the SUBI Certificate, excluding the right to proceeds of the Residual Value Insurance Policy retained by the Transferor pursuant to the Agreement. The property of the Trust will also include such amounts as from time to time are held in the SUBI Collection Account and the Certificateholders' Account. The Trust will also have the collateral benefit of the Contingent and Excess Liability Insurance Policies described below (and indemnification by TMCC of the related deductibles) and the Trustee's rights as a third-party beneficiary of the Servicing Supplement and SUBI Supplement. As registered holder of the SUBI Certificate, the Trustee will be deemed to have ownership of the SUBI Certificate and, through such ownership, an indirect beneficial ownership interest in the Contracts and Leased Vehicles. If a court of competent jurisdiction recharacterizes the transfer of the SUBI to the Trust as a transfer for security, the Trustee may instead be deemed to have a perfected security interest in the SUBI Certificate, the Contracts and Contract Rights susceptible of perfection under the UCC, but in no event will the Trustee be deemed to have a perfected security interest in the Leased Vehicles. SEE "Certain Legal Aspects of the Titling Trust--Structural Considerations". THE ACCOUNTS; COLLECTIONS THE SUBI COLLECTION ACCOUNT On or prior to the Closing Date, the Titling Trustee will establish an account maintained at the Trust Agent in the name of the Titling Trustee as the SUBI Collection Account (the "SUBI Collection Account" and, together with the Certificateholders' Account and the Reserve Fund, the "Accounts") as a trust account for the exclusive benefit of the holders of interests in the SUBI into which collections on or in respect of the Contracts and the Leased Vehicles with respect to each Collection Period generally will be deposited on the Deposit Date. DEPOSITS INTO THE SUBI COLLECTION ACCOUNT. Deposits into the SUBI Collection Account will include, but will not be limited to, the following payments made in respect of the SUBI Assets: (i) Monthly Payments; (ii) early payments in full of any Contract, including an amount equal to the Residual Value of the related Leased Vehicle (each, a "Prepayment"); (iii) Matured Leased Vehicle Proceeds, Repossessed Vehicle Proceeds and other Liquidation Proceeds; (iv) Payments Ahead; (v) Advances made by the Servicer and Maturity Advances made by the Transferor; and (vi) Reallocation Payments by TMCC (together with, under certain circumstances during the Amortization Period, Reallocation Deposit Amounts) in respect of certain Contracts as to which an uncured breach of certain representations and warranties or certain servicing covenants has occurred. Pursuant to the Agreement and the Servicing Agreement, in the event that TMCC, as Servicer, ceases to satisfy certain tests with respect to its credit ratings, the Servicer will thereafter be required to commence depositing Interest and Principal Collections and other proceeds in respect of the Contracts and Leased Vehicles into the SUBI Collection Account within two Business Days of receipt thereof, and will cease to have the right, described below, to make such deposits net of amounts payable, reimbursable or distributable to TMCC, as Servicer. SEE "Assets of the Trust-- The Accounts; Collections". Deposits also will be made to the SUBI Collection Account from, among other sources, (i) monies on deposit in the Reserve Fund and (ii) the Transferor, in the event it purchases the SUBI Certificate on or after the Class A-3 Targeted Maturity Date when the Certificate Balance is less than or equal to $123,123,151.92 (10% of the Aggregate Net Investment Value as of the Cutoff Date) or amounts sufficient to effectively reduce the Certificate Balance to such amount have been deposited in the Collection Account on such date. "Net Insurance Proceeds" will include recoveries pursuant to the Contingent and Excess Liability Insurance Policies and the comprehensive, collision, public liability and property damage insurance policy 60 required to be obtained and maintained by the lessee pursuant to each Contract (or payment by TMCC of the deductibles as to which it has indemnified the Trust as described in "Additional Document Provisions-- The Servicing Agreement--Insurance on Leased Vehicles"), and amounts paid by any insurer under any other insurance policies relating to the Contracts, the related lessees or the Leased Vehicles (excluding the Residual Value Insurance Policy, the proceeds of which will be a SUBI Asset but will not be transferred by the Transferor to the Trust), in each case net of certain sums applied to the repair of the related Leased Vehicles. NET DEPOSITS. So long as TMCC is the Servicer, the Servicer will be permitted to deposit in the SUBI Collection Account only the net amount distributable to the Trustee, as holder of the SUBI Certificate, and the Transferor on the related Deposit Date. The Servicer, however, will account to the Trustee, the Titling Trustee, the Certificateholders and the Transferor as if all of the deposits and distributions described herein were made individually. This "net deposit" provision will be for the administrative convenience of the parties involved and will not affect amounts required to be deposited into the Accounts. CERTAIN WITHDRAWALS FROM THE SUBI COLLECTION ACCOUNT. To the extent not already netted against Collections, Matured Leased Vehicle Proceeds or Liquidation Proceeds, as the case may be, the Titling Trustee shall remit to the Servicer, without interest and prior to any other distribution from the SUBI Collection Account on such date, monies from the SUBI Collection Account representing (i) unreimbursed Matured Leased Vehicle Expenses, Repossessed Vehicle Expenses and other Liquidation Expenses; (ii) delinquent Monthly Payments with respect to which the Servicer has made an unreimbursed Advance; and (iii) an amount equal to any unreimbursed Advances that the Servicer has concluded are Nonrecoverable Advances. SEE "Additional Document Provisions--The Servicing Agreement--Advances" regarding "Nonrecoverable Advances". THE CERTIFICATEHOLDERS' ACCOUNT On or prior to the Closing Date, the Trustee will establish an account maintained at the Trust Agent in the name of the Trustee as the Certificateholders' Account (the "Certificateholders' Account") as a trust account for the exclusive benefit of the Certificateholders into which the Investor Percentage of Interest Collections and Principal Collections will be deposited on each Monthly Allocation Date to the extent allocated for distribution on subsequent Certificate Payment Dates in the amounts described above under "Description of the Certificates--Allocations and Distributions on the Certificates". Amounts so deposited will be invested in Permitted Investments (which are expected to include one or more TMCC Demand Notes) meeting the criteria and bearing a rate of interest satisfactory to the Rating Agencies that mature on or before the next relevant Certificate Payment Date. Upon the occurrence of a Monthly Payment Event, however, no further deposits will be made to the Certificateholders' Account, but instead all such investments will be liquidated and amounts on deposit therein will be distributed to Certificateholders on the next Monthly Allocation Date (which will be a relevant Certificate Payment Date with respect to interest on all Classes of Certificates and with respect to principal on the outstanding Classes of Certificates to the extent described above under "Description of the Certificates--Allocations and Distributions on the Certificates"). Thereafter, Collections will simply be deposited into the SUBI Collection Account for distribution to Certificateholders on a monthly basis on each Certificate Payment Date as described under "Description of the Certificates--Allocations and Distributions on the Certificates". THE RESERVE FUND On or prior to the Closing Date, pursuant to the Agreement, the Transferor will establish the Reserve Fund as a trust account with the Trustee for the benefit of the Certificateholders and the Transferor. The Reserve Fund will not be an asset of the Trust. On each Monthly Allocation Date, to the extent described herein, monies on deposit in the Reserve Fund will be applied to pay certain Loss Amounts and shortfalls in respect of amounts collected with respect to the related Collection Period. In addition, to the extent not 61 otherwise required to make any of the payments specified under "Description of the Certificates-- Allocations and Distributions on the Certificates--Allocations and Distributions of Collections", monies on deposit in the Reserve Fund will be available to make payments to the Certificateholders should Collections ultimately be insufficient to reduce the Class A Certificate Balances or the Class B Certificate Balance to zero on the related Stated Maturity Date. A portion of the amounts on deposit in the Reserve Fund equal to the Class B Interest Reserve Amount will be available only to cover interest shortfalls with respect to the Class B Certificates, and will not be available to cover interest shortfalls, Loss Amounts or Certificate Principal Loss Amounts allocated to the Class A Certificates. The "Class B Interest Reserve Amount" with respect to any Monthly Allocation Date, means the lesser of (i) $1,246,218.75 less all amounts previously withdrawn from the Reserve Fund and applied to make allocations or distributions in respect of interest accrued on the Class B Certificates or Certificate Principal Loss Amounts allocated thereto or (ii) 1.6875% of the Class B Certificate Balance as of the day prior to such Monthly Allocation Date; provided that the Class B Interest Reserve Amount will be zero on and after any date on which any Rating Agency reduces its rating of the Class A Certificates to less than "A" or its equivalent or withdraws its rating of any Class of Class A Certificates (unless such rating is restored). Amounts on deposit in the Reserve Fund not allocated to the Class B Interest Reserve Amount will be available for application for all of the purposes described above. THE SPECIFIED RESERVE FUND BALANCE. The Reserve Fund will be created on or prior to the Closing Date with the deposit by the Transferor of the Initial Deposit. On each Monthly Allocation Date, the Reserve Fund will be supplemented by certain Collections in excess of those amounts required to be allocated or distributed to the Certificateholders and certain monies that otherwise would be distributed as Transferor Amounts, until the amount on deposit therein equals the applicable Specified Reserve Fund Balance. Except as described below, the "Specified Reserve Fund Balance" with respect to any Monthly Allocation Date will equal $30,780,787.98 (2.5% of the Aggregate Net Investment Value as of the Cutoff Date), except that, if on any Monthly Allocation Date (i) the average of the Charge-off Rates for the three preceding Collection Periods exceeds 1.25%, (ii) the average of the Delinquency Percentages for the three preceding Collection Periods exceeds 1.25%, or (iii) the Residual Value Test is not satisfied as of the related Determination Date, then the Specified Reserve Fund Balance will equal $61,561,575.96 (5.0% of the Aggregate Net Investment Value as of the Cutoff Date); provided, however, that the Specified Reserve Fund Balance shall in no event be more than the sum of the outstanding principal amounts of each Class of Certificates. The "Charge-off Rate" with respect to a Collection Period will equal the Aggregate Net Losses with respect to the Contracts expressed, on an annualized basis, as a percentage of the average of (i) the Aggregate Net Investment Value on the last day of the immediately preceding Collection Period and (ii) the Aggregate Net Investment Value on the last day of such Collection Period. The "Aggregate Net Losses" with respect to a Collection Period will equal the Discounted Principal Balance of all Contracts newly designated during such Collection Period as Charged-off Contracts minus the sum of (x) Net Liquidation Proceeds collected during such Collection Period with respect to all Charged-off Contracts and (y) the portion of amounts subsequently received in respect of Contracts liquidated in prior Collection Periods specified in the SUBI Supplement. The "Delinquency Percentage" with respect to a Collection Period will equal (a) the number of all outstanding Contracts 60 days or more delinquent (after taking into account permitted deferrals) as of the last day of such Collection Period, determined in accordance with the Servicer's normal practices, plus (b) the number of repossessed Leased Vehicles that have not been liquidated (to the extent the related Contract is not otherwise reflected in clause (a) above), expressed as a percentage of the aggregate number of Current Contracts on the last day of such Collection Period. The "Residual Value Test" will not be satisfied as of any Determination Date if (i) with respect to the related Collection Period the number of Leased Vehicles returned to the Servicer during such period 62 relating to Contracts that became Matured Contracts during such period is greater than 25% of all Contracts that, as of their respective origination dates, had been scheduled to become Matured Contracts during such period (provided that at least 500 such Contracts had been scheduled to become Matured Contracts during such Collection Period), and (ii) the average Net Matured Leased Vehicle Proceeds during the three immediately preceding calendar months (or the months of August and September 1997 in the case of the October 1997 Determination Date) is less than 75% of the average Residual Values of Leased Vehicles disposed of or liquidated during such period. A "Current Contract" will be a Contract that is not a Charged-off Contract, a Liquidated Contract, a Matured Contract or an Additional Loss Contract. A "Liquidated Contract" will be a Contract that has been the subject of a Prepayment in full or otherwise has been paid in full or, in the case of a Charged-off Contract, a Contract as to which the Servicer has determined that the final amounts in respect thereof have been paid. An "Additional Loss Contract" will be a Contract as to which the related SUBI Assets have been sold or otherwise disposed of by the Servicer, acting on behalf of the Titling Trust, to pay an Additional Loss Amount. The Transferor may, from time to time after the date of this Prospectus, request each Rating Agency to (a) approve a formula for determining the Specified Reserve Fund Balance that is different from the one described above that would result in a decrease in the amount of the Specified Reserve Fund Balance or (b) a change in the manner by which the Reserve Fund is funded or to meet the Specified Reserve Fund Balance. If each Rating Agency delivers a letter to the Trustee to the effect that the use of any such new formula or change will not result in a qualification, reduction or withdrawal of its then-current rating of any Class of Certificates, then such new formula or change will be implemented and, to the extent necessary, the Agreement will be amended, without the consent of any Certificateholder or Certificate Owner. WITHDRAWALS FROM THE RESERVE FUND. On each Deposit Date the Trustee shall withdraw from the Reserve Fund, to the extent available, and deposit in the SUBI Collection Account or Certificateholders' Account, as appropriate, an aggregate amount equal to the Required Amount. Amounts on deposit in the Reserve Fund will also be available to make certain other payments to Certificateholders and the Transferor. Monies on deposit in the Reserve Fund on a Monthly Allocation Date in excess of the Specified Reserve Fund Balance will be released to the Transferor. Income on investment of amounts held in the Reserve Fund will belong to the Transferor and will be distributed thereto on each Monthly Allocation Date. Any such amounts received by the Transferor shall be free of any claim of the Trust, the Trustee or the Certificateholders and shall not be available to the Trustee or the Trust for the purpose of making deposits to the Reserve Fund or making payments to the Investor Certificateholders, nor shall the Transferor be required to refund any amount properly received by it. MAINTENANCE OF THE ACCOUNTS The Accounts will be maintained with the Trustee so long as either (i) the short-term unsecured debt obligations of the Trustee are rated at least P-1 by Moody's and A-1+ by Standard & Poor's or (ii) the Trustee is a depository institution or trust company having a long-term unsecured debt rating from Moody's of at least Baa3 and corporate trust powers and the related Account is maintained in a segregated trust account in the corporate trust department of the Trustee. If the Trustee at any time does not qualify under either of these criteria, the Servicer shall, with the assistance of the Trustee, as necessary, cause the related Account to be moved to a depository institution organized under the laws of the United States or any state thereof that does so qualify, or moved to a segregated trust account located in a corporate trust department of a depository institution or trust company as described above. PERMITTED INVESTMENTS At the direction of the Servicer, the Trustee or the Trust Agent, as the case may be, shall invest funds on deposit in the SUBI Collection Account and the Reserve Fund in one or more Permitted Investments 63 maturing no later than the Deposit Date succeeding the date of such investment. Additionally, at the direction of the Servicer, the Trustee or the Trust Agent, as the case may be, shall invest funds on deposit in the Certificateholders' Account in one or more Permitted Investments maturing no later than the Deposit Date preceding the next relevant Certificate Payment Date or the Target Maturity Date, as appropriate and bearing interest at the Required Rate. It is expected that all or substantially all Permitted Investments identified by the Servicer with respect to amounts on deposit in the Certificateholders' Account will be TMCC Demand Notes. "Permitted Investments" will be specified in the SUBI Supplement and will include, among other things, U.S. treasury securities, certificates of deposit issued by highly rated U.S. depository institutions or trust companies (including the Trustee), demand or time deposits of, bankers acceptances issued by, or federal funds sold by highly rated U.S. depository institutions or trust companies or other savings institutions that are fully insured by the FDIC, certain repurchase obligations held by any Securitization Trustee backed by similar securities, certain highly rated mutual funds, certain debt securities issued by highly rated U.S. corporations, certain highly rated money market funds for which the Trustee or an Affiliate of the Trustee serves as an investment advisor, administrator, shareholder servicing agent and/or custodian and the TMCC Demand Notes. Notwithstanding the foregoing, (a) investments on which the obligor is the entity at which the related Account is located may mature on the related Deposit Date or Monthly Allocation Date, as the case may be, and (b) investments during the Revolving Period of Principal Collections and reimbursements of Loss Amounts and Certificate Principal Loss Amounts on deposit in the SUBI Collection Account may mature on such dates as in the Servicer's discretion will maintain sufficient cash to acquire Subsequent Contracts and Subsequent Leased Vehicles on the related Transfer Dates. All income or other gain from the foregoing investments generally shall be retained in the related Account with such gain in respect of funds in the SUBI Collection Account generally being treated as Interest Collections received in respect of the related Collection Period. Any loss resulting from such investments shall be charged to the related Account. The "Required Rate" with respect to any Permitted Investment of amounts held in the Certificateholders' Account in respect of principal for any Class of Certificates will be the related Certificate Rate, and with respect to amounts held in the Certificateholders' Account in respect of interest for any Class of Certificates will be the one month commercial paper rate, which rate will reset monthly. THE CONTINGENT AND EXCESS LIABILITY INSURANCE POLICIES In addition to the physical damage and liability insurance coverage required to be obtained and maintained by the lessees pursuant to the Contracts, and as additional protection in the event that any lessee fails to maintain all such required insurance, TMCC maintains contingent liability insurance for bodily injury and property damage suffered by third persons caused by any vehicle owned by any insured. TMCC also maintains with such insurers substantial amounts of excess insurance coverage for which the Titling Trust is an additional named insured (together with the aforementioned primary contingent liability insurance policy, the "Contingent and Excess Liability Insurance Policies"). Currently, these insurance policies collectively provide insurance coverage of $100 million per occurrence, and permit multiple claims in any policy period (with no annual or aggregate cap on the number of claims thereunder), but such coverages may be reduced as described below. Such Contingent and Excess Liability Insurance Policies are subject to significant per occurrence deductibles (generally $125,000, but $250,000 if the related lessees primary insurance policy has lapsed or the related insurer denies coverage on the basis that TMCC or an approved TMCC affiliate is named as loss payee instead of the Titling Trust) in respect of which TMCC will indemnify the Trust. However, in the event that all such insurance coverage were exhausted and/or TMCC did not satisfy its indemnity obligations such that damages were assessed against the Titling Trust, various claims could be imposed against the Titling Trust Assets, including the SUBI Assets. In such event, investors in the Class A Certificates could incur a loss on their investment. However, the Titling Trust will be an additional named insured under the Contingent and Excess Liability Insurance Policies and 64 payments made thereunder in respect of Leased Vehicles comprising SUBI Assets, and indemnity payments made by TMCC in respect of related deductibles, will constitute SUBI Assets. To the extent that payments under the Contingent and Excess Liability Insurance Policies are made to third party claimants, they will reduce the Additional Loss Amounts that otherwise would be required to be paid out of the SUBI Assets. SEE "Risk Factors--Risks Associated with Vicarious Tort Liability with Respect to Leased Vehicles", "--Structural Considerations--Allocation of Titling Trust Liabilities" and "--Third-Party Liens on SUBI Assets" and "Certain Legal Aspects of the Contracts and the Leased Vehicles--Vicarious Tort Liability". The Servicing Agreement will provide that so long as any Certificates are outstanding, the Titling Trustee and TMCC will maintain one or more Contingent and Excess Liability Insurance Policies with coverages in an amount of at least $10 million per occurrence as specified in the Servicing Supplement unless each Rating Agency has delivered notice to the Trustee to the effect that failure to maintain any such insurance policy will not cause it to qualify, reduce or withdraw its then-current rating of any Class of Certificates. The foregoing obligations of TMCC will survive any termination of TMCC as Servicer under the Servicing Agreement. SUBORDINATION The rights of the Class B Certificateholders will be subordinated to the rights of the Class A Certificateholders to the extent described herein. This subordination is intended to enhance the likelihood of timely receipt by Class A Certificateholders of the full amount of interest and principal required to be paid to them, and to afford such Certificateholders limited protection against losses in respect of the Contracts. The Class B Certificateholders will not receive any distributions of interest with respect to a Certificate Payment Date until the full amount of interest accrued on the Class A Certificate Balances and on unreimbursed Certificate Principal Loss Amounts previously allocated thereto has been distributed to the Class A Certificateholders. The Class B Certificateholders will not receive any distributions of principal with respect to any Certificate Payment Date until each Class of Class A Certificates has been paid in full. Distributions of interest on the Class B Certificates, to the extent of collections on Contracts allocable to interest and the amount on deposit in the Reserve Fund, will not be subordinated to the payment of principal of or reimbursement of Loss Amounts allocated to the Class A Certificates. In addition, the rights of the Certificateholders to receive certain distributions with respect to the Contracts will be subordinated to the rights of the Servicer (to the extent that the Servicer is paid the Servicing Fee with respect to the related Collection Period, including any unpaid Servicing Fees with respect to one or more prior Collection Periods and any additional servicing compensation as described herein, and to the extent the Servicer is reimbursed for certain unreimbursed Advances). ADDITIONAL DOCUMENT PROVISIONS The following summaries of certain provisions of the Agreement, the Titling Trust Agreement, the Servicing Agreement, TMCC Demand Notes and of the Indenture do not purport to be complete and are qualified in their entirety by reference to such agreements, copies of which have been filed as exhibits to the Registration Statement of which this Prospectus is a part. Capitalized terms used but not defined in such summaries have the meanings given to them in the respective agreements. 65 ADDITIONAL AGREEMENT PROVISIONS Certain additional provisions of the Agreement are summarized below. NO PETITION The Trustee will agree not to institute, or join in, any bankruptcy or similar proceeding against the Transferor, TMCC, the Titling Trust or the Titling Trustee until one year and one day after the later of (i) payment of the Certificates in full and (ii) final payment of all other financings involving interests in the Titling Trust (including the transaction described herein and all other transactions involving the UTI and each Other SUBI). AMENDMENT The Agreement may be amended by the Transferor and the Trustee, without the consent of the Certificateholders, to cure any ambiguity, to correct or supplement any provision therein which may be inconsistent with any other provision therein, to add any other provisions with respect to matters or questions arising under the Agreement which are not inconsistent with the provisions of the Agreement or to add or amend any provision therein in connection with permitting transfers of the Class B Certificates; provided that any such action will not, in the good faith judgment of the parties, materially and adversely affect the interest of any Certificateholder and the Trustee shall have been furnished with an opinion of counsel to the effect that such amendment will not materially and adversely affect the interest of any Certificateholder. The Agreement may also be amended from time to time by the Transferor and the Trustee (including with respect to changing the formula for determining the Specified Reserve Fund Balance, the manner in which the Reserve Fund is funded, changing the remittance schedule for collection deposits in the SUBI Collection Account or changing the definition of Permitted Investments) if (a) the Trustee has been furnished with a letter from each Rating Agency to the effect that such amendment would not cause its then-current rating on any Class of Certificates to be qualified, reduced or withdrawn or (b) the Trustee has received the consent of the holders of Certificates evidencing not less than 51% of the Voting Interests of the Class A Certificates and the Class B Certificates, voting together as a single class, for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Agreement or of modifying in any manner the rights of each Class of Certificateholders; provided, however, that no such amendment shall increase or reduce in any manner the amount of, or accelerate or delay the timing of, collections of payments on the SUBI or the SUBI Certificate or distributions that shall be required to be made on any Class of Certificates or the applicable Certificate Rate and no amendment of any type shall reduce the percentage of the aggregate Voting Interests of the Certificates of any Class required to consent to any such amendment, in each case without the consent of all Certificateholders and Certificate Owners. The Agreement may also be amended by the Transferor and the Trustee to modify certain provisions thereof relating to obtaining the Requested Exemption. Any amendment eliminating the Reserve Fund or reducing the Specified Reserve Fund Balance shall also require the Transferor to deliver to the Trustee an opinion of counsel to the effect that after such amendment, for federal income tax purposes, the Trust will not be treated as an association taxable as a corporation, and the Class A Certificates will, and the Class B Certificates should, properly be characterized as indebtedness that is secured by the assets of the Trust. LIST OF CERTIFICATEHOLDERS Upon a written request of the Servicer, the Trustee, as Certificate Registrar, will provide to the Servicer within 15 days after receipt thereof a list of the names and addresses of all Certificateholders. In addition, three or more Certificateholders or holders of Certificates evidencing not less than 25% of the Voting Interests of any Class of Certificates, upon compliance by such Certificateholders with certain 66 provisions of the Agreement, may request that the Trustee, as Certificate Registrar, afford such Certificateholders access during business hours to the current list of Certificateholders for purposes of communicating with other Certificateholders with respect to their rights under the Agreement. SEE "Description of the Certificates--Book-Entry Registration" and "--Definitive Certificates". The Agreement will not provide for the holding of any annual or other meetings of Certificateholders. THE TRUSTEE U.S. Bank will be the Trustee under the Agreement. The Corporate Trust Office of the Trustee is located at One Illinois Center, 111 E. Wacker Drive, Suite 3000, Chicago, Illinois 60601. U.S. Bank is not affiliated with TMCC, although it does act as a service provider to TMCC. The Trustee may resign at any time, in which event the Transferor will be obligated to appoint a successor Trustee. The Transferor may also remove the Trustee if the Trustee ceases to be eligible to continue as such under the Agreement, becomes legally unable to act or becomes insolvent. In such circumstances, the Transferor will be obligated to appoint a successor Trustee. Any resignation or removal of the Trustee and appointment of a successor Trustee will not become effective until acceptance of the appointment by such successor Trustee. The Trustee must be a bank or trust company organized under the laws of the United States, any state of the United States, the District of Columbia or the Commonwealth of Puerto Rico, authorized to exercise corporate trust powers under those laws, and subject to supervision or examination by federal or state laws, with a combined capital and surplus of at least $50,000,000 and a long-term deposit rating no lower than Baa3 by Moody's, or must be otherwise acceptable to each Rating Agency. A co-trustee or separate trustee appointed as described above need not meet these eligibility requirements. Holders of Certificates evidencing not less than 25% of the Voting Interests of the Class A Certificates and the Class B Certificates, voting together as a single class, generally will have the power to direct any proceeding for any remedy available to the Trustee under the Agreement, and the exercise of any trust or power conferred on the Trustee by the Agreement (including actions by the Trustee in its capacity as a party to, or a third-party beneficiary of, the SUBI Supplement or the Servicing Supplement). However, the Trustee will not be required to follow such a direction if, after being advised by counsel, it concludes that the action is unlawful, or if it in good faith determines that the proceedings directed would be illegal, would subject it to personal liability or would be unduly prejudicial to the rights of other Certificateholders. A Certificateholder may institute proceedings under the Agreement, but only if (i) such holder previously has given to the Trustee written notice of default, (ii) holders of Certificates evidencing not less than 25% of the Voting Interests of the Class A Certificates and the Class B Certificates, voting together as a single class, have made written request upon the Trustee to institute such proceeding in its own name as Trustee and have offered to the Trustee reasonable indemnity and (iii) the Trustee for 30 days has neglected or refused to institute any such proceeding. The Trustee will be under no obligation to exercise any of the trusts or powers vested in it by the Agreement or to make any investigation of matters arising thereunder or to institute, conduct or defend any litigation thereunder or in relation thereto at the request, order or direction of any of the Certificateholders, unless such holders have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which may be incurred therein or thereby. Certificateholders will have no express right to institute a proceeding directly under the Titling Trust Agreement or the Servicing Agreement. GOVERNING LAW The Agreement and the Certificates will be governed by the laws of the State of California. 67 THE TITLING TRUST AGREEMENT THE SUBI, THE OTHER SUBIS AND THE UTI TMCC is the grantor and (as holder of the UTI) a beneficiary of the Titling Trust. In its capacity as grantor, TMCC will from time to time assign, transfer, grant and convey (or cause to be assigned, transferred, granted and conveyed) to the Titling Trustee in trust the Titling Trust Assets. TMCC will hold the UTI, which represents a beneficial interest in all Titling Trust Assets other than the SUBI Assets and the Other SUBI Assets. TMCC may pledge the UTI as security for obligations to third-party lenders and may create and sell or pledge Other SUBIs in connection with financings similar to the transaction described herein. Each holder or pledgee of the UTI and any Other SUBI will be required expressly to disclaim any interest in the Titling Trust Assets other than the UTI Assets or the Other SUBI Assets, respectively, and to subordinate fully any claims to such other Titling Trust Assets in the event that this disclaimer is not given effect. Except under the limited circumstances described under "Certain Legal Aspects of the Titling Trust--Structural Considerations--Allocation of Titling Trust Liabilities", the SUBI Assets will not be available to make payments in respect of, or pay expenses relating to, the UTI or any Other SUBIs, and the Other SUBI Assets evidenced by any Other SUBIs will not be available to make payments on, or pay expenses relating to, the SUBI, the UTI or any other SUBI. Each Other SUBI will be created pursuant to a supplement to the Titling Trust Agreement (each, an "Other SUBI Supplement") which will amend the Titling Trust Agreement only with respect to the Other SUBI to which it relates. The SUBI Supplement will amend the Titling Trust Agreement only as it relates to the SUBI, and no Other SUBI Supplement will amend the Titling Trust Agreement as it relates to the SUBI. All Titling Trust Assets, including the SUBI Assets, will be owned by the Titling Trust on behalf of the beneficiaries of the Titling Trust. The SUBI Assets will be segregated from the rest of the Titling Trust Assets on the books and records of the Titling Trustee and the Servicer and the holders of other beneficial interests in the Titling Trust (including the UTI and any Other SUBIs) will have no rights to the SUBI Assets. Liabilities of the Titling Trust shall be allocated to the SUBI Assets, the UTI Assets or Other SUBI Assets, respectively, if incurred with respect thereto, or will be allocated pro rata among all Titling Trust Assets if incurred with respect to the Titling Trust Assets generally. TMCC has obtained an insurance policy (the "Residual Value Insurance Policy") naming the Titling Trust as an additional loss payee and providing coverage with respect to shortfalls in amounts collected in respect of the Residual Values of lease contracts and related leased vehicles that are Titling Trust Assets and that are or may become SUBI Assets. The proceeds of such policy with respect to Contracts and Leased Vehicles that are SUBI Assets will also be SUBI Assets, but will be retained by the Transferor and not transferred to the Trust with the SUBI Certificate and will therefore not be available as Collections, Net Insurance Proceeds or otherwise for the benefit of the Certificateholders. Additional Loss Amounts will be incurred in the event that any uninsured liability to third parties (i.e., litigation risk) on the part of the Titling Trust is ultimately borne by the SUBI Assets, whether such liability is incurred (i) with respect to the SUBI Assets and is therefore allocated to the SUBI Assets pursuant to the SUBI Supplement, (ii) with respect to the Titling Trust Assets generally and a pro rata portion of such liability is allocated to the SUBI Assets pursuant to the Titling Trust Agreement or (iii) with respect to UTI Assets or Other SUBI Assets if such UTI Assets or Other SUBI Assets are insufficient to pay such liability. SEE "Certain Legal Aspects of the Titling Trust--Structural Considerations--Allocation of Titling Trust Liabilities" and "--Third-Party Liens on SUBI Assets". For purposes of making calculations with respect to distributions on the Certificates, "Additional Loss Amounts" will include both losses incurred with respect to the foregoing uninsured liabilities and monies reserved within the SUBI Collection Account against future losses in respect of such liabilities by the Servicer on behalf of the Trustee. 68 SPECIAL OBLIGATIONS OF TMCC AS BENEFICIARY AND GRANTOR TMCC, as grantor and holder of the UTI Certificate, will be liable for all debts and obligations arising with respect to the Titling Trust Assets or the operation of the Titling Trust; provided, however, that its liability to any holder, assignee or pledgee of the SUBI or the SUBI Certificate will be governed by the SUBI Supplement, the Agreement and the agreement pursuant to which TMCC transfers the SUBI to the Transferor, and its liability with respect to any transfer, pledge or other financing of the UTI or any UTI Certificate, or any Other SUBI or Other SUBI Certificate shall be as set forth in the documents relating thereto. To the extent that TMCC shall pay or suffer any liability or expense with respect to the Titling Trust Assets or the operation of the Titling Trust (including reasonable attorneys' fees and expenses, but excluding all obligations with respect to making Advances, Reallocation Payments and Reallocation Deposits), TMCC shall be indemnified, defended and held harmless out of the Titling Trust Assets. TITLING TRUSTEE DUTIES AND POWERS; FEES AND EXPENSES Pursuant to the Titling Trust Agreement, the Titling Trustee will be required to, among other things, (i) apply for and maintain, or cause to be applied for and maintained, all licenses, permits and authorizations necessary and appropriate to accept assignments of the Contracts and the Leased Vehicles and to carry out its duties as Titling Trustee, including motor vehicle dealer licenses, and (ii) file, or cause to be filed, applications for certificates of title as are necessary and appropriate so as to cause the Titling Trust to be recorded as the holder of legal title of record to the Leased Vehicles. The Titling Trustee may be replaced by TMCC only if it ceases to be qualified in accordance with the terms of the Titling Trust Agreement and shall be removed if certain representations and warranties made by the Titling Trustee therein prove to have been materially incorrect when made, or in certain events of bankruptcy or insolvency thereof. The Trustee, as holder of the SUBI Certificate, on behalf of the Certificateholders may, or at the direction of holders of Certificates evidencing not less than 51% of the Voting Interests of the Class A Certificates and the Class B Certificates voting together as a single class will, exercise its powers under the Titling Trust Agreement to cause the Trustee to be removed or replaced for a material breach of its obligations. The Titling Trustee will make no representations as to the validity or sufficiency of the SUBI or the SUBI Certificate (other than as to the execution and authentication of the SUBI Certificate), or of any Contract, Leased Vehicle or related document, will not be responsible for performing any of the duties of TMCC or the Servicer and will not be accountable for the use or application by any owners of beneficial interests in the Titling Trust Assets of any funds paid in respect of the Titling Trust Assets, or the investment of any of such monies before such monies are deposited into the accounts relating to the SUBI, the Other SUBIs and the UTI. The Titling Trustee will not independently verify the Contracts or the Leased Vehicles. The duties of the Titling Trustee will generally be limited to the holding and liquidation of lease contracts, the titling of the related leased vehicles in the name of the Titling Trust, the creation of the SUBI, the Other SUBIs and the UTI, the maintenance of the SUBI Collection Account and accounts relating to the Other SUBIs and the UTI and the receipt of the various certificates, reports or other instruments required to be furnished to the Titling Trustee under the Titling Trust Agreement, in which case it will only be required to examine them to determine whether they conform to the requirements of the Titling Trust Agreement. The Titling Trustee will be under no obligation to exercise any of the rights or powers vested in it by the Titling Trust Agreement or to make any investigation of matters arising thereunder or to institute, conduct or defend any litigation thereunder or in relation thereto at the request, order or direction of the Servicer, the UTI Beneficiary or by the holders of a majority in interest in the SUBI, unless such party or parties have offered to the Titling Trustee reasonable security or indemnity against the costs, expenses and liabilities that may be incurred therein or thereby. The reasonable expenses of every such exercise of rights 69 or powers or examination shall be paid by the party or parties requesting such exercise or examination or, if paid by the Titling Trustee, shall be a reimbursable expense of the Titling Trustee. The Titling Trustee may enter from time to time into one or more agency agreements (each, an "Agency Agreement") with such person or persons, including without limitation any affiliate of the Titling Trustee (each, a "Trust Agent"), as are by experience and expertise qualified to act in a trustee capacity and otherwise acceptable to TMCC. The Titling Trustee has engaged U.S. Bank as the Trust Agent. Pursuant to the Agency Agreement, the Trust Agent shall perform each and every obligation of the Titling Trustee under the Titling Trust Agreement. The Titling Trustee shall be paid out of Titling Trust Assets reasonable compensation and reimbursement of all reasonable expenses (including reasonable attorneys' fees). However, with regard to the SUBI Assets allocable to the SUBI, this requirement is subject to provisions regarding Capped Titling Trust Administrative Expenses. SEE "Description of the Certificates--Allocations and Distributions on the Certificates--Allocations and Distributions of Collections". INDEMNITY OF TITLING TRUSTEE AND TRUST AGENTS The Titling Trustee and each Trust Agent will be indemnified and held harmless out of and to the extent of the Titling Trust Assets with respect to any loss, liability or expense, including reasonable attorneys' fees and expenses (collectively "Claims"), arising out of or incurred in connection with (i) any of the Titling Trust Assets (including without limitation any Claims relating to lease contracts or leased vehicles of the Titling Trust, any personal injury or property damage claims arising with respect to any such leased vehicle or any claim with respect to any tax arising with respect to any Titling Trust Asset) or (ii) the Titling Trustee's or the Trust Agent's acceptance or performance of the trusts and duties contained in the Agreement or any Agency Agreement. Notwithstanding the foregoing, neither the Titling Trustee nor any Trust Agent will be indemnified or held harmless out of the Titling Trust Assets as to any Claim (i) which TMCC shall have satisfied because of its liability therefor pursuant to the Servicing Agreement, (ii) incurred by reason of the Titling Trustee's or such Trust Agent's willful misfeasance, bad faith or negligence or (iii) incurred by reason of the Titling Trustee's or Trust Agent's breach of its respective representations and warranties pursuant to the Titling Trust Agreement or the Servicing Supplement. Such indemnities may result in Additional Loss Amounts to the extent payable in respect of the SUBI Assets or allocated to the SUBI. TERMINATION The Titling Trust and the respective obligations and responsibilities of TMCC and the Titling Trustee shall terminate upon the last to occur of (i) the payment to TMCC and each permitted purchaser, assignee and pledgee of any of TMCC's interests in the Titling Trust (including the Trustee, with respect to the SUBI) of all amounts and obligations required to be paid to them, and the expiration or termination of all financings secured by the Titling Trust Assets by their respective terms and (ii) the maturity or liquidation and the disposition of all Titling Trust Assets and the disposition to or upon the order of TMCC or any permitted purchaser, assignee or pledgee of all net proceeds thereof. NO PETITION The Titling Trustee and the Trust Agent will agree not to institute, or join in, any bankruptcy or similar proceeding against the Transferor or TMCC until one year and one day after final payment of all financings involving interests in the Titling Trust. Each pledgee or assignee of any UTI or other SUBI must give a similar non-petition covenant. 70 AMENDMENT The Titling Trust Agreement may be amended by written agreement between TMCC and the Titling Trustee, with the approval of the Trustee (which may be given in the circumstances described under "Additional Document Provisions--Additional Agreement Provisions--Amendment"). To the extent that any such amendment relates to or affects the UTI or any Other SUBI in addition to the SUBI, the SUBI Certificate or the SUBI Assets, such amendment may require certain other approvals. GOVERNING LAW The Titling Trust Agreement will be governed by the laws of the State of Delaware. TRUSTEE AS THIRD-PARTY BENEFICIARY As the holder of the SUBI Certificate, the Trustee will be a third-party beneficiary of the Titling Trust Agreement. Therefore, the Trustee may, and, upon the direction of Certificateholders representing at least 51% of the Voting Interests of the Class A Certificates and the Class B Certificates (voting together as a single class) will, exercise any right conferred by the Titling Trust Agreement upon a holder of any interest in the SUBI. THE SERVICING AGREEMENT Pursuant to the Servicing Agreement, the Servicer will perform on behalf of the Titling Trustee all of the obligations of the Trust as lessor under the Contracts, including, but not limited to, collecting and posting payments, responding to inquiries of the lessees, investigating delinquencies, sending payment statements to the lessees, collecting and remitting certain sales and use and other taxes to state and local governments and agencies, advancing certain licensing fees, payments of fines for citations and costs of disposition of Leased Vehicles related to Charged-off Contracts, Matured Contracts and Additional Loss Contracts and policing the Contracts, commencing legal proceedings to enforce a Contract on behalf of the Titling Trust, administering the Contracts, including accounting for collections and furnishing monthly and annual statements to the Titling Trustee with respect to distributions and generating federal income tax information. The Titling Trustee will furnish the Servicer with all powers of attorney and other documents necessary or appropriate to enable the Servicer to carry out such servicing and administrative duties under the Servicing Agreement. The Trustee will be a third-party beneficiary of the Servicing Agreement. CUSTODY OF CONTRACT DOCUMENTS AND CERTIFICATES OF TITLE To assure uniform quality in servicing the Contracts and TMCC's own portfolio of automobile and light duty truck lease contracts and to reduce administrative costs, the Titling Trustee will appoint TMCC, as Servicer, to be its agent, bailee and custodian of the Contracts, the certificates of title relating to the Leased Vehicles and insurance policies and other documents relating to the Contracts, the related lessees and the Leased Vehicles. Such documents will not be physically segregated from other automobile and light duty truck lease contracts, certificates of title and insurance policies and other documents relating to such lease contracts and leased vehicles of TMCC, or those which TMCC services for others, including those leased vehicles constituting Titling Trust Assets that are not evidenced by the SUBI. The accounting records and computer systems of TMCC will reflect the interests of the holders of interest in the SUBI in the Initial Contracts, the Subsequent Contracts, the Initial Leased Vehicles, the Subsequent Leased Vehicles and all related Contract Rights, and "protective" UCC financing statements reflecting certain interests in the Contracts and the Contract Rights will be filed. SEE "Certain Legal Aspects of the Titling Trust--Structural Considerations--Back-up Security Interest in Certain SUBI Assets" and "Certain Legal Aspects of the Contracts and Leased Vehicles--Back-up Security Interests". The Servicer will be responsible for filing all periodic sales and use tax or property (real or personal) tax reports, periodic renewals of licenses and permits, periodic renewals of qualification to act as a trust and a business trust and other 71 periodic governmental filings, registration or approvals arising with respect to or required of the Titling Trustee or the Titling Trust. COLLECTIONS The Servicer will service, administer and collect all amounts due on or in respect of the Contracts. The Servicer will make reasonable efforts to collect all such amounts and, in a manner consistent with the Servicing Agreement, will be obligated to service the Contracts generally in accordance with its customary and usual procedures in respect of lease contracts serviced by it for its own account. Consistent with its usual procedures, the Servicer may, in its discretion, defer one or more payments (having the practical effect of extending the Maturity Date of any Contract) by up to four months in the aggregate, provided that no Contract may be deferred more than four times and that the new Maturity Date of any such Contract must not be later than the last day of the Collection Period with respect to the Stated Maturity Date occurs. The amount of any Deferral Fee received by the Servicer in connection with the deferral of a Contract will be treated as additional servicing compensation and will not be deposited into the SUBI Collection Account. The Servicing Agreement will provide that Advances be made with respect to Contracts as to which deferrals of payments are made that result in any diminution of the amount of Collections received in connection therewith relative to the originally scheduled Monthly Payments. The Servicing Agreement will also provide for the reallocation to the UTI from the SUBI (accompanied by an appropriate Reallocation Payment by TMCC) of each Contract as to which more than four deferrals are made or as to which, through deferrals or extensions, the maturity date is extended beyond the last day of the Collection Period relating to the Stated Maturity Date. Upon any such reallocation, such Contract and the related Leased Vehicle and other related assets and rights will be UTI Assets and will no longer constitute SUBI Assets. NOTIFICATION OF LIENS AND CLAIMS The Servicer will be required to notify the Transferor (in the event that TMCC is not acting as the Servicer), the Trustee and the Titling Trustee as soon as practicable of all liens or claims of whatever kind made by a third party that would materially adversely affect the interests of, among others, the Transferor, the Titling Trust, the Trust or any Certificateholder in or with respect to the Contracts or Leased Vehicles. Following its learning of any such lien or claim with respect to the Contracts or Leased Vehicles, the Servicer will take whatever actions it deems reasonably necessary to cause such lien or claim to be removed. SEE "Certain Legal Aspects of the Titling Trust--Structural Considerations". ADVANCES In addition to Advances with respect to delinquent Monthly Payments, on each Deposit Date, the Servicer will be obligated to make, by deposit into the SUBI Collection Account, an advance with respect to delinquent Contracts and Contracts as to which it has deferred payments as described above under "Collections" in an amount equal to the aggregate amount of Monthly Payments due thereon but not received during the related Collection Period. Notwithstanding the foregoing, the Servicer will not be required to make an Advance to the extent that such Advance would constitute a Nonrecoverable Advance. A "Nonrecoverable Advance" will be any Advance that, in the reasonable judgment of the Servicer, may not be ultimately recoverable by the Servicer from Net Liquidation Proceeds or otherwise. In making Advances, the Servicer will assist in maintaining a regular flow of scheduled principal and interest payments on such delinquent or deferred Contracts, rather than to guarantee or insure against losses. Accordingly, all Advances including Nonrecoverable Advances shall be reimbursable to the Servicer monthly, without interest, from Collections prior to the deposit thereof into the SUBI Collection Account. 72 SECURITY DEPOSITS The Contract Rights will include all rights under the Contracts to the security deposits paid by the lessees at the time of origination of the Contracts (the "Security Deposits") to the extent applied to cover excess wear and tear charges or treated as Liquidation Proceeds as described below. As part of its general servicing obligations, the Servicer will retain possession of each Security Deposit remitted by the lessees as an agent for the Titling Trust and will apply the proceeds of Security Deposits in accordance with the terms of the Contracts, its customary and usual servicing procedures and applicable law. However, in the event that any Contract becomes a Charged-off Contract or the related Leased Vehicle is repossessed, the related Security Deposit will, to the extent provided by applicable law and such Contract, constitute Liquidation Proceeds. The Titling Trustee may not have an interest in the Security Deposits that is enforceable against third parties until such time as they are deposited into the SUBI Collection Account. The Servicer will not be required to segregate Security Deposits from its own funds, and any income earned from any investment thereof by the Servicer shall be for the account of the Servicer as additional servicing compensation. INSURANCE ON LEASED VEHICLES The terms of the Contracts require each lessee to maintain in full force and effect during the term of a Contract a comprehensive collision and physical damage insurance policy covering the actual cash value of the related Leased Vehicle and naming the Titling Trust as loss payee. The terms of the Contracts also require each lessee to maintain bodily injury and property damage liability insurance in amounts equal to the greater of the amount prescribed by applicable state law or industry standards as set forth in the Contract and naming the Titling Trust as an additional insured. Since lessees may choose their own insurers to provide the required coverage, the specific terms and conditions of their policies vary. If a lessee fails to obtain or maintain the required insurance, the related Contract will be in default. It is the practice of TMCC not to obtain insurance on behalf of and at the expense of the related lessee. TMCC's central insurance tracking unit, which monitors compliance with such lease contract provisions, will initiate follow-up procedures, including the telephone and mail contact with the related lessee, upon being alerted by the tracking system that any lessee has not obtained or is not maintaining required insurance. Typically, if such default is not cured within 70 days from the date TMCC's central insurance tracking unit becomes aware of such default by the tracking system, the related lease contract is forwarded to the appropriate TMCC branch for follow-up handling, including possible repossession of the related Leased Vehicles if the related lessee does not timely obtain a satisfactory replacement policy. The policies issued with respect to a significant number of the Contracts may name TMCC rather than the Titling Trust as additional loss payee. If a primary insurer makes payment under such a policy to TMCC, TMCC will apply such amounts or forward such amounts to the Titling Trust for application as a portion of Net Insurance Proceeds. If a primary insurer failed to make payments under a policy to the lessee and also to TMCC and the Titling Trust, losses could be experienced by the Certificateholders. However, the Transferor has been advised by the primary provider of the Contingent and Excess Liability Policies described herein that such provider will not refuse any claim under the Contingent and Excess Liability Policies solely because a primary policy names TMCC or an approved TMCC affiliate, rather than the Titling Trust, as additional loss payee (although under such circumstances, if the primary insurer denies a claim on such basis, a deductible of $250,000 (rather than the standard deductible of $125,000) will be payable by TMCC, as to which TMCC will indemnify the Trust). TMCC does not require lessees to carry credit disability, credit life or credit health insurance or other similar insurance coverage which provides for payments to be made on the Contracts on behalf of such lessees in the event of disability or death. To the extent that such insurance coverage is obtained by a lessee, payments received in respect of such coverage may be applied to payments on the related Contract to the extent that the lessee's beneficiary chooses to do so. 73 REALIZATION UPON CHARGED-OFF CONTRACTS The Servicer will use commercially reasonable efforts to repossess and liquidate the Leased Vehicle relating to a Contract that comes into and continues in default and for which no satisfactory arrangements can be made for collection of delinquent payments. Such liquidation may be through repossession of such Leased Vehicle and disposition at a public or private sale, or the Servicer may take any other action permitted by applicable law. The Servicer may enforce all rights under any such Contract, sell the Leased Vehicle in accordance with the Contract and commence and prosecute any proceedings in connection with the Contract. In connection with any such repossession, the Servicer will follow its usual and customary practices and procedures in respect of lease contracts serviced by it for its own account, and in any event will act in compliance with all applicable laws. The Servicer will be required to repair the Leased Vehicle if it reasonably determines that such repairs will increase the related Net Repossessed Vehicle Proceeds. The Servicer will be responsible for all costs and expenses incurred in connection with the sale or other disposition of Leased Vehicles related to Charged-off Contracts and other Contracts as to which a lessee has defaulted, but will be entitled to reimbursement to the extent that such costs constitute Repossessed Vehicle Expenses or other Liquidation Expenses or expenses recoverable under an applicable insurance policy. Proceeds from the sale or other disposition of repossessed Leased Vehicles will constitute Repossessed Vehicle Proceeds and will be deposited into the SUBI Collection Account. The Servicer will be entitled to reimbursement of all related Repossessed Vehicle Expenses, and Principal Collections in respect of a Collection Period will include all Net Repossessed Vehicle Proceeds collected during such Collection Period. MATURED LEASED VEHICLE INVENTORY Upon the scheduled maturity of a Contract, the related lessee has the option to acquire the related Leased Vehicle for an amount equal to its Residual Value plus any applicable taxes and all other incidental charges which may be due under such Contract. If the lessee chooses not to exercise this option but instead returns the Leased Vehicle, the dealer to whom such vehicle is returned will have the option to purchase such vehicle for the same price. TMCC disposes of off-lease and repossessed vehicles not purchased by the related lessee or dealer to whom the vehicle is returned through regional automobile auctions. Off-lease and repossessed vehicles not yet disposed of constitute Matured Leased Vehicle Inventory. Principal Collections in respect of a Collection Period will include all Net Matured Leased Vehicle Proceeds collected during such Collection Period. The Servicer also will be entitled to reimbursement of certain payments made and expenses and charges incurred by it in the ordinary course of servicing the Contracts (including payments it makes on behalf of the related lessees in connection with the payment of taxes, vehicle registration, clearance of parking tickets and similar items) from Collections with respect to the related Contracts, separate payment thereof by the related lessees or from amounts realized upon the final disposition of the related Leased Vehicle. To the extent such amounts are reimbursed prior to or at the final disposition of the related leased vehicle but remain unpaid by the related lessee, such unreimbursed amounts (together with any unpaid Monthly Payments under the related Contract) will be treated as Matured Leased Vehicle Expenses or Liquidation Expenses, as the case may be, and will therefor reduce Net Matured Leased Vehicle Proceeds or Liquidation proceeds, as the case may be. Related Matured Leased Vehicle Expenses may be retained by the Servicer or released from amounts on deposit in the SUBI Collection Account upon request therefor presented to the Trustee by the Servicer together with any supporting documentation reasonably requested by the Trustee. Any Residual Value Surplus for a Collection Period will be released to the Transferor on the related Monthly Allocation Date, and thereafter neither the Trust nor any Certificateholder will have a claim to or interest in such amounts. RECORDS, SERVICER DETERMINATIONS AND REPORTS The Servicer will retain or cause to be retained all data (including, without limitation, computerized records, operating software and related documentation) relating directly to or maintained in connection 74 with the servicing of the Contracts for at least 2 years after the termination of the Trust. Upon the occurrence and continuance of an Event of Servicing Termination and termination of the Servicer's obligations under the Servicing Agreement, the Servicer will use commercially reasonable efforts to effect the orderly and efficient transfer of the servicing of the Contracts, including all such records to the extent necessary, to a successor servicer. The Servicer will perform certain monitoring and reporting functions on behalf of the Transferor, the Trustee, the Titling Trustee and Certificateholders, including the preparation and delivery to the Trustee, the Titling Trustee and each Rating Agency of a monthly certificate, on or before each Determination Date, setting forth all information necessary to make all distributions required in respect of the related Collection Period (the "Servicer's Certificate"), and the preparation and delivery of (i) monthly statements setting forth information described under "Description of the Certificates--Statements to Certificateholders" and (ii) an annual officer's certificate specifying, among other things, the occurrence and status of any Event of Servicing Termination. EVIDENCE AS TO COMPLIANCE The Servicing Agreement will provide that a firm of nationally recognized independent public accountants will furnish to the Trustee annually, commencing in 1998, a statement as to compliance by the Servicer during the preceding twelve months (or since the Closing Date in the case of the first such statement) with certain standards relating to the servicing of the Contracts. The Servicing Agreement will also provide for delivery to the Trustee, substantially simultaneously with the delivery of such accountants' statement, of a certificate signed by an officer of the Servicer stating that the Servicer has fulfilled its obligations under the Servicing Agreement throughout the preceding twelve months (or since the Closing Date in the case of the first such certificate) or, if there has been a default in the fulfillment of any such obligation, describing each such default. Copies of such statements and certificates may be obtained by Certificate Owners or Class A Certificateholders by a request in writing addressed to the Trustee at its Corporate Trust Office. SERVICING COMPENSATION The Servicer will be entitled to compensation for the performance of its servicing obligations under the Servicing Agreement. The Servicer will be entitled to receive on each Monthly Allocation Date, the Servicing Fee in respect of the related Collection Period equal to one-twelfth of the product of 1.00% and the Aggregate Net Investment Value as of the first day of the related Collection Period (or, in the case of the first Monthly Allocation Date, as of the Cutoff Date). The Servicing Fee will be calculated and paid based upon a 360-day year consisting of twelve 30-day months. So long as TMCC is the Servicer, it may, by notice to the Trustee and the Titling Trustee, on or before a Determination Date, elect to waive the Servicing Fee with respect to the related Collection Period, so long as TMCC believes that sufficient collections will be available from Interest Collections on one or more future Monthly Allocation Dates to pay such waived Servicing Fee, without interest. In such event, the Servicing Fee for such Collection Period shall be deemed to equal zero for all purposes of the Agreement and the Servicing Agreement. The Servicer will also be entitled to additional servicing compensation in the form of certain late payment fees, Deferral Fees and other administrative fees or similar charges paid with respect to the Contracts, and earnings from the investment of Security Deposits (to the extent lawful and as provided in the Contracts). SEE "Additional Document Provisions--The Servicing Agreement-- Security Deposits". The Servicer will be entitled to retain Deferral Fees paid in connection with deferred Contracts as additional servicing compensation. The Servicer will pay all expenses incurred by it in connection with its servicing activities under the Servicing Agreement, including the payment of Uncapped Titling Trust Administrative Expenses allocable to the SUBI, and will not be entitled to reimbursement of such expenses except to the extent any such expenses constitute Liquidation Expenses in respect of a Contract or Leased 75 Vehicle or reasonable expenses under an applicable insurance policy, or to the extent that Uncapped Titling Trust Administrative Expenses are reimbursed out of Interest Collections. The Servicing Fee will compensate the Servicer for performing the functions of a third party servicer of the Contracts as an agent for the Trustee under the Servicing Agreement, including collecting and posting payments, responding to inquiries of lessees on the Contracts, investigating delinquencies, policing the SUBI Assets, administering the Contracts, making Advances, accounting for collections and furnishing monthly and annual statements to the Trustee with respect to distributions and generating federal income tax information. SERVICER RESIGNATION AND TERMINATION The Servicer may not resign from its obligations and duties under the Servicing Agreement unless it determines that its duties thereunder are no longer permissible by reason of a change in applicable law or regulations. No such resignation will become effective until a successor servicer has assumed the Servicer's obligations under the Servicing Agreement. The Servicer may not assign the Servicing Agreement or any of its rights, powers, duties or obligations thereunder except as otherwise provided therein or except in connection with a consolidation, merger, conveyance, transfer or lease made in compliance with the Servicing Agreement. The rights and obligations of the Servicer under the Servicing Agreement may be terminated following the occurrence and continuance of an Event of Servicing Termination. SEE "Additional Document Provisions--The Servicing Agreement-- Rights Upon Event of Servicing Termination". INDEMNIFICATION BY THE SERVICER The Servicer will indemnify the Trustee and its agents for any and all liabilities, losses, damages and expenses that may be incurred by them as a result of any act or omission by the Servicer in connection with the performance of its duties under the Servicing Agreement. EVENTS OF SERVICING TERMINATION "Events of Servicing Termination" under the Servicing Agreement with respect to the SUBI Assets will consist of, among other things: (i) any failure by the Servicer to deliver to the Titling Trustee for distribution to holders of interests in the SUBI or to the Trustee for distribution to the Certificateholders any required payment on the related Certificates as to allocations and distributions, which failure continues unremedied for three Business Days after discovery of such failure by an officer of the Servicer or receipt by the Servicer of notice thereof from the Trustee, the Titling Trustee or holders of Certificates evidencing not less than 25% of the Voting Interests of the Class A Certificates and the Class B Certificates, voting together as a single class, or failure, for any reason, of the Trust to pay in full any Class of Certificates on the Stated Maturity Date; (ii) any failure by the Servicer duly to observe or perform in any material respect any other of its covenants or agreements in the Servicing Agreement which failure materially and adversely affects the rights of holders of interests in the SUBI or the Certificateholders and which continues unremedied for 90 days after written notice of such failure is given as described in clause (i) above; or (iii) the occurrence of certain Insolvency Events relating to the Servicer. Notwithstanding the foregoing, a delay in or failure of performance referred to under clause (i) above for a period of ten Business Days shall not constitute an Event of Servicing Termination if such failure or delay was caused by an event of force majeure. Upon the occurrence of any such event, the Servicer shall not be relieved from using all commercially reasonable efforts to perform its obligations in a timely manner in accordance with the terms of the Servicing Agreement and the Servicer shall provide to the Trustee, the Titling Trustee, the Transferor and the Certificateholders prompt notice of such failure or delay by it, together with a description of its efforts to so perform its obligations. 76 RIGHTS UPON EVENT OF SERVICING TERMINATION As long as an Event of Servicing Termination remains unremedied, the Titling Trustee, upon the direction of the Trustee or holders of Certificates evidencing not less than 51% of the Voting Interests of the Class A Certificates and the Class B Certificates, voting together as a single class, may terminate all of the rights and obligations of the Servicer under the Servicing Agreement with respect to the SUBI Assets. In the event of such a termination affecting the SUBI Assets, the Trust Agent generally will succeed to the rights, powers, responsibilities, duties and liabilities of the Servicer under the Servicing Agreement with respect to the SUBI Assets (excluding certain specific obligations listed in the Servicing Agreement) or provide for a new Servicer to be approved by each Rating Agency. The Trust Agent or other new Servicer will receive substantially the same servicing compensation to which the Servicer otherwise would have been entitled. If, however, a bankruptcy trustee or similar official has been appointed for the Servicer, and no Event of Servicing Termination other than such appointment has occurred, such trustee or official may have the power to prevent the Titling Trustee, the Trustee or such Certificateholders from effecting a transfer of servicing. Notwithstanding the termination of the Servicer's rights and powers in such event, the Servicer will remain obligated to perform certain specific obligations listed in the Servicing Agreement and to reimburse the Trust Agent for any losses incurred in performing certain such obligations, and will be entitled to payment of certain amounts payable to it for services rendered prior to such termination. The holders of Certificates evidencing not less than 51% of the Voting Interests of the Class A Certificates and the Class B Certificates, voting together as a single class, with the consent of the Titling Trustee and the Trustee (which consents shall not be unreasonably withheld) may waive any default by the Servicer in the performance of its obligations under the Servicing Agreement and its consequences with respect to the SUBI Assets, other than a default in making any required deposits to or payments from an Account in accordance with the Servicing Agreement or in respect of a covenant or provision of the Servicing Agreement that cannot be modified or amended without the consent of each Certificateholder, in which event the related waiver will require the approval of holders of all of the Certificates. No such waiver will impair the rights of the Certificateholders with respect to subsequent defaults. COMPLIANCE WITH ERISA If the credit rating of TMCC becomes less than investment grade, then on a quarterly basis, TMCC shall provide the Trustee and each Rating Agency with an officer's certificate stating that none of TMCC and its affiliates for purposes of ERISA (i) maintains an ERISA plan which, as of its last valuation date, had unfunded current liability, (ii) anticipates that the value of the assets of any ERISA plan it maintains would not be sufficient to cover any current liability and (iii) is contemplating benefit improvements with respect to any plans then maintained or the establishment of any new ERISA plans, either of which would cause it to maintain an ERISA plan with unfunded current liability (the "ERISA Compliance Test"). In the event that TMCC does not timely make the foregoing certifications, all Excess Amounts in respect of each Monthly Allocation Date, after giving effect to all payments or allocations required to be made therefrom on such Monthly Allocation Date, will be deposited into the Reserve Fund until the ERISA Compliance Test is satisfied. On the Monthly Allocation Date following the date on which such failure is cured, monies on deposit in the Reserve Fund in excess of the Specified Reserve Fund Balance shall be distributed to the Transferor. NO PETITION The Servicer will agree not to institute, or join in, any bankruptcy or similar proceeding against the Transferor, the Titling Trustee or the Titling Trust until one year and one day after final payment of all financings involving interests in the Titling Trust. 77 AMENDMENT The Servicing Agreement may be amended from time to time in a writing signed by the Titling Trustee and the Servicer, with the approval of the Trustee (which approval may be given in the circumstances described under "Additional Document Provisions--Additional Agreement Provisions--Amendment"). Any such amendment relating to the UTI or any Other SUBI may require certain other approvals. TERMINATION The Servicing Agreement shall terminate upon the earlier to occur of (i) the termination of the Titling Trust, (ii) the discharge of the Servicer in accordance with its terms or (iii) the termination of the Agreement. GOVERNING LAW The Servicing Supplement will be governed by the laws of the State of Delaware. TMCC DEMAND NOTES GENERAL So long as a Monthly Payment Event has not occurred, and so long as the Certificates of any Class are outstanding, amounts allocated to interest on or principal of the Certificates of such Class on a Monthly Allocation Date that is not also a Certificate Payment Date will be deposited into the Certificateholders' Account on such Monthly Allocation Date and invested in Permitted Investments maturing prior to the succeeding relevant Certificate Payment Date or Targeted Maturity Date, as appropriate. The Servicer will have the power to direct the investment of such funds in Permitted Investments. Due to the incremental administrative difficulty in obtaining highly rated investments in variable amounts and with variable maturities that bear the required interest rate, the Servicer expects initially to invest all such funds in TMCC Demand Notes. The TMCC Demand Notes will be issued under an indenture, dated as of September 1, 1997, as such indenture may be amended from time to time (the "Indenture"), between TMCC and U.S. Bank, as trustee thereunder (in such capacity, the "Indenture Trustee"). The terms of the TMCC Demand Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). The principal amount of the TMCC Demand Notes outstanding will change from time to time on Monthly Allocation Dates. The aggregate principal amount of TMCC Demand Notes that may be issued under the Indenture is limited to $1.6 billion. The principal amount of TMCC Demand Notes will bear interest from and including the date of issuance of such principal amount, to but excluding its date of Maturity. Interest on the TMCC Demand Notes will be paid on each Certificate Payment Date and at Maturity with respect to such TMCC Demand Notes. Each TMCC Demand Note will mature on the Business Day preceding the earlier of (x) in the case of the TMCC Demand Notes issued with respect to the investment of Available Interest, the next succeeding Certificate Payment Date, and in the case of the TMCC Demand Notes issued with respect to the investment of Principal Collections and other amounts allocable as principal, the next succeeding Targeted Maturity Date, and (y) the date on which the Trustee demands payment of the TMCC Demand Notes (each such date, a "Maturity"). Each TMCC Demand Note will bear interest at the related Required Rate. Interest accrued on TMCC Demand Notes will be calculated on the basis of a 360 day year of twelve 30-day months. The TMCC Demand Notes will be unsecured general obligations of TMCC and will rank pari passu with all other unsecured and unsubordinated indebtedness of TMCC from time to time outstanding. Currently, no outstanding debt of TMCC is senior in right of payment to the TMCC Demand Notes. The TMCC Demand Notes will be obligations solely of TMCC and will not be obligations of, or guaranteed by, TMS or any affiliate of TMCC or TMS, directly or indirectly. The TMCC Demand Notes will not be subject to redemption by TMCC and will not have the benefit of any sinking fund. 78 The TMCC Demand Notes will be issued only in fully registered form without coupons and payment of principal of and interest on TMCC Demand Notes will be made by the Indenture Trustee as paying agent by wire transfer to an account maintained by the Trustee, as the holder of the TMCC Demand Notes. No Certificateholder will have a direct interest in the TMCC Demand Notes or have any direct rights under the TMCC Demand Notes or the Indenture. The Trustee will be the only holder of the TMCC Demand Notes, which it will hold for the benefit of the Certificateholders. In the event any vote or other action, including action upon the occurrence of an Event of Default under the Indenture, is required or permitted by the holders of the TMCC Demand Notes under the Indenture, the Trustee as such holder will be permitted to vote or take such other action as it shall deem fit. However, the Trustee shall be permitted to seek the direction of the Certificateholders, who in such case shall be permitted to vote in the manner set forth under "--Additional Agreement Provisions--Amendment" above. References under this caption to "holders of the TMCC Demand Notes" and phrases of similar import shall be to the Trustee as the holder of the TMCC Demand Notes. REMOVAL OF INDENTURE TRUSTEE; SUCCESSOR INDENTURE TRUSTEE The Indenture Trustee may resign by providing written notice to TMCC and the Trust, as holder of the TMCC Demand Notes. The Trust, as holder of the TMCC Demand Notes, may remove the Indenture Trustee by written notice thereto and to TMCC, and may appoint a successor Indenture Trustee. TMCC may remove the Indenture Trustee in the event that: (a) the Indenture Trustee fails to continue to satisfy the criteria for eligibility to act as Indenture Trustee; (b) the Indenture Trustee is adjudged a bankrupt or insolvent; (c) a receiver or other public officer takes charge of the Indenture Trustee or its property; or (d) the Indenture Trustee otherwise becomes incapable of acting in such capacity. If the Indenture Trustee resigns, is removed or is unable to act as Indenture Trustee for any reason, TMCC shall promptly appoint a successor Indenture Trustee, unless the Trust shall already have done so. Within one year after a successor Indenture Trustee takes office, the Trust may appoint a successor Indenture Trustee to replace any successor Indenture Trustee appointed by TMCC. Any resignation or removal of the Indenture Trustee and appointment of a successor Indenture Trustee shall become effective only upon such successor's acceptance of such appointment and the payment of outstanding fees and expenses due to the prior Indenture Trustee as set forth in the Indenture. SUCCESSOR CORPORATION The Indenture provides that TMCC may consolidate with, or sell, lease or convey all or substantially all of its assets to, or merge with or into, any other corporation, provided, that in any such case: (i) either TMCC shall be the continuing corporation, or the successor corporation shall be a corporation organized and existing under the laws of the United States or any state thereof and shall expressly assume, by execution and delivery to the Indenture Trustee of a supplemental indenture in form satisfactory thereto, all of the obligations of TMCC under the TMCC Demand Notes and the Indenture; and (ii) TMCC or such successor corporation, as the case may be, shall not, immediately after such merger or consolidation, or such sale, lease or conveyance, be in default in the performance of any such obligation. Subject to certain limitations in the Indenture, the Indenture Trustee may receive from TMCC an officer's certificate and an opinion of counsel as conclusive evidence that any such consolidation, merger, sale, lease or conveyance, and any such assumption, complies with the provisions of the Indenture. SUPPLEMENTAL INDENTURES Supplemental indentures may be entered into by TMCC and the Indenture Trustee with the consent of the holder of the TMCC Demand Notes, for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of modifying in any manner the rights with respect to the TMCC Demand Notes, provided that no supplemental indenture may, among other things, 79 reduce the principal amount of or interest on any TMCC Demand Notes, change the maturity date for the payment of the principal, the date on which interest will be payable or other terms of payment or reduce the percentage of holders of TMCC Demand Notes necessary to modify or alter the Indenture, without the consent of each holder of Certificates affected thereby. Under certain circumstances, supplemental indentures may also be entered into without the consent of the holders. EVENTS OF DEFAULT UNDER THE INDENTURE The Indenture defines an Event of Default with respect to the TMCC Demand Notes as being any one of the following events: (i) default in payment of principal on the TMCC Demand Notes; (ii) default in payment of any interest on the TMCC Demand Notes and continuance of such default for a period of 30 days; (iii) default in the performance, or breach, of any other covenant or warranty of TMCC in the Indenture continued for 60 days after appropriate notice; and (iv) certain events of bankruptcy, insolvency or reorganization. If an Event of Default occurs and is continuing, the Indenture Trustee or the holders of at least 25% in aggregate principal amount of TMCC Demand Notes may declare the TMCC Demand Notes to be due and payable. Any past default with respect to the TMCC Demand Notes may be waived by the holders of a majority in aggregate principal amount of the outstanding TMCC Demand Notes, except in a case of failure to pay principal of or interest on the TMCC Demand Notes for which payment has not been subsequently made or a default in respect of a covenant or provision of the Indenture which cannot be modified or amended without the consent of the Holder of each outstanding TMCC Demand Note. TMCC will be required to file with the Indenture Trustee annually an officer's certificate as to the absence of certain defaults. The Indenture Trustee may withhold notice to holders of the TMCC Demand Notes of any default with respect to such series (except in payment of principal or interest) if it in good faith determines that it is in the interest of such holders to do so. Subject to the provisions of the Indenture relating to the duties of the Indenture Trustee in case an Event of Default shall occur and be continuing, the Indenture Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request or direction of any of the holders, unless such holders have offered to the Indenture Trustee reasonable indemnity or security against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction. Subject to provisions in the Indenture for the indemnification of the Indenture Trustee and to certain other limitations, the holders of a majority in principal amount of the outstanding TMCC Demand Notes will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Indenture Trustee, or exercising any trust or power conferred on the Indenture Trustee with respect to the TMCC Demand Notes. ABSENCE OF COVENANTS The provisions of the Indenture do not contain any covenants that limit the ability of TMCC to subject its properties to liens, to enter into any type of transaction or business or to secure any of its other indebtedness without providing security for the TMCC Demand Notes. The provisions of the Indenture do not afford the holders of the TMCC Demand Notes protection in the event of a highly leveraged transaction, reorganization, restructuring, change in control, merger or similar transaction or other event. DEFEASANCE AND DISCHARGE OF INDENTURE The Company may satisfy and discharge its obligations under the Indenture by delivering to the Indenture Trustee for cancellation all outstanding TMCC Demand Notes, or depositing with the Indenture Trustee money and/or U.S. Government Obligations which through the payment of principal and interest in accordance with their terms will provide money sufficient to pay the principal of and interest on the outstanding TMCC Demand Notes on the date on which any such payments are due and payable in accordance with the terms of the Indenture and the TMCC Demand Notes, and in each case by satisfying certain additional conditions in the Indenture. However, in the case of any such deposit, certain of the 80 Company's obligations under the Indenture (including the obligation to pay the principal and interest on the outstanding TMCC Demand Notes) will continue until all of the TMCC Demand Notes are paid in full. REGARDING THE INDENTURE TRUSTEE The Indenture Trustee is the Trustee under the Agreement. The Indenture contains certain limitations on the right of the Indenture Trustee, should it become a creditor of TMCC, to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The Indenture Trustee is permitted to engage in other transactions with TMCC; provided, however, that if the Indenture Trustee acquires any conflicting interest (as defined) it must eliminate such conflict or resign. The Indenture provides that, in case an Event of Default has occurred and is continuing, the Indenture Trustee is required to use the degree of care and skill of a prudent person in the conduct of his or her own affairs in the exercise of its powers. GOVERNING LAW The Indenture and the TMCC Demand Notes will be governed by and construed in accordance with the laws of the State of New York. CERTAIN LEGAL ASPECTS OF THE TITLING TRUST THE TITLING TRUST The Titling Trust was formed as a Delaware business trust. The Titling Trust also has been qualified as a business trust authorized to transact business in certain other states where it is required to be so qualified. Because the Titling Trust has been registered as a business trust for Delaware and other state law purposes, like a corporation, it may be eligible to be a debtor in its own right under the United States Bankruptcy Code. SEE "Risk Factors--Risks Associated with Possible Future Insolvency of TMCC; Substantive Consolidation with TMCC". STRUCTURAL CONSIDERATIONS Unlike many structured financings in which the holders of the related securities have a direct ownership interest or a perfected security interest in the underlying assets being securitized, the Trust will not own directly the SUBI Assets. Instead, the Titling Trust will own the Titling Trust Assets, including the SUBI Assets, and the Titling Trustee will take action with respect thereto in the name of the Titling Trust on behalf of and as directed by the beneficiaries of the Titling Trust (i.e. the holders of the UTI Certificate and each SUBI Certificate or Other SUBI Certificate). The Trust will own the assets of the Trust, the primary asset of which will be the SUBI Certificate evidencing a 100% beneficial interest in the SUBI Assets, and the Trustee will take action with respect thereto in the name of the Trust and on behalf of the Certificateholders and the Transferor. Beneficial interests in the Contracts and Leased Vehicles, rather than direct legal ownership thereof, are transferred under this structure in order to avoid the administrative difficulty and expense of retitling the Leased Vehicles in the name of the transferee. The SUBI Assets will be segregated from the other Titling Trust Assets on the books and records maintained with respect thereto by the Servicer and/or the Titling Trustee. Except under the limited circumstances described below, neither the Servicer nor any holders of other beneficial interests in the Titling Trust will have rights in the SUBI Assets, and payments made on or in respect of any Titling Trust Assets other than the SUBI Assets will not be available to make payments on the Certificates or to cover expenses of the Titling Trust allocable to the SUBI Assets. 81 ALLOCATION OF TITLING TRUST LIABILITIES Pursuant to the Titling Trust Agreement, the various liabilities of the Titling Trust will be allocated to and charged against (i) to the extent incurred specifically with respect thereto, the SUBI Assets, the Titling Trust Assets allocated to Other SUBIs ("Other SUBI Assets") or Titling Trust Assets not allocated to the SUBI or any Other SUBI (the "UTI Assets"), respectively, or (ii) pro rata among the Titling Trust Assets if incurred with respect to the Titling Trust Assets generally. The Titling Trustee and the beneficiaries of the Titling Trust and their assignees and pledgees will be bound by the foregoing allocation. Thus, any liability to third parties arising from or in respect of a Contract or Leased Vehicle will be borne by the Trust as a holder of interests in the SUBI. If any such liability arises from or in respect of a contract or leased vehicle that is an Other SUBI Asset or a UTI Asset, the SUBI Assets will not be subject to such liability unless such Other SUBI Assets or UTI Assets are insufficient to pay the liability. However, to the extent that there are no other assets from which to satisfy such liability, and such liability is owed to entities other than the Titling Trustee or other beneficiaries of the Titling Trust, the SUBI Assets may be used to satisfy such liabilities. Under such circumstances, investors in the Class A Certificates could incur a loss on their investment. THIRD-PARTY LIENS ON SUBI ASSETS Because the Trustee will not own directly the SUBI Assets, and since its interest therein generally will be an indirect beneficial ownership interest, perfected liens of third-party creditors of the Titling Trust in one or more SUBI Assets will take priority over the interest of the Trustee therein. With respect to claims relating to the SUBI Assets, this result is no different than would be the case if a claim were made against the Trust and the Trust directly owned the SUBI Assets. However, because the Titling Trust also will hold Other SUBI Assets and UTI Assets, and third-party creditors of the Titling Trust may not be bound in all cases by the allocation of liabilities described above, a general creditor of the Titling Trust may obtain a lien on one or more SUBI Assets. Such liens could include tax liens arising against the Transferor or the Trust, liens arising under various federal and state criminal statutes, judgment liens arising from successful claims under federal and state consumer protection laws and Lemon Laws with respect to leases and leased vehicles that are Titling Trust Assets and judgment liens arising from successful claims against the Titling Trust arising from the operation of such leased vehicles. Various liens could be imposed upon all or part of the SUBI Assets that, by operation of law, would take priority over the Trustee's interest therein. SEE "Risk Factors--Risks Associated with Consumer Protection Laws", "--Risks Associated with ERISA Liabilities" and "--Risks Associated with Vicarious Tort Liability with Respect to Leased Vehicles" and "Certain Legal Aspects of the Contracts and the Leased Vehicles--Back-up Security Interests". The Titling Trust Agreement provides that, to the extent that such a third-party claim is satisfied out of one or more SUBI Assets rather than Other SUBI Assets or UTI Assets, as the case may be, the Titling Trustee will reallocate the remaining Titling Trust Assets (i.e., the Other SUBI Assets and the UTI Assets) so that each portfolio will bear the expense of the claim as nearly as possible as if the claim had been allocated as provided in the Titling Trust Agreement. However, if a third party claim exceeds the value of the portfolio or portfolios of Titling Trust Assets to which it should be allocated, and as a result the damages and expenses with respect to such claim are borne by the SUBI Assets, investors in the Class A Certificates could incur a loss on their investment. SEE "Additional Document Provisions--The Titling Trust Agreement--The SUBI, the Other SUBIs and the UTI". TMCC may pledge the UTI as security for obligations to third-party lenders, and may create and sell or pledge Other SUBIs in connection with other financings. Each holder or pledgee of the UTI or any Other SUBI will be required expressly to disclaim any interest in the SUBI Assets, and to fully subordinate any claims to the SUBI Assets in the event that this disclaimer is not given effect. Although no assurance can be given, in the unlikely event of a bankruptcy of TMCC, the Transferor believes that the SUBI Assets would not be treated as part of TMCC's bankruptcy estate and that, even if they were so treated, the subordination by holders and pledgees of the UTI and Other SUBIs should be enforceable. In addition, a 82 pledge of the UTI will not impair the Titling Trustee's ability to reallocate leases and leased vehicles out of the UTI Assets as Subsequent Contracts and Subsequent Leased Vehicles during the Revolving Period. BACK-UP SECURITY INTEREST IN CERTAIN SUBI ASSETS The transfer of the SUBI Certificate by the Transferor to the Trust is intended to constitute a sale of the SUBI Certificate and of the beneficial interest in the SUBI Assets evidenced thereby, subject in each case to the rights of the Transferor as the holder of the Transferor Interest. Although unlikely, it is possible that a court could recharacterize (for accounting and general state law purposes) the transactions contemplated by the Titling Trust Agreement and SUBI Supplement as a financing secured by a pledge of the SUBI Certificate or the SUBI Assets rather than as a sale. In such an event, absent prior perfection of the Trustee's security interest in the SUBI Assets, the holder of a perfected lien in one or more SUBI Assets would have priority over the interest of the Trustee in such SUBI Assets. Certain actions have been taken to ensure that, if the transfer of the SUBI were to be so recharacterized as a transfer to secure a loan, the Trustee would be deemed to have a perfected security interest in the SUBI Certificate (and the SUBI evidenced thereby) and in the Contracts and the Contract Rights susceptible of perfection under the Uniform Commercial Code (the "UCC") as in effect in the Trust States. The "Contract Rights" are all rights relating to the Contracts and the proceeds thereof, including the documents evidencing such Contracts, Monthly Payments received or due on or after the related Cutoff Date, Security Deposits (to the extent applied to cover excess wear and tear charges or treated as Liquidation Proceeds as described herein and as provided for in the Contracts), Prepayments, Liquidation Proceeds and Net Insurance Proceeds (to the extent constituting proceeds of the related Contract rather than proceeds of the related Leased Vehicle) received on or after the related Cutoff Date. The SUBI Certificate will constitute an "instrument" under the UCC and, by virtue of its possession thereof, the Trustee will be deemed to have a perfected security interest therein (and the SUBI evidenced thereby). The Contracts will not be stamped to reflect the Trustee's indirect interest therein. On or prior to the Closing Date, however, "protective" UCC-1 financing statements will be filed in California, Illinois and Delaware with respect to the Contracts and the Contract Rights to reflect the perfection of any security interest that the Trustee would be deemed to have therein. However, no action will be taken to perfect the lien that the Trustee would be deemed to have in the Leased Vehicles in the event of such a recharacterization. Therefore, to the extent that a valid lien is imposed by a third party against a Leased Vehicle, the interest of the lienholder will be superior to the unperfected beneficial interest of the Trustee in such Leased Vehicle. The Servicing Agreement will require the Servicer to contest all such liens and cause the removal of any liens that may be imposed, but investors in the Class A Certificates could incur a loss on their investment if any such liens are imposed against the Leased Vehicles. SEE "Additional Document Provisions--The Servicing Agreement--Notification of Liens and Claims". Additionally, any perfected security interest of the Trustee in all or part of the property of the Trust could be subordinate to claims of any trustee in bankruptcy or debtor-in-possession in the event of a bankruptcy of the Transferor prior to any perfection of the transfer of the assets transferred by the Transferor to the Trust pursuant to the Agreement. SEE "Risk Factors--Risks Associated with Possible Future Insolvency of TMCC; Substantive Consolidation with TMCC". INSOLVENCY RELATED MATTERS Although no assurance can be given, the Transferor believes that in the unlikely event of a bankruptcy of TMCC the SUBI Assets would not be treated as part of TMCC's bankruptcy estate and that, even if they were so treated, the subordination by holders and pledgees of the UTI and Other SUBIs should be enforceable. In addition, the Transferor has taken steps in structuring the transactions contemplated hereby that are intended to make it unlikely that the voluntary or involuntary application for relief by TMCC under any Insolvency Laws will result in consolidation of the assets and liabilities of the Transferor, the Titling Trust or the Trust with those of TMCC. If, however, (i) a court concluded that the assets and 83 liabilities of the Transferor, the Titling Trust or the Trust should be consolidated with those of TMCC in the event of the application of applicable Insolvency Laws to TMCC, (ii) a filing were made under any Insolvency Law by or against the Transferor, the Titling Trust or the Trust or (iii) an attempt were made to litigate any of the foregoing issues, delays in payments on the Certificates and possible reductions in the amount of such payments could occur. CERTAIN LEGAL ASPECTS OF THE CONTRACTS AND THE LEASED VEHICLES Although all Contracts have been or will be originated in the Trust States, in some instances the related lessees may live in other states at the time of origination or may move to another state after the time of origination. Consequently, the related Leased Vehicles may be operated and registered in states other than Trust States and the related certificates of title may be recorded in such other states. The following discussion of certain legal aspects of the Contracts and Leased Vehicles does not purport to address the laws of every state in which a Leased Vehicle may be operated or registered or in which title may be recorded. BACK-UP SECURITY INTERESTS The Contracts are "chattel paper" as defined in the UCC. Pursuant to the California UCC, a non-possessory security interest in or transfer of chattel paper in favor of the Titling Trust and the Transferor may be perfected by filing a UCC-1 financing statement with the appropriate state authorities in the jurisdiction in which the principal place of business of the transferor is located (i.e. the California Secretary of State). On or prior to the Closing Date, "protective" UCC-1 financing statements will be filed in California, Delaware and Illinois to effect this perfection. If the Certificates were to be recharacterized as loans secured by the SUBI Assets, the Trustee will be deemed to have a perfected security interest in certain SUBI Assets, including the Contracts. The Trustee's security interest in that circumstance could be subordinate to the interest of certain other parties, if any, who take possession of the Contracts before the filing described above has been completed. Specifically, the Trustee's security interest in a Contract could be subordinate to the rights of a purchaser of such Contract who takes possession thereof without knowledge or actual notice of the Trustee's security interest. The Contracts will not be stamped to reflect the foregoing back-up security arrangements. Any perfected security interest of the Trustee in the Contracts will be unaffected by any change of location of any lessee, since, under the UCC, this back-up security interest will be perfected by the filing of a UCC-1 financing statement in the jurisdiction in which the chief executive office of the "debtor" (in this case, the Titling Trust) is located, not the location of any lessee. Various liens could be imposed upon all or part of the SUBI Assets (including the Leased Vehicles) that, by operation of law, would take priority over the Trustee's interest therein. Such liens could include tax liens arising against the Transferor or the Trust, mechanic's, repairmen's, garagemen's and motor vehicle accident liens and certain liens for personal property taxes, in each case arising with respect to a particular Leased Vehicle, and liens arising under various state and federal criminal statutes. Additionally, any perfected security interest of the Trustee in all or part of the property of the Trust could also be subordinate to claims of any trustee in bankruptcy or debtor-in-possession in the event of a bankruptcy of the Transferor prior to any perfection of the transfer of the assets transferred by the Transferor to the Trust pursuant to the Agreement. VICARIOUS TORT LIABILITY Although the Titling Trust will own the Leased Vehicles, they will be operated by the lessees and their respective invitees. State laws differ as to whether anyone suffering injury to person or property involving a leased vehicle may bring an action against the owner of the vehicle merely by virtue of that ownership. To 84 the extent that applicable State law permits such an action, the Titling Trust and the Titling Trust Assets may be subject to liability to such an injured party. For example, in California, where a majority of the Initial Contracts were originated, under Section 17150 of the California Vehicle Code, the owner of a motor vehicle subject to a lease is responsible for injuries to persons or property resulting from the negligent or wrongful operation of the vehicle by any person using the vehicle with the owner's permission. The owner's liability for personal injuries is limited to $15,000 per person and $30,000 in total per accident and for property damage is limited to $5,000 per accident. However, recourse for any judgment arising out of the operation of the vehicle must first be had against the operator's property if the operator is within the jurisdiction of the court. The laws of most states, including the Trust States, either do not permit such suits, or limit the lessor's liability to the amount of any liability insurance that the lessee was required under applicable law to maintain (or in the case of Florida, the lessor was permitted to maintain), but failed to maintain. Notwithstanding the foregoing, in the event that vicarious liability is imposed on the Titling Trust as owner of a Leased Vehicle in a state that does not so limit liability, and the coverage provided by the Contingent and Excess Liability Insurance Policies is insufficient to cover such loss, including in certain circumstances with respect to a leased vehicle that is an Other SUBI Asset or a UTI Asset, investors in the Class A Certificates could incur a loss on their investments. The Titling Trust's insurance coverage is substantial. However, in the event that all applicable insurance coverage were exhausted and damages were assessed against the Titling Trust, claims could be imposed against the Titling Trust Assets, including the Leased Vehicles. Such claims would not take priority over any SUBI Assets to the extent that the Trustee has a prior perfected security interest therein (such as would be the case, in certain limited circumstances, with respect to the Contracts). If any such claims were imposed against the Titling Trust Assets and the Trustee did not have a prior perfected security interest, investors in the Class A Certificates could incur a loss on their investment. SEE "Certain Legal Aspects of the Titling Trust--Structural Considerations--Back-up Security Interest in Certain SUBI Assets". REPOSSESSION OF LEASED VEHICLES In the event that a default by a lessee has not been cured within a certain period of time after notice, the Servicer will ordinarily retake possession of the related leased vehicle. Some jurisdictions require that the lessee be notified of the default and be given a time period within which to cure the default prior to repossession. Generally, this right to cure may be exercised on a limited number of occasions in any one-year period. In these jurisdictions, if the lessee objects or raises a defense to repossession, an order must be obtained from the appropriate state court, and the vehicle must then be repossessed in accordance with that order. Other jurisdictions (including each of the Trust States) permit repossession without notice, but only if the repossession can be accomplished peacefully. If a breach of the peace cannot be avoided, judicial action is required. If a breach of the peace cannot be avoided, the lessor typically must seek a writ of possession or replevin in a state court action or pursue other judicial action to repossess such leased vehicle. After the Servicer has repossessed a Leased Vehicle, it may provide the lessee with a period of time within which to cure the default under the related Contract. If by the end of such period the default has not been cured, the Servicer will attempt to sell the Leased Vehicle. The Net Repossessed Vehicle Proceeds therefrom may be less than the remaining amounts due under the Contract at the time of default by the lessee. DEFICIENCY JUDGMENTS The proceeds of sale of a leased vehicle generally will be applied first to the expenses of resale and repossession and then to the satisfaction of the amounts due under the related lease contract. While some 85 states impose prohibitions or limitations on deficiency judgments if the net proceeds from resale of a leased vehicle do not cover the full amounts due under the related lease contract, a deficiency judgment can be sought in those states (including each of the Trust States) that do not prohibit directly or limit such judgments. However, in some states (including California), a lessee may be allowed an offsetting recovery for any amount not recovered at resale because the terms of the resale were not commercially reasonable. In any event, a deficiency judgment would be a personal judgment against the lessee for the shortfall, and a defaulting lessee might have little capital or sources of income available following repossession. Therefore, in many cases, it may not be useful to seek a deficiency judgment. Because it is a personal judgment against an obligor who may have few if any assets remaining after the repossession, even if a deficiency judgment is obtained, it may be settled at a significant discount or it may prove impossible to collect all or any portion thereof. CONSUMER PROTECTION LAWS Numerous federal and state consumer protection laws impose requirements upon lessors and servicers involved in consumer leasing. The federal Consumer Leasing Act of 1976 and Regulation M, issued by the Board of Governors of the Federal Reserve System, for example, require that a number of disclosures be made at the time a vehicle is leased, including, among other things, all amounts due at the time of origination of the lease, a description of the lessee's liability at the end of the lease term, the amount of any periodic payments, the circumstances under which the lessee may terminate the lease prior to the end of the lease term and (beginning in October 1997) the capitalized cost of the vehicle and a warning regarding possible charges for early termination. Each of the Trust States has adopted Article 2A of the uniform commercial code which provides protection to lessees through certain implied warranties and the right to cancel a lease contract relating to defective goods. In addition, California and Florida have enacted comprehensive vehicle leasing statutes that, among other things, regulate the disclosures to be made at the time a vehicle is leased. The various federal and state consumer protection laws would apply to the Titling Trust as a "co-lessor" of the Contracts and may also apply to the Trust as holder of a beneficial interest in the Contracts. The failure to comply with such consumer protection laws may give rise to liabilities on the part of the Servicer, the Titling Trust and the Titling Trustee, including liabilities for statutory damages and attorneys' fees. In addition, claims by the Servicer, the Titling Trust and the Titling Trustee may be subject to set-off as a result of such noncompliance. Courts have applied general equitable principles in litigation relating to repossession and deficiency balances. These equitable principles may have the effect of relieving a lessee from some or all of the legal consequences of a default. In several cases, consumers have asserted that the self-help remedies of lessors violate the due process protection provided under the Fourteenth Amendment to the Constitution of the United States. Courts have generally found that repossession and resale by a lessor do not involve sufficient state action to afford constitutional protection to consumers. Many states, including each of the Trust States, have adopted laws (each, a "Lemon Law") providing redress to consumers who purchase or lease a vehicle that remains out of conformance with its manufacturer's warranty after a specified number of attempts to correct a problem or after a specific time period. Should any Leased Vehicle become subject to a Lemon Law, a lessee could compel the Titling Trust to terminate the related Contract and refund all or a portion of payments that previously have been paid. Although the Titling Trust may be able to assert a claim against the manufacturer of any such defective Leased Vehicle, there can be no assurance any such claim would be successful. To the extent a lessee is able to compel the Titling Trust to terminate the related Contract, such Contract will be deemed to be a Liquidated Contract and amounts received thereafter on such Contract will be deemed to be Liquidation Proceeds. As noted below, TMCC will represent and warrant to the Trustee as of the Cutoff Date and as of each Transfer Date that none of the Initial Leased Vehicles or the related Subsequent Leased Vehicles, as the case may be, is out of compliance with any law, including any Lemon Law. Nevertheless, there can be 86 no assurance that one or more Leased Vehicles will not become subject to return (and the related Contract terminated) in the future under a Lemon Law. Representations and warranties will be made in the Titling Trust Agreement that each Contract complies with all requirements of law in all material respects. If any such representation and warranty proves to be incorrect with respect to any Contract, has certain material adverse effects, and is not timely cured, TMCC will be required under the Servicing Agreement to deposit an amount equal to the Reallocation Payment (together with, in certain circumstances during the Amortization Period, an amount equal to the Reallocation Deposit Amount) in respect of such Contract into the SUBI Collection Account unless the breach is cured. SEE "Additional Document Provisions--The Titling Trust Agreement--The SUBI, the Other SUBIs and the UTI" and "The Contracts--Representations, Warranties and Covenants". OTHER LIMITATIONS In addition to laws limiting or prohibiting deficiency judgments, numerous other statutory provisions, including applicable Insolvency Laws, may interfere with or affect the ability of a lessor to enforce its rights under an automobile or light duty truck lease contract. For example, if a lessee commences bankruptcy proceedings, the lessor's receipt of rental payments due under the lease contract is likely to be delayed. In addition, a lessee who commences bankruptcy proceedings might be able to assign the lease contract to another party even though the lease prohibits assignment. MATERIAL FEDERAL INCOME TAX CONSIDERATIONS GENERAL Set forth below is a discussion representing the opinion of Andrews & Kurth L.L.P., special federal income tax counsel to the Transferor, as to material federal income tax consequences to holders of the Class A Certificates who are original owners and who hold the Class A Certificates as capital assets under the Internal Revenue Code of 1986, as amended (the "Code"). This discussion does not purport to be complete or to deal with all aspects of federal income taxation or any aspects of state or local taxation that may be relevant to Class A Certificateholders or Certificate Owners in light of their particular circumstances, nor to certain types of Class A Certificateholders or Certificate Owners subject to special treatment under the federal income tax laws (for example, banks and life insurance companies). This discussion is based upon present provisions of the Code, the regulations promulgated thereunder and judicial and ruling authorities, all of which are subject to change, which change may be retroactive. The parties do not intend to seek a ruling from the Internal Revenue Service ("IRS") on any of the issues discussed below. Moreover, there can be no assurance that if such a ruling were sought, the IRS would rule favorably. Taxpayers and preparers of tax returns (including those filed by any partnership or other issuer) should be aware that under applicable Treasury Regulations a provider of advice on specific issues of law is not considered an income tax return preparer unless the advice is (i) given with respect to events that have occurred at the time the advice is rendered and is not given with respect to the consequences of contemplated actions and (ii) is directly relevant to the determination of an entry on a tax return. Accordingly, taxpayers should consult their respective tax advisors and tax return preparers regarding the preparation of any item on a tax return, even where the anticipated tax treatment has been discussed herein. Prospective investors should consult their own tax advisors with regard to the federal income tax consequences of the purchase, ownership or disposition of the Class A Certificates, as well as the tax consequences arising under the laws of any state, foreign country or other taxing jurisdiction. 87 CHARACTERIZATION OF THE CLASS A CERTIFICATES AS INDEBTEDNESS The Transferor and the Trustee (by entering into the Agreement) and each Certificateholder, and each Certificate Owner (by acquiring a beneficial interest in a Class A Certificate) will agree to and will express their intent that the Class A Certificates be treated as indebtedness, secured by the assets of the Trust, for all federal, state and local income and franchise tax purposes. However, because different criteria are used to determine the non-tax accounting characterization of the transaction, the Transferor will treat the transfer of the SUBI to the Trust, for financial accounting purposes, as a sale of an ownership interest in the Titling Trust Assets and not as the issuance of a debt obligation. In general, the characterization of a transaction for federal income tax purposes is based upon economic substance, and the substance of the transaction in which the Class A Certificates are issued is consistent with the treatment of the Class A Certificates as debt for federal income tax purposes. Although there are certain judicial precedents holding that under appropriate circumstances a taxpayer should be required to treat a transaction in accordance with the form chosen by the taxpayer regardless of the transaction's substance, the operative provisions of the transaction and the Agreement will not be inconsistent with treating the Class A Certificates as debt and, accordingly, these authorities should not be applied to require sale characterization for federal income tax purposes. The determination of whether the economic substance of a property transfer is a sale or a loan secured by the transferred property depends upon numerous factors designed to determine whether the Transferor has relinquished (and the transferee has obtained) substantial incidents of ownership in the property. The primary factors examined are whether the transferee has the opportunity to gain if the property increases in value, and has the risk of loss if the property decreases in value. Based upon its analysis of such factors, Andrews & Kurth L.L.P. is of the opinion that, for federal income tax purposes, the characterization of the Class A Certificates should be governed by the substance of the transaction and accordingly, (i) the Trust will not be treated as an association or a publicly traded partnership taxable as a corporation and (ii) the Class A Certificates will properly be characterized as indebtedness that is secured by the assets of the Trust. TAXATION OF INTEREST AND DISCOUNT INCOME Assuming that the Certificate Owners are owners of debt obligations for federal income tax purposes, interest generally will be taxable as ordinary income for federal income tax purposes when received by the Certificate Owners utilizing the cash method of accounting and when accrued by Certificate Owners utilizing the accrual method of accounting. Interest received on the Class A Certificates may also constitute "investment income" for purposes of certain limitations of the Code concerning the deductibility of investment interest expense. ORIGINAL ISSUE DISCOUNT. Under regulations issued with respect to the original issue discount ("OID") provisions of the Code, the Class A Certificates will be deemed to have been issued with OID in an amount equal to the excess of the "stated redemption price at maturity" of the Class A Certificates (generally equal to their Initial Class Certificate Balances plus all interest other than "qualified stated interest" payable prior to or at maturity), over their original issue price (in this case, the initial offering price at which a substantial amount of the related Class of Class A Certificates is sold to the public). Qualified stated interest generally means interest payable at a single fixed rate or qualified variable rate provided that such interest payments are unconditionally payable at intervals of one year or less during the entire term of the relevant Class A Certificates. Under the OID provisions of the Code, interest will only be treated as qualified stated interest if it is "unconditionally payable". Interest will be treated as "unconditionally payable" only if Certificateholders have reasonable remedies to compel payment of interest deficiencies (E.G., default and acceleration rights). Because Class A Certificateholders will not be entitled to penalty payments of interest on interest deficiencies, and Class A Certificateholders will have no default and acceleration rights in the event of interest shortfalls, interest paid on the Class A Certificates may not be treated by the IRS as qualified stated interest, and, in such event, would be treated as OID. A Class A Certificateholder must include OID income over the term of the related Class A Certificate under a 88 constant yield method. In general, OID must be included in income in advance of the receipt of cash representing that income, regardless of the Certificateholder's method of accounting. The issue price of a Class A Certificate is the first price at which a substantial amount of Class A Certificates are sold to the public (excluding brokers, underwriters or wholesalers). If less than a substantial amount of a particular Class of Class A Certificates is sold for cash on or prior to the Closing Date, the issue price of such Class will be treated as the fair market value of such Class on the Closing Date. The issue price of a Class A Certificate also includes the amount paid by a Class A Certificateholder for accrued interest that relates to a period prior to the issue date of the Class A Certificate. The stated redemption price at maturity of a Class A Certificate includes the initial Certificate Balance of the Class A Certificate, but generally will not include distributions of interest if such distributions constitute "qualified stated interest." Under the de minimis rule, OID on a Class A Certificate will be considered to be zero if such OID is less than 0.25% of the stated redemption price at maturity of the Class A Certificate multiplied by the weighted average maturity of the Class A Certificate. Certificateholders generally must report de minimis OID pro rata as principal payments are received, and such income will be capital gain if the Class A Certificate is held as a capital asset. However, accrual method holders may elect to accrue all de minimis OID as well as market discount under a constant interest method. The holder of a Class A Certificate issued with OID must include in gross income, for all days during its taxable year on which it holds such Class A Certificate, the sum of the "daily portions" of such original issue discount. The amount of OID includible in income by a Certificateholder will be computed by allocating to each day during a taxable year a pro rata portion of the original issue discount that accrued during the relevant accrual period. If a Certificateholder purchases a Class A Certificate issued with OID at an "acquisition premium" (i.e., at a price in excess of the adjusted issue price of the Class A Certificate, but less than or equal to the "stated redemption price at maturity"), the amount includible by such Certificateholder in income in each taxable year as OID will be reduced by that portion of the premium properly allocable to such year. Although the matter is not entirely clear, the Transferor currently intends to report all stated interest on the Class A Certificates as qualified stated interest and not as OID. MARKET DISCOUNT. Certificate Owners should be aware that the resale of a Class A Certificate may be affected by the market discount rules of the Code. These rules generally provide that, subject to a de minimis exception, if a holder acquires a Class A Certificate at a market discount (i.e., at a price below its "adjusted issue price") and thereafter recognizes gain upon a disposition of the Class A Certificate, the lesser of such gain or the portion of the market discount that accrued while the Class A Certificate was held by such holder will be treated as ordinary interest income realized at the time of the disposition. A taxpayer may elect to include market discount currently in gross income in taxable years to which it is attributable, computed using either a ratable accrual or a yield to maturity method. PREMIUM. A Certificate Owner who purchases a Class A Certificate for more than its stated redemption price at maturity will be subject to the premium amortization rules of the Code. Under those rules, the Certificate Owner may elect to amortize such premium on a constant yield method. Amortizable premium reduces interest income on the related Class A Certificate. If the Certificate Owner does not make such an election, the premium paid for the Class A Certificate generally will be included in the tax basis of the Class A Certificate in determining the gain or loss on its disposition. 89 Each Certificate Owner should consult his own tax advisor regarding the impact of the original issue discount, market discount, and premium amortization rules. SALES OF CLASS A CERTIFICATES In general, a Certificate Owner will recognize gain or loss upon the sale, exchange, redemption or other taxable disposition of a Class A Certificate measured by the difference between (i) the amount of cash and the fair market value of any property received (other than amounts attributable to, and taxable as, accrued stated interest) and (ii) the Certificate Owner's tax basis in the Class A Certificate (as increased by any OID or market discount previously included in income by the holder and decreased by any deductions previously allowed for amortizable bond premium and by any payments, other than qualified stated interest payments, received with respect to such Class A Certificate). Subject to the market discount rules discussed above and to the applicable holding period requirement for long-term capital gain treatment, any such gain or loss generally will be long-term capital gain or loss, provided that the Class A Certificate was held as a capital asset. Moreover, capital losses generally may be used only to offset capital gains. The recently enacted Tax Relief Act of 1997 reduces the maximum rate of tax on net capital gains for individuals on sales of certain assets (including stocks and securities) and increases the time period for which an asset must be held for the gain from its sale to be eligible for the lowest rate. Generally, the holding period is increased from 12 to 18 months for the lowest rate, with a further rate reduction scheduled to take effect after the year 2000 for the sale of certain assets that have been held at least five years. FEDERAL INCOME TAX CONSEQUENCES TO FOREIGN INVESTORS The following information describes the United States federal income tax treatment of investors that are not United States persons ("Foreign Investors") if the Class A Certificates are treated as debt. The term "Foreign Investor" means any person other than (i) a citizen or resident of the United States, (ii) a corporation, partnership or other entity organized in or under the laws of the United States or any state or political subdivision thereof, or (iii) an estate the income of which is includible in gross income for United States federal income tax purposes, regardless of its source or (iv) a trust whose administration is subject to the primary supervision of a United States court and which has one or more United States fiduciaries who have authority to control all substantial decisions of the trust. The Code and Treasury regulations generally subject interest paid to a Foreign Investor to a withholding tax at a rate of 30% (unless such rate were changed by an applicable treaty). The withholding tax, however, is eliminated with respect to certain "portfolio debt investments" issued to Foreign Investors. Portfolio debt investments include debt instruments issued in registered form for which the United States payor receives a statement that the beneficial owner of the instrument is a Foreign Investor. The Class A Certificates will be issued in registered form; therefore, if the information required by the Code is furnished (as described below) and no other exceptions to the withholding tax exemption are applicable, no withholding tax will apply to the Class A Certificates. For the Class A Certificates to constitute portfolio debt investments exempt from United States withholding tax, the withholding agent must receive from the Certificate Owner an executed IRS Form W-8 signed under penalty of perjury by the Certificate Owner stating that the Certificate Owner is a Foreign Investor and providing such Certificate Owner's name and address. The statement must be received by the withholding agent in the calendar year in which the interest payment is made, or in either of the two preceding calendar years. A Certificate Owner that is a nonresident alien or foreign corporation will not be subject to United States federal income tax on gain realized on the sale, exchange or redemption of such Class A Certificate, provided that (i) such gain is not effectively connected with a trade or business carried on by the Certificate Owner in the United States, (ii) in the case of a Certificate Owner that is an individual, such Certificate 90 Owner is not present in the United States for 183 days or more during the taxable year in which such sale, exchange or redemption occurs and (iii) in the case of gain representing accrued interest, the conditions described in the immediately preceding paragraph are satisfied. BACKUP WITHHOLDING A Certificate Owner may be subject to a backup withholding at the rate of 31% with respect to interest paid on the Class A Certificates if the Certificate Owner, upon issuance, fails to supply the Trustee or his broker with such Certificate Owner's taxpayer identification number, fails to report interest, dividends or other "reportable payments" (as defined in the Code) properly, or under certain circumstances, fails to provide the Trustee or his broker with a certified statement, under penalty of perjury, that such Certificate Owner is not subject to backup withholding. Information returns will be sent annually to the IRS and to each Certificate Owner setting forth the amount of interest paid on the Class A Certificates and the amount of tax withheld thereon. POSSIBLE ALTERNATIVE TREATMENT OF THE CLASS A CERTIFICATES Although, as described above, it is the opinion of Andrews & Kurth L.L.P. that the Class A Certificates will properly be characterized as debt for federal income tax purposes, such opinion will not be binding on the IRS and thus no assurance can be given that such a characterization shall prevail. If the IRS were to contend successfully that the Class A Certificates did not represent debt for federal income tax purposes, certain adverse tax consequences to the Class A Certificateholders could result. For example, the Trust generally should be required to pay corporate income tax on its taxable income (thus reducing the cash available to make payments on the Class A Certificates). In addition, income to certain tax-exempt entities (including pension funds) generally should be "unrelated business taxable income", and income to foreign holders generally should be subject to U.S. withholding tax and reporting requirements. Prospective investors are advised to consult with their own tax advisors regarding the federal income tax consequences of the purchase, ownership and disposition of the Class A Certificates. ERISA CONSIDERATIONS Section 406 of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and Section 4975 of the Code prohibit pension, profit sharing or other employee benefit plans ("Benefit Plans") from engaging in certain transactions with persons that are "parties in interest" under ERISA or "disqualified persons" under the Code with respect to such Benefit Plans. ERISA also imposes certain duties on persons who are fiduciaries of Benefit Plans subject to ERISA. Under ERISA, any person who exercises any authority or control with respect to the management or disposition of the assets of a Benefit Plan is considered to be a fiduciary of such Benefit Plan (subject to certain exceptions not here relevant). A violation of these "prohibited transaction" rules may result in liability under ERISA and the Code for such persons. Neither ERISA nor the Code defines the terms "plan assets". Under Section 2510.3-101 of the United States Department of Labor ("DOL") regulations (the "Regulation"), a Plan's assets may include an interest in the underlying assets of an entity (such as a trust) for certain purposes, including the prohibited transaction provisions of ERISA and the Code, if the Plan acquires an "equity interest" in such entity. The Transferor believes that the Certificates will give Certificateholders an equity interest in the Trust for purposes of the Regulation. Under the Regulation, when a Plan acquires an equity interest that is neither a "publicly offered security" nor a security issued by an investment company registered under the Investment Company Act of 1940, the underlying assets of the entity will be considered "plan assets" unless the entity is an "operating company" or equity participation in the entity by benefit plan investors is not "significant". A "publicly-offered security" is a security that is (a) freely transferable, (b) part of a class of securities that is owned, immediately subsequent to the initial offering, by 100 or more investors who were 91 independent of the issuer and of one another ("Independent Investors") and (c) either is (i) part of a class of securities registered under section 12(b) or 12(g) of the Exchange Act, or (ii) sold to the plan as part of an offering of securities to the public pursuant to an effective registration statement under the Securities Act and the class of securities of which such security is a part is registered under the Exchange Act within 120 days (or such later time as may be allowed by the Commission) after the end of the fiscal year of the issuer during which the offering of such securities to the public occurred. For purposes of the 100 Independent Investor criterion, each Class of Certificates should be deemed to be a "class" of securities that would be tested separately from any other securities that may be issued by the Trust. Except to the extent otherwise disclosed herein, it is anticipated that each Class of Class A Certificates will meet the foregoing criteria for treatment as "publicly-offered securities." No restrictions will be imposed on the transfer of the Class A-1, Class A-2 or Class A-3 Certificates. Although no assurances can be given, and no monitoring or other measures will be taken to ensure, that such condition will be met, the Underwriters expect that the Class A-1, Class A-2 and Class A-3 Certificates will be held by at least 100 independent investors at the conclusion of the initial public offering. The Class A Certificates will be sold as part of an offering pursuant to an effective registration statement under the Act and then will be timely registered under the Exchange Act except as described below. The Transferor has applied to the DOL for the Requested Exemption described herein pursuant to which the Class A-1, Class A-2 and Class A-3 Certificates would be eligible to be held by employee benefit plan investors meeting the conditions specified therein as of the effective date of the Requested Exemption. In the event the Requested Exemption is granted substantially in the form for which such application was made, the Transferor intends to deregister the Class A Certificates under the Exchange Act as soon as permitted by law or not to register such Classes if the Requested Exemption is granted prior to the date such registration is required. As a result, the Class A-1, Class A-2 or Class A-3 Certificates may no longer be eligible to be held by Benefit Plans that did not meet the eligibility criteria for the Requested Exemption, even if more than 100 other qualified investors continued to hold securities of each such Class. Accordingly, Benefit Plans intending to purchase any Class A Certificates should confirm that they meet the conditions specified in the Requested Exemption. The Transferor anticipates that all of the conditions of the Exemption that are within its control will be satisfied if and when the Exemption is granted. There can be no assurance that the Exemption will be granted, or the date on which the Exemption might be granted. Equity participation in an entity by "benefit plan investors" (i.e., Plans and other employee benefit plans not subject to ERISA, such as governmental or foreign plans, as well as entities holding assets deemed to be "plan assets") is not "significant" on any date on which any series of certificates is issued and outstanding if, immediately after the most recent acquisition of any equity interest therein, less than 25% of the value of each class of equity interests therein (excluding interests held by the related transferor, the trustee or their affiliates in the case of a trust) is held by benefit plan investors. No assurance can be given by the Transferor as to whether the value of each Class of Certificates that might be deemed to be equity interests in the Trust held by benefit plan investors will be "significant" upon completion of the offering of any Certificates or thereafter, and no monitoring or other measures will be taken with respect to the satisfaction of the conditions to this exception. TMCC, on behalf of itself and certain of its affiliates (including the Transferor), has applied to the DOL for an administrative exemption (the "Requested Exemption") from certain of the prohibited transaction rules of ERISA with respect to the initial purchase, the holding and the subsequent resale by Benefit Plans of certificates similar to the Class A Certificates. There can be no assurance that the Requested Exemption will be granted or that, if granted, it will be made retroactive through the date of the issuance of the Class A Certificates. Should the Requested Exemption be granted, it would apply to the acquisition, holding and resale by Benefit Plans of the Class A Certificates provided that specified conditions (including those described below) are met. The Transferor believes that all conditions of the Requested Exemption other than those within the control of the investors have or will be met. 92 For the Requested Exemption to apply to the acquisition by a Benefit Plan of Class A Certificates, the Class A Certificates would be required to be offered and sold initially to the public (including Benefit Plans) pursuant to an underwriting arrangement with one or more underwriters which have received one of a group of administrative exemptions from certain of the prohibited transaction rules of ERISA. Such exemptions apply with respect to the initial purchase, the holding and the subsequent resale by Benefit Plans of certificates representing interests in asset backed pass-through trusts that consist of certain receivables, loans and other obligations that meet the conditions and requirements of such exemption. The DOL has granted such an administrative exemption to one of the underwriters (Prohibited Transaction Exemption 90-25; Exemption Application No. D-8102, 55 Fed. Reg. 42597 (1990), as amended). Among the other conditions that are required to be satisfied for the Requested Exemption to apply to the acquisition by a Benefit Plan of the Class A Certificates are the following (each of which the Transferor believes has been or will be met in connection with the Class A Certificates): (i) The acquisition of the Class A Certificates by a Benefit Plan is on terms (including the price for the Class A Certificates) that are at least as favorable to the Benefit Plan as they would be in an arm's length transaction with an unrelated party. (ii) The rights and interests evidenced by the Class A Certificates acquired by the Benefit Plan are not subordinated to the rights and interests evidenced by any other Class of Certificates, and the rights and interests evidenced by the SUBI are not subordinated to the rights and interests evidenced by Other SUBI Certificates or UTI Certificates. (iii) The Class A Certificates acquired by the Benefit Plan have received a rating at the time of such acquisition that is in one of the three highest generic rating categories from Standard & Poor's, Moody's, Duff & Phelps Credit Rating Co. ("Duff & Phelps") or Fitch Investors Service, Inc. ("Fitch"). (iv) The sum of all payments made to the Underwriters in connection with the distribution of the Class A Certificates represents not more than reasonable compensation for underwriting the Class A Certificates. The sum of all payments made to and retained by the Transferor pursuant to the sale of the SUBI to the Trust represents not more than the fair market value of the interest in the Contracts and Leased Vehicles represented thereby. The sum of all payments made to and retained by the Servicer with regard to the SUBI Assets represents not more than reasonable compensation for the Servicer's services under the Servicing Agreement and reimbursement of the Servicer's reasonable expenses in connection therewith. (v) The Revolving Period ends no more than 15 consecutive months from the Closing Date and (A) all Subsequent Contracts meet the terms and conditions for eligibility described in this Prospectus, and (B) the addition of Subsequent Contracts does not result in the reduction of the ratings on the Class A Certificates received from any of Moody's, Standard & Poor's, Duff & Phelps or Fitch. (vi) After the Revolving Period ends, the average Lease Rate for the Contracts included in the SUBI Assets shall not be more than 200 basis points greater than the average Lease Rate for the Initial Contracts. (vii) Principal Collections that are reinvested in Subsequent Contracts during the Revolving Period are first invested in an eligible lease contract with the earliest origination date, then in an eligible lease contract with the next earliest origination date and so forth, beginning with the lease contracts that have been reserved specifically for such purpose at the time of the initial allocation of lease contracts to the SUBI, but excluding those specific lease contracts reserved for allocation to or allocated to Other SUBIs. 93 In addition, it is a condition that the Benefit Plan investing in the Class A Certificates be an "accredited investor" as defined in Rule 501(a)(1) of Regulation D of the Commission under the Securities Act. The Requested Exemption would not apply to Benefit Plans sponsored by the Transferor, the Underwriters, the Trustee, the Servicer, any lessee with respect to Contracts allocated to the SUBI Assets constituting more than 5% of the aggregate unamortized principal balance of the SUBI Assets, or any affiliate of such parties (the "Restricted Group"). As of the date hereof, no lessee with respect to the Contracts allocated to the SUBI Assets constitutes more than 5% of the aggregate unamortized principal balance of the Trust (i.e., more than 5% of the Aggregate Net Investment Value as of the Cutoff Date). Moreover, the Requested Exemption would provide relief for sales, exchanges or transfers between a Benefit Plan and the underwriter or sponsor with discretionary investment authority over such Benefit Plan's assets, from certain self-dealing/conflict of interest prohibited transactions, only if, among other requirements, (i) a Benefit Plan's investment in the Class A Certificates does not exceed 25% of all of the Class A Certificates outstanding at the time of the acquisition, and (ii) immediately after the acquisition, no more than 25% of the assets of a Benefit Plan with respect to which the person who has discretionary authority or renders investment advice are invested in Class A Certificates representing an interest in a trust containing assets sold or serviced by the same entity. Due to the complexities of these rules and the penalties imposed upon persons involved in prohibited transactions, it is important that the fiduciary of a Benefit Plan considering the purchase of Class A Certificates consult with its counsel regarding the grant and applicability of the Requested Exemption and the prohibited transaction provisions of ERISA and the Code to such investment. Moreover, each Benefit Plan fiduciary should determine whether, under the general fiduciary standards of investment prudence and diversification, an investment in the Class A Certificates is appropriate for the Benefit Plan, taking into account the overall investment policy of the Benefit Plan and the composition of the Benefit Plan's investment portfolio. 94 UNDERWRITING Under the terms and subject to the conditions contained in an Underwriting Agreement dated September 11, 1997 (the "Underwriting Agreement"), among the Transferor, TMCC and the underwriters named below (the "Underwriters"), the Transferor has agreed to sell to the Underwriters, and the Underwriters have agreed to purchase from the Transferor, severally but not jointly, the following respective amounts of Class A Certificates:
CLASS A-1 CLASS A-2 CLASS A-3 UNDERWRITER CERTIFICATES CERTIFICATES CERTIFICATES - --------------------------------------------- -------------- -------------- ------------- Merrill Lynch, Pierce, Fenner & Smith Incorporated....................... $ 110,000,000 $ 175,000,000 $ 24,250,000 Lehman Brothers Inc.......................... $ 110,000,000 $ 175,000,000 $ 24,250,000 Morgan Stanley & Co. Incorporated............ $ 110,000,000 $ 175,000,000 $ 24,250,000 Credit Suisse First Boston Corporation....... $ 20,000,000 $ 30,000,000 $ 0 Goldman, Sachs & Co.......................... $ 20,000,000 $ 30,000,000 $ 0 J.P. Morgan & Co............................. $ 20,000,000 $ 30,000,000 $ 0 BA Securities, Inc........................... $ 10,000,000 $ 17,500,000 $ 0 Salomon Brothers Inc ........................ $ 10,000,000 $ 17,500,000 $ 0 -------------- -------------- ------------- Total.............................. $ 410,000,000 $ 650,000,000 $ 72,750,000 -------------- -------------- ------------- -------------- -------------- -------------
In the Underwriting Agreement the Underwriters have agreed, subject to the terms and conditions set forth therein, to purchase all the Class A Certificates if any are purchased. The Underwriting Agreement provides that, in the event of a default by an Underwriter, in certain circumstances the purchase commitments of the non-defaulting Underwriter may be increased or the Underwriting Agreement may be terminated. The Transferor has been advised by the Underwriters that they propose to offer the Class A Certificates to the public initially at the public offering prices set forth on the cover page of this Prospectus and to certain dealers at such prices less a concession of .15%, .20% and .20% of the principal amount per Class A-1, Class A-2 and Class A-3 Certificate, respectively, and that the Underwriters and such dealers may allow a discount of .10%, .15% and .15% of such principal amount per Class A-1, Class A-2 and Class A-3 Certificate, respectively, on sales to certain other dealers. After the initial public offering, the public offering price and concessions and discounts to dealers may be changed by the Underwriters. The Transferor and TMCC have agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act. The Class A Certificates are a new issue of securities with no established trading markets. The Transferor has been advised by the Underwriters that the Underwriters intend to make a market in each Class of Class A Certificates, as permitted by applicable laws and regulations. The Underwriters are not obligated, however, to make a market in any Class of Class A Certificates and any such market-making may be discontinued at any time at the sole discretion of the Underwriters without notice. Accordingly, no assurance can be given as to the liquidity of or trading markets for any Class of Class A Certificates. The Underwriters have advised the Transferor that, pursuant to Regulation M under the Securities Act, certain persons participating in this offering may engage in transactions, including stabilizing bids and syndicate covering transactions, which may have the effect of stabilizing or maintaining the market price of any Class of Class A Certificates at levels above those that might otherwise prevail in the open market. A "stabilizing bid" is a bid for or the purchase of any Class A Certificates on behalf of the Underwriters for the purpose of fixing or maintaining the price of such Certificates. A "syndicate covering transaction" is the bid for or the purchase of Class A Certificates on behalf of the Underwriters to reduce a short position incurred by the Underwriters in connection with this offering. 95 Stabilizing bids and syndicate covering transactions may have the effect of causing the price of the Class A Certificates of any Class to be higher than it might be in the absence thereof. Neither the Transferor nor the Underwriters makes any representation or prediction as to the direction or magnitude of any such effect on the prices for the Certificates. Neither the Transferor nor the Underwriters makes any representation that the Underwriters will engage in any such transactions or that, once commenced, any such transactions will not be discontinued without notice. The Trust may, from time to time, invest the funds in the Accounts in Permitted Investments acquired from one or more of the Underwriters or the Servicer. It is expected that delivery of the Class A Certificates will be made against payment therefor on or about the date specified in the last paragraph of the cover page of this Prospectus, which is the ninth business day following the date hereof. Under Rule 15c6-1 of the Commission under the Exchange Act, trades in the secondary market generally are required to settle in three business days, unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade Class A Certificates on the date hereof will be required, by virtue of the fact that the Class A Certificates initially will settle nine business days after the date hereof, to specify an alternate settlement cycle at the time of any such trade to prevent a failed settlement. TMCC has agreed to pay the Underwriters an aggregate fee of $750,000 for certain advisory, analytical and structuring services relating to the Titling Trust. Upon receipt of a request by an investor who has received an electronic Prospectus from an Underwriter or a request by such investor's representative within the period during which there is an obligation to deliver a Prospectus, the Transferor or the Underwriters will promptly deliver, or cause to be delivered, without charge, a paper copy of the Prospectus. LISTING AND GENERAL INFORMATION FOR NON-U.S. INVESTORS REPRESENTATIONS OF TRANSFEROR AND UNDERWRITERS In connection with the listing of the Class A Certificates on The Stock Exchange of Hong Kong Limited, the Underwriters have each represented and agreed that they have not, directly or indirectly, offered or sold and will not, directly or indirectly, offer or sell in Hong Kong, by means of any document, the Class A Certificates other than to persons whose ordinary business it is to buy or sell shares or debentures, whether as principal or agent, or in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32) of Hong Kong. The Underwriters have further represented and agreed that, unless they are persons who are permitted to do so under the securities laws of Hong Kong, they have not issued, or had in their possession for the purposes of issuing, and they will not issue, or have in their possession for the purposes of issuing, any advertisement, invitation or document relating to the Class A Certificates other than with respect to Class A Certificates intended to be disposed of to persons outside Hong Kong or to persons whose business involves the acquisition, or disposal or holding of securities, whether as principal or agent. This Prospectus includes particulars given in compliance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited for the purpose of giving information with regard to the Class A Certificates. For the purposes of such Rules, the Class A Certificates are treated as "selectively marketed debt securities". Each Underwriter will represent that: (i) it has not offered or sold and will not offer or sell, prior to the date six months after their date of issuance, any Class A Certificates to persons in the United Kingdom, except to persons whose activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted in and will not result in an offer to the public in the United Kingdom within the meaning of the 96 Public Offers of Securities Regulations 1995; (ii) it has complied and will comply with all applicable provisions of the Financial Services Act 1986 with respect to anything done by it in relation to the Class A Certificates in, from or otherwise involving the United Kingdom; and (iii) it has only issued or passed on and will only issue or pass on in the United Kingdom any document received by it in connection with the issuance of the Class A Certificates to a person who is of a kind described in Article 11(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996 (as amended) or is a person to whom the document can otherwise lawfully be issued or passed on. No action has been taken or will be taken by the Transferor or the Underwriters that would permit a public offering of any Class A Certificates in any country or jurisdiction other than in the United States where action for that purpose is required. Accordingly, the Class A Certificates may not be offered or sold, directly or indirectly, and neither this Prospectus nor any circular, prospectus, form of application, advertisement or other material may be distributed in or from or published in any country or jurisdiction except under circumstances that will result in compliance with any applicable laws and regulations. Persons into whose hands this Prospectus comes are required by the Transferor and the Underwriters to comply with all applicable laws and regulations in each country or jurisdiction in which they purchase, sell or deliver Class A Certificates or have in their possession or distribute this Prospectus, in all cases at their own expense. Each Underwriter will represent and agree that it will comply with all applicable laws and regulations in each jurisdiction in which it purchases, offers or sells Class A Certificates or possesses or distributes this Prospectus or any other offering material and will obtain any consent, approval or permission required by it for the purchase, offer or sale by it of Class A Certificates under the laws and regulations in force in any jurisdiction to which it is subject or in which it makes such purchases, offers or sales and neither the Transferor nor TMCC shall have any responsibility therefor. Each Underwriter will also represent and agree that it will not offer, sell or deliver any of the Class A Certificates or distribute any such offering material in or from any jurisdiction except under circumstances which will result in compliance with applicable laws and regulations and which will not impose any obligation on the Transferor, TMCC or the Underwriters. LISTING Application will be made for listing the Class A Certificates on the Luxembourg Stock Exchange and for listing and permission to deal in the Class A Certificates on The Stock Exchange of Hong Kong Limited. The Trust has requested that such permission become effective on September 25, 1997. In connection with the listing application made to the Luxembourg Stock Exchange, the Articles of Incorporation and Bylaws of the Transferor and the Agreement and a legal notice relating to the issuance of the Class A Certificates will be deposited prior to the listing with the Chief Registrar of the District Court of Luxembourg, where copies thereof may be obtained upon request. TOYOTA LEASING, INC. The Transferor was incorporated in the State of California in April 1997 as a wholly owned, limited purpose subsidiary of TMCC. The principal executive offices of the Transferor are located at 19001 South Western Avenue, Torrance, California 90509 and its telephone number is (310) 618-4000. DOCUMENTS AVAILABLE FOR COLLECTION AND INSPECTION Copies of the Articles of Incorporation and Bylaws of the Transferor, the Agreement, the Titling Trust Agreement, the SUBI Supplement, the Servicing Supplement and the Indenture will be available for inspection during the term of the Class A Certificates, and for so long as any Class A Certificates are listed on the Luxembourg Stock Exchange or The Stock Exchange of Hong Kong Limited, copies of the reports to Certificateholders to be delivered by the Trustee will be obtainable at the offices of Bankers Trust 97 Company Luxembourg S.A., 14 Boulevard F.D. Roosevelt, L-2450, Luxembourg and at the offices of Merrill Lynch & Co. at Asia Pacific Financial, 3 Garden Road, Hong Kong. AUTHORIZATION The execution and delivery of the Agreement, the Titling Trust Agreement, the SUBI Supplement, the Servicing Supplement and the Indenture and the sale of the Class A Certificates were authorized by the Boards of Directors of the Transferor and/or TMCC, as appropriate, on July 29, 1997 and August 15, 1997. NO MATERIAL CHANGE There has been no material adverse change in the information provided in this Prospectus with respect to the SUBI, the Contracts, the Leased Vehicles or the Trust since August 1, 1997 except as otherwise disclosed herein. LITIGATION Neither the Trust nor TMCC or any of its subsidiaries are involved in, nor are there any, legal or arbitration proceedings pending or threatened of which TMCC is aware, which may have or have had during the 12 months prior to the date hereof a material effect on the financial position of TMCC and its subsidiaries on a consolidated basis. INDEPENDENT ACCOUNTANTS Price Waterhouse LLP of Los Angeles, California are independent public accountants of TMCC. EUROCLEAR AND CEDEL The Class A Certificates have been accepted for clearance through the Cedel Bank and Euroclear systems. The Common Codes and ISIN numbers for the Class A Certificates are:
CLASS COMMON CODE ISIN - ----------- ------------- ------------------- Class A-1 8008612 US892317AA63 Class A-2 8008728 US892317AB47 Class A-3 8008752 US892317AC20
UNITED STATES LAW Andrews & Kurth L.L.P., a law firm licensed in the states of California, New York and Texas, and in the District of Columbia, in the United States, has given and has not withdrawn its consent to the inclusion in the Registration Statement and this Prospectus of the descriptions of its opinions regarding matters of United States federal income taxation and other matters with respect to the Class A Certificates in the forms and contexts in which they are included, in each case effective as of the dates of such documents. NOTICE TO CANADIAN RESIDENTS RESALE RESTRICTIONS The distribution of the Class A Certificates in Canada is being made only on a private placement basis exempt from the requirement that the Transferor, on behalf of the Trust, prepare and file a prospectus with the securities regulatory authorities in each province where trades of the Class A Certificates are effected. Accordingly, any resale of the Class A Certificates in Canada must be made in accordance with applicable securities laws which will vary depending on the relevant jurisdiction, and which may require resales to be made in accordance with available statutory exemptions or pursuant to a discretionary exemption granted 98 by the applicable Canadian securities regulatory authority. Purchasers are advised to seek legal advice prior to any resale of the Class A Certificates. REPRESENTATIONS OF PURCHASERS Each purchaser of Class A Certificates in Canada who receives a purchase confirmation will be deemed to represent to the Transferor, the Trust, the Trustee, TMCC and the dealer from whom such purchase confirmation is received that (i) such purchaser is entitled under applicable provincial securities laws to purchase such Class A Certificates without the benefit of a prospectus qualified under such securities laws, (ii) where required by law, that such purchaser is purchasing as principal and not as agent, and (iii) such purchaser has reviewed the text above under "Resale Restrictions". RIGHTS OF ACTION AND ENFORCEMENT (ONTARIO PURCHASERS) The securities being offered are those of foreign issuers and Ontario purchasers will not receive the contractual right of action prescribed by section 32 of the Regulation under the SECURITIES ACT (Ontario). As a result, Ontario purchasers must rely on other remedies that may be available, including common law rights of action for damages or rescission or rights of action under the civil liabilities provisions of the U.S. federal securities laws. All of the issuer's directors and officers as well as the experts named herein may be located outside of Canada and, as a result, it may not be possible for Ontario purchasers to effect service of process within Canada upon the issuer or such persons. All or a substantial portion of the assets of the issuer and such persons may be located outside of Canada and, as a result, it may not be possible to satisfy a judgment against the issuer or such persons in Canada or to enforce a judgment obtained in Canadian courts against such issuer or persons outside of Canada. Following a recent decision of the U.S. Supreme Court, it is possible that Ontario purchasers will not be able to rely upon the remedies set out in Section 12(2) of the Securities Act if the securities are being offered under a U.S. private placement memorandum. NOTICE TO BRITISH COLUMBIA RESIDENTS A purchaser of Class A Certificates to whom the SECURITIES ACT (British Columbia) applies is advised that such purchaser is required to file with the British Columbia Securities Commission a report within ten days of the sale of any Class A Certificates acquired by such purchaser pursuant to this offering. Such report must be in the form attached to British Columbia Securities Commission Blanket Order BOR #95/17, a copy of which may be obtained from the Transferor. Only one such report must be filed in respect of Class A Certificates acquired on the same date and under the same prospectus exemption. TAXATION AND ELIGIBILITY FOR INVESTMENT Canadian purchasers of Class A Certificates should consult their own legal and tax advisers with respect to the tax consequences of an investment in the Class A Certificates in their particular circumstances and with respect to the eligibility of the Class A Certificates for investment by the purchaser under relevant Canadian legislation. RATINGS OF THE CLASS A CERTIFICATES It is a condition of issuance that each of Moody's and Standard & Poor's rates each Class of Class A Certificates in its highest rating category. The ratings of the Class A Certificates will be based primarily upon the value of the Initial Contracts, the Reserve Fund and the terms of the Transferor Interest and the Class B Certificates. There is no assurance that any such rating will not be lowered or withdrawn by the assigning Rating Agency if, in its judgment, circumstances so warrant. In the event that a rating with respect to any Class of Class A Certificates is qualified, reduced or withdrawn, no person or entity will be obligated to provide any additional credit enhancement with respect to such Class of Class A Certificates. 99 The ratings of the Class A Certificates should be evaluated independently from similar ratings on other types of securities. A rating is not a recommendation to buy, sell or hold the related Class A Certificates, inasmuch as such rating does not comment as to market price or suitability for a particular investor. The ratings of each Class of Class A Certificates addresses the likelihood of the payment of principal of and interest on such Certificates pursuant to their terms. There can be no assurance as to whether any rating agency other than Moody's and Standard & Poor's will rate the Class A Certificates, or, if one does, what rating will be assigned by such other rating agency. A rating on any Class of Class A Certificates by another rating agency, if assigned at all, may be lower than the ratings assigned to such Class A Certificates by each of Moody's and Standard & Poor's. LEGAL MATTERS Certain legal matters, including certain federal income tax matters, with respect to the Class A Certificates have been passed upon for TMCC and the Transferor by Andrews & Kurth L.L.P., Los Angeles, California. Brown & Wood LLP, New York, New York will act as counsel for the Underwriters and has performed certain legal services for TMCC in connection with the Titling Trust. EXPERTS The financial statements incorporated in this Prospectus by reference to the Annual Report on Form 10-K of Toyota Motor Credit Corporation for the year ended September 30, 1996 have been so incorporated in reliance on the report of Price Waterhouse LLP, independent accountants, given on the authority of that firm as experts in auditing and accounting. With respect to the unaudited consolidated financial information of Toyota Motor Credit Corporation for the three-month periods ended December 31, 1996 and 1995, the six-month periods ended March 31, 1997 and 196, and the nine-month periods ended June 30, 1997 and 1996 incorporated by reference in this Prospectus, Price Waterhouse LLP reported that they have applied limited procedures in accordance with professional standards for a review of such information. However, their separate reports dated February 12, 1997, May 12, 1997 and August 12, 1997 incorporated by reference herein state that they did not audit and they do not state an opinion on that unaudited consolidated financial information. Price Waterhouse LLP has not carried out any significant additional audit tests beyond those which would have been necessary if their reports had not been included. Accordingly, the degree of reliance on their reports on such information should be restricted in light of the limited nature of the review procedures applied. Price Waterhouse LLP is not subject to the liability provisions of section 11 of the Securities Act for their reports on the unaudited consolidated financial information because those reports are not a "report" or a "part" of the registration statement prepared or certified by Price Waterhouse LLP within the meaning of section 7 and 11 of the Securities Act. 100 INDEX OF CAPITALIZED TERMS Accelerated Principal Distribution Amount........................................ 10 Accounts......................................................................... 60 Additional Loss Amounts.......................................................... 68 Additional Loss Contract......................................................... 63 Adjusted Certificate Balance..................................................... 10 Advance.......................................................................... 17 Agency Agreement................................................................. 70 Aggregate Net Investment Value................................................... 11 Aggregate Net Losses............................................................. 62 Agreement........................................................................ i Amortization Date................................................................ 7 Amortization Period.............................................................. 9 Available Interest............................................................... 49 Benefit Plans.................................................................... 92 Business Day..................................................................... 4, 56 Capped Contingent and Excess Liability Premiums.................................. 50 Capped Origination Trust Administrative Expenses................................. 50 Capped Titling Trust Administrative Expenses..................................... 50 Capped Trust Administrative Expenses............................................. 50 Cedel Bank....................................................................... 12 Cedel Bank Participants.......................................................... 58 Certificate Balance.............................................................. 5 Certificate Distribution Amount.................................................. 54 Certificate Factor............................................................... 43 Certificate Owners............................................................... 12 Certificate Payment Date......................................................... 6 Certificate Principal Loss Amounts............................................... 5, 48 Certificate Rates................................................................ 6 Certificateholders' Account...................................................... 61 Certificateholders............................................................... ii Certificates..................................................................... i Charge-off Rate.................................................................. 62 Charged-off Amount............................................................... 45 Charged-off Contract............................................................. 45 Claims........................................................................... 70 Class A Certificate Balance...................................................... 5 Class A Certificates............................................................. ii Class A Interest Carryover Shortfall............................................. 49 Class A-1 Certificates........................................................... ii Class A-1 Rate................................................................... 6 Class A-2 Rate................................................................... 6 Class A-3 Rate................................................................... 6 Class B Available Principal...................................................... 50 Class B Certificates............................................................. ii Class B Interest Carryover Shortfall............................................. 49 Class B Interest Reserve Amount.................................................. 62 Class B Rate..................................................................... 6 Class Certificate Balance........................................................ 5 Closing Date..................................................................... 4
101 Code............................................................................. 19, 88 Collection Period................................................................ 9 Collections...................................................................... 9 Commission....................................................................... iv Contingent and Excess Liability Insurance Policies............................... 64 Contract Rights.................................................................. 83 Contracts........................................................................ 2 Cooperative...................................................................... 58 Current Contract................................................................. 63 Cutoff Date...................................................................... 2 Dealers.......................................................................... 1 Deferral Fee..................................................................... 32 Definitive Certificates.......................................................... 59 Delinquency Percentage........................................................... 63 Deposit Date..................................................................... 14 Determination Date............................................................... 46 Discounted Contract.............................................................. 9, 11 Discounted Principal Balance..................................................... 11 DOL.............................................................................. 92 DTC.............................................................................. 12 DTC Participants................................................................. 56 Early Amortization Event......................................................... 52 ERISA............................................................................ 19, 92 ERISA Compliance Test............................................................ 77 Euroclear........................................................................ 12, 61 Euroclear Operator............................................................... 58 Euroclear Participants........................................................... 58 Events of Servicing Termination.................................................. 76 Excess Amounts................................................................... 50 Exchange Act..................................................................... iv First Principal Monthly Allocation Date.......................................... 7 Full Term Ratio.................................................................. 23 Indenture........................................................................ 78 Indenture Trustee................................................................ 78 Independent Investors............................................................ 92 Indirect DTC Participants........................................................ 57 Initial Certificate Balance...................................................... 4 Initial Class A Certificate Balance.............................................. 4 Initial Class A-1 Certificate Balance............................................ 4 Initial Class A-2 Certificate Balance............................................ 4 Initial Class A-3 Certificate Balance............................................ 4 Initial Class B Certificate Balance.............................................. 4 Initial Contracts................................................................ 2 Initial Deposit.................................................................. 16 Initial Leased Vehicles.......................................................... 2 Insolvency Event................................................................. 26 Insolvency Laws.................................................................. 26 Interest Collections............................................................. 9 Interest Period.................................................................. 6 Investor Interest................................................................ 4 Investor Percentage.............................................................. 10 IRS.............................................................................. 88
102 Lease Rate....................................................................... 13 Leased Vehicles.................................................................. 2 Lemon Law........................................................................ 86 Liquidated Contract.............................................................. 63 Liquidation Expenses............................................................. 15 Liquidation Proceeds............................................................. 14 Loss Amounts..................................................................... 20, 45 Matured Contract................................................................. 11 Matured Leased Vehicle Expenses.................................................. 14 Matured Leased Vehicle Inventory................................................. 11 Matured Leased Vehicle Proceeds.................................................. 14 Maturity......................................................................... 78 Maturity Advance................................................................. 18 Maturity Date.................................................................... 36 Monthly Allocation Date.......................................................... ii Monthly Payment.................................................................. 13 Monthly Payment Events........................................................... 11 Moody's.......................................................................... 19 Net Insurance Proceeds........................................................... 61 Net Liquidation Proceeds......................................................... 9 Net Matured Leased Vehicle Proceeds.............................................. 16 Net Repossessed Vehicle Proceeds................................................. 9 Nonrecoverable Advance........................................................... 72 OID.............................................................................. 89 Other SUBI Assets................................................................ 82 Other SUBI Certificates.......................................................... 29 Other SUBIs...................................................................... 1 Other SUBI Supplement............................................................ 68 Outstanding Principal Balance.................................................... 13 Payment Ahead.................................................................... 14 Payoff Amount.................................................................... 36 Permitted Investments............................................................ 64 Prepayment....................................................................... 60 Principal Allocation............................................................. 10 Principal Collections............................................................ 9 Rating Agencies.................................................................. 19 Realized Value................................................................... 36 Reallocation Deposit Amount...................................................... 45 Reallocation Payment............................................................. 41 Record Date...................................................................... 4 Registration Statement........................................................... iv Regulation....................................................................... 12 Repossessed Vehicle Expenses..................................................... 14 Repossessed Vehicle Proceeds..................................................... 14 Requested Exemption.............................................................. 93 Required Amount.................................................................. 16 Required Rate.................................................................... 64 Reserve Fund..................................................................... 16 Residual Value................................................................... 13 Residual Value Insurance Policy.................................................. 68 Residual Value Loss Amount....................................................... 20 Residual Value Surplus........................................................... 16
103 Residual Value Test.............................................................. 63 Revolving Period................................................................. 8 Schedule of Contracts and Leased Vehicles........................................ 40 Securities Act................................................................... iv Security Deposits................................................................ 73 Servicer......................................................................... 3 Servicer's Certificate........................................................... 75 Servicing Agreement.............................................................. 3 Servicing Fee.................................................................... 18 Servicing Supplement............................................................. 3 Specified Reserve Fund Balance................................................... 62 Standard & Poor's................................................................ 19 Stated Maturity Date............................................................. i, 6 SUBI............................................................................. i, 1 SUBI Supplement.................................................................. 28 SUBI Assets...................................................................... i, 2 SUBI Certificate................................................................. 13 SUBI Collection Account.......................................................... 14, 60 Subsequent Contracts............................................................. 2 Subsequent Leased Vehicles....................................................... 2 Targeted Maturity Date........................................................... 6 Titling Trust.................................................................... i Titling Trust Agreement.......................................................... 2 Titling Trust Assets............................................................. i, 30 Titling Trustee.................................................................. 2 TMA.............................................................................. 3 TMC.............................................................................. 3 TMCC............................................................................. iv, 31 TMCC Demand Note................................................................. 11 TMS.............................................................................. 3 Transfer Date.................................................................... 8 Transferor....................................................................... i Transferor Amounts............................................................... 46 Transferor Interest.............................................................. ii, 1 Transferor Percentage............................................................ 45 Trust............................................................................ i Trust Administrative Expenses.................................................... 55 Trust Agent...................................................................... 2, 70 Trust Indenture Act.............................................................. 78 Trust States..................................................................... 1, 13, 23 Trustee.......................................................................... i U.S. Bank........................................................................ 1 Unallocated Principal Collections................................................ 46 Uncapped Titling Trust Administrative Expenses................................... 50 Uncapped Trust Administrative Expenses........................................... 50 Underwriters..................................................................... 95 Underwriting Agreement........................................................... 95 UTI.............................................................................. 1 UTI Assets....................................................................... 82 UTI Certificates................................................................. 29 Voting Interests................................................................. 53
104 ANNEX 1 GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES Except in certain limited circumstances, the globally offered Class A-1 Certificates (the "Global Securities") will be available only in book-entry form. Investors in the Global Securities may hold such Global Securities through DTC, Cedel Bank or Euroclear. The Global Securities will be tradeable as home market instruments in both the European and U.S. domestic markets. Initial settlement and all secondary trades will settle in same-day funds. Secondary market trading between investors holding Global Securities through Cedel Bank and Euroclear will be conducted in the ordinary way in accordance with their normal rules and operating procedures and in accordance with conventional eurobond practice (i.e., seven calendar day settlement). Secondary market trading between investors holding Global Securities through DTC will be conducted according to the rules and procedure applicable to U.S. corporate debt obligations and prior asset-backed securities issues. Secondary cross-market trading between Cedel Bank or Euroclear and DTC Participants holding securities will be effected on a delivery-against-payment basis through the Relevant Depositaries of Cedel Bank and Euroclear (in such capacity) and as DTC Participants. Non-U.S. holders (as described below) of Global Securities will be subject to U.S. withholding taxes unless such holders meet certain requirements and deliver appropriate U.S. tax documents to the securities clearing organizations or their participants. INITIAL SETTLEMENT All Global Securities will be held in book-entry form by DTC in the name of Cede & Co. as nominee of DTC. Investors' interests in the Global Securities will be represented through financial institutions acting on their behalf as direct and indirect Participants in DTC. As a result, Cedel Bank and Euroclear will hold positions on behalf of their participants through their Depositaries, which in turn will hold such positions in accounts as DTC Participants. Investors electing to hold their Global Securities through DTC will follow DTC settlement practice. Investor securities custody accounts will be credited with their holdings against payment in same-day funds on the settlement date. Investors electing to hold their Global Securities through Cedel Bank or Euroclear accounts will follow the settlement procedures applicable to conventional eurobonds, except that there will be no temporary global security and no "lock-up" or restricted period. Global Securities will be credited to securities custody accounts on the settlement date against payment in same-day funds. SECONDARY MARKET TRADING Since the purchaser determines the place of delivery, it is important to establish at the time of the trade where both the purchaser's and seller's accounts are located to ensure that settlement can be made on the desired value date. TRADING BETWEEN DTC PARTICIPANTS. Secondary market trading between DTC Participants will be settled using the procedures applicable to prior asset-backed securities issues in same-day funds. TRADING BETWEEN CEDEL BANK AND/OR EUROCLEAR PARTICIPANTS. Secondary market trading between Cedel Bank Participants or Euroclear Participants will be settled using the Procedures applicable to conventional eurobonds in same-day funds. TRADING BETWEEN DTC SELLER AND CEDEL BANK OR EUROCLEAR PARTICIPANTS. When Global Securities are to be transferred from the account of a DTC Participant to the account of a Cedel Bank Participant or a Euroclear Participant, the purchaser will send instructions to Cedel Bank or Euroclear through a Cedel A-1 Bank Participant or Euroclear Participant at least one business day prior to settlement. Cedel Bank or Euroclear will instruct the respective Depositary, as the case may be, to receive the Global Securities against payment. Payment will include interest accrued on the Global Securities from and including the last coupon payment date to and excluding the settlement date, on the basis of the actual number of days in such accrual period and a year assumed to consist of 360 days. For transactions settling on the 31st of the month, payment will include interest accrued to and excluding the first day of the following month. Payment will then be made by the respective Depositary to the DTC Participant's account against delivery of the Global Securities. After settlement has been completed, the Global Securities will be credited to the respective clearing system and by the clearing system, in accordance with its usual procedures, to the Cedel Bank Participant's or Euroclear Participant's account. The securities credit will appear the next day (European time) and the cash debt will be back-valued to, and the interest on the Global Securities will accrue from, the value date (which would be the preceding day when settlement occurred in New York). If settlement is not completed on the intended value date (i.e., the trade fails), the Cedel Bank or Euroclear cash debt will be valued instead as of the actual settlement date. Cedel Bank Participants and Euroclear Participants will need to make available to the respective clearing systems the funds necessary to process same-day funds settlement. The most direct means of doing so is to preposition funds for settlement, either from cash on hand or existing lines of credit, as they would for any settlement occurring within Cedel Bank or Euroclear. Under this approach, they may take on credit exposure to Cedel Bank or Euroclear until the Global Securities are credited to their accounts one day later. As an alternative, if Cedel Bank or Euroclear has extended a line of credit to them, Cedel Bank Participants or Euroclear Participants can elect not to preposition funds and allow that credit line to be drawn upon to finance settlement. Under this procedure, Cedel Bank Participants or Euroclear Participants purchasing Global Securities would incur overdraft charges for one day, assuming they clear the overdraft when the Global Securities are credited to their accounts. However, interest on the Global Securities would accrue from the value date. Therefore, in many cases the investment income on the Global Securities earned during that one-day period may substantially reduce or offset the amount of such overdraft charges, although this result will depend on each Cedel Bank Participants or Euroclear Participant's particular cost of funds. Since the settlement is taking place during New York business hours, DTC Participants can employ their usual procedures for sending Global Securities to the respective European Depositary for the benefit of Cedel Bank Participants or Euroclear Participants. The sale proceeds will be available to the DTC seller on the settlement date. Thus, to the DTC Participants a cross-market transaction will settle no differently than a trade between two DTC Participants. TRADING BETWEEN CEDEL BANK OR EUROCLEAR SELLER AND DTC PURCHASER. Due to time zone differences in their favor, Cedel Bank Participants and Euroclear Participants may employ their customary procedures for transactions in which Global Securities are to be transferred by the respective clearing system, through the respective Depositary, to a DTC Participant. The seller will send instructions to Cedel Bank or Euroclear through a Cedel Bank Participant or Euroclear Participant at least one business day prior to settlement. In these cases, Cedel Bank or Euroclear will instruct the Relevant Depositary, as appropriate, to deliver the Global Securities to the DTC Participant's account against payment. Payment will include interest accrued on the Global Securities from and including the last coupon payment to and excluding the settlement date on the basis of the actual number of days in such accrual period and a year assumed to consist of 360 days. For transactions settling on the 31st of the month, payment will include interest accrued to and excluding the first day of the following month. The payment will then be reflected in the account of the Cedel Bank Participant or Euroclear Participant the following day, and receipt of the cash proceeds in the Cedel Bank Participant's or Euroclear Participant's account would be back-valued to the value date (which would be the preceding day, when settlement occurred in New York). Should the Cedel Bank Participant or Euroclear Participant have a line of credit with its respective clearing system and elect A-2 to be in debt in anticipation of receipt of the sale proceeds in its account, the back valuation will extinguish any overdraft incurred over that one-day period. If settlement is not completed on the intended value date (i.e., the trade fails), receipt of the cash proceeds in the Cedel Bank Participant's or Euroclear Participant's account would instead be valued as of the actual settlement date. Finally, day traders that use Cedel Bank or Euroclear and that purchase Global Securities from DTC Participants for delivery to Cedel Bank Participants or Euroclear Participants should note that these trades would automatically fail on the sale side unless affirmative action were taken. At least three techniques should be readily available to eliminate this potential problem: (a) borrowing though Cedel Bank or Euroclear for one day (until the purchase side of the day trade is reflected in their Cedel Bank or Euroclear accounts) in accordance with the clearing system's customary procedures; (b) borrowing the Global Securities in the U.S. from a DTC Participant no later than one day prior to settlement, which would give the Global Securities sufficient time to be reflected in their Cedel Bank or Euroclear account in order to settle the sale side of the trade; or (c) staggering the value dates for the buy and sell sides of the trade so that the value date for the purchase from the DTC Participant is at least one day prior to the value date for the sale to the Cedel Bank Participant or Euroclear Participant. CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS A beneficial owner of Global Securities holding securities through Cedel Bank or Euroclear (or through DTC if the holder has an address outside the U.S.) will be subject to the 30% U.S. withholding tax that generally applies to payments of interest (including original issue discount) on registered debt issued by U.S. Persons, unless (i) each clearing system, bank or other financial institution that holds customers' securities in the ordinary course of its trade or business in the chain of intermediaries between such beneficial owner and the U.S. entity required to withhold tax complies with applicable certification requirements and (ii) such beneficial owner takes one of the following steps to obtain an exemption or reduced tax rate: EXEMPTION FOR NON-U.S. PERSONS (FORM W-8). Beneficial owners of Global Securities that are Non-U.S. Persons can obtain a complete exemption from the withholding tax by filing a signed Form W-8 (Certificate of Foreign Status). If the information shown on Form W-8 changes, a new Form W-8 must be filed within 30 days of such change. EXEMPTION FOR NON-U.S. PERSONS WITH EFFECTIVELY CONNECTED INCOME (FORM 4224). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S. branch, for which the interest income is effectively connected with its conduct of a trade or business in the United States, can obtain an exemption from the withholding tax by filing Form 4224 (Exemption from Withholding of Tax on Income Effectively Connected with the Conduct of a Trade or Business in the United States). EXEMPTION OR REDUCED RATE FOR NON-U.S. PERSONS RESIDENT IN TREATY COUNTRIES (FORM 1001). Non-U.S. Persons residing in a country that has a tax treaty with the United States can obtain an exemption or reduced tax rate depending on the treaty terms) by filing Form 1001 (Ownership, Exemption or Reduced Rate Certificate). If the treaty provides only for a reduced rate, withholding tax will be imposed at that rate unless the filer alternatively files Form W-8. Form 1001 may be filed by the Certificate Owners or their agents. EXEMPTION FOR U.S. PERSONS (FORM W-9). U.S. Persons can obtain a complete exemption from the withholding tax by filing Form W-9 (Payer's Request for Taxpayer Identification Number and Certification). A-3 U.S. FEDERAL INCOME TAX REPORTING PROCEDURE. The Certificate Owner of a Global Security or, in the case of a Form 1001 or a Form 4224 filer, his agent, files by submitting the appropriate form to the person though whom it holds (the clearing agency, in the case of persons holding directly on the books of the clearing agency). Form W-8 and Form 1001 are effective for three calendar years, and Form 4224 is effective for one calendar year. As used in the foregoing discussion, the term "U.S. Person" means (i) a citizen or resident of the United States, (ii) a corporation or partnership organized in or under the laws of the United States or any political subdivision thereof, (iii) an estate that is subject to United States federal income tax, regardless of the source of its income or (iv) a trust if (a) a court within the United States is able to exercise primary supervision over the administration of the trust and (b) one or more United States fiduciaries have the authority to control all substantial decisions of the Trust. The term "Non-U.S. Person" means any person who is not a U.S. Person. This summary does not deal with all aspects of U.S. federal income tax withholding that may be relevant to foreign holders of Global Securities. Investors are advised to consult their own tax advisors for specific tax advice concerning their holding and disposing of Global Securities. A-4 PRINCIPAL OFFICES OF THE TRANSFEROR AND NOTICE ADDRESS OF TRUST Toyota Leasing, Inc. 19001 South Western Avenue Torrance, California 90509 United States JOINT BOOKRUNNERS Merrill Lynch & Co. Lehman Brothers Morgan Stanley Dean Witter (GLOBAL COORDINATOR) CO-LEAD MANAGERS Credit Suisse First Boston Goldman, Sachs & Co. J.P. Morgan & Co. CO-MANAGERS BancAmerica Securities, Inc. Salomon Brothers Inc TRUSTEE, REGISTRAR AND PAYING AGENT (U.S.) U.S. Bank National Association One Illinois Center 111 E. Wacker Drive, Suite 3000 Chicago, Illinois 60601 United States LUXEMBOURG TRANSFER AGENT AND PAYING AGENT Bankers Trust Luxembourg S.A. 14 Boulevard F.D. Roosevelt L-2450, Luxembourg LUXEMBOURG LISTING AGENT HONG KONG LISTING AGENT Bankers Trust Luxembourg S.A. Clifford Chance 14 Boulevard F.D. Roosevelt 30th Floor, Jardine House L-2450, Luxembourg One Connaught Place Hong Kong
LEGAL ADVISER INDEPENDENT PUBLIC ACCOUNTANTS (as to United States law) OF THE COMPANY Andrews & Kurth L.L.P. Price Waterhouse LLP 601 S. Figueroa, Suite 4200 400 South Hope Street, 22nd Floor Los Angeles, California 90017 Los Angeles, California 90071-2889 United States United States
- ------------------------------------------------ ------------------------------------------------ - ------------------------------------------------ ------------------------------------------------ NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRANSFEROR OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE TRANSFEROR SINCE SUCH DATE. ------------------- TABLE OF CONTENTS
PAGE --------- Available Information................................ iv Documents Incorporated by Reference.................. iv Reports to Certificateholders........................ v Summary.............................................. 1 Risk Factors......................................... 20 The Trust and the SUBI............................... 27 The Titling Trust.................................... 28 Use of Proceeds...................................... 30 The Transferor....................................... 30 TMCC................................................. 31 TMCC's Leasing Operations............................ 31 The Contracts........................................ 35 Maturity, Prepayment and Yield Considerations........ 41 Class A Certificate Factors and Trading Information; Reports to Class A Certificateholders.............. 43 Description of the Certificates...................... 43 Assets of the Trust.................................. 60 Additional Document Provisions....................... 65 Certain Legal Aspects of the Titling Trust........... 81 Certain Legal Aspects of the Contracts and the Leased Vehicles........................................... 84 Material Federal Income Tax Considerations........... 87 ERISA Considerations................................. 91 Underwriting......................................... 95 Listing and General Information for Non-U.S. Investors.......................................... 96 Notice to Canadian Residents......................... 98 Ratings of the Class A Certificates.................. 99 Legal Matters........................................ 100 Experts.............................................. 100 Index of Capitalized Terms........................... 101 Global Clearance, Settlement and Tax Documentation Procedures......................................... A-1
TOYOTA AUTO LEASE TRUST 1997-A $410,000,000 6.20% AUTO LEASE ASSET BACKED CERTIFICATES, CLASS A-1 $650,000,000 6.35% AUTO LEASE ASSET BACKED CERTIFICATES, CLASS A-2 $72,750,000 6.45% AUTO LEASE ASSET BACKED CERTIFICATES, CLASS A-3 TOYOTA LEASING, INC. TRANSFEROR TOYOTA MOTOR CREDIT CORPORATION SERVICER ------------------- PROSPECTUS ------------------- JOINT BOOKRUNNERS MERRILL LYNCH & CO. (GLOBAL COORDINATOR) LEHMAN BROTHERS MORGAN STANLEY DEAN WITTER CO-LEAD MANAGERS CREDIT SUISSE FIRST BOSTON GOLDMAN, SACHS & CO. J.P. MORGAN & CO. CO-MANAGERS BANCAMERICA SECURITIES, INC. SALOMON BROTHERS INC -------------- SEPTEMBER 11, 1997 - ------------------------------------------------ ------------------------------------------------ - ------------------------------------------------ ------------------------------------------------ PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 13. OTHER EXPENSES OF ISSUANCE AND PAYMENT. Expenses in connection with the offering of the Class A Certificates being registered herein are estimated as follows: SEC registration fee.......................................... $ 347,272.73 Legal fees and expenses....................................... 617,500.00 Accounting fees and expenses.................................. 90,000.00 Blue sky fees and expenses.................................... 10,000.00 Rating agency fees............................................ 203,181.00 Trustee fees and expenses..................................... 45,000.00 Printing...................................................... 75,000.00 Miscellaneous................................................. 62,046.27 ------------ Total..................................................... $1,450,000.00 ------------ ------------
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Toyota Motor Credit Corporation ("TMCC") and Toyota Leasing, Inc. ("TLI") were incorporated as California corporations. Section 317 of the California Corporations Code authorizes a corporation to indemnify any person who was or is a party or is threatened to be made a party to any proceeding (other than an action by or in the right of the corporation to procure a judgment in its favor) by reason of the fact that such person is or was an officer or director of the corporation, against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with such proceeding if such person acted in good faith and in a manner such person reasonably believed to be in the best interests of the corporation and, in the case of a criminal proceeding, had no reasonable cause to believe the conduct of such person was unlawful. Each of TMCC's and TLI's Bylaws authorize TMCC and the Transferor to indemnify their officers and directors to the maximum extent permitted by the California Corporations Code. TMCC has entered into indemnification agreements with its officers and directors to indemnify such officers and directors to the maximum extent permitted by the California Corporations Code. This item is not applicable to the other Registrants. ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES. Not applicable. ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. a. Exhibits: 1.1 Form of Underwriting Agreement. 3.1 Articles of Incorporation of Toyota Leasing, Inc.* 3.2 Bylaws of Toyota Leasing, Inc.* 4.1 Form of Securitization Trust Agreement between Toyota Leasing, Inc. and First Bank National Association ("First Bank")+, as Trustee (including forms of Class A Certificates). 5.1 Opinion of Andrews & Kurth L.L.P. with respect to legality.
II-1 8.1 Opinion of Andrews & Kurth L.L.P. with respect to federal income tax matters. 10.1 Amended and Restated Trust and Servicing Agreement among Toyota Motor Credit Corporation ("TMCC"), TMTT, Inc., as Trustee and First Bank, as Trust Agent, dated as of October 1, 1996. 10.2 UTI Supplement to Amended and Restated Trust and Servicing Agreement among TMCC, TMTT, Inc., as Trustee, and First Bank, as Trust Agent, dated October 1, 1996 (including form of UTI Certificate). 10.3 Form of SUBI Supplement 1997-A to Amended and Restated Trust Agreement among TMCC, TMTT, Inc., as Trustee and U.S. Bank National Association (f/k/a First Bank National Association, "U.S. Bank")+, as Trust Agent (including form of SUBI Certificate). 10.4 Form of 1997-A SUBI Servicing Supplement to Amended and Restated Trust and Servicing Agreement between TMTT, Inc., TMCC and Toyota Leasing, Inc. 10.5 Form of SUBI Certificate Purchase and Sale Agreement between TMCC and Toyota Leasing, Inc. 10.6 Form of Indenture with respect to TMCC Demand Notes between TMCC and U.S. Bank, as Trustee. 15.1 Awareness Letter of Price Waterhouse LLP. 23.1 Consent of Andrews & Kurth L.L.P. (included as part of Exhibit 5.1). 23.2 Consent of Andrews & Kurth L.L.P. (included as part of Exhibit 8.1). 23.3 Consent of Price Waterhouse LLP. 24.1 Powers of Attorney.* 25.1 Statement of Eligibility on Form T-1 of U.S. Bank.*
- ------------------------ * Previously filed. + First Bank changed its name to U.S. Bank National Association following its merger therewith in July 1997. b. Financial Statement Schedules: Not applicable. ITEM 17. UNDERTAKINGS. The undersigned Registrants hereby undertake as follows: (a) To provide to the Underwriters at the closing date specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to provide prompt delivery to each purchaser. (b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is therefore unenforceable. In the event that a claim for indemnification against such liabilities (other than payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-2 (c) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrants pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act will be deemed to be part of this registration statement as of the time it was declared effective. (d) For the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment that contains a form of prospectus will be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time will be deemed to be the initial BONA FIDE offering thereof. (e) TMCC, one of the undersigned registrants, hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of such registrant's annual report pursuant to Section 13(a) and 15(d) of the Securities Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial BONA FIDE offering thereof. (f) The undersigned Registrants hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; PROVIDED, HOWEVER, that paragraphs (f)(1)(i) and (f)(1)(ii) do not apply if the registration statement is on Form S-3 and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. II-3 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Amendment No. 4 to Registration Statement on Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Torrance and State of California, on the 11th day of September, 1997. TOYOTA AUTO LEASE TRUST 1997-A By: TOYOTA LEASING, INC., solely as originator of Toyota Auto Lease Trust 1997-A By: /s/ GREGORY WILLIS ----------------------------------------- Gregory Willis, DIRECTOR AND PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 4 to Registration Statement has been signed by the following persons in the capacities and on the dates indicated. SIGNATURE TITLE DATE - ------------------------------ -------------------------- ------------------- /s/ GREGORY WILLIS Director and Principal - ------------------------------ Executive Officer of September 11, 1997 Gregory Willis Toyota Leasing, Inc. Director and Principal /s/ NOBU SHIGEMI* Financial Officer and - ------------------------------ Principal Accounting September 11, 1997 Nobu Shigemi Officer of Toyota Leasing, Inc. /s/ WILLIAM LATHAM, III* - ------------------------------ Director of Toyota September 11, 1997 William Latham, III Leasing, Inc. *By: /s/ GREGORY WILLIS ------------------------- Gregory Willis ATTORNEY-IN-FACT II-4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Amendment No. 4 to Registration Statement on Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Torrance and State of California, on the 11th day of September, 1997. TOYOTA LEASING, INC. By: /s/ GREGORY WILLIS ----------------------------------------- Gregory Willis, DIRECTOR AND PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 4 to Registration Statement has been signed by the following persons in the capacities and on the dates indicated. SIGNATURE TITLE DATE - ------------------------------ -------------------------- ------------------- /s/ GREGORY WILLIS Director and Principal - ------------------------------ Executive Officer of September 11, 1997 Gregory Willis Toyota Leasing, Inc. Director and Principal /s/ NOBU SHIGEMI* Financial Officer and - ------------------------------ Principal Accounting September 11, 1997 Nobu Shigemi Officer of Toyota Leasing, Inc. /s/ WILLIAM LATHAM, III* - ------------------------------ Director of Toyota September 11, 1997 William Latham, III Leasing, Inc. *By: /s/ GREGORY WILLIS ------------------------- Gregory Willis ATTORNEY-IN-FACT II-5 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Amendment No. 4 to Registration Statement to be signed on their behalf by the undersigned, thereunto duly authorized, in the City of Torrance and State of California, on the 11th day of September, 1997. TOYOTA MOTOR CREDIT CORPORATION, solely as transferor of the SUBI to the Transferor and issuer of the TMCC Demand Notes By: /s/ GEORGE BORST ----------------------------------------- George Borst SENIOR VICE PRESIDENT AND GENERAL MANAGER TOYOTA LEASE TRUST By: TOYOTA MOTOR CREDIT CORPORATION, solely as originator of the Toyota Lease Trust By: /s/ GEORGE BORST ----------------------------------------- George Borst SENIOR VICE PRESIDENT AND GENERAL MANAGER
Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 4 to Registration Statement has been signed by the following persons in the capacities and on the dates indicated. SIGNATURE TITLE DATE - ------------------------------ -------------------------- ------------------- Director, Senior Vice /s/ GEORGE BORST President and General - ------------------------------ Manager of TMCC September 11, 1997 George Borst (principal executive officer) /s/ ROBERT PITTS* - ------------------------------ Director and Secretary of September 11, 1997 Robert Pitts TMCC Director, Senior Vice /s/ NOBU SHIGEMI* President and Treasurer - ------------------------------ of TMCC (principal September 11, 1997 Nobu Shigemi financial officer) /s/ DOUGLAS WEST* - ------------------------------ Director of TMCC September 11, 1997 Douglas West Vice President of Finance /s/ GREGORY WILLIS and Administration - ------------------------------ (principal accounting September 11, 1997 Gregory Willis officer) *By: /s/ GREGORY WILLIS ------------------------- Gregory Willis ATTORNEY-IN-FACT II-6 EXHIBIT INDEX
SEQUENTIALLY EXHIBIT DESCRIPTION NUMBERED PAGE - ----------- ---------------------------------------------------------------------------------------- ----------------- 1.1 Form of Underwriting Agreement.......................................................... 3.1 Articles of Incorporation of Toyota Leasing, Inc.*...................................... 3.2 Bylaws of Toyota Leasing, Inc.*......................................................... 4.1 Form of Securitization Trust Agreement between Toyota Leasing, Inc. and First Bank National Association ("First Bank")+, as Trustee (including forms of Class A Certificates)......................................................................... 5.1 Opinion of Andrews & Kurth L.L.P. with respect to legality.............................. 8.1 Opinion of Andrews & Kurth L.L.P. with respect to federal income tax matters............ 10.1 Amended and Restated Trust and Servicing Agreement among Toyota Motor Credit Corporation ("TMCC"), TMTT, Inc., as Trustee and First Bank, as Trust Agent, dated as of October 1, 1996............................................................................... 10.2 UTI Supplement to Amended and Restated Trust and Servicing Agreement among TMCC, TMTT, Inc., as Trustee, and First Bank, as Trust Agent, dated October 1, 1996 (including form of UTI Certificate).............................................................. 10.3 Form of SUBI Supplement 1997-A to Amended and Restated Trust Agreement among TMCC, TMTT, Inc., as Trustee and U.S. Bank National Association (f/k/a First Bank National Association, "U.S. Bank")+, as Trust Agent (including form of SUBI Certificate)....... 10.4 Form of 1997-A SUBI Servicing Supplement to Amended and Restated Trust and Servicing Agreement between TMTT, Inc., TMCC and Toyota Leasing, Inc............................ 10.5 Form of SUBI Certificate Purchase and Sale Agreement between TMCC and Toyota Leasing, Inc................................................................................... 10.6 Form of Indenture with respect to TMCC Demand Notes between TMCC and U.S. Bank, as Trustee............................................................................... 15.1 Awareness Letter of Price Waterhouse LLP................................................ 23.1 Consent of Andrews & Kurth L.L.P. (included as part of Exhibit 5.1)..................... 23.2 Consent of Andrews & Kurth L.L.P. (included as part of Exhibit 8.1)..................... 23.3 Consent of Price Waterhouse LLP......................................................... 24.1 Powers of Attorney.*.................................................................... 25.1 Statement of Eligibility on Form T-1 of U.S. Bank.*.....................................
- ------------------------ * Previously filed. + First Bank changed its name to U.S. Bank National Association following its merger therewith in July 1997. II-7 EX-1.1 2 EXHIBIT 1-1 Exhibit 1.1 TOYOTA AUTO LEASE TRUST 1997-A $410,000,000 [____]% Auto Lease Asset Backed Certificates, Class A-1 $650,000,000 [___]% Auto Lease Asset Backed Certificates, Class A-2 $72,750,000 [___]% Auto Lease Asset Backed Certificates, Class A-3 UNDERWRITING AGREEMENT September __, 1997 MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED As Representative of the Several Underwriters World Financial Center Bank Tower New York, New York 10281 Dear Sirs: 1. INTRODUCTORY. Toyota Leasing, Inc., a California corporation (the "Transferor"), and Toyota Motor Credit Corporation, a California corporation ("TMCC"), hereby confirm their respective agreements with you and each of the other underwriters named in Schedule I hereto (the "Underwriters"), for whom you are acting as representative (the "Representative"), with respect to the sale by the Transferor to the Underwriters of $410,000,000 aggregate principal amount of [_____]% Auto Lease Asset Backed Certificates, Class A-1 (the "Class A-1 Certificates"), $650,000,000 aggregate principal amount of [_____]% Auto Lease Asset Backed Certificates, Class A-2 (the "Class A-2 Certificates") and $72,750,000 aggregate principal amount of [ ____]% Auto Lease Asset Backed Certificates, Class A-3 (the "Class A-3 Certificates") and, together with the Class A-1 Certificates and the Class A-2 Certificates, the "Class A Certificates") of the Toyota Auto Lease Trust 1997-A (the "Securitization Trust") under the terms and conditions herein contained. Simultaneously with the issuance of the Class A Certificates, the Transferor will cause the Trust to issue $73,850,000 aggregate principal amount of __% Auto Lease Asset Backed Certificates, Class B (the "Class B Certificates" and, together with the Class A Certificates, the "Investor Certificates"). The Investor Certificates will be issued pursuant to a securitization trust agreement, dated as of September 1, 1997 (the "Securitization Trust Agreement"), between the Transferor and U.S. National Association ("U.S. Bank"), as trustee (in such capacity, the "Securitization Trustee"). The Investor Certificates will represent undivided interests in the Securitization Trust. The Transferor will own the undivided interest in the Securitization Trust not evidenced by the Investor Certificates (the "Transferor Interest"). The Class B Certificates will be subordinated to the Class A Certificates, and the certificate evidencing the Transferor Interest (the "Transferor Certificate" and, together with the Investor Certificates, the "Certificates") will be subordinated to the Investor Certificates, in each case to the extent described in the Securitization Trust Agreement. Capitalized terms used herein that are not otherwise defined shall have the meanings ascribed thereto in the Securitization Trust Agreement. The property of the Securitization Trust will consist primarily of a special unit of beneficial interest (the "1997-A SUBI"), which, in turn, will evidence a beneficial interest in certain specified assets of Toyota Lease Trust, a Delaware business trust (the "Titling Trust"), monies on deposit in the SUBI Collection Account, and the right to receive payments from the Reserve Fund in certain circumstances (collectively, the "1997-A SUBI Assets"). The assets of the Titling Trust (the "Titling Trust Assets") will consist primarily of retail closed-end lease contracts assigned to the Titling Trust by motor vehicle dealers pursuant to dealer agreements with the Titling Trust, the automobiles and light duty trucks relating thereto and the proceeds thereof, and payments made under certain insurance policies relating to such lease contracts, the related lessees or such leased vehicles. The Titling Trust is expected to invest certain collections on the Contracts and Leased Vehicles in certain demand notes ("TMCC Demand Notes") issued by TMCC pursuant to an indenture (the "Indenture") dated as of September 1, 1997 between TMCC and U.S. Bank, as trustee (in such capacity, the "Indenture Trustee"). The 1997-A SUBI will be evidenced by a certificate (the "1997-A SUBI Certificate") issued to TMCC by the Titling Trust pursuant to the Series 1997-A Supplement (the "1997-A SUBI Supplement") dated [ ], 1997, to the Amended and Restated Trust and Servicing Agreement (the "Titling Trust Agreement") dated as of October 1, 1996, in each case, among TMCC, as grantor, initial beneficiary and servicer, TMTT, Inc., as trustee (the "Titling Trustee") and U.S. Bank, as trust agent (in such capacity, the "Trust Agent"). TMCC will transfer the 1997-A SUBI Certificate to the Transferor pursuant to the 1997-A SUBI Certificate Purchase and Sale Agreement between them (the "1997-A SUBI Certificate Sale Agreement"). The 1997-A SUBI Certificate will be transferred and assigned by the Transferor to the Securitization Trustee pursuant to the Securitization Trust Agreement. The Titling Trust Assets (including the 1997-A SUBI Assets) will be serviced by TMCC pursuant to the Titling Trust Agreement and the Series 1997-A SUBI Servicing Supplement to the Titling Trust Agreement dated as of September 1, 1997 (the "1997-A SUBI Servicing 2 Supplement") among the Titling Trustee, TMCC and the Transferor. The Securitization Trust Agreement, the Titling Trust Agreement, the 1997-A SUBI Supplement, the 1997-A SUBI Servicing Supplement, the 1997-A SUBI Certificate Sale Agreement, the UTI Supplement (as defined herein), the Indenture and the TMCC Demand Notes are referred to herein collectively as the "Basic Agreements". 2. REPRESENTATIONS AND WARRANTIES OF THE TRANSFEROR AND TMCC. (a) Each of the Transferor and TMCC, jointly and severally, represents and warrants to, and agrees with, each of the Underwriters that: (i) A registration statement on Form S-1 and Form S-3 (No. 333-26717), including a form of prospectus, relating to the Class A Certificates has been filed with the Securities and Exchange Commission (the "Commission") and either (1) has been declared effective under the Securities Act of 1933, as amended (the "Act"), and is not proposed to be amended or (2) is proposed to be amended by amendment or post-effective amendment. If the Transferor does not propose to amend such registration statement and if any post-effective amendment to such registration statement has been filed with the Commission prior to the execution and delivery of this Agreement, the most recent such post-effective amendment has been declared effective by the Commission. For purposes of this Agreement, "Effective Time" means (1) if the Transferor has advised the Representative that it does not propose to amend such registration statement, the date and time as of which such registration statement, or the most recent post-effective amendment thereto, if any, filed prior to the execution and delivery of this Agreement, was declared effective by the Commission or (2) if the Transferor has advised the Representative that it proposes to file an amendment or post-effective amendment to such registration statement, the date and time as of which such registration statement, as amended by such amendment or post-effective amendment, as the case may be, is declared effective by the Commission. "Effective Date" means the date of the Effective Time. Such registration statement, as amended at the Effective Time (including all information, if any, deemed to be a part of such registration statement as of the Effective Time pursuant to Rule 430A(b) under the Act, the exhibits thereto and all documents incorporated by reference therein), is hereinafter referred to as the "Registration Statement", and the form of prospectus (including all documents incorporated therein or deemed to be incorporated therein) relating to the Class A Certificates, in the form transmitted to the Commission for filing pursuant to and in accordance with Rule 424(b) under the Act ("Rule 424(b)"), or, if no such filing is required, as included in the Registration Statement at the Effective Time, is hereinafter referred to as the "Prospectus". The Prospectus delivered to you for use in connection with the offering of the Class A Certificates is identical to the electronically transmitted copies thereof filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval ("EDGAR") system, except to the extent permitted by Regulation S-T. All references in this Agreement to financial statements and schedules and other information which is "contained," "included" or "stated" in the Registration Statement or the Prospectus (and all other references of like 3 import) shall be deemed to mean and include all such financial statements and schedules and other information which is or is deemed to be incorporated by reference in the Registration Statement or the Prospectus, as the case may be; and all references in this Agreement to amendments or supplements to the Registration Statement or the Prospectus shall be deemed to mean and include the filing of any document under the Securities Exchange Act of 1934, as amended (the "1934 Act") which is or is deemed to be incorporated by reference in the Registration Statement or the Prospectus, as the case may be. (ii) If the Effective Time is prior to the execution and delivery of this Agreement: (A) on the Effective Date, the Registration Statement conformed, and on the date of this Agreement the Registration Statement conforms, in all material respects with the requirements of the Act and the rules and regulations of the Commission promulgated under the Act (the "Rules and Regulations") and at such times did not and does not include any untrue statement of a material fact, and did not and does not omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and (B) at the time of the filing of the Prospectus pursuant to Rule 424(b) and at the Closing Date (as such term is defined in Section 3 hereof), the Prospectus does and will conform in all material respects to the requirements of the Act and the Rules and Regulations and does not and will not include any untrue statement of a material fact and does not and will not omit any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. If the Effective Time is subsequent to the execution and delivery of this Agreement: (A) on the Effective Date, the Registration Statement and the Prospectus will conform in all material respects to the requirements of the Act and the Rules and Regulations, and the Registration Statement will not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and (B) on the Effective Date or at the time of the filing of the Prospectus pursuant to Rule 424(b), if required, as the case may be, and at the Closing Date, the Prospectus will not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The two immediately preceding sentences do not apply to statements in or omissions from the Registration Statement or Prospectus based upon written information furnished to TMCC by any Underwriter through the Representative specifically for use therein. (iii) The consummation of the transactions contemplated by this Agreement and the Basic Agreements, and the fulfillment of the terms thereof, will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, or result in the creation of any lien, charge, or encumbrance upon any of the property or assets of the Transferor or TMCC pursuant to the terms of, any indenture, mortgage, deed of trust, loan agreement, guarantee, lease financing agreement or similar agreement or instrument under which the Transferor or TMCC is a debtor or guarantor. 4 (iv) No consent, approval, authorization, or order of, or filing with, any court or governmental agency or body is required to be obtained or made by the Transferor or TMCC for the consummation of the transactions contemplated by this Agreement and the Basic Agreements, including without limitation (A) the issuance of the 1997-A SUBI Certificate or the UTI Certificates, (B) the issuance of the Certificates or the offering and sale of the Investor Certificates, or (C) the execution, delivery and performance by each of the Transferor or TMCC of this Agreement or any Basic Agreement to which it is a party and the Certificates, except such as have been obtained and made under the Act or the Rules and Regulations and such as may be required under securities laws of any state or foreign jurisdiction. (v) Neither the Transferor nor TMCC is in violation of its charter or by-laws or in default in the performance or observance of any obligation, agreement, covenant or condition contained in any agreement or instrument to which it is a party or by which it or its properties are bound which could have a material adverse effect on the transactions contemplated herein or in the Basic Agreements. The execution, delivery and performance of this Agreement and the Basic Agreements and the issuance and sale of the Certificates and compliance with the terms and provisions of the Certificates will not, subject to obtaining any consents or approvals as may be required under the securities laws of various jurisdictions (in the United States and elsewhere), result in a breach or violation of any of the terms and provisions of, or constitute a default under, any statute, rule, regulation or order of any governmental agency or body or any court having jurisdiction over the Transferor or TMCC or any of their respective properties or any agreement or instrument to which the Transferor or TMCC is a party or by which the Transferor or TMCC is bound or to which any of their respective properties is subject, or with the charter or by-laws of the Transferor or TMCC, and each of the Transferor and TMCC has full corporate power and authority to enter into this Agreement and the Basic Agreements to which it is a party and to consummate the transactions contemplated hereby and thereby. Each of the Transferor and TMCC is duly qualified or registered as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification or registration is required, whether by reason of the ownership of property or the conduct of business, except where the failure to so qualify would not have a material adverse effect on its condition, financial or otherwise, or the enforceability of the Contracts. (vi) This Agreement has been duly authorized, executed and delivered by the Transferor and TMCC. (vii) The Basic Documents, the 1997-A SUBI Certificate and the certificate or certificates representing the Titling Trust Assets not allocated to the 1997-A SUBI (the "UTI Certificates") conform in all material respects to the respective descriptions thereof and the statements in relation thereto contained in the Prospectus; the 1997-A SUBI Certificate and the UTI Certificates have been duly and validly authorized and, when executed, issued, authenticated and delivered in accordance with the 1997-A SUBI Supplement, the Titling 5 Trust Agreement and the UTI Supplement to the Titling Trust Agreement dated as of October 1, 1996, among TMCC, TMTT, Inc. and First Bank as trust agent (the "UTI Supplement"), will be duly and validly issued and outstanding and entitled to the benefits of the 1997-A SUBI Supplement, the UTI Supplement and the Titling Trust Agreement. (viii) The Certificates conform in all material respects to the description thereof and the statements in relation thereto contained in the Prospectus; the Certificates have been duly and validly authorized and, when executed, issued, authenticated and delivered in accordance with the Securitization Trust Agreement and, in the case of the Class A Certificates, when delivered to the Underwriters, against payment of the consideration specified herein, will be duly and validly issued and outstanding and entitled to the benefits of the Securitization Trust Agreement. (ix) None of the Transferor, TMCC, the Titling Trust or the Securitization Trust is now or, as a result of the transactions contemplated by this Agreement, will become, an "investment company", nor is any of them "controlled" by an "investment company" as such terms are defined in the Investment Company Act of 1940, as amended (the "Investment Company Act"). (x) At or prior to the Closing Date, the Titling Trustee will have allocated as 1997-A SUBI Assets, Contracts and Leased Vehicles that have an Aggregate Net Investment Value as of the Cutoff Date equal to $[___________]. (xi) The representations and warranties of each of the Transferor and TMCC in each Basic Agreement to which it is a party will be true and correct in accordance with the terms of such Basic Agreement; provided, however, that with respect to representations or warranties made with respect to any Contracts or SUBI Assets, the sole remedy for any breach thereof is, as provided in the related agreement, the repurchase by either TMCC or the Transferor, as the case may be, of any such Contract or SUBI Asset. (xii) All of the issued and outstanding capital stock of the Transferor is owned by TMCC free and clear of any lien, mortgage, pledge, charge, encumbrance, adverse claim or other security interest (collectively, "Liens") except as permitted by the Basic Agreements. (xiii) All filings required to be made in respect of the Titling Trust's status as a business trust under the laws of each state in which such filings are required have been made and are in full force and effect on the Closing Date, except where the failure so to file would not have a material adverse effect on its condition, financial or otherwise, or its ability to perform its obligations under each Basic Agreement to which it is a party or on the enforceability of the Contracts. 6 (xiv) The accountants who certified the financial statements and supporting schedules incorporated by reference in the Registration Statement are independent public accountants with respect to TMCC as required by the Act and the Rules and Regulations. (xv) The financial statements and supporting schedules incorporated by reference in the Registration Statement and the Prospectus present fairly the financial position of TMCC and its consolidated subsidiaries as of the dates indicated and the results of their operations for the periods specified; except as otherwise stated in the Registration Statement, said financial statements have been prepared in conformity with generally accepted accounting principles applied on a consistent basis and the supporting schedules incorporated by reference in the Registration Statement present fairly the information required to be stated therein. (xvi) Since the respective dates as of which information is given in the Registration Statement and the Prospectus, except as otherwise stated therein or contemplated thereby, (A) there has been no material adverse change in the condition, financial or otherwise, of TMCC and its subsidiaries considered as one enterprise or in the earnings, business affairs or business prospects of TMCC and its subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business, (B) there have been no transactions entered into by TMCC or any of its subsidiaries, other than those in the ordinary course of business (which includes, but is not limited to, Euromarket, EuroAsian, or global financing and domestic private placement and public financing), which are material with respect to TMCC and its subsidiaries considered as one enterprise, and (C) since the date of the most recent audited financial statements of TMCC, there has been no dividend or distribution of any kind declared, paid or made by TMCC on any class of its capital stock, except as otherwise disclosed in the Registration Statement and the Prospectus. (b) Any Officer's Certificate signed by any officer of TMCC or the Transferor and delivered to the Representative or counsel for the Underwriters shall be deemed a representation and warranty of TMCC or the Transferor, as the case may be, to each Underwriter as to the matters covered thereby. 3. PURCHASE, SALE AND DELIVERY OF THE CLASS A CERTIFICATES. On the basis of and in reliance on the representations, warranties and agreements herein contained, but subject to the terms and conditions herein set forth, the Transferor agrees to sell to each Underwriter, severally and not jointly, and each Underwriter, severally and not jointly, agrees to purchase from the Transferor, the aggregate principal amount of each Class of Class A Certificates set forth in Schedule I opposite the name of such Underwriter, at a purchase price equal to the following percentages of the aggregate initial principal balances thereof, (i) in the case of the Class A-1 Certificates, [__________]%, (ii) in the case of the Class A-2 Certificates, [________]% and (iii) in the case of the Class A-3 Certificates, [ ]%. 7 Each Class of Class A Certificates will initially be represented by one or more certificates registered in the name of Cede & Co., as the nominee of The Depository Trust Company ("DTC"). The interests of beneficial owners of each Class of Class A Certificates will be represented by book entries on the records of DTC and participating members thereof. The Transferor will deliver the Class A Certificates to the Representative for the respective securities accounts of the Underwriters, against payment of the purchase price therefor in immediately available funds payable to the order of the Transferor, at the office of Andrews & Kurth L.L.P., 601 South Figueroa, Los Angeles, California 90017 (or at such other location as agreed upon among the Transferor, TMCC and the Representative) at 10:00 A.M., Los Angeles time, on September , 1997, or at such other time not later than five full business days thereafter, as the Transferor, TMCC and the Representative determine, such time being herein referred to as the "Closing Date". The certificates evidencing the Class A Certificates will be made available for inspection at the above offices of Andrews & Kurth L.L.P. (or at such other location agreed upon among the Transferor, TMCC and the Representative) at least 24 hours prior to the Closing Date. 4. OFFERING BY THE UNDERWRITERS. It is understood that the several Underwriters propose to offer the Class A Certificates for sale to the public as set forth in the Prospectus. 5. CERTAIN AGREEMENTS OF THE TRANSFEROR AND TMCC. Each of the Transferor and TMCC, as the case may be, jointly and severally, covenants and agrees with each of the Underwriters that: (a) If the Effective Time is prior to the execution and delivery of this Agreement, the Transferor will file the Prospectus with the Commission pursuant to and in accordance with subparagraph (1) (or, if applicable and if consented to by the Representative, subparagraph (4)) of Rule 424(b), not later than the second business day following the execution and delivery of this Agreement. The Transferor will advise the Representative promptly of any such filing pursuant to Rule 424(b). (b) The Transferor will advise the Representative promptly of any proposal to amend or supplement the registration statement as filed or the related prospectus or the Registration Statement or the Prospectus (whether pursuant to the Act or the 1934 Act) and will not effect any such amendment or supplement without the consent of the Representative. The Transferor will advise the Representative promptly of the effectiveness of the Registration Statement (if the Effective Time is subsequent to the execution and delivery of this Agreement), of any amendment or supplement of the Registration Statement or the Prospectus and of the institution by the Commission of any stop order proceedings in respect of the Registration Statement. The Transferor will use its best efforts to prevent the issuance of any such stop order and to obtain as soon as possible its lifting, if issued. (c) If, at any time when a prospectus relating to the Class A Certificates is required to be delivered under the Act, any event occurs as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact 8 necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it is necessary at any time to amend or supplement the Prospectus to comply with the Act, the Transferor will promptly notify the Representative and, with the consent of the Representative (which consent shall not be unreasonably withheld), will promptly prepare and file, or cause to be prepared and filed, with the Commission an amendment or supplement which will correct such statement or omission, or an amendment or supplement that will effect such compliance. Neither the consent of the Representative to, nor the delivery by the Representative of, any such amendment or supplement shall constitute a waiver of any of the conditions set forth in Section 6 hereof. (d) As soon as practicable, but not later than the Availability Date (as defined below), the Transferor will cause the Securitization Trustee to make generally available to the Class A Certificateholders an earnings statement with respect to the Securitization Trust covering a period of at least 12 months beginning after the Effective Date that will satisfy the provisions of Section 11(a) of the Act. For the purpose of the preceding sentence, "Availability Date" means the 45th day after the end of the fourth fiscal quarter following the Transferor's fiscal quarter that includes such Effective Date, except that, if such fourth fiscal quarter is the last quarter of the Transferor's fiscal year, "Availability Date" means the 90th day after the end of such fourth fiscal quarter. (e) The Transferor will furnish to the Representative copies of the registration statement as originally filed with the Commission and each amendment thereto (in each case including a photocopy of the originally executed copy and one with all exhibits), each related preliminary prospectus, the Prospectus and all amendments and supplements to such documents, in each case as soon as available and in such quantities as the Representative may reasonably request. (f) The Transferor will arrange for the qualification of the Class A Certificates for sale under the laws of such jurisdictions in the United States as the Representative may reasonably designate and will continue such qualifications in effect so long as required for the distribution of the Class A Certificates, provided that the Transferor shall not be obligated to qualify to do business or become subject to service of process generally, but only to the extent required for such qualification, in any jurisdiction in which it is not currently so qualified. (g) So long as any Investor Certificates are outstanding, the Transferor or TMCC, as the case may be, will deliver or cause to be delivered to the Representative copies of (i) each statement relating to the Investor Certificates delivered to Certificateholders pursuant to Section 3.03 of the Securitization Trust Agreement, (ii) the annual statement as to compliance and the annual statement of a firm of independent public accountants furnished pursuant to Sections 5.02 or 5.03 of the 1997-A SUBI Servicing Supplement, (iii) each certificate or notice delivered by the Servicer pursuant to Section 9.03 of the Titling Trust Agreement and Section 7.04 of the 1997-A SUBI Servicing Supplement, (iv) each periodic report required to be filed by the Transferor with the Commission pursuant to the Exchange Act, or any order of the Commission thereunder, and (v) such other information concerning the Transferor, TMCC, the Titling Trustee (in its capacity as trustee 9 of the Titling Trust), the Titling Trust, the Trust or the Certificates as the Representative may reasonably request from time to time. (h) The Transferor and TMCC will pay all expenses incident to the performance of their respective obligations under this Agreement, including without limitation, (i) expenses incident to the word processing, printing, reproduction and distribution of the registration statement as originally filed with the Commission and each amendment thereto, preliminary prospectuses and the Prospectus (including any amendments and supplements thereto), (ii) the fees and disbursements of the Titling Trustee, the Securitization Trustee, the Trust Agent and their respective counsel, (iii) the fees and disbursements of counsel and the independent public accountants of the Transferor and TMCC, (iv) the fees charged by each of Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's Ratings Services ("Standard & Poor's" and, together with Moody's, the "Rating Agencies") in connection with the rating of each Class of Class A Certificates, (v) the fees of DTC in connection with the book-entry registration of the Class A Certificates, (vi) listing fees, (vii) the fees and expenses of U.S. Bank and (viii) expenses incurred in distributing preliminary prospectuses and the Prospectus (including any amendments and supplements thereto) to the Underwriters, and will reimburse the Underwriters for any expenses (including reasonable fees and disbursements of counsel) incurred by the Underwriters in connection with the qualification of the Class A Certificates for sale under the laws of such jurisdictions in the United States as the Representative may designate pursuant to Section 5(f) hereof. If this Agreement is terminated by the Representative in accordance with the provisions of Section 6 or clause (i) or clause (ii) of Section 9 hereof, the Transferor and TMCC shall reimburse the Underwriters for all of their out-of-pocket expenses, including the reasonable fees and disbursements of counsel to the Underwriters, reasonably incurred by them in the offering of the Class A Certificates. On the Closing Date TMCC shall pay to the Underwriters, PRO RATA in proportion to their commitments to purchase Class A Certificates, a fee in the aggregate amount of $___________ for advisory, analytical and structuring services relating to the Titling Trust. (i) For a period of 45 days from the date hereof, none of the Transferor, TMCC or any of their respective affiliates will, without the prior written consent of the Representative, directly or indirectly, offer, sell or contract to sell or announce the offering of, in a public or private transaction, any other asset-backed auto lease securities similar to the Class A Certificates other than the Class B Certificates. (j) So long as any Class A Certificates are outstanding, the Transferor and TMCC will cause to be delivered to the Representative a reliance letter relating to each Opinion of Counsel delivered to the Securitization Trustee or any Rating Agency by counsel to the Transferor or counsel to TMCC pursuant to the Basic Agreements. (k) To the extent, if any, that the rating provided with respect to any Class of Class A Certificates by any Rating Agency is conditional upon the furnishing of documents or the taking of any other actions by the Transferor or TMCC, the Transferor or TMCC, as the case may be, shall furnish such documents and take any such other actions. 10 (l) The Transferor will file with the Commission such report on Form SR as may be required pursuant to Rule 463 under the Act. 6. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The obligations of the several Underwriters to purchase and pay for the Class A Certificates will be subject to the accuracy of the respective representations and warranties on the part of the Transferor and TMCC herein, to the accuracy of the statements of the Transferor and TMCC made in any officers' certificate pursuant to the provisions hereof, to the performance by the Transferor and TMCC of their respective obligations hereunder and to the following additional conditions precedent: (a) On (i) the date of this Agreement, the Representative and the Transferor shall have received two letters (one of which relates to the Contracts and related information and one of which relates to the financial statements of TMCC), dated the date of delivery thereof (which, if the Effective Time is prior to the execution and delivery of this Agreement, shall be on or prior to the date of this Agreement or, if the Effective Time is subsequent to the execution and delivery of this Agreement, shall be prior to the filing of the amendment or post-effective amendment to the registration statement to be filed shortly prior to the Effective Time), of Price Waterhouse LLP ("Price Waterhouse") confirming that they are independent public accountants with respect to the Transferor and TMCC within the meaning of the Act and the Rules and Regulations, substantially in the form of the drafts to which the Representative has previously agreed and otherwise in form and in substance satisfactory to the Representative and counsel for the Underwriters, and (ii) on the Closing Date, the Representative and the Transferor and TMCC shall have received a letter, dated as of the Closing Date, from Price Waterhouse, updating the letter delivered pursuant to clause (i) above that relates to the financial statements of TMCC, in form and substance satisfactory to the Representative and counsel for the Underwriters. (b) If the Effective Time has not occurred prior to the date of this Agreement, the Effective Time shall have occurred not later than 5:30 p.m. New York City time on the date of execution and delivery of this Agreement, or such later date as shall have been consented to by the Representative. If the Effective Time is prior to the execution and delivery of this Agreement, the Prospectus shall have been filed with the Commission in accordance with the Rules and Regulations and Section 5(a) hereof. Prior to the Closing Date, no stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall have been instituted or, to the knowledge of the Transferor, TMCC or the Representative, shall be contemplated by the Commission. (c) The Representative shall have received a certificate dated the Closing Date of the President, any Vice President or a principal accounting or financial officer of the Transferor and the President, any Vice President or a principal accounting or financial officer of TMCC in which such officer shall state (i) in the case of the Transferor, that (A) to the best knowledge of such officer after reasonable investigation, the representations and warranties of the Transferor in this Agreement are true and correct, (B) to the best knowledge of such officer after reasonable investigation, the Transferor has complied with all agreements and satisfied all conditions on its part to be performed 11 or satisfied hereunder at or prior to the Closing Date, no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or are contemplated by the Commission and (C) subsequent to the date of this Agreement, there has been no material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Transferor except as set forth in or contemplated by the Prospectus and (ii) in the case of TMCC, that (A) to the best knowledge of such officer after reasonable investigation, the representations and warranties of TMCC in this Agreement are true and correct, (B) to the best knowledge of such officer after reasonable investigation, TMCC has complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder and (C) subsequent to the date of this Agreement, there has been no material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of TMCC that would materially and adversely affect the performance by TMCC of its obligations under this Agreement or the Basic Documents to which it is a party. (d) The Representative shall have received: (1) the favorable opinion, dated the Closing Date, of Alan F. Cohen, Esq., General Counsel of TMCC and counsel to the Transferor, in form and scope satisfactory to the Representative and its counsel, to the effect that: (i) Each of the Transferor and TMCC is a corporation duly organized, existing and in good standing under the laws of the State of California. (ii) To such counsel's knowledge, each of the Transferor and TMCC is duly incorporated or qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which their respective ownership or lease of substantial properties or the conduct of their respective businesses requires such qualification and in which the failure to so qualify and be in good standing would materially adversely affect their respective businesses or financial condition. (iii) To such counsel's knowledge (A) there are no legal or governmental proceedings pending or threatened against TMCC or in connection with the origination and servicing of the Contracts by TMCC which are required to be disclosed in the registration statement, other than those disclosed therein, (B) there are no legal or governmental proceedings to which TMCC is a party or to which any of its property is subject which are not described in TMCC's Annual Report on Form 10-K for the year ended September 30, 1996, or its Quarterly Report for the quarter ended June 30, 1997, which are required to be disclosed therein other than those disclosed therein and (C) there are no pending legal or governmental proceedings to which the Transferor is a party or to which any of its property is subject. (iv) To such counsel's knowledge (A) no default exists in the due performance or observance by TMCC of any obligation, agreement, covenant or 12 condition contained in any contract, indenture, mortgage, loan agreement, note, lease or other instrument to which it is a party or by which it may be bound, which default would have a material adverse effect on the financial condition, earnings, business affairs, business prospects, properties or results of operations of TMCC and its subsidiaries considered as one enterprise, and (B) other than this Agreement and the Basic Agreements, the Transferor is not a party to any material contract, indenture, mortgage, loan agreement, note, lease or other instrument. (v) The execution, delivery and performance of this Agreement and the Basic Agreements and the consummation of the transactions herein and therein contemplated will not (A) conflict with or constitute a breach of, or default under, or result in the creation or imposition of any Lien upon any property or assets of TMCC or any of its subsidiaries pursuant to, any material contract, indenture, mortgage, loan agreement, note, lease or other instrument known to such counsel to which TMCC or any of its subsidiaries is a party or by which it or any of them may be bound, or to which any of the property or assets of TMCC or any of its subsidiaries is subject, (B) result in any violation of the provisions of the charter or bylaws of TMCC or the Transferor or (C) to such counsel's knowledge, result in any violation of any applicable law, administrative regulation or administrative or court decree. (vi) Each of the Transferor and TMCC has obtained all necessary authorizations and approvals under the federal law of the United States and the laws of the State of California to conduct their respective businesses in which the failure to obtain such licenses and approvals would render any Contract or any other material part of the corpus of the Titling Trust unenforceable or would materially and adversely affect the ability of either the Transferor or TMCC to perform any of their respective obligations under, or the enforceability of, any Basic Agreement; provided, however, that such counsel need express no opinion with respect to any consent or approval relating to the authority to lease motor vehicles, originate lease contracts or to service such leased motor vehicles and lease contracts. (2) The favorable opinions of Andrews & Kurth L.L.P., special counsel to the Transferor and TMCC, dated the Closing Date and satisfactory in form and substance to the Representative and counsel for the Underwriters and to the effect that: (i) Each of the Transferor and TMCC has corporate power and authority to own, lease and operate its properties and to conduct its business as presently conducted and to enter into and perform its obligations under this Agreement and each Basic Agreement to which it is a party. (ii) Each of the Transferor and TMCC has duly authorized, executed and delivered this Agreement and each Basic Agreement to which it is a party, and, assuming the due authorization, execution and delivery thereof by the 13 other parties thereto, each Basic Agreement to which the Transferor or TMCC is a party constitutes a legally valid and binding obligation of the Transferor and TMCC, as applicable, enforceable in accordance with its respective terms, except as limited by bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect affecting creditors' rights generally and by the application of general principles of equity (regardless of whether enforcement is considered in a proceeding at law or in equity), including, without limitation (a) the possible unavailability of specific performance, injunctive relief or any other equitable remedy and (b) concepts of materiality, reasonableness, good faith and fair dealing. (iii) The Certificates have been duly and validly authorized and, when executed and authenticated by the Trustee as specified in the Securitization Trust Agreement and, in the case of the Class A Certificates, delivered against payment of the consideration specified in this Agreement and, in the case of the Class B Certificates, paid for pursuant to the Purchase Agreement dated September __, 1997 between the Transferor, TMCC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, will be duly and validly issued and outstanding and entitled to the benefits of the Securitization Trust Agreement, except as limited by bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect affecting creditors' rights generally and by the application of general principles of equity (regardless of whether enforcement is considered in a proceeding at law or in equity), including, without limitation (a) the possible unavailability of specific performance, injunctive relief or any other equitable remedy and (b) concepts of materiality, reasonableness, good faith and fair dealing. (iv) No authorization, approval, consent, or order of any court or governmental agency or body is required, under the Federal law of the United States or the laws of the State of California or the State of New York, for the consummation by either the Transferor or TMCC of the transactions contemplated in this Agreement or any Basic Agreement except such as may be required under the Act, the Rules and Regulations or securities laws of any state or foreign jurisdiction, and those authorizations, approvals, consents, orders and filings which have previously been obtained or made are in full force and effect as of the Closing Date; provided, that such counsel need express no opinion as to state or foreign securities laws, and the opinion set forth in this sentence is limited to such authorizations, approvals, consents and orders which, in such counsel's experience, are normally applicable to transactions of the type contemplated by the Basic Documents; and provided, further, that such counsel need express no opinion with respect to any consent or approval relating to the authority to lease motor vehicles, originate lease contracts or to service such leased motor vehicles and lease contracts. (v) To such counsel's knowledge, there are no actions, proceedings or investigations pending or threatened, to which the Transferor or 14 TMCC is a party or of which any property of the Transferor or TMCC is the subject required to be disclosed in the Registration Statements, other than those disclosed therein, or (A) asserting the invalidity of this Agreement, any Basic Agreement or the Certificates, (B) seeking to prevent the issuance of the Certificates or the consummation of any of the transactions contemplated by this Agreement or the Basic Agreements, (C) that would, if determined adversely to TMCC or the Transferor, materially and adversely affect the performance by the Transferor or TMCC of its respective obligations under, or the validity or enforceability of, this Agreement, any Basic Agreement or the Certificates or (D) seeking adversely to affect the federal income tax attributes of the Certificates as described in the Prospectus under the heading "Material Federal Income Tax Consequences" or the California income and franchise tax attributes of the Class A Certificates. (vi) The Certificates and the Basic Agreements each conform in all material respects with the respective descriptions thereof contained in the Registration Statement and the Prospectus. (vii) The statements in the Prospectus under the captions "Summary", "Risk Factors", "Description of the Certificates", "Assets of the Trust" and "Additional Document Provisions", insofar as such statements purport to summarize certain provisions of the 1997-A SUBI, the UTI Certificates, the Certificates, the Basic Agreements and the Contingent and Excess Liability Insurance Policies, provide a fair summary of such provisions. (viii) The statements in the Prospectus under "Risk Factors -- Risks Associated with Consumer Protection Laws", "-- Risks Associated with ERISA Liabilities", "-- Risks Associated with Vicarious Tort Liability on Leased Vehicles", "-- Risks Associated with Possible Insolvency of TMCC; Substantive Consolidation with TMCC" and "-- Legal Proceedings Relating to Lease Contracts", "Additional Document Provisions", "Certain Legal Aspects of the Titling Trust", "Certain Legal Aspects of the Contracts and the Leased Vehicles", "Material Federal Income Tax Consequences" and "ERISA Considerations", to the extent that they constitute matters of law or legal conclusions relating to U.S. federal law or the laws of the State of California, have been reviewed by such counsel and are correct in all material respects. (ix) Neither the Titling Trust nor the Securitization Trust will be classified as an association taxable as a corporation, or a publicly traded partnership taxable as a corporation, for federal income tax purposes or California income or franchise tax purposes. The Class A Certificates will be classified as indebtedness for federal income tax purposes and for California income and franchise tax purposes. 15 (x) No authorization, approval, consent or order of any court or governmental authority or agency is required in connection with the issuance of the 1997-A SUBI Certificate, the UTI Certificates or the Certificates, the offering of the Class A Certificates or the sale of the Class A Certificates to the Underwriters, except as may be required under the Act and except those authorizations, approvals, consents and orders which have previously been obtained and are in full force and effect as of the Closing Date; provided that such counsel need express no opinion as to state or foreign securities laws and the opinion set forth in this sentence is limited to such authorizations, approvals, consents and orders which, in such counsel's experience, are normally applicable to transactions of the type contemplated by the Basic Documents. (xi) The Registration Statement has become effective under the Act, and, to the knowledge upon due inquiry of such counsel, no stop order suspending the effectiveness of the Registration Statement has been issued under the Act and no proceedings for that purpose have been initiated or threatened by the Commission under the Act, and the Registration Statement and the Prospectus, and each amendment or supplement thereto, as of their respective effective or issue dates, appeared on its face to be appropriately responsive in all material respects to the applicable requirements of the Act and the Rules and Regulations, except that such counsel need not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement or the Prospectus except for those as contemplated by clauses (vii) and (viii) of Section 6(d)(2), in each case to the extent set forth therein, and such counsel need not opine as to the financial statements and related notes, schedules and other financial and statistical data included or incorporated by reference therein. (xii) None of the Titling Trust Agreement, the 1997-A SUBI Supplement, or the Securitization Trust Agreement are required to be qualified under the Trust Indenture Act of 1939, as amended (the "1939 Act"); and the Indenture has been duly qualified under the 1939 Act. (xiii) None of the Transferor, TMCC, the Titling Trust or the Securitization Trust is an "investment company" or is "controlled" by an "investment company" as such terms are defined in the Investment Company Act. [(xiv) If TMCC were to become a debtor in a case under the Bankruptcy Code, the 1997-A SUBI Assets and the 1997-A SUBI Certificate would not be part of the bankruptcy estate of TMCC and it would not be a proper exercise by a federal bankruptcy court of its equitable jurisdiction to substantively consolidate the assets of the Titling Trust, the Transferor or the Securitization Trust with the assets and liabilities of TMCC. The transfer of the 1997-A SUBI Certificate by TMCC to the Transferor constitutes a sale of the 1997-A SUBI Certificate and the 16 1997-A SUBI Assets evidenced thereby. The transfer of the 1997-A SUBI Certificate by the Transferor to the Securitization Trust either (A) constitutes a sale of the 1997-A SUBI Certificate and the 1997-A SUBI Assets evidenced thereby or (B) if such transfer does not constitute a sale, then the Securitization Trust Agreement and the delivery to and possession by the Securitization Trustee of the 1997-A SUBI Certificate creates a valid first priority perfected security interest, for the benefit of the Securitization Trustee on behalf of the Certificateholders, in the Transferor's right, title and interest in the 1997-A SUBI Certificate, the Reserve Fund and the proceeds thereof.] In addition, such counsel shall state that such counsel has participated in conferences with the officers and other representations of TMCC and the Transferor, representatives of their independent public accountants and the Underwriters, at which the contents of the Registration Statement and the Prospectus and related matters were discussed and, although such counsel is not passing upon, and does not assume any responsibility for, the accuracy, completeness or fairness of the statements contained or incorporated by reference therein and has not made any independent check or verification thereof, during the course of such participation (relying as to factual matters as to materiality to a large extent upon the statements of officers and other representatives of TMCC and the Transferor), such counsel does not believe that the Registration Statement, at the Effective Time, or any such amendment or supplement, as of its effective date, contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus, at the date thereof (or any such amendment or supplement, as of its respective date) or at the Closing Date included or includes an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; it being understood that such counsel need not make a statement as to any financial statements, schedules or other financial or statistical data contained or incorporated by reference in any Registration Statement or the Prospectus or the Indenture Trustee's Statement of Qualification on Form T-1. (3) Reliance letters relating to each legal opinion relating to the transactions contemplated by this Agreement and the Basic Agreements rendered by counsel to the Transferor or TMCC to the Securitization Trustee, the Titling Trustee and each Rating Agency. (4) The favorable opinion of Richards, Layton & Finger, special Delaware counsel to the Titling Trust, dated the Closing Date and satisfactory in form and substance to the Representative and counsel for the Underwriters, to the effect that: (i) The Titling Trust Agreement is the legal, valid and binding agreement of TMCC, the Titling Trustee and First Bank, enforceable against each of them in accordance with its terms. 17 (ii) The Titling Trust has been duly formed and validly existing as a business trust under the Delaware Business Trust Act, 12 DEL C. SECTION 3801 ET SEQ. (the "Delaware Act"). (iii) The Titling Trust has the power and authority under the Delaware Act and the Titling Trust Agreement, and the Titling Trust Agreement authorizes the Titling Trustee, to execute, deliver and perform its obligations under each Basic Agreement to which it is a party. (iv) To the extent that Article 9 of the Uniform Commercial Code as in effect in the State of Delaware (the "UCC") is applicable (without regard to conflict of laws principles), and assuming that a security interest in the 1997-A Contracts created by the Securitization Trust Agreement has been duly created and has attached, upon the filing of the Financing Statement with the Secretary of State of the State of Delaware, the Securitization Trustee will have a perfected security interest in the Titling Trust's rights in the 1997-A Contracts and the proceeds thereof, and such security interest will be prior to any other security interest granted by the Titling Trust that is perfected solely by the filing of financing statements under the UCC, excluding purchase money security interests under SECTION 9-312(4) of the UCC and temporarily perfected security interests in proceeds under SECTION 9-306(3) of the UCC. (v) No re-filing or other action is necessary under the UCC in the State of Delaware in order to maintain the perfection of such security interest except for the filing of continuation statements at five year intervals. (vi) The 1997-A SUBI Certificate and the UTI Certificates have been duly and validly authorized and, when executed, authenticated and delivered pursuant to the 1997-A SUBI Supplement, the UTI Supplement and the Titling Trust Agreement, will be duly and validly issued and outstanding and entitled to the benefits of the 1997-A SUBI Supplement, the UTI Supplement and the Titling Trust Agreement. (vii) Under 12 DEL. C. SECTION 3805(b), no creditor of any holder of a SUBI Certificate or a UTI Certificate (including creditors of TMCC, as the holder of the UTI Certificate) shall have any right to obtain possession of, or otherwise exercise legal or equitable remedies with respect to, the property of the Titling Trust except in accordance with the terms of the Titling Trust Agreement. (5) The favorable opinion of Hudson Cook LLP, special counsel to TMCC and the Titling Trust, with respect to various licensing, consumer protection and other state law matters in the form previously agreed on with the Representative and counsel for the Underwriters. 18 (6) The favorable opinion of [ ], counsel to the Securitization Trustee, dated the Closing Date and satisfactory in form and substance to the Representative and counsel to the Underwriters, to the effect that: (i) U.S. Bank has been duly incorporated and is validly existing as a national banking association, in good standing under the laws of United States with full power and authority (corporate and other) to own its properties and conduct its business, as presently conducted by it, and to enter into and perform its obligations as Securitization Trustee and Trust Agent under each Basic Agreement to which U.S. Bank is a party. (ii) Each Basic Agreement to which U.S. Bank is a party has been duly authorized, executed and delivered by U.S. Bank and, assuming the due authorization, execution and delivery thereof by the other parties thereto, will constitute a legal, valid and binding obligation of U.S. Bank enforceable in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting enforcement of creditors' rights generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). (iii) The Certificates have been duly executed, authenticated and delivered by the Securitization Trustee. (iv) Neither the execution nor delivery by U.S. Bank of each Basic Agreement to which it is a party nor the consummation of any of the transactions by U.S. Bank contemplated thereby require the consent or approval of, the giving of notice to, the registration with or the taking of any other action with respect to, any governmental authority or agency under any existing federal or state law governing the banking or trust powers of U.S. Bank. (v) The execution and delivery of each Basic Agreement to which U.S. Bank is a party and the performance by U.S. Bank of its terms do not conflict with or result in a violation of (A) any federal or state law or regulation governing the banking or trust powers of U.S. Bank (B) the Articles of Association or By-Laws of U.S. Bank, or (C) to the best knowledge of such counsel, any indenture, lease, or material agreement to which U.S. Bank is a party or to which its assets are subject. (vi) All of the issued and outstanding capital stock of the Titling Trustee is owned by U.S. Bank, free and clear of any Liens. 19 (7) The favorable opinion of __________________, counsel to the Titling Trustee, dated the Closing Date and satisfactory in form and substance to the Representative and counsel for the Underwriters, to the effect that: (i) The Titling Trustee has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware with corporate power and authority to own, lease and operate its properties, to conduct its business as described in the Registration Statement and to enter into and perform its obligations under each Basic Agreement to which it is a party; to the best of their knowledge and information, the Titling Trustee is duly qualified as a foreign corporation to transact business and is in good standing in California, Florida, Michigan, Pennsylvania and Ohio; and the shares of issued and outstanding capital stock of the Titling Trustee have been duly authorized and validly issued, are fully paid and non-assessable and are owned by U.S. Bank. (ii) Each Basic Agreement to which the Titling Trustee is a party has been duly authorized, executed and delivered by the Titling Trustee and, assuming the due authorization, execution and delivery thereof by the other parties thereto, will constitute legal, valid and binding obligations of the Titling Trustee enforceable in accordance with their respective terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting enforcement of creditors' rights generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). (iii) The 1997-A SUBI Certificate and the UTI Certificates have been duly executed, authenticated and delivered by the Titling Trustee. (iv) Neither the execution nor delivery by the Titling Trustee of each Basic Agreement to which it is a party nor the consummation of any of the transactions by the Titling Trustee contemplated thereby require the consent or approval of, the giving of notice to, the registration with or the taking of any other action with respect to, any person or entity, including any governmental authority or agency under any existing federal or state law. (v) The execution and delivery of each Basic Agreement to which the Titling Trustee is a party and the performance by the Titling Trustee of their respective terms do not conflict with or result in a violation of its articles of incorporation or bylaws of the Titling Trustee or, to the best of such counsel's knowledge, any contract, indenture, mortgage, loan agreement, note, lease or other instrument to which it is a party, by which it may be bound or to which any of its property or assets is subject. 20 (8) The favorable opinion of Brown & Wood LLP, counsel for the Underwriters, dated the Closing Date, with respect to the existence of the validity of the Certificates and such other related matters as the Representative shall request. In rendering such opinion, Brown & Wood LLP may rely on the opinions of counsel referred to above. (e) Each Class of Class A Certificates shall be rated in the highest rating category by each of Moody's and Standard & Poor's. (f) On or prior to the Closing Date, counsel for the Underwriters shall have been furnished with such documents and opinions as they may reasonably require for the purpose of enabling them to pass upon the issuance of the Certificates and sale of the Class A Certificates as herein contemplated and related proceedings, or in order to evidence the accuracy of any of the representations or warranties, or the fulfillment of any of the conditions, herein contained; and all proceedings taken by the parties to the Basic Agreements in connection with the issuance of the Certificates and sale of the Class A Certificates as herein contemplated shall be reasonably satisfactory in form and substance to the Representative and counsel for the Underwriters. If any condition specified in this Section shall not have been fulfilled when and as required to be fulfilled, this Agreement may be terminated by the Representative by notice to the Transferor and TMCC at any time at or prior to the Closing Date, and such termination shall be without liability of any party to any other party except as provided in Section 5(h) hereof. 7. INDEMNIFICATION AND CONTRIBUTION. (a) The Transferor and TMCC will, jointly and severally, indemnify and hold harmless each Underwriter against any losses, claims, damages or liabilities, joint or several, as incurred, to which such Underwriter may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each Underwriter for any legal or other expenses reasonably incurred by such Underwriter in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that neither the Transferor nor TMCC will be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement in or omission or alleged omission from any of such documents in reliance upon and in conformity with written information furnished to the Transferor or TMCC by any Underwriter through the Representative specifically for use therein; provided that neither TMCC nor the Transferor shall be liable under this subsection (a) to the extent that such losses, claims, damages or liabilities arose out of or are based upon an untrue statement or omission made in any preliminary prospectus that is corrected in the final Prospectus (or any amendment or supplement thereto) if the 21 person asserting such loss, claim, damage or liability was not given the final Prospectus (or any amendment or supplement thereto) on or prior to the confirmation of the sale of the Certificates. (b) Each Underwriter, severally and not jointly, will indemnify and hold harmless the Transferor and TMCC against any losses, claims, damages or liabilities, joint or several, as incurred, to which the Transferor or TMCC may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Transferor or TMCC by such Underwriter through the Representative specifically for use therein, and will reimburse any legal or other expenses reasonably incurred by the Transferor or TMCC in connection with investigating or defending any such action or claim as such expenses are incurred. (c) Promptly after receipt by an indemnified party under this Section of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under subsection (a) or (b) above, notify the indemnifying party of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party otherwise than under subsection (a) or (b) above. In case any such action is brought against any indemnified party and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this Section for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation. (d) If the indemnification provided for in this Section is unavailable or insufficient to hold harmless an indemnified party under Section 7 (a) or (b) above, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities referred to in Section 7(a) or (b) above (i) in such proportion as is appropriate to reflect the relative benefits received by the Transferor and TMCC on the one hand and the Underwriters on the other from the offering of the Class A Certificates or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Transferor and TMCC on the one hand and the Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities as well as any other relevant equitable considerations. The relative benefits received by the Transferor and TMCC 22 on the one hand and the Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Transferor and TMCC bear to the total underwriting discounts and commissions and the service fee specified in Section 5(h) received by the Underwriters. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Transferor or TMCC or the Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this Section 7(d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this Section 7(d). Notwithstanding the provisions of this Section 7(d), no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Class A Certificates underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations in this Section 7(d) to contribute are several in proportion to their respective underwriting obligations and not joint. (e) The obligations of the Transferor and TMCC under this Section shall be in addition to any liability which the Transferor or TMCC may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls any Underwriter within the meaning of the Act; and the obligations of the Underwriters under this Section shall be in addition to any liability which the respective Underwriters may otherwise have and shall extend, upon the same terms and conditions, to each director of the Transferor or TMCC, to each officer of the Transferor or TMCC who has signed the Registration Statement and to each person, if any, who controls the Transferor or TMCC within the meaning of the Act. 8. SURVIVAL OF CERTAIN REPRESENTATIONS AND OBLIGATIONS. The respective indemnities, agreements, representations, warranties and other statements of the Transferor and TMCC or their respective officers and of the Underwriters set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation, or statement as to the results thereof, made by or on behalf of any Underwriter, the Transferor, TMCC or any of their respective representatives, officers or directors or any controlling person, and will survive delivery of and payment for the Class A Certificates. If for any reason the purchase of the Class A Certificates by the Underwriters is not consummated, the Transferor and TMCC shall remain responsible for the expenses to be paid or reimbursed by them pursuant to Section 5(h) hereof and the respective obligations of the Transferor, TMCC and the Underwriters pursuant to Section 7 hereof shall remain in effect. 23 9. TERMINATION OF AGREEMENT. The Representative may terminate this Agreement, by notice to the Transferor and TMCC, at any time prior to or at the Closing Date (i) if there has been any material adverse change in the condition, financial or otherwise, or in the business affairs or business prospects of the Transferor, TMCC or the Titling Trust which, in the reasonable judgment of the Representative (after consultation with the Underwriters), materially impairs the investment quality of the Class A Certificates, or makes it impractical or inadvisable to proceed with the completion of the sale of and payment for the Class A Certificates; (ii) if there has occurred any downgrading in the rating of the debt securities of TMCC or Toyota Motor Sales, U.S.A., Inc. or any of their direct or indirect subsidiaries by any "nationally recognized statistical rating organization" (as such term is defined for purposes of Rule 436(g) under the Act), or any public announcement that any such organization has under surveillance or review its rating of any debt securities (other than an announcement with positive implications of a possible upgrading, and no implication of a possible downgrading, of such rating); (iii) if there has occurred any outbreak or escalation of major hostilities in which the United States is involved, any declaration of war by the United States Congress or any other substantial national or international calamity or emergency if, in the reasonable judgment of the Representative (after consultation with the Underwriters), the effect of any such outbreak, escalation, declaration calamity or emergency makes it impractical or inadvisable to proceed with completion of the sale of and payment for the Class A Certificates; (iv) if there has occurred any suspension or limitation of trading in securities generally on the New York Stock Exchange, the Luxembourg Stock Exchange or The Stock Exchange of Hong Kong Limited or any setting of minimum prices for trading on such exchange, or any suspension of trading of any securities of TMCC on any exchange or in the over-the-counter market; or (v) if a banking moratorium has been declared by either federal, New York or California authorities. 10. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS. If one or more of the Underwriters shall fail at the Closing Date to purchase the Class A Certificates which it or they are obligated to purchase under this Agreement (the "Defaulted Securities"), the Representative shall have the right, but not the obligation, within 24 hours thereafter, to make arrangements for one or more of the non-defaulting Underwriters, or any other underwriters, to purchase all, but not less than all, of the Defaulted Securities in such amounts as may be agreed upon and upon the terms herein set forth; if, however, the Representative shall not have completed such arrangements within such 24-hour period, then: (a) if the aggregate principal amount of Defaulted Securities does not exceed 10% of the total aggregate principal amount of the Class A Certificates, the non-defaulting Underwriters shall be obligated to purchase the full amount thereof in such proportions that their respective underwriting obligations hereunder bear to the underwriting obligations of all non-defaulting Underwriters, or (b) if the aggregate principal amount of Defaulted Securities exceeds 10% of the total aggregate principal amount of the Class A Certificates, this Agreement shall terminate without liability on the part of any non-defaulting Underwriter. 24 No action pursuant to this Section shall relieve any defaulting Underwriter from liability in respect of its default. In the event of any such default which does not result in a termination of this Agreement, either the Representative or the Transferor shall have the right to postpone the Closing Time for a period not exceeding seven days in order to effect any required changes in the Registration Statement or Prospectus or in any other documents or arrangement. 11. NOTICES. All communications hereunder will be in writing and, if sent to (i) the Underwriters, shall be directed to the Representative and will be mailed, delivered or sent by facsimile and confirmed to it at Merrill Lynch, Pierce, Fenner & Smith Incorporated, World Financial Center, New York, New York 10281, Attention: Geoffrey Witt, Managing Director, Asset Backed Securities Group (facsimile number 212-449-9015); (ii) the Transferor, will be mailed, delivered or sent by facsimile and confirmed to it at Toyota Leasing, Inc., 19001 South Western Avenue, Torrance, California 90501, Attention: Treasury Department (facsimile number 310-787-6194); or (iii) TMCC, will be mailed, delivered or sent by facsimile and confirmed to it at 19001 South Western Avenue, Torrance, California 90501, Attention: Treasury Department (facsimile number 310-787-6194). 12. SUCCESSORS. This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and the officers and directors and controlling persons referred to in Section 7 hereof, and no other person will have any right or obligation hereunder. 13. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF UNDERWRITERS. (a) With respect to any offers or sales of the Class A Certificates outside the United States (and solely with respect to any such offers and sales) each Underwriter severally and not jointly makes the following representations and agrees that: (i) United Kingdom (A) in relation to the Class A Certificates which have a maturity of one year or more, it has not offered or sold and, prior to the expiry of the period of six months from the Issue Date in respect of any such the Class A Certificates, will not offer or sell any such the Class A Certificates to persons in the United Kingdom except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995; (B) it has complied and will comply with all applicable provisions of the Financial Services Act 1986 with respect to anything done by it in relation to the Class A Certificates in, from or otherwise involving the United Kingdom; and 25 (C) it has only issued or passed on and will only issue or pass on in the United Kingdom any document received by it in connection with the issue of any of the Class A Certificates to a person who is of a kind described in Article 11(3) of the Financial Services Act 1986 (Investment Advertisements)(Exemptions) Order 1996 (AS AMENDED) or is a person to whom the document may otherwise lawfully be issued or passed on. (ii) Germany in connection with the initial placement of any Class A Certificates in Germany, it will offer and sell such Class A Certificates (i) only for an aggregate purchase price per purchaser of at least DM 80,000 (or the foreign currency equivalent) or such other amount as may be stipulated from time to time by applicable German law or (ii) as may otherwise be permitted in accordance with applicable German law. (iii) Hong Kong each Underwriter represents and agrees that it has not, directly or indirectly, offered or sold and will not, directly or indirectly, offer or sell in Hong Kong, by means of any document, any Class A Certificates other than to persons whose ordinary business it is to buy or sell shares or debentures, whether as principal or agent, or in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32) of Hong Kong. Each Underwriter further represents and agrees that, unless it is a person who is permitted to do so under the securities laws of Hong Kong, it has not issued, or had in its possession for the purposes of issuing, and it will not issue, or have in its possession for the purposes of issuing, any advertisement, invitation or document relating to Class A Certificates other than with respect to Class A Certificates intended to be disposed of to persons outside Hong Kong or to persons whose business involves the acquisition, or disposal or holding of securities, whether as principal or agent. (iv) General (A) Each Underwriter represents and agrees that it will comply with all applicable laws and regulations in each jurisdiction in which it purchases, offers or sells Class A Certificates or possesses or distributes the Prospectus or any other offering material and will obtain any consent, approval or permission required by it for the purchase, offer or sale by it of Class A Certificates under the laws and regulations in force in any jurisdiction to which it is subject or in which it makes such purchases, offers or sales and neither the Transferor, TMCC nor any other Underwriter shall have any responsibility therefor; 26 (B) No action has been or will be taken by such Underwriter that would permit a public offering of the Class A Certificates or possession or distribution of any offering material in relation to the Class A Certificates in any jurisdiction where action for that purpose is required unless the Transferor or TMCC has agreed to such actions and such actions have been taken; (C) Each Underwriter represents and agrees that it will not offer, sell or deliver any of the Class A Certificates or distribute any such offering material in or from any jurisdiction except under circumstances which will result in compliance with applicable laws and regulations and which will not impose any obligation on the Transferor or TMCC or the Underwriters; (D) Such Underwriter acknowledges that it is not authorized to give any information or make any representations in relation to the Class A Certificates other than those contained or incorporated by reference in the Prospectus for the Class A Certificates and such additional information, if any, as the Transferor or TMCC shall, in writing, provide to and authorize such Underwriter so to use and distribute to actual and potential purchasers of Class A Certificates; (b) The Underwriters agree to provide a letter as soon as practicable after the Closing Date substantially to the effect that, based on a thorough survey of the distribution of the Class A-1, Class A-2 and Class A-3 Certificates, the Underwriters have calculated that each Class of such Certificates has been distributed to more than 100 investors who are independent of the Securitization Trust, the Titling Trust, the Transferor and TMCC and each other. (c) The Underwriters shall provide the Transferor and TMCC from time to time (but no less frequently than weekly), information with respect to the amounts and prices at which the Class A Certificates are sold to investors to be used solely for transmission to the staff of the Commission as correspondence (I.E., not publicly available). 14. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same Agreement. 15. APPLICABLE LAW. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York without regard to any otherwise applicable principles of conflicts of laws. 27 If the foregoing is in accordance with your understanding of our agreement, kindly sign and return to us one of the counterparts duplicate hereof, whereupon it will become a binding agreement between the Transferor and TMCC and the Underwriters in accordance with its terms. Very truly yours, TOYOTA MOTOR CREDIT CORPORATION By: _______________________________ Name: Title: TOYOTA LEASING, INC. By: _______________________________ Name: Title: CONFIRMED AND ACCEPTED, as of the date first above written. MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By: __________________________________ Name: Title: For itself and as Representative of the other Underwriters named in Schedule I hereto. 28 SCHEDULE I
Principal Amount of Principal Amount of Principal Amount of Class A-1 Class A-2 Class A-3 Name of Underwriter Certificates Certificates Certificates - ------------------- ------------------- ------------------- ------------------- Merrill Lynch, Pierce, Fenner & Smith Incorporated . . . . . . . . . . . . . $[ ] $[ ] $[ ] Lehman Brothers Inc. . . . . . . . . . . [ ] [ ] [ ] Morgan Stanley & Co. Incorporated . . . [ ] [ ] [ ] ------------- ------------- ------------- Total . . . . . . . . . . . . . . . [ ] [ ] [ ] ------------- ------------- ------------- ------------- ------------- -------------
SI-1 EX-4.1 3 EXHIBIT 4-1 Exhibit 4.1 _________________________________________________________________ TOYOTA LEASING, INC. AND U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE TOYOTA AUTO LEASE TRUST 1997-A AUTOMOBILE LEASE ASSET-BACKED CERTIFICATES 1997-A SECURITIZATION TRUST AGREEMENT DATED AS OF SEPTEMBER 1, 1997 _________________________________________________________________ TABLE OF CONTENTS PAGE RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ARTICLE ONE DEFINITIONS Section 1.01. Definitions.. . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 1.02. Article and Section References. . . . . . . . . . . . . . . . 2 ARTICLE TWO CREATION OF TRUST Section 2.01. Creation of Trust.. . . . . . . . . . . . . . . . . . . . . . 3 Section 2.02. Conveyance of 1997-A SUBI . . . . . . . . . . . . . . . . . . 3 Section 2.03. Acceptance by Trustee . . . . . . . . . . . . . . . . . . . . 4 ARTICLE THREE ALLOCATIONS AND DISTRIBUTIONS; RESERVE FUND; STATEMENTS TO CERTIFICATEHOLDERS Section 3.01. Allocations and Distributions . . . . . . . . . . . . . . . . 4 Section 3.02. 1997-A Certificateholders' Account; Reserve Fund.. . . . . . . 10 Section 3.03. Statements to Certificateholders. . . . . . . . . . . . . . . 12 ARTICLE FOUR THE CERTIFICATES Section 4.01. The Certificates. . . . . . . . . . . . . . . . . . . . . . . 15 Section 4.02. Authentication and Delivery of Certificates.. . . . . . . . . 16 Section 4.03. Registration of Transfer and Exchange of Certificates.. . . . 16 Section 4.04. Mutilated, Destroyed, Lost or Stolen Certificates.. . . . . . 20 Section 4.05. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . 20 Section 4.06. Access to List of Certificateholders' Names and Addresses . . 20 Section 4.07. Maintenance of Office or Agency . . . . . . . . . . . . . . . 21 Section 4.08. Temporary Certificates. . . . . . . . . . . . . . . . . . . . 21 Section 4.09. Book-Entry Certificates . . . . . . . . . . . . . . . . . . . 22 Section 4.10. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Section 4.11. Definitive Certificates . . . . . . . . . . . . . . . . . . . 24 Section 4.12. Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . 25 Section 4.13. ERISA Matters . . . . . . . . . . . . . . . . . . . . . . . . 26 i ARTICLE FIVE THE TRANSFEROR Section 5.01. Representations of Transferor. . . . . . . . . . . . . . . . 26 Section 5.02. Liability of Transferor; Indemnities. . . . . . . . . . . . . 28 Section 5.03. Merger or Consolidation of, or Assumption of the Obligations of, Transferor; Certain Limitations.. . . . . . . 29 Section 5.04. Limitation on Liability of Transferor and Others. . . . . . . 31 Section 5.05. Transferor May Own Investor Certificates. . . . . . . . . . . 31 Section 5.06. No Transfer . . . . . . . . . . . . . . . . . . . . . . . . . 32 Section 5.07. Tax Matters Partner . . . . . . . . . . . . . . . . . . . . . 32 ARTICLE SIX THE 1997-A SECURITIZATION TRUSTEE Section 6.01. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . 32 Section 6.02. Certain Matters Affecting the 1997-A Securitization Trustee . 34 Section 6.03. Trustee Not Liable for Certificates or Contracts. . . . . . . 36 Section 6.04. Trustee May Own Certificates. . . . . . . . . . . . . . . . . 37 Section 6.05. Trustee's Fees and Expenses . . . . . . . . . . . . . . . . . 37 Section 6.06. Eligibility Requirements for Trustee. . . . . . . . . . . . . 38 Section 6.07. Resignation or Removal of Trustee . . . . . . . . . . . . . . 38 Section 6.08. Successor Trustee . . . . . . . . . . . . . . . . . . . . . . 39 Section 6.09. Merger or Consolidation of Trustee. . . . . . . . . . . . . . 40 Section 6.10. Appointment of Co-Trustee or Separate Trustee.. . . . . . . . 40 Section 6.11. Representations and Warranties of Trustee . . . . . . . . . . 42 Section 6.12. Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . 43 Section 6.13. Trustee May Enforce Claims Without Possession of Certificates. . . . . . . . . . . . . . . . . . . . . . . . . 43 Section 6.14. Suit for Enforcement. . . . . . . . . . . . . . . . . . . . . 43 Section 6.15. Rights of Certificateholders to Direct Trustee. . . . . . . . 44 Section 6.16. No Petition . . . . . . . . . . . . . . . . . . . . . . . . . 44 ii ARTICLE SEVEN TERMINATION Section 7.01. Termination of the 1997-A Securitization Trust. . . . . . . . 45 Section 7.02. Optional Purchase of 1997-A SUBI. . . . . . . . . . . . . . . 46 ARTICLE EIGHT EARLY AMORTIZATION EVENTS Section 8.01. Early Amortization Events . . . . . . . . . . . . . . . . . . 47 Section 8.02. Additional Rights Upon the Occurrence of Certain Events . . 50 ARTICLE NINE MISCELLANEOUS PROVISIONS Section 9.01. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Section 9.02. Protection of Title to Trust. . . . . . . . . . . . . . . . . 53 Section 9.03. Limitation on Rights of Certificateholders. . . . . . . . . . 54 Section 9.04. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 55 Section 9.05. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Section 9.06. Severability of Provisions; Counterparts. . . . . . . . . . . 56 Section 9.07. Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . 56 Section 9.08. Certificates Nonassessable and Fully Paid . . . . . . . . . . 57 ARTICLE TEN AGENT FOR SERVICE Section 10.01. Agent for Service of Transferor. . . . . . . . . . . . . . . 57 Section 10.02. Agent of Trustee . . . . . . . . . . . . . . . . . . . . . . 57 EXHIBITS: Exhibit A-1 - Form of Class A-1 Certificate . . . . . . . . . . . . . . . A-1 Exhibit A-2 - Form of Class A-2 Certificate . . . . . . . . . . . . . . . A-2 Exhibit A-3 - Form of Class A-3 Certificate . . . . . . . . . . . . . . . A-3 Exhibit B - Form of Class B Certificate . . . . . . . . . . . . . . . . B-1 Exhibit C - Form of Transferor Certificate . . . . . . . . . . . . . . . C-1 Exhibit D - Form of Transferee Certificate . . . . . . . . . . . . . . D-1-1 Exhibit E - Annex of Definitions . . . . . . . . . . . . . . . . . . . . E-1 Exhibit F - Annex of Supplemental Definitions. . . . . . . . . . . . . . F-1 iii 1997-A SECURITIZATION TRUST AGREEMENT THIS 1997-A SECURITIZATION TRUST AGREEMENT, dated as of September 1, 1997, is made with respect to the formation of the TOYOTA AUTO LEASE TRUST 1997-A (the "1997-A SECURITIZATION TRUST"), between TOYOTA LEASING, INC. a California corporation ("TLI" or, in its capacity as transferor hereunder, the "Transferor"), and U.S. BANK NATIONAL ASSOCIATION, as trustee (the "1997-A SECURITIZATION TRUSTEE"). RECITALS A. The Toyota Lease Trust (the "Titling Trust") is governed by the Amended and Restated Trust and Servicing Agreement dated as of October 1, 1996 (the "Titling Trust Agreement") among Toyota Motor Credit Corporation, a California corporation, as grantor, initial beneficiary and servicer ("TMCC" and in its capacity as servicer, the "Servicer"), TMTT, Inc., a Delaware corporation, as trustee (the "TITLING TRUSTEE") and, for the limited purposes stated therein, U.S. Bank National Association, a national banking association, as trust agent ("U.S. BANK"). The Titling Trust acquires and holds title to various automobiles, light-duty trucks, related lease contracts and certain other assets in accordance with the terms of the Titling Trust Agreement. Capitalized terms used and not defined in these Recitals have the meanings given in Article I below. B. Concurrently herewith, TMCC, the Titling Trustee and U.S. Bank have entered into the 1997-A SUBI Supplement to the Titling Trust Agreement dated as of September 1, 1997 (the "1997-A SUBI Supplement") pursuant to which the Titling Trust, at the direction of TMCC, will create and issue to TLI a special unit of beneficial interest in the Titling Trust (the "1997-A SUBI"), whose beneficiaries generally will be entitled to the net cash flow arising from the related SUBI Portfolio (such SUBI Portfolio, the "1997-A SUBI Portfolio"). The 1997-A SUBI will be evidenced by one SUBI Certificate representing the entire beneficial interest in the 1997-A SUBI (the "1997-A SUBI Certificate"). C. Concurrently herewith, the Titling Trustee (on behalf of the Titling Trust) and the Servicer also have entered into a 1997-A SUBI Servicing Supplement to the Titling Trust Agreement dated as of September 1, 1997 (the "1997-A SUBI Servicing Supplement"), pursuant to which the terms of the Titling Trust Agreement will be supplemented insofar as they apply to the 1997- A SUBI Portfolio, providing for further servicing obligations that will benefit the holders of the 1997-A SUBI Certificate. D. Concurrently herewith, TMCC and the Transferor have entered into the 1997-A SUBI Certificate Purchase and Sale Agreement dated as of September 1, 1997 (the "SUBI Certificate Agreement"), pursuant to which TMCC sold to the Transferor, without recourse, all of TMCC's right, title and interest in and to the 1997-A SUBI and the 1997-A SUBI Certificate, all monies due thereon and the right to realize on any property subject to the 1997-A SUBI, and all proceeds thereof, for the consideration stated therein. E. The parties desire to enter into this 1997-A Securitization Trust Agreement to create the 1997-A Securitization Trust, to provide for the issuance by the 1997-A Securitization Trust of certain Certificates and to provide for the exchange of those Certificates for the 1997-A SUBI Certificate in connection with a Securitized Financing by the Transferor. NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the parties hereto agree as follows: ARTICLE ONE DEFINITIONS SECTION 1.01. DEFINITIONS. For all purposes of this 1997-A Securitization Trust Agreement, except as otherwise expressly provided or unless the context otherwise requires, (a) unless otherwise defined herein, all capitalized terms used herein shall have the meanings attributed to them in the Annex of Definitions or the Annex of Supplemental Definitions attached hereto as Exhibit E and Exhibit F, respectively, (b) defined terms include (i) all genders and (ii) the plural as well as the singular, (c) all references to words such as "herein", "hereof" and the like shall refer to this 1997-A Securitization Trust Agreement as a whole and not to any particular article or section within this 1997-A Securitization Trust Agreement, (d) the term "include" and all variations thereon shall mean "include without limitation", and (e) the term "or" shall include "and/or". SECTION 1.02. ARTICLE AND SECTION REFERENCES. 2 Except as otherwise specified herein, all article and section references shall be to Articles and Sections in this 1997-A Securitization Trust Agreement. ARTICLE TWO CREATION OF TRUST SECTION 2.01. CREATION OF TRUST. Upon the execution of this 1997-A Securitization Trust Agreement by the parties hereto, there is hereby created the Toyota Auto Lease Trust 1997-A. SECTION 2.02. CONVEYANCE OF 1997-A SUBI. In consideration of the 1997-A Securitization Trustee's delivery to, or upon the order of, the Transferor of executed and authenticated Investor Certificates, in authorized denominations, in an aggregate amount equal to the Initial Certificate Balance, and of the executed and authenticated Transferor Certificate, the Transferor does hereby transfer, assign and otherwise convey to the 1997-A Securitization Trustee, in trust for the benefit of the Certificateholders, to the full extent of the Transferor's interest therein, without recourse (subject to the Transferor's obligations herein): (i) all right, title and interest of the Transferor in and to the 1997-A SUBI and the 1997-A SUBI Certificate evidencing the 1997-A SUBI and all monies due thereon and paid thereon or in respect thereof; (ii) the right to realize upon any property that may be deemed to secure the 1997-A SUBI; (iii) all rights accruing to the holder of the 1997-A SUBI under the Titling Trust Agreement, the 1997-A SUBI Supplement and the 1997-A SUBI Servicing Supplement; and (iv) all proceeds of the foregoing; PROVIDED that all monies and payments due or payable under any Residual Value Insurance Policy applicable to the 1997-A Leased Vehicles and the 1997-A Contracts and the right to receive such payments and monies are retained by the Transferor and are not hereby transferred, assigned or otherwise conveyed to the 1997-A Securitization Trustee. 3 The Transferor also does hereby grant to the 1997-A Securitization Trustee a security interest in all of the foregoing (exclusive of the monies and payments referred to in the preceding PROVISO), and the 1997-A Securitization Trustee shall have all the rights, powers and privileges of a secured party under the UCC. SECTION 2.03. ACCEPTANCE BY TRUSTEE. The 1997-A Securitization Trustee does hereby accept all consideration conveyed by the Transferor pursuant to Section 2.02 and declares that the 1997-A Securitization Trustee shall hold such consideration in trust as herein set forth for the benefit of the Certificateholders, subject to the terms and provisions of this 1997-A Securitization Trust Agreement. ARTICLE THREE ALLOCATIONS AND DISTRIBUTIONS; RESERVE FUND; STATEMENTS TO CERTIFICATEHOLDERS SECTION 3.01. ALLOCATIONS AND DISTRIBUTIONS. (a) On each Determination Date, pursuant to Section 4.02(g) of the 1997-A SUBI Servicing Supplement, the Servicer shall calculate the amounts to be allocated or distributed to the holder of the 1997-A SUBI Certificate, the Class A-1 Distributable Amount, the Class A-2 Distributable Amount, the Class A-3 Distributable Amount, the Class B Distributable Amount, the Transferor Distributable Amount, and all other allocations or distributions to be made on the related Monthly Allocation Date and Certificate Payment Date. (b) The rights of the Class B Certificateholders to receive allocations and distributions of Available Interest allocable to the 1997-A SUBI, any Reserve Fund Withdrawal Amount and any Transferor Amounts shall be and hereby are subordinated to the rights of the Class A-1 Certificateholders, the Class A-2 Certificateholders and the Class A-3 Certificateholders to receive allocations and distributions of Available Interest allocable to the 1997-A SUBI to the extent provided in this subsection. On each Monthly Allocation Date, based on the Servicer's Certificate prepared by the Servicer, the 1997-A Securitization Trustee shall allocate or distribute from the 1997-A SUBI Collection Account and the 1997-A SUBI Certificateholders' Account, as applicable, the Available Interest in the following amounts and in the following order of priority to the following accounts and Persons: 4 (i) in the event of an Early Amortization Event involving an Insolvency Event, as a result of the 1997-A Securitization Trustee having received written instructions from holders of certificates evidencing voting interests of not less than 51% of the Class A Certificates (voting together as a single class) or 51% of the Class A Certificates and Class B Certificates (voting together as a single class) to sell the property of the 1997-A Securitization Trust pursuant to Section 8.02(a), to the 1997-A Securitization Trustee, the Investor Percentage of Capped 1997-A Securitization Trust Administrative Expenses; (ii) to the 1997-A SUBI Certificateholders' Account until there has been deposited therein pursuant to this clause (ii), the Class A-1 Interest Distributable Amount together with any Class A-1 Certificate Principal Loss Interest Amount and any unpaid Class A-1 Interest Carryover Shortfall, the Class A-2 Interest Distributable Amount together with any Class A-2 Certificate Principal Loss Interest Amount and any Class A-2 Interest Carryover Shortfall and the Class A-3 Interest Distributable Amount together with any Class A-3 Certificate Principal Loss Interest Amount and any Class A-3 Interest Carryover Shortfall; (iii) to the 1997-A SUBI Certificateholders' Account until there has been deposited therein pursuant to this clause (iii), the Class B Interest Distributable Amount, together with any unpaid Class B Interest Carryover Shortfall; (iv) to the Servicer, the Investor Percentage of (a) the Servicing Fee and (b) any unpaid Servicing Fee in respect of any prior Collection Period; (v) to the Servicer, the Investor Percentage of the Capped Contingent and Excess Liability Premiums that have not yet been reimbursed to the Servicer; (vi) to the Titling Trustee, the Investor Percentage of Capped Titling Trust Administration Expenses; (vii) in circumstances other than those set forth in clause (i), to the 1997-A Securitization Trustee, the Investor Percentage of Capped 1997-A Securitization Trust Administrative Expenses for the preceding Collection Period; (viii) to the 1997-A SUBI Certificateholders' Account until there has been deposited therein pursuant to this clause (viii), the aggregate Loss Amount allocated to the Class A Certificates on such Monthly Allocation Date plus the aggregate amount of Certificate Principal Loss Amounts allocated to the Class A Certificates on any prior Monthly Allocation Dates that have not been previously reimbursed or deposited in the 1997-A SUBI Certificateholders' Account (whether from Available 5 Interest or from amounts applied pursuant to Section 3.01(e)); (ix) to the 1997-A SUBI Certificateholders' Account until there has been deposited therein pursuant to this clause (ix), (A) the amount, if any, of (x) accrued and unpaid interest to but excluding such Monthly Allocation Date at the Class B Rate on any Certificate Principal Loss Amounts previously allocated to the Class B Certificates and not yet reimbursed and then (y) the aggregate amount of Loss Amounts allocated to the Class B Certificateholders on such Monthly Allocation Date plus the aggregate amount of Certificate Principal Loss Amounts allocated to the Class B Certificates on any prior Monthly Allocation Date, in each case to the extent not previously reimbursed pursuant to this clause (ix) (whether from Available Interest or from amounts applied pursuant to Section 3.01(e)) and (B) the amount, if any, of Class B Available Principal applied to fund interest shortfalls, Loss Amounts or Certificate Principal Loss Amounts allocated to the Class A Certificates on any Monthly Allocation date and not previously deposited in the 1997-A SUBI Certificateholders' Account pursuant to this clause (ix) (whether from Available Interest or from amounts applied pursuant to Section 3.01(e)); (x) into the Reserve Fund until the amount on deposit therein equals the Specified Reserve Fund Balance; (xi) to the Titling Trustee, the Investor Percentage of Uncapped Administrative Expenses of the Titling Trust; (xii) to the 1997-A Securitization Trustee, the Investor Percentage of Uncapped Administrative Expenses of the 1997-A Securitization Trust and; (xiii) the balance, if any, shall constitute Excess Collections and shall be applied as set forth in subsection (c) below. Notwithstanding the foregoing, on any Monthly Allocation Date related to a Collection Period in the Revolving Period, the amounts set forth in clause (viii) above and the amounts applied to Class B Loss Amounts, Class B Certificate Principal Loss Amounts and Class B Certificate Principal Carryover Shortfalls in clause (ix) above shall not be deposited in the 1997-A SUBI Certificateholders' Account, but shall be treated as Principal Collections for purposes of Section 3.02 of the 1997-A SUBI Servicing Supplement and this Section 3.01. On each Certificate Payment Date in March and September, commencing in March 1998, or if a Monthly Payment Event has occurred, then on each Certificate Payment Date thereafter, the 1997-A Securitization Trustee shall distribute to the holders of Investor Certificates of each Class the amounts allocable to interest deposited in the 1997-A SUBI Certificateholders' Account for such Class pursuant to the preceding clauses of this Section 3.01(B) and in the following order of priority: (ii), (iii) and (ix); provided that if the amount deposited pursuant to any such clause in the 1997-A SUBI Certificateholders' Account is distributable to Class A 6 Certificateholders and the amount available pursuant to such clause is less than the full amount due to be distributed pursuant to such clause, then such available amount shall be distributed to the Class A-1 Certificateholders, the Class A-2 Certificateholders and the Class A-3 Certificateholders PRO RATA on the basis of the full amounts due them pursuant to such clause. (c) On each Monthly Allocation Date, based on the Servicer's Certificate prepared by the Servicer, the 1997-A Securitization Trustee shall distribute or allocate any Excess Collections as follows: (i) if the Monthly Allocation Date relates to a Collection Period in the Revolving Period, any remainder to the Transferor, and (ii) if the Monthly Allocation Date relates to a Collection Period in the Amortization Period, any remainder up to but not exceeding the Accelerated Principal Distribution Amount to the 1997-A SUBI Certificateholders' Account as additional principal. The balance of any remainder will then be paid to the Transferor. (d)(i) On each Monthly Allocation Date beginning with the Monthly Allocation Date related to the Collection Period in which the Amortization Period commences and ending on the Monthly Allocation Date that is the Certificate Payment Date on which the Certificate Balance of all Classes of Investor Certificates has been reduced to zero, based on the Servicer's Certificate prepared by the Servicer, the 1997-A Securitization Trustee shall withdraw from the 1997-A SUBI Collection Account and deposit in the 1997-A SUBI Certificateholders' Account an amount equal to the Investor Percentage of all Principal Collections collected or received in respect of the related Collection Period allocable to the 1997-A SUBI, less amounts applied in reimbursement of Advances, Nonrecoverable Advances or Maturity Advances. (ii) If a Monthly Payment Event has not occurred, the 1997-A Securitization Trustee, based on the Servicer's Certificate prepared by the Servicer, shall distribute to holders of the Investor Certificates of each Class on the Targeted Maturity Date for such Class of Investor Certificates the lesser of (x) the entire Class Certificate Balance of such Class of Investor Certificates and (y) the sum of the amount of Principal Collections and the Accelerated Principal Distribution Amount on deposit in the 1997-A SUBI Certificateholders' Account and the Maturity Advance actually made by the Servicer in respect of such Class of Investor Certificates pursuant to Section 4.05 of the 1997-A SUBI Servicing Supplement. 7 (iii) If on the Targeted Maturity Date for any Class of Investor Certificates the entire Class Certificate Balance of such Class of Investor Certificates is not distributed, then the 1997-A Securitization Trustee shall, based on the Servicer's Certificate, distribute to the holders of such Class of Investor Certificates on each following Monthly Allocation Date, until the Class Certificate Balance of such Class of Investor Certificates has been reduced to zero, (I) the lesser of (x) the Class Certificate Balance of such Class of Investor Certificates and (y) the amount of Principal Collections, the Accelerated Principal Distribution Amount and Maturity Advance on deposit in the 1997-A SUBI Certificateholders' Account on such Monthly Allocation Date and (II) the amount of interest deposited into the 1997-A SUBI Certificateholders' Account and allocated to such Class of Investor Certificates pursuant to Section 3.01(b) in respect of such Monthly Allocation Date. If at any one time the preceding sentence is applicable to more than one Class of Investor Certificates, then the application of Principal Collections, the Accelerated Principal Distribution Amount and Maturity Advance provided for in such sentence shall be made to the Class of Investor Certificates with the earliest Targeted Maturity Date until the Class Certificate Balance of such Class of Investor Certificates has been reduced to zero. (iv) If a Monthly Payment Event occurs in any month, then on the Monthly Allocation Date in each succeeding month the 1997-A Securitization Trustee shall, based on the Servicer's Certificate for such Monthly Allocation Date, allocate or distribute the sum of the Investor Percentage of Principal Collections and the Accelerated Principal Distribution Amount in the following order of priority: (1) to the Class A-1 Certificateholders until the Class A-1 Certificate Balance is reduced to zero; (2) to the Class A-2 Certificateholders until the Class A-2 Certificate Balance is reduced to zero; (3) to the Class A-3 Certificateholders until the Class A-3 Certificate Balance is reduced to zero; and (4) to the Class B Certificateholders until the Class B Certificate Balance is reduced to zero. (v) If a Monthly Payment Event occurs in any month, then on the Monthly Allocation Date in each succeeding month the 1997-A Securitization Trustee shall, based on the Servicer's Certificate for such Monthly Allocation Date, distribute the amount of interest deposited into the 1997-A SUBI Certificateholders' Account and allocated to each Class of Investor Certificates pursuant to Section 3.01(b) in respect of such Monthly Allocation Date; PROVIDED that if the amount of interest deposited pursuant to 8 Section 3.01(b) in the 1997-A SUBI Certificateholders' Account is distributable to Class A Certificateholders and the amount available for such interest pursuant to Section 3.01(b) is less than the full amount of interest due to be distributed pursuant to Section 3.01(b), then such available amount shall be distributed or allocated to the Class A-1 Certificateholders, the Class A-2 Certificateholders and the Class A-3 Certificateholders PRO RATA on the basis of the full amounts of interest due them pursuant to Section 3.01(b). (e) On each Monthly Allocation Date for which there is a Required Amount, based on the Servicer's Certificate prepared by the Servicer, the 1997-A Securitization Trustee shall apply the following amounts in the following order of priority to the payment of the unpaid components of the Required Amount to the extent necessary to pay such components: (i) the Reserve Fund Withdrawal Amount to the extent of any unpaid components in clauses (i) through (x) in the order of clauses (i) through (ix) in Section 3.01(b); (ii) to the extent of any remaining unpaid components of the Required Amount in clauses (i) through (x) of Section 3.01(b), first the Transferor Interest Distributable Amount and then the Transferor Principal Distributable Amount in the order of clauses (i) through (x) in Section 3.01(b); and (iii) to the extent of any remaining unpaid components of the Required Amount in clauses (ii) and (viii) of Section 3.01(B), the Class B Available Principal from the Investor Percentage of Principal Collections in the 1997-A SUBI Collection Account or the 1997-A SUBI Certificateholders' Account. Amounts applied pursuant to the preceding sentence on a Monthly Allocation Date in respect of the Revolving Period pursuant to clause (viii) of Section 3.01(B) and as Class B Loss Amounts, Class B Certificate Principal Loss Amounts and Class B Certificate Principal Shortfalls in clause (ix) of Section 3.01(B) shall be treated as Principal Collections and applied pursuant to Section 3.02 of the 1997-A SUBI Servicing Supplement. On such Monthly Allocation Date, after giving effect to all payments required to be made and all required deposits to or withdrawals from the Reserve Fund, amounts that otherwise would be payable to the Transferor in respect of the Transferor Distributable Amount (other than Transferor Amounts) will be deposited into the Reserve Fund until the amount on deposit therein equals the Specified Reserve Fund Balance, and any remaining amounts so payable to the Transferor will be distributed to the Transferor by the 1997-A Securitization Trustee as follows: (A) if such Monthly Allocation Date relates 9 to a Collection Period during the Revolving Period, the interest component of such remaining amounts will be paid in respect of the Transferor Interest Distributable Amount and (B) if such Monthly Allocation Date relates to a Collection Period during the Amortization Period, (l) the interest component of such remaining amounts will be paid in respect of the Transferor Interest Distributable Amount and (2) if and to the extent that the Transferor Interest will be equal to or greater than zero, after all required distributions have been made on such Monthly Allocation Date, the principal component of such remaining amounts will be paid in respect of the Transferor Principal Distributable Amount. Any amounts that would otherwise be payable to the Transferor pursuant to the foregoing as the Transferor Principal Distributable Amount, but may not be so paid because the Transferor Interest would be less than or equal to zero, shall instead be allocated or distributed to the Investor Certificateholders pursuant to Section 3.01(d). (f) Subject to Section 7.01 respecting the final payment upon retirement of each Certificate, the 1997-A Securitization Trustee shall on each Certificate Payment Date distribute to each Certificateholder of any Class of record on the related Record Date by check mailed to such Certificateholder at the address of such Holder appearing in the Certificate Register (or, if DTC, its nominee or a Clearing Agency is the relevant Certificateholder, by wire transfer of immediately available funds or pursuant to other arrangements), the amount to be distributed to such Certificateholder pursuant to Section 3.01. (g) Amounts properly received by the Transferor pursuant to this 1997-A Securitization Trust Agreement shall be free of any claim of the 1997-A Securitization Trust, the 1997-A Securitization Trustee or the Investor Certificateholders and shall not be available to the 1997-A Securitization Trustee or the 1997-A Securitization Trust for the purpose of making deposits to the Reserve Fund or making payments to the Investor Certificateholders, nor shall the Transferor be required to refund any amount properly received by it. (h) The Investor Percentage of the Loss Amount with respect to any Monthly Allocation Date shall be allocated first to the Class B Certificates to the extent of the Class B Certificate Balance and then, if the Class B Certificate Balance has been reduced to zero, any remainder to the Class A Certificates of each Class PRO RATA in accordance with the respective Class Certificate Balances of such Classes of Class A Certificates. SECTION 3.02. 1997-A CERTIFICATE ACCOUNT; RESERVE FUND. (a) The 1997-A Securitization Trustee shall establish and maintain a separate trust account to be known as the "Series 1997-A SUBI Certificateholders' Account", which will include the money and other property deposited and held therein pursuant to Section 3.01 and this Section. The 1997-A SUBI Certificateholders' Account shall be an Eligible Account and initially shall be established with the 1997-A Securitization Trustee. If for any reason the 1997-A SUBI 10 Certificateholders' Account is no longer an Eligible Account, the 1997-A Securitization Trustee shall promptly cause the 1997-A SUBI Certificateholders' Account to be moved to another institution or otherwise changed so that the 1997-A SUBI Certificateholders' Account becomes an Eligible Account. Pursuant to Section ___ of the 1997-A Servicing Supplement, the Servicer shall direct the 1997-A Securitization Trustee to cause the funds in the 1997-A SUBI Certificateholders' Account to be invested in Permitted Investments, which are expected to be TMCC Demand Notes at the applicable Required Rates so long as the TMCC Demand Notes are Permitted Investments. Such Permitted Investments shall mature in such a manner that the amount required to be distributed on the next succeeding Certificate Payment Date will be available on the Deposit Date preceding such next succeeding Certificate Payment Date. To the extent that a Monthly Payment Event occurs, the 1997-A Securitization Trustee shall exercise the demand feature in the TMCC Demand Notes so as to have funds available on the next succeeding Certificate Payment Date. Earnings (net of investment losses) on the investment of funds in the 1997-A SUBI Certificateholders' Account shall be part of Available Interest. Such net earnings need not be withdrawn from the 1997-A SUBI Certificateholders' Account and redeposited as Available Interest, but may be retained in the 1997-A SUBI Certificateholders' Account and applied as provided in this 1997-A Securitization Trust Agreement. (b)(i) Pursuant to Section ___ of the 1997-A Servicing Supplement, the Servicer shall establish and maintain with the 1997-A Securitization Trustee a separate trust account to be known as the "Reserve Fund", which will include the money and other property deposited and held therein pursuant to Section 3.01(b) and this Section. Funds in the Reserve Fund shall be the property of the Transferor and not the property of the 1997-A Securitization Trust. The Transferor hereby grants to the 1997-A Securitization Trustee for the benefit of the Investor Certificateholders a security interest in all funds (including Permitted Investments) in the Reserve Fund (including the Reserve Fund Initial Deposit) and the proceeds thereof, and the 1997-A Securitization Trustee shall have all of the rights of a secured party under the UCC with respect thereto. The Reserve Fund shall be an Eligible Account and initially shall be established with the 1997-A Securitization Trustee. If for any reason the Reserve Fund is no longer an Eligible Account, the 1997-A Securitization Trustee shall promptly cause the Reserve Fund to be moved to another institution or otherwise changed so that the Reserve Fund becomes an Eligible Account. 11 (ii) All amounts held in the Reserve Fund shall be invested, as directed by the Servicer pursuant to Section ___ of the 1997-A Servicing Supplement, in Permitted Investments. Earnings on investment of funds in the Reserve Fund shall be paid to the Transferor on each Certificate Payment Date, and losses and any investment expenses shall be charged against the funds on deposit therein. (c) On or prior to the Closing Date, the Transferor shall deposit an amount equal to the Reserve Fund Initial Deposit into the Reserve Fund. Amounts on deposit in the Reserve Fund shall be supplemented from time to time by the deposit therein of Excess Collections otherwise distributable to the Transferor pursuant to Section 3.01(c), and amounts that otherwise would be payable to the Transferor pursuant to Section 3.01(e) but for the fact that the amount on deposit in the Reserve Fund is less than the Specified Reserve Fund Balance, to the extent described in this subparagraph (c). On each Monthly Allocation Date the amounts on deposit in the Reserve Fund shall be available for allocation and distribution as provided in Section 3.01; PROVIDED that the Class B Interest Reserve Amount shall only be applied to distributions of interest on the Class B Certificates and, on each Certificate Payment Date, if the amount on deposit in the Reserve Fund (after giving effect to all deposits thereto or withdrawals therefrom on such Monthly Allocation Date) is greater than the Specified Reserve Fund Balance, the 1997-A Securitization Trustee will distribute any such excess amount to the Transferor, whereupon such excess amount shall no longer be available to the 1997-A Securitization Trustee or the Investor Certificateholders. (d) Upon termination of the 1997-A Securitization Trust pursuant to Section 7.01, any amounts on deposit in the Reserve Fund shall be available for payment of any remaining amounts due to the Investor Certificateholders, and for payment of any remaining amounts due to the 1997-A Securitization Trustee, and after payment of such amounts due, shall be paid to the Transferor. SECTION 3.03. STATEMENTS TO CERTIFICATEHOLDERS. (a) On each Monthly Allocation Date, the 1997-A Securitization Trustee shall include with each allocation or distribution to each Certificateholder of record a statement, prepared by the Servicer, based on information in the Servicer's Certificate furnished pursuant to Section 5.01(b) of the 1997-A Servicing Supplement, setting forth for the related Collection Period and such Monthly Allocation Date the following information 12 as of the related Record Date or Deposit Date or such Monthly Allocation Date, as the case may be: (i) the Investor Percentage and Transferor Percentage in effect with respect to the related Collection Period; (ii) the Certificate Distribution Amount being allocated or distributed to each Class of Certificateholders; (iii) the amount of the Certificate Distribution Amount allocable to interest on and principal of each Class of Certificates, separately identifying any Maturity Advances; (iv) the amount of the Certificate Distribution Amount, if any, allocable to the Class A-1 Interest Carryover Shortfall, Class A-2 Interest Carryover Shortfall, Class A-3 Interest Carryover Shortfall and Class B Interest Carryover Shortfall; (v) the amount, if any, of the remaining unpaid Class A-1 Interest Carryover Shortfall, Class A-2 Interest Carryover Shortfall, Class A-3 Interest Carryover Shortfall and Class B Interest Carryover Shortfall after giving effect to the Certificate Distribution Amount; (vi) the Certificate Balance, the Class A-1 Certificate Balance, the Class A-2 Certificate Balance, the Class A-3 Certificate Balance, the Class B Certificate Balance, the Class A-1 Certificate Factor, the Class A-2 Certificate Factor, the Class A-3 Certificate Factor and the Class B Certificate Factor, in each case as of such Monthly Allocation Date and after giving effect to the allocation and/or distribution of the Certificate Distribution Amount; (vii) the aggregate amount, if any, of the reimbursement of Loss Amounts included in the allocation or distribution of the Certificate Distribution Amount and the amount thereof allocated to each of the Class A-1 Loss Amounts, the Class A-2 Loss Amounts, the Class A-3 Loss Amounts and the Class B Loss Amounts; (viii) the amount, if any, of the reimbursement of Class A-1 Certificate Principal Loss Amounts, Class A-2 Certificate Principal Loss Amounts, Class A-3 Certificate Principal Loss Amounts and Class B Certificate Principal Loss Amounts included in the Certificate Distribution Amount, in each case together with the amount of accrued interest thereon; 13 (ix) the amount, if any, of the aggregate of unreimbursed Class A-1 Certificate Principal Loss Amounts, Class A-2 Certificate Principal Loss Amounts, Class A-3 Certificate Principal Loss Amounts and Class B Certificate Principal Loss Amounts after giving effect to the allocation or distribution of the Certificate Distribution Amount; (x) the amount of any Class B Available Principal and unreimbursed Class B Available Principal, after giving effect to the allocation or distribution of the Certificate Distribution Amount; (xi) the Investor Percentage of the Servicing Fee allocable to the 1997-A SUBI for such Monthly Allocation Date and any unpaid previous such amounts with respect to prior Monthly Allocations Dates; (xii) the amount of any Required Amount included in the Certificate Distribution Amount and the balance on deposit in the Reserve Fund and the Class B Interest Reserve Amount on such Monthly Allocation Date, after giving effect to withdrawals therefrom and deposits thereto on such Monthly Allocation Date, the change in such balance from the immediately preceding Monthly Allocation Date and the Specified Reserve Fund Balance; (xiii) the amount of Transferor Amounts, if any, included in the Certificate Distribution Amount; (xiv) the Aggregate Net Investment Value as of the end of such Collection Period; (xv) the aggregate amount of Payments Ahead received by the Servicer and being held thereby or on deposit in the SUBI Collection Account in respect of future Collection Periods and the change in such amount from the immediately preceding Monthly Allocation Date; (xvi) the amount of Advances and Maturity Advances made, and the amount of unreimbursed Advances and Maturity Advances outstanding after giving effect to the allocation or distribution of the Certificate Distribution Amount; and (xvii) the weighted average Contract Rate of the Contracts in the 1997-A SUBI Portfolio for the immediately preceding Collection Period, the Charge-off Rate and Delinquency Percentage for each of the three immediately preceding Collection Periods and whether the Residual Value Test is satisfied. 14 Any Certificate Owner may obtain a copy of any such statement, of any Servicer's Certificate required pursuant to Section 5.01(b) of the 1997-A SUBI Servicing Supplement, any annual report of Independent Accountants required pursuant to Section 5.02 of the 1997-A SUBI Servicing Supplement, and of any annual Officer's Certificate required pursuant to Section 5.03 of the 1997-A SUBI Servicing Supplement, upon written request to the 1997-A Securitization Trustee at the Corporate Trust Office. (b) Within a reasonable period of time after the end of each calendar year, but not later than the latest date permitted by law, the 1997-A Securitization Trustee shall mail to each Person who at any time during such calendar year shall have been a Holder of an Investor Certificate, a statement or statements which in the aggregate contain the sum of the amounts set forth in clauses (iii), (ix) and (xi) in Section 3.03(a) for such calendar year or, in the event such Person shall have been a Holder of an Investor Certificate during a portion of such calendar year, for the applicable portion of such year, for the purposes of such Certificateholder's preparation of federal income tax returns. In addition, the Servicer shall furnish to the 1997-A Securitization Trustee for distribution to such Person at such time any other information reasonably necessary under applicable law for the preparation of such income tax returns. ARTICLE FOUR THE CERTIFICATES SECTION 4.01. THE CERTIFICATES. (a) The Class A-1 Certificates, the Class A-2 Certificates, the Class A-3 Certificates, the Class B Certificates and the Transferor Certificate shall be substantially in the form of Exhibits A-1, A-2, A-3, B and C, respectively, to this 1997-A Securitization Trust Agreement. The Class A-1 Certificates, the Class A-2 Certificates and the Class A-3 Certificates shall be issuable in minimum denominations of $1,000 and integral multiples in excess thereof and the Class B Certificates shall be issuable in minimum denominations of $250,000 and integral multiples of $1,000 in excess thereof (PROVIDED that no Class B Certificate may be issued or transferred in a denomination that would cause there to be, immediately after such issuance or transfer, one hundred (100) or more Class B Certificateholders); PROVIDED, HOWEVER, that one Class A-1 Certificate, one Class A-2 Certificate, one Class A-3 Certificate and one Class B Certificate may be issued in a denomination that includes any remaining portion of the Initial Class A-1 Certificate Balance, the Initial Class A-2 Certificate 15 Balance, the Initial Class A-3 Certificate Balance and the Initial Class B Certificate Balance, respectively (each, a "Residual Certificate"). A single Transferor Certificate shall be issued. The Certificates shall be executed on behalf of the Transferor by manual or facsimile signature of an officer of the Transferor. Certificates bearing the manual or facsimile signatures of individuals who were, at the time when such signatures were affixed, authorized to sign on behalf of the Transferor shall not be rendered invalid, notwithstanding that such individuals or any of them have ceased to be so authorized prior to the authentication and delivery of such Certificates or did not hold such offices at the date of such Certificates. All Certificates shall be dated the date of their authentication. (b) The Investor Certificates shall represent fractional undivided interests in the 1997-A Securitization Trust, including the right to receive the Investor Percentage of Interest Collections and Principal Collections and the other amounts at the times and in the amounts specified in this 1997-A Securitization Trust Agreement. The Transferor Certificate shall represent the interest in the 1997-A Securitization Trust not represented by the Investor Certificates. SECTION 4.02. AUTHENTICATION AND DELIVERY OF CERTIFICATES. In exchange for, and simultaneously with the sale, assignment and transfer to the 1997-A Securitization Trustee of the 1997-A SUBI, the 1997-A SUBI Certificate and the other assets of the 1997-A Securitization Trust, the 1997-A Securitization Trustee shall cause to be executed, authenticated and delivered to or upon the order of the Transferor Investor Certificates in authorized denominations equaling in the aggregate the sum of the Initial Class A-1 Certificate Balance, the Initial Class A-2 Certificate Balance, the Initial Class A-3 Certificate Balance and the Initial Class B Certificate Balance, and the Transferor Certificate, each duly authorized by the 1997-A Securitization Trustee, and evidencing the entire ownership of the 1997-A Securitization Trust. No Certificate shall be entitled to any benefit under this 1997-A Securitization Trust Agreement, or be valid for any purpose, unless there appears on such Certificate a certificate of authentication substantially in the form set forth in Exhibit A-1, A-2, A-3, B or C to this 1997-A Securitization Trust Agreement, as the case may be, executed by the 1997-A Securitization Trustee by manual signature, and such certificate upon any Certificate shall be conclusive evidence, and the only evidence, that such Certificate has been duly authenticated and delivered under this 1997-A Securitization Trust Agreement. 16 SECTION 4.03. REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES. (a) The Certificate Registrar shall maintain a Certificate Register in which, subject to such reasonable regulations as it may prescribe, the Certificate Register shall provide for the registration of Certificates and transfers and exchanges of Certificates as provided in this 1997-A Securitization Trust Agreement. The 1997-A Securitization Trustee is hereby initially appointed Certificate Registrar for the purpose of registering Certificates and transfers and exchanges of Certificates as provided in this 1997-A Securitization Trust Agreement. In the event that, subsequent to the Closing Date, the 1997-A Securitization Trustee notifies the Servicer that it is unable to act as Certificate Registrar, the Servicer shall appoint another bank or trust company, having an office or agency located in the Borough of Manhattan, The City of New York, agreeing to act in accordance with the provisions of this 1997-A Securitization Trust Agreement applicable to it, and otherwise acceptable to the 1997-A Securitization Trustee, to act as successor Certificate Registrar under this 1997-A Securitization Trust Agreement. The Transferor Certificate shall be owned by the Transferor and may not be transferred, as provided by Section 5.06. No transfer of the Class B Certificates shall be made unless such resale or transfer is made (i) pursuant to an effective Registration Statement under the Securities Act, (ii) in a transaction exempt from the registration requirements of the Securities Act and applicable state and foreign securities laws (iii) to the Transferor, or (iv) to a Person who the transferor of such Class B Certificate reasonably believes is a qualified institutional buyer within the meaning of Rule 144A under the Securities Act and that is aware that the resale or other transfer is being made in reliance on Rule 144A. In the event that a transfer is to be made in reliance upon an exemption from the Securities Act and such state and foreign securities laws, the 1997-A Securitization Trustee shall require that the transferee execute a representation letter acceptable to and in form and substance satisfactory to the 1997-A Securitization Trustee (PROVIDED that the form attached as Exhibit D shall be deemed acceptable if it is completed in a manner acceptable to the 1997-A Securitization Trustee) certifying to the 1997-A Securitization Trustee the facts surrounding such transfer, which representation letter shall not be an expense of the 1997-A Securitization Trustee, the Transferor or the Servicer. The Holder of a Class B Certificate desiring to effect such transfer shall, and does hereby agree to, indemnify the 1997-A 17 Securitization Trustee, the Transferor and the Servicer against any liability that may result if the transfer is not so exempt or is not made in accordance with the Securities Act and such state laws. Neither the Transferor, the Servicer nor the 1997-A Securitization Trustee is under any obligation to register the Class B Certificates under the Securities Act or any applicable state or foreign securities laws. Prospective purchasers of the Class B Certificates are hereby notified that the seller of any Class B Certificates may be relying on the exemption from the registration requirements of Section 5 of the Act provided by Rule 144A under the Act. The Class B Certificates or a beneficial interest therein may not be transferred unless the 1997-A Securitization Trustee has received (i) either (a) a certificate from the transferee to the effect that such transferee is not an employee benefit plan, trust or account subject to ERISA, or subject to Section 4975 of the Code, or a governmental plan defined in Section 3(32) of ERISA subject to any federal, state or local law which is, to a material extent, similar to the foregoing provisions of ERISA or the Code ("Similar Law") (each, a "Benefit Plan") and is not an entity including an insurance company separate account or an insurance company general account if the assets in any such accounts constitute "Plan Assets" for purposes of regulation Section 2510.3-101 Of ERISA, whose underlying assets include Benefit Plan assets by reason of a Benefit Plan's investment in the entity (such Benefit Plan or entity, a "Benefit Plan Investor") or (b) an Opinion of Counsel satisfactory to the 1997-A Securitization Trustee, the Transferor and the Servicer to the effect that the purchase or holding of such Class B Certificate will not constitute or result in the assets of the 1997-A Securitization Trust being deemed to be "Plan Assets" subject to the fiduciary responsibility provisions of ERISA or prohibited transactions provisions of Section 4975 of the Code or Similar Law, will not constitute or result in a prohibited transaction within the meaning of Section 406 or Section 407 of ERISA or Section 4975 of the Code or Similar Law, and will not subject the 1997-A Securitization Trustee, the Transferor or the Servicer to any obligation or liability (including obligations or liabilities under ERISA, Section 4975 of the Code or Similar Law) and (ii) a certificate to the effect that if the transferee is a partnership, grantor trust or S corporation for federal income tax purposes (a "Flow-Through Entity"), any Class B Certificates owned by such Flow-Through Entity will represent less than 50% of the value of all the assets owned by such Flow-Through Entity and no special allocation of income, gain, loss, deduction or credit from such Class B Certificates will be made among the beneficial owners of such Flow-Through Entity. Notwithstanding the foregoing restrictions, the 1997-A Securitization Trustee shall permit a transfer of Class B Certificates to a Benefit Plan if, 18 in the sole determination of the 1997-A Securitization Trustee, after giving effect to the proposed transfer to such Benefit Plan, Benefit Plans will not own 25% or more of the Class B Certificates (by Class Certificate Balance). The Transferor shall, whenever the 1997-A Securitization Trust is not subject to Section 13 or 15(d) of the Exchange Act, make available, upon request, to any holder of such Class B Certificates in connection with any sale thereof and any prospective purchaser of Class B Certificates from such holder the information specified in Rule 144A(d)(4) under the Securities Act. In addition, no resale or other transfer of the Class B Certificates or any interest therein shall be permitted unless immediately after giving effect to such resale or other transfer, there would be fewer than 100 Class B Certificateholders. The Class B Certificates, this 1997-A Securitization Trust Agreement and related documents may be amended or supplemented from time to time to modify restrictions on and procedures for resale and other transfer of such Class B Certificates to reflect any change in applicable law or regulation (or the interpretation thereof) or practices relating to the resale or transfer of restricted securities generally. (b) Upon surrender for registration of transfer of any Certificate at the Corporate Trust Office of the 1997-A Securitization Trustee in its capacity as Certificate Registrar, or at the office of the agent of the 1997-A Securitization Trustee as Certificate Registrar, who shall initially be First Trust of New York, National Association, 100 Wall Street, 20th Floor, New York, New York 10005, in the Borough of Manhattan, the City of New York, or the appropriate office of any successor Certificate Registrar, the 1997-A Securitization Trustee shall execute, authenticate and deliver, in the name of the designated transferee or transferees, one or more new Certificates of the same Class in authorized denominations of a like aggregate principal amount. (c) At the option of a Certificateholder, Certificates may be exchanged for other Certificates of the same Class of authorized denominations of a like aggregate Percentage Interest, upon surrender of the Certificates to be exchanged at any such office or agency. Whenever any Certificates are so surrendered for exchange, the 1997-A Securitization Trustee on behalf of the 1997-A Securitization Trust shall execute, authenticate and deliver the Certificates that the Certificateholder making the exchange is entitled to receive. Every Certificate presented or surrendered for registration of transfer or exchange shall be 19 accompanied by a written instrument of transfer in form satisfactory to the 1997-A Securitization Trustee and the Certificate Registrar duly executed by the Holder thereof or his attorney duly authorized in writing. (d) No service charge shall be imposed on any Holder for any registration of transfer or exchange of Certificates, but the 1997-A Securitization Trustee may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer or exchange of Certificates. (e) All Certificates surrendered for registration of transfer and exchange shall be cancelled and subsequently destroyed by the 1997-A Securitization Trustee. (f) No Class B Certificate shall be listed for trading on any recognized securities exchange. SECTION 4.04. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES. If (i) any mutilated Certificate is surrendered to the Certificate Registrar, or the Certificate Registrar receives evidence to its satisfaction of the destruction, loss or theft of any Certificate, and (ii) there is delivered to the Certificate Registrar and the 1997-A Securitization Trustee such security or indemnity as may be required by them to save each of them and the 1997-A Securitization Trust harmless, then, in the absence of notice that such Certificate has been acquired by a bona fide purchaser, the 1997-A Securitization Trustee on behalf of the 1997-A Securitization Trust shall execute and the 1997-A Securitization Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of like tenor and Percentage Interest. In connection with the issuance of any new Certificate under this Section, the 1997-A Securitization Trustee may require the payment by the Holder of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto. Any duplicate Certificate issued pursuant to this Section shall constitute complete and indefeasible evidence of ownership in the 1997-A Securitization Trust, as if originally issued, whether or not the lost, stolen or destroyed Certificate shall be found at any time, and any such lost, stolen or destroyed Certificate shall, upon issuance of any such duplicate Certificate, be null, void and of no effect. 20 SECTION 4.05. PERSONS DEEMED OWNERS. Prior to due presentation of a Certificate for registration of transfer, the 1997-A Securitization Trustee, the Certificate Registrar and any of their respective agents may treat the Person in whose name any Certificate is registered as the owner of such Certificate for the purpose of receiving distributions pursuant to Section 3.01 and for all other purposes whatsoever, and neither the 1997-A Securitization Trustee, the Certificate Registrar nor any of their respective agents shall be affected by any notice to the contrary. SECTION 4.06. ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND ADDRESSES. The Certificate Registrar shall furnish or cause to be furnished to the Servicer, within 15 days after receipt by the Certificate Registrar of a written request therefor from the Servicer, a list, in such form as the Servicer may reasonably require, of the names and addresses of the Certificateholders as of the most recent Record Date. If three or more Certificateholders or holders of Investor Certificates evidencing not less than 25% of the aggregate Percentage Interests of any Class (hereinafter referred to as "Applicants") apply in writing to the 1997-A Securitization Trustee, and such application states that the Applicants desire to communicate with other Investor Certificateholders with respect to their rights under this 1997-A Securitization Trust Agreement or under the Certificates and such application is accompanied by a copy of the communication that such Applicants propose to transmit, then the 1997-A Securitization Trustee shall, within five Business Days after the receipt of such application, afford such Applicants access, during normal business hours, to the current list of Investor Certificateholders. Every Certificateholder, by receiving and holding a Certificate, agrees with the Servicer and the 1997-A Securitization Trustee that neither the Servicer nor the 1997-A Securitization Trustee shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Certificateholders under the Agreement, regardless of the source from which such information was derived. SECTION 4.07. MAINTENANCE OF OFFICE OR AGENCY. The 1997-A Securitization Trustee shall maintain in the Borough of Manhattan, The City of New York, an office or offices or agency or agencies where Certificates may be surrendered for registration of transfer or exchange. The initial such agency shall be c/o [First Trust of New York, National Association, 100 Wall Street, 20th Floor, New York, New York 10005]; PROVIDED that 21 a copy of any such Certificate surrendered shall be sent to the 1997-A Securitization Trustee at the Corporate Trust Office. The 1997-A Securitization Trustee shall give prompt written notice to the Transferor, the Servicer and the Certificateholders of any change in the location of any such office or agency. Notices and demands to or upon the 1997-A Securitization Trustee in respect of the Certificates and this 1997-A Securitization Trust Agreement shall not be sent to such office or agency, but shall be sent as set forth in Section 10.02. SECTION 4.08. TEMPORARY CERTIFICATES. Pending the preparation of definitive Class A-1 Certificates, Class A-2 Certificates or Class A-3 Certificates, the 1997-A Securitization Trustee, on behalf of the 1997-A Securitization Trust, may execute, authenticate and deliver, temporary Class A-1 Certificates, Class A-2 Certificates or Class A-3 Certificates that are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Class A-1 Certificates, Class A-2 Certificates or Class A-3 Certificates in lieu of which they are issued. If temporary Class A-1 Certificates, Class A-2 Certificates or Class A-3 Certificates are issued, the Transferor will cause definitive Class A-1 Certificates, Class A-2 Certificates or Class A-3 Certificates to be prepared without unreasonable delay. After the preparation of definitive Class A-1 Certificates, Class A-2 Certificates or Class A-3 Certificates, the temporary Class A-1 Certificates, Class A-2 Certificates or Class A-3 Certificates shall be exchangeable for definitive Class A-1 Certificates, Class A-2 Certificates or Class A-3 Certificates upon surrender of the temporary Class A-1 Certificates, Class A-2 Certificates, or Class A-3 Certificates at the office or agency to be maintained as provided in Section 4.07, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Class A Certificates, the 1997-A Securitization Trustee shall execute and authenticate and deliver in exchange therefor a like principal amount of definitive Class A Certificates in authorized denominations. Until so exchanged the temporary Class A Certificates shall in all respects be entitled to the same benefits under the Agreement as definitive Class A Certificates. SECTION 4.09. BOOK-ENTRY CERTIFICATES. The Class A-1 Certificates, the Class A-2 Certificates and the Class A-3 Certificates, upon original issuance will be issued in the form of one or more typewritten certificates representing the Book-Entry Certificates, to be delivered to DTC, the initial Clearing Agency, by, or on behalf of, the Transferor. The 22 certificate or certificates delivered to DTC evidencing such Class A-1 Certificates, Class A-2 Certificates and Class A-3 Certificates shall initially be registered on the Certificate Register in the name of Cede & Co., the nominee of the initial Clearing Agency, and no Certificate Owner will receive a definitive certificate representing such Certificate Owner's interest in the Class A-1 Certificates, the Class A-2 Certificates or the Class A-3 Certificates, except as provided in Section 4.11. Unless otherwise specified in this 1997-A Securitization Trust Agreement, unless and until definitive, fully registered Class A-1 Certificates, Class A-2 Certificates, and Class A-3 Certificates (the "Definitive Certificates") have been issued to Certificate Owners pursuant to Section 4.11: (i) the provisions of this Section shall be in full force and effect; (ii) the Transferor, the Servicer, the Certificate Registrar and the 1997-A Securitization Trustee may deal with the Clearing Agency for all purposes (including the making of distributions on the Class A-1 Certificates, the Class A-2 Certificates and the Class A-3 Certificates) as the authorized representative of the Certificate Owners; (iii) to the extent that the provisions of this Section conflict with any other provisions of the Agreement, the provisions of this Section shall control; (iv) the rights of Certificate Owners shall be exercised only through (or through procedures established by) the Clearing Agency and shall be limited to those established by law and agreements between such Certificate Owners and the Clearing Agency and/or the Clearing Agency Participants. Unless and until Definitive Certificates are issued pursuant to Section 4.11, the initial Clearing Agency will make book-entry transfers among the Clearing Agency Participants and receive and transmit distributions of principal and interest on the Class A-1 Certificates, the Class A-2 Certificates and the Class A-3 Certificates to such Clearing Agency Participants; and (v) whenever this 1997-A Securitization Trust Agreement requires or permits actions to be taken based upon instructions or directions of Holders of Class A-1 Certificates, Class A-2 Certificates or Class A-3 Certificates evidencing a specified aggregate Percentage Interest thereof the Clearing Agency shall be deemed to represent such percentage (if and to the extent that it will act on behalf of Certificate Owners and/or Clearing Agency Participants) only to the extent that it has received 23 instructions to such effect from Certificate Owners and/or Clearing Agency Participants owning or representing, respectively, such required percentages of the beneficial interest in Class A-1 Certificates, Class A-2 Certificates or Class A-3 Certificates and has delivered such instructions to the 1997-A Securitization Trustee. SECTION 4.10. NOTICES. Whenever notice or other communication to the Class A-1 Certificateholders, Class A-2 Certificateholders or the Class A-3 Certificateholders is required under this 1997-A Securitization Trust Agreement, other than to the Holder of the Residual Certificate with respect to the Class A-1 Certificates, the Class A-2 Certificates or the Class A-3 Certificates, respectively, unless and until Definitive Certificates shall have been issued to Certificate Owners pursuant to Section 4.11, the 1997-A Securitization Trustee and the Servicer shall give all such notices and communications specified herein to be given to Holders of the Class A-1 Certificates, the Class A-2 Certificates or the Class A-3 Certificates to the Clearing Agency. Whenever notice or other communication to the holders of Definitive Certificates is required under this 1997-A Securitization Trust Agreement, the 1997-A Securitization Trustee and the Servicer shall give all such notices and communications specified herein to the Holders of such Definitive Certificates. SECTION 4.11. DEFINITIVE CERTIFICATES. If (i)(A) the Transferor advises the 1997-A Securitization Trustee in writing that the Clearing Agency is no longer willing or able to properly discharge its responsibilities as described in the letter of representations among the Transferor, the 1997-A Securitization Trustee and the Clearing Agency and (B) the 1997-A Securitization Trustee or the Transferor is unable to locate a qualified successor, (ii) the Transferor at its option, advises the 1997-A Securitization Trustee in writing that it elects to terminate the book-entry system through the Clearing Agency, or (iii) after the occurrence of an Early Amortization Event, Certificate Owners representing beneficial interests in the Class A-1 Certificates, the Class A-2 Certificates and the Class A-3 Certificates (voting together as a single class) aggregating not less than 51% of the Percentage Interests advise the 1997-A Securitization Trustee and the Clearing Agency through the Clearing Agency Participants in writing that the continuation of a book-entry system through the Clearing Agency is no longer in the best interests of the Certificate Owners, then the 1997-A Securitization Trustee shall notify all Certificate Owners, through the Clearing Agency, of the occurrence of such event and 24 of the availability of Definitive Certificates to Certificate Owners requesting the same. Upon surrender to the 1997-A Securitization Trustee of the Class A-1 Certificates, the Class A-2 Certificates or the Class A-3 Certificates by the Clearing Agency, accompanied by registration instructions from the Clearing Agency for registration, the 1997-A Securitization Trustee shall issue the Definitive Certificates and deliver such Definitive Certificates in accordance with the instructions of the Clearing Agency. None of the Transferor, the Certificate Registrar or the 1997-A Securitization Trustee shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be protected in relying on, such instructions. Upon the issuance of Definitive Certificates, the 1997-A Securitization Trustee shall recognize the Holders of the Definitive Certificates as Class A-1 Certificateholders, Class A-2 Certificateholders or Class A-3 Certificateholders hereunder, as applicable. The 1997-A Securitization Trustee shall not be liable if the 1997-A Securitization Trustee or the Transferor is unable to locate a qualified successor Clearing Agency. The Class B Certificates shall be Definitive Certificates in minimum denominations of $250,000 and in integral multiples of $1,000 in excess thereof. SECTION 4.12. TAX TREATMENT. (a) It is the intention of the Transferor and the Investor Certificateholders that the Investor Certificates will be indebtedness of the Transferor for federal, state and local income and franchise tax purposes and for purposes of any other tax imposed on or measured by income. The Transferor, the 1997-A Securitization Trustee and each Holder of an Investor Certificate (or Certificate Owner) by acceptance of its Investor Certificate (or, in the case of a Certificate Owner, by virtue of such Certificate Owner's acquisition of a beneficial interest therein) agree to treat the Investor Certificates (or beneficial interest therein), for purposes of federal, state and local income or franchise taxes and any other tax imposed on or measured by income, as secured indebtedness of the Transferor and to report the transactions contemplated by this 1997-A Securitization Trust Agreement on all applicable tax returns in a manner consistent with such treatment. Each Holder of an Investor Certificate agrees that it will cause any Certificate Owner acquiring an interest in a Certificate through it to comply with this 1997-A Securitization Trust Agreement as to treatment as secured indebtedness for federal, state and local income and franchise tax purposes and for purposes of any other tax imposed on or measured by income. Each Holder of an Investor Certificate also agrees that it will not be entitled to any of the tax benefits 25 related to the 1997-A Contracts and 1997-A Leased Vehicles, including any of the depreciation deductions resulting therefrom. (b) In the event that, notwithstanding the statement of intentions and undertakings set forth in Section 4.12(a), it is finally determined that the Class A-1 Certificates, the Class A-2 Certificates, the Class A-3 Certificates and/or the Class B Certificates do not evidence indebtedness of the Transferor for all income and franchise tax purposes, but rather represent an equity interest in the assets of the 1997-A Securitization Trust, then the Transferor, the 1997-A Securitization Trustee, each Holder of such Investor Certificate and each Certificate Owner thereof, by virtue of acquiring a beneficial interest therein, all agree (i) to treat such Investor Certificates, together with the Transferor Certificate, as representing an interest in a partnership for all tax purposes, (ii) to treat all payments in respect of such Investor Certificates (to the extent not a return of capital) as a "guaranteed payment" thereon made pursuant to Section 707(c) of the Code, and (iii) to allocate all other items of income, gain, deduction, loss or credit with respect to the assets and operations of the 1997-A Securitization Trust to the Transferor. SECTION 4.13. ERISA MATTERS. The Transferor shall cause the Class A-1 Certificates, the Class A-2 Certificates and the Class A-3 Certificates to be registered under Section 12(g) of the Exchange Act within 120 days after December 31, 1997 and, with respect to each such Class of Class A Certificates, maintain such registration until the Class Certificate Balance of such Class of Class A Certificates is reduced to zero. The Transfer has applied to the Department of Labor for an administrative exemption (the "Requested Exemption") from certain of the prohibited transaction rules of ERISA in respect of the Class A Certificates. Notwithstanding the foregoing, if the Requested Exemption is granted by the Department of Labor substantially in the form for which the application for the Requested Exemption was made, the Transferor, at its option, may deregister the Class A Certificates under the Exchange Act or, if such registration has not been effected, not register the Class A Certificates under the Exchange Act. 26 ARTICLE FIVE THE TRANSFEROR SECTION 5.01. REPRESENTATIONS OF TRANSFEROR. The Transferor hereby makes the following representations on which the 1997-A Securitization Trustee relies in accepting the 1997-A SUBI and 1997-A SUBI Certificate in trust and authenticating the Certificates. The representations speak as of the execution and delivery of this 1997-A Securitization Trust Agreement, but shall survive the sale, transfer and assignment of the 1997-A SUBI and 1997-A SUBI Certificate to the 1997-A Securitization Trustee. (a) ORGANIZATION AND GOOD STANDING. The Transferor is a corporation duly incorporated and validly existing and in good standing under the laws of the State of California, with power and authority to own its properties and to conduct its business as such properties shall be currently owned and such business is presently conducted, and has power, authority and legal right to acquire, own and sell the 1997-A SUBI and 1997-A SUBI Certificate. (b) DUE REGISTRATION. The Transferor is duly registered as a foreign corporation in good standing, and has obtained all necessary licenses and approvals in all jurisdictions in which the ownership or lease of property or the conduct of its business requires such qualifications, except where the failure to so qualify or to have obtained such licenses and approvals would not have a material adverse effect on the earnings, business affairs or business prospects of the Transferor. (c) POWER AND AUTHORITY. The Transferor has the power and authority to execute and deliver this 1997-A Securitization Trust Agreement and to carry out its terms, the Transferor has full power and authority to sell and assign the property to be sold and assigned to and deposited with the 1997-A Securitization Trustee as part of the 1997-A Securitization Trust and has duly authorized such sale and assignment to the 1997-A Securitization Trustee by all necessary action; and the execution, delivery and performance of this 1997-A Securitization Trust Agreement have been duly authorized by the Transferor by all necessary corporate action. (d) VALID SALE; BINDING OBLIGATIONS. This 1997-A Securitization Trust Agreement evidences a valid sale, transfer and assignment of the 1997-A SUBI and 1997-A SUBI Certificate, 27 and constitutes a legal, valid and binding obligation of the Transferor enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors' rights in general and by general principles of equity, regardless of whether such enforceability shall be considered in a proceeding in equity or at law. (e) NO VIOLATION. The consummation of the transactions contemplated by this 1997-A Securitization Trust Agreement and the fulfillment of the terms of this 1997-A Securitization Trust Agreement do not conflict with, result in any breach of any of the terms and provisions of, nor constitute (with or without notice or lapse of time) a default under, the certificate of incorporation of the Transferor, or conflict with or violate any of the material terms or provisions of, or constitute (with or without notice or lapse of time) a default under, any indenture, agreement or other instrument to which the Transferor is a party or by which it is bound; nor result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such indenture, agreement or other instrument (other than this 1997-A Securitization Trust Agreement); nor violate any law or, to the best of the Transferor's knowledge, any order, rule or regulation applicable to the Transferor of any court or of any federal or state regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Transferor or its properties; which breach, default, conflict, lien or violation would have a material adverse effect on the earnings, business affairs or business prospects of the Transferor. (f) NO PROCEEDINGS. There are no proceedings or investigations pending, or to the Transferor's best knowledge, threatened, before any court, regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Transferor or its properties: (i) asserting the invalidity of this 1997-A Securitization Trust Agreement or the Certificates, (ii) seeking to prevent the issuance of the Certificates or the consummation of any of the transactions contemplated by this 1997-A Securitization Trust Agreement, (iii) seeking any determination or ruling that might materially and adversely affect the performance by the Transferor of its obligations under, or the validity or enforceability of, this 1997-A Securitization Trust Agreement or the Certificates or (iv) relating to the Transferor and which might adversely affect the federal, Delaware or Illinois income tax attributes of the Certificates. 28 (g) TITLE TO 1997-A SUBI CERTIFICATE. The Transferor has good title to, and is the sole legal and beneficial owner of, the 1997-A SUBI Certificate, free and clear of all Liens. (h) CONSENTS AND APPROVALS. The Transferor has obtained or made all necessary licenses, consents, approvals, waivers and notifications of creditors, lessors and other nongovernmental Persons, in each case in connection with the execution and delivery of this 1997-A Securitization Trust Agreement and the consummation of all the transactions herein contemplated, and the Transferor is not required to obtain the consent of any other party or the consent, license, approval, or authorization from, or registration or declaration with, any governmental authority, bureau or agency in connection with the execution, delivery, performance, validity or enforceability of this 1997-A Securitization Trust Agreement. SECTION 5.02. LIABILITY OF TRANSFEROR; INDEMNITIES. (a) The Transferor shall be liable in accordance with this 1997-A Securitization Trust Agreement only to the extent of the obligations in this 1997-A Securitization Trust Agreement specifically undertaken by the Transferor in such capacity under this 1997-A Securitization Trust Agreement and shall have no other obligations or liabilities hereunder. (b) The Transferor agrees to be, and shall be, liable (as if the 1997-A Securitization Trust were a limited partnership under the California Revised Limited Partnership Act in which the Transferor is the general partner) without limitation for all liabilities (including taxes), contracts, expenses, indemnity payments and other charges of the 1997-A Securitization Trust, other than distributions to Certificateholders. SECTION 5.03. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS OF, TRANSFEROR; CERTAIN LIMITATIONS. (a) Any Person (i) into which the Transferor may be merged or consolidated, (ii) which may result from any merger, conversion or consolidation to which the Transferor shall be a party or (ii) which may succeed to all or substantially all of the business of the Transferor, shall be the successor to the Transferor under this 1997-A Securitization Trust Agreement without the execution or filing of any document or any further act on the part of any of the parties to this 1997-A Securitization Trust Agreement, except that if the Transferor in any of the foregoing cases is not the surviving entity, then the surviving entity shall execute an agreement of assumption to 29 perform every obligation of the Transferor either generally or specifically as provided herein. The Transferor shall provide notice of any merger, consolidation or succession pursuant to this Section to each Rating Agency and shall receive from each Rating Agency a letter to the effect that such merger, consolidation, or succession will not result in a qualification, downgrading or withdrawal of the then-current rating assigned to any Rated Certificates. (b)(i) Subject to subparagraph (ii) below, the purpose of the Transferor shall be to engage in any lawful activity for which a corporation may be organized under the laws of the State of California other than the banking business, the trust company business or the practice of a profession that is permitted to be incorporated under the California Corporations Code. (ii) Notwithstanding subparagraph (b)(i) above, the purpose of the Transferor shall be limited to the following purposes and activities incidental to and necessary or convenient to accomplish the following purposes: (A) to acquire from time to time from TMCC all right, title and interest in and to the SUBI Certificates evidencing units of beneficial interest in the SUBI Assets; (B) to acquire, own, hold, service, sell, assign, pledge and otherwise deal with the SUBI Certificates and SUBI Assets, related insurance policies, related agreements with TMCC and any proceeds or further rights associated with any of the foregoing; (C) to sell, assign, transfer, convey and/or pledge all or any part of each such SUBI Certificate to one or more trusts or other persons or legal entities pursuant to one or more securitization trust agreements, indentures or similar agreements (the "Agreements") to be entered into by and among TMCC, as servicer, the Transferor and each other pledgee or transferee named therein (the "transferees"); (D) to sell any series or class of asset-backed certificates or other securities issued by or evidencing interests in the transferees or obligations of the transferees or the Transferor under the related Agreements, including the Investor Certificates ("Securities"); (E) to hold and enjoy all of the rights and privileges of any Securities so issued under the related Agreements; 30 (F) to perform its obligations under the Agreements; and (G) to engage in any activity and to exercise any powers permitted to corporations under the laws of the State of California that are related or incidental to the foregoing and necessary, convenient and advisable to accomplish the foregoing. (c) Notwithstanding any other provision of this Section and any provision of law, the Transferor shall not do any of the following: (i) engage in any business or activity other than as set forth in clause (b) above; (ii) without the affirmative vote of a majority of the members of the Board of Directors of the Transferor (which must include the affirmative vote of all Independent Directors of the Transferor, as required by certificate of incorporation of the Transferor), (A) dissolve or liquidate, in whole or in part, or institute proceedings to be adjudicated bankrupt or insolvent, (B) consent to the institution of bankruptcy or insolvency proceedings against it, (C) file a petition seeking or consent to reorganization or relief under any applicable federal or state law relating to bankruptcy, (D) consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Transferor or a substantial part of its property, (E) make a general assignment for the benefit of creditors, (F) admit in writing its inability to pay its debts generally as they become due, or (G) take any corporate action in furtherance of the actions set forth in clauses (A) through (F) above; (iii) without the unanimous affirmative vote of the members of the Board of Directors of the Transferor, merge or consolidate with any other corporation, company or entity or sell all or substantially all of its assets or acquire all or substantially all of the assets or capital stock or other ownership interest of any other corporation, company or entity; PROVIDED that such restrictions shall not limit the acquisition of SUBI Certificates from TMCC or the ability of the Transferor to sell, assign, transfer, convey and/or pledge all or any part of any SUBI Certificate in accordance with Section 5.03(b)(ii) hereof, on which there shall be no such restriction; or (iv) so long as any outstanding debt of the Transferor or Securities are rated by any nationally recognized 31 statistical rating agency, issue unsecuritized notes or otherwise borrow money unless (A) the Transferor has made a written request to the related nationally recognized rating agency to issue unsecured notes or incur borrowings and such notes or borrowings are rated by the related nationally recognized rating agency the same as or higher than the rating afforded any outstanding rated debt or Securities, or (B) such notes or borrowings (1) are fully subordinated (and which shall provide for payment only after payment in respect of all outstanding rated debt and/or Securities) or are nonrecourse against any assets of the Transferor other than the assets pledged to secure such notes or borrowings, (2) do not constitute a claim against the Transferor in the event that such assets are insufficient to pay such notes or borrowings, and (3) where such notes or borrowings are secured by the rated debt or Securities, are fully subordinated (and which shall provide for payment only after payment in respect of all outstanding rated debt and/or Securities) to such rated debt or Securities. SECTION 5.04. LIMITATION ON LIABILITY OF TRANSFEROR AND OTHERS. The Transferor and any director or officer or employee or agent of the Transferor may rely in good faith on the advice of counsel or on any document of any kind, prima facie properly executed and submitted by any Person respecting any matters arising under this 1997-A Securitization Trust Agreement. SECTION 5.05. TRANSFEROR MAY OWN INVESTOR CERTIFICATES. Each of the Transferor and any Person controlling, controlled by or under common control with the Transferor may in its individual or any other capacity become the owner or pledgee of Investor Certificates with the same rights as it would have if it were not the Transferor or such an affiliate thereof except as otherwise specifically provided in the definition of the term "Certificateholder." Investor Certificates so owned by or pledged to the Transferor or such controlling or commonly controlled Person shall have an equal and proportionate benefit under the provisions of this 1997-A Securitization Trust Agreement, without preference, priority or distinction as among all of the Investor Certificates. The Transferor will give notice to each Rating Agency if any such controlling or commonly controlled Person shall at any time become the owner or pledgee of Investor Certificates. 32 SECTION 5.06. NO TRANSFER. The Transferor on behalf of itself and its successors and assigns hereby covenants that it will not transfer, pledge or assign to any Person the Transferor Certificate or any part of its right to receive any Excess Collections pursuant to Section 3.01(c). SECTION 5.07. TAX MATTERS PARTNER. In the event that the 1997-A Securitization Trust is recharacterized as a partnership for tax purposes, the Transferor shall act as "Tax Matters Partner" (i) to represent the Transferor and the Class B Certificateholders, in their capacities as partners in a partnership for tax purposes, before taxing authorities or courts of competent jurisdiction in any tax matters affecting the 1997-A Securitization Trust as a tax partnership; and (ii) to execute any agreements or other documents relating to or affecting such tax matters, including agreements or other documents binding the Class B Certificateholders with respect to such tax matters or otherwise affecting their rights, including, but not limited to, extending the statute of limitations for assessment of tax deficiencies against the Class B Certificateholders and adjusting the 1997-A Securitization Trust's federal, state or local tax returns. The Transferor shall not be liable to the 1997-A Securitization Trust or to any Certificateholder for any action taken or omitted by the Transferor with regard to such tax matters or otherwise as a result of its holding the position of Tax Matters Partner. ARTICLE SIX THE 1997-A SECURITIZATION TRUSTEE SECTION 6.01. DUTIES OF TRUSTEE. (a) The 1997-A Securitization Trustee, both prior to and after the occurrence of an Event of Servicing Termination under the 1997-A SUBI Servicing Supplement, undertakes to perform such duties and only such duties as are specifically set forth in this 1997-A Securitization Trust Agreement. (b) The 1997-A Securitization Trustee, upon receipt of all resolutions, certificates, statements, opinions, reports, documents, orders or other instruments furnished to the 1997-A Securitization Trustee that shall be specifically required to be furnished pursuant to any provision of this 1997-A Securitization Trust Agreement, shall examine them to determine whether they 33 conform on their face to the requirements of this 1997-A Securitization Trust Agreement. (c) No provision of this 1997-A Securitization Trust Agreement shall be construed to relieve the 1997-A Securitization Trustee from liability for its own negligent action, its own negligent failure to act, its own bad faith or its own willful misfeasance; PROVIDED, HOWEVER, that (i) the duties and obligations of the 1997-A Securitization Trustee shall be determined solely by the express provisions of this 1997-A Securitization Trust Agreement, the 1997-A Securitization Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this 1997-A Securitization Trust Agreement, no implied covenants or obligations shall be read into this 1997-A Securitization Trust Agreement against the 1997-A Securitization Trustee, the permissive right of the 1997-A Securitization Trustee to do things enumerated in this 1997-A Securitization Trust Agreement shall not be construed as a duty and, in the absence of bad faith on the part of the 1997-A Securitization Trustee, the 1997-A Securitization Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the 1997-A Securitization Trustee and conforming on their face to the requirements of this 1997-A Securitization Trust Agreement; (ii) the 1997-A Securitization Trustee shall not be personally liable for an error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the 1997-A Securitization Trustee was negligent in performing its duties in accordance with the terms of this 1997-A Securitization Trust Agreement; and (iii) the 1997-A Securitization Trustee shall not be personally liable with respect to any action taken, suffered or omitted to be taken in good faith in accordance with the direction of the Holders of Investor Certificates evidencing not less than 51% of the aggregate Percentage Interest relating to the time, method and place of conducting any proceeding for any remedy available to the 1997-A Securitization Trustee, or exercising any trust or power conferred upon the 1997-A Securitization Trustee, under this 1997-A Securitization Trust Agreement or the Titling Trust Agreement (as supplemented by the 1997-A SUBI Supplement). (d) The 1997-A Securitization Trustee shall not be required to expend or risk its own funds or otherwise incur 34 financial liability in the performance of any of its duties under this 1997-A Securitization Trust Agreement, or in the exercise of any of its rights or powers, if there shall be reasonable grounds for believing that the repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (e) All information obtained by the 1997-A Securitization Trustee regarding the Obligors and the Contracts contained in the 1997-A SUBI, whether upon the exercise of its rights under this 1997-A Securitization Trust Agreement or otherwise, shall be maintained by the 1997-A Securitization Trustee in confidence and shall not be disclosed to any other Person, unless such disclosure is required by any applicable law or regulation or pursuant to subpoena. SECTION 6.02. CERTAIN MATTERS AFFECTING THE 1997-A SECURITIZATION TRUSTEE. (a) Except as otherwise provided in Section 6.01: (i) the 1997-A Securitization Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, Officer's Certificate, certificate of an authorized signatory, certificate of auditors or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, appraisal, bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (ii) the 1997-A Securitization Trustee may consult with counsel and any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken or suffered or omitted by it under this 1997-A Securitization Trust Agreement in good faith and in accordance with such Opinion of Counsel; (iii) the 1997-A Securitization Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this 1997-A Securitization Trust Agreement or the Titling Trust Agreement (as supplemented by the 1997-A SUBI Supplement), or to institute, conduct or defend any litigation under this 1997-A Securitization Trust Agreement or the Titling Trust Agreement (as supplemented by the 1997-A SUBI Supplement), or in relation to this 1997-A Securitization Trust Agreement or the Titling Trust Agreement (as supplemented by the 1997-A SUBI Supplement), at the request, order or direction of any of the Certificateholders pursuant to the provisions of this 1997-A 35 Securitization Trust Agreement or the Titling Trust Agreement (as supplemented by the 1997-A SUBI Supplement), unless such Certificateholders shall have offered to the 1997-A Securitization Trustee reasonable security or indemnity against the costs, expenses and liabilities that may be incurred therein or thereby; (iv) the 1997-A Securitization Trustee shall not be personally liable for any action taken, suffered or omitted by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this 1997-A Securitization Trust Agreement; (v) the 1997-A Securitization Trustee shall not be bound to recalculate, reverify, or make any investigation into the facts of matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond or other paper or document, unless requested in writing to do so by Holders of Investor Certificates evidencing not less than 25% of the aggregate Percentage Interest of any Class; PROVIDED, HOWEVER, that if the payment within a reasonable time to the 1997-A Securitization Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the 1997-A Securitization Trustee, not reasonably assured to the 1997-A Securitization Trustee by the security afforded to it by the terms of this 1997-A Securitization Trust Agreement, the 1997-A Securitization Trustee may require reasonable indemnity against such cost, expense or liability as a condition to so proceeding; the reasonable expense of every such examination shall be paid by the Transferor or, if paid by the 1997-A Securitization Trustee, shall be reimbursed by the Transferor upon demand; and nothing in this clause shall derogate from the obligation of the Servicer to observe any applicable law prohibiting disclosure of information regarding the Obligors; and (vi) the 1997-A Securitization Trustee may execute any of the trusts or powers under this 1997-A Securitization Trust Agreement or perform any duties under this 1997-A Securitization Trust Agreement either directly or by or through agents or attorneys or a custodian. (b) No Certificateholder will have any right to institute any proceeding with respect to this 1997-A Securitization Trust Agreement except upon satisfying the conditions set forth in Section 9.03(c). 36 SECTION 6.03. TRUSTEE NOT LIABLE FOR CERTIFICATES OR CONTRACTS. The 1997-A Securitization Trustee shall make no representations as to the validity or sufficiency of this 1997-A Securitization Trust Agreement or of the Certificates (other than the execution by the 1997-A Securitization Trustee on behalf of the 1997-A Securitization Trust of, and the certificate of authentication on, the Certificates), or of the 1997-A SUBI or 1997-A SUBI Certificate. The 1997-A Securitization Trustee shall have no obligation to perform any of the duties of the Transferor unless explicitly set forth in this 1997-A Securitization Trust Agreement. The 1997-A Securitization Trustee shall at no time have any responsibility or liability for or with respect to the legality, validity and enforceability of the 1997-A SUBI or 1997-A SUBI Certificate or any 1997-A Contract, any ownership interest in any 1997-A Leased Vehicle, or the maintenance of any such ownership interest, or for or with respect to the efficacy of the 1997-A Securitization Trust or its ability to generate the payments to be distributed to Certificateholders under this 1997-A Securitization Trust Agreement, including without limitation the validity of the assignment of the 1997-A SUBI or 1997-A SUBI Certificate to the 1997-A Securitization Trust or of any intervening assignment; the existence, condition, location and ownership of any 1997-A Contract or 1997-A Leased Vehicle; the existence and enforceability of any physical damage or credit life or credit disability insurance; the existence and contents of any 1997-A Contract or any computer or other record thereof; the completeness of any 1997-A Contract; the performance or enforcement of any Contract; the compliance by the Transferor with any covenant or the breach by the Transferor of any warranty or representation made under this 1997-A Securitization Trust Agreement or in any related document and the accuracy of any such warranty or representation prior to the 1997-A Securitization Trustee's receipt of notice or other discovery of any noncompliance therewith or any breach thereof; the acts or omissions of the Transferor or the Servicer; or any action by the 1997-A Securitization Trustee taken at the instruction of the Servicer PROVIDED, HOWEVER, that the foregoing shall not relieve the 1997-A Securitization Trustee of its obligation to perform its duties under this 1997-A Securitization Trust Agreement. Except with respect to a claim based on the failure of the 1997-A Securitization Trustee to perform its duties under this 1997-A Securitization Trust Agreement or based on the 1997-A Securitization Trustee's willful misconduct, bad faith or negligence, no recourse shall be had for any claim based on any provision of this 1997-A Securitization Trust Agreement, the Certificates, the 1997-A SUBI or 1997-A SUBI Certificate or assignment thereof against the institution serving as Trustee in 37 its individual capacity. The 1997-A Securitization Trustee shall not have any personal obligation, liability or duty whatsoever to any Certificateholder or any other Person with respect to any such claim, and any such claim shall be asserted solely against the 1997-A Securitization Trust or any indemnitor who shall furnish indemnity as provided in this 1997-A Securitization Trust Agreement. The 1997-A Securitization Trustee shall not be accountable for the use or application by the Transferor of any of the Certificates or of the proceeds of such Certificates, or for the use or application of any funds paid to the Servicer in respect of the 1997-A SUBI or 1997-A SUBI Certificate. SECTION 6.04. TRUSTEE MAY OWN CERTIFICATES. The 1997-A Securitization Trustee in its individual or any other capacity may become the owner or pledgee of Certificates with the same rights as it would have if it were not Trustee. SECTION 6.05. TRUSTEE'S FEES AND EXPENSES. The 1997-A Securitization Trustee shall be entitled to reasonable compensation (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) for all services rendered by it in the execution of the trusts created by this 1997-A Securitization Trust Agreement and in the exercise and performance of any of the powers and duties of the 1997-A Securitization Trustee under this 1997-A Securitization Trust Agreement, and payment or reimbursement upon its request for all reasonable expenses, disbursements and advances incurred or made by the 1997-A Securitization Trustee in its capacity as Trustee in accordance with any of the provisions of this 1997-A Securitization Trust Agreement (including the reasonable compensation and the expenses and disbursements of its counsel and of all persons not regularly in its employ) except any such expense, disbursement or advance as may arise from its negligence, willful misfeasance or bad faith or that is the responsibility of Certificateholders under this 1997-A Securitization Trust Agreement. Such compensation and reimbursement shall be paid as set forth in Section 3.01(b) hereof. SECTION 6.06. ELIGIBILITY REQUIREMENTS FOR TRUSTEE. The 1997-A Securitization Trustee under this 1997-A Securitization Trust Agreement shall at all times be a national banking association or State banking institution; and organized and doing business under the laws of any State or the United States; authorized under such laws to exercise corporate trust powers; having a combined capital and surplus of at least 38 $50,000,000 and subject to supervision or examination by federal or state authorities; and having a long-term deposit rating no lower than Baa3 by Moody's, so long as Moody's is a Rating Agency, or be otherwise acceptable to each Rating Agency, as evidenced by a letter to such effect from each of them. If the 1997-A Securitization Trustee shall publish reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purpose of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any time the 1997-A Securitization Trustee shall cease to be eligible in accordance with the provisions of this Section, the 1997-A Securitization Trustee shall resign immediately in the manner and with the effect specified in Section 6.07. SECTION 6.07. RESIGNATION OR REMOVAL OF TRUSTEE. (a) The 1997-A Securitization Trustee may at any time resign and be discharged from the trusts created by this 1997-A Securitization Trust Agreement by giving written notice thereof to the Transferor. Upon receiving such notice of resignation, the Transferor shall promptly appoint a successor Trustee by written instrument, in duplicate, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor Trustee. If no successor Trustee shall have been so appointed and have accepted appointment within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. (b) If at any time the 1997-A Securitization Trustee shall cease to be eligible in accordance with the provisions of Section 6.06 and shall fail to resign after written request therefor by the Transferor, or if at any time the 1997-A Securitization Trustee shall be legally unable to act, or shall be adjudged a bankrupt or insolvent, or a receiver of the 1997-A Securitization Trustee or of its property shall be appointed, or any public officer shall take charge or control of the 1997-A Securitization Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then the Transferor may remove the 1997-A Securitization Trustee. If it shall remove the 1997-A Securitization Trustee under the authority of the immediately preceding sentence, the Transferor shall promptly appoint a successor Trustee by written instrument, in duplicate, one copy of which instrument shall be delivered to the 1997-A Securitization Trustee so removed and one copy to the 39 successor Trustee, and arrange for the payment of all fees owed to the outgoing Trustee. (c) Any resignation or removal of the 1997-A Securitization Trustee and appointment of a successor Trustee pursuant to any of the provisions of this Section shall not become effective until acceptance of appointment by the successor Trustee as provided in Section 6.08. The Servicer shall give each Rating Agency notice of any such resignation or removal of the 1997-A Securitization Trustee and appointment and acceptance of a successor Trustee. SECTION 6.08. SUCCESSOR TRUSTEE. Any successor Trustee appointed as provided in Section 6.07 shall execute, acknowledge and deliver to the Transferor and to its predecessor Trustee an instrument accepting such appointment under this 1997-A Securitization Trust Agreement, and thereupon the resignation or removal of the predecessor Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become fully vested with all the rights, powers, duties and obligations of its predecessor under this 1997-A Securitization Trust Agreement, with like effect as if originally named as Trustee. The predecessor Trustee shall deliver to the successor Trustee all documents and statements held by it under this 1997-A Securitization Trust Agreement; and the Transferor and the predecessor Trustee shall execute and deliver such instruments and do such other things as may reasonably be required for fully and certainly vesting and confirming in the successor Trustee all such rights, powers, duties and obligations. No successor Trustee shall accept appointment as provided in this Section unless at the time of such acceptance such successor Trustee shall be eligible under the provisions of Section 6.06. Upon acceptance of appointment by a successor Trustee as provided in this Section, the Transferor shall cause notice of the successor of such Trustee under this 1997-A Securitization Trust Agreement to be mailed to all Certificateholders at their addresses as shown in the Certificate Register and shall give notice by mail to each Rating Agency. If the Transferor fails to mail or cause to be mailed such notice within ten days after acceptance of appointment by the successor Trustee, the successor Trustee shall cause such notice to be mailed at the expense of the Transferor. 40 SECTION 6.09. MERGER OR CONSOLIDATION OF TRUSTEE. Any corporation (i) into which the 1997-A Securitization Trustee may be merged or consolidated, (ii) which may result from any merger, conversion or consolidation to which the 1997-A Securitization Trustee shall be a party, or (iii) which may succeed to the corporate trust business of the 1997-A Securitization Trustee, shall be the successor of the 1997-A Securitization Trustee hereunder, provided such corporation shall be eligible pursuant to Section 6.06, without the execution or filing of any instrument or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding, except that if the 1997-A Securitization Trustee in any of the foregoing cases is not the surviving entity, then the surviving entity shall execute an agreement of assumption to perform every obligation of the 1997-A Securitization Trustee, either generally or particularly as provided herein. Notice of any such event shall be given by the 1997-A Securitization Trustee to each Rating Agency. SECTION 6.10. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE. Notwithstanding any other provisions of this 1997-A Securitization Trust Agreement, at any time, for the purpose of meeting any legal requirements of any jurisdiction in which any part of the 1997-A Securitization Trust may at the time be located, the Transferor and the 1997-A Securitization Trustee acting jointly shall have the power and shall execute and deliver all instruments to appoint one or more Persons approved by the 1997-A Securitization Trustee to act as co-trustee, jointly with the 1997-A Securitization Trustee, or separate trustee or separate trustees, of all or any part of the 1997-A Securitization Trust, and to vest in such Person, in such capacity and for the benefit of the Certificateholders, such title to the 1997-A Securitization Trust, or any part thereof, and, subject to the other provisions of this Section, such powers, duties, obligations, rights and trusts as the Transferor and the 1997-A Securitization Trustee may consider necessary or desirable. If the Transferor shall not have joined in such appointment within 15 days after the receipt by it of a request so to do, the 1997-A Securitization Trustee alone shall have the power to make such appointment. No co-trustee or separate trustee under this 1997-A Securitization Trust Agreement shall be required to meet the terms of eligibility as a successor Trustee pursuant to Section 6.06 and no notice of a successor Trustee pursuant to Section 6.08 and no notice to Certificateholders of the appointment of any co-trustee or separate trustee shall be required pursuant to Section 6.08. 41 Each separate trustee and co-trustee shall, to the extent permitted by law, be appointed and act subject to the following provisions and conditions: (i) all rights, powers, duties and obligations conferred or imposed upon the 1997-A Securitization Trustee shall be conferred upon and exercised or performed by the 1997-A Securitization Trustee and such separate trustee or co-trustee jointly (it being understood that such separate trustee or co-trustee is not authorized to act separately without the 1997-A Securitization Trustee joining in such act), except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed, the 1997-A Securitization Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the 1997-A Securitization Trust or any portion thereof in any such jurisdiction) shall be exercised and performed singly by such separate trustee or co-trustee, but solely at the direction of the 1997-A Securitization Trustee; (ii) no trustee under this 1997-A Securitization Trust Agreement shall be personally liable by reason of any act or omission of any other trustee under this 1997-A Securitization Trust Agreement; and (iii) the Transferor and the 1997-A Securitization Trustee acting jointly may at any time accept the resignation of or remove any separate trustee or co-trustee. Any notice, request or other writing given to the 1997-A Securitization Trustee shall be deemed to have been given to each of the then separate trustees and co-trustees, as effectively as if given to each of them. Every instrument appointing any separate trustee or co-trustee shall refer to this 1997-A Securitization Trust Agreement and the conditions of this Section. Each separate trustee and co-trustee, upon its acceptance of the trusts conferred, shall be vested with the estates or property specified in its instrument of appointment, either jointly with the 1997-A Securitization Trustee or separately, as may be provided therein, subject to all the provisions of this 1997-A Securitization Trust Agreement, specifically including every provision of this 1997-A Securitization Trust Agreement relating to the conduct of, affecting the liability of, or affording protection to, the 1997-A Securitization Trustee. Each such instrument shall be filed with the 1997-A Securitization Trustee and a copy thereof given to the Transferor and the Servicer. 42 Any separate trustee or co-trustee may at any time appoint the 1997-A Securitization Trustee its agent or attorney-in-fact with full power and authority, to the extent not prohibited by law, to do any lawful act under or in respect of this 1997-A Securitization Trust Agreement on its behalf and in its name. If any separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, all of its estates, properties, rights, remedies and trusts shall vest in and be exercised by the 1997-A Securitization Trustee, to the extent permitted by law, without the appointment of a new or successor trustee. Notwithstanding anything to the contrary in this 1997-A Securitization Trust Agreement, the appointment of any separate trustee or co-trustee shall not relieve the 1997-A Securitization Trustee of its obligations and duties under this 1997-A Securitization Trust Agreement. SECTION 6.11. REPRESENTATIONS AND WARRANTIES OF TRUSTEE. The 1997-A Securitization Trustee makes the following representations and warranties on which the Transferor and Certificateholders may rely: (i) ORGANIZATION AND GOOD STANDING. The 1997-A Securitization Trustee is a national banking association organized, existing and in good standing under the laws of the United States of America. (ii) POWER AND AUTHORITY. The 1997-A Securitization Trustee has full power, authority and right to execute, deliver and perform this 1997-A Securitization Trust Agreement and has taken all necessary action to authorize the execution, delivery and performance by it of this 1997-A Securitization Trust Agreement. (iii) DUE EXECUTION. This 1997-A Securitization Trust Agreement has been duly executed and delivered by the 1997-A Securitization Trustee. (iv) ENFORCEABILITY. This 1997-A Securitization Trust Agreement constitutes the legal, valid and binding obligation of the 1997-A Securitization Trustee, enforceable against it in accordance with its terms except as the enforceability thereof may be limited by bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting enforcement of creditors' rights generally and by general principles of equity. 43 SECTION 6.12. TAX RETURNS. The 1997-A Securitization Trustee shall, at the direction of the Servicer and on behalf of the Transferor, prepare or shall cause to be prepared any required federal tax information returns (in a manner consistent with the treatment of the Investor Certificates as indebtedness) and shall file and distribute such forms as required by law. The Servicer shall prepare or cause to be prepared any federal and state tax returns that may be required with respect to the 1997-A Securitization Trust or the 1997-A Securitization Trust assets and shall deliver any such returns to the 1997-A Securitization Trustee for signature at least five days prior to the date such returns are required by law to be filed. The 1997-A Securitization Trust shall not elect to be treated as an association under Treasury Regulations Section 301.7701-3(a) for federal income tax purposes. SECTION 6.13. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF CERTIFICATES. All rights of action and claims under this 1997-A Securitization Trust Agreement or the Certificates may be prosecuted and enforced by the 1997-A Securitization Trustee without the possession of any of the Certificates or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the 1997-A Securitization Trustee shall be brought in its own name as trustee. Any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the 1997-A Securitization Trustee, its agents and counsel, be for the ratable benefit of the Certificateholders in respect of which such judgment has been obtained. SECTION 6.14. SUIT FOR ENFORCEMENT. If an Event of Servicing Termination shall occur and be continuing under the Titling Trust Agreement, as supplemented by the 1997-A SUBI Servicing Supplement with respect to the 1997-A SUBI Portfolio, the 1997-A Securitization Trustee, in its discretion may, subject to the provisions of Sections 6.01 and 6.02 hereof and Sections 6.01(b) and 6.01(c) of the 1997-A SUBI Servicing Supplement, proceed to protect and enforce its rights and the rights of the Certificateholders under this 1997-A Securitization Trust Agreement, the Titling Trust Agreement and the 1997-A SUBI Servicing Supplement by a suit, action or proceeding in equity or at law or otherwise, whether for the specific performance of any covenant or agreement contained herein or therein or in aid of the execution of any power granted herein or therein or for the enforcement of any other legal, 44 equitable or other remedy as the 1997-A Securitization Trustee, being advised by counsel, shall deem most effectual to protect and enforce any of the rights of the 1997-A Securitization Trustee or the Certificateholders. SECTION 6.15. RIGHTS OF CERTIFICATEHOLDERS TO DIRECT TRUSTEE. Holders of Investor Certificates evidencing not less than 25% of the aggregate Percentage Interest shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the 1997-A Securitization Trustee under this 1997-A Securitization Trust Agreement, or exercising any trust or power conferred on the 1997-A Securitization Trustee by this 1997-A Securitization Trust Agreement; PROVIDED, HOWEVER, that (a) if any greater Percentage Interest is required to cause any action to be taken under the Titling Trust Agreement or the 1997-A SUBI Supplement by the 1997-A Securitization Trustee in its capacity as a transferee of the 1997-A SUBI Certificate, the greater Percentage Interest shall prevail; (b) subject to Sections 6.01 and 6.02, the 1997-A Securitization Trustee shall have the right to decline to follow any such direction if the 1997-A Securitization Trustee being advised by counsel determines that the action so directed may not lawfully be taken, or if the 1997-A Securitization Trustee in good faith shall determine that the proceedings so directed would be illegal or subject it to personal liability or be unduly prejudicial to the rights of Certificateholders not parties to such direction; and (c) nothing in this 1997-A Securitization Trust Agreement shall impair the right of the 1997-A Securitization Trustee to take any action deemed proper by the 1997-A Securitization Trustee and which is not inconsistent with such direction by the Certificateholders. SECTION 6.16. NO PETITION. The 1997-A Securitization Trustee covenants and agrees that prior to the date which is one year and one day after the last date upon which (a) each Class of Investor Certificates has been paid in full, and (b) all obligations due under any other Securitized Financing have been paid in full, the 1997-A Securitization Trustee will not institute against, or join any other Person in instituting against the Transferor, TMCC, the Titling Trustee or the Titling Trust any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding or other proceedings under any federal or state bankruptcy or similar law. The foregoing shall not limit the 1997-A Securitization Trustee's right to file any claim in or otherwise take actions with respect to any such proceeding instituted by any Person not under such a constraint. This Section shall 45 survive the termination of this 1997-A Securitization Trust Agreement or the resignation or removal of the 1997-A Securitization Trustee under this 1997-A Securitization Trust Agreement. ARTICLE SEVEN TERMINATION SECTION 7.01. TERMINATION OF THE 1997-A SECURITIZATION TRUST. (a) The 1997-A Securitization Trust and the respective obligations and responsibilities of the Transferor and the 1997-A Securitization Trustee shall terminate upon the earliest of (i) the maturity, sale or other liquidation, as the case may be, of the last Outstanding 1997-A Contract and 1997-A Leased Vehicle evidenced by the 1997-A SUBI and the distribution of all proceeds thereof, together with all amounts on deposit in all 1997-A SUBI Accounts and the Reserve Fund in the manner provided in Section 3.01, (ii) the purchase by the Transferor of the corpus of the 1997-A Securitization Trust as described in Section 7.02 (except that the 1997-A Securitization Trust shall continue solely for the limited purposes set forth in (b) and (c) below), (iii) the day following the Monthly Allocation Date on which the Class A-1 Certificate Balance, the Class A-2 Certificate Balance, the Class A-3 Certificate Balance and the Class B Certificate Balance have been reduced to zero or (iv) the expiration, disposition or termination of the 1997-A SUBI; PROVIDED, HOWEVER, that in no event shall the trust created by this 1997-A Securitization Trust Agreement continue beyond the expiration of 21 years from the death of the last survivor of the descendants of William Jefferson Clinton of the State of Arkansas, living on the date of the Agreement. The Transferor shall promptly notify the 1997-A Securitization Trustee and each Rating Agency of any prospective termination of the 1997-A Securitization Trust. (b) Notice of any termination, specifying the Monthly Allocation Date upon which the Certificateholders may surrender their Certificates to the 1997-A Securitization Trustee for payment of the final distribution and retirement of the Certificates, shall be given promptly by the 1997-A Securitization Trustee by letter to Certificateholders mailed not later than the 15th day and not earlier than the 30th day prior to the date on which such final distribution is expected to occur specifying (i) the Certificate Payment Date upon which final payment of the Certificates shall be made upon presentation and surrender of Certificates at the Corporate Trust Office or such other office of the 1997-A Securitization Trustee therein 46 specified, (ii) the amount of any such final payment and (iii) if applicable, that the Record Date otherwise applicable to such Certificate Payment Date is not applicable, payments being made only upon presentation and surrender of the Certificates at the Corporate Trust Office or such other office of the 1997-A Securitization Trustee therein specified. The 1997-A Securitization Trustee shall give such notice to the Certificate Registrar (if other than the 1997-A Securitization Trustee) at the time such notice is given to Certificateholders. In the event such notice is given, in the case of an optional purchase of the 1997-A Securitization Trust corpus pursuant to Section 7.02, the Transferor shall deposit the amount specified in Section 7.02. Upon presentation and surrender of the Certificates, the 1997-A Securitization Trustee shall cause to be distributed to Certificateholders so surrendering amounts distributable on such Certificate Payment Date pursuant to Section 3.01. No further interest will accrue with respect to any Investor Certificate from and after the final Certificate Payment Date with respect thereto. (c) In the event that all of the Certificateholders shall not have surrendered their Certificates for retirement within six months after the date specified in the above-mentioned written notice, the 1997-A Securitization Trustee shall give a second written notice to the remaining Certificateholders to surrender their Certificates for retirement and receive the final distribution with respect thereto. If within one year after the second notice all the Certificates shall not have been surrendered for retirement, the 1997-A Securitization Trustee may take appropriate steps, or may appoint an agent to take appropriate steps, to contact the remaining Certificateholders concerning surrender of their Certificates, and the cost thereof shall be paid out of the funds and other assets that remain subject to this 1997-A Securitization Trust Agreement. Any funds remaining in the 1997-A Securitization Trust after exhaustion of such remedies shall be distributed by the 1997-A Securitization Trustee to the Transferor. SECTION 7.02. OPTIONAL PURCHASE OF 1997-A SUBI. On each Monthly Allocation Date on or after the Class A-3 Targeted Maturity Date, if either before or after giving effect to any payment of principal required to be made on such Monthly Allocation Date, the Certificate Balance shall be less than or equal to $123,123,151.92 (ten percent (10%) of the Aggregate Net Investment Value as of the Cutoff Date), the Transferor shall have the option to purchase the Investor Certificateholders' interest in the corpus of the 1997-A Securitization Trust. To exercise such option, the Transferor 47 shall notify the 1997-A Securitization Trustee and the Servicer, in writing, no later than the fifteenth day of the month preceding the month in which the Monthly Allocation Date as of which such purchase is to be effected and shall deposit in the 1997-A SUBI Collection Account an amount equal to the greater of (i) the Aggregate Net Investment Value as of the last day of the preceding Collection Period, and (ii) the sum of (A) the Certificate Balance (B) the accrued and unpaid Class A-1 Interest Distributable Amount, Class A-2 Interest Distributable Amount, Class A-3 Interest Distributable Amount and Class B Interest Distributable Amount, (C) any accrued and unpaid Class A-1 Interest Carryover Shortfall, Class A-2 Interest Carryover Shortfall, Class A-3 Interest Carryover Shortfall and Class B Interest Carryover Shortfall, (D) any unpaid Class A-1 Certificate Principal Loss Amount, unpaid Class A-2 Certificate Principal Loss Amount, unpaid Class A-3 Certificate Principal Loss Amount, unpaid Class B Certificate Principal Loss Amount and unpaid Class B Certificate Principal Carryover Shortfall, and (E) any accrued and unpaid Class A-1 Certificate Principal Loss Interest Amount, unpaid Class A-2 Certificate Principal Loss Interest Amount, unpaid Class A-3 Certificate Principal Loss Interest Amount, unpaid Class B Certificate Principal Loss Interest Amount and Class B Certificate Principal Carryover Shortfall Interest Amount through the day preceding the final Certificate Payment Date. The Transferor also shall pay to the Servicer the aggregate amount of any unreimbursed Advances. Thereupon the Transferor shall succeed to all of the Investor Certificateholders' interests in and to the 1997-A Securitization Trust corpus. ARTICLE EIGHT EARLY AMORTIZATION EVENTS SECTION 8.01. EARLY AMORTIZATION EVENTS. If any one of the following events shall occur during the Revolving Period: (a) failure on the part of the Servicer (i) to make any payment or deposit required with respect to the 1997-A SUBI, the 1997-A SUBI, or the Investor Certificates under this 1997-A Securitization Trust Agreement, the Titling Trust Agreement or the 1997-A SUBI Supplement or the 1997-A SUBI Servicing Supplement, on or before the date occurring five Business Days after the payment or deposit is required to be made, or (ii) to deliver a Servicer's Certificate within ten Business Days after 48 any Determination Date, which failure continues for three Business Days; (b) failure on the part of the Transferor or the Servicer duly to observe or perform in any material respect any other covenants or agreements of the Transferor or the Servicer set forth in this 1997-A Securitization Trust Agreement, the Titling Trust Agreement, the 1997-A SUBI Supplement (other than those described in Section 8.01(a)) or the 1997-A SUBI Servicing Supplement, which failure materially and adversely affects the rights of the holder of the 1997-A SUBI or of the Investor Certificateholders and which continues unremedied and continues to affect materially and adversely the rights of the holder of the 1997-A SUBI or of the Investor Certificateholders for a period of 60 days after the date on which written notice of such failure, requiring the same to be remedied, is given (i) to the Transferor or the Servicer, as the case may be, by the 1997-A Securitization Trustee or the Titling Trustee, or (ii) to the Transferor or the Servicer, as the case may be, and to the 1997-A Securitization Trustee by the Holders of Investor Certificates evidencing not less than 25% of the aggregate Percentage Interest; (c) any representation or warranty made by the Transferor in this 1997-A Securitization Trust Agreement, or the representation and warranty made by the Servicer in Section 3.02(b) of the 1997-A SUBI Servicing Supplement or any certificate given pursuant to Section 5.01 of the 1997-A SUBI Servicing Supplement, shall prove to have been incorrect in any material respect when made or given, as a result of which the interests of the holder of the 1997-A SUBI or of the Investor Certificateholders are materially and adversely affected and which continues to be incorrect in any material respect and continues to affect materially and adversely the interests of the holder of the 1997-A SUBI or of the Investor Certificateholders for a period of 60 days after the date on which written notice of such failure, requiring the same to be remedied, is given (i) to the Transferor or the Servicer, as the case may be, by the 1997-A Securitization Trustee or the Titling Trustee, or (ii) to the Transferor or the Servicer, as the case may be, and to the 1997-A Securitization Trustee by the Holders of Investor Certificates evidencing not less than 25% of the aggregate Percentage Interest; PROVIDED, HOWEVER, that an Early Amortization Event pursuant to this subparagraph (c) shall not be deemed to have occurred hereunder if the Servicer has made the deposit contemplated by Section 3.03(a) of the 1997-A SUBI Servicing Supplement and has reallocated the relevant 1997-A Contract and 1997-A Leased Vehicle to the UTI Portfolio within the time provided therefor; 49 (d) the Transferor shall file a petition commencing a voluntary case under any chapter of the Federal bankruptcy laws; or the Transferor shall file a petition or answer or consent seeking reorganization, arrangement, adjustment, or composition under any other similar applicable Federal law, or shall consent to the filing of any such petition, answer, or consent; or the Transferor shall appoint, or consent to the appointment of a custodian, receiver, liquidator, trustee, assignee, sequestrator or other similar official in bankruptcy or insolvency of it or of any substantial part of its property, or shall make an assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts generally as they become due; (e) any order for relief against the Transferor shall have been entered by a court having jurisdiction in the premises under any chapter of the Federal bankruptcy laws; or a decree or order by a court having jurisdiction in the premises shall have been entered approving as properly filed a petition seeking reorganization, arrangement, adjustment, or composition of the Transferor under any other similar applicable Federal law; or a decree or order of a court having jurisdiction in the premises for the appointment of a custodian, receiver, liquidator, trustee, assignee, sequestrator or other similar official in bankruptcy or insolvency of the Transferor or of any substantial part of its property, or for the winding up or liquidation of its affairs, shall have been entered; (f) any Lien, other than Liens permitted under this 1997-A Securitization Trust Agreement, the Titling Trust Agreement or the 1997-A SUBI Supplement or the 1997-A SUBI Servicing Supplement, shall be created on or extend to or otherwise arise upon or burden the 1997-A SUBI, the 1997-A SUBI Certificate, or the 1997-A Contracts or 1997-A Leased Vehicles, or any part thereof or any interest therein or the proceeds thereof, and not be released or bonded over within 60 days thereafter; (g) the Transferor, the 1997-A Securitization Trust or the Titling Trust shall become subject to registration as an "investment company" under the Investment Company Act; (h) if the Servicer determines on the last calendar day of any calendar month (commencing October 1997) that the aggregate amount of Principal Collections and reimbursed Loss Amounts and Certificate Principal Loss Amounts for the preceding Collection Period collected through the last day of the related Collection Period that have not been reinvested in Subsequent Contracts and Subsequent Leased Vehicles as of the first day of such month, as contemplated by Section 3.02 of the 1997-A SUBI Servicing Supplement, exceeds $1,000,000; 50 (i) an Event of Servicing Termination has occurred; or (j) on any Monthly Allocation Date the aggregate amount withdrawn from the Reserve Fund and deposited in the 1997-A Collection Account or the 1997-A SUBI Certificateholders' Account on or prior to such Monthly Allocation Date (without reference to any subsequent deposits to the Reserve Fund from any source) exceeds $3,078,079 (i.e., 0.25% of the Aggregate Net Investment Value as of the Cutoff Date); then (but in the case of any event described in subparagraph (a), (b), (c) or (f) after any applicable grace period set forth in such clause) an early amortization event (an "Early Amortization Event") shall have occurred. SECTION 8.02. ADDITIONAL RIGHTS UPON THE OCCURRENCE OF CERTAIN EVENTS (a) Following the occurrence of an Early Amortization Event described in Section 8.01(d) or (e) (such event, an "Insolvency Event"), the Transferor shall promptly give notice to the 1997-A Securitization Trustee of such Insolvency Event. Within 15 days of the receipt by the 1997-A Securitization Trustee of the notice, the 1997-A Securitization Trustee may and, upon receipt of a notice from Investor Certificateholders evidencing more than 51% of the aggregate Percentage Interest of the Class A Certificates or 51% of the aggregate Percentage Interests of the Class A Certificates and the Class B Certificates (voting together as a single class), shall publish a notice in Authorized Newspapers that an Insolvency Event has occurred and that the 1997-A Securitization Trustee intends to sell, dispose of or otherwise liquidate the 1997-A SUBI, the 1997-A SUBI Certificate and the other property of the 1997-A Securitization Trust in a commercially reasonable manner. Following such publication, the 1997-A Securitization Trustee shall, unless otherwise prohibited by applicable law from any such action, sell, dispose of, or otherwise liquidate the 1997-A SUBI, the 1997-A SUBI Certificate and the other property of the 1997-A Securitization Trust, in a commercially reasonable manner and on commercially reasonable terms, which shall include the solicitation of competitive bids, and shall proceed to consummate the sale, liquidation or disposition thereof as provided above with the highest bidder; PROVIDED, HOWEVER, that such sale, disposition or other liquidation shall not be made without the consent of all Holders of Investor Certificates if a net loss would be realized. The Transferor and the Servicer shall be permitted to bid for the 1997-A Securitization Trust property. The 1997-A Securitization Trustee may obtain a prior determination from the conservator, receiver, or trustee in 51 bankruptcy of the Transferor that the terms and manner of any proposed sale, disposition or liquidation are commercially reasonable. The provisions of Sections 8.01 and 8.02 shall not be deemed to be mutually exclusive. (b) The proceeds from the sale, disposition or liquidation of the 1997-A SUBI, the 1997-A SUBI Certificate and the other property of the 1997-A Securitization Trust pursuant to Section 8.02 (a) above, net of expenses incurred in such sale, disposition or liquidation, shall be treated as Principal Collections and Interest Collections received during the Amortization Period; PROVIDED that such Principal Collections, will be distributed, first, on a PRO RATA basis, to the Class A-1 Certificateholders, the Class A-2 Certificateholders and the Class A-3 Certificateholders based on their respective Certificate Balances, and second, to the Class B Certificateholders; FURTHER PROVIDED that the Servicer on behalf of the 1997-A Securitization Trustee shall determine conclusively without liability for such determination the amount of such proceeds which are allocable to Interest Collections and the amount of such proceeds which are allocable to Principal Collections. On the day following the Certificate Payment Date on which such proceeds are distributed to the Investor Certificateholders, the 1997-A Securitization Trust shall terminate. ARTICLE NINE MISCELLANEOUS PROVISIONS SECTION 9.01. AMENDMENT. (a) This 1997-A Securitization Trust Agreement and the other Transaction Documents may be amended by the respective parties thereto, without the consent of any of the Certificateholders, (i) to cure any ambiguity, mistake or error, (ii) to correct or supplement any provisions herein or therein that may be inconsistent with any provisions hereof or thereof or with the prospectus pursuant to which the Class A Certificates were offered or the private placement memorandum pursuant to which the Class B Certificates were offered, (iii) to add, change or eliminate any other provisions hereof or thereof with respect to matters or questions arising hereunder or thereunder that shall not be inconsistent with the provisions hereof or thereof, or (iv) to add or amend any provision therein in connection with permitting transfers of the Class B Certificates; PROVIDED, HOWEVER, that in the case of clause (iii), any such action shall not, in the good faith judgment of the parties hereto or thereto, adversely affect in any material respect the interests of the 52 Certificateholders and the Titling Trustee and the 1997-A Securitization Trustee shall have received an Opinion of Counsel to the effect that such action shall not affect the legal interests or positions of the Certificateholders; PROVIDED, HOWEVER, further, that any amendment eliminating the Reserve Fund or reducing the Specified Reserve Fund Balance shall also require the Transferor to deliver to the 1997-A Securitization Trustee an Opinion of Counsel to the effect that after such amendment, for federal income tax purposes, the 1997-A Securitization Trust will not be treated as an association taxable as a corporation and the Class A Certificates will, and the Class B Certificates should, properly be characterized as indebtedness that is secured by the assets of the 1997-A Securitization Trust. (b) This 1997-A Securitization Trust Agreement and the other Transaction Documents may also be amended from time to time by the respective parties hereto or thereto including with respect to (i) changing the formula for determining the Specified Reserve Fund Balance which change would result in a decrease in the amount of the Specified Reserve Fund Balance, (ii) changing the manner by which the Reserve Fund is funded, which changes could include borrowings by the Transferor to fund all or a portion of the Reserve Fund Initial Deposit (which borrowings would be payable from assets or cash flow otherwise payable to the Transferor), (iii) changing the remittance schedule for collection deposits in the 1997-A SUBI Collection Account, or (iv) changing the definition of "Permitted Investments"), if either (A) the 1997-A Securitization Trustee has been furnished with a letter from each Rating Agency to the effect that such amendment would not cause its then-current rating of any Rated Certificate to be qualified, reduced or withdrawn, or (B) the 1997-A Securitization Trustee has received the consent of the Holders of Investor Certificates representing not less than 51% of the aggregate Percentage Interests (which consent of any Holder of an Investor Certificate given pursuant to this Section or pursuant to any other provision of this 1997-A Securitization Trust Agreement shall be conclusive and binding on such Holder and on all future Holders of such Investor Certificate and of any Investor Certificate issued upon the transfer thereof or in exchange thereof or in lieu thereof whether or not notation of such consent is made upon the Investor Certificate); PROVIDED, HOWEVER, that no such amendment shall (x) except as otherwise provided in Section 9.01(a), increase or reduce in any manner the amount of, or accelerate or delay the timing of, collections of payments on the 1997-A SUBI or any 1997-A SUBI Certificate or distributions that shall be required to be made on any Investor Certificate or the applicable Certificate Rate or (y) reduce the aforesaid percentage of the aggregate Percentage Interest of the Investor Certificates of each Class required to consent to any 53 such amendment, without the consent of the Holders of all Certificates of such Class then outstanding. (c) The 1997-A Securitization Trustee shall provide each Rating Agency prior notice of any proposed amendment hereto and copies of an Opinion of Counsel, if required pursuant to Section 9.01(a), whether or not such amendment requires its approval. Any notice of any such amendment or modification as to which notice is required to be given to any Rating Agency shall contain both the substance and substantial form of the proposed amendment or modification. (d) Promptly after the execution of any such amendment or consent, the 1997-A Securitization Trustee shall furnish written notification of the substance of such amendment or consent to each Certificateholder. The failure to send such notification shall not affect the validity of such amendment. It shall not be necessary for the consent of Certificateholders pursuant to Section 9.01(b) to approve the particular form of any proposed amendment or consent, but it shall be sufficient if such consent shall approve the substance thereof. The manner of obtaining such consents and of evidencing the authorization by Certificateholders of the execution thereof shall be subject to such reasonable requirements as the 1997-A Securitization Trustee may prescribe. (e) Prior to the execution of any amendment to this 1997-A Securitization Trust Agreement, the 1997-A Securitization Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this 1997-A Securitization Trust Agreement. The 1997-A Securitization Trustee may, but shall not be obligated to, enter into any such amendment which affects the 1997-A Securitization Trustee's own rights, duties or immunities under this 1997-A Securitization Trust Agreement or otherwise. SECTION 9.02. PROTECTION OF TITLE TO TRUST. (a) The Transferor shall execute and file, or cause to be executed and filed, such financing statements and such continuation and other statements, all in such manner and in such places as may be required by law fully to preserve, maintain and protect the interest of the Certificateholders and the 1997-A Securitization Trustee under this 1997-A Securitization Trust Agreement in the 1997-A SUBI, the 1997-A SUBI Certificate and in the proceeds thereof. The Transferor shall deliver (or cause to be delivered) to the 1997-A Securitization Trustee file-stamped copies of, or filing receipts for, any document filed as provided above, as soon as available following such filing. 54 (b) The Transferor shall not change its name, identity or corporate structure in any manner that would, could or might make any financing statement or continuation statement filed by the Transferor in accordance with paragraph (a) above seriously misleading within the meaning of Section 9-402(7) of the UCC, unless it shall have given the 1997-A Securitization Trustee written notice thereof and shall have promptly filed appropriate amendments to all previously filed financing statements or continuation statements. (c) The Transferor shall give the 1997-A Securitization Trustee prior written notice of any relocation of its principal executive office if, as a result of such relocation, the applicable provisions of the UCC would require the filing of any amendment of any previously filed financing or continuation statement or of any new financing statement and shall promptly make any such filing. (d) The Transferor shall deliver to the 1997-A Securitization Trustee promptly after the execution and delivery of each amendment to this 1997-A Securitization Trust Agreement, an Opinion of Counsel either (i) stating that, in the opinion of such Counsel, all financing statements and continuation statements have been executed and filed that are necessary fully to preserve and protect the interest of the 1997-A Securitization Trustee in the 1997-A SUBI, and reciting the details of such filings or referring to prior Opinions of Counsel in which such details are given, or (ii) stating that, in the opinion of such Counsel, no such action is necessary to preserve and protect such interest. (e) The Transferor shall, if and to the extent required by applicable law, cause the Class A-1 Certificates, the Class A-2 Certificates and the Class A-3 Certificates to be registered with the Commission pursuant to Section 12(b) or Section 12(g) of the Exchange Act within the time periods specified in such Sections. SECTION 9.03. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS. (a) The death or incapacity of any Certificateholder shall not operate to terminate this 1997-A Securitization Trust Agreement or the 1997-A Securitization Trust, nor entitle such Certificateholder's legal representatives or heirs to claim an accounting or to take any action or commence any proceeding in any court for a partition or winding up of the 1997-A Securitization Trust, nor otherwise affect the rights, obligations and liabilities of the parties to this 1997-A Securitization Trust Agreement or any of them. 55 (b) No Certificateholder shall have any right to vote (except as provided in Sections 8.02 and 9.01) or in any manner otherwise control the operation and management of the 1997-A Securitization Trust, or the obligations of the parties to this 1997-A Securitization Trust Agreement, nor shall anything set forth in this 1997-A Securitization Trust Agreement, or contained in the terms of the Certificates, be construed so as to constitute the Certificateholders from time to time as partners or members of an association; nor shall any Certificateholder be under any liability to any third person by reason of any action pursuant to any provision of this 1997-A Securitization Trust Agreement. (c) No Certificateholder shall have any right by virtue or by availing itself of any provisions of this 1997-A Securitization Trust Agreement to institute any suit, action, or proceeding in equity or at law upon or under or with respect to this 1997-A Securitization Trust Agreement or any other Transaction Document, unless such Holder previously shall have given to the 1997-A Securitization Trustee a written notice of default and of the continuance thereof, as hereinbefore provided, and unless also the Holders of Investor Certificates evidencing not less than 25% of the aggregate Percentage Interest, shall have made written request upon the 1997-A Securitization Trustee to institute such action, suit or proceeding in its own name as Trustee under this 1997-A Securitization Trust Agreement and shall have offered to the 1997-A Securitization Trustee such reasonable indemnity as it may require against the costs, expenses, and liabilities to be incurred therein or thereby, and the 1997-A Securitization Trustee, for 30 days after its receipt of such notice, request and offer of indemnity, shall have neglected or refused to institute any such action, suit, or proceeding and during such 30-day period, no request or waiver inconsistent with such written request has been given to the 1997-A Securitization Trustee pursuant to this Section; it being understood and intended, and being expressly covenanted by each Certificateholder with every other Certificateholder and the 1997-A Securitization Trustee, that no one or more Holders of Certificates shall have any right in any manner whatever by virtue or by availing itself or themselves of any provisions of this 1997-A Securitization Trust Agreement or any other Transaction Document to affect, disturb, or prejudice the rights of the Holders of any other of the Certificates, or to obtain or seek to obtain priority over or preference to any other such Holder, or to enforce any right under this 1997-A Securitization Trust Agreement or any other Transaction Document, except in the manner provided in this 1997-A Securitization Trust Agreement and for the equal, ratable, and common benefit of all Certificateholders. For the protection and enforcement of the provisions of this Section, each and every Certificateholder and 56 the 1997-A Securitization Trustee shall be entitled to such relief as can be given either at law or in equity. SECTION 9.04. GOVERNING LAW. THIS 1997-A SECURITIZATION TRUST AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO ANY OTHERWISE APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS. SECTION 9.05. NOTICES. All demands, notices and communications under this 1997-A Securitization Trust Agreement shall be in writing, personally delivered or mailed by certified mail, return receipt requested, and shall be deemed to have been duly given upon receipt (i) in the case of the Transferor, to the agent for service as specified in this 1997-A Securitization Trust Agreement, or at such other address as shall be designated by the Transferor in a written notice to the 1997-A Securitization Trustee; (ii) in the case of the 1997-A Securitization Trustee, at the Corporate Trust Office; (iii) in the case of Standard & Poor's, at 25 Broadway, 20th Floor, New York, New York 10004, Attention: Asset Backed Surveillance Department; and (iv) in the case of Moody's, at 99 Church Street, New York, New York 10007 Attention: ABS Monitoring Department. Any notice required or permitted to be mailed to a Certificateholder shall be given by first class mail, postage prepaid, at the address of such Holder as shown in the Certificate Register. Any notice so mailed within the time prescribed in this 1997-A Securitization Trust Agreement shall be conclusively presumed to have been duly given, whether or not the Certificateholder shall receive such notice. SECTION 9.06. SEVERABILITY OF PROVISIONS; COUNTERPARTS. If any one or more of the covenants, agreements, provisions or terms of this 1997-A Securitization Trust Agreement shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this 1997-A Securitization Trust Agreement and shall in no way affect the validity or enforceability of the other provisions of this 1997-A Securitization Trust Agreement or of the Certificates or the rights of the Holders thereof. This 1997-A Securitization Trust Agreement may be executed simultaneously in any number of counterparts, each of which 57 counterparts shall be deemed to be an original, and all of which counterparts shall constitute but one and the same instrument. SECTION 9.07. ASSIGNMENT. Notwithstanding anything to the contrary contained in this 1997-A Securitization Trust Agreement, except as provided in Section 5.03, this 1997-A Securitization Trust Agreement may not be assigned by the Transferor without the prior written consent of Holders of Investor Certificates evidencing not less than 51% of the aggregate Percentage Interest. The Transferor shall provide a copy of any such assignment to each Rating Agency. SECTION 9.08. CERTIFICATES NONASSESSABLE AND FULLY PAID. Except as provided in Section 5.02(b) with regard to the Transferor, Certificateholders shall not be personally liable for obligations of the 1997-A Securitization Trust. The interests represented by the Certificates shall be nonassessable for any losses or expenses of the 1997-A Securitization Trust or for any reason whatsoever, and, upon the execution and authentication thereof by the 1997-A Securitization Trustee pursuant to Sections 4.02, 4.03 or 4.04, the Certificates are and shall be deemed fully paid. ARTICLE TEN AGENT FOR SERVICE SECTION 10.01. AGENT FOR SERVICE OF TRANSFEROR. The agent for service of process for the Transferor shall be its Corporate Treasury Manager, at 19001 South Western Avenue, Torrance, California 90501, Attention: Corporate Treasury Manager (fax: 310-787-6194). SECTION 10.02. AGENT OF TRUSTEE. The 1997-A Securitization Trustee shall maintain an office or offices or agency or agencies where notices and demands to or upon the 1997-A Securitization Trustee in respect of the Certificates and this 1997-A Securitization Trust Agreement may be served. The initial such office shall be the Corporate Trust Office. The 1997-A Securitization Trustee shall give prompt written notice to the Transferor, the Servicer and Certificateholders of any change in the location of the Certificate Register or any such office or agency. Certificates 58 shall be surrendered for transfer or exchange not at this office, but as set forth in Section 4.07. [SIGNATURES ON NEXT PAGE] 59 IN WITNESS WHEREOF, the parties have caused this 1997-A Securitization Trust Agreement to be duly executed by their respective officers as of the day and year first above written. TOYOTA LEASING, INC. as Transferor By: ----------------------------------- Name: Title: U.S. BANK NATIONAL ASSOCIATION, as 1997-A Securitization Trustee By: ----------------------------------- Name: Title: 60 EXHIBIT A-1 UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TOYOTA AUTO LEASE TRUST 1997-A _____% AUTO LEASE ASSET BACKED CERTIFICATE, CLASS A-1 evidencing a percentage interest in the distributions allocable to the Investor Certificates, as defined below, evidencing an undivided interest in the 1997-A Securitization Trust, as defined below, the property of which includes, among other things, a special unit of beneficial interest (the "1997-A SUBI") in Toyota Lease Trust, a Delaware business trust (the "Titling Trust"), which 1997-A SUBI represents a beneficial interest in a pool of retail lease contracts for new and used automobiles and light duty trucks (and the related automobiles and light-duty trucks) entered into by various automobile and light duty truck dealers pursuant to contractual arrangements with Toyota Lease Trust, and which 1997-A SUBI was originally issued to Toyota Leasing, Inc. and then to the 1997-A Securitization Trust. (This Certificate does not represent an obligation of, or an interest in, Toyota Leasing, Inc., Toyota Motor Credit Corporation, the Titling Trustee, the 1997-A Securitization Trustee or any of their respective affiliates.) Aggregate Denominations of all Class A-1 Certificates: CUSIP # $_______________ Number A-1- Denomination: $____________ A-1-1 THIS CERTIFIES THAT CEDE & CO. is the registered owner of a _______________________________ ($____________) nonassessable, fully-paid, fractional undivided interest in the Toyota Auto Lease Trust 1997-A (the "1997-A Securitization Trust") formed by Toyota Leasing, Inc., a Delaware corporation, as Transferor (the "Transferor"). The 1997-A Securitization Trust was created pursuant to a 1997-A Securitization Trust Agreement dated as of September 1, 1997 (the "Agreement"), between the Transferor and U.S. Bank National Association, a national banking association, as trustee (the "1997-A Securitization Trustee"). A summary of certain of the pertinent provisions of the Agreement is set forth below. To the extent not otherwise defined herein, the capitalized terms used herein have the meanings assigned to them in the Agreement. This Certificate is one of the duly authorized Certificates issued under the Agreement and designated as "Toyota Auto Lease Trust 1997-A _____% Automobile Lease Asset Backed Certificates, Class A-1" (the "Class A-1 Certificates"). Also issued under the Agreement are Certificates designated as "Toyota Auto Lease Trust 1997-A _____% Automobile Lease Asset Backed Certificates, Class A-2" (the "Class A-2 Certificates"), Certificates designated as "Toyota Auto Lease Trust 1997-A _____% Automobile Lease Asset Backed Certificates, Class A-3" (the "Class A-3 Certificates" and, together with the Class A-1 Certificates and the Class A-2 Certificates, the "Class A Certificates"), Certificates designated as "Toyota Auto Lease Trust 1997-A _____% Automobile Lease Asset Backed Certificates, Class B" (the "Class B Certificates" and, together with the Class A Certificates, the "Investor Certificates") and a Certificate designated as the "Toyota Auto Lease Trust 1997-A Asset Backed Transferor Certificate" (the "Transferor Certificate" and, together with the Investor Certificates, the "Certificates"). The Class B Certificates are subordinated to the Class A Certificates and the Transferor Certificate is subordinated to the Investor Certificates to the extent described in the Agreement. This Class A-1 Certificate is issued under and is subject to the terms, provisions and conditions of the Agreement, to which Agreement the Holder of this Class A-1 Certificate by virtue of the acceptance hereof assents and by which such Holder is bound. The property of the 1997-A Securitization Trust includes, among other things, the 1997-A SUBI, which 1997-A SUBI represents a beneficial interest in a pool of retail automobile and light duty truck lease contracts ("Contracts") and the new and used automobiles and light duty trucks leased thereby ("Leased Vehicles") (such pool of Contracts and Leased Vehicles, the "1997-A SUBI Portfolio") entered into by various automobile and light duty truck dealers pursuant to contractual arrangements A-1-2 with the Titling Trust. Toyota Motor Credit Corporation acts as servicer (in that capacity, the "Servicer") of the 1997-A SUBI Portfolio. During the Revolving Period, Principal Collections allocable to the 1997-A SUBI generally will be applied towards the allocation to the 1997-A SUBI Portfolio of additional qualifying Contracts and Leased Vehicles from among all other unallocated Contracts and Leased Vehicles owned by the Titling Trust. Under the Agreement, there will be distributed on the 25th day of March and September or, to the extent provided in the Agreement, on the 25th day of each month, or if such 25th day is not a Business Day, the next succeeding Business Day (each, a "Certificate Payment Date"), commencing on March 25, 1998 (except as provided otherwise in the Agreement), to the Person in whose name this Class A-1 Certificate is registered at the close of business on the last calendar day of the immediately preceding calendar month (each a "Record Date"), such Class A-1 Certificateholder's percentage interest in the amount distributed on the Class A-1 Certificates pursuant to Section 3.01 of the Agreement, all to the extent and as more specifically set forth in the Agreement. Except to the extent provided otherwise in the Agreement, no principal payments shall be made in respect of the Class A-2 Certificates until the Class A-1 Certificates have been paid in full, no principal payments shall be made in respect of the Class A-3 Certificates until the Class A-2 Certificates have been paid in full and no principal payments will be made in respect of the Class B Certificates until the Class A-3 Certificates have been paid in full. Distributions on this Class A-1 Certificate will be made by the 1997-A Securitization Trustee by check mailed to the Class A-1 Certificateholder of record in the Certificate Register without the presentation or surrender of this Class A-1 Certificate or the making of any notation hereon except that with respect to Class A-1 Certificates registered in the name of Cede & Co., the nominee for The Depository Trust Company, distributions will be made by wire transfer of immediately available funds. Except as otherwise provided in the Agreement and notwithstanding the foregoing, the final distribution on this Class A-1 Certificate will be made after due notice by the 1997-A Securitization Trustee of the pendency of such distribution and only upon presentation and surrender of this Class A-1 Certificate at the Corporate Trust Office of the 1997-A Securitization Trustee. It is the intention of the Transferor and the Holders of Investor Certificates that the Investor Certificates will be indebtedness for federal, state and local income and franchise tax purposes and for purposes of any other tax imposed on or A-1-3 measured by income. The Transferor, the 1997-A Securitization Trustee and the Holder of this Certificate (or Certificate Owner) by acceptance of this Certificate (or, in the case of a Certificate Owner, by virtue of such Certificate Owner's acquisition of a beneficial interest herein) agree to treat the Investor Certificates (or beneficial interests therein), for purposes of federal, state and local income or franchise taxes and any other tax imposed on or measured by income, as indebtedness and to report the transactions contemplated by the Agreement on all applicable tax returns in a manner consistent with such treatment. Each Holder of this Certificate agrees that it will cause any Certificate Owner acquiring an interest in this Certificate through it to comply with the Agreement as to treatment as indebtedness for federal, state and local income and franchise tax purposes and for purposes of any other tax imposed on or measured by income. By accepting this Certificate, the Holder hereof (and each Certificate Owner with respect hereto, by virtue of such Certificate Owner's acquisition of a beneficial interest herein) waives any claim to any proceeds or assets of the Titling Trustee and to all assets of the Titling Trust other than those from time to time included in the 1997-A SUBI Assets and those proceeds or assets derived from or earned by such 1997-A SUBI Assets (excluding the rights to proceeds of the Residual Value Insurance Policy). In the event that, notwithstanding the statement of intentions and undertakings set forth in Section 4.12(a) of the Agreement and herein, it is finally determined that the Class A-1 Certificates do not evidence indebtedness of the Transferor for all income and franchise tax purposes, but rather represent an equity interest in the assets of the 1997-A Securitization Trust, then the Holder (and each Certificate Owner hereof with respect hereto by virtue of acquiring a beneficial interest herein), agrees (i) to treat such Certificates, together with the Transferor Certificate, as representing an interest in a partnership for all tax purposes, (ii) to treat all payments in respect of such Certificates (to the extent not a return of capital) as a "guaranteed payment" thereon made pursuant to Section 707(c) of the Code, and (iii) to allocate all other items of income, gain, deduction, loss or credit with respect to the assets and operations of the 1997-A Securitization Trust to the Transferor. The Certificates do not represent an obligation of, or an interest in, the Transferor, the Servicer, the Titling Trust, the Titling Trustee, the 1997-A Securitization Trustee or any of their respective affiliates. The Certificates are limited in right of payment to certain collections and recoveries respecting A-1-4 the 1997-A SUBI and 1997-A SUBI Certificate and certain monies on deposit in the Reserve Fund and in certain other accounts established for the benefit of the Certificateholders, in each case to the extent and as more specifically set forth in the Agreement. A copy of the Agreement may be examined during normal business hours at the Corporate Trust Office of the 1997-A Securitization Trustee, and at such other places, if any, designated by the 1997-A Securitization Trustee, by any Certificateholder upon request. The Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the parties thereto and the rights of the Certificateholders under the Agreement at any time by the Transferor and the 1997-A Securitization Trustee. In certain limited circumstances, the Agreement may only be amended with the consent of the Holders of Investor Certificates evidencing not less than 51% of the aggregate Percentage Interest of all Investor Certificates, voting together as a single class. Any such consent by the Holder of this Certificate shall be conclusive and binding on such Holder and on all future Holders of this Certificate and of any Certificate issued upon the transfer hereof or in exchange herefor or in lieu hereof whether or not notation of such consent is made upon this Certificate. As provided in the Agreement and subject to certain limitations set forth therein, the transfer of this Certificate is registrable in the Certificate Register upon surrender of this Certificate for registration of transfer at the Corporate Trust Office of the 1997-A Securitization Trustee in its capacity as Certificate Registrar, or at the office of the agent of the 1997-A Securitization Trustee in its capacity as Certificate Registrar, who shall initially be First Trust of New York, National Association, 100 Wall Street, 20th Floor, New York, New York 10005, in the Borough of Manhattan, the City of New York, or at the appropriate office of any successor Certificate Registrar, accompanied by a written instrument of transfer in form satisfactory to the 1997-A Securitization Trustee and the Certificate Registrar duly executed by the Holder hereof or such Holder's attorney duly authorized in writing, and thereupon one or more new Class A-1 Certificates of authorized denominations and of a like aggregate fractional undivided interest will be issued to the designated transferee. The Class A-1 Certificates are issuable only as registered Certificates without coupons in denominations of $1,000 and integral multiples thereof (except for one Class A-1 Certificate in a smaller minimum denomination representing any remaining portion of the Initial Class A-1 Certificate Balance). As provided in the Agreement and subject to certain limitations A-1-5 therein set forth, Certificates are exchangeable for new Certificates of the same Class, of authorized denominations of a like aggregate principal amount, as requested by the Holder surrendering the same. No service charge will be made for any such registration of transfer or exchange, but the 1997-A Securitization Trustee may require payment of a sum sufficient to cover any tax or governmental charges payable in connection therewith. Prior to due presentation of this Certificate for registration of transfer, the 1997-A Securitization Trustee, the Certificate Registrar and any of their respective agents may treat the Person in whose name this Class A-1 Certificate is registered as the owner hereof for the purpose of receiving distributions and for all other purposes, and neither the 1997-A Securitization Trustee, the Certificate Registrar nor any such agent shall be affected by any notice to the contrary. The obligations and responsibilities created by the Agreement and the 1997-A Securitization Trust created thereby shall terminate upon the payment to Investor Certificateholders of all amounts required to be paid to them pursuant to the Agreement and the disposition of all property held as part of the 1997-A Securitization Trust. The Transferor may at its option purchase the corpus of the 1997-A Securitization Trust at a price specified in the Agreement, and such purchase of the 1997-A SUBI and 1997-A SUBI Certificate and other property of the 1997-A Securitization Trust will effect early retirement of the Certificates; PROVIDED, HOWEVER, such right of purchase is exercisable only on the Monthly Allocation Date on or after the Class A-3 Targeted Maturity Date, if either before or after giving effect to any payments of principal required to be made on such Monthly Allocation Date, the Certificate Balance shall be less than or equal to $123,123,151.92 (ten percent (10%) of the Aggregate Net Investment Value as of the Cutoff Date). By accepting this Certificate, the Holder hereof (and each Certificate Owner with respect hereto, by virtue of acquiring a beneficial interest herein) covenants and agrees that prior to the date which is one year and one day after the last date upon which (a) each Class of Investor Certificates has been paid in full, and (b) all obligations due under any other Securitized Financing have been paid in full, the Holder and/or Certificate Owner will not institute against, or join any other Person in instituting against the Transferor, Toyota Motor Credit Corporation, the 1997-A Securitization Trust, the Titling Trustee or the Titling Trust any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding or other proceedings under any federal or state bankruptcy or similar law. The foregoing shall not limit the Holder's and/or Certificate Owner's right to A-1-6 file any claim in or otherwise take actions with respect to any such proceeding instituted by any Person not under such a constraint. This non-petition covenant shall survive the termination of the Agreement. Unless the certificate of authentication hereon shall have been executed by an authorized officer of the 1997-A Securitization Trustee, by manual signature, this Class A-1 Certificate shall not entitle the Holder hereof to any benefit under the Agreement or be valid for any purpose. A-1-7 IN WITNESS WHEREOF, the Transferor has caused this Class A-1 Certificate to be duly executed. Dated: __________ __, 199_ TOYOTA LEASING, INC., By:________________________________ Authorized Officer A-1-8 This is one of the Class A-1 Certificates referred to in the within-mentioned Agreement. U.S. BANK NATIONAL ASSOCIATION, as 1997-A Securitization Trustee By:________________________________ A-1-9 ASSIGNMENT FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE _______________________________________________________________________________ (Please print or typewrite name and address, including postal zip code, of assignee) _______________________________________________________________________________ the within Certificate, and all rights thereunder, hereby irrevocably constituting and appointing _______________________________________________________________________________ Attorney to transfer said Certificate on the books of the Certificate Registrar, with full power of substitution in the premises. Dated: _____________________________* Signature Guaranteed: _____________________________* * NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Certificate in every particular, without alteration, enlargement or any change whatever. Such signature must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Certificate Registrar, which requirements include membership or participation in STAMP or such other "signature guarantee program" as may be determined by the Note Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. A-1-10 EXHIBIT A-2 UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TOYOTA AUTO LEASE TRUST 1997-A _____% AUTO LEASE ASSET BACKED CERTIFICATE, CLASS A-2 evidencing a percentage interest in the distributions allocable to the Investor Certificates, as defined below, evidencing an undivided interest in the 1997-A Securitization Trust, as defined below, the property of which includes, among other things, a special unit of beneficial interest (the "1997-A SUBI") in Toyota Lease Trust, a Delaware business trust (the "Titling Trust), which 1997-A SUBI represents a beneficial interest in a pool of retail lease contracts for new and used automobiles and light duty trucks (and the related automobiles and light-duty trucks) entered into by various automobile and light duty truck dealers pursuant to contractual arrangements with Toyota Lease Trust, and which 1997-A SUBI was originally issued to Toyota Leasing, Inc. and then to the 1997-A Securitization Trust. (This Certificate does not represent an obligation of, or an interest in, Toyota Leasing, Inc., Toyota Motor Credit Corporation, the Titling Trustee, the 1997-A Securitization Trustee or any of their respective affiliates.) Aggregate Denominations of all Class A-2 Certificates: CUSIP # $________________ Number A-2-__ Denomination: $__________ A-2-1 THIS CERTIFIES THAT CEDE & CO. is the registered owner of a ____________________________ ($__________) nonassessable, fully-paid, fractional undivided interest in the Toyota Auto Lease Trust 1997-A (the "1997-A Securitization Trust") formed by Toyota Leasing, Inc., a Delaware corporation, as Transferor (the "Transferor"). The 1997-A Securitization Trust was created pursuant to a 1997-A Securitization Trust Agreement dated as of September 1, 1997 (the "Agreement"), between the Transferor and U.S. Bank National Association, a national banking association, as trustee (the "1997-A Securitization Trustee"). A summary of certain of the pertinent provisions of the Agreement is set forth below. To the extent not otherwise defined herein, the capitalized terms used herein have the meanings assigned to them in the Agreement. This Certificate is one of the duly authorized Certificates issued under the Agreement and designated as "Toyota Auto Lease Trust 1997-A _____% Automobile Lease Asset Backed Certificates, Class A-2" (the "Class A-2 Certificates"). Also issued under the Agreement are Certificates designated as "Toyota Auto Lease Trust 1997-A _____% Automobile Lease Asset Backed Certificates, Class A-1" (the "Class A-1 Certificates"), Certificates designated as "Toyota Auto Lease Trust 1997-A _____% Automobile Lease Asset Backed Certificates, Class A-3" (the "Class A-3 Certificates" and, together with the Class A-1 Certificates and the Class A-2 Certificates, the "Class A Certificates"), Certificates designated as "Toyota Auto Lease Trust 1997-A _____% Automobile Lease Asset Backed Certificates, Class B" (the "Class B Certificates" and, together with the Class A Certificates, the "Investor Certificates") and a Certificate designated as the "Toyota Auto Lease Trust 1997-A Asset Backed Transferor Certificate" (the "Transferor Certificate" and, together with the Investor Certificates, the "Certificates"). The Class B Certificates are subordinated to the Class A Certificates and the Transferor Certificate is subordinated to the Investor Certificates to the extent described in the Agreement. This Class A-2 Certificate is issued under and is subject to the terms, provisions and conditions of the Agreement, to which Agreement the Holder of this Class A-2 Certificate by virtue of the acceptance hereof assents and by which such Holder is bound. The property of the 1997-A Securitization Trust includes, among other things, the 1997-A SUBI, which 1997-A SUBI represents a beneficial interest in a pool of retail automobile and light duty truck lease contracts ("Contracts") and the new and used automobiles and light duty trucks leased thereby ("Leased Vehicles") (such pool of Contracts and Leased Vehicles; the "1997-A SUBI Portfolio") entered into by various automobile and light duty truck dealers pursuant to contractual arrangements A-2-2 with the Titling Trust. Toyota Motor Credit Corporation acts as servicer (in that capacity, the "Servicer") of the 1997-A SUBI Portfolio. During the Revolving Period, Principal Collections allocable to the 1997-A SUBI generally will be applied towards the allocation to the 1997-A SUBI Portfolio of additional qualifying Contracts and Leased Vehicles from among all other unallocated Contracts and Leased Vehicles owned by the Titling Trust. Under the Agreement, there will be distributed on the 25th day of March and September or, to the extent provided in the Agreement, on the 25th day of each month, or if such 25th day is not a Business Day, the next succeeding Business Day (each, a "Certificate Payment Date"), commencing on March 25, 1998 (except as provided otherwise in the Agreement), to the Person in whose name this Class A-2 Certificate is registered at the close of business on the last calendar day of the immediately preceding calendar month (each a "Record Date"), such Class A-2 Certificateholder's percentage interest in the amount distributed on the Class A-2 Certificates pursuant to Section 3.01 of the Agreement, all to the extent and as more specifically set forth in the Agreement. Except to the extent provided otherwise in the Agreement, no principal payments shall be made in respect of the Class A-2 Certificates until the Class A-1 Certificates have been paid in full, and no principal payments shall be made in respect of the Class A-3 Certificates until the Class A-2 Certificates have been paid in full and no principal payments shall be made in respect of the Class B Certificates until the Class A-3 Certificates have been paid in full. Distributions on this Class A-2 Certificate will be made by the 1997-A Securitization Trustee by check mailed to the Class A-2 Certificateholder of record in the Certificate Register without the presentation or surrender of this Class A-2 Certificate or the making of any notation hereon except that with respect to Class A-2 Certificates registered in the name of Cede & Co., the nominee for The Depository Trust Company, distributions will be made by wire transfer of immediately available funds. Except as otherwise provided in the Agreement and notwithstanding the foregoing, the final distribution on this Class A-2 Certificate will be made after due notice by the 1997-A Securitization Trustee of the pendency of such distribution and only upon presentation and surrender of this Class A-2 Certificate at the Corporate Trust Office of the 1997-A Securitization Trustee. It is the intention of the Transferor and the Holders of Investor Certificates that the Investor Certificates will be indebtedness for federal, state and local income and franchise tax purposes and for purposes of any other tax imposed on or A-2-3 measured by income. The Transferor, the 1997-A Securitization Trustee and the Holder of this Certificate (or Certificate Owner) by acceptance of this Certificate (or, in the case of a Certificate Owner, by virtue of such Certificate Owner's acquisition of a beneficial interest herein) agree to treat the Investor Certificates (or beneficial interest therein), for purposes of federal, state and local income or franchise taxes and any other tax imposed on or measured by income, as indebtedness and to report the transactions contemplated by the Agreement on all applicable tax returns in a manner consistent with such treatment. Each Holder of this Certificate agrees that it will cause any Certificate Owner acquiring an interest in this Certificate through it to comply with the Agreement as to treatment as indebtedness for federal, state and local income and franchise tax purposes and for purposes of any other tax imposed on or measured by income. By accepting this Certificate, the Holder hereof (and each Certificate Owner with respect hereto, by virtue of such Certificate Owner's acquisition of a beneficial interest herein) waives any claim to any proceeds or assets of the Titling Trustee and to all assets of the Titling Trust other than those from time to time included in the 1997-A SUBI Assets and those proceeds or assets derived from or earned by such 1997-A SUBI Assets (excluding the rights to proceeds of the Residual Value Insurance Policy). In the event that, notwithstanding the statement of intentions and undertakings set forth in Section 4.12(a) of the Agreement and herein, it is finally determined that the Class A-2 Certificates do not evidence indebtedness of the Transferor for all income and franchise tax purposes, but rather represent an equity interest in the assets of the 1997-A Securitization Trust, then the Holder (and each Certificate Owner hereof with respect hereto by virtue of acquiring a beneficial interest herein), agrees (i) to treat such Certificates, together with the Transferor Certificate, as representing an interest in a partnership for all tax purposes, (ii) to treat all payments in respect of such Certificates (to the extent not a return of capital) as a "guaranteed payment" thereon made pursuant to Section 707(c) of the Code, and (iii) to allocate all other items of income, gain, deduction, loss or credit with respect to the assets and operations of the 1997-A Securitization Trust to the Transferor. The Certificates do not represent an obligation of, or an interest in, the Transferor, the Servicer, the Titling Trust, the Titling Trustee, the 1997-A Securitization Trustee or any of their respective affiliates. The Certificates are limited in right of payment to certain collections and recoveries respecting A-2-4 the 1997-A SUBI and 1997-A SUBI Certificate and certain monies on deposit in the Reserve Fund and in certain other accounts established for the benefit of the Certificateholders, in each case to the extent and as more specifically set forth in the Agreement. A copy of the Agreement may be examined during normal business hours at the Corporate Trust Office of the 1997-A Securitization Trustee, and at such other places, if any, designated by the 1997-A Securitization Trustee, by any Certificateholder upon request. The Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the parties thereto and the rights of the Certificateholders under the Agreement at any time by the Transferor and the 1997-A Securitization Trustee. In certain limited circumstances, the Agreement may only be amended with the consent of the Holders of Investor Certificates evidencing not less than 51% of the aggregate Percentage Interest of all Investor Certificates, voting together as a single class. Any such consent by the Holder of this Certificate shall be conclusive and binding on such Holder and on all future Holders of this Certificate and of any Certificate issued upon the transfer hereof or in exchange herefor or in lieu hereof whether or not notation of such consent is made upon this Certificate. As provided in the Agreement and subject to certain limitations set forth therein, the transfer of this Certificate is registrable in the Certificate Register upon surrender of this Certificate for registration of transfer at the Corporate Trust Office of the 1997-A Securitization Trustee in its capacity as Certificate Registrar, or at the office of the agent of the 1997-A Securitization Trustee in its capacity as Certificate Registrar, who shall initially be First Trust of New York, National Association, 100 Wall Street, 20th Floor, New York, New York 10005, in the Borough of Manhattan, the City of New York, or at the appropriate office of any successor Certificate Registrar, accompanied by a written instrument of transfer in form satisfactory to the 1997-A Securitization Trustee and the Certificate Registrar duly executed by the Holder hereof or such Holder's attorney duly authorized in writing, and thereupon one or more new Class A-2 Certificates of authorized denominations and of a like aggregate fractional undivided interest will be issued to the designated transferee. The Class A-2 Certificates are issuable only as registered Certificates without coupons in denominations of $1,000 and integral multiples thereof (except for one Class A-2 Certificate in a smaller minimum denomination representing any remaining portion of the Initial Class A-2 Certificate Balance). As provided in the Agreement and subject to certain limitations A-2-5 therein set forth, Certificates are exchangeable for new Certificates of the same Class, of authorized denominations of a like aggregate principal amount, as requested by the Holder surrendering the same. No service charge will be made for any such registration of transfer or exchange, but the 1997-A Securitization Trustee may require payment of a sum sufficient to cover any tax or governmental charges payable in connection therewith. Prior to due presentation of this Certificate for registration of transfer, the 1997-A Securitization Trustee, the Certificate Registrar and any of their respective agents may treat the Person in whose name this Class A-2 Certificate is registered as the owner hereof for the purpose of receiving distributions and for all other purposes, and neither the 1997-A Securitization Trustee, the Certificate Registrar nor any such agent shall be affected by any notice to the contrary. The obligations and responsibilities created by the Agreement and the 1997-A Securitization Trust created thereby shall terminate upon the payment to Investor Certificateholders of all amounts required to be paid to them pursuant to the Agreement and the disposition of all property held as part of the 1997-A Securitization Trust. The Transferor may at its option purchase the corpus of the 1997-A Securitization Trust at a price specified in the Agreement, and such purchase of the 1997-A SUBI and 1997-A SUBI Certificate and other property of the 1997-A Securitization Trust will effect early retirement of the Certificates; PROVIDED, HOWEVER, such right of purchase is exercisable only on the Monthly Allocation Date on or after the Class A-3 Targeted Maturity Date, if either before or after giving effect to any payments of principal required to be made on such Monthly Allocation Date, the Certificate Balance shall be less than or equal to $123,123,151.92 (ten percent (10%) of the Aggregate Net Investment Value as of the Cutoff Date). By accepting this Certificate, the Holder hereof (and each Certificate Owner with respect hereto, by virtue of acquiring a beneficial interest herein) covenants and agrees that prior to the date which is one year and one day after the last date upon which (a) each Class of Investor Certificates has been paid in full, and (b) all obligations due under any other Securitized Financing have been paid in full, the Holder and/or Certificate Owner will not institute against, or join any other Person in instituting against the Transferor, Toyota Motor Credit Corporation, the 1997-A Securitization Trust, the Titling Trustee or the Titling Trust any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding or other proceedings under any federal or state bankruptcy or similar law. The foregoing shall not limit the Holder's and/or Certificate Owner's right to A-2-6 file any claim in or otherwise take actions with respect to any such proceeding instituted by any Person not under such a constraint. This non-petition covenant shall survive the termination of the Agreement. Unless the certificate of authentication hereon shall have been executed by an authorized officer of the 1997-A Securitization Trustee, by manual signature, this Class A-2 Certificate shall not entitle the Holder hereof to any benefit under the Agreement or be valid for any purpose. A-2-7 IN WITNESS WHEREOF, the Transferor has caused this Class A-2 Certificate to be duly executed. Dated: __________ __, 199_ TOYOTA LEASING INC. By:________________________________ Authorized Officer A-2-8 This is one of the Class A-2 Certificates referred to in the within-mentioned Agreement. U.S. BANK NATIONAL ASSOCIATION, as 1997-A Securitization Trustee By:________________________________ A-2-9 ASSIGNMENT FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE _______________________________________________________________________________ (Please print or typewrite name and address, including postal zip code, of assignee) _______________________________________________________________________________ the within Certificate, and all rights thereunder, hereby irrevocably constituting and appointing _______________________________________________________________________________ Attorney to transfer said Certificate on the books of the Certificate Registrar, with full power of substitution in the premises. Dated: _____________________________* Signature Guaranteed: _____________________________* * NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Certificate in every particular, without alteration, enlargement or any change whatever. Such signature must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Certificate Registrar, which requirements include membership or participation in STAMP or such other "signature guarantee program" as may be determined by the Note Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. A-2-10 EXHIBIT A-3 UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TOYOTA AUTO LEASE TRUST 1997-A _____% AUTO LEASE ASSET BACKED CERTIFICATE, CLASS A-3 evidencing a percentage interest in the distributions allocable to the Investor Certificates, as defined below, evidencing an undivided interest in the 1997-A Securitization Trust, as defined below, the property of which includes, among other things, a special unit of beneficial interest (the "1997-A SUBI") in Toyota Lease Trust, a Delaware business trust (the "Titling Trust"), which 1997-A SUBI represents a beneficial interest in a pool of retail lease contracts for new and used automobiles and light duty trucks (and the related automobiles and light-duty trucks) entered into by various automobile and light duty truck dealers pursuant to contractual arrangements with Toyota Lease Trust, and which 1997-A SUBI was originally issued to Toyota Leasing, Inc. and then to the 1997-A Securitization Trust. (This Certificate does not represent an obligation of, or an interest in, Toyota Leasing, Inc., Toyota Motor Credit Corporation, the Titling Trustee, the 1997-A Securitization Trustee or any of their respective affiliates.) Aggregate Denominations of all Class A-3 Certificates: CUSIP # $______________ Number A-3-__ Denomination: $____________ A-3-1 THIS CERTIFIES THAT CEDE & CO. is the registered owner of a _______________________________ ($____________) nonassessable, fully-paid, fractional undivided interest in the Toyota Auto Lease Trust 1997-A (the "1997-A Securitization Trust") formed by Toyota Leasing, Inc., a Delaware corporation, as Transferor (the "Transferor"). The 1997-A Securitization Trust was created pursuant to a 1997-A Securitization Trust Agreement dated as of September 1, 1997 (the "Agreement"), between the Transferor and U.S. Bank National Association, a national banking association, as trustee (the "1997-A Securitization Trustee"). A summary of certain of the pertinent provisions of the Agreement is set forth below. To the extent not otherwise defined herein, the capitalized terms used herein have the meanings assigned to them in the Agreement. This Certificate is one of the duly authorized Certificates issued under the Agreement and designated as "Toyota Auto Lease Trust 1997-A _____% Automobile Lease Asset Backed Certificates, Class A-3" (the "Class A-3 Certificates"). Also issued under the Agreement are Certificates designated as "Toyota Auto Lease Trust 1997-A _____% Automobile Lease Asset Backed Certificates, Class A-1" (the "Class A-1 Certificates"), Certificates designated as "Toyota Auto Lease Trust 1997-A_____% Automobile Lease Asset Backed Certificates, Class A-2" (the "Class A-2 Certificates" and, together with the Class A-1 Certificates and the Class A-3 Certificates, the "Class A Certificates"), Certificates designated as "Toyota Auto Lease Trust 1997-A _____% Automobile Lease Asset Backed Certificates, Class B" (the "Class B Certificates" and, together with the Class A Certificates, the "Investor Certificates") and a Certificate designated as the "Toyota Auto Lease Trust 1997-A Asset Backed Transferor Certificate" (the "Transferor Certificate" and, together with the Investor Certificates, the "Certificates"). The Class B Certificates are subordinated to the Class A Certificates and the Transferor Certificate is subordinated to the Investor Certificates to the extent described in the Agreement. This Class A-3 Certificate is issued under and is subject to the terms, provisions and conditions of the Agreement, to which Agreement the Holder of this Class A-3 Certificate by virtue of the acceptance hereof assents and by which such Holder is bound. The property of the 1997-A Securitization Trust includes, among other things, the 1997-A SUBI, which 1997-A SUBI represents a beneficial interest in a pool of retail automobile and light duty truck lease contracts ("Contracts") and the new and used automobiles and light duty trucks leased thereby ("Leased Vehicles") (such pool of Contracts and Leased Vehicles; the "1997-A SUBI Portfolio") entered into by various automobile and light duty truck dealers pursuant to contractual arrangements A-3-2 with the Titling Trust. Toyota Motor Credit Corporation acts as servicer (in that capacity, the "Servicer") of the 1997-A SUBI Portfolio. During the Revolving Period, Principal Collections allocable to the 1997-A SUBI generally will be applied towards the allocation to the 1997-A SUBI Portfolio of additional qualifying Contracts and Leased Vehicles from among all other unallocated Contracts and Leased Vehicles owned by the Titling Trust. Under the Agreement, there will be distributed on the 25th day of March and September or, to the extent provided in the Agreement, on the 25th day of each month, or if such 25th day is not a Business Day, the next succeeding Business Day (each, a "Certificate Payment Date"), commencing on March 25, 1998 (except as provided otherwise in the Agreement), to the Person in whose name this Class A-3 Certificate is registered at the close of business on the last calendar day of the immediately preceding calendar month (each a "Record Date"), such Class A-3 Certificateholder's percentage interest in the amount distributed on the Class A-3 Certificates pursuant to Section 3.01 of the Agreement, all to the extent and as more specifically set forth in the Agreement. Except to the extent provided otherwise in the Agreement, no principal payments shall be made in respect of the Class A-2 Certificates until the Class A-1 Certificates have been paid in full, and no principal payments shall be made in respect of the Class A-3 Certificates until the Class A-2 Certificates have been paid in full and no principal payments shall be made in respect of the Class B Certificates until the Class A-3 Certificates have been paid in full. Distributions on this Class A-3 Certificate will be made by the 1997-A Securitization Trustee by check mailed to the Class A-3 Certificateholder of record in the Certificate Register without the presentation or surrender of this Class A-3 Certificate or the making of any notation hereon except that with respect to Class A-3 Certificates registered in the name of Cede & Co., the nominee for The Depository Trust Company, distributions will be made by wire transfer of immediately available funds. Except as otherwise provided in the Agreement and notwithstanding the foregoing, the final distribution on this Class A-3 Certificate will be made after due notice by the 1997-A Securitization Trustee of the pendency of such distribution and only upon presentation and surrender of this Class A-3 Certificate at the Corporate Trust Office of the 1997-A Securitization Trustee. It is the intention of the Transferor and the Holders of Investor Certificates that the Investor Certificates will be indebtedness for federal, state and local income and franchise tax purposes and for purposes of any other tax imposed on or A-3-3 measured by income. The Transferor, the 1997-A Securitization Trustee and the Holder of this Certificate (or Certificate Owner) by acceptance of this Certificate (or, in the case of a Certificate Owner, by virtue of such Certificate Owner's acquisition of a beneficial interest herein) agree to treat the Investor Certificates (or beneficial interest therein), for purposes of federal, state and local income or franchise taxes and any other tax imposed on or measured by income, as indebtedness and to report the transactions contemplated by the Agreement on all applicable tax returns in a manner consistent with such treatment. Each Holder of this Certificate agrees that it will cause any Certificate Owner acquiring an interest in this Certificate through it to comply with the Agreement as to treatment as indebtedness for federal, state and local income and franchise tax purposes and for purposes of any other tax imposed on or measured by income. By accepting this Certificate, the Holder hereof (and each Certificate Owner with respect hereto, by virtue of such Certificate Owner's acquisition of a beneficial interest herein) waives any claim to any proceeds or assets of the Titling Trustee and to all assets of the Titling Trust other than those from time to time included in the 1997-A SUBI Assets and those proceeds or assets derived from or earned by such 1997-A SUBI Assets (excluding the rights to proceeds of the Residual Value Insurance Policy). In the event that, notwithstanding the statement of intentions and undertakings set forth in Section 4.12(a) of the Agreement and herein, it is finally determined that the Class A-3 Certificates do not evidence indebtedness of the Transferor for all income and franchise tax purposes, but rather represent an equity interest in the assets of the 1997-A Securitization Trust, then the Holder (and each Certificate Owner hereof with respect hereto by virtue of acquiring a beneficial interest herein), agrees (i) to treat such Certificates, together with the Transferor Certificate, as representing an interest in a partnership for all tax purposes, (ii) to treat all payments in respect of such Certificates (to the extent not a return of capital) as a "guaranteed payment" thereon made pursuant to Section 707(c) of the Code, and (iii) to allocate all other items of income, gain, deduction, loss or credit with respect to the assets and operations of the 1997-A Securitization Trust to the Transferor. The Certificates do not represent an obligation of, or an interest in, the Transferor, the Servicer, the Titling Trust, the Titling Trustee, the 1997-A Securitization Trustee or any of their respective affiliates. The Certificates are limited in right of payment to certain collections and recoveries respecting A-3-4 the 1997-A SUBI and 1997-A SUBI Certificate and certain monies on deposit in the Reserve Fund and in certain other accounts established for the benefit of the Certificateholders, in each case to the extent and as more specifically set forth in the Agreement. A copy of the Agreement may be examined during normal business hours at the Corporate Trust Office of the 1997-A Securitization Trustee and at such other places, if any, designated by the 1997-A Securitization Trustee, by any Certificateholder upon request. The Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the parties thereto and the rights of the Certificateholders under the Agreement at any time by the Transferor and the 1997-A Securitization Trustee. In certain limited circumstances, the Agreement may only be amended with the consent of the Holders of Investor Certificates evidencing not less than 51% of the aggregate Percentage Interest of all Investor Certificates, voting together as a single class. Any such consent by the Holder of this Certificate shall be conclusive and binding on such Holder and on all future Holders of this Certificate and of any Certificate issued upon the transfer hereof or in exchange herefor or in lieu hereof whether or not notation of such consent is made upon this Certificate. As provided in the Agreement and subject to certain limitations set forth therein, the transfer of this Certificate is registrable in the Certificate Register upon surrender of this Certificate for registration of transfer at the Corporate Trust Office of the 1997-A Securitization Trustee in its capacity as Certificate Registrar, or at the office of the agent of the 1997-A Securitization Trustee in its capacity as Certificate Registrar, who shall initially be First Trust of New York, National Association, 100 Wall Street, 20th Floor, New York, New York 10005, in the Borough of Manhattan, the City of New York, or at the appropriate office of any successor Certificate Registrar, accompanied by a written instrument of transfer in form satisfactory to the 1997-A Securitization Trustee and the Certificate Registrar duly executed by the Holder hereof or such Holder's attorney duly authorized in writing, and thereupon one or more new Class A-3 Certificates of authorized denominations and of a like aggregate fractional undivided interest will be issued to the designated transferee. The Class A-3 Certificates are issuable only as registered Certificates without coupons in denominations of $1,000 and integral multiples thereof (except for one Class A-3 Certificate in a smaller minimum denomination representing any remaining portion of the Initial Class A-3 Certificate Balance). As provided in the Agreement and subject to certain limitations A-3-5 therein set forth, Certificates are exchangeable for new Certificates of the same Class, of authorized denominations of a like aggregate principal amount, as requested by the Holder surrendering the same. No service charge will be made for any such registration of transfer or exchange, but the 1997-A Securitization Trustee may require payment of a sum sufficient to cover any tax or governmental charges payable in connection therewith. Prior to due presentation of this Certificate for registration of transfer, the 1997-A Securitization Trustee, the Certificate Registrar and any of their respective agents may treat the Person in whose name this Class A-3 Certificate is registered as the owner hereof for the purpose of receiving distributions and for all other purposes, and neither the 1997-A Securitization Trustee, the Certificate Registrar nor any such agent shall be affected by any notice to the contrary. The obligations and responsibilities created by the Agreement and the 1997-A Securitization Trust created thereby shall terminate upon the payment to Investor Certificateholders of all amounts required to be paid to them pursuant to the Agreement and the disposition of all property held as part of the 1997-A Securitization Trust. The Transferor may at its option purchase the corpus of the 1997-A Securitization Trust at a price specified in the Agreement, and such purchase of the 1997-A SUBI and 1997-A SUBI Certificate and other property of the 1997-A Securitization Trust will effect early retirement of the Certificates; PROVIDED, HOWEVER, such right of purchase is exercisable only on the Monthly Allocation Date on or after the Class A-3 Targeted Maturity Date, if either before or after giving effect to any payments of principal required to be made on such Monthly Allocation Date, the Certificate Balance shall be less than or equal to $123,123,151.92 (ten percent (10%) of the Aggregate Net Investment Value as of the Cutoff Date). By accepting this Certificate, the Holder hereof (and each Certificate Owner with respect hereto, by virtue of acquiring a beneficial interest herein) covenants and agrees that prior to the date which is one year and one day after the last date upon which (a) each Class of Investor Certificates has been paid in full, and (b) all obligations due under any other Securitized Financing have been paid in full, the Holder and/or Certificate Owner will not institute against, or join any other Person in instituting against the Transferor, Toyota Motor Credit Corporation, the 1997-A Securitization Trust, the Titling Trustee or the Titling Trust any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding or other proceedings under any federal or state bankruptcy or similar law. The foregoing shall not limit the Holder's and/or Certificate Owner's right to A-3-6 file any claim in or otherwise take actions with respect to any such proceeding instituted by any Person not under such a constraint. This nonpetition covenant shall survive the termination of the Agreement. Unless the certificate of authentication hereon shall have been executed by an authorized officer of the 1997-A Securitization Trustee, by manual signature, this Class A-3 Certificate shall not entitle the Holder hereof to any benefit under the Agreement or be valid for any purpose. A-3-7 IN WITNESS WHEREOF, the Transferor has caused this Class A-3 Certificate to be duly executed. Dated: __________ __, 199_ TOYOTA LEASING INC. By:________________________________ Authorized Officer A-3-8 This is one of the Class A-3 Certificates referred to in the within-mentioned Agreement. U.S. BANK NATIONAL ASSOCIATION, as 1997-A Securitization Trustee By:________________________________ A-3-9 ASSIGNMENT FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE _______________________________________________________________________________ (Please print or typewrite name and address, including postal zip code, of assignee) _______________________________________________________________________________ the within Certificate, and all rights thereunder, hereby irrevocably constituting and appointing _______________________________________________________________________________ Attorney to transfer said Certificate on the books of the Certificate Registrar, with full power of substitution in the premises. Dated: _____________________________* Signature Guaranteed: _____________________________* * NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Certificate in every particular, without alteration, enlargement or any change whatever. Such signature must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Certificate Registrar, which requirements include membership or participation in STAMP or such other "signature guarantee program" as may be determined by the Note Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. A-3-10 EXHIBIT B THIS CLASS B CERTIFICATE HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION IN RELIANCE ON EXEMPTIONS PROVIDED BY THE SECURITIES ACT AND SUCH STATE OR FOREIGN SECURITIES LAWS. THE CLASS B CERTIFICATES ARE ELIGIBLE FOR PURCHASE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT. NO RESALE OR OTHER TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS SUCH RESALE OR TRANSFER (A) IS MADE IN ACCORDANCE WITH SECTION 4.03 OF THE AGREEMENT REFERRED TO HEREIN AND (B) IS MADE (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (ii) IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE AND FOREIGN SECURITIES LAWS, (iii) TO TOYOTA LEASING INC. (THE "TRANSFEROR") OR (iv) TO A PERSON WHO THE TRANSFEROR OF THIS CLASS B CERTIFICATE REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT THAT IS AWARE THAT THE RESALE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A. IN THE EVENT THAT THE TRANSFER OF A CLASS B CERTIFICATE IS TO BE MADE OTHER THAN AS DESCRIBED IN THE PRECEDING SENTENCE, THE PROSPECTIVE INVESTOR IS REQUIRED TO DELIVER AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE 1997-A SECURITIZATION TRUSTEE AND THE TRANSFEROR TO THE EFFECT THAT SUCH TRANSFER MAY BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE OR FOREIGN SECURITIES LAWS. PROSPECTIVE PURCHASERS OF THE CLASS B CERTIFICATES ARE HEREBY NOTIFIED THAT THE SELLER OF ANY CLASS B CERTIFICATES MAY BE RELYING ON THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SECTION 5 OF THE ACT PROVIDED BY RULE 144A UNDER THE ACT. THIS CLASS B CERTIFICATE OR A BENEFICIAL INTEREST HEREIN MAY NOT BE TRANSFERRED UNLESS THE 1997-A SECURITIZATION TRUSTEE HAS RECEIVED (I) EITHER (A) A CERTIFICATE FROM THE TRANSFEREE TO THE EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN, TRUST OR ACCOUNT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED B-1 (THE "CODE"), OR A GOVERNMENTAL PLAN DEFINED IN SECTION 3(32) OF ERISA SUBJECT TO ANY FEDERAL STATE OR LOCAL LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE ("SIMILAR LAW") (EACH, A "BENEFIT PLAN") AND IS NOT AN ENTITY INCLUDING AN INSURANCE COMPANY SEPARATE ACCOUNT OR AN INSURANCE COMPANY GENERAL ACCOUNT IF THE ASSETS IN ANY SUCH ACCOUNTS CONSTITUTE "PLAN ASSETS" FOR PURPOSES OF REGULATION SECTION 2510.3-101 OF ERISA, WHOSE UNDERLYING ASSETS INCLUDE BENEFIT PLAN ASSETS BY REASON OF A BENEFIT PLAN'S INVESTMENT IN THE ENTITY (SUCH BENEFIT PLAN OR ENTITY, A "BENEFIT PLAN INVESTOR") OR (B) AN OPINION OF COUNSEL SATISFACTORY TO THE 1997-A SECURITIZATION TRUSTEE, THE TRANSFEROR AND THE SERVICER TO THE EFFECT THAT THE PURCHASE OR HOLDING OF SUCH CERTIFICATE WILL NOT CONSTITUTE OR RESULT IN THE ASSETS OF THE 1997-A SECURITIZATION TRUST BEING DEEMED TO BE "PLAN ASSETS" SUBJECT TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF ERISA OR PROHIBITED TRANSACTIONS PROVISIONS OF SECTION 4975 OF THE CODE OR SIMILAR LAW, WILL NOT CONSTITUTE OR RESULT IN A PROHIBITED TRANSACTION WITHIN THE MEANING OF SECTION 406 OR SECTION 407 OF ERISA OR SECTION 4975 OF THE CODE OR SIMILAR LAW, AND WILL NOT SUBJECT THE TRUSTEE, THE TRANSFEROR OR THE SERVICER TO ANY OBLIGATION OR LIABILITY (INCLUDING OBLIGATIONS OR LIABILITIES UNDER ERISA, SECTION 4975 OF THE CODE OF SIMILAR LAW) IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT AND (II) A CERTIFICATE TO THE EFFECT THAT IF THE TRANSFEREE IS A PARTNERSHIP, GRANTOR TRUST OR S CORPORATION FOR FEDERAL INCOME TAX PURPOSES (A "FLOW-THROUGH ENTITY"), ANY CLASS B CERTIFICATES OWNED BY SUCH FLOW-THROUGH ENTITY WILL REPRESENT LESS THAN 50% OF THE VALUE OF ALL THE ASSETS OWNED BY SUCH FLOW-THROUGH ENTITY AND NO SPECIAL ALLOCATION OF INCOME, GAIN, LOSS, DEDUCTION OR CREDIT FROM SUCH CLASS B CERTIFICATES WILL BE MADE AMONG THE BENEFICIAL OWNERS OF SUCH FLOW-THROUGH ENTITY. NOTWITHSTANDING THE FOREGOING RESTRICTIONS, THE 1997-A SECURITIZATION TRUSTEE SHALL PERMIT A TRANSFER OF CLASS B CERTIFICATES TO A BENEFIT PLAN IF, IN THE SOLE DETERMINATION OF THE 1997-A SECURITIZATION TRUSTEE, AFTER GIVING EFFECT TO THE PROPOSED TRANSFER TO SUCH BENEFIT PLAN, BENEFIT PLANS WILL NOT OWN 25% OR MORE OF THE CLASS B CERTIFICATES (BY CLASS CERTIFICATE BALANCE). IN ADDITION, NO RESALE OR OTHER TRANSFER OF THIS CLASS B CERTIFICATE OR ANY INTEREST THEREIN SHALL BE PERMITTED UNLESS B-2 IMMEDIATELY AFTER GIVING EFFECT TO SUCH RESALE OR OTHER TRANSFER, THERE WOULD BE FEWER THAN 100 CLASS B CERTIFICATEHOLDERS. TOYOTA AUTO LEASE TRUST 1997-A _____% AUTO LEASE ASSET BACKED CERTIFICATE, CLASS B evidencing a percentage interest in the distributions allocable to the Investor Certificates, as defined below, evidence an undivided interest in the 1997-A Securitization Trust, as defined below, the property of which includes, among other things, a special unit of beneficial interest (the "1997-A SUBI") in Toyota Lease Trust, a Delaware business trust (the "Titling Trust"), which 1997-A SUBI represents a beneficial interest in a pool of retail lease contracts for new and used automobiles and light duty trucks (and the related automobiles and light-duty trucks) entered into by various automobile and light duty truck dealers pursuant to contractual arrangements with Toyota Lease Trust, and which special unit of beneficial interest was originally issued to Toyota Leasing Inc. and then to the 1997-A Securitization Trust. (This Certificate does not represent an obligation of, or an interest in, Toyota Leasing, Inc., Toyota Motor Credit Corporation, the Titling Trustee or the 1997-A Securitization Trustee or any of their respective affiliates.) Aggregate Denominations of all Class B Certificates: CUSIP # $_____________ Number B-__ Denomination: $__________ THIS CERTIFIES THAT _______________ is the registered owner of a ________________________________________________ DOLLAR and ________________ CENTS ($__________ ) nonassessable, fully-paid, fractional undivided interest in the Toyota Auto Lease Trust 1997-A (the "1997-A Securitization Trust") formed by Toyota Leasing, Inc., a Delaware corporation, as Transferor (the "Transferor"). The 1997-A Securitization Trust was created pursuant to a 1997-A Securitization Trust Agreement dated as of September 1, 1997 (the "Agreement"), between the Transferor and U.S. Bank National Association, a national banking association, B-3 as trustee (the "Trustee"). A summary of certain of the pertinent provisions of the Agreement is set forth below. To the extent not otherwise defined herein, the capitalized terms used herein have the meanings assigned to them in the Agreement. This Certificate is one of the duly authorized Certificates issued under the Agreement and designated as "Toyota Auto Lease Trust 1997-A_____% Automobile Contract Asset Backed Certificates, Class B" (the "Class B Certificates"). Also issued under the Agreement are Certificates designated as "Toyota Auto Lease Trust 1997-A _____% Automobile Lease Asset Backed Certificates, Class A-1" (the "Class A-1 Certificates"), Certificates designated as "Toyota Auto Lease Trust 1997-A_____% Automobile Lease Asset Backed Certificates, Class A-2" (the "Class A-2 Certificates"), Certificates designated as "Toyota Auto Lease Trust 1997-A _____% Automobile Lease Asset Backed Certificates, Class A-3" (the "Class A-3 Certificates" and, together with the Class A-1 Certificates and the Class A-2 Certificates, the "Class A Certificates" and, together with the Class B Certificates, the "Investor Certificates") and a Certificate designated as the "Toyota Auto Lease Trust 1997-A Automobile Asset Backed Transferor Certificate" (the "Transferor Certificate" and, together with the Investor Certificates, the "Certificates"). The Class B Certificates are subordinated to the Class A Certificates, and the Transferor Certificate is subordinated to the Investor Certificates, to the extent described in the Agreement. This Class B Certificate is issued under and is subject to the terms, provisions and conditions of the Agreement, to which Agreement the Holder of this Class B Certificate by virtue of the acceptance hereof assents and by which such Holder is bound. The property of the 1997-A Securitization Trust includes, among other things, the 1997-A SUBI, which 1997-A SUBI represents a beneficial interest in a pool of retail automobile and light duty truck lease contracts ("Contracts") and the new and used automobiles and light duty trucks leased thereby ("Leased Vehicles") (such pool of Contracts and Leased Vehicles, the "1997-A SUBI Portfolio") entered into by various automobile and light duty truck dealers pursuant to contractual arrangements with the Titling Trust. Toyota Motor Credit Corporation acts as servicer (in that capacity, the "Servicer") of the 1997-A SUBI Portfolio. Under the Agreement, there will be distributed on the 25th day of March and September or, to the extent provided in the Agreement, on the 25th day of each month, or if such 25th day is not a Business Day, the next succeeding Business Day (each, a "Certificate Payment Date"), commencing on March 25, 1998 (except as provided otherwise in the Agreement), to the Person in whose B-4 name this Class B Certificate is registered at the close of business on the last calendar day of the immediately preceding calendar month (each a "Record Date"), such Class B Certificateholder's percentage interest in the amount distributed on the Class B Certificates pursuant to Section 3.01 of the Agreement, all to the extent and as more specifically set forth in the Agreement. To the extent provided in the Agreement, no principal payments shall be made in respect of the Class A-2 Certificates until the Class A-1 Certificates have been paid in full, no principal payments shall be made in respect of the Class A-3 Certificates until the Class A-2 Certificates have been paid in full and no principal payments shall be made in respect of the Class B Certificates until the Class A-3 Certificates have been paid in full. Distributions on this Class B Certificate will be made by the 1997-A Securitization Trustee by check mailed to the Class B Certificateholder of record in the Certificate Register without the presentation or surrender of this Class B Certificate or the making of any notation hereon or, at the option of a Holder who owns Class B Certificates having an aggregate initial denomination of $250,000 or more, upon written instructions received by the 1997-A Securitization Trustee not later than fifteen days prior to the related Record Date, by wire transfer of immediately available funds to an account maintained by such Holder at a depository institution in the United States having appropriate facilities therefor. Except as otherwise provided in the Agreement and notwithstanding the foregoing, the final distribution on this Class B Certificate will be made after due notice by the 1997-A Securitization Trustee of the pendency of such distribution and only upon presentation and surrender of this Class B Certificate at the Corporate Trust Office of the 1997-A Securitization Trustee. It is the intention of the Transferor and the Holders of Investor Certificates that the Investor Certificates will be indebtedness for federal, state and local income and franchise tax purposes and for purposes of any other tax imposed on or measured by income. The Transferor, the 1997-A Securitization Trustee and the Holder of this Certificate by acceptance of this Certificate agree to treat the Investor Certificates, for purposes of federal, state and local income or franchise taxes and any other tax imposed on or measured by income, as indebtedness and to report the transactions contemplated by the Agreement on all applicable tax returns in a manner consistent with such treatment. By accepting this Certificate, the Holder hereof waives any claim to any proceeds or assets of the Titling Trustee and to all assets of the Titling Trust other than those from time to time B-5 included in the 1997-A SUBI Assets and those proceeds or assets derived from or earned by such 1997-A SUBI Assets (excluding the rights of the Residual Value Insurance Policy). In the event that, notwithstanding the statement of intentions and undertakings set forth in Section 4.12(a) of the Agreement and herein, it is finally determined that the Class B Certificates do not evidence indebtedness of the Transferor for all income and franchise tax purposes, but rather represent an equity interest in the assets of the 1997-A Securitization Trust, then the Holder hereof agrees (i) to treat such Certificates, together with the Transferor Certificate, as representing an interest in a partnership for all tax purposes, (ii) to treat all payments in respect of such Certificates (to the extent not a return of capital) as a "guaranteed payment" thereon made pursuant to Section 707(c) of the Code, and (iii) to allocate all other items of income, gain, deduction, loss or credit with respect to the assets and operations of the 1997-A Securitization Trust to the Transferor. The Certificates do not represent an obligation of, or an interest in, the Transferor, the Servicer, the Titling Trust, the Titling Trustee, the 1997-A Securitization Trustee or any of their respective affiliates. The Certificates are limited in right of payment to certain collections and recoveries respecting the 1997-A SUBI and 1997-A SUBI Certificate and certain monies on deposit in the Reserve Fund and in certain other accounts established for the benefit of the Certificateholders, in each case to the extent and as more specifically set forth in the Agreement. A copy of the Agreement may be examined during normal business hours at the Corporate Trust Office of the 1997-A Securitization Trustee, and at such other places, if any, designated by the 1997-A Securitization Trustee, by any Certificateholder upon request. The Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the parties thereto and the rights of the Certificateholders under the Agreement at any time by the Transferor and the 1997-A Securitization Trustee. In certain limited circumstances, the Agreement may only be amended with the consent of the Holders of Investor Certificates evidencing not less than 51% of the aggregate Percentage Interest of all Investor Certificates, voting together as a single class. Any such consent by the Holder of this Certificate shall be conclusive and binding on such Holder and on all future Holders of this Certificate and of any Certificate issued upon the transfer hereof or in exchange herefor or in lieu hereof whether or not notation of such consent is made upon this Certificate. B-6 As provided in the Agreement and subject to certain limitations set forth therein, the transfer of this Certificate is registrable in the Certificate Registrar upon surrender of this Certificate for registration of transfer at the Corporate Trust Office of the 1997-A Securitization Trustee in its capacity as Certificate Registrar, or at the office of the agent of the 1997-A Securitization Trustee in its capacity as Certificate Registrar, who shall initially be First Trust of New York, National Association, 100 Wall Street, 20th Floor, New York, New York 10005, in the Borough of Manhattan, the City of New York, or at the appropriate office of any successor Certificate Registrar, accompanied by a written instrument of transfer in form satisfactory to the 1997-A Securitization Trustee and the Certificate Registrar duly executed by the Holder hereof or such Holder's attorney duly authorized in writing, and thereupon one or more new Class B Certificates of authorized denominations and of a like aggregate fractional undivided interest will be issued to the designated transferee. The Class B Certificates are issuable only as registered Certificates without coupons in denominations of $250,000 and integral multiples of $1,000 in excess thereof, (except for one Class B Certificate in a smaller minimum denomination representing any remaining portion of the Initial Class B Certificate Balance). As provided in the Agreement, and subject to certain limitations therein set forth, Certificates are exchangeable for new Certificates of the same Class, of authorized denominations of a like aggregate principal amount, as requested by the Holder surrendering the same. No service charge will be made for any such registration of transfer or exchange, but the 1997-A Securitization Trustee may require payment of a sum sufficient to cover any tax or governmental charges payable in connection therewith. Prior to due presentation of this Certificate for registration of transfer, the 1997-A Securitization Trustee, the Certificate Registrar and any of their respective agents may treat the Person in whose name this Class B Certificate is registered as the owner hereof for the purpose of receiving distributions and for all other purposes, and neither the 1997-A Securitization Trustee, the Certificate Registrar nor any such agent shall be affected by any notice to the contrary. The obligations and responsibilities created by the Agreement and the 1997-A Securitization Trust created thereby shall terminate upon the payment to Investor Certificateholders of all amounts required to be paid to them pursuant to the Agreement and the disposition of all property held as part of the 1997-A Securitization Trust. The Transferor may at its option purchase the corpus of the 1997-A Securitization Trust at a price B-7 specified in the Agreement, and such purchase of the 1997-A SUBI and 1997-A SUBI Certificate and other property of the 1997-A Securitization Trust will effect early retirement of the Certificates; PROVIDED, HOWEVER, such right of purchase is exercisable only on the Monthly Allocation Date on or after the Class A-3 Targeted Maturity Date, if either before or after giving effect to any payments of principal required to be made on such Monthly Allocation Date, the Certificate Balance shall be less than or equal to $123,123,151.92 (ten percent (10%) of the Aggregate Net Investment Value as of the Cutoff Date). By accepting this Certificate, the Holder hereof covenants and agrees that prior to the date which is one year and one day after the last date upon which (a) each Class of Investor Certificates has been paid in full, and (b) all obligations due under any other Securitized Financing have been paid in full, the Holder will not institute against, or join any other Person in instituting against the Transferor, Toyota Motor Credit Corporation, the 1997-A Securitization Trust, the Titling Trustee or the Titling Trust any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding or other proceedings under any federal or state bankruptcy or similar law. The foregoing shall not limit the Holder's right to file any claim in or otherwise take actions with respect to any such proceeding instituted by any Person not under such a constraint. This non-petition covenant shall survive the termination of the Agreement. Unless the certificate of authentication hereon shall have been executed by an authorized officer of the 1997-A Securitization Trustee, by manual signature, this Class B Certificate shall not entitle the Holder hereof to any benefit under the Agreement or be valid for any purpose. B-8 IN WITNESS WHEREOF, the Transferor has caused this Class B Certificate to be duly executed. Dated: __________ __, 199_ TOYOTA LEASING INC. By:________________________________ Authorized Officer B-9 This is one of the Class B Certificates referred to in the within-mentioned Agreement. U.S. BANK NATIONAL ASSOCIATION, as Trustee By:________________________________ B-10 ASSIGNMENT FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE _______________________________________________________________________________ (Please print or typewrite name and address, including postal zip code, of assignee) _______________________________________________________________________________ the within Certificate, and all rights thereunder, hereby irrevocably constituting and appointing _______________________________________________________________________________ Attorney to transfer said Certificate on the books of the Certificate Registrar, with full power of substitution in the premises. Dated: _____________________________* Signature Guaranteed: _____________________________* * NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Certificate in every particular, without alteration, enlargement or any change whatever. Such signature must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Certificate Registrar, which requirements include membership or participation in STAMP or such other "signature guarantee program" as may be determined by the Note Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. B-11 EXHIBIT C THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE APPLICABLE SECURITIES LAWS OF ANY STATE AND MAY NOT BE RESOLD OR TRANSFERRED. TOYOTA AUTO LEASE TRUST 1997-A AUTO LEASE ASSET BACKED TRANSFEROR CERTIFICATE evidencing the entire interest in the distributions allocable to the Transferor Certificate evidencing an undivided interest in the 1997-A Securitization Trust, as defined below, the property of which includes, among other things, a special unit of beneficial interest (the "1997-A SUBI") in Toyota Lease Trust, a Delaware business trust, which 1997-A SUBI represents a beneficial interest in a pool of retail lease contracts for new and used automobiles and light duty trucks (and the related automobiles and light-duty trucks) entered into by various automobile and light duty truck dealers pursuant to contractual arrangements with Toyota Lease Trust, and which 1997-A SUBI was originally issued to Toyota Leasing, Inc., and then to the 1997-A Securitization Trust. (This Certificate does not represent an obligation of, or an interest in, Toyota Leasing, Inc., Toyota Motor Credit Corporation, the Titling Trustee, the 1997-A Securitization Trustee, or any of their respective affiliates.) THIS CERTIFIES THAT TOYOTA LEASING, INC. (the "Transferor") is the registered owner of the entire interest not allocated to the Investor Certificates in the Toyota Auto Lease Trust 1997-A (the "1997-A Securitization Trust") formed by the Transferor. The 1997-A Securitization Trust was created pursuant to a 1997-A Securitization Trust Agreement dated as of ________ 1, 1997 (the "Agreement"), between the Transferor and U.S. Bank National Association, a national banking association, as trustee (the "1997-A Securitization Trustee"). A summary of certain of the pertinent provisions of the Agreement is set forth below. To the extent not otherwise defined herein the capitalized terms used herein have the meanings assigned to them in the Agreement. C-1 This Certificate is the duly authorized Transferor Certificate issued under the Agreement and designated as the "Toyota Auto Lease Trust 1997-A Automobile Lease Asset Backed Transferor Certificate" (the "Transferor Certificate"). Also issued under the Agreement are Certificates designated as "Toyota Auto Lease Trust 1997-A ____% Automobile Lease Asset Backed Certificates, Class A-1" (the "Class A-1 Certificates"), Certificates designated as "Toyota Auto Lease Trust 1997-A ____% Automobile Contract Asset Backed Certificates, Class A-2" (the "Class A-2 Certificates"), Certificates designated as "Toyota Auto Lease Trust 1997-A ____% Automobile Lease Asset Backed Certificates, Class A-3" (the "Class A-3 Certificates" and, together with the Class A-1 Certificates and the Class A-2 Certificates, the "Class A Certificates") and Certificates designated as "Toyota Auto Lease Trust 1997-A ___% Automobile Lease Asset Backed Certificates, Class B" (the "Class B Certificates" and, together with the Class A Certificates, the "Investor Certificates" and, together with the Transferor Certificate, the "Certificates"). This Transferor Certificate is issued under and is subject to the terms, provisions and conditions of the Agreement, to which Agreement the Holder of this Transferor Certificate by virtue of the acceptance hereof assents and by which such Holder is bound. The property of the 1997-A Securitization Trust includes, among other things, the 1997-A SUBI, which 1997-A SUBI represents a beneficial interest in a pool of retail automobile and light duty truck lease contracts ("Contracts") and the new and used automobiles and light duty trucks leased thereby ("Leased Vehicles") (such pool of Contracts and Leased Vehicles, the "1997-A SUBI Portfolio") entered into by various automobile and light duty truck dealers pursuant to contractual arrangements with the Titling Trust. Toyota Motor Credit Corporation acts as servicer (in that capacity, the "Servicer") of the 1997-A SUBI Portfolio. During the Revolving Period, Principal Collections allocable to the 1997-A SUBI generally will be applied towards the allocation to the 1997-A SUBI Portfolio of additional qualifying Contracts and Leased Vehicles from among all other unallocated Contracts and Leased Vehicles owned by the Titling Trust. Payments in respect of the 1997-A SUBI will be allocated between the Investor Certificates and this Transferor Certificate and paid to the registered Holder of this Transferor Certificate as provided in the Agreement. It is the intention of the Transferor, as the Holder of this Certificate, and the Holders of Investor Certificates that the Investor Certificates will be indebtedness for federal, state and local income and franchise tax purposes and for purposes of any C-2 other tax imposed on or measured by income. The 1997-A Securitization Trustee and Transferor, as the Holder of this Certificate, by acceptance of this Certificate, agree to treat the Investor Certificates, for purposes of federal, state and local income or franchise taxes and any other tax imposed on or measured by income, as indebtedness and to report the transactions contemplated by the Agreement on all applicable tax returns in a manner consistent with such treatment. By accepting this Certificate, the Holder hereof waives any claim to any proceeds or assets of the Titling Trustee and to all assets of the Titling Trust other than those from time to time included in the 1997-A SUBI Assets and those proceeds or assets derived from or earned by such 1997-A SUBI Assets. In the event that, notwithstanding the statement of intentions and undertakings set forth in Section 4.12(a) of the Agreement and herein, it is finally determined that the Investor Certificates do not evidence indebtedness of the Transferor for all income and franchise tax purposes, but rather represent an equity interest in the assets of the 1997-A Securitization Trust, then the Transferor, as Holder hereof, agrees (i) to treat the Investor Certificates, together with this Certificate, as representing an interest in a partnership for all tax purposes, (ii) to treat all payments in respect of such Certificates (to the extent not a return of capital) as a "guaranteed payment" thereon made pursuant to Section 707(c) of the Code, and (iii) to allocate all other items of income, gain, deduction, loss or credit with respect to the assets and operations of the 1997-A Securitization Trust to the Transferor. The Certificates do not represent an obligation of, or an interest in, the Transferor, the Servicer, the Titling Trust, the Titling Trustee, the 1997-A Securitization Trustee or any of their respective affiliates. The Certificates are limited in right of payment to certain collections and recoveries respecting the 1997-A SUBI and 1997-A SUBI Certificate and certain monies on deposit in the Reserve Fund and in certain other accounts established for the benefit of the Certificateholders, in each case to the extent and as more specifically set forth in the Agreement. A copy of the Agreement may be examined during normal business hours at the Corporate Trust Office of the 1997-A Securitization Trustee, and at such other places, if any, designated by the 1997-A Securitization Trustee, by any Certificateholder upon request. The Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the parties thereto and the rights of the Certificateholders under the Agreement at any time by the C-3 Transferor and the 1997-A Securitization Trustee. In certain limited circumstances, the Agreement may only be amended with the consent of the Holders of Certificates evidencing not less than 51% of the aggregate Percentage Interest of all Investor Certificates, voting together as a single class. As provided in the Agreement, this Certificate shall be owned by the Transferor and may not be transferred. As provided in the Agreement and subject to certain limitations therein set forth, Certificates are exchangeable for new Certificates of the same Class, of authorized denominations of a like aggregate principal amount, as requested by the Holder surrendering the same. No service charge will be made for any such registration of transfer or exchange, but the 1997-A Securitization Trustee may require payment of a sum sufficient to cover any tax or governmental charges payable in connection therewith. The obligations and responsibilities created by the Agreement and the 1997-A Securitization Trust created thereby shall terminate upon the payment to Investor Certificateholders of all amounts required to be paid to them pursuant to the Agreement and the disposition of all property held as part of the 1997-A Securitization Trust. The Transferor may at its option purchase the corpus of the 1997-A Securitization Trust at a price specified in the Agreement, and such purchase of the 1997-A SUBI and 1997-A SUBI Certificate and other property of the 1997-A Securitization Trust will effect early retirement of the Certificates; PROVIDED, HOWEVER, such right of purchase is exercisable only on the Monthly Allocation Date on or after the Class A-3 Targeted Maturity Date, if either before or after giving effect to any payment required to be made on such Monthly Allocation Date, the Certificate Balance shall be less than or equal to $123,123,151.92 (ten percent (10%) of the Aggregate Net Investment Value as of the Cutoff Date). Unless the certificate of authentication hereon shall have been executed by an authorized officer of the 1997-A Securitization Trustee, by manual signature, this Transferor Certificate shall not entitle the Holder hereof to any benefit under the Agreement or be valid for any purpose. C-4 IN WITNESS WHEREOF, the Transferor has caused this Transferor Certificate to be duly executed. Dated: __________, 1997 TOYOTA LEASING, INC. (SEAL) By:________________________________ Authorized Officer ATTEST _________________________ C-5 This is the Transferor Certificate referred to in the within-mentioned Agreement. U.S. BANK NATIONAL ASSOCIATION, as 1997-A Securitization Trustee By:________________________________ C-6 EXHIBIT D-1 FORM OF TRANSFEREE CERTIFICATE Toyota Motor Credit Corporation Toyota Leasing, Inc., c/o Toyota Motor Credit Corporation 19001 S. Western Avenue Torrance, California 90509 U.S. Bank National Association One Illinois Center 111 East Wacker Drive, Suite 3000 Chicago, Illinois 60601 Re: Toyota Auto Lease Trust 1997-A; ____% Auto Lease Asset Backed Certificates, Class B ---------------------------------------- Ladies and Gentlemen: __________________ (the "Purchaser") is today purchasing in a private resale from ______________ (the "Seller") $______ aggregate principal amount of Auto Lease Asset-Backed Certificates, Class B (the "Certificates"), issued pursuant to a securitization trust agreement, dated as of September 1, 1997 (the "Agreement") between Toyota Leasing, Inc. ("TLI") and U.S. Bank National Association (the "U.S. Bank"), as trustee (the "Trustee"). The Certificates are securities issued by and evidencing interests in the assets of Toyota Auto Lease Trust 1997-A (the "Trust"). In connection with the purchase of the Certificates, the Purchaser hereby represents and warrants to each of you as follows: 1. The Purchaser understands that the Certificates have not been registered under the Securities Act of 1933, as amended (the "Securities Act") or the securities law of any state or foreign jurisdiction. 2. The Purchaser is acquiring the Certificates for its own account only for investment and not for any other person, and not with a view to, or for resale in connection with, a distribution that would constitute a violation of the Securities Act or any state or foreign securities laws (subject to the understanding that disposition of the Purchaser's property will at all times be and remain within its control). The Purchaser is not an affiliate of TLI, the Trustee or any of their respective affiliates. D-1 3. The Purchaser agrees that the Certificates must be held indefinitely by it unless (i) the Certificates are subsequently registered under the Securities Act or (ii) an exemption from the registration requirements of the Securities Act is available. 4. The Purchaser agrees that if at some time it wishes to dispose of or exchange any of the Certificates, it will not transfer or exchange any of the Certificates unless such transfer or exchange is in accordance with the provisions of Section 4.03 of the Agreement. 5. The Purchaser is a qualified institutional buyer as defined in Rule 144A of the Securities Act and has completed one of the forms of certification to that effect attached as Annexes hereto, it is aware that the sale to it is being made in reliance on Rule 144A, it is acquiring the Certificates for its own account or for the account of a qualified institutional buyer and it understands that such Certificates may be resold, pledged or transferred by the Purchaser only (i) to a person who the Purchaser reasonably believes is a qualified institutional buyer that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that the resale, pledge or transfer is being made in reliance on Rule 144A or (ii) pursuant to another exemption from registration under the Securities Act and applicable state and foreign securities laws. 6. Neither the Purchaser nor anyone acting on its behalf has offered, transferred, pledged, sold or otherwise disposed of any Certificate, any interest in any Certificate or any other similar security of the Transferor to, or solicited any offer to buy or accept a transfer, pledge or other disposition of any Certificate, any interest in any Certificate or any other similar security of TLI or the Trust with, any person in any manner, or made any general solicitation by means of general advertising or in any other manner, or taken any other action, which would constitute a distribution of the Certificates under the Securities Act or which would render the disposition of any Certificate a violation of Section 5 of the Securities Act or any state securities law, require registration or qualification pursuant thereto, or require registration of the Trust or TLI as an "investment company" under the Investment Company Act of 1940, as amended, nor will it act, nor has it authorized or will it authorize any person to act in such manner with respect to the Certificates. 7. The Purchaser understands that there is no market, nor is there any assurance that a market will develop, for the Certificates and that TLI and the Trust have no obligation to make or facilitate any such market (or to otherwise repurchase the Certificates from the Purchaser) under any circumstances. D-2 8. The Purchaser has consulted with its own legal counsel, independent accountants and financial advisors to the extent it deems necessary regarding the tax consequences to it of ownership of the Certificates, is aware that its taxable income with respect to the Certificates in any accounting period may not correspond to the cash flow (if any) from the Certificates for such period, and is not purchasing the Certificates in reliance on any representations of TLI or its counsel with respect to tax matters. 9. The Purchaser has reviewed the Private Placement Memorandum with respect to the Certificates dated September 23, 1997, including the Prospectus attached thereto as Exhibit A (the "Private Placement Memorandum"), and the agreements and other materials referred to therein, and has had the opportunity to ask questions and receive answers concerning the terms and conditions of the transaction contemplated by the Private Placement Memorandum and to obtain additional information necessary to verify the accuracy and completeness of any information furnished to the Purchaser or to which the Purchaser had access. 10. The Purchaser understands that the Certificates will bear legends substantially as set forth in the form of Certificate included as Exhibit B to the Agreement. 11. The Purchaser hereby further agrees to be bound by all the terms and conditions of the Certificates as provided in the Agreement. 12. The Purchaser selects one of the following: ___________ (a) the Purchaser is not an employee benefit plan, trust or account subject to Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or subject to Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"), or a governmental plan defined in Section 3(32) of ERISA subject to any federal state or local law which is, to material extent, similar to the foregoing provisions of ERISA or the Code ("Similar Law") (each, a "Benefit Plan") and is not an entity including an insurance company separate account or an insurance company general account if the assets in any such accounts constitute "Plan Assets" for purposes of regulation Section 2510.3-101 of ERISA, whose underlying assets include Benefit Plan assets by reason of a Benefit Plan's investment in the entity; or _____________ (b) the Transferee is delivering herewith an Opinion of Counsel addressed to the Trustee, the Transferor and the Servicer to the effect that the purchase or holding of such Certificate will not constitute or result in the assets of D-3 the trust being deemed to be "Plan Assets" subject to the fiduciary responsibility provisions of ERISA or prohibited transactions provisions of Section 4975 of the Code or Similar Law, will not constitute or result in a prohibited transaction within the meaning of Section 406 or Section 407 of ERISA or Section 4975 of the Code or Similar Law, and will not subject the Trustee, the Transferor or the Servicer to any obligation or liability (including obligations or liabilities under ERISA, Section 4975 of the Code or Similar Law) in addition to those undertaken in the Agreement. 13. If the Purchaser is a partnership, grantor trust or S corporation for federal income tax purposes (a "Flow-Through Entity"), any Certificates owned by such Flow-Through Entity will represent less than 50% of the value of all the assets owned by such Flow-Through Entity and no special allocation of income, gain, loss, deduction or credit from such Certificates will be made among the beneficial owners of such Flow-Through Entity. 14. If the Purchaser sells any of the Certificates, the Purchaser will obtain from any subsequent purchaser of the Certificates the same representations contained in this Representation Letter. Capitalized terms used herein that are not otherwise defined shall have the meanings ascribed thereto in the Agreement or the Private Placement Memorandum, as the case may be. D-4 The representations and warranties contained herein shall be binding upon the heirs, executors, administrators and other successors of the undersigned. If there is more than one signatory hereto, the obligations, representations, warranties and agreements of the undersigned are made jointly and severally. Executed at _________________, this ____ day of ____________ 199_ ______________________________ Purchaser's Name (Print) By____________________________ Signature Its___________________________ ______________________________ Address of Purchaser ______________________________ Purchaser's Taxpayer Identification Number D-5 APPENDIX 1 TO EXHIBIT D QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A (Buyers other than Registered Investment Companies) Toyota Motor Credit Corporation Toyota Leasing, Inc., c/o Toyota Motor Credit Corporation 19001 S. Western Avenue Torrance, California 90509 U.S. Bank National Association One Illinois Center 111 East Wacker Drive, Suite 3000 Chicago, Illinois 60601 Re: Toyota Auto Lease Trust 1997-A; ____% Auto Lease Asset Backed Certificates, Class B ---------------------------------------- Name of Buyer: _______________ ("Buyer") Ladies and Gentlemen: I hereby certify that, as indicated below, I am the President, Chief Executive/Financial Officer, Senior Vice President or other executive officer of the Buyer. In connection with purchases by Buyer from time to time, I hereby certify to you and, if you act as broker for one or more customers, to such customers, that Buyer is a "qualified institutional buyer" as that term is defined in Rule 144A under the Securities Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned and/or invested on a discretionary basis $________(1) in securities (except for the excluded securities referred to below) as of the end of Buyer's most recent fiscal year (such amount being calculated in accordance with Rule 144A) and (ii) Buyer satisfies the criteria in the category marked below. ___ CORPORATION, ETC. Buyer is a corporation (other than a bank, savings and loan association or similar institution), Massachusetts or similar business trust, partnership, or charitable - ---------- (1) Buyer must own and/or invest on a discretionary basis at least $100,000,000 in securities unless Buyer is a dealer, and, in that case, Buyer must own and/or invest on a discretionary basis at least $10,000,000 in securities. D-6 organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended. ___ BANK. Buyer (a) is a national bank or banking institution organized under the laws of any State, territory or the District of Columbia, the business of which is substantially confined to banking and is supervised by the State or territorial banking commission or similar official or is a foreign bank or equivalent institution, and (b) has an audited net worth of at least $25,000,000 as demonstrated in its latest annual financial statements. ___ SAVINGS AND LOAN. Buyer (a) is a savings and loan association, building and loan association, cooperative bank, homestead association or similar institution, which is supervised and examined by a State or Federal authority having supervision over any such institutions or is a foreign savings and loan association or equivalent institution and (b) has an audited net worth of at least $25,000,000 as demonstrated in its latest annual financial statements. ___ BROKER-DEALER. Buyer is a dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, as amended (the "1934 Act"). ___ INSURANCE COMPANY. Buyer is an insurance company whose primary and predominant business activity is the writing of insurance or the reinsuring of risks underwritten by insurance companies and which is subject to supervision by the insurance commissioner or a similar official or agency of a State, territory or the District of Columbia ___ STATE OR LOCAL PLAN. Buyer is a plan established and maintained by a State, its political subdivisions, or any agency or instrumentality of the State or its political subdivisions, for the benefit of its employees. ___ ERISA PLAN. Buyer is an employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974. ____ INVESTMENT ADVISOR. Buyer is an investment advisor registered under the Investment Advisors Act of 1940. D-7 The term "SECURITIES" as used herein does not include (i) securities of issuers that are affiliated with Buyer, (ii) securities that are part of an unsold allotment to or subscription by the Purchaser, if Buyer is a dealer, (iii) bank deposit notes and certificates of deposit, (iv) loan participations, (v) repurchase agreements, (vi) securities owned but subject to a repurchase agreement and (vii) currency, interest rate and commodity swaps. For purposes of determining the aggregate of securities owned and/or invested on a discretionary basis by Buyer, Buyer used the cost of such securities to Buyer and did not include any of the securities referred to in the preceding paragraph. Further, in determining such aggregate amount, Buyer may have included securities owned by subsidiaries of Buyer, but only if such subsidiaries are consolidated with Buyer in its financial statements prepared in accordance with generally accepted accounting principles and if the investments of such subsidiaries are managed under Buyer's direction. However, such securities were not included if Buyer is a majority owned, consolidated subsidiary of another enterprise and Buyer is not itself a reporting company under the 1934 Act. Buyer acknowledges that it is familiar with Rule 144A and understands that you and your customers (if you act as a broker for one or more customers) are and will continue to rely on the statements made herein because one or more sales by you for your own account or your customer's account to Buyer may be in reliance on Rule 144A. Will Buyer be purchasing Rule 144A securities only for Buyer's own account? ___ ___ Yes No If the answer to this question is "no", Buyer agrees that, in connection with any purchase of securities sold to Buyer for the account of a third party (including any separate account) in reliance on Rule 144A, Buyer will only repurchase for the account of a third party that at the time is a "qualified institutional buyer" within the meaning of Rule 144A. In addition, Buyer agrees that Buyer will not purchase securities for a third party unless Buyer has obtained a current representation letter from such third party or taken other appropriate steps contemplated by Rule 144A to conclude that such third party independently meets the definition of "qualified institutional buyer" set forth in Rule 144A. D-8 Buyer agrees to notify you of any changes in the information and conclusions herein. Until such notice is given, Buyer's purchase of securities from you, or through you from your customers, will constitute a reaffirmation of the foregoing certifications and acknowledgements as of the date of such purchase. Further, if Buyer is a bank or savings and loan is provided above, Buyer agrees that it will furnish to such parties updated annual financial statements promptly after they become available. Very truly yours, Date: ______________ ______________________________ Name of Buyer Print By:___________________________ Name: Title: D-9 ANNEX 2 TO EXHIBIT D QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A (Buyers that are Registered Investment Companies) Toyota Motor Credit Corporation U.S. Bank National Association Toyota Leasing, Inc. One Illinois Center c/o Toyota Motor Credit Corporation 111 E. Wacker Drive, Suite 3000 19001 South Western Avenue Chicago, Illinois 60601 Torrance, California 90509 Re: Toyota Auto Lease Trust 1997-A; Auto Lease Asset-Backed Certificates, Class B Name of Buyer: _____________________ ("Buyer") Name of Investment Adviser: __________________ ("Adviser") I hereby certify that, as indicated below, I am the President, Chief Executive/Financial Officer or Senior Vice President of Buyer or, if Buyer is a "qualified institutional buyer" as defined in Rule 144A ("Rule 144A") under the Securities Act of 1933, as amended, because Buyer is part of a Family of Investment Companies (as defined below), of Adviser. In connection with purchases by Buyer, from time to time, I hereby certify to you and, if you act as broker for one or more customers, to such customers, that Buyer is a "qualified institutional buyer" as defined in Rule 144A because (i) Buyer is an investment company registered under the Investment Company Act of 1940, as amended and (ii) as marked below, Buyer alone, or Buyer's Family of Investment Companies, owned at least $100,000,000 in securities (other than the excluded securities referred to below) as of the end of Buyer's most recent fiscal year. (2) ___ Buyer owned $___________ in securities (other than the excluded securities referred to below) as of the end of Buyer's most recent fiscal year (such amount being calculated in accordance with Rule 144A). - ---------- (2) Buyer must own and/or invest on a discretionary basis at least $100,000,000 in securities unless Buyer is a dealer, and, in that case, Buyer must own and/or invest on a discretionary basis at least $10,000,000 in securities. D-10 ___ Buyer is part of a Family of Investment Companies which owned in the aggregate $__________ in securities (other than the excluded securities referred to below) as of the end of Buyer's most recent fiscal year (such amount being calculated in accordance with Rule 144A). For purposes of determining the amount of securities owned by Buyer or Buyer's Family of Investment Companies, I used the cost of such securities and did not include any of the securities referred to below in the second succeeding paragraph. The term "FAMILY OF INVESTMENT COMPANIES" as used herein means two or more registered investment companies (or series thereof) that have the same investment adviser or investment advisers that are affiliated (by virtue of being majority owned subsidiaries of the same parent or because one investment adviser is a majority owned subsidiary of the other). The term "SECURITIES" as used herein does not include (i) securities of issuers that are affiliated with Buyer or are part of Buyer's Family of Investment Companies, (ii) bank deposit notes and certificates of deposit, (iii) loan participations, (iv) repurchase agreements, (v) securities owned but subject to a repurchase agreement and (vi) currency, interest rate and commodity swaps. On behalf of Buyer, I acknowledge that Buyer is familiar with Rule 144A and understands that the parties listed in the Rule 144A Representation Letter to which this certification relates are relying and will continue to rely on the statements made herein because one or more sales to Buyer by you for your account or your customer's account will be made in reliance on Rule 144A. In addition, on behalf of Buyer, I agree that, in connection with any purchase of securities sold by or through you in reliance on Rule 144A, Buyer will only purchase for Buyer's own account. D-11 Finally, on behalf of Buyer or Adviser (as appropriate), I agree to notify you of any changes in the information and conclusions herein. Until such notice is given, Buyer's purchase from time to time of securities from you, or, through you from your customers, will constitute a reaffirmation of foregoing certificates and acknowledgement by me as of the date of such purchase. Date: --------------- Very truly yours, ______________________________ Name: Title: By:___________________________ Name: Title: On behalf of ______________________________ Name of Buyer: or ______________________________ Name of Adviser: D-12 EX-5.1 4 EXHIBIT 5.1 [Letterhead of Andrews & Kurth L.L.P.] September 11, 1997 Toyota Motor Credit Corporation Toyota Leasing, Inc. Toyota Lease Trust Toyota Auto Lease Trust 1997-A c/o Toyota Motor Credit Corporation 19001 South Western Avenue Torrance, California 90509 Re: TOYOTA AUTO LEASE TRUST 1997-A, REGISTRATION STATEMENT (REGISTRATION NO. 333-26717) Ladies and Gentlemen: We have acted as special counsel to (i) Toyota Leasing, Inc. ("TLI"), as originator of Toyota Auto Lease Trust 1997-A (the "Securitization Trust") and to the Securitization Trust, in connection with the proposed issuance by the Securitization Trust of the Automobile Lease Asset Backed Certificates, Class A-1, Class A-2 and Class A-3 (the "Certificates") evidencing certain beneficial interests in the assets of the Securitization Trust pursuant to the Securitization Trust Agreement (the "Securitization Trust Agreement") to be dated as of September 1, 1997 between TLI and U.S. Bank National Association (formerly knows as First Bank National Association), (ii) the Securitization Trust in connection with the execution and delivery by TLI of the Registration Statement and of Amendments No.1, No. 2, No. 3 and No. 4 thereto (collectively, the "Registration Statement") on behalf of the Securitization Trust as issuer of the Certificates, and (iii) Toyota Motor Credit Corporation ("TMCC") in connection with the proposed issuance by TMCC of the TMCC Demand Notes (the "Notes") pursuant to the Indenture (the "Indenture") to be dated as of September 1, 1997, between U.S. Bank National Association, as indenture trustee (the "Indenture Trustee"), and TMCC. The Securitization Trustee, on behalf of the Securitization Trust and the holders of the Certificates, is expected to invest certain collections in respect of the SUBI Assets in the Notes from time to time while the Certificates are outstanding. Page 2 The Securitization Trust Agreement and the Indenture have been filed with the Securities and Exchange Commission as exhibits to the Registration Statement under the Securities Act of 1933, as amended (the "1933 Act"). We have examined originals or copies, certified or otherwise identified to our satisfaction, of (i) the form of Securitization Trust Agreement and the forms of Certificates included therein, (ii) the form of the Indenture and the forms of the Notes included therein and (iii) such other documents, records, certificates of officers of TLI, TMCC and the Securitization Trust and of public officials and such other instruments as we have deemed necessary for the purposes of rendering this opinion. In addition, we have assumed that each of the Securitization Trust Agreement and the Indenture will be duly executed and delivered by each of the parties thereto substantially in the form filed as an exhibit to the Registration Statement; that the Certificates and the Notes, as completed, will be duly executed, authenticated and delivered substantially in the forms contemplated by the Securitization Trust Agreement and the Indenture, respectively; and that the Certificates and Notes will be issued and sold as described in the Registration Statement, including all amendments thereto. Based upon the foregoing and subject to the limitations and qualifications set forth below, we are of the opinion that: (i) Assuming the due authorization, execution and delivery of the Securitization Trust Agreement by each of the parties thereto, and the due authorization of the Certificates by all necessary action on the part of the Securitization Trustee, when the Certificates have been validly executed, authenticated and issued in accordance with the Securitization Trust Agreement and delivered against payment therefor, the Certificates will be validly issued and outstanding, fully paid and non-assessable, and entitled to the benefits of the Securitization Trust Agreement in accordance with their terms, except that the enforceability thereof may be subject to (a) bankruptcy, insolvency, reorganization, arrangement, moratorium, fraudulent or preferential conveyance or other similar laws now or hereinafter in effect relating to creditors' rights generally, and (b) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and to the discretion of the court before which any proceeding therefor may be brought. (ii) Assuming the due authorization, execution and delivery of the Indenture by each of the parties thereto, and the due authorization and execution of the Notes by all necessary action on the part of TMCC and when the Notes have been validly, completed and authenticated by the Indenture Trustee and issued in accordance with the Indenture and delivered against payment therefor, the Notes will be binding obligations of TMCC, and entitled to the benefits of the Indenture Page 3 in accordance with their terms, except that the enforceability thereof may be subject to (a) bankruptcy, insolvency, reorganization, arrangement, moratorium, fraudulent or preferential conveyance or other similar laws now or hereinafter in effect relating to creditors' rights generally, and (b) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and to the discretion of the court before which any proceeding therefor may be brought. The opinions expressed above are subject to the qualification that we do not purport to be experts as to the laws of any jurisdiction other than the federal laws of the United States of America and the laws of the States of California and New York, and we express no opinion herein as to the effect that the laws and decisions of courts of any such other jurisdiction may have upon such opinions. We consent to the use and filing of this opinion as Exhibit 5.1 to the Registration Statement and to the reference to our firm under the caption "Legal Matters" in the Prospectus contained therein. In giving such consent we do not imply or admit that we are within the category of persons whose consent is required under Section 7 of the 1933 Act or the rules and regulations of the Securities and Exchange Commission thereunder. Very truly yours, /s/ Andrews & Kurth L.L.P. EX-8.1 5 ANDREWS & KURTH OPINION [Letterhead of Andrews & Kurth L.L.P.] September 11, 1997 Toyota Leasing, Inc. Toyota Auto Lease Trust 1997-A c/o Toyota Motor Credit Corporation 19001 South Western Avenue Torrance, California 90509 Re: TOYOTA AUTO LEASE TRUST 1997-A, REGISTRATION STATEMENT (REGISTRATION NO. 333-26717) Ladies and Gentlemen: We have acted as special counsel to Toyota Leasing, Inc. ("TLI"), as originator of Toyota Auto Lease Trust 1997-A (the "Securitization Trust") and to the Securitization Trust, in connection with the proposed issuance by the Securitization Trust of the Automobile Lease Asset Backed Certificates, Class A-1, Class A-2 and Class A-3 (the "Certificates") evidencing certain beneficial interests in the assets of the Securitization Trust pursuant to the Securitization Trust Agreement (the "Securitization Trust Agreement") to be dated as of September 1, 1997 between TLI and U.S. Bank National Association (formerly known as First Bank National Association). We have also acted as special counsel to the Securitization Trust in connection with the execution and delivery by TLI of the Registration Statement and of Amendments No. 1, No. 2 and No. 3 thereto (collectively, the "Registration Statement") on behalf of the Securitization Trust as issuer of the Certificates. The Securitization Trust Agreement has been filed with the Securities and Exchange Commission as an exhibit to the Registration Statement under the Securities Act of 1933, as amended (the "1933 Act"). We have examined originals or copies, certified or otherwise identified to our satisfaction, of the form of Securitization Trust Agreement and the forms of Certificates included therein, and such other documents, records, certificates of officers of TLI and the Securitization Trust and of public officials and such other instruments as we have deemed necessary for the purposes of rendering this opinion. In addition, we have assumed that the Securitization Trust Agreement will be duly executed and delivered by each of the parties thereto substantially in the form filed as an Toyota Auto Lease Trust 1997-A September 11, 1997 Page 2 exhibit to the Registration Statement; that the Certificates, as completed, will be duly executed, authenticated and delivered substantially in the forms contemplated by the Securitization Trust Agreement; and that the Certificates will be sold as described in the Registration Statement, including all amendements thereto. On the basis of the foregoing, we confirm the opinion ascribed to us in the Prospectus with respect to the material federal income tax consequences to holders of Certificates under existing law and subject to the qualifications and assumptions stated therein, and we confirm that we are of the opinion that the description of federal income tax consequences appearing under the heading "Material Federal Income Tax Consequences" in the Prospectus accurately describes the material federal income tax consequences to holders of the Certificates under existing law and subject to the qualifications and assumptions stated therein. The opinions herein are based upon our interpretations of current law, including court authority and existing Final and Temporary Regulations, which are subject to change both prospectively and retroactively, and upon the facts and assumptions discussed herein. This opinion letter is limited to the matters set forth herein, and no opinions are intended to be implied or may be inferred beyond those expressly stated herein. Our opinion is rendered as of the date hereof and we assume no obligation to update or supplement this opinion or any matter related to this opinion to reflect any change of fact, circumstances, or law after the date hereof. In addition, our opinion is based on the assumption that the matter will be properly presented to the applicable court. In addition, we must note that our opinion represents merely our best legal judgment on the matters presented and that others may disagree with our conclusion. Our opinion is not binding on the Internal Revenue Service or a court and there can be no assurance that the Internal Revenue Service will not take a contrary position or that a court would agree with our opinion if litigated. In the event any one of the statements, representations or assumptions we have relied upon to issue this opinion is incorrect, our opinion might be adversely affected and may not be relied upon. We hereby consent to the reference to us under the caption "Material Federal Income Tax Consequences" in the Prospectus, and to the filing of this opinion as an Exhibit to the Registration Statement, without implying or admitting that we are experts within the meaning of the 1933 Act with respect to any part of the Registration Statement. Very truly yours, /s/ Andrews & Kurth L.L.P. EX-10.1 6 EXHIBIT 10.1 EXHIBIT 10.1 - ------------------------------------------------------------------------------- TOYOTA LEASE TRUST (a Delaware Business Trust) _______________ AMENDED AND RESTATED TRUST AND SERVICING AGREEMENT Among TOYOTA MOTOR CREDIT CORPORATION, TMTT, INC. and (For certain limited purposes only) FIRST BANK NATIONAL ASSOCIATION _______________ Dated as of October 1, 1996 - -------------------------------------------------------------------------------- TABLE OF CONTENTS ARTICLE I DEFINITIONS SECTION 1.01 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . 1 ARTICLE II CREATION OF TITLING TRUST; GRANTOR'S INTEREST SECTION 2.01 Creation of Titling Trust. . . . . . . . . . . . . . . . . . . 1 SECTION 2.02 Business Trust . . . . . . . . . . . . . . . . . . . . . . . . 2 SECTION 2.03 Offices. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 SECTION 2.04 Purposes.. . . . . . . . . . . . . . . . . . . . . . . . . . . 2 SECTION 2.05 Document Execution and Performance.. . . . . . . . . . . . . . 3 SECTION 2.06 Additional Beneficiaries.. . . . . . . . . . . . . . . . . . . 3 SECTION 2.07 Tax Reporting and Characterization.. . . . . . . . . . . . . . 4 ARTICLE III BENEFICIAL INTERESTS IN THE TITLING TRUST SECTION 3.01 Sub-Trusts: Creation of UTI and SUBIs . . . . . . . . . . . . 4 SECTION 3.02 Beneficiary Liabilities . . . . . . . . . . . . . . . . . . . 6 SECTION 3.03 Insurance Policies. . . . . . . . . . . . . . . . . . . . . . 7 SECTION 3.04 Allocation of Liabilities and Indemnification . . . . . . . . 8 ARTICLE IV THE SERVICER SECTION 4.01 Duties of the Servicer . . . . . . . . . . . . . . . . . . . . 8 SECTION 4.02 Liability of Servicer; Indemnities.. . . . . . . . . . . . . . 9 SECTION 4.03 Merger, Consolidation, or Assumption of the Obligations of, the Servicer . . . . . . . . . . . . . . . . . . . . . . . . 10 SECTION 4.04 Limitation on Liability of Servicer and Others. . . . . . . . 10 SECTION 4.05 Servicer Not to Resign; Delegation of Duties. . . . . . . . . 11 SECTION 4.06 Servicing Compensation. . . . . . . . . . . . . . . . . . . . 12 SECTION 4.07 Powers of Attorney. . . . . . . . . . . . . . . . . . . . . . 12 SECTION 4.08 Protection of Title to Titling Trust. . . . . . . . . . . . . 13 ARTICLE V PAYMENTS SECTION 5.01 Payments from Titling Trust Assets Only . . . . . . . . . . . 13 SECTION 5.02 Manner of Payment . . . . . . . . . . . . . . . . . . . . . . 14 -i- ARTICLE VI THE TITLING TRUSTEE SECTION 6.01 Duties and Powers of Titling Trustee . . . . . . . . . . . . 14 SECTION 6.02 Duty of Care.. . . . . . . . . . . . . . . . . . . . . . . . 15 SECTION 6.03 Certain Matters Affecting the Titling Trustee. . . . . . . . 16 SECTION 6.04 Titling Trustee Not Liable for Certificates or Losses. . . . 18 SECTION 6.05 Indemnity of Titling Trustee and Trust Agents. . . . . . . . 19 SECTION 6.06 Titling Trustee's Right Not to Act.. . . . . . . . . . . . . 19 SECTION 6.07 Qualification of Titling Trustee.. . . . . . . . . . . . . . 20 SECTION 6.08 Resignation or Removal of Titling Trustee. . . . . . . . . . 20 SECTION 6.09 Successor Titling Trustee. . . . . . . . . . . . . . . . . . 20 SECTION 6.10 Merger or Consolidation of Titling Trustee.. . . . . . . . . 21 SECTION 6.11 Appointment of Co-Titling Trustee, Separate Titling Trustee, or Nominee . . . . . . . . . . . . . . . . . . . . . . . . . 21 SECTION 6.12 Representations, Warranties and Covenants of Titling Trustee 23 SECTION 6.13 Titling Trustee's Fees and Expenses. . . . . . . . . . . . . 24 SECTION 6.14 No Petition. . . . . . . . . . . . . . . . . . . . . . . . . 24 SECTION 6.15 Stock of TMTT, Inc.. . . . . . . . . . . . . . . . . . . . . 24 ARTICLE VII ACCOUNTS; CASH FLOWS; PERMITTED INVESTMENTS SECTION 7.01 Accounts.. . . . . . . . . . . . . . . . . . . . . . . . . . 25 SECTION 7.02 Relationship to Securitized Financings.. . . . . . . . . . . 28 SECTION 7.03 SUBI Lease Funding Accounts. . . . . . . . . . . . . . . . . 28 SECTION 7.04 Rebalancing After Third Party Claim. . . . . . . . . . . . . 29 ARTICLE VIII TERMINATION SECTION 8.01 Termination of the Titling Trust.. . . . . . . . . . . . . . 29 SECTION 8.02 Termination at the Option of Beneficiary. . . . . . . . . . 30 SECTION 8.03 Titling Trustee Actions Upon Termination. . . . . . . . . . 30 -ii- ARTICLE IX MISCELLANEOUS PROVISIONS SECTION 9.01 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . 30 SECTION 9.02 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . 30 SECTION 9.03 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 30 SECTION 9.04 Severability of Provisions.. . . . . . . . . . . . . . . . . 31 SECTION 9.05 Counterparts.. . . . . . . . . . . . . . . . . . . . . . . . 31 SECTION 9.06 Successors and Assigns. . . . . . . . . . . . . . . . . . . 31 SECTION 9.07 Table of Contents and Headings. . . . . . . . . . . . . . . 31 EXHIBITS EXHIBIT A -- Form of Certificate of Trust. . . . . . . . . . . . . . . . . A-1 EXHIBIT B -- Form of UTI Supplement, including Form of UTI Certificate . . . . . . . . . . . . . . . . . . B-1 EXHIBIT C -- Form of SUBI Supplement, including Form of SUBI Certificate . . . . . . . . . . . . . . . . . . C-1 -iii- AMENDED AND RESTATED TRUST AND SERVICING AGREEMENT, dated as of October 1, 1996 among TOYOTA MOTOR CREDIT CORPORATION, a California corporation (as grantor, initial beneficiary and servicer) and TMTT, INC., a Delaware corporation, as Titling Trustee, and, for the limited purposes set forth herein, FIRST BANK NATIONAL ASSOCIATION, a national banking association, as Trust Agent, amending and restating in its entirety the Trust and Servicing Agreement dated as of October 1, 1996 among the same parties, and herein referred to as the "Titling Trust Agreement" or this "Agreement". IN CONSIDERATION of the mutual agreements herein contained, and of other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows: ARTICLE I DEFINITIONS SECTION 1.01 DEFINITIONS. For all purposes of this Titling Trust Agreement, except as otherwise expressly provided or unless the context otherwise requires, capitalized terms used and not otherwise defined herein shall have the meanings ascribed thereto in the Annex of Definitions attached hereto for all purposes of this Titling Trust Agreement. In the event of any conflict between a definition set forth herein and that set forth in the Annex of Definitions, that set forth herein shall prevail. All terms used in this Titling Trust Agreement include, as appropriate, all genders and the plural as well as the singular. All references such as "herein", "hereof" and the like shall refer to this Titling Trust Agreement as a whole and not to any particular article or section within this Titling Trust Agreement. All references such as "includes" and variations thereon shall mean "includes without limitation" and references to "or" shall mean "and/or". Any reference to the "Titling Trustee, acting on behalf of the Titling Trust", or words of similar import, shall be deemed to mean the Titling Trustee, acting on behalf of Toyota Lease Trust and all beneficiaries thereof. ARTICLE II CREATION OF TITLING TRUST; GRANTOR'S INTEREST SECTION 2.01 CREATION OF TITLING TRUST. There is hereby formed in accordance with the provisions of the Delaware Act, a Delaware business trust to be known as the Toyota Lease Trust. The Titling Trustee is hereby authorized and vested with the power and authority to make and execute contracts, instruments, certificates, agreements and other writings on behalf of the Titling Trust as set forth herein and to sue and be sued on behalf of the Titling Trust. -1- The Titling Trustee does hereby accept and agree to hold in trust, for the benefit of the UTI Beneficiary and such other Persons as may become Beneficiaries hereunder from time to time, all Titling Trust Assets conveyed or to be conveyed pursuant to Section 3.01, and all monies and proceeds that may be received thereunder, subject to the terms of this Agreement. SECTION 2.02 BUSINESS TRUST. It is the intention of the parties hereto that the Titling Trust be a business trust under the Delaware Act and that this Agreement shall constitute the governing instrument of the Titling Trust. Effective as of the date hereof, the Titling Trustee shall have all rights, powers and duties set forth herein and in the Delaware Act with respect to accomplishing the purposes of the Titling Trust. The Titling Trustee shall file or cause to be filed a certificate of trust for the Titling Trust pursuant to the Delaware Act in substantially the form of Exhibit A attached hereto. SECTION 2.03 OFFICES. The principal office of the Titling Trust, and such additional offices as the Titling Trustee may establish, shall be located at such place or places inside or outside of the State of Delaware as the Titling Trustee may designate from time to time by written notice to each Beneficiary and the Servicer. Initially, such principal office shall be in the care of the Titling Trustee at offices of Toyota Motor Credit Corporation set forth in Section 9.03. SECTION 2.04 PURPOSES. (a) The purposes of the Titling Trust are to: (i) take assignments and conveyances of, hold in trust and release its ownership interest in the Titling Trust Assets as nominee holder of legal title and for the benefit of, and at the direction of, the Beneficiaries; (ii) engage in any of the other activities described or authorized in this Agreement, any UTI Supplement or SUBI Supplement, or in any amendment to this Agreement or any UTI Supplement or SUBI Supplement; and (iii) engage in any and all activities that are necessary or appropriate to accomplish the foregoing or that are incidental thereto or connected therewith. The Titling Trust shall not engage in any activity other than in connection with the foregoing or other than as required or authorized by applicable law or (subject to the terms of this Agreement) the documents relating to a Securitized Financing. In consideration of the receipt of beneficial interests in the Titling Trust described in Article III, the Grantor shall from time to time assign, transfer, contribute or convey, or cause to be assigned, transferred, contributed or conveyed, the Titling Trust Assets to the Titling Trust. The Titling Trust, and the Titling Trustee on behalf of the Titling Trust, shall hold in trust all legal rights and interests in the Titling Trust Assets for the benefit of the Beneficiaries. The UTI Beneficiary may from time to time designate the Titling Trust or the Titling Trustee, on behalf of the Titling Trust, as the nominee holder of legal title to Contracts that are Eligible Contracts, the related Leased Vehicles and other Titling Trust Assets. In connection therewith, such Leased Vehicles will be titled in the name of the Titling Trust or the Titling Trustee, on behalf of -2- the Titling Trust, and the Titling Trustee will accept such designation and, subject to the other terms of this Agreement, will permit the related Certificates of Title to be titled in the name of the Titling Trust or the Titling Trustee, on behalf of the Titling Trust. Legal title to all Titling Trust Assets shall be vested in the Titling Trust or the Titling Trustee, on behalf of the Titling Trust, as a separate legal entity except to the extent otherwise specifically provided herein or in any other document relating to a Securitized Financing or where applicable state law requires any Titling Trust Asset to be vested otherwise, in which case the Titling Trustee will, at the direction of the UTI Beneficiary or the Servicer, cause legal title to be held as required thereby. (b) The Titling Trustee hereby accepts and agrees to hold in trust all Titling Trust Assets conveyed to it hereunder, for the use and benefit of, and as nominee holder of legal title for, the Beneficiaries and any successors and assigns as may be designated pursuant to the terms hereof or as may otherwise succeed to the rights of a Beneficiary hereunder. The Servicer may appoint one or more nominees to hold title to some or all of the Titling Trust Assets in the name of such nominee title holder for the sole and exclusive benefit of the Titling Trust and, upon the appointment of such nominee title holder(s), the Titling Trustee will transfer title to all or such portion of the Titling Trust Assets as directed by the Servicer. SECTION 2.05 DOCUMENT EXECUTION AND PERFORMANCE. Each Beneficiary hereby authorizes and directs the Titling Trustee, and the Titling Trustee hereby agrees to: (i) at the request of a Beneficiary or the Servicer, execute and deliver all agreements, instruments or documents necessary or advisable to accept, or cause the Titling Trust to accept, the designation as nominee holder of legal title to Contracts, Leased Vehicles and other Titling Trust Assets as described herein and cause the related Certificates of Title to be titled in the name of the Titling Trust or the Titling Trustee, on behalf of the Titling Trust; (ii) take action that is required to be taken by the Titling Trustee as specified in the documents relating to a Securitized Financing or at the direction of the relevant Beneficiary in accordance with applicable law; (iii) exercise its rights and perform its duties as Titling Trustee as specified in the documents relating to a Securitized Financing; (iv) at the direction of a Beneficiary (a) release, discharge, sell, assign, transfer, pledge, convey or otherwise dispose of any right, title or interest in and to any portion of the Titling Trust Assets comprising the related Sub-Trust (or to cause the Titling Trust to take any such action), (b) amend or revoke the terms hereof with respect to all or any portion of the related Titling Trust Assets or affecting any other provision hereof; and (v) appoint the servicer as the attorney in fact for the Titling Trust as contemplated by this Titling Trust Agreement and the related SUBI Servicing Supplement and direct the Servicer to perform such administrative duties on behalf of the Titling Trust as are set forth herein. SECTION 2.06 ADDITIONAL BENEFICIARIES. Notwithstanding any other provision of this Agreement, the UTI Beneficiary and the Servicer may in writing designate additional Beneficiaries who shall have the right to designate the Titling Trust or the Titling Trustee, on behalf of the Titling Trust, as nominee holder of legal title to Contracts, Leased Vehicles and other Titling Trust Assets and cause the related Certificates of Title to be titled in the name of the Titling Trust or the Titling Trustee, on behalf of the Titling Trust. No Person shall become a Beneficiary until it has delivered -3- to the parties hereto an agreement in form and substance satisfactory to the Titling Trustee and the Servicer pursuant to which it agrees to become a party to this Agreement. SECTION 2.07 TAX REPORTING AND CHARACTERIZATION. Consistent with the treatment of the Titling Trust for tax purposes as a mere nominee holder of legal title of the Titling Trust Assets with respect to each Sub-Trust, unless otherwise required by appropriate taxing authorities, the Titling Trust will not file or cause to be filed any annual or other tax returns with respect to the Titling Trust. Consistent with the treatment of the UTI Sub-Trust as a mere agent of the UTI Beneficiary for tax purposes, unless otherwise required by appropriate taxing authorities, the UTI Beneficiary will not file or cause to be filed any annual or other tax returns with respect to the UTI Sub-Trust. In the event that the Titling Trust or the UTI Sub-Trust or the Titling Trustee on behalf of the Titling Trust or the UTI Sub-Trust is required to file any tax returns, the Servicer will prepare or cause to be prepared the returns for the Titling Trust, the Titling Trustee or the UTI Sub-Trust and will deliver such returns to the Titling Trustee for signature, unless applicable law requires one or more Beneficiaries to sign such returns, in which case the Servicer will deliver such returns to such Beneficiary or Beneficiaries. ARTICLE III BENEFICIAL INTERESTS IN THE TITLING TRUST SECTION 3.01 SUB-TRUSTS: CREATION OF UTI AND SUBIS. (a) Subject to the other provisions of this Section, to the extent designated by the UTI Beneficiary from time to time, the Titling Trustee shall establish one or more Sub-Trusts under this Agreement and allocate the Titling Trust Assets identified by the UTI Beneficiary to each such Sub-Trust, and the Titling Trustee shall hold such Titling Trust Assets as Titling Trustee hereunder for the benefit, and subject to the direction, of the Beneficiaries of such Sub-Trust. Each Sub-Trust shall have the name and beneficiaries designated by the UTI Beneficiary and shall be a separate series of the Titling Trust pursuant to Section 3806(b)(2) of the Delaware Act. The Servicer shall maintain separate and distinct records for each Sub-Trust, and the Titling Trust Assets allocated to such Sub-Trust shall be held and accounted for separately from all other Titling Trust Assets. Subject to the right of the Titling Trustee to allocate certain Liabilities, charges and reserves as provided herein and in any UTI Supplement or SUBI Supplement, and in accordance with Section 3804(a) of the Delaware Act or to the extent otherwise permitted by applicable law, all debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to a Sub-Trust shall be enforceable against the Titling Trust Assets allocated to such Sub-Trust only, and not against the Titling Trust Assets allocated to any other Sub-Trust. Every note, bond, contract or other undertaking issued by or on behalf of a Sub-Trust (including any UTI Certificate or SUBI Certificate) shall include a recitation limiting the obligation represented thereby to the related Sub-Trust and the Titling Trust Assets allocated thereto. The Certificate of Trust for the Titling Trust -4- shall include notice of the limitation of liabilities of each Sub-Trust of the Titling Trust, in accordance with Section 3804(a) of the Delaware Act. (b) In accordance with Section 3806(b) of the Delaware Act, all Titling Trust Assets that have not been allocated to a SUBI Sub-Trust shall constitute, and be defined as, the "UTI Assets" and shall be, and be deemed to be, identified to and assets of the UTI Sub-Trust separate from the assets of any SUBI Sub-Trust within the Titling Trust. The UTI Sub-Trust shall be a separate series of the Titling Trust pursuant to Section 3806(b)(2) of the Delaware Act. In accordance with Section 3.01(a), the Servicer shall maintain separate and distinct records for the UTI Sub-Trust and the UTI Assets shall be held and accounted for separately from all other Titling Trust Assets. The Titling Trustee shall distribute to or upon the order of the UTI Beneficiary, a UTI representing an undivided interest in the UTI Sub-Trust and the UTI Assets which may be subdivided and will be represented by one or more UTI Certificates issued pursuant to one or more related UTI Supplements. Except as otherwise provided for herein or in a UTI Supplement, all income and other amounts with respect to the UTI shall be distributed or retained by the Titling Trustee as directed from time to time by the UTI Beneficiary. (c) The Titling Trustee shall from time to time, as directed in writing by the UTI Beneficiary, and subject to Section 3.01(d), identify or cause to be identified on the books and records of the Titling Trust one or more separate SUBI Sub-Trusts to be accounted for separately from each other and from the UTI Sub-Trust within the Titling Trust, and will identify and allocate, or cause to be identified and allocated, to such SUBI Sub-Trust on such books and records certain Titling Trust Assets that are not then allocated to another SUBI Sub-Trust. Upon such allocation, such related SUBI Assets shall no longer be assets of, or allocated to, the UTI (unless and until specifically reallocated to the UTI from that SUBI in accordance with the related SUBI Supplement). Each SUBI shall constitute a separate series of the Titling Trust pursuant to Section 3806(b)(2) of the Delaware Act and shall represent the beneficial interest in such SUBI and the SUBI Assets allocated thereto from time to time. Each SUBI shall be represented by one or more separate SUBI Certificates issued pursuant to the related SUBI Supplement. The Titling Trustee shall issue each SUBI Certificate to or upon the order of the UTI Beneficiary. (d) Notwithstanding anything to the contrary contained in this Section, the Titling Trustee shall create a new SUBI Sub-Trust and SUBI and issue to or upon the order of the UTI Beneficiary one or more SUBI Certificates evidencing such SUBI by executing and delivering a SUBI Supplement only (i) upon receipt of a certification of the UTI Beneficiary, dated as of the date of the issuance of the related SUBI Certificate, to the effect that, as of the date of such certificate, and after giving effect to the creation of the SUBI Sub-Trust, the transfer to the UTI Beneficiary of any SUBI Certificates in connection therewith and the application by the UTI Beneficiary of any net proceeds from any Securitized Financing involving such SUBI and such SUBI Certificates, no Event of Servicing Termination or other Early Amortization Event (or event that, with the passage of time or the giving of notice, or both, could constitute an Event of Servicing Termination or other Early Amortization Event), in each case as defined in the relevant Transaction Documents, shall exist under any Securitized Financing or other agreement or obligation secured by a UTI Pledge, and (ii) -5- if, as of the date of the issuance of the SUBI Certificates, the Titling Trustee shall not have received from any pledgee of a UTI Pledge a notice asserting any such default under any Securitized Financing or other agreement or obligation so secured. (e) The UTI Beneficiary shall not further transfer, assign, or pledge any beneficial interest in the Titling Trust except as contemplated herein. The UTI Beneficiary shall at all times maintain any minimum net worth specified in the related UTI Supplement or any related SUBI Supplement. (f) Each SUBI Beneficiary shall maintain with respect to the SUBI relating thereto any minimum interest in that SUBI and the related SUBI Sub-Trust as may be required by the applicable SUBI Supplement. Each SUBI Beneficiary shall at all times maintain any minimum net worth specified in the related SUBI Supplement. (g) Except to the extent specified in this Agreement or in any applicable SUBI Supplement, interests in a SUBI or SUBI Certificate shall be nontransferable, provided that all or any part thereof may be (i) transferred and assigned to a special purpose subsidiary of TMCC or another vehicle created for the purpose of a Securitized Financing involving a SUBI, or (ii) assigned, either absolutely or collaterally, or pledged by the UTI Beneficiary or the related SUBI Beneficiary to or in favor of a trustee for one or more securitization trusts solely for the purpose of securing or otherwise facilitating one or more Securitized Financings, and provided further that each such assignee or pledgee must (x) give a non-petition covenant substantially similar to that set forth in Section 6.14, and (y) execute an agreement between or among itself and each UTI Beneficiary and any SUBI Beneficiary, to release all claims to the Titling Trust Assets allocated to the UTI Sub-Trust or any other SUBI Sub-Trust and, in the event that such release is not given effect, to fully subordinate all claims it may be deemed to have against the Titling Trust Assets allocated thereto. In the event of a sale or an absolute assignment, or upon foreclosure in the event of a collateral assignment or pledge as contemplated in clause (ii), such purchaser, assignee or pledgee shall be a SUBI Beneficiary in the manner and to the extent set forth in the related SUBI Certificates so acquired and in the applicable SUBI Supplement. If so specified in the related SUBI Supplement, the foregoing provisions restricting the transfer of SUBI Certificates may be waived upon delivery to the Titling Trustee and the UTI Beneficiary of an Opinion of Counsel in form and scope reasonably satisfactory thereto to the effect that a contemplated transfer of SUBI Certificates will not have any material adverse effect upon the Titling Trust, any Sub-Trust or the interests of any Beneficiary. SECTION 3.02 BENEFICIARY LIABILITIES. (a) The Beneficiary or Beneficiaries of each Sub-Trust shall, as to such Sub-Trust but not as to any other Sub-Trust, each be jointly and severally liable to third parties (including the Beneficiary or Beneficiaries of all other Sub-Trusts) and indemnify, defend and hold harmless the Titling Trustee, including its officers, directors, employees and agents, for all Liabilities incurred in connection with the SUBI Assets of such Sub-Trust, including all state and local taxes assessed -6- on the Titling Trustee or the Titling Trust or any such other Beneficiary resulting from the allocation of Titling Trust Assets to such Sub-Trust. (b) The UTI Beneficiary shall (to the extent necessary after giving effect to Section 3.02(a)) indemnify, defend and hold harmless the Titling Trustee, including its officers, directors, employees and agents, for all Liabilities of the Titling Trust or the UTI Sub-Trust to third parties to the same extent that the UTI Beneficiary would be liable if the Titling Trust or the UTI Sub-Trust were a partnership formed under either of the Delaware Partnership Acts and the UTI Beneficiary were a general partner thereof. (c) As set forth in this Section, the Titling Trustee and its successors, assigns, agents, officers, directors and employees shall be indemnified, defended and held harmless with respect to any Liabilities arising out of or in connection with the Titling Trustee's acceptance or performance of the trusts and duties contained in this Titling Trust Agreement and in any SUBI Supplement or related SUBI Servicing Supplement. Notwithstanding the foregoing, in no event shall the Titling Trustee or its officers, directors or employees, be indemnified, defended or held harmless for any Liabilities incurred solely (i) by reason of the Titling Trustee's willful malfeasance, bad faith or negligence or (ii) by reason of the Titling Trustee's breach of its representations set forth in Section 6.12. The Titling Trustee shall promptly notify the Beneficiaries of any claim for which it may seek indemnity. Failure by the Titling Trustee to so notify the Beneficiaries of a claim for which it seeks indemnification shall not relieve the Beneficiaries of their obligations under this Section except to the extent of Liabilities that the Beneficiaries could have avoided if notice had been so provided. (d) All third party creditors of the Titling Trust shall be deemed to be third party beneficiaries for purposes of this Section. The indemnities contained in this Section shall survive the resignation or termination of the Titling Trustee, or the termination of this Agreement. Any amounts that are paid to the Titling Trustee pursuant to this Section shall no longer be deemed to be Titling Trust Assets immediately after such amounts have been paid to the Titling Trustee. To the extent provided in this Section, the Beneficiaries hereby waive the limited liability protection otherwise afforded under the Delaware Act (including Section 3803 thereof) or any other law. SECTION 3.03 INSURANCE POLICIES. (a) The Grantor will cause to be maintained, and shall not, without the prior written consent of the Servicer, which consent may not be unreasonably withheld, or, in the case of a rated Securitized Financing, unless otherwise specified in the related SUBI Supplement, the consent of each Rating Agency, cause the termination without replacement of, one or more contingent liability, excess liability, physical damage and/or umbrella Insurance Policies providing coverage against third-party claims that may be raised against the Titling Trust, any Sub-Trust or the Titling Trustee, on behalf of the Titling Trust or any Sub-Trust, with respect to any Leased Vehicle in an amount at least equal to $100 million per occurrence, not subject to any annual or aggregate cap on the number of claims payable, which policy or policies may be a blanket insurance policy or policies and which policy or policies may contemplate a per occurrence deductible of up to $ - million. -7- (b) The UTI Beneficiary shall cause each of the Contingent and Excess Liability Insurance Policies referred to in Section 3.03(a) to name the Titling Trustee or Titling Trust as additional insureds or loss payees. SECTION 3.04 ALLOCATION OF LIABILITIES AND INDEMNIFICATION. Notwithstanding any other provision of this Agreement, any Supplement or any amendment hereto, (i) to the extent that a Liability, including any indemnification obligation, shall be incurred or suffered with respect to, or is attributable to, one or more Affected Trust Assets allocated to one or more Sub-Trusts, the Beneficiaries of each such Sub-Trust shall bear in full such Liability or indemnification obligation in proportion to the ratio of the aggregate value of the Affected Trust Assets in the UTI Portfolio or the related SUBI Portfolio, as the case may be, to the aggregate value of the Affected Trust Assets, but (ii) to the extent that any such Liability or indemnification obligation is suffered with respect to all Titling Trust Assets generally, the Beneficiaries shall bear such Liability or indemnification obligation in proportion to the ratio of the aggregate value of the Contracts and Leased Vehicles in the UTI Portfolio or the related SUBI Portfolio, as the case may be, to the aggregate value of all Contracts and Leased Vehicles that are Titling Trust Assets. ARTICLE IV THE SERVICER SECTION 4.01 DUTIES OF THE SERVICER. The Servicer is hereby appointed and authorized to act as attorney-in-fact for the Titling Trust, and in such capacity shall manage, service, administer and make collections on the Titling Trust Assets with reasonable care, using that degree of skill and attention that it exercises with respect to comparable assets that it services for itself. The Titling Trustee shall, with the consent of the Servicer, enter into any and all agreements specified by the Beneficiary of the UTI or a SUBI in order to add, delete or amend any or all of the obligations of the Servicer hereunder in respect of all or any portion of the Titling Trust Assets in the UTI Sub-Trust or the related SUBI Sub-Trust. The Servicer shall follow its customary standards, policies and procedures and, unless otherwise indicated herein or in the related SUBI Servicing Supplement, shall have full power and authority, acting alone, to do any and all things in connection with such managing, servicing, administrating and collecting that it may deem necessary or desirable in the interest of the Titling Trust. The foregoing shall not be construed to prevent the Servicer from implementing new programs, whether on an intermediate pilot or permanent basis, or on a regional or nationwide basis, or from modifying its standards, policies and procedures, as long as, in each case, the Servicer does or would implement such programs, or modify its standards, policies and procedures, in respect of comparable assets for itself in the ordinary course of business. Without limiting the generality of the foregoing, the Servicer is hereby authorized and empowered by the Beneficiaries and the Titling Trust to (x) modify or extend the term of any Contract on the same terms and conditions it applies or would apply to comparable assets owned by it, or (y) execute and deliver, on behalf of the Titling Trust, any and all instruments, certificates or other documents necessary or advisable to record and maintain title to the Leased Vehicles in the -8- name of the Titling Trust or the Titling Trustee, on behalf of the Titling Trust, and to release interests of the Titling Trust, the Titling Trustee, on behalf of the Titling Trust, and each Beneficiary in any Leased Vehicle in connection with the sale or other disposition of a Leased Vehicle (whether directly to the Obligor under the Contract relating to the Leased Vehicle or to a third party) by the related Beneficiary as contemplated by this Agreement and the other documents relating to a Securitized Financing. The Servicer also shall be responsible for creating, maintaining and amending the Schedule of Contracts and Leased Vehicles. The Servicer shall deliver to the Titling Trustee, upon written request therefor by the Titling Trustee or any Beneficiary, and upon any Trust Asset Transfer, a revised Schedule of Contracts and Leased Vehicles current as of a date not more than ten days prior to the date of such delivery. The Servicer is hereby authorized to communicate with Obligors in the course of its servicing of the Contracts and Leased Vehicles in its own name. The Servicer is hereby authorized to commence, in its own name or in the name of the Titling Trust, a legal proceeding or participate in a legal proceeding (including a bankruptcy proceeding) relating to or involving the protection or enforcement of the interest of the Titling Trust or the related Beneficiary in any Contract, Leased Vehicle or other Trust Asset. If the Servicer commences or participates in such legal proceeding in its own name, the Titling Trust shall thereupon be deemed to have automatically assigned legal title to each related Leased Vehicle and the Titling Trust's interest in the related Contract to the Servicer for purposes of commencing or participating in any such proceeding as a party or claimant, and the Servicer is authorized and empowered by the Titling Trust to execute and deliver in the Servicer's name any notices, demands, Claims, responses, affidavits or other documents or instruments in connection with any such proceeding. The Titling Trustee shall furnish the Servicer with any powers of attorney and other documents and take any other steps which the Servicer may deem necessary or appropriate to enable it to carry out its duties under this Agreement and the other documents relating to a Securitized Financing. SECTION 4.02 LIABILITY OF SERVICER; INDEMNITIES. (a) The Servicer shall be liable in accordance with this Agreement and the other documents relating to a Securitized Financing only to the extent of the obligations specifically undertaken by the Servicer and shall have no other obligations or liabilities hereunder or thereunder. The Servicer shall indemnify, defend and hold harmless: (i) (A) the Titling Trust, the Titling Trustee and the Trust Agent from and against any and all Liabilities arising out of or resulting from its use, ownership or operation of any Leased Vehicle; and (B) the Titling Trust, the Titling Trustee and the Trust Agent from and against any taxes that may at any time be asserted against any of them with respect to the transactions contemplated by this Agreement (other than taxes with respect to fees payable hereunder, such fees being payable by the related Beneficiary, or as herein provided, by the Servicer), including any state sales, gross receipts, general corporation (including franchise and minimum income taxes), tangible personal property, privilege or license, taxes and costs and expenses in defending against the same, in each case to the extent not paid by the -9- related Obligors and to the extent related Titling Trust Assets are not available therefor hereunder or are insufficient therefor; (ii) the Titling Trust, the Titling Trustee, the Trust Agent and the Beneficiaries from and against any and all Liabilities to the extent that such Liabilities arose out of, or are imposed upon, any of them through the Servicer by reason of its disregard of its obligations and duties hereunder or thereunder; and (iii) the Titling Trustee and the Trust Agent from and against all Liabilities arising out of or incurred in connection with the acceptance or performance of the trusts and duties contained in this Agreement, except to the extent that such Liabilities: (A) are due to the willful misfeasance, bad faith or negligence (except for errors in judgment) of the Titling Trustee or Trust Agent, (B) arise from the material breach by the Titling Trustee or the Trust Agent of any of its representations or warranties set forth in this Agreement, or (C) shall arise out of or be incurred in connection with the performance by the Titling Trustee of the duties of a successor Servicer hereunder, or of any such duties on behalf of the Titling Trustee by the Trust Agent. (b) Indemnification under this Section shall include reasonable fees and expenses of counsel and expenses of litigation. If the Servicer has made any indemnity payments pursuant to this Section and the recipient thereafter collects any such amounts from others, the recipient shall promptly repay such amounts collected to the Servicer, without interest, to the extent of such payments made by the Servicer. Indemnification under this Section shall survive any transaction described in Section 4.03 with respect to any and all Titling Trust Assets as of the date of such transaction and any acts, occurrences or transactions related thereto whether arising before or after the date of such transaction. SECTION 4.03 MERGER, CONSOLIDATION, OR ASSUMPTION OF THE OBLIGATIONS OF, THE SERVICER. Any corporation (i) into which the Servicer may be merged or consolidated, (ii) resulting from any merger, conversion or consolidation to which the Servicer shall be a party or (iii) succeeding to the business of the Servicer and which is otherwise servicing leases or retail installment sales contracts, which corporation executes an agreement of assumption to perform every obligation of the Servicer hereunder, shall be the successor to the Servicer without the execution or filing of any paper or any further act on the part of any of the parties to this Agreement. The Servicer shall provide notice of any merger, consolidation or succession pursuant to this Section 4.03 to the Titling Trustee, the UTI Beneficiary and each Rating Agency. SECTION 4.04 LIMITATION ON LIABILITY OF SERVICER AND OTHERS. (a) Neither the Servicer nor any of its directors, officers, employees or agents shall be under any liability to the Titling Trust, the Titling Trustee, the Trust Agent, or any Beneficiary, except as otherwise provided in this Agreement and the other documents relating to a Securitized Financing, for any action taken or for refraining from the taking of any action pursuant hereto or -10- thereto, or for errors in judgment. Notwithstanding the foregoing, this provision shall not protect the Servicer or any such Person against any Liability that would otherwise be imposed by reason of willful misfeasance, bad faith or negligence (except errors in judgment) in the performance of duties or by reason of reckless disregard of obligations hereunder or thereunder. The Servicer and its directors, officers, employees or agents may rely in good faith on the advice of counsel or on any document of any kind prima facie properly executed and submitted by any Person respecting any matters arising hereunder or thereunder. (b) Except as provided in this Agreement and the other documents relating to a Securitized Financing, the Servicer shall not be under any obligation to appear in, prosecute or defend any legal action that is not incidental to its duties to service the Titling Trust Assets in accordance herewith or therewith and that in its opinion may involve it in any expense or Liability. Notwithstanding the foregoing, the Servicer may undertake any reasonable action that it may deem necessary or desirable in respect of this Agreement and the other documents relating to a Securitized Financing and the rights and duties of the parties hereto or thereto and the interests of any Beneficiary hereunder or thereunder. In such event, the reasonable legal expenses and costs for such action and any liability resulting therefrom shall be expenses, costs and liabilities of the Titling Trust Assets relating to the applicable Sub-Trust and the Servicer shall be entitled to be reimbursed therefor solely from funds available therefor. SECTION 4.05 SERVICER NOT TO RESIGN; DELEGATION OF DUTIES. (a) Subject to Section 4.03, the Servicer shall not resign from the obligations and duties imposed on it by this Agreement as Servicer except upon a determination that the performance of its duties under this Agreement is no longer permissible under applicable law. Any such determination permitting the resignation of the Servicer shall be evidenced by an opinion of counsel to such effect delivered to the Titling Trustee. No such resignation shall become effective until a successor servicer shall have assumed the responsibilities and obligations of the Servicer in accordance with Section 4.03. The Titling Trustee will, in no event, be obligated to serve as successor servicer except upon its express prior written consent. (b) The Servicer may not assign any of its rights, powers, duties or obligations under this Agreement. Notwithstanding the foregoing, the Servicer may make such an assignment in connection with a consolidation, merger, conversion or succession effected in compliance with Section 4.03 or in connection with the transfer to a successor servicer as contemplated by clause (a) above. (c) Except as provided in paragraphs (a) and (b) of this Section or in any other document relating to a Securitized Financing, the duties and obligations of the Servicer under this Agreement shall continue until this Agreement has been terminated as provided in Section 8.01 and shall survive the exercise by the Titling Trustee of any right or remedy under, or the enforcement by the Titling Trustee of any provision contained in, this Agreement or any other documents relating to a Securitized Financing. -11- (d) Notwithstanding the foregoing, the Servicer may enter into subservicing agreements with one or more subservicers (which may be Affiliates of the Servicer) for the servicing and administration (in whole or in part) of the Contracts and the Leased Vehicles, with the consent of the Beneficiaries (which consent shall not be unreasonably withheld) if such subservicer is not an Affiliate of the Servicer. References in this Agreement or any other document relating to a Securitized Financing to actions taken or to be taken by the Servicer in servicing the Contracts and Leased Vehicles include actions taken or to be taken by any such subservicer on behalf of the Servicer. Each such subservicing agreement will be upon terms and conditions not inconsistent with this Agreement and the other documents relating to a Securitized Financing and as the Servicer and any such subservicer may agree and shall contain a non-petition covenant substantially identical to that set forth in Section 6.14. The Servicer shall provide the Titling Trustee with a copy of each such subservicing agreement. (e) Notwithstanding any subservicing agreement, any of the provisions of this Agreement or the other documents relating to a Securitized Financing that relate to agreements or arrangements between the Servicer and any subservicer or reference to actions that are taken through a subservicer or otherwise, the Servicer shall remain obligated and liable to the Titling Trust and the Titling Trustee pursuant to Section 4.02 without diminution of such obligation or liability by virtue of such delegation or by virtue of indemnification from any subservicer, to the same extent and under the same terms and conditions as if the Servicer alone were servicing and administering the Contracts and Leased Vehicles. SECTION 4.06 SERVICING COMPENSATION. The Servicer shall receive such fees and reimbursement for expenses with respect to the Titling Trust Assets relating to a Sub-Trust as may be agreed to from time to time between the Servicer and the related Beneficiary. SECTION 4.07 POWERS OF ATTORNEY. The Servicer is hereby designated by each Beneficiary, the Titling Trust, and the Titling Trustee as its true and lawful attorney-in-fact, with full power and authority to perform any and all acts related to managing, servicing, administering, collecting or repossessing any part of the Titling Trust Assets and any and all acts otherwise required or permitted to be performed by the Servicer pursuant to Section 4.01 or otherwise under this Agreement and the other documents relating to a Securitized Financing whether acting in its own name or in the name of the Titling Trust, the Titling Trustee or any Beneficiary. The Servicer is hereby authorized and empowered to execute and deliver, on behalf and in the name of each Beneficiary, the Titling Trust or the Titling Trustee, any and all instruments, certificates or other documents relating thereto. The Servicer also has the right, power and authority to designate in writing other persons and entities as true and lawful attorneys-in-fact for and on its or their behalf to do anything that the Servicer has the power to do under this Agreement and the other documents relating to a Securitized Financing. Without limiting the generality of the foregoing, the Servicer or any such person or entity designated by the Servicer is hereby authorized and empowered by the Titling Trustee and the Titling Trust to execute and deliver, on behalf of the Titling Trust and the Titling Trustee, any and all applications for or duplicates of Certificates of Title in the name of the Titling Trust or the Titling Trustee, on behalf of the Titling Trust, any and all applications for registrations of vehicles and/or license plates, -12- any and all applications for transfers of Certificates of Title or registrations for vehicles and/or license plates, and any and all other instruments, certificates or other documents which the Servicer deems necessary or advisable to record, hold or release title to and/or registration of motor vehicles in the name of the Titling Trust or the Titling Trustee, as appropriate. SECTION 4.08 PROTECTION OF TITLE TO TITLING TRUST. (a) The Servicer shall maintain its computer systems so that its master computer records (including any back-up archives) that refer to any Leased Vehicles indicate clearly that legal title to such Leased Vehicle is held by the Titling Trust or the Titling Trustee, on behalf of the Titling Trust, as appropriate, as nominee holder of legal title for the related Beneficiary. Indication of the legal title of the Titling Trust or the Titling Trustee, on behalf of the Titling Trust, to a Leased Vehicle shall be deleted from or modified on such computer systems when, and only when, legal title to such Leased Vehicle is no longer owned by the Titling Trust or the Titling Trustee, on behalf of the Titling Trust, for the benefit of the related Beneficiary. (b) If at any time the Servicer or a Beneficiary proposes to sell, grant a security interest in or otherwise transfer any interest in any Leased Vehicles to any prospective purchaser, lender or other transferee, all computer tapes, records or print-outs (including any restored from back-up archives) delivered by the Titling Trustee to such prospective purchaser, lender or other transferee that refers in any manner whatsoever to any Leased Vehicle shall indicate clearly that legal title to such Leased Vehicle is held in the name of the Titling Trust or the Titling Trustee, on behalf of the Titling Trust, for the benefit of the related Beneficiary. ARTICLE V PAYMENTS SECTION 5.01 PAYMENTS FROM TITLING TRUST ASSETS ONLY. All payments, if any, to be made by the Titling Trustee or the Servicer under this Agreement or any other documents relating to a Securitized Financing, other than (i) indemnities of the Servicer pursuant to Section 4.02, (ii) payment of the Titling Trustee's fees and expenses by the Servicer pursuant to Section 6.13 or (iii) amounts owing by the Titling Trustee arising from its willful misfeasance, bad faith or negligence, shall be made only from any then available collections and proceeds in respect of the Titling Trust Assets or the SUBI Assets of the related Sub-Trust, as appropriate, and only to the extent that the Titling Trustee or the Servicer shall have received such collections and proceeds in respect thereof to make such payments in accordance with the terms hereof. This Section is not intended to override the waivers of limited liability by the Beneficiaries made in Section 3.02. SECTION 5.02 MANNER OF PAYMENT. All amounts payable to Beneficiaries pursuant to this Agreement or any other document relating to a Securitized Financing shall be paid or caused to be paid by the Titling Trustee or the Servicer, as the case may be, to or for the account of the related Beneficiary in immediately available funds by wire transfer or other method of same-day transfer. -13- ARTICLE VI THE TITLING TRUSTEE SECTION 6.01 DUTIES AND POWERS OF TITLING TRUSTEE. (a) The Titling Trustee and the Trust Agent undertake to perform such duties and engage in such activities, and only such duties and activities, as are specified in this Agreement, any SUBI Supplement or UTI Supplement, any other amendment to this Agreement, SUBI Supplement or UTI Supplement, or as may be directed by the Beneficiary in a manner not contrary to the terms hereof or thereof from time to time, including in connection with (i) Securitized Financings, (ii) sales of Contracts and other Titling Trust Assets to the extent permitted by the terms of any existing Securitized Financings (so long as the Certificate of Title of any Leased Vehicle so sold is amended to reflect the transfer of ownership thereof from the Titling Trust or the Titling Trustee, on behalf of the Titling Trust, as applicable, unless applicable law permits the transfer of ownership of a motor vehicle without an amendment to the vehicle's certificate of title) or (iii) activities ancillary thereto. (b) Neither the Titling Trustee nor the Trust Agent shall engage in any activities other than activities required or permitted by the provisions of this Agreement. Except as provided in or permitted by this Titling Trust Agreement, any UTI Supplement, any SUBI Supplement or any related SUBI Servicing Supplement, neither the Titling Trustee nor the Trust Agent shall (i) issue beneficial interests in the Titling Trust Assets or securities of the Titling Trust other than the UTI and UTI Certificates and one or more SUBIs and SUBI Certificates; (ii) borrow money on behalf of the Titling Trust; (iii) make loans on behalf of the Titling Trust; (iv) invest in or underwrite securities; (v) offer securities in exchange for Titling Trust Assets (other than UTI Certificates and SUBI Certificates); (vi) repurchase or otherwise reacquire any UTI Certificate or SUBI Certificate except as permitted by or in connection with any Securitized Financing; or (vii) grant any security interest in or lien upon any Titling Trust Assets. (c) At the direction of the UTI Beneficiary or the Servicer and at the expense of the [Servicer], the Titling Trustee shall: (i) apply for and maintain (or cause to be applied for and maintained) all licenses, permits and authorizations necessary and appropriate for the Titling Trust or the Titling Trustee in carrying out the terms of this Agreement (including receiving assignments of Contracts and causing Certificates of Title to reflect the Titling Trust, OR the Titling Trustee on behalf of the Titling Trust, as the owner of the Leased Vehicles) in each jurisdiction that the UTI Beneficiary or the Servicer reasonably deems appropriate; (ii) file (or cause to be filed) all notices, reports and other required filings in each jurisdiction that the UTI Beneficiary or the Servicer reasonably deems appropriate; (iii) file (or cause to be filed) in each jurisdiction that the UTI Beneficiary or the Servicer reasonably deems appropriate applications for Certificates of Title as are necessary and appropriate so as to cause the Titling Trust or the Titling Trustee, on behalf of the Titling Trust, to be recorded as the holder of legal title of record of the Leased Vehicles and to execute and deliver to each Dealer a power of attorney in order to allow such Dealers to so record the Titling Trust or the Titling Trustee, on behalf of the Titling Trust, as the holder of legal title to -14- such Leased Vehicles; (iv) to the extent that the UTI Beneficiary or the Servicer deems it necessary or useful to have a lien recorded on Certificates of Title, file (or cause to be filed) in each jurisdiction that the UTI Beneficiary or the Servicer reasonably deems appropriate, such applications as are necessary to record upon each of the Certificates of Title an Administrative Lien in favor of an Administrative Lienholder; (v) be, or cause the Titling Trust to be, the assignee of the original Dealer/Obligee with respect to the Contracts; and (vi) pay or cause to be paid all applicable taxes and fees properly due and owing in connection with its activities. (d) The Titling Trustee, or the Trust Agent on its behalf, shall establish accounts and receive, maintain, invest and disburse funds in accordance with Articles V and VII hereof and the SUBI Supplements. (e) Neither any Beneficiary nor the Servicer shall direct the Titling Trustee or the Trust Agent to take any action that (i) is inconsistent with the purposes of the Titling Trust as set forth in Section 2.04 or (ii) would result in the treatment of the Titling Trust or any SUBI Sub-Trust as an entity that is taxable as an "association" for federal income tax purposes. SECTION 6.02 DUTY OF CARE. (a) In carrying out their duties hereunder, the Titling Trustee and the Trust Agent each shall exercise the rights and powers vested in it only as set forth in this Agreement. No provision of this Agreement shall be construed to relieve the Titling Trustee or the Trust Agent from liability for their own negligent actions, negligent failure to act, bad faith or willful misfeasance or similar act or omission; provided, however, that: (i) neither the Titling Trustee nor the Trust Agent shall be personally liable for any action taken, suffered or omitted by it or any error of judgment, in each case made in good faith by any officer of, or any other employee of the Corporate Trust Office of, the Titling Trustee or any Trust Agent, including the president, any vice-president, assistant vice-president, trust officer, corporate secretary or assistant corporate secretary or any other officer of the Titling Trustee or such Trust Agent customarily performing functions similar to those performed by such officers or to whom any corporate trust matter is referred because of such Person's knowledge of or familiarity with the particular subject, unless it shall be proved that the Titling Trustee or Trust Agent was negligent or acted with willful misfeasance in performing its duties in accordance with the terms of this Agreement; and (ii) neither the Titling Trustee nor the Trust Agent shall be personally liable with respect to any action taken, suffered or omitted to be taken in good faith in accordance with the express direction of the UTI Beneficiary (to the extent relating to the Undivided Trust Interest) or the holder or pledgee of a SUBI Certificate that is not the Titling Trustee or a trust agent of the Titling Trustee in connection with a Securitized Financing (to the extent relating to the SUBI evidenced thereby) relating to the exercise of any trust, power or authority conferred upon the Titling Trustee under this Agreement. -15- (b) Notwithstanding subsection (a) above, the Titling Trustee shall not be required to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties under this Agreement, or in the exercise of any of its rights or powers, if there shall be reasonable grounds for believing that the repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it, and none of the provisions contained in this Agreement shall in any event require the Titling Trustee to perform, or be responsible for the manner of performance of, any of the obligations of a Servicer hereunder or under any related SUBI Servicing Supplement except during such time, if any, as the Titling Trustee shall be successor to, and be vested with the rights, duties, powers and privileges of, any Servicer in accordance with the terms of this Agreement or any related SUBI Servicing Supplement. (c) Except for actions expressly authorized by this Agreement, a SUBI Supplement, a UTI Supplement, or an amendment thereto, the Titling Trustee shall take no action as to which the Titling Trustee has been notified by a Beneficiary, or has actual knowledge, that such action would impair the beneficial interests in the Titling Trust, would impair the value of any Titling Trust Asset or would adversely affect the then outstanding credit rating issued by a Rating Agency with respect to any class of securities issued in a Securitized Financing. (d) All information obtained by the Titling Trustee regarding the administration of the Titling Trust, whether upon the exercise of its rights under this Agreement or otherwise, shall be maintained by the Titling Trustee in confidence and shall not be disclosed to any other Person other than to the Trust Agent or an appropriate Beneficiary unless such disclosure is required by any applicable law or regulation or pursuant to subpoena, or such information is already otherwise publicly available. SECTION 6.03 CERTAIN MATTERS AFFECTING THE TITLING TRUSTEE. Except as otherwise provided in this Agreement: (a) The Titling Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, officer's certificate, certificate of auditors or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, appraisal, bond or other paper or document reasonably believed by it to be genuine and to have been signed or presented by an authorized signatory of the relevant party. In particular, but without limitation, whenever in this Agreement it is provided that the Titling Trustee shall receive or may rely on the instructions or directions of a Beneficiary in connection with a Securitized Financing, any written instruction or direction purporting to bear the signature of any officer or authorized signatory of the Beneficiary, or the holder or pledgee of a UTI Certificate or a SUBI Certificate in connection with a Securitized Financing reasonably believed by it to be genuine may be deemed by the Titling Trustee to have been signed or presented by the proper party. -16- (b) The Titling Trustee may consult with counsel, and any written opinion of counsel shall be full and complete authorization and protection in respect of any action taken or suffered or omitted by it under this Agreement in good faith and in accordance with such opinion of counsel. (c) The Titling Trustee shall be under no obligation to exercise any of the discretionary rights or powers vested in it by this Agreement, or to institute, conduct or defend any litigation under this Agreement or in relation to this Agreement, at the request, order or direction of a Beneficiary in connection with a Securitized Financing or any Beneficiary of the Titling Trust pursuant to the provisions of this Agreement, unless such requesting Person(s) shall have offered to the Titling Trustee reasonable security or indemnity against the Liabilities that may be incurred therein or thereby. (d) The Titling Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond or other paper or document, unless requested in writing to do so by a Beneficiary; provided, however, that if the payment within a reasonable time to the Titling Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Titling Trustee, not reasonably assured to the Titling Trustee by the security afforded to it by the terms of this Agreement or any SUBI Supplement, the Titling Trustee may require reasonable indemnity against such costs, expenses or liabilities as a condition to so proceeding; the reasonable expense of every such examination shall be paid by the Person(s) requesting such examination or, if paid by the Titling Trustee, shall be reimbursed as a Titling Trust expense upon demand. (e) The Titling Trustee may execute any of the trusts or powers under this Agreement or perform any duties under this Agreement either directly or by or through agents or attorneys or one or more custodians and shall not be liable for the negligence or willful misconduct of such agents or attorneys appointed with due care. By way of illustration and not in limitation of the foregoing, the Titling Trustee may from time to time enter into one or more Trust Agency Agreements with such Trust Agents, including any Affiliate of the Titling Trustee, as are by experience and expertise qualified to act in a trustee capacity and otherwise acceptable to the UTI Beneficiary. Notwithstanding the foregoing, the Titling Trustee shall replace any Trust Agent if (i) in the good faith judgment of the UTI Beneficiary, the compensation or level of service of such Trust Agent shall no longer be reasonably competitive with those of any alternative agent reasonably proposed by the UTI Beneficiary, or (ii) if the Trust Agent has materially breached its obligations under the Trust Agency Agreement, the UTI Beneficiary or a Beneficiary in connection with a Securitized Financing has given written notice to the Titling Trustee and the Trust Agent of such breach, and the Trust Agent has not cured such breach in all material respects within 30 Business Days thereafter. Such Trust Agency Agreement shall specify the duties, powers, liabilities, obligations and compensation of such Trust Agent(s) to carry out on behalf of the Titling Trustee any or all of its obligations as Titling Trustee of the Titling Trust arising under this Agreement or otherwise and shall contain a non-petition covenant substantially identical to that set forth in Section 6.14, provided, however, that nothing contained in any Trust Agency Agreement shall excuse, limit -17- or otherwise affect any power, duty, obligation, liability or compensation otherwise applicable to the Titling Trustee hereunder. The Titling Trustee hereby engages First Bank National Association as its initial Trust Agent, and First Bank National Association by its signature hereto accepts such engagement, with all provisions of this Section 6.03(e) relating to Trust Agents constituting a Trust Agency Agreement between First Bank National Association and the Titling Trustee, subject to any amendment or supplement thereto between such parties not inconsistent herewith. First Bank National Association shall carry out as Trust Agent each and every obligation of the Titling Trustee hereunder and under any SUBI Supplement and is hereby delegated by the Titling Trustee all power and authority delegable by the Titling Trustee hereunder in order better to be able to carry out its duties as Trust Agent. SECTION 6.04 TITLING TRUSTEE NOT LIABLE FOR CERTIFICATES OR LOSSES. The Titling Trustee shall have no obligation to perform any of the duties of the Grantor or the Servicer unless explicitly set forth herein or in any SUBI Supplement or related SUBI Servicing Supplement. The Titling Trustee shall at no time have any responsibility or liability for or with respect to the (a) legality, validity and enforceability of any security interest in any Trust Asset; (b) the perfection or priority of such a security interest or the maintenance of any such perfection and priority; (c) the efficacy of the Titling Trust or its ability to generate the payments to be distributed to any Beneficiary or its permitted assignee(s) under this Agreement, including the existence, condition, location and ownership of any Trust Asset; (d) the existence and enforceability of any Insurance Policy; (e) the existence and contents of any Contract or any computer or other record thereof; (f) the validity of the assignment of any Trust Asset to the Titling Trustee or of any intervening assignment; (g) the completeness of any Contract; (h) the performance or enforcement of any Contract; (i) the compliance by the Grantor or any Servicer with any covenant or the breach by the Grantor or any Servicer of any warranty or representation in any document and the accuracy of any such warranty or representation prior to the Titling Trustee's receipt of notice or other discovery of any noncompliance therewith or any breach thereof; (j) any investment of monies by any Servicer or any loss resulting therefrom (it being understood that the Titling Trustee shall remain responsible for any Titling Trust Assets that it may hold); (k) the acts or omissions of any Dealer or any other Person, the Grantor, any Servicer or any obligor under, or in connection with the origination of, any Contract; (l) any action of any Servicer taken in the name of the Titling Trustee; or (m) any action by the Titling Trustee taken at the instruction of any Servicer; provided, however, that the foregoing shall not relieve the Titling Trustee of its obligation to perform its duties under this Agreement. Except with respect to a claim based on the Titling Trustee's or any Trust Agent's willful misconduct, bad faith or negligence, (i) no recourse shall be had against the institution serving as Titling Trustee in its individual capacity for any claim based on any provision of this Agreement, a SUBI Supplement or UTI Supplement or any amendment thereof, a SUBI Certificate or any Trust Asset or assignment thereof and (ii) the Titling Trustee shall not have any personal obligation, liability or duty whatsoever to the UTI Beneficiary or any other Person with respect to any such claim, and any such claim shall be asserted solely against the Titling Trust Assets (subject to Section 3.04) or any indemnitor who shall furnish indemnity as provided in this Agreement. The Titling Trustee shall not be accountable for the use or application by a Beneficiary of any SUBI -18- Certificate or of the proceeds of such SUBI Certificate, or for the use or application of any funds properly paid to any Servicer hereunder or pursuant to any SUBI Servicing Supplement. SECTION 6.05 INDEMNITY OF TITLING TRUSTEE AND TRUST AGENTS. The Titling Trustee and any Trust Agent shall be indemnified and held harmless out of and to the extent of the Titling Trust Assets with respect to any Claim arising out of or incurred in connection with (a) any of the Titling Trust Assets (including any Claim relating to any Contract, Leased Vehicle, consumer fraud, consumer leasing act violation, misrepresentation, deceptive and unfair trade practice, and any other claim arising in connection with any Contract, personal injury or property damage claim arising with respect to any Leased Vehicle or any claim with respect to any tax arising with respect to any Titling Trust Asset) or (b) the Titling Trustee's or Trust Agent's acceptance or performance of the trusts and duties contained in this Agreement or any Trust Agency Agreement, with any allocation of such indemnification among the Titling Trust Assets to be made as provided for in Section 3.04; provided, however, that neither the Titling Trustee nor any Trust Agent shall be indemnified or held harmless out of the Titling Trust Assets as to any Claim for which the Servicer shall be expressly and solely liable hereunder or pursuant to any SUBI Servicing Supplement (unless the Servicer shall not have paid such claim upon the final determination of its liability therefor), (ii) incurred by reason of the Titling Trustee's or such Trust Agent's willful misconduct, bad faith or negligence or (iii) incurred by reason of the Titling Trustee's breach of its representations, warranties or covenants herein or in any Transaction Document. The Beneficiaries will indemnify, defend and hold harmless the Titling Trustee and any Trust Agent for any such Claims that the Titling Trust Assets are insufficient to satisfy, with any allocation of such indemnification among the Beneficiaries to be made as provided for in Section 3.04. Such indemnification shall be irrespective of any other indemnification provided to the Beneficiaries under any other documents relating to a Securitized Financing. SECTION 6.06 TITLING TRUSTEE'S RIGHT NOT TO ACT. Notwithstanding anything to the contrary contained herein, the Titling Trustee shall have the right to decline to act in any particular manner otherwise provided for herein if the Titling Trustee, being advised in writing by counsel, determines that such action may not lawfully be taken, or if the Titling Trustee in good faith shall determine that such action would be illegal or subject it to personal liability or, in the case of a direction from one or more Beneficiaries, be prejudicial to the rights of other Beneficiaries; and provided further, that nothing in this Agreement shall impair the right of the Titling Trustee to take any action deemed proper by the Titling Trustee that is not inconsistent with such otherwise required acts. SECTION 6.07 QUALIFICATION OF TITLING TRUSTEE. Except as otherwise provided in this Agreement, the Titling Trustee under this Agreement shall at all times be (a) a corporation organized under the laws of one of the fifty states of the United States, the District of Columbia or the Commonwealth of Puerto Rico (which corporation shall not -19- be the Grantor or any Affiliate thereof), (b) qualified, or promptly will be qualified, to do business as a foreign corporation in each of the Trust States and (c) otherwise acceptable to each Rating Agency rating any class of securities at the request of the Grantor issued in connection with any Securitized Financing and to any pledgee of a UTI Pledge (such acceptance by any such pledgee not to be unreasonably withheld, delayed or conditioned). SECTION 6.08 RESIGNATION OR REMOVAL OF TITLING TRUSTEE. (a) The Titling Trustee may not at any time resign without the express written consent of the Beneficiaries. (b) If at any time the Titling Trustee shall cease to be qualified in accordance with Section 6.07, or if any representation or warranty made by the Titling Trustee pursuant to Section 6.12 or the Trust Agent pursuant to Section 6.15 shall prove to have been untrue in any material respect when made and shall not have been cured within 45 days after any Beneficiary gives the Titling Trustee written notice of such inaccuracy, but the Titling Trustee shall fail to resign after written request therefor by any Beneficiary or pledgee of any UTI Certificate or SUBI Certificate in connection with a Securitized Financing, or if at any time the Titling Trustee shall be legally unable to act, or shall be adjudged bankrupt or insolvent, or a receiver of the Titling Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Titling Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then the UTI Beneficiary shall remove the Titling Trustee. If the Titling Trustee is removed under the authority of the immediately preceding sentence, the UTI Beneficiary shall promptly appoint a successor Titling Trustee by written instrument, in duplicate, one copy of which instrument shall be delivered to the Titling Trustee so removed and one copy to the successor Titling Trustee, together with payment of all fees owed to the outgoing Titling Trustee. (c) Any resignation or removal of the Titling Trustee and appointment of a successor Titling Trustee pursuant to any of the provisions of this section shall not become effective until acceptance of appointment by the successor Titling Trustee. SECTION 6.09 SUCCESSOR TITLING TRUSTEE. Any successor Titling Trustee appointed as provided in Section 6.08 shall execute, acknowledge and deliver to the UTI Beneficiary, the Servicer and to its predecessor Titling Trustee an instrument accepting such appointment under this Agreement, and thereupon the resignation or removal of the predecessor Titling Trustee shall become effective and such successor Titling Trustee, without any further act, deed or conveyance, shall become fully vested with all the rights, powers, duties and obligations of the Titling Trustee under this Agreement, with like effect as if originally named as Titling Trustee. The predecessor Titling Trustee shall deliver to the successor Titling Trustee all documents and statements held by it under this Agreement, and the UTI Beneficiary and the predecessor Titling Trustee shall execute and deliver such instruments and do such other things as may reasonably be required for fully and certainly vesting and confirming in the successor Titling -20- Trustee all such rights, powers, duties and obligations. No successor Titling Trustee shall accept appointment as provided in this Section unless at the time of such acceptance such successor Titling Trustee shall be eligible under the provisions of Section 6.07. Upon acceptance of appointment by a successor Titling Trustee as provided in this Section, the UTI Beneficiary shall mail notice of the successor of such Titling Trustee under this Agreement to each pledgee or other Beneficiary of a UTI Certificate or a SUBI Certificate. If the UTI Beneficiary fails to mail such notice within ten days after acceptance of appointment by the successor Titling Trustee, the successor Titling Trustee shall cause such notice to be mailed at the expense of the UTI Beneficiary. SECTION 6.10 MERGER OR CONSOLIDATION OF TITLING TRUSTEE. The Titling Trustee shall not merge or consolidate with, or sell all or any substantial part of its assets to any other Person, without the express written consent of the UTI Beneficiary. Any such corporation (i) into which the Titling Trustee may be merged or consolidated, (ii) which may result from any merger, conversion, or consolidation to which the Titling Trustee shall be a party, or (iii) which may succeed to the corporate business of the Titling Trustee, which corporation executes an agreement of assumption to perform every obligation of the Titling Trustee under this Agreement, shall be the successor of the Titling Trustee hereunder, provided such corporation shall be eligible pursuant to Section 6.07, without the execution or filing of any other instrument or any further act on the part of any of the parties hereto other than the written consent of the UTI Beneficiary. The Titling Trustee shall give reasonable written notice to each SUBI Beneficiary and each Rating Agency of any such merger or consolidation. SECTION 6.11 APPOINTMENT OF CO-TITLING TRUSTEE, SEPARATE TITLING TRUSTEE, OR NOMINEE. (a) Notwithstanding any other provisions of this Agreement, if at any time the Titling Trustee determines that it is in the best interests of the Titling Trust to take any action for the purpose of meeting any legal requirements of any jurisdiction in which any Titling Trust Asset may at the time be located or within which such Titling Trust Asset is to be acquired or for any other purpose as so determined by the Titling Trustee, the Beneficiary of the Sub-Trust to which such Trust Asset is allocated and the Titling Trustee, acting jointly, shall have the power to execute and deliver all instruments to appoint one or more Persons approved by the Titling Trustee and such Beneficiary to act as co-trustee, jointly with the Titling Trustee, or as a separate trustee or nominee holder of legal title, of all or any part of such Titling Trust Assets, and to vest in such Person, in such capacity and for the benefit of such Beneficiary and its permitted assignee(s), such title to such Titling Trust Assets, or any part thereof, and, subject to the other provisions of this Section, such powers, duties, obligations, rights and trusts as such Beneficiary and the Titling Trustee may consider necessary or desirable. No co-trustee, separate trustee, or nominee holder of legal title under this Agreement shall be required to meet the terms of eligibility as a successor trustee pursuant to Section 6.07, except that no co-trustee, separate trustee or nominee holder of legal title under this Agreement may be the UTI Beneficiary or any Affiliate thereof. -21- (b) Each separate trustee, co-trustee and nominee holder of legal title shall, to the extent permitted by law, be appointed and act subject to the following provisions and conditions: (i) all rights, powers, duties and obligations conferred or imposed upon the Titling Trustee shall be conferred upon and exercised or performed by the Titling Trustee and such separate trustee, co-trustee or nominee holder of legal title jointly (it being understood that such separate trustee, co-trustee or nominee holder of legal title is not authorized to act separately without the Titling Trustee joining in such act), except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed (whether as Titling Trustee under this Agreement or as successor to any Servicer under this Agreement or any SUBI Servicing Supplement), the Titling Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Titling Trust or any portion thereof in any such jurisdiction) shall be exercised and performed singly by such separate trustee, co-trustee or nominee holder of legal title, but solely at the direction of the Titling Trustee; (ii) no trustee or nominee holder of legal title under this Agreement shall be personally liable by reason of any act or omission of any other trustee or nominee holder of legal title under this Agreement; and (iii) the Beneficiaries and the Titling Trustee acting jointly may at any time accept the resignation of or remove any separate trustee, co-trustee or nominee holder of legal title. (c) Any notice, request or other writing given to the Titling Trustee shall be deemed to have been given to each of the then separate trustees, co-trustees and nominee holders of legal title, as effectively as if given to each of them. Every instrument appointing any separate trustee, co-trustee or other nominee holder of legal title shall refer to this Agreement and the conditions of this Section. Each separate trustee, co-trustee and nominee holder of legal title, upon its acceptance of the trusts conferred, shall be vested with the estates or property specified in its instrument of appointment, either jointly with the Titling Trustee or separately, as may be provided therein, subject to all the provisions of this Agreement, specifically including every provision of this Agreement relating to the conduct of, affecting the liability of, or affording protection to, the Titling Trustee. Each such instrument shall be filed with the Titling Trustee and a copy thereof given to the Servicer and each Beneficiary. Any separate trustee, co-trustee or nominee holder of legal title may at any time appoint the Titling Trustee its agent or attorney-in-fact with full power and authority, to the extent not prohibited by law, to do any lawful act under or in respect of this Agreement on its behalf and in its name. If any separate trustee, co-trustee or nominee holder of legal title shall die, become incapable of acting, resign or be removed, all of its estates, properties, rights, remedies and trusts relating to this Agreement and the Titling Trust Assets shall vest in and be exercised by the Titling Trustee, to the extent permitted by law, without the appointment of a new or successor trustee. Notwithstanding -22- anything to the contrary in this Agreement, the appointment of any separate trustee, co-trustee or nominee holder of legal title shall not relieve the Titling Trustee of its obligations and duties under this Agreement. SECTION 6.12 REPRESENTATIONS, WARRANTIES AND COVENANTS OF TITLING TRUSTEE. The Titling Trustee hereby represents, warrants and covenants for the benefit of the Grantor, each Beneficiary and each pledgee of a UTI Certificate or SUBI Certificate: (a) ORGANIZATION AND GOOD STANDING. The Titling Trustee is a corporation, duly organized, validly existing and in good standing under the law of the State of Delaware and is, or promptly will be, qualified to do business as a foreign corporation and is, or promptly will be, in good standing in each state that is a Trust State as of the date of this Agreement. The Titling Trustee shall promptly take or cause to be taken all such actions and execute and file or cause to be executed and filed all such instruments and documents, the cost of which shall be a Titling Trust Expense, as may reasonably be required in order for the Titling Trustee to qualify to do business and be in good standing in each other State identified in writing from time to time by the Grantor or the UTI Beneficiary. (b) POWER AND AUTHORITY. The Titling Trustee has full power, authority and right to execute and deliver this Agreement, and has, or promptly will have, full power and authority to perform its obligations hereunder in each state that is a Trust State as of the date of this Agreement, and has taken all necessary action to authorize the execution and delivery of this Agreement, and has taken, or promptly will take, all necessary action to authorize performance by it of this Agreement in each state that is a Trust State as of the date of this Agreement. (c) DUE EXECUTION. This Agreement has been duly executed and delivered by the Titling Trustee, and is a legal, valid and binding instrument enforceable against the Titling Trustee in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or hereafter in effect, affecting the enforcement of creditors' rights in general and except as such enforceability may be limited by general principles of equity (whether considered in a suit at law or in equity). (d) NO CONFLICT. To the Titling Trustee's actual knowledge, neither the execution and delivery of this Agreement nor the consummation of the transactions herein contemplated, nor compliance with the provisions hereof, will conflict with or result in a breach of, or constitute a default (with notice or passage of time or both) under any provision of any law, governmental rule, regulation, judgment, decree or order binding on the Titling Trustee (but excluding any matters of consumer protection or credit laws as to which the Titling Trustee has no actual knowledge and has conducted no independent investigation) or the articles of incorporation or bylaws of the Titling Trustee or any provision of any mortgage, indenture, contract agreement or other instrument to which the Titling Trustee is a party or by which it is bound. -23- (e) SINGLE PURPOSE. The Titling Trustee has not engaged, is not currently engaged, and will not engage during the term of this Agreement in any other activity other than serving as Titling Trustee and in such ancillary activities as are necessary and proper in order to act as Titling Trustee in accordance with this Agreement, any SUBI Supplement or UTI Supplement, and any amendment thereto or any of the other documents relating to a Securitized Financing. SECTION 6.13 TITLING TRUSTEE'S FEES AND EXPENSES. The Titling Trustee shall be paid out of Titling Trust Assets in the UTI Portfolio reasonable compensation (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) and reimbursement for all services rendered by it in the execution of the Titling Trust and in the exercise and performance of any of the powers and duties under this Agreement and the other documents relating to a Securitized Financing to which it is a party, and as an expense of the Titling Trust, reimbursement of all reasonable costs and expenses (including reasonable attorneys' fees and expenses) of incorporation, qualification, periodic maintenance of its corporate franchises and qualification, annual board of directors' meetings and all necessary corporate filings, franchise taxes and fees. SECTION 6.14 NO PETITION. Each of the Titling Trustee and First Bank National Association, as Trust Agent, covenants and agrees that prior to the date which is one year and one day after the date upon which all obligations under each Securitized Financing has been paid in full, it will not institute against, or join any other Person in instituting against, TMCC any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding or other proceedings under any federal or state bankruptcy or similar law. This Section shall survive the termination of this Agreement or the resignation or removal of the Titling Trustee under this Agreement. SECTION 6.15 STOCK OF TMTT, INC. First Bank National Association hereby represents, warrants and covenants, for the benefit of the Grantor, each Beneficiary and each pledgee of a UTI Certificate or SUBI Certificate, as follows: (a) OWNERSHIP OF STOCK. All of the issued and outstanding Titling Trustee Stock is owned by First Bank National Association, free and clear of any lien, encumbrance or any other restriction, agreement or commitment of any kind (other than as provided for in this Agreement) that would in any way restrict First Bank National Association's ability freely to transfer, convey and assign the Titling Trustee Stock. All such Titling Trustee Stock currently outstanding is (and any Titling Trustee Stock that may be issued in the future will be) validly issued, fully paid and nonassessable and has not been (and will not be) issued in violation of any preemptive, first refusal or other subscription rights of any Person. There are no outstanding options, warrants, conversion' rights, subscription rights, preemptive rights, exchange rights or other rights, agreements or commitments -24- of any kind obligating First Bank National Association to sell any Titling Trustee Stock or to issue any additional capital stock in the Titling Trustee to any Person. First Bank National Association will not issue any additional Titling Trustee Stock without the express written consent of the UTI Beneficiary. (b) TRANSFER OF TITLING TRUSTEE STOCK. For so long as First Bank National Association is acting as a Trust Agent pursuant to this Agreement or any Trust Agency Agreement, but subject to any applicable legal or regulatory requirements, it will retain ownership of all of the Titling Trustee Stock. If at any time (and for any reason, including First Bank National Association's resignation or termination as Trust Agent or the termination of the Titling Trust) First Bank National Association either is no longer acting as a Trust Agent, is no longer able, because of legal or regulatory changes, to own the Titling Trustee Stock, or the Titling Trustee would have to be removed pursuant to Section 6.08 because of its being owned by First Bank National Association, First Bank National Association will (i) notify the UTI Beneficiary of such event and (ii) sell to the UTI Beneficiary's designee (who shall not be the UTI Beneficiary or any Affiliate thereof), at the UTI Beneficiary's option, without recourse except with respect to the representations, warranties and covenants of the Titling Trustee and the Trust Agent contained herein, all of the Titling Trustee Stock for the sum of Ten Dollars ($10). The UTI Beneficiary's designee shall have sixty (60) days from the date of receipt of such notice in which to exercise such option and to consummate such acquisition, during which time First Bank National Association shall refrain from offering for sale or selling any Titling Trustee Stock to any Person other than the UTI Beneficiary's designee. If the UTI Beneficiary's designee shall not consummate such acquisition within such period, First Bank National Association shall be free to offer for sale or sell to any Person any or all of the Titling Trustee Stock or to dissolve the Titling Trustee; provided, however, that a successor Titling Trustee shall have been appointed in accordance herewith. If the UTI Beneficiary's designee shall timely exercise its option to acquire the Titling Trustee Stock, First Bank National Association shall promptly tender all such Titling Trustee Stock to such buyer at a time and place determined by the buyer, duly endorsed in blank or with duly endorsed stock powers attached, against payment of the purchase price. The UTI Beneficiary shall pay any transfer or similar taxes arising from a transfer of the Titling Trustee Stock as contemplated herein. If no designee of the UTI Beneficiary shall be willing to purchase the Titling Trustee Stock as described above, then the Titling Trustee and each Beneficiary shall have the right to petition a court of competent jurisdiction to appoint a successor trustee meeting the requirements for a successor trustee set forth herein. ARTICLE VII ACCOUNTS; CASH FLOWS; PERMITTED INVESTMENTS SECTION 7.01 ACCOUNTS. (a) Unless otherwise specified in the UTI Supplement, the Titling Trustee will establish and maintain with respect to the Undivided Trust Interest a Lease Funding Account satisfying the definition of an Eligible Account. The Lease Funding Account shall be established and maintained -25- in the name of the Titling Trustee on behalf of the UTI Sub-Trust. None of the Grantor, any Beneficiary or, subject to Section 7.02(c), the holder or pledgee of any UTI Certificate or SUBI Certificate shall have any right to draw on the Lease Funding Account without the express written consent of the Titling Trustee; provided, however, that the Titling Trustee, with the express written consent of the related UTI Beneficiary, shall so consent to the extent provided for in the documentation relating to any Securitized Financing of such UTI Certificate or SUBI Certificate. The Lease Funding Account shall only contain funds relating to UTI Assets. (b) For so long as the Monthly Remittance Conditions are satisfied, the Servicer shall not be required to remit to the Lease Funding Account collections in respect of any Titling Trust Assets allocable to the Lease Funding Account on a daily basis but shall be entitled to retain such collections, without segregation from its other funds, until the Business Day preceding the date identified as a "Distribution Date" in the related UTI Supplement, at which time the Servicer shall so remit all such collections in immediately available funds; provided that (i) investments on which the Trust Agent is the obligor (including repurchase agreements as to which it, in its commercial capacity, is liable as principal), may mature on the Distribution Date, and (ii) investments made of Principal Collections or Interest Collections on deposit in a SUBI Collection Account may mature on such dates as specified by the Titling Trustee at the Servicer's direction so as to maintain the availability of sufficient cash to make the payments described in any SUBI Supplement or related SUBI Servicing Supplement. Notwithstanding the foregoing, commencing with the first day of the first period identified as a "Collection Period" in the related UTI Supplement or SUBI Supplement, as the case may be, that begins at least two Business Days after the day on which any Monthly Remittance Conditions cease to be satisfied and for so long as the Monthly Remittance Conditions are not satisfied, all collections in respect of the UTI Assets or the related SUBI Assets, as applicable, then held by the Servicer shall be immediately so deposited and all such future collections shall be so remitted by the Servicer to the appropriate account in accordance with this Agreement or the related SUBI Servicing Supplement, as applicable, on a daily basis within two Business Days after receipt thereof. Each SUBI Servicing Supplement shall also provide (i) the terms on which any other funds received by any Servicer, including funds transferred from any of the SUBI Collection Accounts to the extent of (1) the net investment value (as recorded on the books of the Titling Trust) of any Contracts and Leased Vehicles allocated to a SUBI in a Trust Asset Transfer, (2) reimbursement of any Servicer Advances provided for in any Securitized Financing with respect to such SUBI or (3) funding for such SUBI's share of any allocable Titling Trust Expenses will be deposited by the Servicer into the Lease Funding Account (or transferred directly to the Servicer, Grantor or UTI Beneficiary directly, as appropriate) and (ii) whether and under what circumstances any other funds received by the Servicer with respect to a SUBI Asset, including income with respect to any investment made in any SUBI Account, shall be deposited by the Servicer into an appropriate SUBI Account. (c) Except as otherwise provided in Section 7.03, a UTI Supplement or a SUBI Supplement, all Titling Trust Expenses shall be paid out of the Lease Funding Account or from monies held by the Servicer and allocable thereto or distributable in respect thereof, including: (i) -26- any reimbursement due to the Servicer for payments from its own operating accounts in order to fund (A) amounts due to Dealers in payment for the assignment to the Titling Trustee of Contracts and Leased Vehicles occurring prior to the Titling Trustee's notice to the Servicer to cease acquiring Contracts and Leased Vehicles on behalf of the Titling Trustee given pursuant to Section 7.02(c)(ii) and (B) any other Advances made by the Servicer with the consent of the Titling Trustee (to be given at the direction of the UTI Beneficiary or in accordance with the terms of any Securitized Financing), with respect to any Contract or Leased Vehicle, (ii) Servicer fees (and expenses, if any, not covered by the Servicer fee under any SUBI Servicing Supplement), (iii) Titling Trustee fees and expenses and (iv) other Titling Trust Expenses, if any; provided, however, that, to the extent that any Liability of the Titling Trustee or any Beneficiary is incurred in respect of Affected Trust Assets allocated to one or more Sub-Trusts, then such Liability shall be borne in accordance with Section 3.04, and the Titling Trustee, at the direction of the Servicer, shall transfer periodically from the related SUBI Collection Accounts to the Lease Funding Account each Sub-Trust's appropriate share of such aggregate Liabilities of the Titling Trust. Prior to the funding of the Lease Funding Account from collections on outstanding Contracts or otherwise, the UTI Beneficiary will advance monies to fund the origination of Contracts as described in the UTI Supplement. The UTI Supplement or any SUBI Supplement may provide that all or any portion of the collections on the related UTI Assets or SUBI Assets will be deposited in the Lease Funding Account or the related SUBI Lease Funding Account for a period of time specified therein. Prior to the creation of a SUBI, the expenses of the Titling Trust will be advanced by the UTI Beneficiary or funded from collections on the Contracts in the UTI Portfolio, as more fully described in the UTI Supplement. Thereafter, during any period during which there are no monies on deposit in the Lease Funding Account, expenses of the Titling Trust will be advanced by the UTI Beneficiary as and to the extent provided in the UTI Supplement and each SUBI Supplement. (d) All or a portion of the funds deposited into the Lease Funding Account shall be separately invested by the Titling Trustee from time to time at the direction of the UTI Beneficiary or its designee in any of the Permitted Investments; provided, however, that should the terms of any Securitized Financing impose any more stringent limits on the types or tenors of permitted investments in the Lease Funding Account than are provided for in the definition of Permitted Investments, such limits shall apply thereto for the period specified in the related Transaction Documents. The Servicer is hereby made the designee of the UTI Beneficiary for such purpose. All income, gain or loss from investment of monies in the Lease Funding Account shall, unless otherwise specified in the Transaction Documents with respect to any Securitized Financing, be for the account of the UTI Beneficiary; provided that each such investment shall be made in the name of the Titling Trustee, its nominee or its Financial Intermediary. If at any time the relevant Beneficiary or its designee shall not have given the Titling Trustee a timely investment directive with respect to any account, the Titling Trustee shall invest and reinvest any monies in such account(s) in a mutual fund offered by the Trust Agent or an affiliate thereof meeting the requirements of clause (i) of the definition of Permitted Investments. -27- SECTION 7.02 RELATIONSHIP TO SECURITIZED FINANCINGS. (a) All funds in each SUBI Collection Account (other than any DE MINIMIS amount necessary to maintain the account), however derived, to the extent not required to fund that SUBI's share of Trust Liabilities or to fund any Trust Asset Transfer into that SUBI Sub-Trust as provided for in the related SUBI Supplement, shall be reinvested or paid out in accordance with the terms and provisions hereof or of such SUBI Supplement. (b) A UTI Pledge shall be recognized by the Titling Trustee for purposes of this Agreement only if the UTI Beneficiary shall have given the Titling Trustee written notice of such UTI Pledge and the name and address of the related pledgee. During any period in which the Titling Trustee has neither received notice from any pledgee of a UTI Pledge nor otherwise obtained actual knowledge to the effect that (i) there is any sum due with respect to any Securitized Financing secured by a UTI Pledge not otherwise timely paid by a UTI Beneficiary (after any applicable grace period), or (ii) there is any outstanding and uncured other default by a UTI Beneficiary with respect to any such Securitized Financing (after any applicable grace period), the Titling Trustee, promptly upon receipt of a written demand therefor accompanied by a determination by such UTI Beneficiary (or any Servicer on its behalf) as to the amount of Excess Funds, shall pay out to such UTI Beneficiary upon its request the Excess Funds so requested. (c) During any period as to which the Titling Trustee either has received notice from any pledgee of a UTI Pledge or otherwise has obtained actual knowledge that either of the defaults described in Sections 7.02(b)(i) and (ii) has occurred and is continuing, the Titling Trustee shall (i) not create any new SUBI, (ii) direct each Servicer not to accept any further assignments on behalf of the Titling Trustee of Contracts or Leased Vehicles (other than as provided for in Sections 7.03 and 7.04), and (iii) distribute to such pledgee of a UTI Pledge, on demand, all Excess Funds that would otherwise be distributable to the UTI Beneficiary. SECTION 7.03 SUBI LEASE FUNDING ACCOUNTS. In the event that for any reason (a) (i) a different Servicer shall be engaged by the Titling Trustee to manage one or more SUBI Portfolios, on the one hand, and the UTI Portfolio, on the other hand, or (ii) circumstances with respect to any Securitized Financing secured by a UTI Pledge are such that (A) the Titling Trustee has given to any Servicer the notice provided for in Section 7.02(c)(ii) or (B) if there is any outstanding UTI Pledge, the Titling Trustee is notified that a Trust Asset Transfer into one or more SUBI Sub-Trusts would cause a borrowing base deficiency (as defined in the documents related to such Securitized Financing) to occur in any Securitized Financing secured by a UTI Pledge, and (b) at such time the Titling Trustee, acting pursuant to any SUBI Supplement or SUBI Servicing Supplement, would otherwise be causing its Servicer to effect Trust Asset Transfers from the UTI Sub-Trust into one or more SUBI Sub-Trusts: (1) the Titling Trustee shall establish and maintain in its name for each SUBI a separate SUBI Lease Funding Account, (2) to the extent that the Titling Trustee would, but for the conditions set forth in the foregoing clauses (a) and (b), cause the transfer from any SUBI Collection Account to the Lease -28- Funding Account in connection with any Trust Asset Transfer, the Titling Trustee shall instead cause the transfer of such funds from that SUBI Collection Account to the SUBI Lease Funding Account established with respect to that SUBI, (3) the Titling Trustee shall direct the Servicer then servicing the respective SUBI Portfolio to acquire on behalf of the Titling Trust, for the account of that SUBI Sub-Trust rather than for the UTI Sub-Trust, Contracts and Leased Vehicles from Dealers, and (4) the Titling Trustee shall apply any such funds in any such SUBI Lease Funding Account directly to reimburse the Servicer then servicing that SUBI Portfolio for any payments made by it to Dealers in respect of such Contracts and Leased Vehicles. In the event that Contracts and Leased Vehicles are being acquired by any Servicer(s) on behalf of the Titling Trustee (on behalf of the Titling Trust) both with respect to the UTI Sub-Trust and any SUBI Sub-Trust simultaneously, the Titling Trustee shall first allocate all such Contracts and Leased Vehicles to the SUBI Sub-Trusts until funds available for such purpose in any SUBI Lease Funding Account shall be exhausted and then shall allocate all remaining Contracts and Leased Vehicles to the UTI Sub-Trust. SECTION 7.04 REBALANCING AFTER THIRD PARTY CLAIM. To the extent that a third party claim against Titling Trust Assets is satisfied out of Titling Trust Assets in proportions other than as provided in Section 3.04, then, notwithstanding anything to the contrary contained herein, the Titling Trustee shall promptly identify and reallocate (or cause the Servicer to identify and reallocate) the remaining Titling Trust Assets among the UTI Sub-Trust and each of the SUBI Sub-Trusts so that each shall bear the expense of the third party claim as nearly as possible as if the burden of such claim had been allocated as provided in Section 3.04. ARTICLE VIII TERMINATION SECTION 8.01 TERMINATION OF THE TITLING TRUST. (a) This Agreement and the Titling Trust shall terminate upon the last to occur of (i) the payment to the Beneficiaries and each permitted purchaser, assignee and pledgee thereof of interests in the Titling Trust of all amounts and obligations required to be paid to them, and the expiration or termination of all Securitized Financings by their respective terms, and (ii) the maturity or liquidation and the disposition of all Titling Trust Assets and the disposition to the Beneficiaries or their permitted purchasers, assignees or pledgees of all net proceeds thereof. Notwithstanding the foregoing, in no event shall the trust created by this Agreement continue beyond the expiration of 21 years from the death of the last survivor of the descendants of Joseph P. Kennedy, the late ambassador of the United States to the Court of St. James, living on the date of this Agreement. (b) Upon the termination of the Titling Trust, (i) after satisfaction of all creditors, if any, of the Titling Trust, the Titling Trustee shall distribute the Titling Trust Assets to the Beneficiaries in accordance with this Agreement and the outstanding UTI Supplements and SUBI Supplements; (ii) the Beneficiaries to whom such Titling Trust Assets are distributed shall retitle or cause to be -29- retitled any Leased Vehicles so distributed to those Beneficiaries and shall pay or cause to be paid all applicable titling and registration fees and taxes; and (iii) the Titling Trustee shall file or cause to be filed a certificate of cancellation with the Delaware Secretary of State pursuant to Section 3810(c) of the Delaware Act. SECTION 8.02 TERMINATION AT THE OPTION OF BENEFICIARY. Notwithstanding the provisions of Section 8.01, the Titling Trust shall be deemed terminated, solely with respect to the Titling Trust Assets allocated to the related Sub-Trust, and not as to any of the Titling Trust Assets allocated to any other Sub-Trust, upon the written direction to the Titling Trustee by any Beneficiary with respect to such Sub-Trust to revoke and terminate such portion of the Titling Trust. Upon such termination of the Titling Trust with respect to such a Sub-Trust, the Titling Trustee shall distribute to the Beneficiary for such Sub-Trust all Titling Trust Assets allocated to such Sub-Trust and shall cause the Certificates of Title to the Leased Vehicles allocated to such Sub-Trust to be issued in the name of, or at the direction of, such Beneficiaries. The Beneficiary to whom such Titling Trust Assets are distributed shall then pay or cause to be paid all applicable titling and registration fees and taxes. SECTION 8.03 TITLING TRUSTEE ACTIONS UPON TERMINATION. Upon termination of this Agreement, the Titling Trust and/or one or more Sub-Trusts pursuant to Section 8.01 or 8.02, the Titling Trustee shall take such action as may be requested by any Beneficiary to transfer the related Titling Trust Assets to such Beneficiary or such other Person as such Beneficiary may designate, including the execution of the assignment forms on the Certificates of Title and any other instruments of transfer and assignment with respect to the Leased Vehicles. ARTICLE IX MISCELLANEOUS PROVISIONS SECTION 9.01 AMENDMENT. Prior to the first Securitized Financing, this Agreement may be amended by written agreement between the UTI Beneficiary and the Titling Trustee to correct or supplement any provision in this Agreement, to cure any ambiguity, and to add, change or eliminate any other provision of this Agreement with respect to matters or questions arising under this Agreement. After the first Securitized Financing, any such amendment shall also require such additional approvals, if any, as are required under documents relating to each Securitized Financing. SECTION 9.02 GOVERNING LAW. This Agreement shall in all respects be governed by and construed in accordance with the internal laws of the State of California, without reference to its conflicts of laws provisions, and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws. SECTION 9.03 NOTICES. All demands, notices and communications under this Agreement shall be in writing and shall be delivered or mailed by registered or certified first class United States mail, postage prepaid, return receipt requested; hand delivery; prepaid courier service; or telecopier, and addressed in each case as follows: (a) if to the Grantor or UTI Beneficiary, at Toyota Motor -30- Credit Corporation, 19001 S. Western Avenue, Torrance, California 90509, Attention: Corporate Treasury Manager (Telecopier No. (310) 787-6194), (b) if to the Titling Trustee, at TMTT, Inc., care of First Bank National Association, 111 East Wacker Drive, Suite 3000, Chicago, Illinois 60601, Attention: Corporate Trust Office (at Telecopier No. (312) 228-9401), and (c) if to the Trust Agent, First Bank National Association, 111 East Wacker Drive, Suite 3000, Chicago, Illinois 60601, Attention: Corporate Trust Office (at Telecopier No. (312) 228-9401) or at such other address as shall be designated by the Grantor or Beneficiary, the Titling Trustee or the Trust Agent in written notice to the other parties hereto. Delivery shall occur only upon actual receipt or rejected tender of such communication by an officer of the recipient entitled to received such notices located at the address of such recipient for notices hereunder. A copy of all notices to the Titling Trustee shall be delivered to First Bank National Association for so long as it is a Trust Agent. SECTION 9.04 SEVERABILITY OF PROVISIONS. If any one or more of the covenants, agreements, provisions or terms of this Agreement shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement or of any Certificates or the rights of the holders thereof. SECTION 9.05 COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which so executed and delivered shall be deemed to be an original, but all of which counterparts shall together constitute but one and the same instrument. SECTION 9.06 SUCCESSORS AND ASSIGNS. All covenants and agreements contained in this Agreement shall be binding upon, and inure to the benefit of, the parties hereto and their permitted successors and assigns and the Beneficiaries and their respective permitted successors and assigns. Any request, notice, direction, consent, waiver or other instrument or action by a Beneficiary shall bind the successors and assigns of such Beneficiary. SECTION 9.07 TABLE OF CONTENTS AND HEADINGS. The Table of Contents and Article and Section headings are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. -31- IN WITNESS WHEREOF, TMCC, the Titling Trustee and, solely for the limited purposes set forth herein, First Bank National Association, as Trust Agent, have caused this Agreement to be duly executed by their respective officers as of the day and year first above written. TOYOTA MOTOR CREDIT CORPORATION, as Grantor, Initial Beneficiary and Servicer By: ___________________________________ Name: Title: TMTT, Inc., as Titling Trustee By: ___________________________________ Name: Title: FIRST BANK NATIONAL ASSOCIATION, as Trust Agent By: ___________________________________ Name: Title: -32- EXHIBIT A CERTIFICATE OF TRUST OF ----------------------- TOYOTA LEASE TRUST ------------------ THIS Certificate of Trust of Toyota Lease Trust (the "Titling Trust"), dated as of September 24, 1996, is being duly executed and filed by First Bank National Association, a national banking association, as Trust Agent, and TMTT, Inc., a Delaware corporation, as trustee, to form a business trust under the Delaware Business Trust Act (12 Del. Code Sections 3801 et seq.). 1. NAME. The name of the business trust formed hereby is Toyota Lease Trust. 2. DELAWARE TRUSTEE. The name and business address of the trustee of the Titling Trust in the State of Delaware is TMTT, Inc., 1209 Orange Street, Wilmington, New Castle County, Delaware. 3. SERIES TRUST. The Titling Trust shall be a series trust and the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to a particular series shall be enforceable against the assets of such series only, and not against the assets of the Titling Trust generally. 4. EFFECTIVE DATE. This Certificate of Trust shall be effective upon filing. A-1 IN WITNESS WHEREOF, the undersigned, being the sole trustees of the Titling Trust, have executed this Certificate of Trust as of the date first-above written. FIRST BANK NATIONAL ASSOCIATION, As Trust Agent By: /s/ PATRICIA M. CHILD -------------------------- NAME: PATRICIA M. CHILD TITLE: VICE PRESIDENT TMTT, INC., as Titling Trustee By: /s/ PATRICIA M. CHILD -------------------------- NAME: PATRICIA M. CHILD TITLE: VICE PRESIDENT AND CFO A-2 EXHIBIT B FORM OF UTI SUPPLEMENT B-1 EXHIBIT C FORM OF SUBI SUPPLEMENT C-1 ANNEX OF DEFINITIONS Unless otherwise specified in the agreement to which this Annex of Definitions is attached or which refers to this Annex of Definitions, the following terms have the indicated meanings. Terms defined herein but not directly or indirectly used or referenced in such agreement shall not be deemed to have any meaning or significance with respect to such agreement. "ADMINISTRATIVE EXPENSE" means any reasonable administrative cost or expense associated with any relevant Securitization Trust and the Titling Trust, as the context indicates, including reasonable fees and expenses of attorneys and accountants. "ADMINISTRATIVE LIEN" means any first lien specified upon any Certificate of Title as deemed necessary and useful by the Servicer or the UTI Beneficiary to provide for delivery of title documentation to the Titling Trustee or its designee. "ADMINISTRATIVE LIENHOLDER" means the Person or Persons identified as such from time to time to the Titling Trustee by the Servicer and in whose name one or more Administrative Liens are specified on Certificates of Title. "ADVANCE" if a Transaction Document specifies that Advances are to be made, unless otherwise provided in such Transaction Document, means an advance to be made by the Servicer on the date specified in such Transaction Document in respect of the related SUBI Collection Period and with respect to each outstanding Contract that is included in the related SUBI Portfolio as to which the scheduled Monthly Payment is delinquent or as to which payments have been deferred by the Servicer which deferrals have resulted in any diminution of the amount of Collections received in connection therewith relative to the originally scheduled Monthly Payments, each such advance to be in an amount equal to the aggregate amount of the Monthly Payments due thereon during such SUBI Collection Period but not received during such SUBI Collection Period. "AFFECTED TRUST ASSETS" means a discrete Titling Trust Asset or group of Titling Trust Assets impacted by any Liability (including contract, tort or tax claims relating to one or more specific Contracts or Leased Vehicles) as described in Section 3.04 of the Titling Trust Agreement. "AFFILIATE" means, as to any Person, any other Person that (i) directly or indirectly controls, is controlled by or is under common control with such Person (excluding any trustee under, or any committee with responsibility for administering, any employee benefit plan) or (ii) is an officer or director of such Person. A Person shall be deemed to be "controlled by" any other Person if such other Person possesses, directly or indirectly, power (x) to vote 5% or more of the securities (on a fully diluted basis) having ordinary voting power for the election of directors or managing partners; or (y) to direct or cause the direction of the management and policies of such Person whether by contract or otherwise. "AUTHORIZED NEWSPAPER" means a newspaper of general circulation in the Borough of Manhattan, The City of New York, printed in the English language and customarily published on each Business Day, whether or not published on Saturdays, Sundays and holidays. "BENEFICIARY" means the UTI Beneficiary or any holder of a UTI Certificate or SUBI Certificate, including any trust formed with respect to a Securitized Financing but excluding the Titling Trustee, any Trust Agent, or any trustee or trust agent with respect to a Securitized Financing or UTI Pledge. "BOOKED RESIDUAL VALUE" means the amount established at the origination of the lease (based on documentation provided to the Dealers by TMCC) representing the estimated wholesale market value at the Maturity Date of the related Contract, each as set forth on the face of such Contract at the time of origination including, with respect to a Contract for which the Maturity Date of such Contract has been extended by the Servicer in connection with any extension or deferral, the value as set forth above reduced by payments in respect of principal received during the extension period. "BUSINESS DAY" means any day that is not a Saturday, Sunday or other day on which banking institutions in New York, New York, Chicago, Illinois or Los Angeles, California are authorized or obligated by law, executive order or governmental decree to be closed. "CERTIFICATE OF TITLE" means a certificate of title or other evidence of ownership of a Leased Vehicle issued by the Registrar of Titles in the respective jurisdiction in which such Leased Vehicle is registered, which Certificate of Title shall reflect as the owner of such Leased Vehicle "Toyota Lease Trust", "TMTT, Inc., as Trustee of Toyota Lease Trust" or such other similar designation as may be acceptable to any relevant Registrar of Titles. "CERTIFICATE OF TRUST" means the Certificate of Trust for the Titling Trust required to be filed with the office of the Secretary of State of the State of Delaware pursuant to Section 3810 of the Delaware Act, substantially in the form set forth in the Titling Trust Agreement. "CHARGED-OFF CONTRACT" means a Contract (a) with respect to which the related Leased Vehicle has been repossessed and sold or otherwise disposed of or (b) which has been written off by the Servicer in accordance with its normal policies for writing off lease contracts other than with respect to repossession. -2- "CLAIMS" means any losses, liabilities and expenses (including reasonable attorney's and other professional fees and expenses) incurred in connection with reasonable collection efforts or the defense of any suit or action. "CLASS" means all Certificates whose form is identical except for variation in denomination, principal amount or owner. "CLEARING AGENCY" means an organization registered as a "clearing agency" pursuant to Section 17A of the Exchange Act. "CLEARING AGENCY PARTICIPANT" means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Clearing Agency effects book-entry transfers and pledges of securities deposited with the Clearing Agency. "CLOSING DATE" means, with respect to any Securitized Financing, the date specified as such in the related Transaction Documents. "CODE" means the Internal Revenue Code of 1986, as amended. "COLLECTION PERIOD" means, with respect to any Distribution Date, the calendar month preceding such Distribution Date. "COLLECTIONS" means, with respect to any Collection Period, all net collections received in respect of the Contracts and Leased Vehicles during such Collection Period, including Monthly Payments and Payments Ahead that represent Monthly Payments due during such Collection Period; Prepayments, Advances, Net Matured Leased Vehicle Proceeds, Net Repossessed Vehicle Proceeds and other Net Liquidation Proceeds, less (i) amounts representing Payments Ahead with respect to future Collection Periods and (ii) Additional Loss Amounts in respect of such Collection Period. "COMMISSION" means the Securities and Exchange Commission, and any successor thereto. "CONTINGENT AND EXCESS LIABILITY INSURANCE POLICIES" means, collectively, the contingent liability insurance policies maintained or to be maintained by TMCC providing coverage for bodily injury and property damage suffered by third persons caused by the operation of any vehicle that is a Leased Vehicle, and each of the excess liability insurance policies maintained or to be maintained by TMCC with third party insurers providing excess insurance coverage as to such liabilities. "CONTRACT" means any of the fixed rate retail closed-end lease contracts (and all proceeds thereof) originated in connection with the lease of the Leased Vehicles that are or were originated by Dealers pursuant to and in conformity with Dealer Agreements between such Dealers and -3- the titling trust, the rights to which have been assigned to the Titling Trust, or the Titling Trustee on behalf of the Titling Trust, in accordance with such Dealer Agreements. "CONTRACT DOCUMENTS" means, with respect to each Contract, (i) the fully executed Contract, (ii) the related Certificate of Title (or the application therefor if the Certificate of Title has not been received), (iii) any written agreements modifying such Contract (including any written extension thereof), (iv) all related credit applications, factory invoices, Dealer worksheets, written records of certification of information provided in the credit application and odometer statements required by applicable law, (v) documents related to the provision of insurance and (vi) all other documents relating to such Contract and retained by the Servicer. "CONTRACT RECORD" means all data maintained by the Servicer (including, without limitation, computerized records), together with all operating software and appropriate documentation, relating directly to or maintained in connection with the servicing of the Contracts. "CORPORATE TRUST OFFICE" means the office of the Titling Trustee or Trust Agent, as indicated by the context. As of October 1, 1996, the Corporate Trust Office is located at 111 East Wacker Drive, Suite 3000, Chicago, Illinois 60601, Attention: Corporate Trust Office. After October 1, 1996, Corporate Trust Office will mean the corporate trust office designated in writing to the Servicer and to the Beneficiaries by the Titling Trustee, Trust Agent or any successor thereto, as the case may be. "CREDIT AND COLLECTION POLICY" means those credit and collection policies and practices of the Servicer, as applied by the Servicer, with respect to the origination and servicing of Contracts and related Leased Vehicles as they may be amended, supplemented, or modified by the Servicer from time to time. "CURRENT CONTRACT" means a Contract that is not a Charged-off Contract, a Matured Contract, a Liquidated Contract or an Additional Loss Contract. "DEALER" means a motor vehicle dealer, located in a State permitted by the Origination Criteria, that has entered into a Dealer Agreement. "DEALER AGREEMENT" means that certain Retail Motor Vehicle Lease Agreement substantially in the form to be attached as an exhibit to the UTI Supplement or in such other form as may be approved from time to time entered into between the Titling Trust and a Dealer setting forth the respective rights and obligations of the Titling Trust and the Dealer, acting as an independent contractor, with respect to the Dealer's entering into Contracts. "DELAWARE ACT" means the Delaware Business Trust Act 12 Del. Code, Sections 3801 ET SEQ. -4- "DELAWARE PARTNERSHIP ACTS" means the Delaware Revised Uniform Limited Partnership Act and the Delaware Uniform Partnership Act, in each case as amended. "DETERMINATION DATE" means, with respect to any Distribution Date, the second Business Day prior to such Distribution Date. "DISTRIBUTION DATE" means, with respect to the UTI and a Collection Period, the twenty-fifth day of the following month, or if that day is not a Business Day, the next Business Day, beginning with October 25, 1997. "DTC" means The Depository Trust Company and its successors. "DUE DATE" with respect to any Contract, means the monthly date specified in such Contract on which the scheduled Monthly Payment is due. "ELIGIBLE ACCOUNT" means (i) an account maintained with a federal or state chartered depository or trust institution, the short-term unsecured debt obligations of which have the Required Rating, (ii) a segregated trust account maintained with a depository or trust institution in its corporate trust department or (iii) an account otherwise acceptable to each Rating Agency without reduction or withdrawal of its rating of any related Rated Certificates, as evidenced by a letter from each Rating Agency. "ELIGIBLE CONTRACT" -5- with respect to eligibility for origination in the name of the Titling Trust, means a UTI Eligible Contract, and with respect to eligibility for inclusion in any SUBI Sub-Trust means a UTI Eligible Contract that also satisfies the definition of Eligible Contract applicable to such SUBI Sub-Trust as set forth in the related SUBI Servicing Supplement. "ELIGIBLE SERVICER" means TMCC or an entity that is servicing a portfolio of automobile and/or light truck retail installment lease contracts, that is legally qualified and has the capacity to service the Contracts and that has demonstrated the ability to service a portfolio of similar lease contracts professionally and competently in accordance with high standards of skill and care. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor statute of similar import, together with the regulations thereunder, in each case as in effect from time to time. References to sections of ERISA shall be construed to refer also to any successor sections. "ERISA AFFILIATE" means each person (as defined in Section 3(9) of ERISA) which, together with the identified person, would be deemed to be a member of the same "controlled group" within the meaning of Section 414(b), (c), (m) and (o) of the Code or Section 4001 of ERISA. "EXCESS FUNDS" means, as of any date, the amount of funds in the Lease Funding Account or otherwise held by the Servicer or the Titling Trustee in respect of the UTI in excess of those (i) required to maintain the account to meet all existing Liabilities of the Titling Trust to be paid out of such account (after accounting for all transfers to be made from any SUBI Account on or before such date) and (ii) required to be retained in such account as reserves for reasonably anticipated Liabilities of the Titling Trust (after taking into account all transfers to be made to such Lease Funding Account out of any SUBI Account in respect of that SUBI's proportionate share of such anticipated Liabilities). "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. "EXTENSION FEE" means, with respect to any Contract that has had its Maturity Date extended as contemplated in the Titling Trust Agreement or any SUBI Servicing Supplement, any payment required to be made by the Obligor in connection with such extension. "FDIC" means the Federal Deposit Insurance Corporation and its successors. "FINANCIAL INTERMEDIARY" means a financial intermediary, as such term is defined in Section 8-313(4) of the UCC. "FIRST BANK" means First Bank National Association, a national banking association. -6- "FNMA" means the Federal National Mortgage Association and its successors. "FUNDING ADVANCE" means the amount of each advance of the face amount or any portion of a Contract (including with respect to any taxes, fees or charges payable to the related Dealer or any third party at the time of the funding thereof) made by the UTI Beneficiary or any agent thereof in connection with the funding of such Contract that has not previously been reimbursed thereto. "FUNDING ADVANCE REIMBURSEMENT AMOUNT" means, with respect to any Distribution Date, the aggregate amount of Funding Advances made during the related Collection period and not previously reimbursed to the UTI Beneficiary from Collections on the related Contracts or otherwise. "FUNDING ADVANCE REIMBURSEMENT DATE" means a Distribution Date on which a Funding Advance Reimbursement Amount is to be made. "GOVERNMENTAL AUTHORITY" means any nation or government, any federal, state, local or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of government. "GRANTOR" means TMCC in its capacity as Grantor. "INDEPENDENT" with respect to any specified Person means another Person who (a) is in fact independent of TMCC and any of its Affiliates; (b) does not have any direct financial interest or any material indirect financial interest in TMCC or any of its Affiliates; and (c) is not connected with TMCC or any of its Affiliates as an officer, employee, promoter, underwriter, trustee, partner, director or Person performing similar functions. Whenever it is provided in the Titling Trust Agreement or any other agreement adopting this definition that any Independent Person's opinion or certificate shall be furnished, such Independent Person shall be deemed to be Independent to the satisfaction of the recipient thereof if such opinion or certificate shall state that the signer has read this definition and that the signer is in fact Independent within the meaning hereof. "INDEPENDENT ACCOUNTANT" means an Accountant, who may also be the Accountant who audits the books of TMCC or any of its Affiliates, who is Independent with respect to TMCC and its Affiliates as contemplated by Rule 101 of the Code of Professional Conduct of the American Institute of Certified Public Accountants. "INDEPENDENT DIRECTOR" means a director of the Transferor who shall at no time be (i) a director, officer, employee or former employee of the Transferor or any Affiliate thereof, (ii) a natural person related to any director, officer, employee or former employee of the Transferor or any Affiliate thereof, (iii) a holder (directly or indirectly) of any voting securities of the Transferor or any Affiliate thereof, or (iv) a natural person related to a holder (directly or indirectly) of any voting securities of the Transferor or any Affiliate thereof. -7- "INSOLVENCY EVENT" means, with respect to any Person: (i) Such Person shall file a petition commencing a voluntary case under any chapter of the Federal bankruptcy laws; or such Person shall file a petition or answer or consent seeking reorganization, arrangement, adjustment, or composition under any other similar applicable Federal law, or shall consent to the filing of any such petition, answer, or consent; or such Person shall appoint, or consent to the appointment of a custodian, receiver, liquidator, trustee, assignee, sequestrator or other similar official in bankruptcy or insolvency of it or of any substantial part of its property, or shall make any assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts generally as they become due; or (ii) any order for relief against such Person shall have been entered by a court having jurisdiction in the premises under any chapter of the Federal bankruptcy laws; or a decree or order by a court having jurisdiction in the premises shall have been entered approving as properly filed a petition seeking reorganization, arrangement, adjustment, or composition of such Person under any other similar applicable Federal Law; or a decree or order of a court having jurisdiction in the premises for the appointment of a custodian, receiver, liquidator, trustee, assignee, sequestrator or other similar official in bankruptcy or insolvency of such Person or of any substantial part of its property, or for the winding up or liquidation of its affairs, shall have been entered. "INSURANCE COSTS" means, with respect to any Insurance Policy, the premiums therefor, any deductibles and any coinsurance payments. "INSURANCE POLICIES" means any residual value insurance policy and any policy of comprehensive, collision, public liability, physical damage, personal liability, credit accident or health, credit life or unemployment insurance maintained by the Grantor, any Obligor under any Contract or any Affiliate of any such Person to the extent that any such policy covers or applies to any Contract, Leased Vehicle or the ability of any Obligor under any Contract to make required payments with respect to a Contract or the related Leased Vehicle; provided that, with respect to any SUBI, "Insurance Policies" means only such of the foregoing policies as relate to the related SUBI Portfolio and, in the case of such insurance policies that relate to Contracts or related assets in more than one SUBI Portfolio, such policies only insofar as they, or the proceeds thereof, relate to Contracts or related assets included in the related SUBI Portfolio. "INSURANCE PROCEEDS" with respect to any Collection Period, means recoveries pursuant to each Insurance Policy obtained and maintained by the Obligor pursuant to a Contract, or by the Titling Trust or the Servicer with respect to such Contract or the related Leased Vehicle (or payment by TMCC of the deductibles as to which it has indemnified the Titling Trust). "INTEREST COLLECTIONS" means, with respect to any Collection Period, an amount equal to the amount by which Collections exceed Principal Collections with respect to such Collection Period. "INVESTMENT COMPANY ACT" means the Investment Company Act of 1940, as amended. -8- "LEASE FUNDING ACCOUNT" means the Lease Funding Account established and maintained in accordance with Section 7.01(a) of the Titling Trust Agreement. "LEASED VEHICLE" means the new or used (including any dealer demonstrator vehicle or manufacturers' program vehicle) automobile, minivan, sports utility vehicle or light duty truck, together with all accessories, additions and parts constituting a part thereof and all accessions thereto, which is the subject of a Contract. "LEASE RATE" means the imputed interest rate set forth in each Contract on the basis of which the lessor identifies the portions of each Monthly Payment that constitute principal or interest, respectively. "LIABILITIES" means all losses, liabilities, claims, damages, expenses (including related reasonable legal and other professional fees and expenses), taxes, actions and suits of any kind. "LIEN" means any security interest, lien, charge, pledge, equity or encumbrance of any kind other than tax liens, mechanics' liens and any liens that attach to property, as the context may require, by operation of law. "LIQUIDATED CONTRACT" means a Contract that has been the subject of a Prepayment in full or otherwise has been paid in full or, in the case of a Charged-off Contract, a Contract as to which the Servicer has determined that the final amounts in respect thereof have been paid. "LIQUIDATION EXPENSES" means reasonable out-of-pocket expenses (including related attorneys' fees and expenses) incurred by the Servicer in connection with the attempted realization of the full amounts due or to become due under any Contract, including expenses incurred in connection with the repossession of the related Leased Vehicle, the sale of such Leased Vehicle, whether upon its repossession or return (if such Contract is a Matured Contract), any collection effort (whether or not resulting in a lawsuit against the Obligor under such Contract) or any claim under an Insurance Policy. "LIQUIDATION PROCEEDS" means gross amounts received by the Servicer or the Titling Trustee, on behalf of the Titling Trust (before reimbursement for Liquidation Expenses), in connection with the realization of the full amounts due or to become due under any Contract, whether from the sale or other disposition of the related Leased Vehicle (without regard to whether such proceeds exceed the Booked Residual Value), the proceeds of any collection effort (whether or not resulting in a lawsuit against the Obligor under such Contract), the proceeds of recourse payments by Dealers, receipt of Insurance Proceeds, or collection of amounts due hereunder in respect of such Contract (including the application of Security Deposits) or otherwise. "MATURED CONTRACT" means any Contract that has reached its Maturity Date. -9- "MATURED VEHICLE", as of any date, means any Leased Vehicle, the related Contract of which has reached its Maturity Date, and which Leased Vehicle has been returned to the Servicer on behalf of the Titling Trust (or the Titling Trustee on behalf of the Titling Trust), regardless of the status of the sale or disposition of such Leased Vehicle as of the date of such return. "MATURITY DATE" means, with respect to any Contract, the date on which the last scheduled Monthly Payment shall be due and payable, as such date may be extended in accordance with the provisions of the UTI Supplement and any applicable SUBI Supplement or SUBI Servicing Supplement. "MONTHLY PAYMENT" means, with respect to any Contract, the amount of each fixed monthly payment payable by the related Obligor in accordance with the terms thereof, net of any portion of such monthly payment that represents collections allocable to payments to be made by the Obligor for sales taxes or similar items, and excluding any portion thereof relating to the payment of insurance premiums (unless such premiums are included in the related capitalized cost), late payment charges, extension fees or other similar items. "MONTHLY REMITTANCE CONDITIONS" means that (i) TMCC is the Servicer, (ii) either (a) TMCC's short-term unsecured debt is rated at least P-1 by Moody's and A-1 by Standard & Poor's (so long as Moody's and Standard & Poor's are Rating Agencies), or (b) certain arrangements are made that have been approved in writing by each Rating Agency that has rated any class of securities issued in connection with a securitized financing at the request of the Grantor and (iii) no Early Amortization Event or Event of Servicing Termination as defined in any SUBI Supplement shall have occurred and be continuing. "MOODY'S" means Moody's Investors Service, Inc., and its successors. "OBLIGEE" means each Person who is the lessor under a Contract or the assignee thereof, including the Titling Trust or the Titling Trustee on behalf of the Titling Trust. "OBLIGOR" means the Person who is the lessee under a Contract. "OFFICER'S CERTIFICATE" means, with respect to any Person, a certificate signed by the President, any Vice President, the Chief Financial Officer, the Chief Accounting Officer, the Treasurer or any Assistant Treasurer, the Secretary or any Assistant Secretary thereof. "OPINION OF COUNSEL" means, with respect to any Person, a written opinion of counsel which counsel shall be reasonably acceptable to the indicated recipient; provided that, in the case of opinions to be delivered by TMCC or TLI, such counsel may be an employee of or outside counsel to the Transferor or the Servicer. -10- "ORIGINATION CRITERIA" means, with respect to any Contract, TMCC's written underwriting criteria in effect as of the date of origination of any specific Contract, and as the same may be amended, supplemented or modified from time to time by TMCC in the ordinary course of business. "OTHER PROCEEDS" means monies arising from the sale, exchange, lease, collection or other disposition of lease contracts and related leased vehicles or other receivables that are not titling Trust Assets but as to which the Servicer is acting as servicer. "OUTSTANDING PRINCIPAL BALANCE" means, with respect to any Contract as of any date, the amount to which the capitalized cost of a Contract has been amortized at any point in time, which will be an amount equal to (i) the sum of all Monthly Payments remaining to be made, including overdue Monthly Payments (provided, however, that Payments Ahead received but not yet applied are deemed to be Monthly Payments remaining to be made), less any unearned finance or other similar unearned lease charges relating to the period beginning after the next succeeding Payment Date on such Contract (determined on a constant yield basis) in accordance with the Servicer's usual practices, plus (ii) the Booked Residual Value of the related Leased Vehicle. The term "principal amount" and "principal balance" as used in relation to any Contract or Contracts shall refer, as of such date of determination, to the Outstanding Principal Balance of such Contract or Contracts computed as of such time. "PAYMENT AHEAD" means any payment of one or more Monthly Payments (not constituting a Prepayment) remitted by an Obligor with respect to a Contract in excess of the Monthly Payment due with respect to such Contract, which sums the Obligor has instructed the Servicer to hold and apply to Monthly Payments due in one or more immediately subsequent calendar months. "PAYMENT DATE" means, as to each Contract, the date each month therein set forth as the date Monthly Payments are due. "PERMITTED INVESTMENTS" means any one or more of the following instruments, obligations or securities, in each case subject to any further criteria specified in the related SUBI Supplement: (a) obligations of, and obligations fully guaranteed as to timely payment of principal and interest by, the United States or any agency thereof, provided such obligations are backed by the full faith and credit of the United States; (b) general obligations of or obligations guaranteed by FNMA or any state of the United States, the District of Columbia or the Commonwealth of Puerto Rico then rated the highest available credit rating of each Rating Agency for such obligations; (c) certificates of deposit issued by any depository institution or trust company (including any Securitization Trustee) incorporated under the laws of the United States or of any state thereof, the District of Columbia or the Commonwealth of Puerto Rico and subject to supervision and -11- examination by banking authorities of one or more of such jurisdictions, provided that the short-term unsecured debt obligations of such depository institution or trust company are then rated the highest available rating of each Rating Agency for such obligations; (d) certificates of deposit, demand or time deposits of, bankers' acceptances issued by, or federal funds sold by, any depository institution or trust company (including any Securitization Trustee) incorporated under the laws of the United States or any State and subject to supervision and examination by federal and/or State banking authorities and the deposits of which are fully insured by the Federal Deposit Insurance Corporation, so long as at the time of such investment or contractual commitment providing for such investment either such depository institution or trust company has the Required Rating or such Securitization Trustee shall have received a letter from each Rating Agency to the effect that such investment would not result in the qualification, downgrading or withdrawal of the ratings then assigned to any Rated Certificates; (e) certificates of deposit issued by any bank, trust company, savings bank or other savings institution and fully insured by the FDIC; (f) repurchase obligations held by any Securitization Trustee that are acceptable to the Securitization Trustee with respect to any security described in clauses (a), (b) or (g) hereof or any other security issued or guaranteed by any other agency or instrumentality of the United States, in either case entered into with a federal agency or a depository institution or trust company (acting as principal) described in clause (d) above (including any Securitization Trustee); PROVIDED, HOWEVER, that repurchase obligations entered into with any particular depository institution or trust company (including such Securitization Trustee) will not be Permitted Investments to the extent that the aggregate principal amount of such repurchase obligations with such depository institution or trust company held by such Securitization Trustee on behalf of the related Securitization Trust or of all of the Titling Trust Assets shall exceed 10% of either the Aggregate Net Investment Value or the aggregate unpaid principal balance or face amount, as the case may be, of all Permitted Investments so held thereby; (g) interests in any open-end or closed-end management type investment company or investment trust (i) registered under the Investment Company Act, the portfolio of which is limited to the obligations of, or guaranteed by, the United States and to agreements to repurchase such obligations, which agreements, with respect to principal and interest, are at least 100% collateralized by such obligations marked to market on a daily basis and the investment company or investment trust shall take delivery of such obligations either directly or through an independent custodian designated in accordance with the Investment Company Act and (ii) acceptable to each Rating Agency (as approved in writing by each Rating Agency) as collateral for securities having ratings equivalent to the ratings of the Rated Certificates on the Closing Date; (h) securities bearing interest or sold at a discount issued by any corporation incorporated under the laws of the United States or any State so long as at the time of such investment or contractual commitment providing for such investment (i) the long-term, unsecured debt of such -12- corporation has the highest available rating from each Rating Agency, (ii) such corporation is TMCC and TMCC's long term debt obligations shall at such time have a rating of at least Aa3 from Moody's, and TMCC's short term debt obligations shall at such time have a rating of at least A-1+ from Standard & Poor's and at least P-1 from Moody's or (iii) a Securitization Trustee shall have received a letter from each Rating Agency to the effect that such investment would not result in the qualification, downgrading or withdrawal of the ratings then assigned to any Rated Certificates or commercial paper or other short-term debt having the Required Rating; (i) money market funds so long as such funds are rated Aaa by Moody's (so long as Moody's is a Rating Agency) and AAAm by Standard & Poor's (so long as Standard & Poor's is a Rating Agency), and any other fund for which a Securitization Trustee or an Affiliate of such Securitization Trustee serves as an investment advisor, administrator, shareholder servicing agent and/or custodian or subcustodian, provided that any shares of such funds have a credit rating of at least Aaa by Moody's (so long as Moody's is a Rating Agency) and AAAm by Standard & Poor's (so long as Standard & Poor's is a Rating Agency) and notwithstanding that (i) such Trustee or Affiliate charges and collects fees and expenses from such funds for services rendered, (ii) such Trustee charges and collects fees and expenses for services rendered pursuant to the related Securitization Trust Agreement or under the Trust Agency Agreement and (iii) services performed for such funds and pursuant to either such Agreement may converge at any time. Each of the Transferor and the Servicer hereby specifically authorizes each such Trustee or Affiliate thereof to charge and collect all fees and expenses from such funds for services rendered to such funds, in addition to any fees and expenses such Trustee may charge and collect for services rendered pursuant to either such Agreement; and (j) such other investments acceptable to each Rating Agency (as approved in writing by each Rating Agency) as will not result in the qualification, downgrading or withdrawal of the ratings then assigned to any Rated Certificates by such Rating Agency; provided that each of the foregoing investments shall mature no later than the day specified in the related SUBI Supplement, and shall be required to be held to such maturity. None of the foregoing will be considered a Permitted Investment if: (i) it constitutes a certificated security, bankers' acceptance, commercial paper, negotiable certificate of deposit or other obligation that constitutes an "instrument" within the meaning of Section 9-105(1)(i) of the UCC and is susceptible of physical delivery unless it is transferred to the Titling Trustee, a Securitization Trustee or its Financial Intermediary in accordance with Sections 8-313(1)(a), 8-313(1)(d)(i) or 8-313(1)(g) of the UCC, and such Trustee obtains evidence that any such property that is in registrable form has been registered in its name or the name of its Financial Intermediary, its custodian or its nominee; -13- (ii) it constitutes a book-entry security held through the Federal Reserve System pursuant to federal book-entry regulations, unless, in accordance with applicable law, (A) a book-entry registration thereof is made to an appropriate book-entry account maintained with a Federal Reserve Bank by the Titling Trustee, a Securitization Trustee or by a custodian therefor, (B) a deposit advice or other written confirmation of such book-entry registration is issued to such Trustee or custodian, (C) any such custodian makes entries in its books and records identifying that such book-entry security is held through the Federal Reserve System pursuant to federal book-entry regulations and belongs to such Trustee and indicating that such custodian holds such Permitted Investment solely as agent for such Trustee, (D) such Trustee makes entries in its books and records establishing that it holds such security solely as Titling Trustee or Securitization Trustee for the Titling Trust or the related Securitization Trust, as the case may be, and (E) any additional or alternative procedures as may hereafter become necessary to effect complete transfer of ownership thereof to such Trustee are satisfied, consistent with changes in applicable law or regulations or the interpretation thereof; or (iii) it constitutes an uncertificated security under Article 8 of the UCC that is not governed by clause (ii) above, unless the transfer to, and ownership thereof by, the Titling Trustee or Securitization Trustee, its Financial Intermediary, its custodian or its nominee by the issuer of such security is registered by the issuer thereof. Notwithstanding anything to the contrary contained in this definition, no Permitted Investment may be purchased at a premium and no Permitted Investment shall be an interest only instrument. Any of the foregoing which constitutes an uncertificated security shall not be considered a Permitted Investment if: (i) a notation of the right of the issuer thereof to a lien thereon is contained in the initial transaction statement therefor sent to the Titling Trustee; (ii) the Titling Trustee has notice or actual knowledge of (A) any restriction on the transfer thereof imposed by the issuer thereof, or (B) any adverse claim, or a notation of any such restriction or of any specific adverse claim as to which the issuer has a duty under the law of the state in which the Corporate Trust Office is located at the time of registration is contained in the initial transaction statement therefor sent to the Titling Trustee; or (iii) to the Titling Trustee's actual knowledge, a creditor has served legal process upon the issuer thereof at its chief executive office in the United States which legal process attempts to place a Lien thereon prior to the registration thereof in the name of the Titling Trustee. For purposes of this definition, any reference to the highest available credit rating of an obligation shall mean the highest available credit rating for such obligation (excluding any "+" signs associated with such rating), or such lower credit rating (as approved in writing by each Rating Agency) as will not result in the qualification, downgrading or withdrawal of the rating then assigned to any Rated Certificates by such Rating Agency. Also for purposes of this definition, any reference to a Rating Agency refers only to a Rating Agency that has, at the request of the Grantor, rated securities issued in the specific securitized financing as to which this definition is being applied. -14- "PERSON" means any individual, corporation, partnership, joint venture, association, joint-stock company, limited liability company, trust, unincorporated association, Governmental Authority or any other entity. "PLAN" means an "employee benefit plan," as such term is defined in Section 3(3) of ERISA. "PREPAYMENT" means, with respect to any Contract other than a Charged-off Contract, payment to the Servicer of 100% of the Discounted Principal Balance of such Contract, including an amount equal to the Residual Value of the related Leased Vehicle. "PRINCIPAL COLLECTIONS" means, with respect to any Collection Period, all Collections allocable to the principal component of any Contract, discounted to the extent such Contract is a Discounted Contract. "RATED CERTIFICATES" means the securities of any class or series issued in a Securitized Financing that have been rated by a Rating Agency at the request of the Grantor. "RATING AGENCY" means each nationally recognized statistical rating organization that rates a security in a Securitized Financing at the request of the Grantor as of the related Closing Date at the request of the Transferor and continues to do so. "RECORD DATE" means, with respect to each Distribution Date, (i) in the case of the Class A Certificates, the calendar day immediately preceding such Distribution Date (or, if Definitive Certificates have been issued, the last day of the immediately preceding calendar month) and (ii) in the case of the Class B Certificates, the last day of the calendar month immediately preceding the month in which such Distribution Date occurs. "REGISTRAR OF TITLES" means any applicable department, agency or official in a State responsible for accepting applications for, and maintaining records regarding, Certificates of Title and liens thereon. -15- "REQUIRED RATING" means a rating on commercial paper or other short term unsecured debt obligations of Prime-1 by Moody's so long as Moody's is a Rating Agency and A-1+ by Standard & Poor's so long as Standard & Poor's is a Rating Agency; and any requirement that deposits or debt obligations have the "Required Rating" shall mean that such deposits or debt obligations have the foregoing required ratings from Moody's and Standard & Poor's. "RESIDUAL UTI CERTIFICATE" has the meaning set forth in Section 11.02 of the UTI Supplement. "RESIDUAL UTI UNIT" has the meaning set forth in Section 11.01 of the UTI Supplement. "RESIDUAL VALUE" means the actual Liquidation Proceeds, net of Liquidation Expenses, received with respect to the disposition of any Leased Vehicle, whether at maturity of the related Contract or otherwise, and whether or not such Residual Value exceeds the Booked Residual Value. "RESIDUAL VALUE INSURANCE POLICY" means Residual Value Insurance Policy number RVI 97001 issued effective October 1, 1996 by Toyota Motor Insurance Corporation of Vermont, in favor of the Titling Trust and naming the TMCC as additional insured and reinsured by RVI Guaranty Co., Ltd. "RESPONSIBLE OFFICER" means an officer of the Titling Trustee or Securitization Trustee assigned to the relevant Corporate Trust Office, including the President, any Vice President, any trust officer, the corporate Secretary and any assistant corporate Secretary or any other officer performing functions similar to those performed by the persons who at the time shall be such officers, and any other officer thereof to whom a matter is referred because of his or her knowledge of and familiarity with the particular subject. -16- "SECURITIES ACT" means the Securities Act of 1933, as amended. "SECURITIZATION TRUSTEE" means any trustee appointed as such under the Transaction Documents with respect to any Securitized Financing. "SECURITIZED FINANCING" means (i) any financing transaction of any sort undertaken by the related Beneficiary based on or secured by, directly or indirectly, Titling Trust Assets, the UTI or any UTI Unit, any SUBI or any interest in any of the foregoing, (ii) any sale by a Beneficiary of any interest in one or more SUBIs or (iii) any other asset securitization, secured loan or similar transaction involving Titling Trust Assets or any beneficial interest therein or in the Titling Trust. "SECURITY DEPOSIT" means the security deposit, reconditioning reserve or similar deposit paid by an Obligor at the time of origination of the related Contract; provided that the Titling Trust Assets shall include such deposits only to the extent actually applied to cover excess wear and tear charges or may otherwise lawfully be retained by the Titling Trust as lessor or its agents in respect of fees, charges or reimbursable advances, payments or expenses thereby under the related Contract. "SERVICER" means TMCC, in its capacity as servicer under the Titling Trust Agreement, or any successor to TMCC in such capacity. "SERVICER EXPENSES" means all reasonable amounts expended by the Servicer in connection with its performance of its duties under the Titling Trust Agreement, including those incurred in connection with the preparation, execution and delivery of all legal documentation relating to the formation of the Titling Trust and the servicing of the UTI Assets prior to the creation of the first SUBI, the making of any requisite license or other applications, filings and related filing fees in connection with the commencement of origination of leases and the recordation of related certificates of title in the name of the Titling Trust and the perfection of security interests therein or the registration of any offering of securities in any Securitized Financing, the costs and expenses of preparing and delivering servicing, tax and other reports as set forth in the Titling Trust Agreement and the costs and expenses of providing any monitoring, billing and collection services with respect thereto, in each case including any reasonable attorneys' fees and expenses, and in each case excluding any costs and expenses to be paid out of the Servicing Fee specified in any supplement to the Titling Trust Agreement. -17- "SERVICER REIMBURSEMENT" means the amount of any required reimbursement to the Servicer of Servicer Expenses on a Closing Date or any other date (whether a Distribution Date or otherwise) specified in the Transaction Documents with respect to a Securitized Financing. "SERVICER'S CERTIFICATE" means a certificate of an officer or other authorized signatory of the Servicer completed and executed pursuant to Section 5.01(b) of the related SUBI Servicing Supplement. "SERVICING FEE" means (a) prior to the creation of the first SUBI, zero and (b) after the creation of the first SUBI, the sum of each SUBI Servicing Fee specified in a SUBI Supplement plus during any UTI Collection Period for which TMCC is the Servicer, 1.00% of the outstanding balances of the Contracts in the UTI Portfolio. "STANDARD & POOR'S" means Standard & Poor's Ratings Services, a division of The McGraw Hill Companies, Incorporated, and its successors. "STATE" means any state of the United States, the District of Columbia and the Commonwealth of Puerto Rico in which, pursuant to the Origination Criteria, an Eligible Contract may be originated. "SUBI" means any "special unit of beneficial interest" in the Titling Trust comprised of a beneficial interest in a SUBI Sub-Trust. "SUBI ACCOUNT" means, with respect to a SUBI, the SUBI Collection Account or the SUBI Lease Funding Account that is established and maintained in connection therewith in accordance with Section 7.01(a) of the Titling Trust Agreement. "SUBI ASSETS" means, with respect to any SUBI, those Titling Trust Assets that are identified as relating to and allocated to such SUBI by the Titling Trustee upon the written direction of the UTI Beneficiary pursuant to the Titling Trust Agreement and related SUBI Supplement. "SUBI BENEFICIARY" means any Beneficiary that is a Beneficiary because it is the holder or pledgee of a SUBI Certificate. "SUBI CERTIFICATE" means, with respect to a SUBI, each of the certificates evidencing such SUBI, substantially in the form included as an exhibit to each SUBI Supplement, executed and delivered pursuant to the related SUBI Supplement. -18- "SUBI COLLECTION ACCOUNT" means, with respect to a SUBI, any account denominated as such that is established and maintained in accordance with the related SUBI Supplement and SUBI Servicing Supplement. "SUBI COLLECTION PERIOD" means, with respect to any SUBI, the period identified as the "Collection Period" in the related Transaction Documents. "SUBI LEASE FUNDING ACCOUNT" means, with respect to a SUBI, any account denominated as such that is established and maintained in accordance with the related SUBI Supplement and SUBI Servicing Supplement. "SUBI PORTFOLIO" means, with respect to any SUBI, the related Contracts and Leased Vehicles comprising the related SUBI Assets. "SUBI SERVICING SUPPLEMENT" means any agreement supplementing the servicing provisions of the Titling Trust Agreement that is executed by TMCC, the Titling Trustee and one or more other parties in connection with a Securitized Financing. "SUBI SUB-TRUST" means a separate Sub-Trust of the Titling Trust (other than the UTI Sub-Trust) that is established at the direction of the UTI Beneficiary on the books and records of the Titling Trust by the Titling Trustee and that is accounted for separately within the Titling Trust. The Titling Trustee shall from time to time, as directed in writing by the UTI Beneficiary, and subject to Section 3.01(d) of the Titling Trust Agreement, identify or cause to be identified on the books and records of the Titling Trust one or more separate Sub-Trusts to be accounted for separately within the Titling Trust (each, a "SUBI Sub-Trust") and identify and allocate, or cause to be identified and allocated, to such SUBI Sub-Trust on such books and records certain Titling Trust Assets that are not then allocated to another SUBI Sub-Trust. Upon such allocation, such related SUBI Assets shall no longer be assets of, or allocated to, the UTI (unless and until specifically reallocated to the UTI from that SUBI in accordance with the related SUBI Supplement). Each SUBI shall constitute a separate series of the Titling Trust pursuant to Section 3806(b)(2) of the Delaware Act and shall represent the beneficial interest in such SUBI and the SUBI Assets allocated thereto from time to time. Each SUBI shall be represented by one or more separate SUBI Certificates issued pursuant to the related SUBI Supplement. The Titling Trustee shall issue each SUBI Certificate to or upon the order of the UTI Beneficiary. "SUBI SUPPLEMENT" means any of the one or more supplements to the Titling Trust Agreement, substantially in the form attached thereto as an exhibit, the execution and delivery of which by the UTI Beneficiary and the Titling Trustee in accordance with Section 3.01(c) of the Titling Trust Agreement will effect the creation of a SUBI. "SUB-TRUST" means any of the sub-trusts of the Titling Trust established by the Titling Trustee as directed by the UTI Beneficiary from time to time, and to which the Titling Trustee will allocate Titling Trust Assets identified by the UTI Beneficiary, having the name and beneficiaries -19- designated by the UTI Beneficiary and being a separate series of the Titling Trust pursuant to Section 3806(b)(2) of the Delaware Act. "TITLE DOCUMENTS" with respect to any Leased Vehicle means the related Certificate of Title and all related or ancillary documents or instruments necessary for the recordation or transfer of title in each relevant jurisdiction. "TITLING TRUST" means Toyota Lease Trust, a Delaware business trust, formed pursuant to the Titling Trust Agreement. "TITLING TRUST AGREEMENT" means the Trust and Servicing Agreement dated as of October 1, 1996, among TMCC, TMTT, Inc., as Titling Trustee, and, for certain limited purposes, First Bank, as Trust Agent, as amended and restated by the Amended and Restated Trust and Servicing Agreement also dated as of October 1, 1996 among TMCC, TMTT, Inc., as Titling Trustee, and, for certain limited purposes, First Bank, as Trust Agent. "TITLING TRUST ASSETS" means: (i) any capital contributed by the Grantor; (ii) the Contracts and all proceeds thereof; (iii) the Leased Vehicles and all proceeds thereof, including each Certificate of Title and the Residual Value of each Leased Vehicle, whether realized through the exercise by Obligors of purchase options under the Contracts, the proceeds of sale of the Leased Vehicles to Dealers or third parties or through payments received from any other Person (directly or indirectly) under any related Insurance Policy (to the extent not applied to repair or otherwise paid to a third Person or Governmental Authority by the Servicer as required by law or pursuant to its normal servicing practices) or as a subsidy or other funding of any modification of the related Booked Residual Value; (iv) all of the Titling Trust's rights (but not its obligations) with respect to any Contract or Leased Vehicle, including the right to enforce and to proceeds arising from all Dealer repurchase obligations arising under Dealer Agreements; (v) all of TMCC's rights (but not its obligations) with respect to any Contract or Leased Vehicle, including the right to enforce and to proceeds arising from all Dealer repurchase obligations arising under Dealer Agreements; (vi) any Insurance Policy and rights thereunder or proceeds therefrom relating to any of the Contracts, Leased Vehicles or payments of the related Obligors with respect thereto; (vii) any portion of any Security Deposit actually and properly applied by the Servicer against amounts due under the related Contract, to the extent not applied to making repairs to the related Leased Vehicle or paid to a third party or Governmental Authority in accordance with the Servicer's normal servicing practices; and (viii) all proceeds of any of the foregoing. "TITLING TRUSTEE" means TMTT, Inc., in its capacity as such under the Titling Trust Agreement, and any successor thereto in such capacity appointed pursuant to the Titling Trust Agreement. "TITLING TRUSTEE ACCOUNTS" means any of the separate UTI Collection Account, Lease Funding Account, SUBI Collection Account and/or SUBI Lease Funding Account established by the Titling Trustee with respect to the UTI or the related SUBI as described in the Titling Trust -20- Agreement and the related SUBI Supplement and SUBI Servicing Supplement. Each such account maintained with respect to Rated Certificates shall be an Eligible Account. "TITLING TRUSTEE STOCK" means the issued and outstanding capital stock of the Titling Trustee, together with any additional capital stock of the Titling Trustee that may be issued from time to time. "TITLING TRUST EXPENSES" means the aggregate of the Titling Trustee's compensation and other Administrative Expenses with respect to the Titling Trust, including those due under Section 6.13 of the Titling Trust Agreement. "TLI" means Toyota Leasing, Inc. and its successors. "TMCC" means Toyota Motor Credit Corporation, a California corporation, its successors and assigns. "TMS" means Toyota Motor Sales U.S.A., Inc., a California corporation, its successors and assigns. "TRANSACTION DOCUMENTS" means and includes the Titling Trust Agreement, the UTI Supplement and, with respect to any Securitized Financing involving the creation of a SUBI, the related SUBI Supplement, SUBI Servicing Supplement, SUBI Certificate(s), any agreement transferring ownership or other interests in the related SUBI and SUBI Certificate, the related Securitization Trust Agreement, indenture, trust agreement or similar instrument governing the securitization of such SUBI and any securities offered or sold that are secured by interests in the related SUBI, and any other documents ancillary thereto, in each case as the same may be amended, supplemented or modified from time to time but only to the extent that any such amendment, supplement or modification relates to such SUBI. "TRANSFEROR" means TLI in its capacity as transferor under any Securitization Trust Agreement and each other related Transaction Document. "TRUST AGENCY AGREEMENT" means any of the one or more agency agreements entered into by the Titling Trustee in furtherance of its execution of any of the trusts or powers under the Titling Trust Agreement or performance of any duties under the Titling Trust Agreement either directly or by or through agents or attorneys or one or more custodians as set forth in the Titling Trust Agreement. In addition, with respect to any Securitization Trustee, Trust Agency Agreement means any of the one or more agency agreements entered into by such Securitization Trustee in furtherance of its execution of any of the trusts or powers under the related Securitization Trust Agreement or performance of any duties under such Securitization Trust Agreement either directly or by or through agents or attorneys or one or more custodians as set forth in such Securitization Trust Agreement. -21- "TRUST AGENT" means any of the one or more Persons, including any Affiliate of the Titling Trustee or any Securitization Trustee, engaged by the Titling Trustee or such Securitization Trustee pursuant to a Trust Agency Agreement. "TRUST ASSET TRANSFER" means the allocation to a SUBI Sub-Trust of Trust Assets not then allocated to any other SUBI Sub-Trust pursuant to Section 3.01(c) of the Titling Trust Agreement. "TRUST STATES" initially means California, Florida, Michigan, Ohio and Pennsylvania and after the date of this Agreement, means those States and such other States as designated in writing from time to time to the Titling Trustee by the Grantor in which Dealers are regularly originating Contracts and assigning them to the Titling Trust as contemplated by the Titling Trust Agreement. "UCC" means the Uniform Commercial Code as in effect in the relevant jurisdiction. "UNITED STATES" means the United States of America, its territories and possessions and areas subject to its jurisdiction. "UNDIVIDED TRUST INTEREST" or "UTI" means the exclusive, undivided beneficial interest in all Trust Assets (including Contracts and Leased Vehicles), other than SUBI Assets, held by the UTI Beneficiary. "UNDIVIDED TRUST INTEREST CERTIFICATE" or "UTI CERTIFICATE" means the one or more trust certificates (together with any replacements thereof) issued by the Titling Trust at the direction of the UTI Beneficiary substantially in the form attached as an exhibit to the form of UTI Supplement. "UTI ACCOUNT" means any of the separate UTI Collection Accounts and/or Lease Funding Account established by the Titling Trustee with respect to the UTI pursuant to Section 12.01 of the UTI Supplement. "UTI ASSETS" means all Titling Trust Assets that have not been allocated to a SUBI Sub-Trust. "UTI BENEFICIARY" means TMCC, in its capacity as the initial beneficiary of the Titling Trust on the date of the UTI Supplement, and its successors and assigns (exclusive of any pledgee of a UTI Pledge). "UTI CERTIFICATE" has the meaning described in Section 11.02 of the UTI Supplement. "UTI COLLECTION ACCOUNT" means the separate account established by the Titling Trustee with respect to the UTI pursuant to Section 12.01 of the UTI Supplement. "UTI COLLECTION PERIOD" with respect to any Distribution Date, means the preceding calendar month. -22- "UTI ELIGIBLE CONTRACT" means a Contract as to which the following criteria are satisfied as of the date the Contract is originated and assigned by the relevant Dealer to the Titling Trust: (a) that was originated (i) by a Dealer, (ii) in the ordinary course of its retail business, (iii) pursuant to a Dealer Agreement, and (iv) in compliance with the customary underwriting standards employed by the Grantor in originating leases for its own account; (b) which Contract and the related Leased Vehicle are free of all liens and other interests (including tax liens, mechanics liens and liens that arise by operation of law, but excluding any Administrative Lien); (c) that was originated in compliance with, and complies with, all material applicable legal requirements, including, to the extent applicable, the Federal Consumer Credit Protection Act (including the Consumer Leasing Act), as amended, Regulation M of the Board of Governors of the Federal Reserve System, as amended, all State leasing and consumer protection laws and all State and federal usury, fair credit billing, fair credit reporting, equal credit opportunity, and fair debt collection practices laws; (d) as to which all material consents, licenses, approvals or authorizations of, or registrations or declarations with, any Governmental Authority required to be obtained effected or given by the originator of such Contract in connection with (i) the origination of such Contract, (ii) the execution, delivery and performance by such originator of such Contract and (iii) the acquisition by the Titling Trust of such Contract and the related Leased Vehicle have been duly obtained, effected or given and were in full force and effect as of such date of creation or acquisition; (e) that is the legal, valid and binding full-recourse payment obligation of the Obligor thereunder, enforceable against such Obligor in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or hereafter in effect, affecting the enforcement of creditors' rights in general and except as such enforceability may be limited by general principles of equity (whether considered in a suit at law or in equity); (f) that, according to the records of the Grantor, is not subject to any right of rescission, setoff, counterclaim or any other defense (including defenses arising out of violations of usury laws) of the Obligor thereunder to payment of the amounts due thereunder, and no such right of rescission, setoff, counterclaim or other defense has been asserted or threatened; -23- (g) as to which each of the originating Dealer, the Servicer and the Titling Trust has satisfied all obligations required to be fulfilled on its part; (h) that is payable solely in United States dollars in the United States; (i) the Obligor of which is a Person located in one of the United States and is not the Grantor, the Transferor or any of their respective Affiliates; (j) that requires the Obligor thereunder to maintain in full force and effect during the term of such Contract a public liability and a comprehensive and collision physical damage Insurance Policy, with coverage in amounts not less than that required by applicable State law, and that, includes a term requiring such Insurance Policy to name the Titling Trust, the Titling Trustee or an agent of the Titling Trust on behalf of the Titling Trust as a "loss payee" and an "additional insured"; (k) the related Leased Vehicle of which is titled in the name of the Titling Trust or the Titling Trustee on behalf of the Titling Trust (or properly completed applications for such title have been submitted to the appropriate titling authority) and all transfer and similar taxes imposed in connection therewith have been paid; (l) that is fully assignable and that does not require the consent of the Obligor thereunder as a condition to any transfer, sale or assignment of the rights of the originator under such Contracts; (m) that is a "true lease", as opposed to a lease intended as security, under the laws of the State in which it was originated as such laws relate to the perfection of security interests therein; (n) that meets the Origination Criteria and, in the case of any Contract included in a SUBI Portfolio, meets any Additional Origination Criteria specified in the related SUBI Supplement; (o) that was fully and properly executed by the parties thereto and, upon conveyance to the Titling Trust pursuant to the Titling Trust Agreement, shall have been validly assigned by the originating Dealer to the Titling Trust in accordance with the terms of the Dealer Agreement under which it was originated and immediately thereafter shall be owned by the Titling Trust; (p) that is substantially identical to one of the forms of Contract attached to the UTI Supplement (or such other form as may be approved from time to time by TMCC in the ordinary course of business); -24- (q) as to which the information set forth in the Schedule of Contracts and Leased Vehicles with respect to such Contract and related Leased Vehicle as of such Cutoff Date is true and correct in all material respects; (r) the Obligor under which Contract, according to the records of the Servicer, has not filed or had filed against it any petition for relief, rearrangement of its debts or other protection from its creditors under any State or federal bankruptcy or insolvency laws, except as otherwise permitted by the Origination Criteria; (s) in respect of which the Grantor has taken no action such that such Contract has been satisfied, subordinated, amended, waived, restricted, rescinded, held to be invalid or unenforceable, altered or modified in any respect, except (i) to the extent that such action (A) does not render such Contract not in conformity with any other criteria for an Eligible Contract, and (B) was made in accordance with the Grantor's obligations under the Titling Trust Agreement, and (ii) if such action was made pursuant to a document, instrument or writing, such document, instrument or writing is included in the related Contract Documents; (t) as to which the Grantor, consistent with its standard underwriting procedures, has reviewed and verified the material information contained in the related Contract application; (u) as to which, according to the records of the Grantor, no default, breach, violation or event permitting acceleration under the terms of the Contract exists, and no continuing condition that, with notice or lapse of time, or both, would constitute a default, breach, violation or event permitting acceleration under the terms of the Contract has arisen, the Grantor has not waived any of the foregoing, and the related Leased Vehicle has not been repossessed without reinstatement; (v) that has not been originated in, and is not subject to the laws of, any jurisdiction under which the sale, transfer, and assignment of such Contract under its terms or pursuant to which transfers of the Contracts or of the related Certificates of Title are unlawful, void or voidable; (w) as to which there is only one executed original, which will be conveyed by the Dealer to the Titling Trustee or to the Grantor or Servicer as the agent of the Titling Trustee, in each case on behalf of the Titling Trust; (x) that constitutes "chattel paper" as defined in the UCC; (y) that was originated without any fraud or misrepresentation on the part of the Grantor; -25- (z) as to which all taxes of any nature or description whatsoever relating thereto that are due and owing as of the date of origination have been paid or provided for in full except for (i) any state transfer taxes payable in connection with the transfer of any Contracts to the Titling Trustee and (ii) similar transfer taxes to which the Titling Trustee has consented to; and (aa) as to which the related Leased Vehicle was a new vehicle (which may be a dealer demonstrator vehicle driven fewer than 20,000 miles) or used vehicle (four model years old or less at the time of origination of the related Contract, and which may be a certified used vehicle or manufacturers' program vehicle), whether an automobile, light duty truck, minivan or sports utility vehicle. As used in this clause (bb), certified used vehicle means a vehicle purchased by a dealer, reconditioned and certified to meet certain Toyota or Lexus required standards and sold or leased with an extended warranty, and manufacturers' program vehicle means a vehicle that has been sold to a rental car company, repurchased by the manufacturer and subsequently purchased by a dealer to sell or lease as a current model year or one year old used vehicles with 20,000 miles or less. "UTI LEASED VEHICLE" means any Leased Vehicle that is an asset of the UTI Sub-Trust. "UTI PLEDGE" means a pledge of and grant of a security interest in the UTI and UTI Certificate, or any interest therein, in connection with any Securitized Financing, and the terms and conditions thereof set forth in the related documentation. "UTI PORTFOLIO" means the Contracts and Leased Vehicles comprising the Undivided Trust Interest. "UTI SUB-TRUST" means the separate Sub-Trust of the Titling Trust containing all Trust Assets that have not been allocated to any SUBI Sub-Trust. "UTI SUPPLEMENT" means any of the one or more supplements or amendments to the Titling Trust Agreement, substantially in the form attached thereto as an exhibit, the execution and delivery of which by the UTI Beneficiary and the Titling Trustee in accordance with Section 3.01(b) of the Titling Trust Agreement will effect the creation of a UTI. "UTI UNIT CERTIFICATE" has the meaning described in Section 11.02 of the UTI Supplement. "UTI UNIT" has the meaning described in Section 11.01 of the UTI Supplement. -26- EX-10.2 7 EXHIBIT 10-2 EXHIBIT 10.2 - -------------------------------------------------------------------------------- TOYOTA MOTOR CREDIT CORPORATION TMTT, INC., as Trustee of Toyota Lease Trust and, for Certain Limited Purposes only, FIRST BANK NATIONAL ASSOCIATION, as Trust Agent UTI SUPPLEMENT TO AMENDED AND RESTATED TRUST AND SERVICING AGREEMENT Dated as of October 1, 1996 - -------------------------------------------------------------------------------- TABLE OF CONTENTS Page ---- ARTICLE X DEFINITIONS SECTION 10.01 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . .2 ARTICLE XI CREATION AND TERMINATION OF TRUST INTERESTS SECTION 11.01 Initial Creation of UTI, Subdivision Thereof.. . . . . . . . . .2 SECTION 11.02 Issuance and Form of UTI Certificates. . . . . . . . . . . . . .3 SECTION 11.03 Filings. . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 SECTION 11.04 Termination of UTI.. . . . . . . . . . . . . . . . . . . . . . .5 ARTICLE XII ACCOUNTS AND CASH FLOWS SECTION 12.01 Accounts.. . . . . . . . . . . . . . . . . . . . . . . . . . . .5 SECTION 12.02 Cash Flows.. . . . . . . . . . . . . . . . . . . . . . . . . . .6 SECTION 12.03 Distribution of Funds, Default in UTI Pledge.. . . . . . . . . .7 SECTION 12.04 Lease Funding Accounts.. . . . . . . . . . . . . . . . . . . . .7 SECTION 12.05 Rebalancing After Third-Party Claim. . . . . . . . . . . . . . .8 ARTICLE XIII MISCELLANEOUS PROVISIONS SECTION 13.01 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . .8 SECTION 13.02 Effect of UTI Supplement on Trust Agreement. . . . . . . . . . .9 SECTION 13.03 Counterparts.. . . . . . . . . . . . . . . . . . . . . . . . . .9 EXHIBITS EXHIBIT A Form of Direction to Create UTI Unit . . . . . . . . . . . . .A-1 EXHIBIT B Form of Direction to Reallocate UTI Unit Assets. . . . . . . .B-1 EXHIBIT C Form of [Residual] UTI [Unit] Certificate. . . . . . . . . . .C-1 EXHIBIT D Forms of Contract. . . . . . . . . . . . . . . . . . . . . . .D-1 EXHIBIT E Form of Dealer Agreement . . . . . . . . . . . . . . . . . . .E-1 UTI SUPPLEMENT TO AMENDED AND RESTATED TRUST AND SERVICING AGREEMENT UTI SUPPLEMENT TO AMENDED AND RESTATED TRUST AND SERVICING AGREEMENT, dated and effective as of October 1, 1996, among TOYOTA MOTOR CREDIT CORPORATION, a California corporation (in its capacities as grantor, initial beneficiary and servicer), TMTT, INC., a Delaware corporation, as Titling Trustee, and for certain limited purposes only, FIRST BANK NATIONAL ASSOCIATION, a national banking association, as Trust Agent. RECITALS A. TMCC, the Titling Trustee and the Trust Agent have entered into that certain Trust and Servicing Agreement, as the same was amended and restated pursuant to that certain Amended and Restated Trust and Servicing Agreement, each dated as of October 1, 1996 (collectively, the "Titling Trust Agreement"), pursuant to which the Grantor and the Titling Trustee formed Toyota Lease Trust, a Delaware business trust, for the purpose of taking assignments and conveyances of, holding in trust and dealing in, various Titling Trust Assets in accordance with the Titling Trust Agreement. B. The Titling Trust Agreement contemplates that all Titling Trust Assets, other than those from time to time identified on the Titling Trust's books and records by the Titling Trustee on behalf of the Titling Trust and at the direction of the UTI Beneficiary, as SUBI Assets allocated to separate SUBI Sub-Trusts, shall constitute UTI Assets, and that the Titling Trustee shall create an undivided trust interest therein and issue to the UTI Beneficiary a UTI Certificate evidencing such UTI, and the UTI Beneficiary and its permitted assignees generally will be entitled to the proceeds of, including the net cash flow arising from, but only from, the UTI Assets. C. The parties hereto desire to supplement the terms of the Titling Trust Agreement to cause the Titling Trustee, at the direction of the UTI Beneficiary, to identify the UTI Portfolio and to allocate the related Titling Trust Assets to the UTI Sub-Trust and to create and issue to the UTI Beneficiary one or more UTI Certificates that collectively evidence the entire beneficial interest in the UTI, and to set forth the terms and conditions thereof. NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and in the Titling Trust Agreement, the parties hereto agree to the following supplemental obligations and provisions with regard to the UTI Portfolio: ARTICLE X DEFINITIONS SECTION 10.01 DEFINITIONS. For all purposes of this UTI Supplement, except as otherwise expressly provided or unless the context otherwise requires, capitalized terms used and not otherwise defined herein shall have the meanings ascribed thereto in the Annex of Definitions attached TO THE TITLING TRUST AGREEMENT for all purposes of this UTI Supplement. In the event of any conflict between a definition set forth herein and that set forth in the Annex of Definitions, that set forth herein shall prevail. All terms used in this UTI Supplement include, as appropriate, all genders and the plural as well as the singular. All references such as "herein", "hereof" and the like shall refer to this UTI Supplement as a whole and not to any particular article or section within this UTI Supplement. All references such as "includes" and variations thereon shall mean "includes without limitation" and references to "or" shall mean "and/or". Any reference herein to the "Titling Trustee, acting on behalf of the Titling Trust", or words of similar import, shall be deemed to mean the Titling Trustee, acting on behalf of Toyota Lease Trust and all beneficiaries thereof. ARTICLE XI CREATION AND TERMINATION OF TRUST INTERESTS SECTION 11.01 INITIAL CREATION OF UTI, SUBDIVISION THEREOF. (a) Pursuant to Section 3.01(b) of the Titling Trust Agreement, all Titling Trust Assets (including without limitation Contracts and Leased Vehicles), other than any Titling Trust Assets denominated as SUBI Assets from time to time in accordance with Section 3.01(c) of the Titling Trust Agreement, shall constitute UTI Assets. All Contracts and Leased Vehicles that are included as UTI Assets shall be, for so long as they remain UTI Assets, "UTI Contracts" and "UTI Leased Vehicles", respectively, and collectively shall comprise the "UTI Portfolio". The UTI Assets also shall include: the Lease Funding Account, including all cash and Permitted Investments therein and all income from the investment of funds therein; all Insurance Policies and rights thereunder to the extent applicable to the UTI Portfolio, including the right to proceeds therefrom with respect to the UTI Portfolio or obligors with respect thereto, as the case may be; the right to receive the proceeds of all Dealer or other repurchase obligations, if any, relating to the UTI Portfolio; and all proceeds of the conversion, voluntary or involuntary, of any of the foregoing into cash or other property. (b) Also pursuant to Section 3.01(b) of the Titling Trust Agreement, the beneficial interest in the UTI Assets shall constitute the UTI. The UTI shall represent an undivided beneficial interest solely in the UTI Assets. (c) Upon the written direction of the UTI Beneficiary to the Titling Trustee (in substantially the form attached as Exhibit A) in connection with a UTI Pledge or otherwise, the 2 Titling Trustee shall from time to time identify and allocate or cause to be identified and allocated on the books and records of the Titling Trust one or more separate sub-portfolios of UTI Assets, to be so identified and allocated by date of origination, lease number and original principal balance, but otherwise not accounted for independently within the UTI Portfolio, which shall be represented by one or more UTI Unit Certificates (as defined in Section 11.02(a)), with the residual UTI Assets and the residual UTI Portfolio being represented by the Residual UTI Certificate. All UTI Assets not allocated or identified as UTI Unit Assets shall remain as Residual UTI Assets until allocated as UTI Unit Assets or SUBI Assets. Upon such allocation as UTI Unit Assets or SUBI Assets, such Residual UTI Assets shall no longer be assets of, or allocated to, the Residual UTI Portfolio, unless and until specifically reallocated to the Residual UTI Portfolio from that UTI Unit Portfolio or SUBI Portfolio pursuant to a written direction from the holder of the related UTI Unit Certificate or SUBI Certificate, as applicable, to the Titling Trustee. Each such direction to reallocate UTI Unit Assets or SUBI Assets to the Residual UTI Portfolio, and each similar direction to allocate UTI Unit Assets or UTI Residual Assets to a SUBI Portfolio, shall be in substantially the form attached as Exhibit B. The undivided beneficial interest in each such UTI Unit Portfolio shall constitute a separate subdivision of the Undivided Trust Interest (each, a "UTI Unit"); the undivided interest in the Residual UTI Portfolio shall constitute a separate subdivision of the UTI (the "Residual UTI Unit"); and the Residual UTI Unit and any UTI Units outstanding from time to time collectively shall comprise the UTI. The Titling Trustee shall distribute to or upon the order of the UTI Beneficiary one or more UTI Units, each UTI Unit representing a specific undivided interest in (but only in) such identified UTI Unit Portfolio and the UTI Unit Assets allocated thereto from time to time. (d) The UTI Beneficiary shall at all times maintain a minimum net worth of at least $5,000,000 (excluding the value of any UTI Certificate(s) or SUBI Certificates held thereby). SECTION 11.02 ISSUANCE AND FORM OF UTI CERTIFICATES. (a) The UTI initially shall be represented by a single trust certificate (together with any replacements thereof, the "Residual UTI Certificate"). Upon the written direction described above in Section 11.01(c), the UTI thereafter shall be represented by the Residual UTI Certificate and any additional trust certificate representing each UTI Unit to be formed (together with any replacements thereof, a "UTI Unit Certificate") and such previous UTI Unit Certificates as may have been issued and not retired. All such trust certificates shall constitute "UTI Certificates" within the meaning of Section 3.01(b) of the Titling Trust Agreement. The Residual UTI Certificate, and each other UTI Certificate shall be in substantially the form of Exhibit C attached hereto, with such appropriate insertions, omissions, substitutions and other variations as are required by this UTI Supplement, and may have such letters, numbers or other marks of identification and such legends and endorsements placed thereon as may, consistently herewith and with the Titling Trust Agreement, be directed by the UTI Beneficiary. Each UTI Certificate shall be printed, lithographed, typewritten, 3 mimeographed, photocopied or otherwise produced or may be produced in any other manner as may, consistently herewith and with the Titling Trust Agreement, be determined by the UTI Beneficiary. (b) Each UTI Certificate shall contain (i) an express written waiver of any claim by any holder thereof to any assets of the Titling Trustee and to all of the Titling Trust Assets or proceeds thereof other than the UTI Unit Assets or Residual UTI Assets, as the case may be, represented by such UTI Certificate, and those proceeds or assets derived from or earned by such UTI Assets, and (ii) an express subordination in favor of the holder of each SUBI Certificate (or pledgee thereof) by any holder or pledgee of a UTI Certificate to any claim to any SUBI Asset that, notwithstanding such holder's or pledgee's disclaimer, may be determined to exist. (c) Neither any interest in the UTI nor any UTI Certificate may be transferred or assigned by the UTI Beneficiary other than as contemplated herein, and any such purported transfer or assignment shall be deemed null, void and of no effect. However, any UTI Certificates and the Residual UTI Certificate may be pledged, and a security interest therein granted, and may be transferred or assigned absolutely to or by the pledgee thereof, solely in connection with exercise of remedies with respect to a default under or with respect to any Securitized Financing secured thereby or any UTI Pledge secured thereby; provided that each pledgee or transferee must (i) give a non-petition covenant substantially similar to that set forth in Section 6.14 of the Titling Trust Agreement, and (ii) execute an agreement between or among itself, each other assignee or pledgee from time to time of the UTI or any UTI Certificate, and each assignee or pledgee from time to time of any SUBI or SUBI Certificate, to release all claims to the SUBI Assets and, in the event that such release is not given effect, to fully subordinate all claims it may be deemed to have against the SUBI Assets. SECTION 11.03 FILINGS. The Grantor, the UTI Beneficiary (if different from the Grantor) and the Titling Trustee, as directed by and at the expense OF the Grantor or the UTI Beneficiary, will undertake all other and future actions and activities as may be deemed reasonably necessary by the Grantor or the UTI Beneficiary to perfect (or evidence) and confirm the foregoing allocations of Titling Trust Assets to the UTI Portfolio, including without limitation filing or causing to be filed UCC financing statements and executing and delivering all related filings, documents or writings as may be deemed reasonably necessary by the Grantor or the UTI Beneficiary hereunder or for such purposes under any other documents relating to any Securitized Financing involving the UTI or a UTI Pledge; provided, however, that in no event will the Grantor, the UTI Beneficiary or the Titling Trustee be required to take any action to perfect (i) any allocation of UTI Assets to a UTI Unit Portfolio or (ii) any security interest that may be deemed to be held by any party in any UTI Leased Vehicle. The Grantor and the UTI Beneficiary each hereby revocably makes and appoints each of the Titling Trustee and the Servicer from time to time of the UTI Portfolio, and any of the respective officers, employees or agents, as the true and lawful attorney-in-fact of the Grantor and the UTI Beneficiary, which appointment is coupled with an interest and is revocable (but, in the case of the Servicer, is made only for so long as such Servicer is acting in such capacity) with power to sign on behalf of 4 the Grantor or the UTI Beneficiary any financing statements, continuation statements, security agreements, assignments, affidavits, letters of authority, notices or similar documents necessary or appropriate SECTION 11.04 TERMINATION OF UTI. In connection with the termination of the Titling Trust Agreement and the Titling Trust, upon the direction of the UTI Beneficiary and the consent of any pledgee of a UTI Pledge, the UTI shall be terminated and the UTI Certificates shall be returned to the Titling Trustee and canceled thereby. ARTICLE XII ACCOUNTS AND CASH FLOWS SECTION 12.01 ACCOUNTS. (a) On the date of the creation of the first SUBI, the Titling Trustee will establish, and for so long as may be required by the provisions of any SUBI Supplement, the Titling Trustee will maintain with respect to the UTI the UTI Collection Account and Lease Funding Account (collectively, the "UTI Accounts") described in Section 7.01(a) of the Titling Trust Agreement. All amounts that are held in the UTI Collection Account shall be invested in Permitted Investments in accordance with Section 12.02 of this UTI Supplement until distributed or otherwise applied in accordance with the Titling Trust Agreement or this UTI Supplement. (b) The UTI Accounts shall relate solely to the UTI and the UTI Portfolio and any funds held therein shall not be commingled with any other monies, except as otherwise provided for or contemplated in the Titling Trust Agreement as supplemented by this UTI Supplement. SUBI Accounts established pursuant to any SUBI Supplement shall relate solely to the respective SUBI's and SUBI Portfolios. The Titling Trustee, as directed by the Servicer, will account for and record separately all proceeds that are received by the Titling Trustee relating to each of the Titling Trustee Accounts from the Titling Trust Assets. (c) For so long as TMCC shall be the Servicer, the Servicer and the Titling Trustee may make any remittances pursuant to this Article net of amounts to be distributed to such remitting party from the Lease Funding Account or the UTI Collection Account. In particular, unless otherwise specified in any SUBI Supplement, advances by the UTI Beneficiary or the Servicer with respect to the funding of Contracts or the payment of Titling Trust Expenses, and the reimbursement of such advances from collections on the Contracts, the proceeds of any Securitized Financing or otherwise, will not require deposit of funds into the Lease Funding Account or UTI Collection Account, and may in each case be made by using funds that have been commingled with other funds. Nonetheless, each such party shall account for all of the above described remittances and distributions as if the amounts were deposited and/or transferred separately rather than on a net basis. 5 SECTION 12.02 CASH FLOWS. (a) Subject to Section 7.01(b) of the Titling Trust Agreement and Sections 12.04 and 12.05 hereof, and except as otherwise provided herein, in any SUBI Supplement or in any related SUBI Servicing Supplement, the Servicer or Titling Trustee shall deposit as described in Section 7.01(b) of the Titling Trust Agreement all collections and proceeds received by the Servicer with respect to any Contract or Leased Vehicle, whether from regular periodic payments by obligors under a Contract sent to a Servicer lock box or from any other payments from such obligors or any other Persons received in any other way by the Servicer. All such collections and proceeds shall be identified by the Servicer as related either to (i) Contracts and Leased Vehicles in a particular SUBI Portfolio or (ii) Contracts and Leased Vehicles remaining as part of the UTI Portfolio and shall be deposited by the Servicer into the appropriate SUBI Collection Account to the extent they relate to any SUBI Portfolio and into the UTI Collection Account (or simply paid to the UTI Beneficiary by the Servicer if the UTI Beneficiary and the Servicer are not the same person) to the extent they relate to the UTI Portfolio. (b) Except as provided in Sections 12.01, 12.04 and 12.05 of this UTI Supplement, or as provided in any SUBI Supplement or related SUBI Servicing Supplement, the Titling Trustee shall, at the direction of the Servicer, make, or cause to be made, the following payments and transfers on each Distribution Date in the following order and priority: (i) to or on behalf of the Servicer, all Servicer Expenses incurred during the related Collection Period, together with any unreimbursed Servicer Expenses incurred in one or more prior Collection Periods; (ii) to or on behalf of the Servicer, all Servicing Fees incurred during the related Collection Period, together with any unpaid Servicing Fees incurred in one or more prior Collection Periods; (iii) to or on behalf of the Person to whom due, all Titling Trust Expenses incurred during the related Collection Period, together with any unpaid Titling Trust Expenses incurred in one or more prior Collection Periods; and (iv) to or upon the direction of the UTI Beneficiary, any remaining funds therein. (c) Except as provided in Sections 12.04 and 12.05 of this UTI Supplement, or as provided in any SUBI Supplement or related SUBI Servicing Supplement, the Titling Trustee shall, at the direction of the Servicer, make, or cause to be made (or permit the allocation by the Servicer with respect to monies held by the Servicer), on each Funding Advance Reimbursement Date, payment from the Lease Funding Account (or from monies held by the Servicer and allocable or distributable therefor) to or on behalf of the Servicer, the related Funding Advance Reimbursement Amount, together with any unreimbursed Funding Advance Reimbursement Amounts incurred in one or more prior Collection Periods. (d) Unless this UTI Supplement is amended to reflect a different arrangement specified in any one or more SUBI Supplements, the allocation of Liabilities of the Titling Trust, including with respect to any Affected Trust Assets, shall be as specified in Section 3.04 of the Titling Trust Agreement. 6 SECTION 12.03 DISTRIBUTION OF FUNDS, DEFAULT IN UTI PLEDGE. (a) On any date during any period in which the Titling Trustee has neither received notice from the Servicer or any pledgee of a UTI Pledge nor otherwise obtained actual knowledge to the effect that (i) there is any sum due with respect to the related Securitized Financing or other UTI Pledge not otherwise timely paid by the UTI Beneficiary (after any applicable grace period), (ii) there is any other outstanding and uncured default by the UTI Beneficiary with respect thereto (after any applicable grace period), or (iii) any reimbursements of Funding Advances due to the Servicer have not been made, the Titling Trustee, promptly upon receipt of a written demand therefor from the related UTI Beneficiary accompanied by a written determination by the Servicer as to the extent of Excess Funds in the Lease Funding Account, shall pay out to such UTI Beneficiary upon its request any or all Excess Funds so requested. (b) Notwithstanding subsection (a) above, or any direction of the Grantor, the UTI Beneficiary or the Servicer to the contrary, during any period as to which the Titling Trustee either has received notice from the Servicer or any pledgee of a UTI Pledge or otherwise has obtained actual knowledge that a default in connection therewith has occurred and is continuing, and the Titling Trustee has not received notice of correction or cure thereof and other assurances and indemnifications reasonably satisfactory to it with respect to such correction or cure, the Titling Trustee shall (i) not create any new SUBI, (ii) direct each Servicer not to accept any further assignments on behalf of the Titling Trustee of Contracts or Leased Vehicles except as provided for in Sections 3.04, 7.02, 7.03 and 7.04 of the Titling Trust Agreement and Section 12.04 of this UTI Supplement, and (iii) distribute to the relevant pledgee of the UTI Pledge to which such default relates, on demand, all Excess Funds that would otherwise be distributable to the UTI Beneficiary up to the amount necessary to cure any such default. The Grantor, UTI Beneficiary and Servicer each hereby agrees to and ratifies each such action on the part of the Titling Trustee, and covenants not to give the Titling Trustee contrary instructions or directions. (c) If for any reason circumstances with respect to any Securitized Financing or other UTI Pledge are such that the Titling Trustee has given to any Servicer the notice provided for in subsection (b)(ii) above, the Titling Trustee shall take the actions set forth in Section 12.04 of this UTI Supplement. SECTION 12.04 LEASE FUNDING ACCOUNTS. In the event that for any reason (a) (i) a different Servicer shall be engaged by the Titling Trustee to manage one or more SUBI Portfolios, on the one hand, and the UTI Portfolio, on the other hand, or (ii) the Titling Trustee has actual knowledge that circumstances with respect to any Securitized Financing secured by a UTI Pledge are such that a Trust Asset Transfer into one or more SUBI Portfolios would cause a borrowing base deficiency (as defined in the documents related to such Securitized Financing or UTI Pledge) or similar default to occur with respect to such Securitized Financing or UTI Pledge, and (b) at such time the Titling Trustee, acting pursuant to any SUBI Supplement, would otherwise be causing the related Servicer to effect Trust Asset Transfers 7 from the UTI Portfolio into one or more SUBI Portfolios upon the written direction of the UTI Beneficiary, the Titling Trustee shall (1) establish (to the extent such account has not already been established with respect to such SUBI Portfolio) and maintain in its name for each SUBI a separate SUBI Lease Funding Account, each of which shall be a Titling Trustee Account and a SUBI Account; (2) to the extent that the Titling Trustee would, but for the conditions set forth in clauses (a)(i) and (a)(ii) of this Section 12.04, cause the transfer of funds from any SUBI Collection Account to the Lease Funding Account (or directly to the Servicer) in connection with any Trust Asset Transfer, instead cause the transfer of such funds from that SUBI Collection Account to the related SUBI Lease Funding Account; (3) direct the Servicer then servicing the respective SUBI Portfolio to acquire on behalf of the Titling Trust, for the account of that SUBI Portfolio rather than for the UTI Portfolio, Contracts and Leased Vehicles from Dealers, and (4) apply any such funds in any such SUBI Lease Funding Account directly to reimburse the Servicer then servicing that SUBI Portfolio for any payments made by it to Dealers in respect of such Contracts and Leased Vehicles. In the event that Contracts and Leased Vehicles are being acquired by any Servicer(s) at such direction of the Titling Trustee on behalf of the Titling Trust with respect to both the UTI Portfolio and any SUBI Portfolio simultaneously, the Titling Trustee and the Servicer shall first allocate all such Contracts and Leased Vehicles to the relevant SUBI Portfolios until funds available for such purpose in any SUBI Lease Account shall be exhausted and then shall allocate all remaining Contracts and Leased Vehicles to the UTI Portfolio. SECTION 12.05 REBALANCING AFTER THIRD-PARTY CLAIM. To the extent that a third-party Claim against Titling Trust Assets is satisfied out of Titling Trust Assets in proportions other than as provided in Section 3.04 of the Titling Trust Agreement, then, notwithstanding anything to the contrary contained herein, the Titling Trustee shall promptly identify and reallocate (or cause the Servicer to identify and reallocate) the remaining Titling Trust Assets among the UTI Sub-Trust and each of the SUBI Sub-Trusts such that each shall bear the expense of such Claim as nearly as possible as if the burden thereof had been allocated as provided in Section 3.04 of the Titling Trust Agreement. ARTICLE XIII MISCELLANEOUS PROVISIONS SECTION 13.01 GOVERNING LAW. This UTI Supplement shall be created under and governed by and construed under the internal laws of the State of California, without regard to any otherwise applicable principles of conflicts of laws, and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws. 8 SECTION 13.02 EFFECT OF UTI SUPPLEMENT ON TRUST AGREEMENT. (a) Except as otherwise specifically provided herein: (i) the parties shall continue to be bound by all provisions of the Titling Trust Agreement; and (ii) the provisions set forth herein shall operate either as additions to or modifications of the extant obligations of the parties under the Titling Trust Agreement, as the context may require. In the event of any conflict between the provisions of this UTI Supplement and the Titling Trust Agreement with respect to the UTI and any UTI Assets, the provisions of this UTI Supplement shall prevail. (b) For purposes of determining the parties' obligations under this UTI Supplement with respect to the UTI, general references in the Titling Trust Agreement to a UTI Supplement shall be deemed to refer more specifically to this UTI Supplement. SECTION 13.03 COUNTERPARTS. This UTI Supplement may be executed in any number of counterparts, each of which so executed and delivered shall be deemed to be an original, but all of which counterparts shall together constitute but one and the same instrument. 9 IN WITNESS WHEREOF, the Grantor, the Titling Trustee and (solely for the limited purposes set forth in Sections 6.03(e), 6.11(d), 6.14, 6.15, 9.01 and 9.03 of the Titling Trust Agreement), the Trust Agent, have caused this UTI Supplement to be duly executed by the respective officers as of the day and year first above written. TOYOTA MOTOR CREDIT CORPORATION, as Grantor, UTI Beneficiary and Servicer By: -------------------------------------- Name: Title: TMTT, Inc., as Titling Trustee By: -------------------------------------- Name: Title: FIRST BANK NATIONAL ASSOCIATION, as Trust Agent By: -------------------------------------- Name: Title: 10 EXHIBIT A FORM OF DIRECTION TO CREATE UTI UNIT TMTT, INC., Titling Trustee c/o First Bank National Association 111 East Wacker Drive, Suite 3000 Chicago, Illinois 60601 Attention: Corporate Trust Office Re: Toyota Lease Trust Creation of UTI Unit No. ____ Dear sirs: Pursuant to Section 11.01(c) of the UTI Supplement (the "UTI Supplement") dated as of October 1, 1996, to the Trust and Servicing Agreement, as the same was amended and restated pursuant to the Amended and Restated Trust and Servicing Agreement (the "Titling Trust Agreement"), dated as of October 1, 1996, each among Toyota Motor Credit Corporation ("TMCC") as grantor, initial beneficiary and servicer, TMTT, INC., as Titling Trustee (the "Titling Trustee"), and for certain limited purposes only, First Bank National Association, a national banking association as trust agent, you are hereby directed to create a UTI Unit No. ___ (the "UTI Unit") comprised of the assets identified in the attached schedule. You are hereby directed to register the UTI Unit Certificate in the name of [Pledgee/Transferee] as of [date], and to deliver the same on [date] to [Pledgee/Transferee or Agent] at [Address], against confirmation of receipt of [amount of proceeds of Pledge or Securitized Financing] received in the account described in the attached account details. The [name, date and parties to controlling document] setting forth the terms and conditions of the [Pledge/Securitized Financing] is attached hereto. Your attention is directed to Sections ___, ___ and ___, which specify events of default the occurrence of which may require the Titling Trustee to make future distributions of amounts payable to the UTI Beneficiary to the persons or on the basis specified in Section 12.03 of the UTI Supplement. A-1 TMCC, as UTI Beneficiary, hereby represents and warrants to the Titling Trustee that all of the conditions precedent to the creation of a UTI Unit are satisfied as of the date of this instruction, including, but not limited to, those contained in Sections 3.01 and 7.02 of the Titling Trust Agreement and Section 11.02 of the UTI Supplement. Dated: _______________ TOYOTA MOTOR CREDIT CORPORATION, as UTI Beneficiary By: ___________________________________ Name: Title: A-2 EXHIBIT B FORM OF DIRECTION TO REALLOCATE UTI UNIT ASSETS TMTT, INC., Titling Trustee c/o First Bank National Association 111 East Wacker Drive, Suite 3000 Chicago, Illinois 60601 Attention: Corporate Trust Office Re: Toyota Lease Trust Reallocation with respect to UTI Unit No. ____ Dear sirs: Pursuant to Section 11.01(c) of the UTI Supplement (the "UTI Supplement") dated as of October 1, 1996, to the Trust and Servicing Agreement, as the same was amended and restated pursuant to the Amended and Restated Trust and Servicing Agreement (collectively, the "Titling Trust Agreement"), dated as of October 1, 1996, each among Toyota Motor Credit Corporation ("TMCC") as grantor, initial beneficiary and servicer, TMTT, INC., as Titling Trustee (the "Titling Trustee"), and for certain limited purposes only, First Bank National Association, a national banking association as trust agent, you are hereby directed to allocate to a UTI Unit Portfolio relating to UTI Unit No. ___ the Contracts and Leased Vehicles specified on the attached schedule, and additionally, for the term of the [Secured Financing UTI Pledge] documented in the attached [name, date and parties to controlling document], to regard and treat the related proceeds and other rights associated with such leases and leased vehicles in relation to such UTI Unit No. ___ as specified in the UTI Supplement. TMCC, as UTI Beneficiary, hereby represents and warrants to the Titling Trustee that all of the conditions precedent to the allocation of UTI Assets to a UTI Unit are satisfied as of the date of this direction, including, but not limited to, those contained in Sections 3.01 and 7.02 of the Titling Trust Agreement and Section 11.02 of the UTI Supplement. Dated: _______________ TOYOTA MOTOR CREDIT CORPORATION By: ___________________________________ Name: Title: B-1 EXHIBIT C FORM OF [RESIDUAL] UTI [UNIT] CERTIFICATE TOYOTA LEASE TRUST UNDIVIDED TRUST INTEREST CERTIFICATE evidencing a fractional undivided interest in the UTI Sub-Trust (as defined below). (This Certificate does not represent any obligation of, or an interest in, Toyota Motor Credit Corporation, Toyota Motor Sales, U.S.A., Inc., TMTT, Inc., Toyota Leasing, Inc. ("TLI") or any of their respective affiliates.) Number ___ THIS CERTIFIES THAT _____________________________________ is the registered owner of a nonassessable, fully-paid, fractional undivided interest in the UTI [UTI Unit] (the ["UTI"]["UTI Unit"]) comprised of interests in those Titling Trust Assets not allocated to any other Sub-Trust of the Titling Trust [or the Residual UTI Sub-Trust], such assets comprising the UTI Sub-Trust (the "UTI Sub-Trust") of the Toyota Lease Trust, a Delaware business trust (the "Trust") formed by Toyota Motor Credit Corporation, as Grantor and UTI Beneficiary (in such capacities, the "Grantor" and the "UTI Beneficiary" respectively), and TMTT, Inc., a Delaware corporation, as trustee (the "Trustee") pursuant to a Trust and Servicing Agreement, as the same was amended and restated pursuant to the Amended and Restated Trust and Servicing Agreement (as amended and restated, the "Titling Trust Agreement"), each dated and effective as of October 1, 1996, among the Grantor, the Titling Trustee, and, for certain limited purposes set forth therein, First Bank National Association, a national banking association, as Trust Agent (the "Trust Agent"). A summary of certain of the provisions of the Titling Trust Agreement is set forth below. Capitalized terms used and not otherwise defined herein have the meanings ascribed thereto in the Titling Trust Agreement and UTI Supplement (defined below). This Certificate is one of the duly authorized UTI Certificates issued under the Titling Trust Agreement, as supplemented by the UTI Supplement (the "UTI Supplement") dated and effective as of October 1, 1996, among the UTI Beneficiary, the Titling Trustee and, for certain limited purposes only set forth therein, the Trust Agent (the "UTI Certificates"). This UTI Certificate is subject to the terms, provisions and conditions of the Titling Trust Agreement and the UTI Supplement, to which agreements each UTI Beneficiary by virtue of the acceptance hereof or of any interest herein hereby assents and by which such UTI Beneficiary is bound. C-1 Also issued or to be issued under the Titling Trust Agreement are various other series of certificates evidencing undivided interests in other Sub-Trusts of the Titling Trust. [To date, no other UTI Certificate has been issued, but] SUBI Certificates representing 100% of the undivided interests in each SUBI Sub-Trust formed or to be formed have or will be issued at the time each related SUBI Sub-Trust is formed. The property of the Titling Trust includes, or will include, among other things: (i) any capital contributed by the Grantor; (ii) the Contracts and all proceeds thereof; (iii) the Leased Vehicles and all proceeds thereof, including each Certificate of Title and the Residual Value of each Leased Vehicle, whether realized through the exercise by Obligors of purchase options under the Contracts, the proceeds of sale of the Leased Vehicles to Dealers or third parties or through payments received from any other Person (directly or indirectly) under any related Insurance Policy (to the extent not applied to repair or otherwise paid to a third Person or Governmental Authority by the Servicer as required by law or pursuant to its normal servicing practices) or as a subsidy or other funding of any modification of the related Booked Residual Value; (iv) all of the Titling Trust's rights (but not its obligations) with respect to any Contract or Leased Vehicle, including the right to enforce and to proceeds arising from all Dealer repurchase obligations arising under Dealer Agreements; (v) all of TMCC's rights (but not its obligations) with respect to any Contract or Leased Vehicle, including the right to enforce and to proceeds arising from all Dealer repurchase obligations arising under Dealer Agreements; (vi) any Insurance Policy and rights thereunder or proceeds therefrom relating to any of the Contracts, Leased Vehicles or payments of the related Obligors with respect thereto; (vii) any portion of any security deposit actually and properly applied by the Servicer against amounts due under the related Contract, to the extent not applied to making repairs to the related Leased Vehicle or paid to a third party or Governmental Authority in accordance with the Servicer's normal servicing practices; and (viii) all proceeds of any of the foregoing (such assets, together with any other assets of the Titling Trust, the "Titling Trust Assets"). The Titling Trust Agreement provides that, from time to time, certain of the Titling Trust Assets will be identified and allocated on the records of the Titling Trust into one or more separate Sub-Trusts comprised of identified Titling Trust Assets (such Sub-Trusts the "UTI Sub-Trust" or a "SUBI Sub-Trust", as the case may be, and the related assets, "UTI Assets" or "SUBI Assets", as the case may be). Pursuant to the UTI Supplement, the UTI Assets were identified and allocated on the records of the Titling Trust as the UTI Sub-Trust, and the beneficial interest in the UTI Sub-Trust was designated as the UTI. The rights of the UTI Beneficiary to certain of the proceeds of the UTI Assets are further set forth in the Titling Trust Agreement and the UTI Supplement. This UTI Certificate is limited in right of payment to certain collections and recoveries respecting the Contracts (and the related Obligors) and the Leased Vehicles allocated to the UTI [Unit] Sub-Trust, all to the extent and as more specifically set in the Titling Trust Agreement and the UTI Supplement. Copies of the Titling Trust Agreement and the UTI Supplement may be examined during normal business hours at the principal office of the Titling Trustee, and at such other places, if any, designated by the Titling Trustee, or by the UTI Beneficiary upon request. C-2 By accepting this UTI Certificate or any interest herein, the UTI Beneficiary waives any claim to any proceeds or assets of the Titling Trustee and to all of the Titling Trust Assets other than those from time to time included within the UTI [Unit] Sub-Trust and those proceeds or assets derived from or earned by the UTI Assets. In addition, by accepting this UTI Certificate or any interest herein, the UTI Beneficiary hereby expressly subordinates any claim or interest in or to any Titling Trust Assets not included in the UTI [Unit] Sub-Trust that may be determined to exist in favor of such UTI Beneficiary notwithstanding the foregoing disclaimer to the rights and interests of each SUBI Beneficiary. The Titling Trust Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the parties thereto by written agreement between the UTI Beneficiary and the Titling Trustee to correct or supplement any provision in the Titling Trust Agreement, to cure any ambiguity, and to add, change or eliminate any other provision of the Titling Trust Agreement with respect to matters or questions arising under the Titling Trust Agreement. After the first Securitized Financing, any such amendment shall also require such additional approvals, if any, as are required under documents relating to each Securitized Financing. As provided in the Titling Trust Agreement and the UTI Supplement, this UTI Certificate and the underlying interests represented hereby may not be transferred or assigned, and any purported transfer or assignment shall be null, void, and of no effect, except in accordance with the provisions of the Titling Trust Agreement and the UTI Supplement. Prior to due presentation of this UTI Certificate for registration of a permitted transfer, the Titling Trustee, the certificate registrar and any of their respective agents may treat the person or entity in whose name this UTI Certificate is registered as the owner hereof for the purpose of receiving distributions and for all other purposes, and, except as provided for in the Titling Trust Agreement, neither the Titling Trustee, the certificate registrar nor any such agent shall be affected by any notice to the contrary. Unless this UTI Certificate shall have been executed by an authorized officer of the Titling Trustee, by manual signature, this UTI Certificate shall not entitle the holder hereof to any benefit under the Titling Trust Agreement or the UTI Supplement or be valid for any purpose. C-3 IN WITNESS WHEREOF, the Titling Trustee on behalf of the Titling Trust and not in its individual capacity has caused this UTI Certificate to be duly executed. Dated: TOYOTA LEASE TRUST By: TMTT, INC., as Titling Trustee By: ----------------------------------- Authorized Officer ATTEST: - -------------------------------- C-4 EXHIBIT D FORMS OF CONTRACT [Omitted - On file with the Servicer] D-1 EXHIBIT E FORM OF DEALER AGREEMENT E-1 EX-10.3 8 EXHIBIT 10-3 EXHIBIT 10.3 - ------------------------------------------------------------------------------- TOYOTA MOTOR CREDIT CORPORATION TMTT, INC., as Titling Trustee of Toyota Lease Trust and, for Certain Limited Purposes only, U.S. BANK NATIONAL ASSOCIATION, as Trust Agent 1997-A SUBI SUPPLEMENT TO AMENDED AND RESTATED TRUST AND SERVICING AGREEMENT Dated as of September 1, 1997 - ------------------------------------------------------------------------------- TABLE OF CONTENTS ARTICLE XV DEFINITIONS SECTION 15.01 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . 2 ARTICLE XVI CREATION AND TERMINATION OF TRUST INTERESTS SECTION SECTION 16.01 Initial Creation of 1997-A SUBI Sub-Trust and 1997-A SUBI. 2 SECTION 16.02 Rights in Respect of 1997-A SUBI . . . . . . . . . . . . . 4 SECTION 16.03 Issuance and Form of 1997-A SUBI Certificate . . . . . . . 4 SECTION 16.04 Filings. . . . . . . . . . . . . . . . . . . . . . . . . . 5 SECTION 16.05 Termination of 1997-A SUBI . . . . . . . . . . . . . . . . 5 SECTION 16.06 Representations and Warranties of Titling Trustee. . . . . 6 SECTION 16.07 Resignation or Removal of Titling Trustee. . . . . . . . . 6 ARTICLE XVII ACCOUNTS; CASH FLOWS; PERMITTED INVESTMENTS SECTION 17.01 1997-A SUBI Collection Account . . . . . . . . . . . . . . 6 SECTION 17.02 1997-A SUBI Lease Funding Account. . . . . . . . . . . . . 7 SECTION 17.03 Investment in Gains and Losses . . . . . . . . . . . . . . 8 SECTION 17.04 Rebalancing After Third-Party Claim. . . . . . . . . . . . 8 ARTICLE XVIII MISCELLANEOUS PROVISIONS SECTION 18.01 Governing Law. . . . . . . . . . . . . . . . . . . . . . . 9 SECTION 18.02 Effect of 1997-A SUBI Supplement on Trust Agreement. . . . 9 SECTION 18.03 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . 9 SECTION 18.04 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . 10 SECTION 18.05 Severability of Provisions . . . . . . . . . . . . . . . . 10 SECTION 18.06 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 10 -i- EXHIBITS ANNEX OF SUPPLEMENTAL DEFINITIONS. . . . . . . . . . . . . . . . . . . Annex I EXHIBIT A Form of Series 1997-A SUBI Certificate. . . . . . . . A-1 SCHEDULE I Schedule of Series 1997-A Contracts and Series 1997-A Leased Vehicles as of the 1997-A Cut-off Date . . . . . S-1 -ii- 1997-A SUBI SUPPLEMENT TO AMENDED AND RESTATED TRUST AND SERVICING AGREEMENT 1997-A SUBI SUPPLEMENT TO AMENDED AND RESTATED TRUST AND SERVICING AGREEMENT, dated and effective as of September 1, 1997, among TOYOTA MOTOR CREDIT CORPORATION, a California corporation (in its capacities as Grantor, UTI Beneficiary and Servicer, respectively), TMTT, INC., as Titling Trustee, and for the limited purposes of acknowledging the provisions of Section 17.01, 17.02 and 17.03 and having rights under Section 18.03, U.S. BANK NATIONAL ASSOCIATION (formerly known as First Bank National Association), a national banking association, as Trust Agent. RECITALS A. TMCC, the Titling Trustee and the Trust Agent have entered into the Titling Trust Agreement, pursuant to which the Grantor and the Titling Trustee formed the Titling Trust, for the purpose of taking assignments and conveyances of, holding in trust and dealing in, various Titling Trust Assets in accordance with the Titling Trust Agreement. B. The Titling Trust Agreement contemplates that certain of the Titling Trust Assets, other than those previously identified on the Titling Trust's books and records as Other SUBI Assets and allocated to a separate SUBI Sub-Trust, may be allocated to a SUBI Sub-Trust and thenceforth constitute SUBI Assets within such SUBI Sub-Trust, and that the Titling Trustee shall create a SUBI and issue to, or to the order of, the UTI Beneficiary one or more SUBI Certificates evidencing the related SUBI, and the related SUBI Beneficiaries and their permitted assignees generally will be entitled to the net cash flow arising from, but only from, such SUBI Assets. C. The parties hereto desire to supplement the terms of the Titling Trust Agreement to cause the Titling Trustee to identify a SUBI Portfolio and allocate the related Titling Trust Assets to the 1997-A SUBI Sub-Trust, to create the 1997-A SUBI and to create and issue to the UTI Beneficiary a SUBI Certificate evidencing the entire beneficial interest in the 1997-A SUBI, and to set forth the terms and conditions thereof. D. The Titling Trustee, on behalf of the Titling Trust, and the Servicer also will enter into the 1997-A Servicing Supplement pursuant to which, among other things, the terms of the Titling Trust Agreement will be supplemented insofar as they apply solely to the servicing of the SUBI Sub-Trust created hereby to provide for further specific servicing obligations that will benefit solely the SUBI Beneficiaries with respect to the 1997-A SUBI created hereby. NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and in the Titling Trust Agreement, the parties hereto agree to the following supplemental obligations and provisions with regard to the 1997-A SUBI Sub-Trust: ARTICLE XIV [RESERVED] ARTICLE XV DEFINITIONS SECTION 15.01. DEFINITIONS. For all purposes of this 1997-A SUBI Supplement, except as otherwise expressly provided or unless the context otherwise requires, capitalized terms used and not otherwise defined herein shall have the meanings ascribed thereto in the Annex of Definitions or the Annex of Supplemental Definitions attached hereto for all purposes of this 1997-A SUBI Supplement. In the event of any conflict between a definition set forth herein and that set forth in the Annex of Definitions or Annex of Supplemental Definitions, that set forth herein shall prevail. All terms used in this 1997-A SUBI Supplement include, as appropriate, all genders and the plural as well as the singular. All references such as "herein", "hereof" and the like shall refer to this 1997-A SUBI Supplement as a whole and not to any particular article or section within this 1997-A SUBI Supplement. All references such as "includes" and variations thereon shall mean "includes without limitation" and references to "or" shall mean "and/or". Any reference herein to the "Titling Trustee, acting on behalf of the Titling Trust", or words of similar import, shall be deemed to mean the Titling Trustee, acting on behalf of Toyota Lease Trust and all beneficiaries thereof. ARTICLE XVI CREATION AND TERMINATION OF TRUST INTERESTS SECTION 16.01 INITIAL CREATION OF 1997-A SUBI SUB-TRUST AND 1997-A SUBI. (a) Pursuant to Section 3.01(c) of the Titling Trust Agreement, Titling Trust Assets not already denominated as SUBI Assets with respect to a different SUBI Sub-Trust may be identified and allocated as SUBI Assets of a separate SUBI Sub-Trust at the direction of the UTI Beneficiary. The UTI Beneficiary hereby directs the Titling Trustee to identify and allocate or cause to be identified and allocated on the books and records of the Titling Trust a separate portfolio of SUBI Assets (the "1997-A SUBI Assets") consisting of (i) the Contracts and related Leased Vehicles listed on Schedule I hereto and other related Titling Trust Assets to be accounted for and held in trust independently from all other Titling Trust Assets within the Titling Trust, including all Titling Trust Assets already identified and allocated to any other SUBI Sub-Trust and from those remaining as assets of the UTI Sub-Trust and (ii) the Contracts, Leased Vehicles and related Titling Trust Assets to be allocated to the 1997-A Sub-Trust pursuant to Section 3.02(a) of the 1997-A Servicing Supplement. -2- The assets of the 1997-A SUBI Sub-Trust established hereby shall consist of: (i) those Contracts identified by contract number on Schedule I hereto that are Eligible Contracts as of the 1997-A Cut-off Date, including the related rights of the Titling Trust as lessor under such Contracts, having an Aggregate Net Investment Value of $- as of the 1997-A Cut-off Date and those Contracts allocated to the 1997-A SUBI Sub-Trust pursuant to Section 3.02(a) of the 1997-A Servicing Supplement; (ii) the related Leased Vehicles and all proceeds thereof, including each Certificate of Title and the Residual Value of each Leased Vehicle, whether realized through the exercise by Obligors of purchase options under the Contracts, the proceeds of sale of the Leased Vehicles to Dealers or third parties or through payments received from any other Person (directly or indirectly) under any related Insurance Policy (to the extent not applied to repair or otherwise paid to a third Person or Governmental Authority by the Servicer as required by law or pursuant to its normal servicing practices) or as a subsidy or other funding of any modification of the related Booked Residual Value; (iii) all of the Titling Trust's right, title, interest and obligations (except such obligations that are specifically retained by the Titling Trust pursuant to the terms of the Titling Trust Agreement) with respect to such Contracts or Leased Vehicles, including the right to enforce all Dealer repurchase obligations arising under Dealer Agreements and to proceeds arising therefrom; (iv) any Insurance Policy and rights thereunder or proceeds therefrom relating to such Contracts, Leased Vehicles or payments of the related Obligors with respect thereto; (v) any portion of any Security Deposit actually and properly applied by the Servicer against amounts due under the related Contract, to the extent not applied to making repairs to the related Leased Vehicle or paid to a third party or Governmental Authority in accordance with the Servicer's normal servicing practices; (vi) the 1997-A SUBI Collection Account, including all cash and Permitted Investments therein and all income from the investment of funds therein and (vii) all proceeds of any of the foregoing. Based upon their identification and allocation by the Servicer pursuant to the 1997-A Servicing Supplement, the Titling Trustee hereby identifies and allocates as 1997-A SUBI Assets the portfolio of Contracts and Leased Vehicles more particularly described on Schedule I hereto, and the related Titling Trust Assets described above, each such 1997-A SUBI Asset to be identified on the books and accounts of the Trust as belonging to the 1997-A SUBI Portfolio. (b) Pursuant to Section 3.01(c) of the Titling Trust Agreement, the Titling Trustee hereby creates the 1997-A SUBI Sub-Trust and the 1997-A SUBI. The 1997-A SUBI shall represent a specific undivided beneficial interest solely in the 1997-A SUBI Sub-Trust and the 1997-A SUBI Assets. (c) As required by Section 3.01(d) of the Titling Trust Agreement, the UTI Beneficiary hereby certifies to the Titling Trustee that as of the date of execution and delivery hereof: that (i) either there is no pledgee of the UTI or each such pledgee of a UTI Pledge has received prior notice of the creation of the 1997-A SUBI Sub-Trust and of the terms and provisions of this 1997-A SUBI Supplement and of the related Securitized Financing and (ii) as of the date hereof, and after giving effect to the creation of the 1997-A SUBI Sub-Trust, the transfer to the UTI Beneficiary of the 1997-A SUBI Certificate in connection therewith and the application by the UTI Beneficiary of any -3- net proceeds from any Securitized Financing involving such SUBI and such SUBI Certificate, there is and will be no default with respect to any Securitized Financing or other agreement or obligation secured by a UTI Pledge. (d) The parties hereto intend that, at any time during which all 1997-A SUBI Certificates are held or beneficially owned by a single Person, the 1997-A SUBI Sub-Trust shall not constitute a separate entity for federal income tax purposes or for state income or franchise tax purposes. However, at any time that the 1997-A SUBI Certificates are held or beneficially owned by two or more Persons, the parties hereto intend that the 1997-A Sub-Trust be characterized as a separate entity for federal and state income tax purposes that shall qualify as a partnership for such purposes. (e) The Beneficiary of the 1997-A SUBI Certificate shall at all times maintain a minimum net worth (excluding the value of the 1997-A SUBI Certificate held thereby and the value of any assets of the 1997-A Securitization Trust established pursuant to the 1997-A Trust Agreement) equal to at least $100,000; provided that such minimum net worth requirement shall not apply to the 1997-A Securitization Trust or the 1997-A Securitization Trustee. SECTION 16.02 RIGHTS IN RESPECT OF 1997-A SUBI. Each holder of a 1997-A SUBI Certificate (including the 1997-A Securitization Trustee, on behalf of the Holders of the securities issued by the 1997-A Securitization Trust) is a third-party beneficiary of the Titling Trust Agreement and this 1997-A SUBI Supplement, insofar as they apply to the 1997-A SUBI and the holder of the 1997-A SUBI Certificate. Therefore, to that extent, references in the Titling Trust Agreement to the ability of any "holder of a SUBI Certificate", "assignee of a SUBI Certificate" or the like to take any action shall also be deemed to refer to the 1997-A Securitization Trustee acting at its own instigation or upon the instruction of Investor Certificateholders pursuant to the terms of Section 6.15 of the 1997-A Securitization Trust Agreement. SECTION 16.03 ISSUANCE AND FORM OF 1997-A SUBI CERTIFICATE. (a) The 1997-A SUBI shall be represented by a single 1997-A SUBI Certificate, which shall represent 100% of the beneficial interests in the 1997-A SUBI and the 1997-A SUBI Sub-Trust, as further set forth herein. The 1997-A SUBI Certificate shall be substantially in the form of Exhibit A attached hereto, but may have such letters, numbers or other marks of identification and such legends and endorsements placed thereon as may, consistently herewith and with the Titling Trust Agreement, be directed by the Beneficiary. The 1997-A SUBI Certificate may be printed, lithographed, typewritten, mimeographed, photocopied or otherwise produced in any other manner as may, consistently herewith and with the Titling Trust Agreement, be determined by the UTI Beneficiary. -4- (b) As required by Section 3.01(g) of the Titling Trust Agreement, the 1997-A SUBI Certificate may not be transferred or assigned unless the assignee or pledgee (x) gives a non-petition covenant substantially similar to that set forth in Section 6.14 of the Titling Trust Agreement, and (y) executes an agreement between or among itself and each UTI Beneficiary and each SUBI Beneficiary of each SUBI relating to another Sub-Trust, to release all claims to the Titling Trust Assets allocated to the UTI Sub-Trust or to such other SUBI Sub-Trust and, in the event that such release is not given effect, to fully subordinate all claims it may be deemed to have against the Titling Trust Assets allocated thereto (which agreement may be included in the 1997-A SUBI Certificate itself). In addition, the 1997-A SUBI Certificate or any beneficial interest therein may not be transferred by any Beneficiary thereof without the prior written consent of each registered holder of a 1997-A SUBI Certificate. SECTION 16.04 FILINGS. The Grantor, the UTI Beneficiary (if different from the Grantor) and the Titling Trustee, as directed by the Grantor or the UTI Beneficiary, will undertake all other and future actions and activities as may be deemed reasonably necessary by the Grantor or the UTI Beneficiary to perfect (or evidence) and confirm the allocation of the 1997-A SUBI Assets to the 1997-A SUBI Portfolio as provided herein, including filing or causing to be filed UCC financing statements and executing and delivering all related filings, documents or writings as may be deemed reasonably necessary by the Servicer hereunder or under any other agreements or instruments relating to such Securitized Financing. The Grantor hereby irrevocably makes and appoints each of the Titling Trustee and the Servicer (in the case of the Servicer, only for so long as such Servicer is acting in such capacity), and any of their respective officers, employees or agents, as the true and lawful attorney-in-fact of the Grantor (which appointment is coupled with an interest and is irrevocable) with power to sign on behalf of the Grantor any financing statements, continuation statements, security agreements, mortgages, assignments, affidavits, letters of authority, notices or similar documents necessary or appropriate to be executed or filed pursuant to this Section 16.04. SECTION 16.05 TERMINATION OF 1997-A SUBI. In connection with any purchase by the Grantor or the Servicer of the 1997-A Certificateholders' interest in the corpus of the 1997-A Securitization Trust pursuant to Section 7.02 of the 1997-A Securitization Trust Agreement, and the succession thereof to all of the interest in the 1997-A SUBI, should all of the interest in the 1997-A SUBI thereafter be transferred to the UTI Beneficiary, whether by sale or otherwise, then, upon the direction of the UTI Beneficiary, the 1997-A SUBI shall be terminated, the 1997-A SUBI Certificates shall be returned to the Titling Trustee and canceled thereby, and the Titling Trustee, at the direction of the Servicer, shall reallocate all 1997-A Contracts, 1997-A Leased Vehicles and related 1997-A SUBI Assets to the UTI Sub-Trust. -5- SECTION 16.06 REPRESENTATIONS AND WARRANTIES OF TITLING TRUSTEE. The Titling Trustee hereby makes the same representations and warranties set forth in Section 6.12 of the Titling Trust Agreement as of the date hereof, on which the Grantor and UTI Beneficiary have relied in executing this 1997-A SUBI Supplement and on which each of their permitted assignees and pledgees, and each pledgee or holder of a 1997-A SUBI Certificate (and each 1997-A SUBI Beneficiary) may rely. SECTION 16.07 RESIGNATION OR REMOVAL OF TITLING TRUSTEE. No resignation or removal of the Titling Trustee pursuant to any provision of the Titling Trust Agreement shall be effective unless and until each Rating Agency has confirmed, in writing, that such resignation or removal would not cause it to reduce, modify or withdraw its then current rating of any class of securities issued by the 1997-A Securitization Trust. ARTICLE XVII ACCOUNTS; CASH FLOWS; PERMITTED INVESTMENTS SECTION 17.01 1997-A SUBI COLLECTION ACCOUNT. (a) The Titling Trustee shall establish and maintain with respect to the 1997-A SUBI the 1997-A SUBI Collection Account in the name of the 1997-A Securitization Trustee, for the benefit of the Beneficiaries of the 1997-A SUBI Certificate, which account shall constitute a SUBI Collection Account. The 1997-A SUBI Collection Account initially shall be established with U.S. Bank, as Trust Agent, and at all times shall be an Eligible Account. In the event that the Trust Agent no longer meets the requirements stated in the definition of Eligible Account, then the Servicer shall, with the Titling Trustee's assistance as necessary, cause the 1997-A SUBI Collection Account to be moved to a bank or trust company that satisfies those requirements. The 1997-A SUBI Collection Account shall relate solely to the 1997-A SUBI and the 1997-A SUBI Sub-Trust, and funds therein shall not be commingled with any other moneys, except as otherwise provided for or contemplated in the Titling Trust Agreement as supplemented by this 1997-A SUBI Supplement or in the 1997-A Servicing Supplement. All amounts held in the 1997-A SUBI Collection Account shall be invested in Permitted Investments until distributed or otherwise applied in accordance with the Titling Trust Agreement or this 1997-A SUBI Supplement. (b) The Servicer shall deposit all amounts collected or received in respect of the 1997-A Contracts and 1997-A Leased Vehicles into the 1997-A SUBI Collection Account (in each case exclusive of amounts reinvested in Subsequent Contracts) -6- on or before the Deposit Date relating to each Collection Period except as otherwise specified herein or in the 1997-A Servicing Supplement (in connection with any failure to satisfy the Monthly Remittance Conditions). Amounts so deposited will be applied by the 1997-A Securitization Trustee or by the Servicer as specified in the 1997-A Securitization Trust Agreement and the 1997-A Servicing Supplement. Notwithstanding the foregoing, because (as the parties hereto acknowledge) (i) TLI as initial SUBI Beneficiary has all rights in, under and to the proceeds of the Residual Value Insurance Policy insofar as such Insurance Policy relates to the 1997-A Contracts and 1997-A Leased Vehicles, and (ii) TLI, as Transferor, has, concurrently with the execution and delivery hereof, executed and delivered an instrument transferring the 1997-A SUBI Certificate to the 1997-A Securitization Trustee on behalf of the 1997-A Securitization Trust exclusive of the proceeds of such Residual Value Insurance Policy, on each Monthly Allocation Date, as directed by the Servicer, the Titling Trustee shall release all proceeds of the Residual Value Insurance Policy payable with respect to the 1997-A Contracts or the 1997-A Leased Vehicles to TLI or to the designee of TLI. (c) Principal Collections and Interest Collections that are to be reinvested in Subsequent Contracts and Subsequent Leased Vehicles to be included in the 1997-A SUBI Sub-Trust during the Revolving Period that are not deposited into the 1997-A SUBI Collection Account on a Monthly Allocation Date, will be so reinvested by the Servicer on one or more dates during the calendar month in which such Monthly Allocation Date occurs as specified in Section in 3.02(a) of the 1997-A Servicing Supplement. (d) Notwithstanding the foregoing paragraphs (b) and (c), from and after the date, if any, on which the Monthly Remittance Conditions cease to be satisfied, the Servicer will deposit all Principal Collections and Interest Collections into the 1997-A SUBI Collection Account within two Business Days of its receipt thereof as set forth in Section 4.02 of the 1997-A Servicing Supplement, and such amounts will thereafter be applied as described in Section 3.02 of the 1997-A Servicing Supplement (and Section 17.02 hereof insofar as they are to be reinvested in Subsequent Contracts and Subsequent Leased Vehicles). SECTION 17.02 1997-A SUBI LEASE FUNDING ACCOUNT. Notwithstanding the provisions of Section 7.03 of the Titling Trust Agreement, the Titling Trustee shall be required to establish -7- and maintain with respect to the 1997-A SUBI the 1997-A SUBI Lease Funding Account in the name of the Titling Trustee, for the benefit of the 1997-A SUBI Beneficiaries (which account shall constitute a SUBI Lease Funding Account) only in the event that the Monthly Remittance Conditions are no longer satisfied. Any such 1997-A SUBI Lease Funding Account initially shall be established with U.S. Bank, as Trust Agent, and at all times shall be an Eligible Account. In the event that the Trust Agent no longer meets the requirements stated in the definition of Eligible Account, then the Servicer shall, with the Titling Trustee's assistance as necessary, cause the 1997-A SUBI Lease Funding Account to be moved to a bank or trust company that satisfies those requirements. The 1997-A SUBI Lease Funding Account shall relate solely to the 1997-A SUBI and the 1997-A SUBI Portfolio, and funds therein shall not be commingled with any other moneys, except as otherwise provided for or contemplated in the Titling Trust Agreement as supplemented by this 1997-A SUBI Supplement or in the 1997-A Servicing Supplement. All amounts held in the 1997-A SUBI Lease Funding Account shall be invested in Permitted Investments until distributed or otherwise applied in accordance with the Titling Trust Agreement, this 1997-A SUBI Supplement or the 1997-A Servicing Supplement. All transfers of funds into and out of the 1997-A SUBI Lease Funding Account shall be made in accordance with Section 7.03 of the Titling Trust Agreement and Sections 3.02 and 4.02 of the 1997-A Servicing Supplement in connection with purchases of Subsequent Contracts and Subsequent Leased Vehicles. Prior to the date, if any, on which the Monthly Remittance Conditions cease to be satisfied, the Servicer will instead be allowed to commingle the amounts to be reinvested in additional Subsequent Contracts and Subsequent Leased Vehicles with its own funds and to reinvest such amounts (by transfer of such amounts to the Lease Funding Account or directly to the UTI Beneficiary, as appropriate) without deposit into the 1997-A SUBI Collection Account or 1997-A SUBI Lease Funding Account. SECTION 17.03 INVESTMENT GAINS AND LOSSES. All or a portion of the funds deposited into the 1997-A SUBI Accounts shall be separately invested by the Titling Trustee or the 1997-A Securitization Trustee, as applicable, from time to time at the direction of the Servicer, in any Permitted Investments. All income, gain or loss from investment of monies in the 1997-A SUBI Certificateholders' Account shall be for the account of the Certificateholders; provided that each such investment shall be made in the name of the 1997-A Securitization Trustee on behalf of the 1997-A Securitization Trust, its nominee or its Financial Intermediary. All income, gain or loss from investment of monies in the 1997-A SUBI Collection Account or 1997-A SUBI Lease Funding Account shall be for the account of the Servicer; provided, that, each such investment shall be made in the name of the Titling Trustee, its nominee or its Financial Intermediary. All income, gain or loss from investment of monies in the Lease Funding Account shall be for the account of the UTI Beneficiary; provided, that, each such investment shall be made in the name of the Titling Trustee, its nominee or its Financial Intermediary. If at any time the Servicer shall not have given the 1997-A Securitization Trustee a timely investment directive with respect to any 1997-A SUBI Account or shall not have given the Titling Trustee a timely investment directive with respect to the Lease Funding Account, the 1997-A Securitization Trustee or the Titling Trustee, as appropriate, shall invest -8- and reinvest any monies in such account(s) in a mutual fund offered by the Trust Agent or another affiliate of the Titling Trustee meeting the requirements of clause (i) of the definition of Permitted Investments. SECTION 17.04 REBALANCING AFTER THIRD-PARTY CLAIM. To the extent that a third-party Claim against Titling Trust Assets is satisfied out of Titling Trust Assets in proportions other than as provided in Section 3.04 of the Titling Trust Agreement, then, notwithstanding anything to the contrary contained herein, the Titling Trustee, at the direction of the Servicer, shall promptly identify and reallocate (or cause the Servicer to identify and reallocate) the remaining Titling Trust Assets among the UTI Sub-Trust and each of the SUBI Sub-Trusts, including the 1997-A SUBI Sub-Trust, such that each shall bear the expense of such Claim as nearly as possible as if the burden thereof had been allocated as provided in Section 3.04 of the Titling Trust Agreement. ARTICLE XVIII MISCELLANEOUS PROVISIONS SECTION 18.01 GOVERNING LAW. This 1997-A SUBI Supplement shall be created under and governed by and construed under the internal laws of the State of Delaware, without regard to any otherwise applicable principles of conflicts of laws, and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws. SECTION 18.02 EFFECT OF 1997-A SUBI SUPPLEMENT ON TRUST AGREEMENT. (a) Except as otherwise specifically provided herein: (i) the parties shall continue to be bound by all provisions of the Titling Trust Agreement; and (ii) the provisions set forth herein shall operate either as additions to or modifications of the extant obligations of the parties under the Titling Trust Agreement, as the context may require. In the event of any conflict between the provisions of this 1997-A SUBI Supplement and the Titling Trust Agreement with respect to the 1997-A SUBI, the provisions of this 1997-A SUBI Supplement shall prevail. (b) For purposes of determining the parties' obligations under this 1997-A SUBI Supplement with respect to the 1997-A SUBI, general references in the Titling Trust Agreement to: (i) a SUBI Account shall be deemed to refer more specifically to the 1997-A SUBI Account; (ii) a SUBI Asset shall be deemed to refer more specifically to a 1997-A SUBI Asset; (ii) an appropriate or applicable SUBI Collection Account shall be deemed to refer more specifically to the 1997-A SUBI Collection Account; (iv) an appropriate or applicable SUBI Lease Funding Account shall be deemed to refer more specifically to a 1997-A SUBI Lease Funding Account; (v) a SUBI Sub-Trust or SUBI Portfolio shall be deemed to refer more specifically to the 1997-A SUBI Sub-Trust or 1997- -9- A SUBI Portfolio, as the case may be; (vi) a SUBI Supplement shall be deemed to refer more specifically to this 1997-A SUBI Supplement; and (vii) a SUBI Servicing Supplement shall be deemed to refer more specifically to the 1997-A Servicing Supplement. SECTION 18.03 AMENDMENT. (a) Notwithstanding Section 9.01 of the Titling Trust Agreement, the Titling Trust Agreement, as supplemented by this Supplement, to the extent that it applies solely to the 1997-A SUBI and the 1997-A SUBI Portfolio, may be amended from time to time by a writing signed by the Titling Trustee, the UTI Beneficiary, each 1997-A SUBI Beneficiary and, to the extent that any such amendment affects any obligation or interest of the Trust Agent, the Trust Agent, in each case only with the prior written consent of the 1997-A Securitization Trustee and upon receipt of written notice from each Rating Agency that the proposed amendment will not cause such Rating Agency to reduce or withdraw any then current rating on any class of securities issued by the 1997-A Securitization Trust. SECTION 18.04 NOTICES. The notice provisions of the Titling Trust Agreement shall apply equally to this Supplement; provided, that, any notice to the 1997-A Securitization Trustee shall be addressed as follows: U.S. Bank National Association 111 East Wacker Drive, Suite 3000 Chicago, Illinois 60601 Attention: Corporate Trust Office A copy of each notice or other writing required to be delivered to the Titling Trustee pursuant to the Titling Trust Agreement or this 1997-A SUBI Supplement also shall be delivered to the 1997-A Securitization Trustee with respect to the 1997-A Securitization Trust. SECTION 18.05 SEVERABILITY OF PROVISIONS. If any one or more of the covenants, agreements, provisions or terms of this 1997-A SUBI Supplement shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this 1997-A SUBI Supplement and shall in no way affect the validity or enforceability of the other provisions of this 1997-A SUBI Supplement or of any 1997-A SUBI Certificates or the rights of the holders thereof. To the extent permitted by law, the parties hereto waive any provision of law that renders any provision of this 1997-A SUBI Supplement invalid or unenforceable in any respect. -10- SECTION 18.06 COUNTERPARTS. This 1997-A SUBI Supplement may be executed in any number of counterparts, each of which so executed and delivered shall be deemed to be an original, but all of which counterparts shall together constitute but one and the same instrument. 11 IN WITNESS WHEREOF, TMCC, the Titling Trustee and, solely for the limited purposes set forth herein, U.S. Bank National Association, as Trust Agent, have caused this 1997-A SUBI Supplement to be duly executed by their respective officers as of the day and year first above written. TOYOTA MOTOR CREDIT CORPORATION, Grantor, Servicer and UTI Beneficiary By: ------------------------------------------ Name: George Borst Title: Senior Vice President and General Manager TMTT, INC., as Titling Trustee By: ------------------------------------------ Name: David Vick Title: President U.S. BANK NATIONAL ASSOCIATION, as Trust Agent By: ------------------------------------------ Name: Nancie Arvin Title: Vice President 12 STATE OF CALIFORNIA ) ) ss.: COUNTY OF LOS ANGELES ) On the _________ day of September 1997, before me, a notary public in and for of the State of California, personally appeared George Borst, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in the capacity or capacities indicated in the within instrument, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Notary Public [Notary Seal] 13 STATE OF CALIFORNIA ) ) ss.: COUNTY OF LOS ANGELES ) On the _________ day of September 1997, before me, a notary public in and for of the State of California, personally appeared David Vick, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in the capacity or capacities indicated in the within instrument, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Notary Public [Notary Seal] 14 STATE OF CALIFORNIA ) ) ss.: COUNTY OF LOS ANGELES ) On the _________ day of September 1997, before me, a notary public in and for of the State of California, personally appeared Nancie Arvin, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that she executed the same in the capacity or capacities indicated in the within instrument, and that by her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Notary Public [Notary Seal] SCHEDULE I SCHEDULE OF 1997-A CONTRACTS AND 1997-A LEASED VEHICLES AS OF AUGUST 1, 1997 [Omitted. On file with the Servicer, the Titling Trustee and the 1997-A Securitization Trustee.] S-1 EXHIBIT A FORM OF 1997-A SUBI CERTIFICATE TOYOTA LEASE TRUST 1997-A SPECIAL UNIT OF BENEFICIAL INTEREST CERTIFICATE evidencing a fractional undivided interest in the 1997-A SUBI Sub-Trust (as defined below). (This Certificate does not represent any obligation of, or an interest in, Toyota Motor Credit Corporation, Toyota Motor Sales, U.S.A., Inc., TMTT, Inc., Toyota Leasing, Inc. ("TLI") or any of their respective affiliates.) Number ___ THIS CERTIFIES THAT __________________________________ is the registered owner of a nonassessable, fully-paid, fractional undivided interest in the 1997-A SUBI (the "1997-A SUBI") comprised of interests in the assets of the 1997-A SUBI Sub-Trust (the "1997-A Sub-Trust") of the Toyota Lease Trust, a Delaware business trust (the "Titling Trust") formed by Toyota Motor Credit Corporation, as Grantor and UTI Beneficiary (in such capacities, the "Grantor" and the "UTI Beneficiary" respectively), and TMTT, Inc., a Delaware corporation, as trustee (the "Titling Trustee") pursuant to a Trust and Servicing Agreement, as the same was amended and restated pursuant to an Amended and Restated Trust and Servicing Agreement (the "Titling Trust Agreement"), each dated and effective as of October 1, 1996, among the Grantor, the Titling Trustee, and, for certain limited purposes set forth therein, U.S. Bank National Association (formerly known as First Bank National Association), a national banking association, as trust agent (the "Trust Agent"). A summary of certain of the provisions of the Titling Trust Agreement is set forth below. Capitalized terms used and not otherwise defined herein have the meanings ascribed thereto in the Titling Trust Agreement and 1997-A SUBI Supplement. This Certificate is the only duly authorized 1997-A SUBI Certificate issued under the Titling Trust Agreement, as supplemented by the 1997-A SUBI Supplement (the "1997-A SUBI Supplement") dated as of September 1, 1997, among the UTI Beneficiary, the Titling Trustee and, for certain limited purposes only set forth therein, the Trust Agent (the "1997-A SUBI Certificate"). This 1997-A SUBI Certificate is subject to the terms, provisions and conditions of the Titling Trust Agreement and the 1997-A SUBI Supplement, to which agreements each 1997-A SUBI Beneficiary by virtue of the acceptance hereof or of any interest herein hereby assents and by which such SUBI Beneficiary is bound. A-1 Also issued or to be issued under the Titling Trust Agreement are various other series of certificates evidencing undivided interests in other Sub-Trusts of the Titling Trust. A single UTI Certificate has been issued to the UTI Beneficiary, no Other SUBI Certificate had been issued as of the date this 1997-A SUBI Certificate was issued, but SUBI Certificates representing 100% of the undivided interests in each other SUBI to be formed will be issued at the time each related SUBI Sub-Trust is formed. The property of the Titling Trust includes, or will include, among other things: (i) any capital contributed by the Grantor; (ii) the Contracts and all proceeds thereof; (iii) the Leased Vehicles and all proceeds thereof, including each Certificate of Title and the Residual Value of each Leased Vehicle, whether realized through the exercise by Obligors of purchase options under the Contracts, the proceeds of sale of the Leased Vehicles to Dealers or third parties or through payments received from any other Person (directly or indirectly) under any related Insurance Policy (to the extent not applied to repair or otherwise paid to a third Person or Governmental Authority by the Servicer as required by law or pursuant to its normal servicing practices) or as a subsidy or other funding of any modification of the related Booked Residual Value; (iv) all of the Titling Trust's rights (but not its obligations) with respect to any Contract or Leased Vehicle, including the right to enforce and to proceeds arising from all Dealer repurchase obligations arising under Dealer Agreements; (v) all of TMCC's rights (but not its obligations) with respect to any Contract or Leased Vehicle, including the right to enforce and to proceeds arising from all Dealer repurchase obligations arising under Dealer Agreements; (vi) any Insurance Policy and rights thereunder or proceeds therefrom relating to any of the Contracts, Leased Vehicles or payments of the related Obligors with respect thereto; (vii) any portion of any Security Deposit actually and properly applied by the Servicer against amounts due under the related Contract, to the extent not applied to making repairs to the related Leased Vehicle or paid to a third party or Governmental Authority in accordance with the Servicer's normal servicing practices; and (viii) all proceeds of any of the foregoing (such assets, the "Titling Trust Assets"). The Titling Trust Agreement provides that, from time to time, certain of the Titling Trust Assets will be identified and allocated on the records of the Titling Trust into one or more separate Sub-Trusts comprised of identified Titling Trust Assets (such Sub-Trusts the "UTI Sub-Trust" or a "SUBI Sub-Trust", as the case may be, and the related assets, "UTI Assets" or "SUBI Assets", as the case may be). Pursuant to the 1997-A SUBI Supplement, the 1997-A SUBI Assets were identified and allocated on the records of the Titling Trust as a separate SUBI Sub-Trust (the "1997-A SUBI Sub-Trust"), and the beneficial interest in the 1997-A SUBI Sub-Trust was designated as a separate SUBI known as the "1997-A SUBI". The rights of the 1997-A SUBI Beneficiaries to certain of the proceeds of the 1997-A SUBI Assets are and will be further set forth in the Titling Trust Agreement and the 1997-A SUBI Supplement. The 1997-A SUBI Certificates are limited in right of payment to certain collections and recoveries respecting the Contracts (and the related Obligors) and the Leased Vehicles allocated to the 1997-A SUBI Sub-Trust, all to the extent and as more specifically set forth in the Titling Trust Agreement and the 1997-A SUBI Supplement. Copies of the Titling Trust Agreement and the A-2 1997-A SUBI Supplement may be examined during normal business hours at the principal office of the Titling Trustee, and at such other places, if any, designated by the Titling Trustee, by each 1997-A SUBI Beneficiary upon request. By accepting this 1997-A SUBI Certificate or any interest herein, the related SUBI Beneficiary waives any claim to any proceeds or assets of the Titling Trustee and to all of the Titling Trust Assets other than those from time to time included within the 1997-A SUBI Sub-Trust and those proceeds or assets derived from or earned by the 1997-A SUBI Assets. In addition, by accepting this 1997-A SUBI Certificate or any interest herein, the related SUBI Beneficiary hereby expressly subordinates any claim or interest in or to any proceeds or assets of the Titling Trustee and to all of the Titling Trust Assets other than those from time to time included within the 1997-A SUBI Sub-Trust that may be determined to exist in favor of such SUBI Beneficiary notwithstanding the foregoing disclaimer to the rights and interests of each SUBI Beneficiary with respect to another SUBI. The Titling Trust Agreement and 1997-A SUBI Supplement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the parties thereto with respect to the 1997-A SUBI Assets, the 1997-A SUBI Sub-Trust and the 1997-A SUBI and the rights of 1997-A SUBI Beneficiaries at any time by a writing signed by the Titling Trustee, the UTI Beneficiary, each 1997-A SUBI Beneficiary and, to the extent that any such amendment affects any obligation or interest of the Trust Agent, the Trust Agent, in each case only with the prior written consent of the 1997-A Securitization Trustee and upon receipt of written notice from each Rating Agency that the proposed amendment will not cause such Rating Agency to reduce or withdraw any then current rating on any class of securities issued by the 1997-A Securitization Trust that was initially issued at the request of the UTI Beneficiary. If approval of any 1997-A SUBI Beneficiary is required, any such consent shall be conclusive and binding on such Beneficiary and on all future Beneficiaries hereof whether or not notation of such consent is made upon this 1997-A SUBI Certificate. As provided in the Titling Trust Agreement and the 1997-A SUBI Supplement, this 1997-A SUBI Certificate and the underlying interests represented hereby may not be transferred or assigned, except in accordance with the provisions thereof. Prior to due presentation of this 1997-A SUBI Certificate for registration of a permitted transfer, the Titling Trustee, the certificate registrar and any of their respective agents may treat the person or entity in whose name this 1997-A SUBI Certificate is registered as the owner hereof for the purpose of receiving distributions and for all other purposes, and, except as provided for in the Titling Trust Agreement, neither the Titling Trustee, the certificate registrar nor any such agent shall be affected by any notice to the contrary. A-3 Unless this 1997-A SUBI Certificate shall have been executed by an authorized officer of the Titling Trustee, by manual signature, this 1997-A SUBI Certificate shall not entitle the holder hereof to any benefit under the Titling Trust Agreement or the 1997-A SUBI Supplement or be valid for any purpose. A-4 IN WITNESS WHEREOF, the Titling Trustee on behalf of the Titling Trust and not in its individual capacity has caused this 1997-A SUBI Certificate to be duly executed. Dated: TOYOTA LEASE TRUST By: TMTT, INC., as Titling Trustee By: ------------------------------------ Authorized Officer ATTEST: - ----------------------------- A-5 ANNEX OF SUPPLEMENTAL DEFINITIONS Unless otherwise specified in the agreement to which this Annex of Supplemental Definitions is attached or which refers to this annex of Supplemental Definitions, the following terms have the indicated meanings. Terms defined herein but not directly or indirectly used or referenced in such agreement shall not be deemed to have any meaning or significance with respect to such agreement. "1997-A CERTIFICATEHOLDERS' ACCOUNT" means the SUBI Account established pursuant to the 1997-A Securitization Trust Agreement and designated as the "1997-A SUBI Certificateholders' Account". "1997-A CONTRACTS" means the Contracts allocated to the 1997-A SUBI and 1997-A SUBI Sub-Trust pursuant to the 1997-A SUBI Supplement, including those allocated during the Revolving Period.. "1997-A CUTOFF DATE" means August 1, 1997. "1997-A LEASED VEHICLES" means the Leased Vehicles and related Titling Trust Assets allocated to the 1997-A SUBI and 1997-A SUBI Sub-Trust pursuant to the 1997-A SUBI Supplement, including those allocated during the Revolving Period. "1997-A PROSPECTUS" means that Prospectus dated September -, 1997, prepared by the Transferor in connection with the Securitized Financing of the 1997-A SUBI by the Transferor. -1- "1997-A SECURITIZATION TRUST" means the trust created by the 1997-A Securitization Trust Agreement, the estate of which consists or will consist of (i) the 1997-A SUBI, the 1997-A SUBI Certificate, and all monies due and to become due thereunder on and after the Cutoff Date, excluding any proceeds of the Residual Value Insurance Policy, whether or not relating to any assets of the 1997-A SUBI Portfolio; (ii) such monies as are from time to time deposited in the 1997-A SUBI Collection Account; (iii) all rights accruing to the holder of the 1997-A SUBI Interest as a third-party beneficiary of the Titling Trust Agreement, the 1997-A SUBI Supplement, the 1997-A Servicing Supplement and the Reserve Fund; and (iv) all proceeds of the foregoing. "1997-A SECURITIZATION TRUST AGREEMENT" means that certain Securitization Trust Agreement, dated as of September 1, 1997, between the Transferor and 1997-A Securitization Trustee, pursuant to which the 1997-A SUBI Certificate will be transferred to the 1997-A Securitization Trustee, in that capacity, in connection with the Securitized Financing of the 1997-A SUBI by the Transferor. "1997-A SECURITIZATION TRUSTEE" means U.S. Bank National Association in its capacity, as trustee in connection with the Securitized Financing of the 1997-A SUBI by the Transferor. "1997-A SERVICING SUPPLEMENT" means the SUBI Servicing Supplement to the Titling Trust Agreement dated as of September 1, 1997 and relating to the servicing of the 1997-A SUBI. "1997-A SUBI" means the SUBI created pursuant to the 1997-A SUBI Supplement. "1997-A SUBI ACCOUNT" means each or any of the 1997-A SUBI Collection Account, the 1997-A SUBI Certificateholders' Account and the 1997-A SUBI Lease Funding Account. "1997-A SUBI ASSETS" means the 1997-A Contracts, 1997-A Leased Vehicles and related Titling Trust Assets allocated to the 1997-A SUBI and 1997-A SUBI Sub-Trust pursuant to the 1997-A SUBI Supplement, including those allocated during the Revolving Period. "1997-A SUBI CERTIFICATE" means the SUBI Certificate issued by the Titling Trust pursuant to the 1997-A SUBI Supplement evidencing the 1997-A SUBI Interest. "1997-A SUBI CERTIFICATE PURCHASE AND SALE AGREEMENT" means the 1997-A SUBI Certificate Purchase and Sale Agreement, dated as of September 1, 1997, pursuant to which TMCC will sell to the Transferor, without recourse, all of its right, title and interest in and to the 1997-A SUBI and the 1997-A SUBI Certificate and the proceeds thereof. "1997-A SUBI CERTIFICATEHOLDERS' ACCOUNT" means the account established by the 1997-A Securitization Trustee for the benefit of the Certificateholders pursuant to Section 3.02 of the 1997-A Securitization Trust Agreement. "1997-A SUBI CERTIFICATEHOLDERS' ACCOUNT INTEREST DEPOSIT" with respect to any Monthly Allocation Date means the amount to be deposited into the 1997-A SUBI Certificateholders' Account in respect of Interest Collections for the related Collection Period, which will be an amount thereof equal to the product of Aggregate Net Investment Value as the first day of such Collection Period and one twelth of the weighted average of the Certificate Rates for each outstanding Class of Certificates (weighted on the basis of their outstanding Class Certificate Balances as of the first day of such Collection Period). "1997-A SUBI COLLECTION ACCOUNT" means the SUBI Collection Account established pursuant to the 1997-A SUBI Supplement and designated as the "1997-A SUBI Collection Account." -2- "1997-A SUBI INTEREST" has the meaning set forth in Section 2.02 of the 1997-A Securitization Trust Agreement. "1997-A SUBI LEASE FUNDING ACCOUNT" means the SUBI Lease Funding Account established in connection with the issuance of the 1997-A SUBI. "1997-A SUBI PORTFOLIO" means the SUBI Portfolio that includes the 1997-A Contracts and 1997-A Leased Vehicles allocated to the 1997-A SUBI and 1997-A SUBI Sub-Trust pursuant to the 1997-A SUBI Supplement. "1997-A SUBI SUB-TRUST" means the SUBI Sub-Trust created pursuant to the 1997-A SUBI Supplement including as its assets the 1997-A SUBI Portfolio and the related Titling Trust Assets. "1997-A SUBI SUPPLEMENT" means the SUBI Supplement to the Titling Trust Agreement dated as of September 1, 1997 pursuant to which the Titling Trustee, at the direction of the UTI Beneficiary, creates the 1997-A Sub-Trust and the 1997-A SUBI and issues the 1997-A SUBI Certificate. "ACCELERATED PRINCIPAL DISTRIBUTION AMOUNT" means, with respect to any Monthly Allocation Date during the Amortization Period, the lesser of (x) the product of (i) one-twelfth of 0.25% and (ii) the Aggregate Net Investment Value as of the last day of the related Collection Period and (y) any portion of the Investor Percentage of Interest Collections in respect of the related Collection Period remaining after all required distributions and/or allocations to Certificateholders have been made and after all required deposits into the Reserve Fund have been made. "ADDITIONAL LOSS AMOUNT" means, with respect to any Collection Period, an amount equal to the sum of (a) all amounts of losses incurred in respect of any uninsured liability to third parties (i.e., litigation risk) on the part of the Titling Trust that is ultimately borne by the SUBI Assets during such Collection Period, whether such liability is incurred (i) with respect to the 1997-A SUBI Assets and is therefore allocated to the 1997-A SUBI Assets pursuant to the 1997-A SUBI Supplement, (ii) with respect to the Titling Trust Assets generally and a pro rata portion of such liability is allocated to the 1997-A SUBI Assets pursuant to the Titling Trust Agreement or (iii) with respect to UTI Assets or Other SUBI Assets if such UTI Assets or Other SUBI Assets are insufficient to pay such liability and a portion thereof is therefore allocated to the 1997-A SUBI Assets pursuant to the Titling Trust Agreement and (b) all monies reserved within the 1997-A SUBI Collection Account against future losses in respect of such liabilities by the Servicer on behalf of the Securitization Trustee as of the last day of such Collection Period. "ADDITIONAL LOSS CONTRACT" means, with respect to any SUBI Portfolio, a Contract included in such SUBI Portfolio that has been sold or otherwise disposed of to pay an Additional Loss Amount with respect to the related SUBI. -3- "ACCELERATED PRINCIPAL DISTRIBUTION AMOUNT" with respect to any Monthly Allocation Date, means any Available Interest remaining after application of amounts pursuant to Section 3.01(b) clauses (i) through (xii), up to but not exceeding the product of one-twelfth of 0.25% and the Aggregate Net Investment Value as of the last day of such Collection Period. "ADJUSTED CERTIFICATE BALANCE" with respect to any date for any Class of Certificates, means the Initial Certificate Balance thereof reduced by the sum of all amounts deposited into the Certificateholders' Account in respect of principal on such Class plus the amount of all unreimbursed Loss Amounts and Certificate Principal Loss Amounts allocated thereto (and in the case of the Class B Certificates, minus the aggregate amount of unreimbursed Class B Available Principal applied to cover interest shortfalls and reimburse Loss Amounts and Certificate Principal Loss Amounts allocated to the Class A Certificates). "AGGREGATE NET INVESTMENT VALUE" means, as of any day, the sum of (i) the aggregate of the Discounted Principal Balances of all 1997-A Contracts at such date, each such Discounted Principal Balance being derived from the Schedule of Contracts and Leased Vehicles as in effect on such date; PROVIDED that as of the last day of any Collection Period, there shall be eliminated from the Schedule of Contracts and Leased Vehicles for the purpose of this definition (including the determination at any subsequent time of the Aggregate Net Investment Value as of the last day of any Collection Period) each 1997-A Contract that became a Charged-off, Liquidated, Matured or Additional Loss Contract before the end of such Collection Period, (ii) the aggregate of the Booked Residual Values of those 1997-A Leased Vehicles that have been added to Matured Leased Vehicle Inventory within the three immediately preceding Collection Periods as the related 1997-A Contracts have reached their Maturity Dates and have been terminated, but which have not been sold or otherwise disposed of as of the last day of the most recent Collection Period for no more than three full Collection Periods, each such Booked Residual Value being derived from the Schedule of Contracts and Leased Vehicles as in effect on such date, and (iii) prior to the last Transfer Date, the aggregate amount of Principal Collections that have not been reinvested in additional 1997-A Contracts and 1997-A Leased Vehicles pursuant to Section 3.02 of the 1997-A Servicing Supplement. As of the Cutoff Date, the Aggregate Net Investment Value was $1,231,231,519.20. "AGGREGATE NET LOSSES" means, with respect to a Collection Period, an amount equal to the aggregate Discounted Principal Balances of all 1997-A Contracts that became Charged-off Contracts during such Collection Period minus the sum of (x) all Net Repossessed Vehicle Proceeds and other Net Liquidation Proceeds collected during such Collection Period with respect to Charged-off Contracts and (y) the portion of amounts subsequently received in respect of Contracts liquidated in prior Collection Periods. "AMORTIZATION DATE" means October 1, 1998. -4- "AMORTIZATION PERIOD" means the period beginning with the day immediately succeeding the last day of the Revolving Period and ending on the day the Certificates have been paid in full and all unpaid Class A-1 Certificate Principal Loss Amounts, Class A-2 Certificate Principal Loss Amounts, the Class A-3 Certificate Principal Loss Amounts, Class B Certificate Principal Loss Amounts and unpaid Class B Certificate Principal Carryover Shortfalls have been paid in full, in each case with accrued interest thereon, or the Securitization Trust otherwise terminates. "APPLICANTS" shall have the meaning specified in Section 4.06 of the 1997-A Securitization Trust Agreement. "AVAILABLE INTEREST" with respect to any Monthly Allocation Date is an amount equal to the sum of (i) the Investor Percentage of Interest Collections for the related Collection Period less any portion of such Interest Collections used to reimburse Advances and any Nonrecoverable Advances plus (ii) investment income (net of investment losses) on Permitted Investments of amounts in the Certificateholders' Account from the prior Monthly Allocation Date through the current Monthly Allocation Date. "BOOK-ENTRY CERTIFICATES" means a beneficial interest in the Class A Certificates, ownership and transfers of which shall be made through book entries by a Clearing Agency. "CAPPED CONTINGENT AND EXCESS LIABILITY PREMIUMS" means, with respect to any Monthly Allocation Date, an amount sufficient to pay or reserve for payment of one-twelfth of the portion of the annual premium payable on the Contingent and Excess Liability Insurance Policies allocable to the 1997-A SUBI Interest, up to but not exceeding $300,000 in any calendar year. "CAPPED SECURITIZATION TRUST ADMINISTRATIVE EXPENSES" means, with respect to any Monthly Allocation Date, the 1997-A Securitization Trustee's compensation and other Administrative Expenses with respect to the Securitization Trust payable or reimbursable thereto on such Monthly Allocation Date under the 1997-A Securitization Trust Agreement, including those due under Section 6.05 of the 1997-A Securitization Trust Agreement; provided that the amount so payable and/or reimbursable on such Monthly Allocation Date, taken together with all such compensation and Administrative Expenses paid or reimbursed since the beginning of the calendar year in which such Monthly Allocation Date occurs, will not exceed $75,000 (or $125,000 in any year in which an Early Amortization Event occurs with respect to which the 1997-A Securitization Trustee sells the property of the 1997-A Securitization Trust pursuant to Section 8.02 of the Securitization 1997-A Securitization Trust Agreement). "CAPPED TITLING TRUST ADMINISTRATIVE EXPENSES" means, with respect to any Monthly Allocation Date, the Titling Trustee's compensation and other Administrative Expenses with respect to the Titling Trust lalocable to the 1997-A SUBI Interest and payable or reimbursable thereto on such Monthly Allocation Date under the 1997-A Securitization Trust Agreement, including those -5- due under Section 6.13 of the Titling Trust Agreement; provided that the amount so payable and/or reimbursable on such Monthly Allocation Date, taken together with all such compensation and Administrative Expenses paid or reimbursed since the beginning of the calendar year in which such Monthly Allocation Date occurs, will not exceed $100,000.00 in any calendar year. "CERTIFICATE BALANCE" initially means the Initial Certificate Balance and, as of any date, means the sum of the Class A Certificate Balance and the Class B Certificate Balance as of the close of business on such date, after giving effect to any changes therein on such date. "CERTIFICATE DISTRIBUTION AMOUNT" with respect to any Monthly Allocation Date and any Class of Certificates, means the aggregate of the amounts being allocated or distributed to the Holders thereof on such date. "CERTIFICATE FACTOR" with respect to any Monthly Allocation Date, means a seven-digit decimal figure equal to the Certificate Balance as of the last day of the related Collection Period divided by the Initial Certificate Balance. "CERTIFICATE OWNER" means, with respect to a Book-Entry Certificate, the Person who is the owner of such Book-Entry Certificate, as reflected on the books of the Clearing Agency, or on the books of a Person maintaining an account with such Clearing Agency (directly or as an indirect participant in accordance with the rules of such Clearing Agency) and shall mean, with respect to a Definitive Certificate, the related Certificateholder. "CERTIFICATE PAYMENT DATE" with respect to any Class of Certificates, means (i) each Monthly Allocation Date in March or September (on which dates the related Certificateholders are entitled to distributions in respect of interest accrued on such Certificates), (ii) the related Targeted Maturity Date (on which date the related Certificateholders are entitled to distributions in respect of principal (including reimbursements of Loss Amounts and Certificate Principal Loss Amounts allocated thereto, and in the case of the Class B Certificates, reimbursements of applied Class B Available Principal) of such Certificates), (iii) if the related Class Certificate Balance is not reduced to zero on the related Targeted Maturity Date, each subsequent Monthly Allocation Date until the Monthly Allocation Date on which the Class Certificate Balance is reduced to zero (on which dates the related Certificateholders are entitled to distributions in respect of principal (including reimbursements of Loss Amounts and Certificate Principal Loss Amounts allocated thereto, and in the case of the Class B Certificates, reimbursements of applied Class B Available Principal) of such Certificates and interest accrued on such Certificates), and (iv) following the occurrence of a Monthly Payment Event (but only on Monthly Allocation Dates during the Amortization Period) each subsequent Monthly Allocation Date (on which dates the related Certificateholders are entitled to -6- distributions in respect of principal (including reimbursements of Loss Amounts and Certificate Principal Loss Amounts allocated thereto, and in the case of the Class B Certificates, reimbursements of applied Class B Available Principal) of such Certificates and interest accrued on such Certificates). "CERTIFICATE PRINCIPAL LOSS AMOUNTS" with respect to any Monthly Allocation Date and Class of Certificates will equal the Loss Amounts allocated to such Class of Certificates on such date less any reimbursement thereof from amounts on deposit in the Reserve Fund, Transferor Amounts, Class B Available Principal (in the case of the Class A Certificates only) and Available Interest available to cover such Loss Amounts. "CERTIFICATE RATE" means the Class A-1 Rate, the Class A-2 Rate, the Class A-3 Rate or the Class B Rate, as indicated by the context. "CERTIFICATE REGISTER" means the register of Certificateholders maintained by the 1997-A Securitization Trustee pursuant to Section 4.03 of the 1997-A Securitization Trust Agreement. "CERTIFICATE REGISTRAR" means the 1997-A Securitization Trustee unless a successor thereto is appointed pursuant to Section 4.03 of the 1997-A Securitization Trust Agreement. "CERTIFICATEHOLDER" or "HOLDER" means the Person in whose name a Certificate is registered in the Certificate Register, except that, solely for the purposes of giving any consent, waiver, request or demand pursuant to the 1997-A Securitization Trust Agreement, the interest evidenced by any Certificate registered in the name of the Transferor, TMCC, or any Person controlling, controlled by or under common control with the Transferor or TMCC, shall not be taken into account in determining whether the requisite percentage necessary to effect any such consent, waiver, request or demand shall have been obtained. "CERTIFICATES" means, collectively, the Class A-1 Certificates, the Class A-2 Certificates, the Class A-3 Certificates, the Class B Certificates and the Transferor Certificate. "CERTIFICATE PAYMENT DATE" means "CHARGE-OFF RATE" means, with respect to any Collection Period, the Aggregate Net Losses with respect to 1997-A Contracts that became Charged-off Contracts during such Collection Period expressed, on an annualized basis, as a percentage of the average of (i) the Aggregate Net Investment Value on the last day of the immediately preceding Collection Period and (ii) the Aggregate Net Investment Value on the last day of such Collection Period. -7- "CHARGED-OFF AMOUNT" means, with respect to any Collection Period, the aggregate of the Discounted Principal Balances of all 1997-A Contracts that became Charged-off Contracts during such Collection Period. "CLASS A CERTIFICATES" means the Class A-1 Certificates and the Class A-2 Certificates. "CLASS A CERTIFICATE BALANCE" means the sum of the Class A-1 Certificate Balance, the Class A-2 Certificate Balance and the Class A-3 Certificate Balance. "CLASS A CERTIFICATEHOLDER" means any Holder of a Class A-1 Certificate, Class A-2 Certificate or Class A-3 Certificate. "CLASS A INTEREST CARRYOVER SHORTFALL" with respect to any Monthly Allocation Date will equal the excess, if any, of (x) the aggregate amount of interest accrued on the Class A Certificate Balances and unreimbursed Certificate Principal Loss Amounts previously allocated thereto at the related Certificate Rates during the period from the prior Monthly Allocation Date to but not including the current Monthly Allocation Date, plus any outstanding Class A Interest Carryover Shortfall from the immediately preceding Monthly Allocation Date, plus interest on such outstanding Class A Interest Carryover Shortfall, to the extent permitted by law, at the weighted average of the Class A Certificate Rates for such period, over (y) the sum of the Interest Collections deposited into or net investment income retained in the Certificateholders' Account and/or distributed to Class A Certificateholders in respect of interest on such Monthly Allocation Date. "CLASS A-1 ADDITIONAL LOSS AMOUNT" means, as of any Monthly Allocation Date, an amount equal to the product of (i) the Class A-1 Allocation Percentage, (ii) the Investor Percentage with respect to Loss Amounts for the related Collection Period and (iii) the portion of the Additional Loss Amount incurred in respect of such Collection Period that is allocable to the 1997-A SUBI Interest. "CLASS A-1 ALLOCATION PERCENTAGE" means, as of any Monthly Allocation Date, the Class A-1 Certificate Balance as of the last day of the related Collection Period as a percentage of the Certificate Balance as of such date. -8- "CLASS A-1 CERTIFICATE" means one of the Certificates executed and authenticated by the 1997-A Securitization Trustee in substantially the form set forth in the 1997-A Securitization Trust Agreement. "CLASS A-1 CERTIFICATE BALANCE" means, initially, the Initial Class A-1 Certificate Balance and, on any date, shall equal the Initial Class A-1 Certificate Balance, reduced by the sum of (i) all amounts distributed to Class A-1 Certificateholders and allocable to principal on or prior to such date and (ii) the amount, if any, by which (a) the aggregate of all Class A-1 Certificate Principal Loss Amounts on or prior to such date exceeds (b) the aggregate of all Class A-1 Certificate Principal Loss Amounts reimbursed or deemed reimbursed on or prior to such date. "CLASS A-1 CERTIFICATE FACTOR" means, with respect to any Monthly Allocation Date, a seven-digit decimal figure equal to the Class A-1 Certificate Balance as of the close of business on such Monthly Allocation Date (after giving effect to all changes in the Class A-1 Certificate Balance made on that date) divided by the Initial Class A-1 Certificate Balance. "CLASS A-1 CERTIFICATEHOLDER" means any Holder of a Class A-1 Certificate. "CLASS A-1 CERTIFICATE PRINCIPAL LOSS AMOUNT" means, with respect to any Monthly Allocation Date, the amount, if any, by which (i) the sum of the Class A-1 Loss Amount for the related Collection Period and any previously unreimbursed Class A-1 Certificate Principal Loss Amount exceeds (ii) the amount available to be distributed in respect of the Class A-1 Certificates pursuant to Section 3.03(b)(viii) of the Securitization Trust Agreement on such Monthly Allocation Date. "CLASS A-1 CERTIFICATE PRINCIPAL LOSS INTEREST AMOUNT" means, with respect to any Monthly Allocation Date, the aggregate amount of accrued and unpaid interest at the Class A-1 Rate on the aggregate amount of unreimbursed Class A-1 Certificate Principal Loss Amounts through such Monthly Allocation Date to the extent lawful. "CLASS A-1 CHARGED-OFF AMOUNT" means, as of any Monthly Allocation Date, an amount equal to the product of (i) the Class A-1 Allocation Percentage, (ii) the Investor Percentage with respect to Loss Amounts for the related Collection Period and (iii) the Charged-off Amount incurred in respect of such Collection Period. "CLASS A-1 DISTRIBUTABLE AMOUNT" means, with respect to any Monthly Allocation Date, the sum of the Class A-1 Principal Distributable Amount and the Class A-1 Interest Distributable Amount. "CLASS A-1 INTEREST CARRYOVER SHORTFALL" means, with respect to any Monthly Allocation Date, the excess, if any, of (i) the Class A-1 Interest Distributable Amount for such Monthly Allocation Date plus any outstanding Class A-1 Interest Carryover Shortfall from the immediately preceding Monthly Allocation Date plus interest on such outstanding Class A-1 Interest Carryover Shortfall, to the extent permitted by law, at the Class A-1 Certificate Rate from such immediately -9- preceding Monthly Allocation Date to but not including the current Monthly Allocation Date, over (ii) the amount of interest distributed to Class A-1 Certificateholders on such current Monthly Allocation Date. "CLASS A-1 INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any Monthly Allocation Date, the product of (i) one-twelfth of the Class A-1 Certificate Rate (or in case of the first Monthly Allocation Date, of -% the Class A-1 Rate) and (ii) the Class A-1 Certificate Balance as of the immediately preceding Monthly Allocation Date (after giving effect to changes in the Class A-1 Certificate Balance made on such immediately preceding Monthly Allocation Date) or, in the case of the first Monthly Allocation Date, the Initial Class A-1 Certificate Balance, plus (iii) interest accrued during such period at the Class A-1 Rate on unreimbursed Certificate Principal Loss Amounts previously allocated to the Class A-1. "CLASS A-1 LOSS AMOUNT" means, with respect to any Monthly Allocation Date, the product of (a) the Class A-1 Allocation Percentage, (b) the Investor Percentage with regard to Loss Amounts for the related Collection Period, and (c) the Loss Amount for the related Collection Period. "CLASS A-1 PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any Monthly Allocation Date related to a Collection Period commencing during the Amortization Period, the amount (if any) that is distributable in respect of principal of the Class A-1 Certificates to the Class A-1 Certificateholders pursuant to Section 3.01 (d) of the 1997-A Securitization Trust Agreement. "CLASS A-1 RATE" means -% per annum. "CLASS A-1 RESIDUAL VALUE LOSS AMOUNT" means, as of any Monthly Allocation Date, an amount equal to the product of (i) the Class A-1 Allocation Percentage, (ii) the Investor Percentage with respect to Loss Amounts for the related Collection Period and (iii) the Residual Value Loss Amount incurred in respect of such Collection Period. "CLASS A-1 TARGETED MATURITY DATE" means September 27, 1999. "CLASS A-2 ADDITIONAL LOSS AMOUNT" means, as of any Monthly Allocation Date, an amount equal to the product of (i) the Class A-2 Allocation Percentage, (ii) the Investor Percentage with respect to Loss Amounts for the related Collection Period and (iii) the portion of the Additional Loss Amount incurred in respect of such Collection Period that is allocable to the 1997-A SUBI Interest. "CLASS A-2 ALLOCATION PERCENTAGE" means, as of any Monthly Allocation Date, the Class A-2 Certificate Balance as of the last day of the related Collection Period as a percentage of the Certificate Balance as of such date. -10- "CLASS A-2 CERTIFICATE" means one of the Certificates executed and authenticated by the 1997-A Securitization Trustee in substantially the form set forth in the 1997-A Securitization Trust Agreement. "CLASS A-2 CERTIFICATE BALANCE" means, initially, the Initial Class A-2 Certificate Balance and, on any date, shall equal the Initial Class A-2 Certificate Balance, reduced by the sum of (i) all amounts distributed to Class A-2 Certificateholders in respect of principal of the Class A-2 Certificates on or prior to such date and (ii) the amount, if any, by which (a) the aggregate of all Class A-2 Certificate Principal Loss Amounts on or prior to such date exceeds (b) the aggregate of all Class A-2 Certificate Principal Loss Amounts reimbursed or deemed reimbursed on or prior to such date. "CLASS A-2 CERTIFICATE FACTOR" means, with respect to any Monthly Allocation Date, a seven-digit decimal figure equal to the Class A-2 Certificate Balance as of the close of business on such Monthly Allocation Date (after giving effect to all changes in the Class A-2 Certificate Balance made on that date) divided by the Initial Class A-2 Certificate Balance. "CLASS A-2 CERTIFICATEHOLDER" means any Holder of a Class A-2 Certificate. "CLASS A-2 CERTIFICATE PRINCIPAL LOSS AMOUNT" means, with respect to any Monthly Allocation Date, the amount, if any, by which (i) the sum of the Class A-2 Loss Amount for the related Collection Period and any previously unreimbursed Class A-2 Certificate Principal Loss Amount exceeds (ii) the amount available to be distributed in respect of the Class A-2 Certificates pursuant to Section 3.03(b)(viii) of the Securitization Trust Agreement on such Monthly Allocation Date. "CLASS A-2 CERTIFICATE PRINCIPAL LOSS INTEREST AMOUNT" means, with respect to any Monthly Allocation Date, the aggregate amount of accrued and unpaid interest (at the Class A-2 Rate) on the aggregate amount of unreimbursed Class A-2 Certificate Principal Loss Amounts through such Monthly Allocation Date to the extent lawful. "CLASS A-2 CHARGED-OFF AMOUNT" means, as of any Monthly Allocation Date, an amount equal to the product of (i) the Class A-2 Allocation Percentage, (ii) the Investor Percentage with respect to Loss Amounts for the related Collection Period and (iii) the Charged-off Amount incurred in respect of such Collection Period. "CLASS A-2 DISTRIBUTABLE AMOUNT" means, with respect to any Monthly Allocation Date, the sum of the Class A-2 Principal Distributable Amount and the Class A-2 Interest Distributable Amount. "CLASS A-2 INTEREST CARRYOVER SHORTFALL" means, with respect to any Monthly Allocation Date, the excess, if any, of (i) the Class A-2 Interest Distributable Amount for such Monthly Allocation Date plus any outstanding Class A-2 Interest Carryover Shortfall from the immediately preceding Monthly Allocation Date plus interest on such outstanding Class A-2 Interest Carryover -11- Shortfall, to the extent permitted by law, at the Class A-2 Rate from such immediately preceding Monthly Allocation Date to but not including the current Monthly Allocation Date, over (ii) the amount of interest distributed to Class A-2 Certificateholders on such current Monthly Allocation Date. "CLASS A-2 INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any Monthly Allocation Date, the product of (i) one-twelfth of the Class A-2 Rate (or in the case of the first Monthly Allocation Date, of -% the Class A-2 Rate) and (ii) the Certificate Balance as of the immediately preceding Monthly Allocation Date (after giving effect to changes in the Class A-2 Certificate Balance made on such immediately preceding Monthly Allocation Date) or, in the case of the first Monthly Allocation Date, the Initial Class A-2 Certificate Balance, plus (iii) interest accrued during such period at the Class A-2 Rate on unreimbursed Certificate Principal Loss Amounts previously allocated to the Class A-2. "CLASS A-2 LOSS AMOUNT" means, with respect to any Monthly Allocation Date, the product of (a) the Class A-2 Allocation Percentage, (b) the Investor Percentage with regard to Loss Amounts for the related Collection Period, and (c) the Loss Amount for the related Collection Period. "CLASS A-2 PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any Monthly Allocation Date related to a Collection Period commencing during the Amortization Period, the amount (if any) that is distributable to the Class A-2 Certificateholders pursuant to Section 3.01(d) of the 1997-A Securitization Trust Agreement. "CLASS A-2 RATE" means -% per annum. "CLASS A-2 RESIDUAL VALUE LOSS AMOUNT" means, as of any Monthly Allocation Date, an amount equal to the product of (i) the Class A-2 Allocation Percentage, (ii) the Investor Percentage with respect to Loss Amounts for the related Collection Period and (iii) the Residual Value Loss Amount incurred in respect of such Collection Period. "CLASS A-2 TARGETED MATURITY DATE" means March 26, 2001. "CLASS A-3 ADDITIONAL LOSS AMOUNT" means, as of any Monthly Allocation Date, an amount equal to the product of (i) the Class A-3 Allocation Percentage, (ii) the Investor Percentage with respect to Loss Amounts for the related Collection Period and (iii) the portion of the Additional Loss Amount incurred in respect of such Collection Period that is allocable to the 1997-A SUBI Interest. "CLASS A-3 ALLOCATION PERCENTAGE" means, as of any Monthly Allocation Date, the Class A-3 Certificate Balance as of the last day of the related Collection Period as a percentage of the Certificate Balance as of such date. -12- "CLASS A-3 CERTIFICATE" means one of the Certificates executed and authenticated by the 1997-A Securitization Trustee in substantially the form set forth in the 1997-A Securitization Trust Agreement. "CLASS A-3 CERTIFICATE BALANCE" means, initially, the Initial Class A-3 Certificate Balance and, on any date, shall equal the Initial Class A-3 Certificate Balance, reduced by the sum of (i) all amounts distributed to Class A-3 Certificateholders in respect of principal of the Class A-3 Certificates on or prior to such date and (ii) the amount, if any, by which (a) the aggregate of all Class A-3 Certificate Principal Loss Amounts on or prior to such date exceeds (b) the aggregate of all Class A-3 Certificate Principal Loss Amounts reimbursed or deemed reimbursed on or prior to such date. "CLASS A-3 CERTIFICATE FACTOR" means, with respect to any Monthly Allocation Date, a seven-digit decimal figure equal to the Class A-3 Certificate Balance as of the close of business on such Monthly Allocation Date (after giving effect to all changes in the Class A-3 Certificate Balance made on that date) divided by the Initial Class A-3 Certificate Balance. "CLASS A-3 CERTIFICATEHOLDER" means any Holder of a Class A-3 Certificate. "CLASS A-3 CERTIFICATE PRINCIPAL LOSS AMOUNT" means, with respect to any Monthly Allocation Date, the amount, if any, by which (i) the sum of the Class A-3 Loss Amount for the related Collection Period and any previously unreimbursed Class A-3 Certificate Principal Loss Amount exceeds (ii) the amount available to be distributed in respect of the Class A-3 Certificates pursuant to Section 3.03(b)(viii) of the Securitization Trust Agreement on such Monthly Allocation Date. "CLASS A-3 CERTIFICATE PRINCIPAL LOSS INTEREST AMOUNT" means, with respect to any Monthly Allocation Date, the aggregate amount of accrued and unpaid interest (at the Class A-3 Rate) on the aggregate amount of unreimbursed Class A-3 Certificate Principal Loss Amounts through such Monthly Allocation Date to the extent lawful. "CLASS A-3 CHARGED-OFF AMOUNT" means, as of any Monthly Allocation Date, an amount equal to the product of (i) the Class A-3 Allocation Percentage, (ii) the Investor Percentage with respect to Loss Amounts for the related Collection Period and (iii) the Charged-off Amount incurred in respect of such Collection Period. "CLASS A-3 DISTRIBUTABLE AMOUNT" means, with respect to any Monthly Allocation Date, the sum of the Class A-3 Principal Distributable Amount and the Class A-3 Interest Distributable Amount. "CLASS A-3 INTEREST CARRYOVER SHORTFALL" means, with respect to any Monthly Allocation Date, the excess, if any, of (i) the Class A-3 Interest Distributable Amount for such Monthly Allocation Date plus any outstanding Class A-3 Interest Carryover Shortfall from the immediately preceding Monthly Allocation Date plus interest on such outstanding Class A-3 Interest Carryover -13- Shortfall, to the extent permitted by law, at the Class A-3 Rate from such immediately preceding Monthly Allocation Date to but not including the current Monthly Allocation Date, over (ii) the amount of interest distributed to Class A-3 Certificateholders on such current Monthly Allocation Date. "CLASS A-3 INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any Monthly Allocation Date, the product of (i) one-twelfth of the Class A-3 Rate (or in the case of the first Monthly Allocation Date, of -% the Class A-3 Rate) and (ii) the Certificate Balance as of the immediately preceding Monthly Allocation Date (after giving effect to changes in the Class A-3 Certificate Balance made on such immediately preceding Monthly Allocation Date) or, in the case of the first Monthly Allocation Date, the Initial Class A-3 Certificate Balance, plus (iii) interest accrued during such period at the Class A-3 Rate on unreimbursed Certificate Principal Loss Amounts previously allocated to the Class A-3. "CLASS A-3 LOSS AMOUNT" means, with respect to any Monthly Allocation Date, the product of (a) the Class A-3 Allocation Percentage, (b) the Investor Percentage with regard to Loss Amounts for the related Collection Period, and (c) the Loss Amount for the related Collection Period. "CLASS A-3 PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any Monthly Allocation Date related to a Collection Period commencing during the Amortization Period, the amount (if any) that is distributable to the Class A-3 Certificateholders pursuant to Section 3.01(d) of the 1997-A Securitization Trust Agreement. "CLASS A-3 RATE" means -% per annum. "CLASS A-3 RESIDUAL VALUE LOSS AMOUNT" means, as of any Monthly Allocation Date, an amount equal to the product of (i) the Class A-3 Allocation Percentage, (ii) the Investor Percentage with respect to Loss Amounts for the related Collection Period and (iii) the Residual Value Loss Amount incurred in respect of such Collection Period. "CLASS A-3 TARGETED MATURITY DATE" means September 25, 2001. "CLASS B ADDITIONAL LOSS AMOUNT" means, as of any Monthly Allocation Date, an amount equal to the product of (i) the Class B Allocation Percentage, (ii) the Investor Percentage with respect to Loss Amounts for the related Collection Period and (iii) the portion of the Additional Loss Amount incurred in respect of such Collection Period that is allocable to the 1997-A SUBI Interest. "CLASS B AVAILABLE PRINCIPAL" with respect to any Monthly Allocation Date means the portion of Principal Collections derived by multiplying (i) a fraction, the numerator of which is the Class B Certificate Balance, and the denominator of which is the Adjusted Certificate Balance as of such Monthly Allocation -14- Date, by (ii) the Investor Percentage, and by (iii) Principal Collections plus any Accelerated Principal Distribution Amount for such Monthly Allocation Date. "CLASS B CERTIFICATE" means any one of the Certificates executed and authenticated by the 1997-A Securitization Trustee in substantially the form set forth in the 1997-A Securitization Trust Agreement. "CLASS B CERTIFICATE BALANCE" means, initially, the Initial Class B Certificate Balance and, on any date, shall equal the Initial Class B Certificate Balance, reduced by the sum of (i) all amounts distributed to Class B Certificateholders in respect of principal of the Class B Certificates on or prior to such date, (ii) the amount, if any, by which (a) the aggregate of all Class B Certificate Principal Loss Amounts on or prior to such date exceeds (b) the aggregate of all Class B Certificate Principal Loss Amounts reimbursed on or prior to such date, and (iii) the amount, if any, by which (a) the aggregate of all Class B Certificate Principal Carryover Shortfalls on or prior to such date exceeds (b) the aggregate of all Class B Certificate Principal Carryover Shortfall reimbursed on or prior to such date. "CLASS B CERTIFICATE FACTOR" means, with respect to any Monthly Allocation Date, a seven-digit decimal figure equal to the Class B Certificate Balance as of the close of business on such Monthly Allocation Date (after giving effect to all changes in the Class B Certificate Balance made on that date) divided by the Initial Class B Certificate Balance. "CLASS B CERTIFICATE PRINCIPAL LOSS AMOUNT" means, with respect to any Monthly Allocation Date, the amount, if any, by which (i) the sum of the Class B Loss Amount for the related Collection Period and any previously unreimbursed Class B Certificate Principal Loss Amount exceeds (ii) the aggregate of amounts available to be allocated or distributed in respect thereof pursuant to Section 3.01 of the 1997-A Securitization Trust Agreement on such Monthly Allocation Date. "CLASS B CERTIFICATE PRINCIPAL LOSS INTEREST AMOUNT" means, with respect to any Monthly Allocation Date, the aggregate amount of accrued and unpaid interest (at the Class B Certificate Rate) on the aggregate amount of unreimbursed Class B Certificate Principal Loss Amounts (to the extent lawful). "CLASS B CERTIFICATEHOLDER" means any Holder of a Class B Certificate. "CLASS B CERTIFICATE PRINCIPAL CARRYOVER SHORTFALL" means, with respect to any Monthly Allocation Date (a) with respect to a Collection Period commencing during the Revolving Period, the amount of principal allocable to the Class B Certificates that otherwise would have been made available for reinvestment in additional 1997-A SUBI Assets pursuant to Section 3.02 of the 1997-A Servicing Supplement and (b) with respect to a Collection Period commencing during the Amortization Period, the amount of principal allocable or distributable to the Class B Certificateholders, but which is instead applied as set forth in Section 3.01(b)(ii) and (viii) pursuant to Section 3.01(e)(iii) of the Securitization Trust Agreement. "CLASS B CHARGED-OFF AMOUNT" means, as of any Monthly Allocation Date, an amount equal to the product of (i) the Class B Allocation Percentage, (ii) the Investor Percentage with respect to Loss Amounts for the related Collection Period and (iii) the Charged-off Amount incurred in respect of such Collection Period. -15- "CLASS B DISTRIBUTABLE AMOUNT" means, with respect to any Monthly Allocation Date, the sum of the Class B Principal Distributable Amount and the Class B Interest Distributable Amount. "CLASS B INTEREST CARRYOVER SHORTFALL" means, with respect to any Monthly Allocation Date, the excess, if any, of (i) the Class B Interest Distributable Amount for such Monthly Allocation Date plus any outstanding Class B Interest Carryover Shortfall from the immediately preceding Monthly Allocation Date plus interest on such outstanding Class B Interest Carryover Shortfall, to the extent permitted by law, at the Class B Certificate Rate from such immediately preceding Monthly Allocation Date to but not including the current Monthly Allocation Date over (ii) the amount of interest distributed to Class B Certificateholders on such current Monthly Allocation Date pursuant to Section 3.02 (b)(ix) of the Securitization Trust Agreement. "CLASS B INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any Monthly Allocation Date, the product of (i) one-twelfth of the Class B Certificate Rate (or in the case of the first Monthly Allocation Date, of the Class B Certificate Rate) and (ii) the Class B Certificate Balance as of the immediately preceding Monthly Allocation Date (after giving effect to changes in the Class B Certificate Balance made on such immediately preceding Monthly Allocation Date) or, in the case of the first Monthly Allocation Date, the Initial Class B Certificate Balance. "CLASS B INTEREST RESERVE AMOUNT" means with respect to any Monthly Allocation Date, the lesser of (i) $- less all amounts previously withdrawn from the Reserve Fund and applied to make allocations or distributions in respect of interest accrued on the Class B Certificates or Certificate Principal Loss Amounts allocated thereto or (ii) -% of the Class B Certificate Balance as of the date prior to such Monthly Allocation Date; provided that the Class B Interest Reserve Amount will be zero on and after any date on which any Rating Agency reduces its rating of the Class A Certificates to less than "A" or its equivalent or withdraws its rating of any Class of Class A Certificates (unless such rating is restored). "CLASS B LOSS AMOUNT" means, with respect to any Monthly Allocation Date, the product of (a) the Class B Allocation Percentage, (b) the Investor Percentage with regard to Loss Amounts for the related Collection Period, and (c) the Loss Amount with respect to the related Collection Period. "CLASS B PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any Monthly Allocation Date related to a Collection Period in the Amortization Period, the amount (if any) that is distributable to the Class B Certificateholders pursuant to Section 3.01(d) of the 1997-A Securitization Trust Agreement. -16- "CLASS B RATE" means -% per annum. "CLASS B RESIDUAL VALUE LOSS AMOUNT" means, as of any Monthly Allocation Date, an amount equal to the product of (i) the Class B Allocation Percentage, (ii) the Investor Percentage with respect to Loss Amounts for the related Collection Period and (iii) the Residual Value Loss Amount with respect to such Collection Period. "CLASS CERTIFICATE BALANCE" of any Class of Certificates on any day will equal the Initial Certificate Balance thereof, reduced by the sum of all distributions made in respect of principal of such class (including any distributions in respect of Loss Amounts and Certificate Principal Loss Amounts allocable to such Class) on or prior to such day and any unreimbursed Certificate Principal Loss Amounts in respect of such Class (and in the case of the Class B Certificates, minus the aggregate amount of unreimbursed Class B Available Principal applied to cover interest shortfalls and reimburse Loss Amounts and Certificate Principal Loss Amounts allocated to the Class A Certificates). "CLOSING DATE" means September -, 1997. "COLLECTION PERIOD" with respect to each Monthly Allocation Date, means the preceding calendar month. "COLLECTIONS" means with respect to any Collection Period, all net collections received in respect of the Contracts and Leased Vehicles during such Collection Period, including Monthly Payments (including Payments Ahead that represent Monthly Payments due during such Collection Period), Prepayments, Advances, Net Matured Leased Vehicle Proceeds, Net Repossessed Vehicle Proceeds and other Net Liquidation Proceeds, less (i) amounts representing Payments Ahead with respect to future Collection Periods and (ii) Additional Loss Amounts in respect of such Collection Period. "CORPORATE TRUST OFFICE" means the office of the Titling Trustee, the Trust Agent or the Securitization Trustee, as indicated by the context. As of September 1, 1997, the Corporate -17- Trust Office is located at 111 East Wacker Drive, Suite 3000, Chicago, Illinois 60601, Attention: Corporate Trust Office. After September 1, 1997, the Corporate Trust Office will mean the corporate trust office designated in writing to the Servicer and to the Beneficiaries by the Titling Trustee, Trust Agent or Securitization Trustee or any successor thereto, as the case may be. "CURRENT LIABILITY" means, with respect to any Plan, the present value of the accrued benefits under the Plan, as set forth in the most recent audited consolidated financial statements of TMS and its subsidiaries. "CUTOFF DATE" means August 1, 1997. "DEFINITIVE CERTIFICATES" means, as of any date of determination, any Certificates not then outstanding in book-entry form. "DELINQUENCY PERCENTAGE" with respect to a Collection Period will equal (a) the number of all outstanding 1997-A Contracts 60 days or more delinquent (after taking into account permitted deferrals) as of the last day of such Collection Period, whether or not the related 1997-A Leased Vehicle has been repossessed (or the process of repossession has been commenced) but has not yet sold or otherwise disposed of during such Collection Period or the related Obligor is the subject of bankruptcy or similar proceedings, determined in accordance with the Servicer's normal practices, plus (b) the number of repossessed 1997-A Leased Vehicles that have not been liquidated (to the extent the related Contract is not otherwise reflected in clause (a) above), expressed as a percentage of the aggregate number of 1997-A Contracts that are Current Contracts on the last day of such Collection Period. "DEPOSIT DATE" means the Business Day immediately preceding each Monthly Allocation Date. -18- "DISCOUNTED CONTRACT" means a Contract with a Lease Rate less than 9.75% per annum. "DISCOUNTED PRINCIPAL BALANCE" means (i) with respect to any Discounted Contract, an amount equal to the present value of the sum of all remaining Monthly Payments on such Contract paid on a timely basis, plus the Booked Residual Value of the related Leased Vehicle, calculated by discounting such Monthly Payments by the Discount Rate, and (ii) with respect to any other Contract, its Outstanding Principal Balance at such time. "DISCOUNT RATE" means 9.75% per annum. "EARLY AMORTIZATION EVENT" means any of the following events: (i) failure on the part of the Servicer (i) to make any payment or deposit required with respect to the 1997-A SUBI, the 1997-A SUBI Interest, or the Investor Certificates under the 1997-A Securitization Trust Agreement, the Titling Trust Agreement or the 1997-A SUBI Supplement or the 1997-A Servicing Supplement, on or before the date occurring five Business Days after the payment or deposit is required to be made, or (ii) to deliver a Servicer's Certificate within ten Business Days after any Determination Date, which failure continues for three business days from the Servicer's receipt of notice thereof; (ii) failure on the part of the Transferor or the Servicer duly to observe or perform in any material respect any other covenants or agreements of the Transferor or the Servicer set forth in the 1997-A Securitization Trust Agreement, the Tiling Trust Agreement, the 1997-A SUBI Supplement or the 1997-A Servicing Supplement, which failure materially and adversely affects the rights of the holder of the 1997-A SUBI Interest or of the Investor Certificateholders and which continues unremedied and continues to affect materially and aversely the rights of the holder of the 1997-A SUBI Interest or of the Investor Certificateholders for a period of 60 days after the date on which written notice of such failure, requiring the same to be remedied, if given (i) to the Transferor or the Servicer, as the case may be, by the 1997-A Securitization Trustee or the Titling Trustee, or (ii) to the Transferor or the Servicer, as the case may be, and to the 1997-A Securitization Trustee by the Holders of Investor Certificates evidencing not less than 25% of the aggregate Percentage Interest; (iii) any representation or warranty made by TMCC in the SUBI Certificate Agreement or by the Transferor in the 1997-A Securitization Trust Agreement, or the representation and warranty made by the Servicer in Section 2.01 of the 1997-A Servicing Supplement or any certificate given pursuant to Section 5.01 of the 1997-A Servicing Supplement, shall prove to have been incorrect in any material respect when made or given, as a result of which the interests of the holder of the 1997-A SUBI Interest or of the Investor Certificateholders are materially and adversely affected and which continues to be incorrect in any material respect and continues to materially and adversely affect the interests of the holder of the 1997-A SUBI Interest or of the Certificateholders for a period of 60 days after the date on which written notice of such failure, requiring the same to be remedied, is given (i) to TMCC, the Transferor or the Servicer, as the case may be, by the Trustee -19- or the Titling Trustee, or (ii) to TMCC, the Transferor or the Servicer, as the case may be, and to the Trustee by the Holders of Investor Certificates evidencing not less than 25% of the aggregate Percentage Interest; PROVIDED, HOWEVER, that an Early Amortization Event pursuant to this subparagraph (iii) shall not be deemed to have occurred hereunder if the Servicer has made the Reallocation Payment contemplated by Section 3.03 of the 1997-A Servicing Supplement and has reallocated the relevant 1997-A Contract and 1997-A Leased Vehicle to the UTI Portfolio within the time provided therefor; (iv) any Insolvency Event relating to the Transferor; (v) any Lien, other than Liens permitted under the 1997-A Securitization Trust Agreement, the Titling Trust Agreement or the 1997-A SUBI Supplement or the 1997-A Servicing Supplement shall be created on or extend to or otherwise arise upon or burden the 1997-A SUBI Interest, the 1997-A SUBI Certificate, or the 1997-A Contracts or the 1997-A Leased Vehicles, or any part thereof or any interest therein or the proceeds thereof, and not be released or bonded over within 60 days thereafter; (vi) the Transferor, the Securitization Trust or the Titling Trust becomes subject to registration as an "investment company" for purposes of the Investment Company Act of 1940, as amended; (vii) the Servicer determines on the last day of any calendar month (commencing in October 1997) that the amount of Principal Collections and reimbursed Loss Amounts and Certificate Principal Loss Amounts that have not been reinvested in Subsequent Contracts and Subsequent Leased Vehicles as of the first day of such month exceeds $1,000,000; (viii) an Event of Servicing Termination occurs; or (ix) if on any Monthly Allocation Date the aggregate amount withdrawn from the Reserve Fund and deposited into the SUBI Collection Account on or prior to such Monthly Allocation Date (without giving effect to any deposits into the Reserve Fund) exceeds $3,078,079 (i.e., 0.25% of the Aggregate Net Investment Value as of the Cutoff Date). "ELIGIBLE CONTRACT" means a Contract as to which the criteria specified in the definition of "Eligible Contract" set forth in the Appendix of Definitions as of the date of the 1997-A SUBI Supplement, and also satisfies the following criteria as of such date: (a) such Contract was originated in the United States, after October 31, 1996 in the case of the Initial Contracts, and on or before October 1, 1997 in the case of the Subsequent Contracts and has a Maturity Date on or after January 1, 1988, and no later -20- than July 31, 2002 in the case of the Initial Contracts, and no later than October 1, 2003, in the case of the Subsequent Contracts; (b) such Contract was not more than 60 days past due as of the Cutoff Date or the related Transfer Date, as the case may be, and has not been deferred more than 4 times or extended by more than 12 months in the aggregate or otherwise modified except in accordance with the Servicer's normal credit and collection policies and practices; (c) such Contract is not an asset of any SUBI other than the 1997-A SUBI; and (d) such Contract is a closed-end lease contract having an original scheduled maturity of not more than 60 months, will have been written for a "capitalized cost" (which may exceed the manufacturer's suggested retail price), plus a lease charge which is based on the Lease Rate and will provide for equal monthly payments required to be made by the Obligor thereunder within 30 days after the billing date for such payment that, when allocated between principal and the lease charge at the Lease Rate on a constant yield basis, will be sufficient to amortize the capitalized cost over the term of the Contract to an amount equal to the Booked Residual Value; provided that such Contract will allow the related Obligor voluntarily to terminate such Contract by paying a "payoff amount" equal to the sum of (i) unpaid Monthly Payments and any incidental charges owing under the Contract, less unearned lease charges and (ii) the Booked Residual Value, less (iii) the actual wholesale price or the wholesale price otherwise determined by TMCC in a commercially reasonable manner or by third party appraisal (if elected by the Obligor) realized upon the sale or other disposition of the related Leased Vehicle (including the amount of related Security Deposit, if any, actually applied to reduce any deficiency) and any miscellaneous charges specified therein. "EVENT OF SERVICING TERMINATION" means any of the following events: (i) failure by the Servicer to deliver to the Titling Trustee for distribution to holders of interests in the 1997-A SUBI or to the 1997-A Securitization Trustee for distribution to the Holders of any required payment on the Certificates as to allocations and distributions, which failure continues unremedied for three Business Days after discovery of such failure by an officer of the Servicer or receipt by the Servicer of notice thereof from the 1997-A Securitization Trustee, the Titling Trustee or holders of Certificates evidencing not less than 25% of the Voting Interests of the Class A Certificates and the Class B Certificates, voting together as a single class; (ii) failure by the Servicer to deliver to the Titling Trustee or the 1997-A Securitization Trustee any report relating to the 1997-a SUBI Sub-Trust and required to be delivered to it pursuant to the 1997-A SUBI Servicing Supplement within ten Business Days after discovery or written notice thereof as described in clause (i) above; -21- (iii) failure by the Servicer duly to observe or perform in any material respect any other of its covenants or agreements in the Titling Trust Agreement or SUBI Servicing Supplement which failure materially and adversely affects the rights of holders of interests in the SUBI or the Certificateholders and which continues unremedied for 90 days after discovery or written notice thereof as described in clause (i) above; (iv) the occurrence of an Insolvency Event with respect to the Servicer; (v) any representation, warranty or statement of the Servicer made in the 1997-A SUBI Servicing Supplement or any certificate, report or other writing delivered pursuant thereto or to any related Transaction Document shall prove to be incorrect in any material respect as of the time when the same shall have been made and such circumstance or condition in respect of which such representation, warranty or statement was incorrect shall not have been eliminated or otherwise cured within 30 days after discovery or written notice thereof as described in clause (i) above; (vi) the Servicer shall have failed to make an Advance (other than any Nonrecoverable Advance) at the time and in the amount required by Section 4.05 of the 1997-A SUBI Servicing Supplement, which failure continues for five Business Days after discovery of such failure by an officer of the Servicer or within three Business Days after discovery or written notice thereof as described in clause (i) above; or (vii) the Servicer shall have failed to perform its obligations under the 1997-A SUBI Servicing Supplement with respect to maintenance of the Contingent and Excess Liability Insurance Policies. Notwithstanding the foregoing, a delay or failure in the performance referred to under clause (i) or (vi) above for a period of ten Business Days, or referred to in clause (ii) above for a period of 20 Business Days, or referred to in clause (v) for a period of 90 days, or referred to in clause (vii) for a period of 60 days, shall NOT constitute an Event of Servicing Termination if such delay or failure in performance arises from an event or circumstance of force majeure. "EXCESS COLLECTIONS" means, with respect to any Monthly Allocation Date, the amount specified in Section 3.01(b)(xiii) of the 1997-A Securitization Trust Agreement. "FIRST PRINCIPAL MONTHLY ALLOCATION DATE" means the Monthly Allocation Date in the month commencing after the earlier to occur of Amortization Date or an Early Amortization Event. "INDENTURE" means that certain Indenture dated as of September 1, 1997 between TMCC and U.S. Bank, as trustee. "INDENTURE TRUSTEE" means U.S. Bank National Association. -22- "INITIAL CERTIFICATE BALANCE" means the sum of the Initial Class a Certificate Balance and the Initial Class B Certificate Balance. "INITIAL CLASS A CERTIFICATE BALANCE" means the sum of the Initial Class A-1 Certificate Balance, the Initial Class A-2 Certificate Balance and the Initial Class A-3 Certificate Balance. "INITIAL CLASS A-1 CERTIFICATE BALANCE" means $410,000,000. "INITIAL CLASS A-2 CERTIFICATE BALANCE" means $650,000,000. "INITIAL CLASS A-3 CERTIFICATE BALANCE" means $72,750,000. "INITIAL CLASS B CERTIFICATE BALANCE" means $73,850,000. "INTEREST COLLECTIONS" with respect to any Collection Period, means an amount equal to the amount by which Collections exceed Principal Collections with respect to such Collection Period. "INTEREST PERIOD" means with respect to each related Certificate Payment Date for a Class of Certificates, the period from and including the preceding Certificate Payment Date, to but excluding such Certificate Payment Date. "INVESTOR CERTIFICATEHOLDER" means any Class A or Class B Certificateholder. "INVESTOR CERTIFICATES" means the Class A Certificates and the Class B Certificates. "INVESTOR PERCENTAGE" means, with respect to any Collection Period, (a) as used with respect to Interest Collections and Loss Amounts allocable to the 1997-A SUBI Interest, the percentage equivalent of a fraction (not to exceed 100%), the numerator of which is the Certificate Balance as of the last day of the immediately preceding Collection Period (or, in the case of the first Collection Period, the Initial Certificate Balance), and the denominator of which is the Aggregate Net Investment Value as of the last day of the immediately preceding Collection Period (or, in the case of the first Collection Period, the Cutoff Date); and -23- (b) as used with respect to Principal Collections allocable to the 1997-A SUBI Interest, the percentage equivalent of a fraction (not to exceed 100%), the numerator of which is the Certificate Balance and the denominator of which is the Aggregate Net Investment Value, calculated as of the last day of the Collection Period (i) preceding the Amortization Date (if no Early Amortization Event occurs prior to such date) or (ii) preceding the month, if any, during which an Early Amortization Event occurs. "LIQUIDATED CONTRACT" means a 1997-A Contract that (a) has been the subject of a Prepayment in full, or otherwise has been paid in full, regardless of whether all or any part of such payment has been made by the Obligor under the related 1997-A Lease, the Servicer pursuant to the Servicing Agreement or 1997-A Servicing Supplement, an insurer pursuant to an Insurance Policy or (b) in the case of a 1997-A Contract that is a Charged-off Contract, as to which the Servicer has determined that the final amounts in respect thereof have been realized. "LIQUIDATION EXPENSES" with respect to any Collection Period, means reasonable out-of-pocket expenses incurred by the Servicer in connection with the realization of the full amounts due or to become due under any 1997-A Lease, including Repossessed Vehicle Expenses, Matured Leased Expenses and other expenses incurred in connection with the sale or other disposition of a 1997-A Leased Vehicle, whether upon repossession or upon return of a 1997-A Leased Vehicle related to a Matured Contract, any collection effort (whether or not resulting in a lawsuit against the Obligor under such 1997-A Contract) or any application for Insurance Proceeds. "LIQUIDATION PROCEEDS" with respect to any Collection Period, means the sum of all amounts received during such Collection Period in connection with the realization of the amounts due under any 1997-a Contract in connection with the final liquidation or other final disposition of such 1997-A Contract, plus all Matured Leased Vehicle Proceeds and Repossessed Vehicle Proceeds received by the Servicer during such Collection Period. "LOSS AMOUNT" with respect to any Monthly Allocation Date, means an amount equal to the sum of the Charged-off Amount, the Residual Value Loss Amount and the Additional Loss Amount, in each case for the related Collection Period. "MATURED CONTRACT" means any 1997-A Contract that has reached its scheduled maturity, as such scheduled maturity may have been modified in connection with any deferral or extension of such Contract. "MATURED LEASED VEHICLE EXPENSES " with respect to any Collection Period, means all reasonable out-of-pocket expenses incurred by the Servicer during such Collection Period in connection with the realization of Matured Leased Vehicle Proceeds, including any unpaid payment of taxes, vehicle Registration charges, clearance of parking tickets and similar items and expenses and charges payable by the Obligors or paid by the Servicer on behalf of Obligors and any unpaid Monthly Payments. "MATURED LEASED VEHICLE INVENTORY" with respect to any date, means each 1997-A Leased Vehicle that is the subject of a 1997-A Contract that became a Matured Contract within -24- the three immediately preceding Collection Periods, but which remains unsold and not otherwise disposed of by the Servicer for no more than three full Collection Periods as of the last day of the most recent Collection Period. "MATURED LEASED VEHICLE PROCEEDS" with respect to any Collection Period, means all proceeds received by the Servicer during such Collection Period from the sale or other disposition of 1997-A Leased Vehicles that are the subject of Matured Contracts, including payments for excess mileage and excess wear and tear. "MATURITY ADVANCE" means any advance made by TMCC on any Targeted Maturity Date with respect to principal distributable on the related Class of Class A Certificates if on such date the aggregate of other amounts available in the 1997-A SUBI Certificateholders' Account and the 1997-A SUBI Collection Account to be paid as principal thereof pursuant to Section 3.01 of the 1997-A Securitization Trust Agreement are insufficient to reduce the related Class Certificate Balance to zero. "MONTHLY ALLOCATION DATE" means the day on which Collections in respect of the Contracts and Leased Vehicles represented by the SUBI are allocated, and shall occur on the twenty-fifth day of each month (or, if such day is not a Business Day, on the next succeeding Business Day) commencing on October 25, 1997, and generally is used with the meaning ascribed to Distribution Date in the Annex of Definitions attached to the Titling Trust Agreement. "MONTHLY PAYMENT EVENT" means (a) the occurrence of any of the Early Amortization Events described in clauses (ii) through (vi) and (viii) of the definition thereof or (b) the downgrade by Standard & Poor's of TMCC's short-term debt to a rating less than A-1+, or the downgrade by Moody's of TMCC's short term debt to a rating less than P-1 or TMCC's long term debt to a rating less than Aa3, unless within ten days of such event alternative arrangements are made with respect to the investment of Collections to be invested, and such alternative arrangements will not result in a downgrade, modification or qualification of the then current rating of the Rated Certificates as evidenced by a letter from each of the Rating Agencies. "NET INSURANCE PROCEEDS" with respect to any Collection Period, means recoveries pursuant to each Insurance Policy (excluding all proceeds of the Residual Value Insurance Policy) obtained and maintained by an Obligor pursuant to a 1997-A Contract, or by the Titling Trust or the Servicer with respect to such 1997-A Contract or the related 1997-A Leased Vehicle, in each case net of certain sums applied to the repair of the related Leased Vehicles. -25- "NET LIQUIDATION PROCEEDS" with respect to any Collection period, means all Liquidation proceeds net of all Liquidation Expenses for such Collection Period. "NET MATURED LEASED VEHICLE PROCEEDS" with respect to any Collection Period, means all Matured Leased Vehicle Proceeds net of all Matured Leased Vehicle Expenses. "NET REPOSSESSED VEHICLE PROCEEDS" with respect to any Collection Period will equal Repossessed Vehicle Proceeds net of Repossessed Vehicle Expenses for such Collection Period. "NONRECOVERABLE ADVANCE" means any Advance that, in the Servicer's reasonable judgment, may not be ultimately recoverable by the Servicer from Matured Leased Vehicle Proceeds, Repossessed Vehicle Proceeds or other Liquidation Proceeds or Insurance Proceeds (excluding proceeds of any Residual Value Insurance Policy) or otherwise. "OTHER SUBI" means any SUBI other than the 1997-A SUBI. "OTHER SUBI ASSETS" means the SUBI Assets with respect to any SUBI other than the 1997-a SUBI. "OTHER SUBI CERTIFICATE" means any SUBI Certificate other than the 1997-A SUBI Certificate. "OUTSTANDING ADVANCES" means, with respect to a 1997-A Contract and the last day of a Collection Period, the sum of all Advances made with respect thereto on or prior to such date, minus any portion of subsequent Collections or Available Interest applied to reimburse such Advances. "PAYOFF AMOUNT" means the amount owed by the related Obligor under any 1997-A Contract upon termination at or before maturity where such Obligor is not in default and does not exercise its option to purchase the related 1997-A Leased Vehicle, determined by (i) adding all unpaid Monthly Payments and any incidental charges owing under such 1997-A Contract, less unearned lease charges to the Booked Residual Value, (ii) subtracting the related Realized Value upon the sale or other disposition of the related 1997-A Leased Vehicle, and (iii) applying the Security Deposit, if any, to reduce any deficiency. "PERCENTAGE INTEREST" means, as to any Investor Certificate, the percentage obtained by dividing the outstanding principal balance of such Investor Certificate by the Class Certificate Balance of the related Class; PROVIDED, HOWEVER, that where the Percentage Interest is relevant in determining whether the vote of the requisite percentage -26- of Investor Certificateholders necessary to requisite percentage of Investor Certificateholders necessary to effect any consent, waiver, request or demand shall have been obtained, the aggregate Percentage Interest shall be deemed to be reduced by the amount equal to the Percentage Interest (without giving effect to this provision) represented by the interests evidenced by any such Investor Certificate that is registered in the name of the Transferor, TMCC or any Person controlling, controlled by or under common control with the Transferor or TMCC. "PRINCIPAL COLLECTIONS" means with respect to any Collection Period, all Collections allocable to the principal component of any Contract (including any payment in respect of the related Leased Vehicle, other than any payment as to which a Loss Amount has been realized and allocated during any prior Collection Period), discounted to the extent such Contract is a Discounted Contract (including, for each Collection Period during the Revolving Period, amounts allocated to reimburse Loss Amounts or Certificate Principal Loss Amount that otherwise would not be deemed to be Principal Collections). "PROSPECTUS" means that certain prospectus dated September -, 1997 relating to the public offering of the Investor Certificates issued by the 1997-A Securitization Trust. "REALLOCATION DEPOSIT AMOUNT" means the amount required to be deposited by the Servicer into the 1997-A SUBI Collection Account in connection with any 1997-A Contract as to which a breach of a representation, warranty or covenant that materially and adversely affects the owners of interests in the 1997-A SUBI or the Certificateholders is not cured in all material respects within 60 days after TMCC discovers such breach or is given notice thereof, equal to the amount by which the Transferor Interest would be reduced to less than zero in connection with the reallocation of the related 1997-A SUBI Contract as a UTI Asset. "REALLOCATION PAYMENT" means the amount required to be deposited by the Servicer into the 1997-A SUBI Collection Account in connection with any 1997-A Contract as to which a breach of a representation, warranty or covenant that materially and adversely affects the owners of interests in the 1997-A SUBI or the Certificateholders is not cured in all material respects within 60 days after TMCC discovers such breach or is given notice thereof, which amount will equal the Discounted Principal Balance of such Contract as of the last day of the Collection Period during which the related cure period ended plus an amount equal to any imputed lease charge on such Contract at the related Lease Rate that was delinquent as of the end of such Collection Period. "REPOSSESSED VEHICLE EXPENSES" with respect to any Collection Period, means all reasonable out-of-pocket expenses incurred by the Servicer during such Collection Period in connection with the repossession of 1997-A Leased Vehicles, including any unpaid payment of taxes, vehicle registration charges, clearance of parking tickets and similar items and expenses and charges payable by the Obligors or paid by the Servicer on behalf of Obligors and any unpaid Monthly Payments. "REPOSSESSED VEHICLE PROCEEDS" with respect to any Collection Period, means proceeds received in connection with the sale or other disposition of 1997-A Leased Vehicles, if any, that have been repossessed during such Collection Period or any prior Collection period. -27- "REQUIRED AMOUNT" means, as of any Deposit Date, the excess of (i) the sum of any anticipated amounts to be payable as set forth in Section 3.01(b) clauses (i) through (x) of the 1997-A Securitization Trust Agreement with respect to the related Monthly Allocation Date, over (ii) the amount of Available Interest allocable or distributable in respect thereof on the related Monthly Allocation Date. "REQUIRED RATE" with respect to any TMCC Demand Note in which amounts deposited in the Certificateholders' Account in respect of principal ultimately distributable to Holders of Certificates of any Class means the Certificate Rate with respect to such Class, and with respect to any TMCC Demand Note in which amounts deposited in the Certificateholders' Account in respect of interest payable on the Certificates, means the one-month commercial paper rate, which will reset monthly, in each case as specified in the Indenture and related TMCC Demand Note. "RESERVE FUND" means the account designated as such and established and maintained pursuant to Section 3.02 of the 1997-A Securitization Trust Agreement. "RESERVE FUND INITIAL DEPOSIT"means the amount to be deposited in the Reserve Fund by the Transferor on the Closing Date equal to $30,780,787.98 (2.50% of the Aggregate Net Investment Value as of the Cutoff Date). "RESERVE FUND WITHDRAWAL AMOUNT" means, with respect to a Monthly Allocation Date, the lesser of (a) the Required Amount for such Monthly Allocation Date and (b) the amount on deposit in the Reserve Fund. "RESIDUAL CERTIFICATE" means any Book-Entry Certificate issued on the Closing Date pursuant to Section 4.01 of the 1997-A Securitization Trust Agreement to represent a Certificate having a principal amount less than $1,000. "RESIDUAL VALUE LOSS AMOUNT" means, as of any Monthly Allocation Date, the sum of (a) the aggregate of the Booked Residual Values of all 1997-A Leased Vehicles that were included in Matured Leased Vehicle Inventory but that had remained unsold and not otherwise disposed of by the Servicer for at least three full Collection Periods as of the last day of such Collection Period and (b) the excess, if any, of (i) the aggregate of the Booked Residual Values of all 1997-A Leased Vehicles previously included in Matured Leased Vehicle Inventory that were sold or otherwise disposed of during such Collection Period over (ii) Net Matured Vehicle Proceeds for such Collection Period. "RESIDUAL VALUE SURPLUS" with respect to any Collection Period, means the excess, if any, of the aggregate of Matured Leased Vehicle Proceeds with respect to 1997-A Leased Vehicles net of Matured Leased Vehicle Expenses incurred with respect to 1997-A Leased Vehicles -28- Vehicles during such Collection Period over the aggregate of the Booked Residual Values of 1997-A Leased Vehicles liquidated or otherwise disposed of during such Collection Period. "RESIDUAL VALUE TEST" will not be satisfied as of any Determination Date if (i) with respect to the related Collection Period the number of 1997-A Leased Vehicles returned to the Servicer during such period relating to 1997-A Contracts that became Matured Contracts during such period is greater than 25% of all 1997-A Contracts that, as of their respective origination dates, had been scheduled to become Matured Contracts during such period (provided that at least 500 such 1997-A Contracts had been scheduled to become Matured Contracts during such Collection Period), and (ii) the average Net Matured Leased Vehicle Proceeds during the three immediately preceding calendar months (or the months of August and September 1997 in the case of the October 1997 Determination Date) is less than 75% of the average Residual Values of Leased Vehicles disposed of or liquidated during such period. "REVOLVING PERIOD" means the period from the Closing Date through the Business Day preceding the earlier of October 1, 1998 or the date of an Early Amortization Event. "SCHEDULE OF CONTRACTS AND LEASED VEHICLES" means the list of Contracts and related Leased Vehicles, on microfiche, microfilm or hard paper copy, that are included as Titling Trust Assets in the Titling Trust, as such list may be revised and supplemented from time to time (which Schedules may be prepared on either a cumulative or additive basis) pursuant to Section 5.01 of the 1997-a Servicing Supplement, and which shall set forth the following information with respect to each such Contract in separate columns: Contract Number Date of Origination Maturity Date Monthly Payment Original Principal Balance Outstanding Principal Balance as of the last day of the immediately preceding calendar month Booked Residual Value Security Deposit Sub-Trust to which Contract is assigned Vehicle Identification Number Model Year Make Model -29- "SECURITY DEPOSIT" means any Security Deposit (as defined in the Annex of Definitions attached to the Titling Trust Agreement) under any 1997-A Contract. "SECURITIZATION TRUST" means the Toyota Auto Lease Trust 1997-A formed pursuant to the 1997-A Securitization Trust Agreement. "SECURITIZATION TRUST DOCUMENTS" means each of the Transaction Documents relating to the Securitized Financing contemplated by the 1997-A SUBI Supplement and the 1997-A Securitization Trust Agreement. "SERVICER" means TMCC, in its capacity as servicer under the Titling Trust Agreement and the 1997-A Servicing Supplement, or any successor to TMCC in such capacities. "SPECIFIED RESERVE FUND BALANCE" with respect to any Monthly Allocation Date, will equal $30,780,787.98 (2.5% of the Aggregate Net Investment Value as of the Cutoff Date), except that, if on any Monthly Allocation Date (i) the average of the Charge-off Rates for the three preceding Collection Periods exceeds 1.25%, (ii) the average of the Delinquency Percentages for the three preceding Collection Periods exceeds 1.25%, or (iii) the Residual Value Test is not satisfied as of the related Determination Date, then the Specified Reserve Fund Balance will equal $61,561,575.96 (5.0% of the Aggregate Net Investment Value as of the Cutoff Date); provided, however, that the Specified Reserve Fund Balance shall in no event be more than the sum of the outstanding principal amounts of each Class of Certificates. "STATED MATURITY DATE" means April 26, 2004 with respect to each Class of Certificates. "SUBSEQUENT CONTRACTS" means those additional retail closed-end lease contracts in which, during the Revolving Period, payments made on or in respect of the 1997-A SUBI Assets allocable to principal and certain reimbursed Loss Amounts will be reinvested. "SUBSEQUENT LEASED VEHICLES" means the automobiles and light duty trucks relating to the Subsequent Contracts. "TARGETED MATURITY DATE" means September 27, 1999 with respect to the Class A-1 Certificates, September 25, 2000 with respect to the Class A-2 Certificates, March 26, 2001 with respect to the Class A-3 Certificates and September 25, 2001 with respect to the Class B Certificates. "TMCC DEMAND NOTES" means the unsecured debt obligations of TMCC issued from time to time as a Permitted Investment pursuant to the terms of the Indenture. -30- "TMCC INTEREST DEMAND NOTES" means the TMCC Demand Notes in which amounts in the 1997-A SUBI Certificate Account in respect of interest on the 1997-A SUBI Assets is invested; each TMCC Interest Demand Note shall mature on the Certificate Payment Date next succeeding the date of issuance of such TMCC Interest Demand Note. "TMCC PRINCIPAL DEMAND NOTES" means the TMCC Demand Notes in which amounts in the 1997-A SUBI Certificate Account in respect of principal on the 1997-A SUBI Assets is invested; each TMCC Principal Demand Note shall mature on the Targeted Maturity Date next succeeding the date of issuance of such TMCC Principal Demand Note. "TRANSFER DATE" means any of the one or more Business Days during the Revolving Period selected by the Servicer each month on which the Servicer will direct the Titling Trustee to reinvest Principal Collections and certain reimbursed Loss Amounts in Subsequent Contracts and Subsequent Leased Vehicles. "TRANSFEROR" means TLI, in its capacity as transferor under the 1997-A Securitization Trust Agreement, and each successor thereto in the same capacity pursuant to the 1997-A Securitization Trust Agreement. "TRANSFEROR AMOUNTS" means, with respect to any Monthly Allocation Date, amounts available for distribution to the Transferor in respect of the Transferor Distributable Amount for such Monthly Allocation Date that are instead distributed pursuant to Section 3.01(e) of the 1997-A Securitization Trust Agreement because of an insufficiency in the amount of Interest Collections and the Reserve Fund Withdrawal Amount available to make such distributions on such Monthly Allocation Date (as determined pursuant to Section 3.01(e) of the 1997-A Securitization Trust Agreement). "TRANSFEROR CERTIFICATE" means the Certificate executed and authenticated by the 1997-A Securitization Trustee in substantially the form set forth in the 1997-A Securitization Trust Agreement. "TRANSFEROR DISTRIBUTABLE AMOUNT" means, with respect to any Monthly Allocation Date, the sum of the Transferor Principal Distributable Amount and the Transferor Interest Distributable Amount. "TRANSFEROR INTEREST" means, as of any date, an amount equal to (i) the Aggregate Net Investment Value less (ii) the Certificate Balance. "TRANSFEROR INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any Monthly Allocation Date, the amount equal to the Transferor Percentage (with respect to Interest Collections) of all Interest Collections collected during or received in respect of the related Collection Period allocable to the 1997-A SUBI Interest, less the Transferor Percentage of Capped Securitization Trust Administrative Expenses and Uncapped Administrative Expenses. -31- "TRANSFEROR PERCENTAGE" means, with respect to Interest Collections and Principal Collections allocable to the 1997-A SUBI Interest, respectively, received in or with respect to any Collection Period, 100% minus the Investor Percentage as applied for such Collection Period with respect to such items, respectively. "TRANSFEROR PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any Monthly Allocation Date related to a Collection Period in the Amortization Period, the amount equal to the Transferor Percentage (with respect to Principal Collections) of all Principal Collections collected during or received in respect of the related Collection Period allocable to the 1997-A SUBI Interest. "UNALLOCATED PRINCIPAL COLLECTIONS" means, with respect to any Monthly Allocation Date, the amount of any Principal Collections that normally would be , but are not, included in Transferor Amounts for such Monthly Allocation Date pursuant to Section 3.01(e) of the 1997-A Securitization Trust Agreement because the Transferor Interest is less than or equal to zero. Such amounts will be retained in the 1997-A SUBI Collection Account until (a) applied to cover interest shortfalls, Loss Amounts or Certificate Principal Loss Amounts allocable to the Certificates, (b) the Certificates are paid in full (in which case such amounts will be released to the Transferor or (c) the Transferor Interest again exceeds zero (in which case such amounts will again be releasable as Transferor Amounts). "UNCAPPED TITLING TRUST ADMINISTRATIVE EXPENSES" with respect to any Monthly Allocation Date will equal-one twelfth of the aggregate amounts sufficient to pay Administrative Expenses of the Titling Trust that are allocable to the SUBI Interest not subject to the limitations set forth in the definition of Capped Titling Trust Administrative Expenses. "UNINVESTED PRINCIPAL COLLECTIONS" means, as of the end of the Revolving Period, any Principal Collections with respect to the Revolving Period (or amounts treated as Principal Collections pursuant to Section 3.01(b) of the 1997-A Securitization Trust Agreement) then on deposit in the 1997-A SUBI Collection Account that have not been reinvested in additional 1997-A Contracts and 1997-A Leased Vehicles as contemplated by Section 3.02 of the 1997-A Servicing Supplement. "U.S. BANK" means U.S. Bank National Association, formerly known as First Bank National Association. "VOTING INTEREST" means, as to any Investor Certificate, the percentage obtained by dividing the outstanding principal balance of such Investor Certificate by the Certificate Balance (or by the Class A Certificate Balance, the Class A-1 Certificate Balance, the Class A-2 Certificate Balance, -32- the Class A-3 Certificate Balance or the Class B Certificate Balance, as the context may require); provided, however, that where the Voting Interest is relevant in determining whether the vote of the requisite percentage of Investor Certificateholders necessary to effect any consent, waiver, request or demand shall have been obtained, the aggregate Voting Interest shall be deemed to be reduced by the amount equal to the Voting Interest (without giving effect to this provision) represented by the interests evidenced by any such Investor Certificate that is registered in the name of TLI, TMCC or any Person controlling, controlled by or under common control with TLI or TMCC. -33- EX-10.4 9 EXHIBIT 10-4 EXHIBIT 10.4 1997-A SUBI SERVICING SUPPLEMENT to AMENDED AND RESTATED TRUST AND SERVICING AGREEMENT Dated as of October 1, 1996 Among TMTT, INC., as Titling Trustee, TOYOTA MOTOR CREDIT CORPORATION, as Servicer, and U.S. BANK NATIONAL ASSOCIATION, as Trust Agent Dated as of September 1, 1997 TABLE OF CONTENTS
Page ---- ARTICLE ONE DEFINITIONS SECTION 1.01. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 ARTICLE TWO REPRESENTATIONS AND WARRANTIES OF SERVICER SECTION 2.01. Representations and Warranties of Servicer . . . . . . . . . . . . 2 ARTICLE THREE CREATION OF 1997-A SUBI SECTION 3.01. Initial Creation of 1997-A SUBI Portfolio and 1997-A SUBI Sub-Trust. . . . . . . . . . . . . . . . . . . . . 4 SECTION 3.02. Subsequent Additions to 1997-A SUBI Portfolio and 1997-A SUBI Sub-Trust. . . . . . . . . . . . . . . . . . . . . 4 SECTION 3.03. Servicer Payment in Respect of Certain Contracts And Leased Vehicles. . . . . . . . . . . . . . . . . . . . . . . . 6 SECTION 3.04. Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 ARTICLE FOUR SPECIFIC REQUIREMENTS FOR ADMINISTRATION AND SERVICING OF CONTRACTS IN 1997-A SUBI PORTFOLIO SECTION 4.01. Servicer Bound by Trust Agreement . . . . . . . . . . . . . . . . . 7 SECTION 4.02. Collection of Monthly Payments and Remittances; Application of Proceeds; Accounts . . . . . . . . . . . . . . . . . 8 SECTION 4.03. Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 SECTION 4.04. Collection and Application of Security Deposits . . . . . . . . . . 13 SECTION 4.05. Advances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 SECTION 4.06. Payment of Certain Fees And Expenses; No Offset . . . . . . . . . . 14 SECTION 4.07. Servicing Compensation. . . . . . . . . . . . . . . . . . . . . . . 14 SECTION 4.08. Repossession And Sale of Leased Vehicles. . . . . . . . . . . . . . 15 SECTION 4.09. Servicer to Act on Behalf of Trustee. . . . . . . . . . . . . . . . 17 SECTION 4.10. Indemnification by Servicer . . . . . . . . . . . . . . . . . . . . 18 SECTION 4.11. Third Party Claims. . . . . . . . . . . . . . . . . . . . . . . . . 19 i SECTION 4.12. Insurance Policies. . . . . . . . . . . . . . . . . . . . . . . . . 19 SECTION 4.13. Servicer Not to Resign; Assignment. . . . . . . . . . . . . . . . . 19 SECTION 4.14. Obligor Insurance Coverage in Respect of Leased Vehicles. . . . . . 20 SECTION 4.15. Corporate Existence; Status; Merger . . . . . . . . . . . . . . . . 21 ARTICLE FIVE STATEMENTS AND REPORTS SECTION 5.01. Reporting by the Servicer . . . . . . . . . . . . . . . . . . . . . 22 SECTION 5.02. Annual Accountants' Reports . . . . . . . . . . . . . . . . . . . . 23 SECTION 5.03. Other Certificates And Notices From Servicer. . . . . . . . . . . . 23 SECTION 5.04. Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 ARTICLE SIX DEFAULT SECTION 6.01. Events of Servicing Termination; Termination of Servicer as to 1997-A SUBI Portfolio. . . . . . . . 24 SECTION 6.02. No Effect on Other Parties. . . . . . . . . . . . . . . . . . . . . 25 ARTICLE SEVEN MISCELLANEOUS SECTION 7.01. Termination of Agreement. . . . . . . . . . . . . . . . . . . . . . 25 SECTION 7.02. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 SECTION 7.03. Governing Law.. . . . . . . . . . . . . . . . . . . . . . . . . . . 26 SECTION 7.04. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 SECTION 7.05. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 SECTION 7.06. Inspection and Audit Rights . . . . . . . . . . . . . . . . . . . . 27 SECTION 7.07. Article And Section Headings. . . . . . . . . . . . . . . . . . . . 27 SECTION 7.08. Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . 27 SECTION 7.09. Rights Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . 27 SECTION 7.10. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . 28 SECTION 7.11. Third-party Beneficiaries . . . . . . . . . . . . . . . . . . . . . 28 ii EXHIBITS EXHIBIT A - Schedule of 1997-A Contracts and 1997-A Leased Vehicles as of the Initial Cutoff Date . . . . . . . . . . . . . . . . .A-1 EXHIBIT B - Form of Servicer's Certificate. . . . . . . . . . . . . . . . .B-1 EXHIBIT C - Form of Power of Attorney . . . . . . . . . . . . . . . . . . .C-1
SCHEDULE I Addresses of Branch Offices iii 1997-A SUBI SERVICING SUPPLEMENT TO AMENDED AND RESTATED TRUST AND SERVICING AGREEMENT (the "1997-A SUBI Servicing Supplement"), dated as of September 1, 1997, among TMTT, INC., a Delaware corporation, as Titling Trustee of TOYOTA LEASE TRUST, a Delaware business trust (the "Titling Trust"), TOYOTA MOTOR CREDIT CORPORATION, a California corporation, as Servicer, and U.S. BANK NATIONAL ASSOCIATION, as Trust Agent. RECITALS A. TMCC, the Titling Trustee and, for certain limited purposes set forth therein, U.S. Bank National Association (formerly known as First Bank National Association), as Trust Agent, have entered into that certain Amended and Restated Trust and Servicing Agreement, dated as of October 1, 1996, amending and restating that certain Trust and Servicing Agreement, dated as of October 1, 1996, among the same parties (as so amended and restated, and as it may be further amended, supplemented or modified, the "Titling Trust Agreement"), pursuant to which TMCC and the Titling Trustee formed the Titling Trust for the purpose of taking assignments and conveyances of, holding in trust and dealing in, various Titling Trust Assets in accordance with the Titling Trust Agreement. B. Concurrently herewith, and as contemplated by the Titling Trust Agreement, TMCC, the Titling Trustee and the Trust Agent are entering into that certain 1997-A SUBI Supplement to the Titling Trust Agreement, dated as of September 1, 1997, pursuant to which the Titling Trustee, on behalf of the Titling Trust and at the direction of TMCC, as UTI Beneficiary, will create and issue to TMCC a 1997-A SUBI Certificate representing a 100% beneficial interest in the 1997-A SUBI, whose beneficiaries generally will be entitled to the net cash flow arising from, but only from, the related 1997-A SUBI Assets, all as set forth in the Titling Trust Agreement and the 1997-A SUBI Supplement. C. Also concurrently herewith, TMCC and the Transferor are entering into that certain 1997-A SUBI Certificate Purchase and Sale Agreement, pursuant to which TMCC is selling to the Transferor, without recourse, all of TMCC's right, title and interest in and to the 1997-A SUBI and the 1997-A SUBI Certificate, all moneys due thereon and paid thereon or in respect thereof and the right to realize on any property that may be deemed to secure the 1997-A SUBI, and all proceeds thereof. D. Also concurrently herewith, and as contemplated by the Titling Trust Agreement, the Transferor and U.S. Bank National Association, as 1997-A Securitization Trustee, are entering into that certain Securitization Trust Agreement, dated as of September 1, 1997 (the "1997-A Securitization Trust Agreement"), pursuant to which the 1997-A SUBI Certificate will be transferred to the 1997-A Securitization Trustee, in that capacity, in connection with a Securitized Financing thereof by the Transferor. E. The parties desire to supplement the terms of the Titling Trust Agreement insofar as they apply to the 1997-A SUBI, the 1997-A SUBI Sub-Trust, and the 1997-A SUBI Certificates to provide for further specific servicing obligations that will benefit the holders of the 1997-A SUBI Certificates and the parties to and the beneficiaries of the Transaction Documents relating to the Securitized Financing contemplated by the 1997-A Securitization Trust Agreement. NOW THEREFORE, in consideration of the premises and the mutual covenants herein contained, the parties hereto agree to the following supplemental obligations with regard to the 1997-A SUBI Sub-Trust: ARTICLE ONE DEFINITIONS SECTION 1.01. DEFINITIONS. For all purposes of this 1997-A SUBI Servicing Supplement, except as otherwise expressly provided or unless the context otherwise requires, capitalized terms used and not otherwise defined herein shall have the meanings ascribed thereto in the Annex of Definitions attached to the Titling Trust Agreement or the Annex of Supplemental Definitions attached to the 1997-A SUBI Supplement for all purposes of this 1997-A SUBI Servicing Supplement. In the event of any conflict between a definition set forth herein and that set forth in the Annex of Definitions or Annex of Supplemental Definitions, that set forth herein shall prevail. All terms used in this 1997-A SUBI Servicing Supplement include, as appropriate, all genders and the plural as well as the singular. All references such as "herein", "hereof" and the like shall refer to this 1997-A SUBI Servicing Supplement as a whole and not to any particular article or section within this 1997-A SUBI Servicing Supplement. All references such as "includes" and variations thereon shall mean "includes without limitation" and references to "or" shall mean "and/or". Any reference herein to the "Titling Trustee, acting on behalf of the Titling Trust", or words of similar import, shall be deemed to mean the Titling Trustee, acting on behalf of Toyota Lease Trust and all beneficiaries thereof. Any reference herein to the "1997-A Securitization Trustee, acting on behalf of the 1997-A Securitization Trust", or words of similar import, shall be deemed to mean the 1997-A Securitization Trustee, acting on behalf of the Toyota Auto Lease Trust 1997-A and all beneficiaries thereof. ARTICLE TWO REPRESENTATIONS AND WARRANTIES OF SERVICER SECTION 2.01. REPRESENTATIONS AND WARRANTIES OF SERVICER. The Servicer represents and warrants to the Titling Trustee, the 1997-A Securitization Trustee and each SUBI Beneficiary as follows: (a) ORGANIZATION AND GOOD STANDING. The Servicer has been duly organized and is validly existing as a corporation in good standing under the laws of the State of California, with corporate power and authority to own its properties and to conduct its business as such properties 2 are currently owned and such business is presently conducted, and had at all relevant times, and now has, corporate power, authority and legal right to acquire, own, sell and service the Contracts and related Leased Vehicles and to hold the related Contract Documents and Certificates of Title as custodian on behalf of the Titling Trust. (b) DUE QUALIFICATION. The Servicer is duly qualified to do business as a foreign corporation in good standing, and has obtained all necessary licenses and approvals in all jurisdictions in which the ownership or lease of property or the conduct of its business (including the servicing of the Contracts and related Leased Vehicles as required by this Agreement) requires such qualifications. (c) POWER AND AUTHORITY. The Servicer has the corporate power and authority to execute and deliver this Agreement and to carry out its terms; and the execution, delivery and performance of this Agreement has been duly authorized by the Servicer by all necessary corporate action. (d) BINDING OBLIGATIONS. This 1997-A SUBI Servicing Supplement constitutes a legal, valid and binding obligation of the Servicer enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights generally or by general principles of equity. (e) NO CONFLICT. The consummation of the transactions contemplated by this 1997-A SUBI Servicing Supplement and the fulfillment of the terms of this 1997-A SUBI Servicing Supplement does not conflict with, result in any breach of any of the terms and provisions of, nor constitute (with or without notice or lapse of time) a default under, the articles of incorporation or bylaws of the Servicer, or conflict with or breach any of the material terms or provisions of, or constitute (with or without notice or lapse of time) a default under, any indenture, agreement or other instrument to which the Servicer is a party or by which it is bound; nor result in the creation or imposition of any lien upon any of its properties pursuant to the terms of any such indenture, agreement or other instrument (other than this 1997-A SUBI Servicing Supplement); nor violate any law or, to the best of the Servicer's knowledge, any order, rule or regulation applicable to the Servicer of any court or of any federal or state regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Servicer or its properties; which breach, default, conflict, lien or violation would have a material adverse effect on the earnings, business affairs or business prospects of the Servicer. (f) NO PROCEEDINGS. To the Servicer's actual knowledge, there is no action, suit or proceeding before or by any court or governmental agency or body, domestic or foreign, now pending, or to the Servicer's knowledge, threatened, against or affecting the Servicer (i) asserting the invalidity of this 1997-A SUBI Servicing Supplement or (ii) seeking any determination or ruling that might materially and adversely affect the performance by the Servicer of its obligations under, or the validity or enforceability of, this 1997-A SUBI Servicing Supplement. 3 ARTICLE THREE CREATION OF 1997-A SUBI SECTION 3.01. INITIAL CREATION OF 1997-A SUBI PORTFOLIO AND 1997-A SUBI SUB-TRUST. (a) Pursuant to Section 3.01 of the Titling Trust Agreement and Section 16.01 of the 1997-A SUBI Supplement, the Titling Trustee has been directed to cause to be identified and allocated on the books and records of the Titling Trust the separate 1997-A SUBI Portfolio consisting of the 1997-A SUBI Portfolio and certain other associated Trust Assets meeting the criteria specified therein. The Titling Trustee, on behalf of the Titling Trust, hereby directs that the Servicer so identify and allocate such a separate SUBI Portfolio of Contracts and related Leased Vehicles from among all Titling Trust Assets owned by the Titling Trustee on behalf of the Titling Trust and currently accounted for as part of the UTI Sub-Trust. (b) The Servicer hereby identifies and allocates such a portfolio of Contracts and related Leased Vehicles more particularly described on Exhibit A hereto which is in substantially the form of a Schedule of Contracts and Leased Vehicles, in order to create the initial 1997-A SUBI Portfolio. (c) The Servicer hereby represents and warrants to the Titling Trustee, the 1997-A Securitization Trustee and each SUBI Beneficiary that each of the Contracts described on Exhibit A hereto is an Eligible Contract. SECTION 3.02. SUBSEQUENT ADDITIONS TO 1997-A SUBI PORTFOLIO AND 1997-A SUBI SUB-TRUST. (a) The Titling Trustee is hereby directed to cause to be identified and allocated on the books and records of the Titling Trust to the 1997-A SUBI Sub-Trust on or before each Transfer Date certain additional Eligible Contracts, related Leased Vehicles and other associated Titling Trust Assets not then allocated, or reserved for allocation, to any other SUBI Portfolio or Sub-Trust. Such Subsequent Contracts and Subsequent Leased Vehicles to be allocated to the 1997-A SUBI Portfolio and 1997-A SUBI Sub-Trust shall have an aggregate Discounted Principal Balance as of the related Transfer Date of an amount not greater than all Principal Collections received after the Cutoff Date (including the amounts treated as Principal Collections pursuant to Section 3.01 of the 1997-A Securitization Trust Agreement) that have not been so applied pursuant to this Section 3.02(a). The Titling Trustee, on behalf of the Titling Trust, hereby directs the Servicer to identify such Subsequent Contracts, related Subsequent Leased Vehicles and other associated Titling Trust Assets (as described in the 1997-A SUBI Supplement and meeting the other requirements set forth therein) on or before each Transfer Date, and cause such Subsequent Contracts and Subsequent Leased Vehicles to be specifically identified on the revised Schedule of Contracts and Leased Vehicles to be delivered pursuant to Section 5.01 hereof. On each such Transfer Date, such Subsequent Contracts, Subsequent Leased Vehicles and other associated Titling Trust Assets shall be added to the 1997-A SUBI Portfolio and 1997-A SUBI Sub-Trust, as the case may be, as additional 1997-A SUBI Assets. 4 (b) The Servicer shall give one Business Day's prior notice to the Titling Trustee of each Transfer Date. On each Transfer Date, the Servicer shall be deemed to have represented and warranted to the 1997-A Securitization Trustee on behalf of the 1997-A Securitization Trust that (i) all Subsequent Contracts added to the 1997-A SUBI Portfolio on that date were Eligible Contracts as of the relevant Transfer Date, (ii) no adverse selection procedures were employed in selecting such Subsequent Contracts, (iii) it is not aware of any bias in the selection of such Subsequent Contracts that would cause the delinquencies or losses therein to differ from those of Initial Contracts, other than the fact that such Subsequent Contracts were selected from all Eligible Contracts not then allocated to any SUBI Portfolio or reserved for allocation to another SUBI Portfolio on a "first-in, first-out" basis, based on the date of origination, and (iv) unless the 1997-A Securitization Trustee receives a letter from each Rating Agency to the effect that the use of different criteria would not result in the qualification, reduction or withdrawal of its then current rating on any Rated Certificates in respect of the 1997-A Certificates, after giving effect to such reallocation (A) each such 1997-A Contract will be allocated to the 1997-A SUBI Portfolio based upon its Discounted Principal Balance as of the relevant Transfer Date, (B) the weighted average remaining term of the 1997-A Contracts (including the Subsequent Contracts) will be not greater than 39 months, and (C) the weighted average Booked Residual Value of all 1997-A Contracts (including the Subsequent Contracts), as a percentage of the aggregate Outstanding Principal Balance of the 1997-A Contracts (including the Subsequent Contracts), will be not greater than 68%, based on the characteristics of all 1997-A Contracts (including the Subsequent Contracts) as of its date of origination. (c) From and after the date on which the 1997-A SUBI Lease Funding Account is required to be maintained as specified in Section 17.02 of the 1997-A SUBI Supplement on each Transfer Date the Servicer shall transfer from the 1997-A SUBI Collection Account to the 1997-A SUBI Lease Funding Account an amount equal to the aggregate Discounted Principal Balance as of the relevant Transfer Date of the Subsequent Contracts then being added to the 1997-A SUBI Portfolio and 1997-A SUBI Sub-Trust pursuant to Section 16.01 of the 1997-A SUBI Supplement and the Services shall direct the Titling Trustee to withdraw such amounts for deposit into the Lease Funding Account or for payment to the UTI Beneficiary, as appropriate, directly in connection with the purchase of Subsequent Contracts and Subsequent Leased Vehicles. 5 SECTION 3.03. SERVICER PAYMENT IN RESPECT OF CERTAIN CONTRACTS AND LEASED VEHICLES. (a) The representations and warranties of the Servicer set forth in Section 3.02(b), with respect to each 1997-A Contract shall survive delivery of the related Contract to the 1997-A SUBI Portfolio and the 1997-A SUBI Sub-Trust and shall continue so long as each such 1997-A Contract remains outstanding, or until the termination of the 1997-A Securitization Trust Agreement pursuant to Section 7.01 thereof, whichever occurs earlier. Upon discovery by the Titling Trustee, the 1997-A Securitization Trustee or the Servicer that any such representation or warranty was incorrect as of the time specified with respect to such representation and warranty and materially and adversely affects such 1997-A Contract, the party discovering such incorrectness shall give prompt written notice to the others. Within 60 days of its discovery of such incorrectness or notice to such effect to the Servicer, the Servicer shall cure in all material respects the circumstances or condition in respect of which such representation or warranty was incorrect. If the Servicer is unable or unwilling to do so timely, it shall, as the sole remedy for such breach, promptly (i) deposit the Reallocation Payment in respect of such 1997-A Contract into the 1997-A SUBI Collection Account, (ii) reallocate such 1997-A Contract and the related Leased Vehicle from the 1997-A SUBI Portfolio to the UTI Portfolio, and (iii) indemnify, defend and hold harmless the holders of any 1997-A SUBI Certificate (including without limitation the 1997-A Securitization Trustee on behalf of the 1997-A Securitization Trust and the Certificateholders) and any subsequent servicer (if other than the current Servicer) from and against, any and all loss or liability with respect to or resulting from any such 1997-A Contract or related Leased Vehicle. Notwithstanding the foregoing, if any reallocation described in clause (ii) would cause the Transferor Interest to be equal to or less than zero, the Servicer also shall deposit promptly into the 1997-A SUBI Collection Account an amount so that the Transferor Interest will not be reduced to less than zero, and the reallocation will not be made until such deposit has been made. (b) In the event that the Servicer receives funds from a Dealer that is required, pursuant to a Dealer Agreement, to repurchase a Contract or Leased Vehicle included in the 1997-A SUBI Portfolio, the Servicer shall, subject to Section 17.01 of the 1997-A SUBI Supplement, within two Business Days of receipt thereof, deposit such funds into the 1997-A SUBI Collection Account, which deposit shall satisfy the UTI Beneficiary's obligations with respect to enforcement of such Dealer repurchase obligation, and return to the repurchasing Dealer the Certificate of Title and Contract with respect to such Leased Vehicle. (c) The obligations of the Servicer pursuant to this Section 3.03 shall survive any termination of the Servicer with respect to the 1997-A SUBI Portfolio and 1997-A SUBI Sub-Trust under this 1997-A SUBI Servicing Supplement or the Titling Trust Agreement. SECTION 3.04. FILINGS. 6 The Servicer will undertake all other and future actions and activities as may be reasonably necessary to perfect (or evidence) and confirm the foregoing allocations of Trust Assets to the 1997-A SUBI Portfolio and 1997-A SUBI Sub-Trust, as the case may be, including filing or causing to be filed UCC financing statements and executing and delivering all related filings, documents or writings as may be reasonably necessary hereunder or under any other Securitization Trust Documents, whether on its own behalf or pursuant to the power of attorney granted by the Grantor in the 1997-A SUBI Supplement; provided, however, that in no event shall the Servicer be required to take any action to perfect a security interest that may be held by the 1997-A Securitization Trustee in any 1997-A Leased Vehicle. ARTICLE FOUR SPECIFIC REQUIREMENTS FOR ADMINISTRATION AND SERVICING OF CONTRACTS IN 1997-A SUBI PORTFOLIO SECTION 4.01. SERVICER BOUND BY TRUST AGREEMENT. (a) Except as otherwise specifically provided herein: (i) the Servicer shall continue to be bound by all provisions of the Titling Trust Agreement with respect to the Contracts, Leased Vehicles and other associated Trust Assets in the 1997-A SUBI Sub-Trust, including without limitation the provisions thereof relating to the administration and servicing of Contracts; and (ii) the provisions set forth herein shall operate either as additions to or modifications of the extant obligations of the Servicer under the Titling Trust Agreement, as the context may require. In the event the provisions of this 1997-A SUBI Servicing Supplement are more exacting or specific than those contained in the Titling Trust Agreement or in the event of any conflict between the provisions of this 1997-A SUBI Servicing Supplement with respect to the 1997-A SUBI, the provisions of this 1997-A SUBI Servicing Supplement shall govern. (b) For purposes of determining the Servicer's obligations with respect to the servicing of the 1997-A SUBI Sub-Trust under this 1997-A SUBI Servicing Supplement (including without limitation pursuant to Article Four hereof), general references in the Titling Trust Agreement to: (i) a SUBI Account shall be deemed to refer more specifically to the 1997-A SUBI Account; (ii) a SUBI Asset shall be deemed to refer more specifically to a 1997-A SUBI Asset; (iii) an appropriate or applicable SUBI Collection Account shall be deemed to refer more specifically to the 1997-A SUBI Collection Account; (iv) an appropriate or applicable SUBI Lease Funding Account shall be deemed to refer more specifically to the 1997-A SUBI Lease Funding Account; (v) a SUBI Portfolio shall be deemed to refer more specifically to the 1997-A SUBI Portfolio; (vi) a SUBI Sub-Trust shall be deemed to refer more specifically to the 1997-A SUBI Sub-Trust; (vii) a SUBI Servicing Supplement shall be deemed to refer more specifically to this 1997-A SUBI Servicing Supplement; and (viii) a SUBI Supplement shall be deemed to refer more specifically to the 1997-A SUBI Supplement. 7 (c) Coincident with the execution and delivery of this 1997-A SUBI Servicing Supplement, the Servicer shall furnish the 1997-A Securitization Trustee, on behalf of the 1997-A Securitization Trust, with an Officer's Certificate listing the officers or other authorized signatories of the Servicer currently involved in, or responsible for, the administration and servicing of the Contracts in the 1997-A SUBI Portfolio, which list shall from time to time be updated by the Servicer. SECTION 4.02. COLLECTION OF MONTHLY PAYMENTS AND REMITTANCES; APPLICATION OF PROCEEDS; ACCOUNTS. (a) The Servicer shall use commercially reasonable efforts, consistent with its then current standards, policies and procedures or new programs, whether or not implemented on a test basis, commenced in the ordinary course of business, to (i) collect all payments required under the terms and provisions of each Contract included in the 1997-A SUBI Portfolio; (ii) cause each Obligor to make all payments in respect of the Contract included in the 1997-A SUBI Portfolio to which such Obligor is a party or otherwise obligated; and (iii) to deposit all amounts collected or received in respect of the 1997-A Contracts and 1997-A Leased Vehicles into the 1997-A SUBI Collection Account on or before the Deposit Date relating to each Collection Period except as otherwise specified herein or in Section 17.01 or Section 17.02 of the 1997-A SUBI Supplement (in connection with any failure to satisfy the Monthly Remittance Conditions). (b) Consistent with the foregoing, the Servicer may in its discretion (i) waive any late payment charge or similar charge, in whole or in part, in connection with delinquent payments on or deferrals or extensions of a Contract included in the 1997-A SUBI Portfolio and (ii) defer one or more payments under a Contract or extend the Maturity Date of any Contract. Notwithstanding the foregoing, the Servicer may not grant more than four deferrals of any 1997-A Contract, and may not extend the Maturity Date of any 1997-A Contract by more than twelve months in the aggregate (or by sixteen months with the inclusions of any deferrals) or such that its Maturity Date will occur later than the last day of the Collection Period related to the Stated Maturity Date; provided, however, that if the Servicer defers payments on any 1997-A Contract more than four times or extends the Maturity Date thereof by more than twelve months in the aggregate or so that the extended Maturity Date will occur later than the last day of the Collection Period relating to the Stated Maturity Date, then, as the sole remedy therefor, the Servicer shall, on the Deposit Date related to the Collection Period in which such extension was granted or on the Deposit Date relating to the Collection Period in which the Servicer discovers or is notified that an improper extension was granted, (y) deposit into the 1997-A SUBI Collection Account an amount equal to the then Discounted Principal Balance of such Contract plus an amount equal to the interest, or lease charge, portion of any Monthly Payments with respect thereto at the related Lease Rate that were accrued but unpaid as of the end of that Collection Period, and (z) reallocate such 1997-A Contract and the related 1997-A Leased Vehicle from the 1997-A SUBI Portfolio and SUBI Sub-Trust to the UTI Portfolio and UTI Sub-Trust. The obligations of the Servicer pursuant to this Section 4.02(b) shall survive any termination of the Servicer's obligations with respect to the 1997-A SUBI Portfolio under this 1997-A SUBI Servicing Supplement. 8 (c) As to any Monthly Payments, Liquidation Proceeds, Insurance Proceeds (excluding proceeds of the Residual Value Insurance Policy which are to be transferred directly to the Transferor), Prepayments, Payments Ahead or any other payments by or on behalf of any Obligor or otherwise (excluding any late fees or deferral fees) with respect to any 1997-A Contract or related Leased Vehicle, including (if applicable) any proceeds of recourse payments by the originating Dealer, whether received by the Servicer through any lock box or similar mechanism used for the collection of regular periodic payments on receivables owned or serviced by it or received directly by the Servicer at any of its servicing offices, but subject to Section 4.08 of this 1997-A SUBI Servicing Supplement with regard to Liquidation Proceeds and Insurance Proceeds: (i) Upon receipt of any such funds (including funds initially deposited in any Servicer lock-box account), the Servicer shall deposit such funds into its operating account and shall ascertain promptly the following information: (A) the amount of each receipt, (B) the Contract Number to which such receipt relates, (C) the nature of the payment (i.e., whether a Monthly Payment, other Liquidation Proceeds, a Prepayment, payment of the Residual Value of the related Leased Vehicle or any other payment by or on behalf of any Obligor), (D) the date such payment is credited; and (E) that such Contract has been allocated to the 1997-A SUBI Portfolio and 1997-A SUBI Sub-Trust (collectively, the "Payment Information"). (ii) As to any such funds received by the Servicer after the date, if any, on which it ceases to satisfy the Monthly Remittance Conditions, the Servicer shall segregate all such funds from other SUBI Sub-Trusts, and deposit all such funds (net of reimbursement of any Liquidation Expenses incurred by the Servicer with respect to any 1997-A Leased Vehicle whose Liquidation Proceeds are included among such funds) into the 1997-A SUBI Collection Account maintained by the Titling Trustee. (iii) Upon the determination by the Servicer that any proceeds received by it with respect to any 1997-A Contract constitute one or more Payments Ahead, the Servicer shall, unless otherwise instructed by the Titling Trustee, (A) maintain appropriate records of such Payment Ahead so as to be able to timely apply such Payment Ahead as a Monthly Payment 9 with respect to the applicable Contract and (B) deposit such Payment Ahead into the 1997-A SUBI Collection Account on the Deposit Date relating to the Collection Period during which such Payment Ahead is to be applied, or, after the date, if any, on which it ceases to satisfy the Monthly Remittance Conditions, with two Business days of such date. (d) The Servicer shall treat all Repossessed Vehicle Proceeds and Matured Leased Vehicle Proceeds in the manner provided for other Liquidation Proceeds in the Titling Trust Agreement and 1997-A SUBI Supplement; provided, however, as set forth in Section 4.07 of this 1997-A SUBI Servicing Supplement, that the Servicer may be reimbursed for related Repossessed Vehicle Expenses, Matured Leased Vehicle Expenses, other Liquidation Expenses and Insurance Costs as provided in Section 4.02(h). (e) The Servicer shall deposit into the 1997-A SUBI Collection Account on or before each Deposit Date each Security Deposit that was applied in respect of a Contract during the related Collection Period and not paid to a third party or to the Servicer as Liquidation Expenses or Matured Leased Vehicle Expenses, or reimbursements in respect thereof. (f) The Servicer, on behalf of the Titling Trustee, shall establish and maintain the 1997-A SUBI Collection Account as set forth in Section 17.01(a) of the 1997-A SUBI Supplement. (g) On each Determination Date the Servicer shall make the calculations necessary to allow the distribution by the 1997-A Securitization Trustee to holders of, or to the accounts on behalf of the holders of, the 1997-A SUBI Certificates on the related Monthly Allocation Date in accordance with Section 3.01 of the 1997-A Securitization Trust Agreement. In connection therewith, the Servicer shall determine the amount of Titling Trust Expenses incurred or suffered during the preceding Collection Period and shall calculate the allocations of such Titling Trust Expenses among the various Sub-Trusts, including the 1997-A SUBI Sub-Trust, in good faith and so as not to disproportionately affect any Sub-Trust, generally as provided for in Section 3.04 or 7.04, as appropriate, of the Titling Trust Agreement. (h) The Servicer will be entitled to reimbursement of Matured Leased Vehicle Expenses, Repossessed Vehicle Expenses and other Liquidation Expenses. The Servicer is hereby authorized to net such expenses from proceeds or Collections in respect of the related 1997-A Contracts or 1997-A Leased Vehicles (including other Liquidation Proceeds), or to withdraw such amounts from amounts on deposit in the 1997-A SUBI Collection Account. The Servicer also will be entitled to reimbursement of certain payments it makes on behalf of Obligors (including payments of taxes, vehicle registration charges, clearance of parking tickets and similar items and expenses and charges incurred by it in the ordinary course of servicing the 1997-A Contracts) from Collections with respect to the 1997-A Contracts (whether or not as separate payments thereof by the related Obligors) or from amounts realized upon the final disposition of 10 1997-A Leased Vehicles. To the extent such amounts are not reimbursed prior to or at the final disposition of the related leased vehicle but remain unpaid by the related lessee, such unreimbursed amounts (together with any unpaid Monthly Payments under the related Contract) will be treated as Matured Leased Vehicle Expenses or Liquidation Expenses, as the case may be, and the Servicer is hereby authorized to offset such reimbursable payments, expenses and charges against Net Matured Leased Vehicle Proceeds or Liquidation Proceeds, as the case may be. To the extent that during any Collection Period (i) Collections, Matured Leased Vehicle Proceeds, Liquidation Proceeds or separate payments from the Obligors in respect of such payments, charges and expenses are deposited into the 1997-A SUBI Collection Account rather than so offset by the Servicer, (ii) any Monthly Payments arising from a Contract allocated to the 1997-A SUBI Sub-Trust are received by the Titling Trustee or deposited in the 1997-A SUBI Collection Account with respect to any prior Collection Period as to which the Servicer has outstanding an unreimbursed Advance, rather than being netted from Collections by the Servicer; or (iii) any amount of unreimbursed Advances are reasonably determined by the Servicer to be Nonrecoverable Advances, then, on the related Deposit Date, (y) the Servicer shall notify the Titling Trustee and the 1997-A Securitization Trustee in writing as to any such amount and (z) instruct the Titling Trustee to, and the Titling Trustee shall, promptly transfer an amount equal to the aggregate of such amounts from the 1997-A SUBI Collection Account, to the 1997-A SUBI Lease Funding Account. Thereafter, the Titling Trustee shall remit to the Servicer from the 1997-A SUBI Lease Funding Account the total of such amounts, without interest (the "Servicer Reimbursement"). In lieu of causing the Titling Trustee to transfer such amounts to the 1997-A SUBI Lease Funding Account (or in the event the 1997-A Lease Funding Account has not been required to be established as set forth in Section 17.02 of the 1997-A SUBI Supplement), the Servicer is hereby authorized to deduct such amounts from amounts on deposit or otherwise to be deposited into the 1997-A SUBI Collection Account, but in each case will notify the Titling Trustee and 1997-A Securitization Trustee in writing of such action and such amounts at the time of such reimbursement. (i) The Servicer shall account to the Titling Trustee and the 1997-A Securitization Trustee with respect to the 1997-A SUBI Sub-Trust separately from any other Sub-Trust. (j) The Servicer shall direct the Titling Trustee or the 1997-A Securitization Trustee, as applicable, to invest amounts held in the 1997-A SUBI Accounts and the Reserve Fund in Permitted Investments as provided in (and subject to the limitations of) the Titling Trust Agreement and 1997-A SUBI Supplement. The maximum permissible maturities of any such investments pursuant to this clause on any date shall be not later than the Business Day immediately preceding the Monthly Allocation Date next succeeding the date of such investment, except for (i) investments on which the Trust Agent or 1997-A Securitization Trustee, respectively, is the obligor (including repurchase agreements as to which it, in its commercial capacity, is liable as principal), which may mature on the Monthly Allocation Date, (ii) investments during the Revolving Period of Principal Collections (including amounts treated as Principal Collections pursuant to Section 3.01(b) of the 1997-A Securitization Trust Agreement) on deposit in the 1997-A SUBI Collection Account, which may mature on such dates as specified by the Titling Trustee at the Servicer's direction so as to maintain the availability of sufficient cash to make payments pursuant to Section 11 3.02(c) hereof, and (iii) prior to the occurrence of a Monthly Payment Event, if any, amounts on deposit in the 1997-A Certificateholders' Account invested in TMCC Demand Notes, which may mature on the Business Day immediately preceding, the next succeeding Certificate Payment Date or the next succeeding Targeted Maturity Date, as applicable (as specified in the related TMCC Demand Note in accordance with the terms of the Indenture). (k) In the event the Servicer provides to the UTI Beneficiary, the Titling Trustee and the 1997-A Securitization Trustee a letter from each Rating Agency to the effect that the utilization by the Servicer of a remittance schedule differing from those contemplated herein or in the 1997-A SUBI Supplement with respect to Collections to be deposited in the 1997-A SUBI Collection Account will not result in a qualification, downgrading or withdrawal of the then-current rating assigned to the Rated Certificates by such Rating Agency, (i) this 1997-A SUBI Servicing Supplement (and any corresponding or related Sections in the 1997-A SUBI Supplement) may be so modified without the consent of any Certificateholders and (ii) the Servicer may remit such collections to the 1997-A SUBI Collection Account in accordance with that alternative remittance schedule. (l) The parties hereto acknowledge that the Titling Trustee, on behalf of the Titling Trust, has made a complete transfer to the 1997-A Securitization Trustee of the Collections in respect of the 1997-A SUBI Assets contained in the 1997-A SUBI Collection Account (excluding proceeds of the Residual Value Insurance Policy which are the sole property of the Transferor) and, except as provided in this 1997-A SUBI Servicing Supplement, the 1997-A SUBI Supplement and the 1997-A Securitization Trust Agreement, neither the Titling Trustee nor the Servicer has any right to direct such funds to a third party or to receive such funds. (m) In the event of a sale, disposition or other liquidation of the 1997-A SUBI Certificate and the other property of the 1997-A Securitization Trust pursuant to Section 8.02 of the 1997-A Securitization Trust Agreement, the Servicer shall allocate the net proceeds thereof between Principal Collections and Interest Collections as set forth in the 1997-A Securitization Trust Agreement. SECTION 4.03. RECORDS. (a) As to any proceeds or other receipts with respect to any Trust Asset, including without limitation Monthly Payments, Prepayments, Liquidation Proceeds and any other payments by or on behalf of any Obligor or otherwise with respect to any 1997-A Contract or 1997-A Leased Vehicle, the Servicer shall maintain or cause to be maintained such computer and manual records with respect to all such proceeds and other receipts in accordance with the customary and usual procedures of institutions which service closed-end automobile and light duty truck leases and, to the extent more exacting, in conformity in all material respects with the procedures used by the 12 Servicer in respect of any such leases serviced by it for its own account or the accounts of its Affiliates. (b) The Servicer shall retain or cause to be retained all data (including, without limitation, computerized records), together with all operating software and appropriate documentation, relating directly to or maintained in connection with the servicing of the 1997-A Contracts (the "Contract Records") consistent with its then applicable retention policies or applicable law. The Servicer shall provide or cause to be provided to the Titling Trustee, on behalf of the Titling Trust, upon its request, copies of all such data and appropriate documentation retained by the Servicer at all reasonable times and upon reasonable notice. The Servicer shall promptly report to the Titling Trustee, on behalf of the Titling Trust, any failure on its part to maintain the Contract Records as herein provided and promptly take appropriate action to remedy any such failure. (c) Upon the occurrence and during the continuance of an Event of Servicing Termination or if the rights of the Servicer with respect to the 1997-A SUBI Portfolio are terminated in accordance with Section 6.01(b) of this 1997-A SUBI Servicing Supplement or, if this 1997-A SUBI Servicing Supplement is terminated pursuant to Section 7.01, the Servicer shall, on demand of the Titling Trustee, on behalf of the Titling Trust (either at the request of the 1997-A Securitization Trustee or, as provided in Section 6.01(b) of this 1997-A SUBI Servicing Supplement, upon demand of Investor Certificateholders representing not less than 51% of the aggregate Voting Interest), deliver to the Titling Trustee all such data, operating software and appropriate documentation necessary for the servicing of the 1997-A Contracts, including but not limited to the related Contract Documents and Title Documents, all moneys collected by it and required to be deposited in any 1997-A SUBI Account on behalf of the Titling Trust, or in the 1997-A SUBI Collection Account or the Reserve Fund on behalf of the 1997-A Securitization Trust, all Security Deposits with respect to 1997-A Contracts, and any 1997-A Leased Vehicle in the possession of the Servicer that has been repossessed or is part of Matured Leased Vehicle Inventory and in either case has not yet been sold or otherwise disposed of. In addition to delivering such data, operating software and appropriate documentation and moneys, if a new servicer is appointed, the Servicer shall use its commercially reasonable efforts to effect the orderly and efficient transfer of the servicing of the 1997-A Contracts to the party that will be assuming responsibility for such servicing, including, without limitation, directing Obligors to remit payments in respect of such Contracts to an account or address designated by the Titling Trustee or such new servicer. SECTION 4.04. COLLECTION AND APPLICATION OF SECURITY DEPOSITS. Subject to Section 4.03(c) of this 1997-A SUBI Servicing Supplement, the Servicer shall retain each Security Deposit remitted to it (or deemed remitted to it) as agent and bailee for the Obligor until such time as the Titling Trust, the Titling Trustee on behalf of the Titling Trust, or the Servicer may lawfully and under the terms of the related Contract apply such Security Deposit against unpaid amounts owed under the Contract, damages to the related Leased Vehicle, excess wear and tear charges, expenses in connection with the refurbishment and disposal of the related 13 Leased Vehicle or against fees, charges, payments or expenses advanced or paid by the Servicer in accordance with applicable law, its customary and usual servicing procedures and the related Contract, from and after which time such amounts will be 1997-A SUBI Assets, subject to any reimbursement due to the Servicer. To the extent any Security Deposit or portion thereof is to be treated as proceeds of a Contract or Leased Vehicle, the related Security Deposit or such portion shall be deemed to be Liquidation Proceeds. On each Deposit Date, but otherwise as provided in Section 4.02(c)(ii) of this 1997-A SUBI Servicing Supplement, the Servicer shall deposit into the 1997-A SUBI Collection Account each Security Deposit that became Liquidation Proceeds during the previous month; otherwise, each Security Deposit, after deduction for amounts applied towards the payment or reimbursement of any amount described above, shall be returned to the related Obligor by the Servicer upon termination of such Contract. SECTION 4.05. ADVANCES. (a) On or prior to each Deposit Date, the Servicer shall make an Advance with respect to each outstanding delinquent 1997-A Contract and each 1997-A Contract as to which payments have been deferred resulting in the diminution of the amount to be received on any Due Date relative to the amount of each originally scheduled Monthly Payment if such 1997-A Contract has not been reallocated to the UTI Portfolio with an accompanying Reallocation Payment. Each such Advance will be made by deposit into the 1997-A SUBI Collection Account of an amount equal to the aggregate amount of Monthly Payments due but not received during the related Collection Period. (b) Notwithstanding any other provision of this 1997-A SUBI Servicing Supplement, the Servicer shall not be obligated to make any Advance in respect of any 1997-A Contract if the Servicer shall have reasonably determined that any such Advance, if made, would constitute a Nonrecoverable Advance. Any such determination shall be evidenced by an Officer's Certificate (or the certification by any other authorized signatory) of the Servicer furnished to each UTI Beneficiary, the Titling Trustee and the 1997-A Securitization Trustee setting out the basis for such determination, which determination shall be conclusive and binding absent manifest error. SECTION 4.06. PAYMENT OF CERTAIN FEES AND EXPENSES; NO OFFSET. (a) As part of its obligations hereunder, to the extent that cash flows relating to the 1997-A SUBI Sub-Trust, as set forth in Section 3.01(b) of the 1997-A Securitization Trust Agreement, are insufficient to provide for the payment of all fees and expenses due to the Titling Trustee or the 1997-A Securitization Trustee as Capped Titling Trust Administrative Expenses, Capped Securitization Trust Administrative Expenses or Uncapped Administrative Expenses, the Servicer shall advance an amount equal to such excess fees and expenses as they become payable from time to time and agrees to indemnify the Titling Trustee and the 1997-A Securitization Trustee and their respective agents for such amounts. The Servicer shall be entitled to reimbursement of such advances as set forth in Section 3.01(b) of the 1997-A Securitization Trust Agreement. The 14 obligations of the Servicer pursuant to this Section shall survive any termination of the Servicer's rights and obligations with respect to the 1997-A SUBI Portfolio under this 1997-A SUBI Servicing Supplement. (b) Prior to the termination of the Servicer's rights and obligations with respect to the 1997-A SUBI Sub-Trust and thereafter if such termination results from an Event of Servicing Termination, the obligations of the Servicer with respect to the 1997-A SUBI Sub-Trust shall not be subject to any defense, counterclaim or right of offset that the Servicer has or may have against any UTI Beneficiary, the Titling Trustee on behalf of the Titling Trust, or the 1997-A Securitization Trustee, whether in respect of this 1997-A SUBI Servicing Supplement, the 1997-A SUBI Supplement, any Securitization Trust Document, any 1997-A Contract, any related Contract Document, any 1997-A Leased Vehicle or otherwise. SECTION 4.07. SERVICING COMPENSATION. (a) As compensation for the performance of its obligations under this 1997-A SUBI Servicing Supplement, the Servicer shall be entitled to receive from the Titling Trustee, on behalf of the Titling Trust, on each Monthly Allocation Date, the Servicing Fee equal to the sum of: (i) An amount (the "Servicing Rate Portion") equal to one-twelfth of 1.00% of the Aggregate Net Investment Value as of the first day of the related Collection Period; and (ii) Any late fees, deferral fees and other administrative fees or similar charges paid by any Obligor pursuant to a 1997-A Contract during the related Collection Period; provided, however, the Servicing Fee shall be paid out of cash flows and in accordance with the priorities of payments specified in Section 3.01(b) of the 1997-A Securitization Trust Agreement and the Servicer may be reimbursed for advancing certain Administrative Expenses as provided in this 1997-A SUBI Servicing Supplement. Further, as additional servicing compensation with regard to the 1997-A SUBI Sub-Trust, the Servicer also shall receive income as and to the extent provided in the 1997-A Securitization Trust Agreement. The Servicing Rate Portion will be calculated and paid based upon a 360-day year consisting of twelve 30-day months. The Servicer shall pay all expenses incurred by it in connection with its servicing activities hereunder and shall not be entitled to reimbursement of such expenses except to the extent they constitute Liquidation Expenses or expenses recoverable under an applicable insurance policy, as provided in Section 4.12 of this 1997-A SUBI Servicing Supplement. For so long as there shall be only one Servicer for the Titling Trust, the Servicing Fee shall be deemed to be an expense incurred with respect to the Titling Trust Assets generally; if at any time the Servicer shall only service some (but not all) Sub-Trusts, the Servicing Fee shall be deemed to be an expense incurred with respect to that discrete group of Titling Trust Assets contained in the Sub-Trusts the Servicer then services. 15 (b) So long as TMCC is the Servicer, the Servicer may, by notice to the Titling Trustee and the 1997-A Securitization Trustee on or prior to any Determination Date, waive its Servicing Fee with respect to the related Collection Period, if the Servicer believes that sufficient collections will be available from Interest Collections on one or more future Monthly Allocation Dates (other than from amounts on deposit in the Reserve Fund) to pay such waived Servicing Fee, without interest. If the Servicer waives such Servicing Fee, the Servicing Fee with respect to such Collection Period shall be deemed to be zero for all purposes, provided, however, that for purposes of Section 3.01(b)(iv) of the 1997-A Securitization Trust Agreement, any such waived Servicing Fee thereafter shall be treated as an unpaid Servicing Fee with respect to a prior Collection Period (unless the Servicer continues to waive such Servicing Fee for subsequent Monthly Allocation Dates or waives such Servicing Fee permanently). SECTION 4.08. REPOSSESSION AND SALE OF LEASED VEHICLES. In accordance with the procedures used by the Servicer in respect of any comparable leases and leased vehicles serviced by it for its own account or the accounts of its Affiliates (including procedures used in connection with new programs commenced in the ordinary course of business, whether or not implemented on a test basis), the Servicer shall use its commercially reasonable efforts to repossess or otherwise take possession of the Leased Vehicle related to any Contract included in the 1997-A SUBI Portfolio that the Servicer shall have determined to be in default or a 1997-A Contract as to which a Prepayment has been made but the related Leased Vehicle has not been purchased by the Obligor. The Servicer shall, in accordance with the standards set forth in the immediately preceding paragraph: (a) follow such practices and procedures as it shall deem necessary or advisable in its servicing of closed-end automobile and light duty truck leases, which may include reasonable efforts to realize upon any recourse to Dealers, consigning a Leased Vehicle to a motor vehicle dealer for resale or selling a Leased Vehicle at public or private sale; and (b) sell or otherwise dispose of each 1997-A Leased Vehicle that is repossessed in accordance with the related 1997-A Contract or that becomes part of Matured Leased Vehicle Inventory for the 1997-A SUBI Sub-Trust and, if such related Contract is in default, shall commence and prosecute any proceedings in respect of such Contract (and such Leased Vehicle) in its own name or, if the Servicer deems it necessary, in the name of the Titling Trustee, on behalf of the Titling Trust. The obligations of the Servicer under this Section are subject to the provision that, in the event of damage to a 1997-A Leased Vehicle from a cause for which the Obligor under the related 1997-A Contract was not required to obtain casualty insurance or maintain such insurance in full force and effect, the Servicer shall not be required to expend its own funds in repairing such Leased 16 Vehicle unless it shall reasonably determine that such restoration will increase Liquidation Proceeds (net of Liquidation Expenses) of the related Contract by at least an equivalent amount. The Servicer shall only expend funds in connection with the repossession and/or sale of any 1997-A Leased Vehicle to the extent that it reasonably determines that Liquidation Expenses will not exceed the anticipated Liquidation Proceeds. The Servicer shall be responsible for all other costs and expenses incurred by it in connection with any action taken in respect of a 1997-A Contract or the related Leased Vehicle; provided, however, that it shall be entitled to reimbursement of such costs and expenses to the extent they constitute Liquidation Expenses or expenses recoverable under an applicable Insurance Policy. All Liquidation Proceeds and Insurance Proceeds (other than proceeds of the Residual Value Insurance Policy) shall be deposited and transferred as provided in Section 4.02 of this 1997-A Servicing Supplement. Notwithstanding the foregoing, in the event the Servicer determines that, in accordance with its normal servicing procedures, it will apply the Insurance Proceeds with respect to a damaged or destroyed Leased Vehicle to the substitution of another vehicle (for which the Contract will remain in force, but will relate to such substituted vehicle), the Servicer shall be permitted to so apply such Insurance Proceeds and shall not report or treat such funds as Insurance Proceeds hereunder. Any such substituted vehicle shall thereafter be the relevant 1997-A Leased Vehicle and such vehicle shall be the "related Leased Vehicle" with respect to such 1997-A Contract, for all purposes of the 1997-A SUBI Sub-Trust. Notwithstanding the foregoing, prior to transferring any such funds out of its operating account, the Servicer shall first deduct therefrom any unreimbursed Liquidation Expenses and expenses recoverable under an applicable Insurance Policy. In connection with this Section, the Titling Trustee, on behalf of the Titling Trust, shall grant to the Servicer a power of attorney in the form attached as Exhibit C with regard to the 1997-A Leased Vehicles, with full power of substitution. If a Servicer conducts such a substitution it shall give prompt written notice thereof to the Titling Trustee. The Servicer is not required hereby to deduct from Repossessed Vehicle Proceeds, Matured Leased Vehicle Proceeds or other Liquidation Proceeds or Insurance Proceeds with respect to any particular 1997-A Leased Vehicle all related unreimbursed Repossessed Vehicle Expenses, Matured Leased Vehicle Expenses or other Liquidation Expenses or Insurance Expenses prior to transferring such funds out of its operating account. Such expenses may instead be reimbursed as provided in Section 4.02(h) of this 1997-A SUBI Servicing Supplement. SECTION 4.09. SERVICER TO ACT ON BEHALF OF TRUSTEE. (a) In order to facilitate the servicing of the 1997-A SUBI Sub-Trust by the Servicer, the Titling Trustee, on behalf of the Titling Trust, hereby appoints the Servicer as its agent and bailee to retain possession of the related Contract Documents, Title Documents and any other related items that from time to time come into possession of the Servicer, and the Servicer hereby accepts such appointment. 17 (b) The Servicer shall maintain each such Contract Document and Title Document at its offices identified on the attached Schedule I, or at such other office as shall be specified by the Servicer to the Titling Trustee on 30 days' prior notice. The Servicer shall promptly report to the Titling Trustee any failure on its part to retain possession of any such Contract Documents or Title Documents and promptly take appropriate action to remedy any such failure. (c) Upon written instructions from the Titling Trustee, on behalf of the Titling Trust, setting forth a reasonable basis therefor, or in the exercise of its duties and powers hereunder, the Servicer shall release any Contract Document, Title Document, or other related item to the Titling Trustee or its agent or designee, as the case may be, at such place or places as the Titling Trustee may designate, as soon as practicable. The Servicer shall not be responsible for any loss occasioned by the failure of the Titling Trustee to return any document or any delay in doing so. (d) The Servicer shall be deemed to have received proper instructions with respect to any such Contract Document, Title Document, any other related item or any Contract Record, upon its receipt of written instructions by a Responsible Officer of the Titling Trustee. A certified copy of a bylaw or a resolution of the Board of Directors of the Titling Trustee shall constitute conclusive evidence of the authority of any such Responsible Officer to act and shall be considered in full force and effect until receipt by the Servicer of written notice to the contrary given by the Titling Trustee. (e) The Servicer shall identify from time to time all (i) periodic sales and use tax or property (real or personal) tax reports, (ii) periodic renewals of licenses and permits, (iii) periodic renewals of qualification to act as a trust and a business trust and (iv) other periodic governmental filing, registration or approvals (collectively, "Filings") arising with respect to or required of the Titling Trust, including (in the case of clauses (ii) and (iv)) such licenses, permits, and other Filings as are required for the Titling Trust or the Titling Trustee on behalf of the Titling Trust to accept assignments of 1997-A Contracts and to be identified as the owner of 1997-A Leased Vehicles on their Certificates of Title, as contemplated by Section 4.01 of this 1997-A SUBI Servicing Supplement. The Servicer shall also identify any surety bonds or other ancillary undertakings required of the Titling Trust or the Titling Trustee in respect of any Filing. The Servicer shall timely prepare and file, or cause to be filed, with the cooperation of the Titling Trustee, on behalf of the Titling Trustee, or the Titling Trust with the appropriate Person each Filing and each such ancillary undertaking with a copy to the Titling Trustee. In connection with this Section, the Titling Trustee, on behalf of the Titling Trust, shall grant to the Servicer such authority, including without limitation any necessary power of attorney in the form attached as Exhibit C, as it may require in order to effect each such Filing and ancillary undertaking. Should the Servicer at any time receive notice, or have actual knowledge, of any non-compliance with any Filing requirement, it shall promptly so notify the Titling Trustee. (f) The Titling Trustee shall deliver to the Servicer, promptly upon their execution and delivery by the parties thereto, the Titling Trust Agreement and each amendment and supplement thereto as any such amendment and supplement relates to the 1997-A SUBI Sub-Trust. The Servicer 18 shall not act contrary to any provision of the Titling Trust Agreement as it relates to the 1997-A SUBI Sub-Trust, as so amended or supplemented. SECTION 4.10. INDEMNIFICATION BY SERVICER. The Servicer agrees to indemnify, defend and hold harmless the 1997-A Securitization Trustee and its agents for any and all liabilities, losses, damages and expenses (including without limitation reasonable fees and expenses of counsel) that may be incurred by the 1997-A Securitization Trustee or its agents as a result of any act or omission by the Servicer in connection with its maintenance and custody of the Contract Documents, Title Documents, and Contract Records with respect to 1997-A Contracts and 1997-A Leased Vehicles, the servicing of the 1997-A Contracts, the Servicer's undertakings in clause (e) of Section 4.09 of this 1997-A SUBI Servicing Supplement or any other activity undertaken or omitted by the Servicer with respect to any 1997-A SUBI Asset. The obligations set forth in this Section shall survive the termination of this 1997-A SUBI Servicing Supplement or the resignation or removal of the Servicer (generally or with respect to the 1997-A SUBI Sub-Trust) or the 1997-A Securitization Trustee. SECTION 4.11. THIRD PARTY CLAIMS. The Servicer shall immediately notify TMCC (in the event that TMCC is not acting as the Servicer hereunder) and the Titling Trustee, on behalf of the Titling Trust, the 1997-A Securitization Trustee and any other holder of any 1997-A SUBI Certificate upon its learning that a claim of whatever kind that would have a material adverse impact on any UTI Beneficiary, the Transferor, the Titling Trustee, the Titling Trust, the 1997-A Securitization Trust, the 1997-A Securitization Trustee, any 1997-A SUBI Asset or the Servicer is being made by a third party with respect to any Contract or Leased Vehicle (whether or not included in the 1997-A SUBI Sub-Trust) or the servicing thereof or with respect to any other Trust Asset (whether or not constituting a 1997-A SUBI Asset). SECTION 4.12. INSURANCE POLICIES. So long as any 1997-A SUBI Certificates are outstanding, the Servicer will maintain and pay when due all premiums with respect to, and the Servicer may not terminate or cause the termination of the following (all premiums with respect to which shall constitute Administrative Expenses): (i) the Contingent and Excess Liability Insurance Policies unless (A) one or more replacement insurance policies or binder(s) is obtained providing coverage against third party claims that may be raised against the Titling Trustee, on behalf of the Titling Trust, with respect to any Leased Vehicle included in the 1997-A SUBI Sub-Trust in an amount at least equal to $10 million per claim, not subject to any annual or aggregate cap (which policy or policies may be a blanket insurance policy or policies covering the Servicer and one or more of its Affiliates), or (B) either each Rating Agency has delivered a letter to the 1997-A Securitization Trustee to the effect that the obtaining of any such replacement insurance policy or policies, in and of itself, will not cause its then-current rating of any of the Rated Certificates to be qualified, reduced or withdrawn; or (ii) the Residual Value Insurance Policy, unless the 1997-A Contracts may properly 19 be treated as finance leases for purposes of generally accepted accounting principles, consistently applied, by virtue of some reason other than maintenance of that policy, and the Servicer has provided to the Titling Trustee and the 1997-A Securitization Trustee an Officer's Certificate to that effect, describing such reasons which shall be in accordance with GAAP. On or before December 31 of each year, the Servicer shall provide to the Titling Trustee one or more Officer's Certificates (or certification by a duly authorized signatory of the Servicer) certifying that the policies it is required to maintain pursuant to this Section remain in full force and effect. The obligations of the Servicer pursuant to this Section shall survive any termination of the Servicer's obligations with respect to the 1997-A SUBI Sub-Trust under this 1997-A SUBI Servicing Supplement. SECTION 4.13. SERVICER NOT TO RESIGN; ASSIGNMENT. (a) Except as provided in Section 6.01 of this 1997-A SUBI Servicing Supplement, the Servicer shall not resign from the duties and obligations hereby imposed on it as Servicer except upon determination by its Board of Directors (or the Executive Committee thereof) that by reason of a change in applicable legal requirements the continued performance by the Servicer of its duties as Servicer under this 1997-A Servicing Supplement would cause it to be in violation of such legal requirements in a manner that would result in a material adverse effect on the Servicer or its financial condition, said determination to be evidenced by a Board Resolution to such effect accompanied by an Opinion of Counsel reasonably satisfactory to the Titling Trustee of Independent counsel reasonably satisfactory to the Titling Trustee, to such effect. No such resignation shall become effective unless and until a new servicer is willing to service the Contracts and enters into a servicing agreement with the Titling Trustee, on behalf of the Titling Trust, such agreement to have substantially the same provisions as this Servicing Agreement. The Titling Trustee, on behalf of the Titling Trust, shall not unreasonably fail to consent to such a servicing agreement. (b) If the Servicer resigns in the circumstances contemplated by clause (a) above, in addition to the requirements set forth therein, the Opinion of Counsel required thereby also shall be reasonably satisfactory to the 1997-A Securitization Trustee. The 1997-A Securitization Trustee shall not unreasonably fail to consent to a servicing agreement with a new servicer that proposes to enter into a servicing agreement that meets the standards required by this 1997-A SUBI Servicing Supplement. No such resignation shall affect the obligation of the Servicer to remit moneys to the 1997-A SUBI Collection Account (in lieu of unrecoverable insurance proceeds pursuant to Section 4.14), or the obligations of the Servicer pursuant to Sections 3.03(a), 4.04, 4.06(a), 4.10 or 4.12 of this 1997-A SUBI Servicing Supplement; no successor Servicer shall be required to undertake any of the foregoing, other than the obligation set forth in Section 4.06(a) of this 1997-A SUBI Servicing Supplement (which shall remain a joint and several obligation of the initial Servicer and any successor Servicer). The Titling Trustee shall give prompt notice to each Rating Agency of any such resignation of the Servicer, and the Titling Trustee and 1997-A Securitization Trustee must obtain from each Rating Agency a letter approving each substitute servicer. 20 (c) The Servicer may not assign this Servicing Agreement or any of its rights, powers, duties or obligations hereunder; provided, however, that the Servicer may assign this Servicing Agreement in connection with a consolidation, merger, conveyance, transfer or lease made in compliance with Section 4.15 of this 1997-A SUBI Servicing Supplement. (d) Except as provided above, the duties and obligations of the Servicer under this 1997-A SUBI Servicing Supplement shall continue until this 1997-A SUBI Servicing Supplement shall have been terminated as provided in Section 7.01 of this 1997-A SUBI Servicing Supplement and shall survive the exercise by the Titling Trustee, on behalf of the Titling Trust, of any right or remedy under this 1997-A SUBI Servicing Supplement or the enforcement by the Titling Trustee, on behalf of the Titling Trust, of any provision of the Titling Trust Documents. SECTION 4.14. OBLIGOR INSURANCE COVERAGE IN RESPECT OF LEASED VEHICLES. The Servicer shall use its normal servicing procedures (including procedures used in connection with new programs commenced in the ordinary course of business, whether or not implemented on a test basis) to ensure that the Obligor under each Contract shall have, and maintain in full force and effect during the term of such Contract, a comprehensive, collision and property damage insurance policy covering the actual cash value of the related Leased Vehicle and naming the Titling Trust or the Titling Trustee on behalf of the Titling Trust as a loss payee, as well as public liability, bodily injury and property damage coverage in the amounts required by applicable state law or as set forth in such Contract, and naming the Titling Trust or the Titling Trustee on behalf of the Titling Trust as an additional insured. Notwithstanding the foregoing, if an insurance policy names the Servicer rather than the Titling Trust or the Titling Trustee on behalf of the Titling Trust as Loss Payee or Additional Insured, the Servicer shall not be required to correct such designation as long as the Servicer is responsible for any increased deductibles under any contingent and excess liability policy as provided in the following paragraph. Except as otherwise set forth in this 1997-A SUBI Servicing Supplement or in any other Securitization Trust Document, the Servicer shall, on at least a monthly basis, deposit into the 1997-A SUBI Account any proceeds of such Insurance Policy that the Servicer may receive with respect to any 1997-A Leased Vehicle. In each case as to which a deductible is applicable under any Contingent and Excess Liability Policy, the Servicer will pay on behalf of the insured all amounts that would have been payable under such policy if there were no deductible (not to exceed the amount of such deductible) less amounts that are payable under any outstanding policy of primary insurance maintained (or that would be payable under any such policy maintained) as required under the related Contract. The foregoing obligation of the Servicer shall survive the resignation of the Servicer or any termination of it as Servicer under this 1997-A SUBI Servicing Supplement pursuant to Section 6.01 of this 1997-A SUBI Servicing Supplement. SECTION 4.15. CORPORATE EXISTENCE; STATUS; MERGER. (a) The Servicer shall keep in full effect its existence, rights and franchises (except as set forth in (b) below) as a California corporation and will obtain and preserve its qualification to do business as a foreign corporation in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure 21 to so qualify would not have a material adverse effect on the condition, financial or otherwise, or the earnings of the Servicer and its subsidiaries considered as a whole, and in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of, or to permit the Servicer to perform its obligations under, the Titling Trust Documents. (b) The Servicer shall not consolidate with or merge into any other corporation or convey, transfer or lease all or substantially all of its assets as an entirety to any Person without the prior written consent of the Titling Trustee, on behalf of the Titling Trust, unless (i) the corporation formed by such consolidation or into which the Servicer has merged or the Person which acquires by conveyance, transfer or lease all or substantially all the assets of the Servicer as an entirety is (A) a citizen of or an entity organized and existing under the laws of the United States or any State and (B) either executes and delivers to the Titling Trustee, on behalf of the Titling Trust, an agreement in form and substance reasonably satisfactory to the Titling Trustee, that contains an assumption by such successor entity of the due and punctual performance and observance of each covenant and condition to be performed or observed by the Servicer under this 1997-A SUBI Servicing Supplement and the other Trust Documents or is so bound by operation of law, or (ii) the Servicer is the surviving corporation resulting from such consolidation or merger. ARTICLE FIVE STATEMENTS AND REPORTS SECTION 5.01. REPORTING BY THE SERVICER. (a) On or prior to the 25th day of each calendar month, the Servicer shall cause to be delivered to the Titling Trustee a report in respect of the prior calendar month, setting forth (i) any information relating to the 1997-A Contracts or the related Leased Vehicles that normally would be available from a servicer of closed-end automobile and light-duty truck leases and is reasonably requested by the Titling Trustee and (ii) if required, any additional information required by the terms of any Securitized Financing, and (c) deliver such other reports, Officer's Certificates or certificates from other authorized signatories as may be necessary pursuant to this 1997-A SUBI Servicing Supplement to document to the Titling Trustee the Servicer's right to any further reimbursement of unreimbursed Servicer Expenses. (b) On or prior to each Determination Date and each Transfer Date, the Servicer shall cause to be delivered to the Titling Trustee and the 1997-A Securitization Trustee a supplement to the Schedule of 1997-A Contracts and 1997-A Leased Vehicles containing data reflecting the addition or removal of Contracts or Leased Vehicles from the 1997-A SUBI Portfolio as of the first day of the related Collection Period (in the case of each Determination Date) or as of the related Subsequent Cutoff Date (in the case of each Transfer Date). Any such supplement shall contain, in addition to the data required by the definition of the term "Schedule of Contracts and 22 Leased Vehicles", an identification of the Discounted Principal Balance of each 1997-A Contract added or removed. In addition, the Servicer shall, on or prior to each Determination Date, cause to be delivered to the Titling Trustee, the 1997-A Securitization Trustee and each Rating Agency a certificate in the name of the Servicer, executed by an officer or authorized signatory therefor in respect of such Collection Period (the "Servicer's Certificate") substantially in the form attached hereto as Exhibit B (and setting forth such additional information as requested by each Rating Agency from time to time and which information the Servicer is able to reasonably provide), containing all information necessary to make the allocations and distributions required by the 1997-A Securitization Trust Agreement in respect of the Collection Period immediately preceding such Determination Date, including the information needed to prepare the statement required by Section 3.03 of the 1997-A Securitization Trust Agreement. Any Certificate Owner may obtain a copy of a Servicer's Certificate upon written request. SECTION 5.02. ANNUAL ACCOUNTANTS' REPORTS. Within 120 days after September 30 of each year (commencing with the year ended September 30, 1998), the Servicer shall deliver to the Titling Trustee and the UTI Beneficiary (if TMCC is no longer both the Servicer and the UTI Beneficiary) a report concerning their review of the activities of the Servicer during the preceding 12-month period ended September 30 (or other applicable period in the case of the first such report or letter) to the effect that such accountants have reviewed certain records and documents relating to the servicing of the Contracts under this Agreement (using procedures specified in such report or letter) and as a result of such review, and in connection with such procedures, they are reporting such exceptions, if any, as shall be set forth therein. Such report or letter shall also indicate that the firm is independent with respect to the Transferor and the Servicer within the meaning of the Code of Professional Ethics of the American Institute of Certified Public Accountants. SECTION 5.03. OTHER CERTIFICATES AND NOTICES FROM SERVICER. (a) Within 120 days after September 30 of each calendar year (commencing with the year ended September 30, 1998), the Servicer shall deliver an Officer's Certificate to the Titling Trustee to the effect that a review of the activities of the Servicer during the prior calendar year (or since the commencement of the Titling Trust in the case of the first such Officer's Certificate) has been made under the supervision of the officer executing such Officer's Certificate with a view to determining whether during such period the Servicer has performed and observed all of its obligations under this 23 1997-A SUBI Servicing Supplement, and either (i) stating that, to the best of his or her knowledge, no default by the Servicer under this 1997-A SUBI Servicing Supplement has occurred and is continuing, or (ii) if such a default has occurred and is continuing, specifying such default and the nature and status thereof. (b) In the event the rating of the Servicer's long-term unsecured debt obligations fall below investment grade as determined by a Rating Agency, then on a quarterly basis, the Servicer shall cause to be delivered to the 1997-A Securitization Trustee and each Rating Agency an Officer's Certificate stating that neither the Titling Trust nor any of its ERISA Affiliates: (i) maintains a Plan, which, as of its last valuation date, has Unfunded Current Liability; (ii) anticipates that the value of the assets of any Plan it maintains would not be sufficient to cover any Current Liability; or (iii) is contemplating benefit improvements with respect to any Plan then maintained by any such entity or the establishment of any new Plan, either of which would cause any such entity to maintain a Plan with Unfunded Current Liability. SECTION 5.04. TAX RETURNS. As contemplated by Section 6.12 of the 1997-A Securitization Trust Agreement, the Servicer shall direct the 1997-A Securitization Trustee to prepare or cause to be prepared, on behalf of the Transferor, any required federal tax information returns (in a manner consistent with the treatment of the Investor Certificates as indebtedness). Also as contemplated by Section 6.12 of the 1997-A Securitization Trust Agreement, the Servicer shall timely prepare or cause to be prepared any federal and state tax returns that may be required with respect to the 1997-A Securitization Trust or the assets thereof and shall timely deliver any such returns to the 1997-A Securitization Trustee for signature. ARTICLE SIX DEFAULT SECTION 6.01. EVENTS OF SERVICING TERMINATION; TERMINATION OF SERVICER AS TO 1997-A SUBI PORTFOLIO. (a) "Events of Servicing Termination" as used herein shall have the meaning set forth in the attached Annex of Supplemental Definitions. Upon the occurrence of an event or circumstance of force majeure, the Servicer shall not be relieved from using all commercially reasonable efforts to perform its obligations in a timely manner, and the Servicer shall provide to the Titling Trustee, the 1997-A Securitization Trustee, the Transferor and the Investor Certificateholders prompt notice of such failure or delay, together with a description of its efforts to perform its obligations. (b) If an Event of Servicing Termination shall have occurred and be continuing, the Titling Trustee, on behalf of the Titling Trust, may remedy such Event of Servicing Termination, or the Titling Trustee may, and at the direction of any pledgee of a UTI Pledge shall, by notice given 24 to the Servicer, terminate all or a portion of the rights and powers of the Servicer under this 1997-A SUBI Servicing Supplement, including all or a portion of the rights of the Servicer to receive the servicing compensation provided for in Section 4.07 of this 1997-A SUBI Servicing Supplement with respect to all periods following such termination. Upon any such termination, all rights, powers, duties and responsibilities of the Servicer under this 1997-A SUBI Servicing Supplement, whether with respect to the related Contract Documents, the related Title Documents or Contract Records, the Servicing Fee or otherwise, so terminated shall vest in and be assumed by any successor servicer appointed by the Titling Trustee pursuant to a servicing agreement with the Titling Trustee, on behalf of the Titling Trust, containing substantially the same provisions as this 1997-A SUBI Servicing Supplement (including with respect to the compensation of such successor servicer), and the Titling Trustee is hereby irrevocably authorized and empowered to execute and deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, all documents and other instruments (including any notices to Obligors deemed necessary or advisable by the Titling Trustee), and to do or accomplish all other acts or things necessary or appropriate to effect such vesting and assumption, including, without limitation, directing some or all of the Obligors to remit Monthly Payments, Prepayments and all other payments on or in respect of the 1997-A Contracts and the 1997-A Leased Vehicles to an account or address designated by the Titling Trustee or such new servicer. Further, in such event, the Servicer shall use its commercially reasonable efforts to effect the orderly and efficient transfer of the servicing of the affected 1997-A Contracts to the new servicer (including transfer of the Security Deposits being held by the Servicer pursuant to Section 4.04 of this 1997-A SUBI Servicing Supplement), and as promptly as practicable, the Servicer shall provide to the new servicer a current computer tape containing all information from the Contract Records required for the proper servicing of the affected Contracts, together with documentation containing any and all information necessary for use of the tape. (c) The Titling Trustee, on behalf of the Titling Trust, shall upon the written direction of (i) if there is a UTI Pledge, the pledgee thereof or, if not, the UTI Beneficiary, or (ii) the holder of the requisite percentage of any SUBI (as set forth in the applicable SUBI Supplement), waive any default by the Servicer in the performance of its obligations hereunder and its consequences with regard to the Sub-Trust containing those Titling Trust Assets, as the case may be. Upon any such waiver of a past default, such default shall cease to exist, and any Event of Servicing Termination arising therefrom shall be deemed to have been remedied for every purpose of this Servicing Agreement. No such waiver shall extend to any subsequent or other default or impair any right consequent thereon. SECTION 6.02. NO EFFECT ON OTHER PARTIES. Upon any termination of the rights and powers of the Servicer with respect to the 1997-A SUBI Sub-Trust from time to time pursuant to Section 6.01 hereof, or upon any appointment of a successor to the Servicer with respect to the 1997-A SUBI Sub-Trust, all the rights, powers, duties and obligations of the Titling Trustee, the UTI Beneficiary and the Transferor under this 1997-A SUBI Servicing Supplement, the 1997-A Securitization Trust Agreement, the 1997-A SUBI Supplement, or any other Trust Document shall remain unaffected by such termination or 25 appointment and shall remain in full force and effect thereafter, except as otherwise expressly provided herein or therein. ARTICLE SEVEN MISCELLANEOUS SECTION 7.01. TERMINATION OF AGREEMENT. (a) In connection with any purchase by the Transferor of the Investor Certificateholders' interest in the corpus of the 1997-A Securitization Trust pursuant to Section 7.02 of the 1997-A Securitization Trust Agreement, and TLI, Inc.'s then succeeding to all of the interest in the 1997-A SUBI represented, and if the UTI Beneficiary shall thereafter succeed to such interest in the 1997-A SUBI, the Servicer, upon the direction of the UTI Beneficiary as provided in Section 16.05 of the 1997-A SUBI Supplement, shall reallocate all 1997-A Contracts, 1997-A Leased Vehicles and related 1997-A SUBI Assets to the UTI Sub-Trust. (b) Except as provided in this Section, the respective duties and obligations of the Servicer and the Titling Trustee with respect to the 1997-A SUBI shall terminate upon the termination of the 1997-A Securitization Trust Agreement pursuant to Section 7.01 thereof. Upon such a termination, the Servicer shall pay over to the Titling Trustee or any other Person entitled thereto all moneys held by the Servicer with respect to the 1997-A SUBI Sub-Trust pursuant to this 1997-A SUBI Servicing Supplement. SECTION 7.02. AMENDMENT. (a) To the extent that any amendment or supplement deals with the 1997-A SUBI Sub-Trust, this 1997-A SUBI Servicing Supplement may be amended from time to time in a writing signed by the Titling Trustee, on behalf of the Titling Trust, the Trust Agent and the Servicer, with the prior written consent of the 1997-A Securitization Trustee, which shall be given only in the circumstances contemplated by Section 9.01 of the 1997-A Securitization Trust Agreement. (b) The Servicer shall provide each Rating Agency that rated the Certificates prior notice of the content of any proposed amendment to this 1997-A SUBI Servicing Supplement, whether or not such amendment relates to the 1997-A SUBI or requires approval of any Rating Agency. SECTION 7.03. GOVERNING LAW. This 1997-A SUBI Servicing Supplement shall in all respects be governed by and construed in accordance with the internal laws of the State of Delaware, without reference to its conflicts of laws provisions, and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws. 26 SECTION 7.04. NOTICES. All demands, notices and communications hereunder shall be in writing and shall be delivered or mailed by registered or certified first-class United States mail, postage prepaid, hand delivery, any prepaid courier service, or by telecopier, and addressed in each case as follows: (a) if to TMCC or the Servicer (if the same as TMCC), at Toyota Motor Credit Corporation, 19001 South Western Avenue, Torrance, California 90501, Attention: Treasury Department--Corporate Treasury Manager (telecopier no. (310) 787-6194); and (b) if to the Trustee, at 111 East Wacker Drive, Suite 3000, Chicago, Illinois 60601 (Telecopier No. (312) 228-9401), with a copy to the principal Trust Agent designated by the Titling Trustee. The Servicer or the Titling Trustee may change its address for notices hereunder by giving notice of such change to the other such Persons. All notices and demands (y) shall be deemed to have been given upon delivery or tender of delivery thereof to any officer or other duly authorized recipient of the Person entitled to receive such notices and demands at the address of such Person for notices hereunder, and (z) if given by the Titling Trustee shall be deemed to have been given by all of the beneficiaries of the Titling Trust. SECTION 7.05. SEVERABILITY. If one or more of the provisions of this 1997-A SUBI Servicing Supplement shall be for any reason whatever held invalid or unenforceable, such provisions shall be deemed severable from the remaining covenants, agreements and provisions of this 1997-A SUBI Servicing Supplement, and such invalidity or unenforceability shall in no way affect the validity or enforceability of such remaining covenants, agreements and provisions, or the rights of any parties hereto. To the extent permitted by law, the parties hereto waive any provision of law that renders any provision of this 1997-A SUBI Servicing Supplement invalid or unenforceable in any respect. SECTION 7.06. INSPECTION AND AUDIT RIGHTS. The Servicer agrees that, on reasonable prior notice, it will permit any representative or designee of the Titling Trustee, on behalf of the Titling Trust, during the normal business hours of the Servicer, to examine all books of account, records, reports and other papers of the Servicer relating to the Titling Trust Assets, to make copies and extracts therefrom, to cause such books to be audited by Independent Accountants selected by the Titling Trustee, and to discuss the affairs, finances and accounts relating to the Titling Trust Assets with its officers, employees and Independent Accountants (and by this provision the Servicer hereby authorizes such Independent Accountants to discuss with such representatives such affairs, finances and accounts), all at such reasonable times and as often as may be reasonably requested. Such rights shall include, but shall not be limited to, any off-site storage facilities at which any data (including, without limitation, computerized records), together with all operating software and appropriate documentation, may be held. The Titling Trustee agrees to keep confidential all the confidential information of the Servicer acquired during any such examination as if such information were its own confidential information, except to the extent necessary for the purposes of this 1997-A SUBI Servicing Supplement. The 27 expenses incident to the exercise by the Titling Trustee of any right under this Section shall be reimbursable by the Servicer. SECTION 7.07. ARTICLE AND SECTION HEADINGS. The article and section headings herein are for convenience of reference only, and shall not limit or otherwise affect the meaning hereof. SECTION 7.08. EXECUTION IN COUNTERPARTS. This 1997-A SUBI Servicing Supplement may be executed in any number of counterparts, each of which so executed and delivered shall be deemed to be an original, but all of which counterparts shall together constitute but one and the same instrument. SECTION 7.09. RIGHTS CUMULATIVE. All rights and remedies from time to time conferred upon or reserved to the Titling Trustee, on behalf of the Titling Trust, the Servicer or the 1997-A Securitization Trustee or to any or all of the foregoing are cumulative, and none is intended to be exclusive of another. No delay or omission in insisting upon the strict observance or performance of any provision of this 1997-A SUBI Servicing Supplement, or in exercising any right or remedy, shall be construed as a waiver or relinquishment of such provision, nor shall it impair such right or remedy. Every right and remedy may be exercised from time to time and as often as deemed expedient. SECTION 7.10. FURTHER ASSURANCES. Each party will do such acts, and execute and deliver to any other party such additional documents or instruments, as may be reasonably requested in order to effect the purposes of this 1997-A SUBI Servicing Supplement and to better assure and confirm unto the requesting party its rights, powers and remedies hereunder. SECTION 7.11. THIRD-PARTY BENEFICIARIES. This 1997-A SUBI Servicing Supplement, insofar as it relates to the 1997-A SUBI Sub-Trust, will inure to the benefit of and be binding upon the parties hereto, their respective successors and permitted assigns, the 1997-A Securitization Trustee, the Titling Trustee (on behalf of the Titling Trust), and each of the holders of any legal or beneficial interest in the 1997-A SUBI Certificates (including without limitation the 1997-A Securitization Trustee and the Certificateholders), who shall be considered to be third-party beneficiaries hereof. Except as otherwise provided in this 1997-A SUBI Servicing Supplement, no other Person will have any right or obligation hereunder. [SIGNATURES ON NEXT PAGE] 28 29 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers duly authorized as of the day and year first above written. TOYOTA MOTOR CREDIT CORPORATION By: --------------------------- Name: Title: TMTT, INC., as trustee of TOYOTA LEASE TRUST By: ---------------------------- Name: Title: U.S. BANK NATIONAL ASSOCIATION, as Trust Agent By: ---------------------------- Name: Title: Acknowledged and Agreed: U.S. BANK NATIONAL ASSOCIATION, as 1997-A Securitization Trustee By: --------------------------- Name: Title: 30 EXHIBIT A SCHEDULE OF 1997-A CONTRACTS AND 1997-A LEASED VEHICLES AS OF THE INITIAL CUTOFF DATE [Omitted. Copies on file with the Servicer, the Titling Trustee and the 1997-A Securitization Trustee.] A-1 EXHIBIT B FORM OF SERVICER'S CERTIFICATE B-1 EXHIBIT C FORM OF POWER OF ATTORNEY C-1 SCHEDULE I LIST OF BRANCH OFFICES C-2 EX-10.5 10 EXHIBIT 10-5 EXHIBIT 10.5 1997-A SUBI CERTIFICATE PURCHASE AND SALE AGREEMENT THIS 1997-A SUBI CERTIFICATE PURCHASE AND SALE AGREEMENT (the "Agreement") is dated as of September ___, 1997, by and between TOYOTA MOTOR CREDIT CORPORATION, a California corporation ("TMCC"), and TOYOTA LEASING, INC., a California corporation ("TLI"). A. TMCC, TMTT Inc., a Delaware corporation (the "Titling Trustee"), and, for certain limited purposes set forth therein, U.S. Bank National Association, a national banking association) ("U.S. Bank"), have entered into an Amended and Restated Trust and Servicing Agreement dated as of October 1, 1996 (the "Titling Trust Agreement") pursuant to which Toyota Lease Trust, a Delaware business trust (the "Titling Trust"), was formed for the purpose of taking assignments and conveyances of, holding in trust and dealing in various Titling Trust Assets (as defined in the Titling Trust Agreement) in accordance with the Titling Trust Agreement. B. Concurrently herewith, and as contemplated by the terms of the Titling Trust Agreement, TMCC, the Titling Trustee and U.S. Bank have entered into a 1997-A SUBI Supplement to Amended and Restated Trust and Servicing Agreement dated as of September ___, 1997 (the 1997-A SUBI Supplement") pursuant to which the Titling Trust at the direction of TMCC, will create and issue to TLI a special unit of beneficial interest in the Titling Trust, or "SUBI" (as defined in the Titling Trust Agreement) (such SUBI, the "1997-A SUBI"). The beneficiaries of the 1997-A SUBI generally will be entitled to the net cash flow arising from, but only from, the related SUBI Portfolio (as defined in the Titling Trust Agreement) (the "1997-A SUBI Portfolio"). The 1997-A SUBI will be evidenced by one 1997-A SUBI Certificate (as defined in the Titling Trust Agreement) representing 100% of the beneficial interest in the 1997-A SUBI (the "1997-A SUBI Certificate"), all as set forth in the Titling Trust Agreement and the 1997-A SUBI Supplement. C. TMCC and TLI desire to enter into this Agreement to provide for the sale by TMCC to TLI, without recourse, of all of TMCC's right, title and interest in and to the 1997-A SUBI and the 1997-A SUBI Certificate. NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the parties hereto agree as follows: ARTICLE ONE DEFINITIONS SECTION 1.01. DEFINITIONS. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires, (a) unless otherwise defined herein, all capitalized terms used herein shall have the meanings attributed to them in the Annex of Definitions or the Annex of Supplemental Definitions, as applicable, attached to the 1997-A SUBI Supplement (b) the capitalized terms expressly defined in this Agreement have the meanings assigned to them in this Agreement and include (i) all genders and (ii) the plural as well as the singular, (c) all references to words such as "herein", "hereof" and the like shall refer to this Agreement as a whole and not to any particular article or section within this Agreement, (d) the term "include" and all variations thereon shall mean "include without limitation", and (e) the term "or" shall include "and/or". SECTION 1.02. ARTICLE AND SECTION REFERENCES. Except as otherwise specified herein, all article and section references shall be to Articles and Sections in this Agreement. ARTICLE TWO PURCHASE AND SALE OF 1997-A SUBI SECTION 2.01. SALE OF 1997-A SUBI. In consideration of TLI's delivery to, or upon the order of, TMCC of (i) cash in the amount of $ _____ representing the cash proceeds from the sale of the Investor Certificates net of certain expenses and (ii) $______ evidenced by a non-recourse promissory subordinated note, TMCC does hereby absolutely sell, assign and otherwise convey to TLI, without recourse, and TLI does hereby purchase and acquire, as of the date set forth above: (i) all right, title and interest in and to the 1997-A SUBI and the 1997-A SUBI Certificate and all monies due thereon and paid thereon or in respect thereof; 2 (ii) the right to realize upon any property that underlies or may be deemed to secure the 1997-A SUBI; and (iii) all proceeds of the foregoing. SECTION 2.02. ACCEPTANCE BY TLI. TLI agrees to comply with all covenants and restrictions applicable to an owner of the 1997-A SUBI and 1997-A SUBI Certificate, whether set forth therein, in the Titling Trust Agreement, the 1997-A SUBI Supplement or otherwise, and assumes all obligations and liabilities, if any associated therewith. ARTICLE THREE MISCELLANEOUS SECTION 3.01. AMENDMENT. This Agreement may be amended from time to time in a writing signed by the parties hereto, with the prior written consent of the 1997-A Securitization Trustee, which shall be given only in the circumstances contemplated by Section 9.01 of the 1997-A Securitization Trust Agreement. SECTION 3.02. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO ANY OTHERWISE APPLICABLE PRINCIPLES OF CONFLICT OF LAWS. SECTION 3.03. SEVERABILITY. If one or more of the provisions of this Agreement shall be for any reason whatever held invalid or unenforceable, such provisions shall be deemed severable from the remaining covenants, agreements and provisions of this Agreement, and such invalidity or unenforceability shall in no way affect the validity or enforceability of such remaining covenants, agreements and provisions, or the rights of any parties hereto. To the extent permitted by law, the parties hereto waive any provision of law that renders any provision of this Agreement invalid or unenforceable in any respect. 3 SECTION 3.04. BINDING EFFECT. The provisions of this Agreement shall be binding upon and inure to the benefit of the respective successors and permitted assigns of the parties hereto. SECTION 3.05. ARTICLE AND SECTION HEADINGS. The article and section headings herein are for convenience of reference only, and shall not limit or otherwise affect the meaning hereof. SECTION 3.06. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which so executed and delivered shall be deemed to be an original, but all of which counterparts shall together constitute but one and the same instrument. SECTION 3.07. FURTHER ASSURANCES. Each party will do such acts, and execute and deliver to any other party such additional documents or instruments as may be reasonably requested in order to effect the purposes of this Agreement and to better assure and confirm unto the requesting party its rights, powers and remedies hereunder. SECTION 3.08. THIRD-PARTY BENEFICIARIES. This Agreement will inure to the benefit of and be binding upon each subsequent holder of any legal or beneficial interest in the 1997-A SUBI Certificate (including without limitation the 1997-A Securitization Trust and the 1997-A Certificateholders), who shall be considered to be third-party beneficiaries hereof. Except as otherwise provided in this Agreement, no other Person will have any right or obligation hereunder. SECTION 3.09. NO PETITION. TLI, as transferee of the 1997-A SUBI Certificate covenants and agrees that prior to the date which is one year and one day after the date upon which all obligations under each Securitized Financing has been paid in full, it will not institute against, or join any other Person in instituting against, TMCC any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding or other proceedings under any federal or state bankruptcy or similar law. This Section shall survive the termination of this Agreement. [SIGNATURES ON NEXT PAGE] 4 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers duly authorized as of the day and year first above written. TOYOTA MOTOR CREDIT CORPORATION By: ----------------------------- Name: Title: TOYOTA LEASING, INC. By: ----------------------------- Name: Title: 5 EX-10.6 11 EXHIBIT 10-6 EXHIBIT 10.6 - ------------------------------------------------------------------------------- TOYOTA MOTOR CREDIT CORPORATION and U.S. BANK NATIONAL ASSOCIATION as Trustee Indenture Dated as of September 1, 1997 $1,600,000,000 TMCC Demand Notes - ------------------------------------------------------------------------------- CROSS-REFERENCE TABLE (not a part of this Indenture) TIA Indenture Section Section - ---------- ---------- (Section) 310(a) (1) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10 (a) (2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10 (a) (3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A. (a) (4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A. (a) (5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.08 7.10 11.02 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A. (Section) 311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A. (Section) 312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.05 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.03 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.03 (Section) 313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06 (b) (1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A. (b) (2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06 11.02 (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06 (Section) 314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.09 4.10 11.02 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A. 11.02 (c) (1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.04 (c) (2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.04 (c) (3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.09(c) (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A. (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A. (e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 11.05 (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A. (Section) 315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(b) (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.05 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(a) (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(c) (e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11 i TIA Indenture Section Section - ---------- ---------- (Section) 316(a) (last sentence) . . . . . . . . . . . . . . . . . . . . . 2.09 (a) (1) (A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.05 (a) (1) (B). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.04 (a) (2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A. (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.07 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.04 (Section) 317(a) (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.08 (a) (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.09 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04 (Section) 318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.01 - --------- N.A. means not applicable ii TABLE OF CONTENTS ARTICLE ONE DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01. Definitions.. . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 1.02. Incorporation by Reference of TIA.. . . . . . . . . . . . . . 1 Section 1.03. Rules of Construction.. . . . . . . . . . . . . . . . . . . . 2 ARTICLE TWO THE SECURITIES Section 2.01. Form; Title and Terms.. . . . . . . . . . . . . . . . . . . . 2 Section 2.02. Execution and Authentication. . . . . . . . . . . . . . . . . 3 Section 2.03. Securities Register.. . . . . . . . . . . . . . . . . . . . . 4 Section 2.04. Paying Agent to Hold Money in Trust.. . . . . . . . . . . . . 5 Section 2.05. Securityholder Lists. . . . . . . . . . . . . . . . . . . . . 5 Section 2.06. Transfer and Exchange.. . . . . . . . . . . . . . . . . . . . 5 Section 2.07. Replacement Securities. . . . . . . . . . . . . . . . . . . . 6 Section 2.08. Outstanding Securities. . . . . . . . . . . . . . . . . . . . 6 Section 2.09. Treasury Securities Not Outstanding.. . . . . . . . . . . . . 7 Section 2.10. Temporary Securities. . . . . . . . . . . . . . . . . . . . . 7 Section 2.11. Cancellation. . . . . . . . . . . . . . . . . . . . . . . . . 7 Section 2.12. Defaulted Interest. . . . . . . . . . . . . . . . . . . . . . 8 Section 2.13. Persons Deemed Owners.. . . . . . . . . . . . . . . . . . . . 9 Section 2.14. Computation of Interest.. . . . . . . . . . . . . . . . . . . 9 ARTICLE THREE REDEMPTION Section 3.01. Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . 9 ARTICLE FOUR COVENANTS Section 4.01. Payment of Securities.. . . . . . . . . . . . . . . . . . . . 9 Section 4.02. Maintenance of Office or Agency.. . . . . . . . . . . . . . .10 Section 4.03. Company Statement as to Compliance; Notice of Certain Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . .10 i ARTICLE FIVE CONSOLIDATIONS AND MERGERS, ETC. Section 5.01. Company May Consolidate, Etc., Only on Certain Terms. . . . .11 Section 5.02. Successor Person Substituted for Company. . . . . . . . . . .11 ARTICLE SIX DEFAULT AND REMEDIES Section 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . . .12 Section 6.02. Acceleration of Maturity; Rescission and Annulment. . . . . .13 Section 6.03. Collection of Indebtedness and Suits for Enforcement by Trustee.. . . . . . . . . . . . . . . . . . . . . . . . . 14 Section 6.04. Trustee May File Proofs of Claim. . . . . . . . . . . . . .. 14 Section 6.05. Trustee May Enforce Claims without Possession of Securities..15 Section 6.06. Application of Money Collected.. . . . . . . . . . . . . . . 15 Section 6.07. Limitation on Suits. . . . . . . . . . . . . . . . . . . . . 16 Section 6.08. Unconditional Right of Holders to Receive Principal and Interest.. . . . . . . . . . . . . . . . . . . . . . . . . . 16 Section 6.09. Restoration of Rights and Remedies.. . . . . . . . . . . . . 17 Section 6.10. Rights and Remedies Cumulative.. . . . . . . . . . . . . . . 17 Section 6.11. Delay or Omission Not Waiver.. . . . . . . . . . . . . . . . 17 Section 6.12. Control by Holders of Securities.. . . . . . . . . . . . . . 17 Section 6.13. Waiver of Past Defaults. . . . . . . . . . . . . . . . . . . 18 Section 6.14. Undertaking for Costs. . . . . . . . . . . . . . . . . . . . 18 ARTICLE SEVEN TRUSTEE Section 7.01. Duties of Trustee.. . . . . . . . . . . . . . . . . . . . . 18 Section 7.02. Rights of Trustee.. . . . . . . . . . . . . . . . . . . . . .20 Section 7.03. Individual Rights of Trustee. . . . . . . . . . . . . . . . .20 Section 7.04. Trustee's Disclaimer. . . . . . . . . . . . . . . . . . . . .20 Section 7.05. Notice of Defaults. . . . . . . . . . . . . . . . . . . . . .20 Section 7.06. Reports by Trustee to Holders.. . . . . . . . . . . . . . . .21 Section 7.07. Compensation and Indemnity. . . . . . . . . . . . . . . . . .21 Section 7.08. Replacement of Trustee. . . . . . . . . . . . . . . . . . . .22 Section 7.09. Successor Trustee by Merger, Etc. . . . . . . . . . . . . . .23 Section 7.10. Eligibility; Disqualification.. . . . . . . . . . . . . . . .23 Section 7.11. Preferential Collection of Claims Against Company . . . . . .23 ARTICLE EIGHT DEFEASANCE; SATISFACTION AND DISCHARGE Section 8.01. Defeasance of the Indenture.. . . . . . .. . . . . . . . . . 23 ii Section 8.02. Satisfaction and Discharge of the Indenture. . . . . . . . . 24 Section 8.03. Survival of Certain Obligations.. . . . . . . . . . . . . . 25 Section 8.04. Acknowledgment of Discharge by Trustee. . . .. . . . . . . . 25 Section 8.05. Application of Trust Money. . . . . . . . . .. . . . . . . . 26 Section 8.06. Repayment to the Company. . . . . . . . . . .. . . . . . . . 26 Section 8.07. Reinstatement.. . . . . . . . . . . . . . . .. . . . . . . . 26 ARTICLE NINE AMENDMENTS, SUPPLEMENTS AND WAIVERS Section 9.01. Without Consent of Holders. . . .. . . . . . . . . . . . . . 27 Section 9.02. With Consent of Holders.. . . . .. . . . . . . . . . . . . . 28 Section 9.03. Compliance with TIA.. . . . . . .. . . . . . . . . . . . . . 29 Section 9.04. Revocation and Effect of Consents... . . . . . . . . . . . . 29 Section 9.05. Notation on or Exchange of Securities. . . . . . . . . . . . 29 Section 9.06. Trustee to Sign Amendments, Etc.. . . . . . . . . . . . . . 30 Section 9.07. Effect of Supplemental Indentures.. . . . . . . . . . . . . 30 ARTICLE TEN MEETINGS OF AND ACTIONS BY SECURITYHOLDERS Section 10.01. Purposes for Which Meetings may be Called. .. . . . . . . . 30 Section 10.02. Manner of Calling Meetings.. . . . . . . . .. . . . . . . . 31 Section 10.03. Call of Meetings by Company or Holders.. . .. . . . . . . . 31 Section 10.04. Who May Attend and Vote at Meetings. . . . .. . . . . . . . 31 Section 10.05. Regulations may be Made by Trustee; Conduct of the Meeting; Voting Rights; Adjournment. . . . .. . . . . . . . 32 Section 10.06. Voting at the Meeting and Record to be Kept. . . . . . . . 32 Section 10.07. Exercise of Rights of Trustee or Securityholders May Not be Hindered or Delayed by Call of Meeting. . . . . .33 Section 10.08. Evidence of Action Taken by Securityholders. . . . . . . . .33 Section 10.09. Proof of Execution of Instruments and of Holding of Securities . . . . . . . . . . . . . . . . . . . . . . .34 Section 10.10. Right of Revocation of Action Taken. . . . . . . . . . . . .34 ARTICLE ELEVEN MISCELLANEOUS Section 11.01. TIA Controls.. . . . . . . . . . . . . . . . . . . . . . . .34 Section 11.02. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . .34 Section 11.03. Communications by Holders with Other Holders.. . . . . . . .35 Section 11.04. Certificate and Opinion as to Conditions Precedent.. . . . .35 Section 11.05. Statements Required in Certificate or Opinion. . . . . . . .36 Section 11.06. Rules by Trustee, Paying Agent, Registrar. . . . . . . . . .36 iii Section 11.07. Legal Holidays.. . . . . . . . . . . . . . . . . . . . . . .36 Section 11.08. Governing Law. . . . . . . . . . . . . . . . . . . . . . . .37 Section 11.09. No Adverse Interpretation of Other Agreements. . . . . . . .37 Section 11.10. No Recourse Against Others.. . . . . . . . . . . . . . . . .37 Section 11.11. Successors.. . . . . . . . . . . . . . . . . . . . . . . . .37 Section 11.12. Duplicate Originals. . . . . . . . . . . . . . . . . . . . .37 Section 11.13. Severability.. . . . . . . . . . . . . . . . . . . . . . . .37 Section 11.14. Headings and Table of Contents.. . . . . . . . . . . . . . .37 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38 EXHIBITS Annex I -- Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . I-1 Exhibit A -- Form of Security. . . . . . . . . . . . . . . . . . . . . . . A-1 iv INDENTURE dated as of September 1, 1997 between Toyota Motor Credit Corporation, a California corporation (the "Company"), and U.S. Bank National Association, a national banking association, as trustee (the "Trustee"). RECITALS A. The Company is duly authorized to execute and deliver this Indenture and to provide for the issuance by the Company of the Securities as provided herein. B. All things have been done that are necessary to make the Securities, when executed by the Company and authenticated and delivered by the Trustee hereunder, the valid obligations of the Company in accordance with the terms of this Indenture. For and in consideration of the premises and the purchase of the Securities by the Holders, each party hereto agrees as follows for the benefit of each other party and for the equal and ratable benefit of the Holders. ARTICLE ONE DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01. DEFINITIONS. All capitalized terms used in this Indenture and not defined elsewhere herein shall have the meanings assigned to them in Annex I, which is hereby incorporated by reference in and made a part of this Indenture. SECTION 1.02. INCORPORATION BY REFERENCE OF TIA. Wherever this Indenture refers to a provision of the TIA, such provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "Commission" means the Commission. "indenture securities" means the Securities. "indenture security holder" means a Holder or a Securityholder. "indenture to be qualified" means this Indenture. "indenture trustee" or "institutional trustee" means the Trustee. "obligor" on the indenture securities means the Company or any other obligor on the Securities. All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by Commission rule and not otherwise defined herein have the meanings assigned to them therein. SECTION 1.03. RULES OF CONSTRUCTION. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) unless otherwise expressly provided in this Indenture, an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP and all financial computations required under this Indenture shall be made in accordance with GAAP; (3) "or" is not exclusive; (4) words in the singular include the plural, and words in the plural include the singular; (5) provisions apply to successive events and transactions; (6) "herein," "hereof" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision; and (7) "including" shall be deemed to mean "including, without limitation." ARTICLE TWO THE SECURITIES SECTION 2.01. FORM; TITLE AND TERMS. The Securities and the Trustee's certificate of authentication thereon shall be substantially in the forms set forth in Exhibit A hereto. The Securities may have notations, legends or endorsements required by law or stock exchange rules. Each Security shall be dated the date of its authentication. 2 The terms and provisions contained in the Securities shall constitute a part of, and are hereby incorporated by reference in and made a part of, this Indenture and to the extent applicable, the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to their incorporation herein. The Securities shall be known and designated as the "TMCC Demand Notes" of the Company. The aggregate original principal amount of Securities that may be authenticated and delivered under this Indenture is limited to $1,600,000,000, except as otherwise provided in Sections 2.06, 2.07, 2.10 and 9.05. References herein and in the forms of Securities to "Security" or "Securities" shall include references to the principal amounts issued thereunder as evidenced by the appropriate notation on the Schedules. The Securities shall be issuable only in registered form, without coupons. The minimum denominations of the Securities will be $0.01. Interest on the Securities which is payable, and is punctually paid or duly provided for, on any Interest Payment Date, shall, except as otherwise provided in Section 2.12, be paid to the Persons in whose names the Securities (or one or more Predecessor Securities) are registered at the close of business on the Record Date next preceding such Interest Payment Date. At the option of the Company, payment of interest on the Securities due on any Interest Payment Date, falling after a Record Date for the payment of interest on the Securities and on or before the related Interest Payment Date, may be paid by check mailed to the address of the Persons entitled thereto as they shall appear in the Securities register. SECTION 2.02. EXECUTION AND AUTHENTICATION. The Securities shall be executed on behalf of the Company by an Officer of the Company. Any such signature may be by facsimile. If an Officer whose signature is on a Security no longer holds that office at the time the Trustee authenticates the Security, the Security shall be valid nevertheless. All of the Securities to be issued under this Indenture, and all of the principal amounts to be evidenced by the Securities need not be issued at the same time and may be issued from time to time at the order of the Company as herein provided for. The Securities and the principal amount in respect of the Securities to be issued hereunder shall all be of the same series known as the "TMCC Demand Notes", but need not have the same issue date, Stated Maturity Date, Required Rate, or Interest Payment Date. It is envisioned that five certificates representing the Securities shall be issued hereunder, as follows: (1) one certificate representing Interest Collections in a maximum aggregate principal amount equal to $393,400,000; (2) one certificate representing Principal Collections and allocable to the Class A-1 Certificates in a maximum aggregate principal amount equal to $410,000,000; (3) one certificate representing 3 Principal Collections and allocable to the Class A-2 Certificates in a maximum aggregate principal amount equal to $650,000,000; (4) one certificate representing Principal Collections and allocable to the Class A-3 Certificates in a maximum aggregate principal amount equal to $72,750,000; and (5) one certificate representing Principal Collections and allocable to the Class B Certificates in a maximum aggregate principal amount equal to $73,850,000; provided that nothing herein shall limit the number of certificates representing the Securities that may be issued hereunder. Each certificate representing a Security will have a Schedule attached thereto indicating: (i) the amount of the increase in the principal amount outstanding under such Security and the date on which each principal amount under such Security was first issued, (ii) the Stated Maturity Date for such principal amount, (iii) the Required Rate applicable to such principal amount, (iv) the amount of the decrease in the principal amount outstanding under such Security and the date on which such principal amount under such Security was paid, (v) the amount of the interest paid on such Security and the date on which such interest was paid, and (vi) the aggregate principal amount outstanding with respect to such certificate representing a Security. A Security shall not be valid until the Trustee manually signs the certificate of authentication on the Security, and an entry on the Schedule to any such Security shall not be valid until the Trustee manually signs the space provided for such entry as authentication of such increase or decrease in outstanding principal amount of such Security. Such signature shall be conclusive evidence that the Security and such entry has been authenticated under this Indenture. The Trustee shall authenticate Securities for original issue in the maximum aggregate principal amount as aforesaid, upon a written order of the Company signed by two Officers or by an Officer and either an Assistant Treasurer, the Secretary or an Assistant Secretary of the Company. The Trustee shall authenticate the Schedule attached to a Security to indicate the issuance of an additional principal amount of the Securities, upon either (i) a written order of the Company signed by two Officers or by an Officer and either an Assistant Treasurer, the Secretary or an Assistant Secretary of the Company, or (ii) if an Officer's Certificate has previously been delivered to the Trustee by the Company specifying the names and titles of officers, employees or agents of the Company eligible to give such an order, the order of any such officer, employee or agent of the Company, which order may be by telephone (confirmed in writing) or by facsimile. Any such order shall specify the principal amount in respect of the Securities to be issued and to which certificate such amount shall be allocable, the applicable Required Rate, the Stated Maturity Date and the date on which such issue of principal in respect of the Securities is to be authenticated. The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Securities and the Schedules attached thereto. Unless otherwise provided in the appointment, an authenticating agent may authenticate Securities and the Schedules attached thereto whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with the Company or an Affiliate of the Company. 4 SECTION 2.03. SECURITIES REGISTER. The Company shall keep or cause to be kept at the Corporate Trust Office or at any office or agency of the Company where Securities may be presented for registration of transfer or for exchange as provided in Section 4.02 a register in which, subject to such reasonable regulations as the Company may prescribe, the Company shall provide for the registration of Securities and registration of transfers and exchanges of Securities as in this Article provided. The Registrar shall keep the register of the Securities and of their transfer and exchange. SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST. Each Paying Agent shall hold in trust for the benefit of the Persons entitled thereto, without interest, all money held by such Paying Agent for the payment of principal of, premium, if any, and interest on the Securities (whether such money has been paid to it by the Company or any other obligor on the Securities), and shall notify the Trustee of any Default by the Company (or any other obligor on the Securities) in making any such payment. If the Company or a Subsidiary of the Company acts as Paying Agent, it shall segregate the money and hold it as a separate trust fund. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee and account for any funds disbursed and the Trustee may at any time during the continuance of any payment Default, upon written request to a Paying Agent, require such Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed. Upon payment of all funds held by it to the Trustee, the Paying Agent shall have no further liability for such money. As provided in Section 6.04 hereof, in any bankruptcy, insolvency, reorganization or other similar proceeding relative to the Company or any other obligor on the Securities, the Trustee shall serve as Paying Agent for the Securities; provided that the foregoing shall not relieve the Company of its obligations under Section 4.02. SECTION 2.05. SECURITYHOLDER LISTS. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list of the names and addresses of the Securityholders furnished to it or maintained by it in its capacity as Paying Agent and Registrar. If and so long as the Trustee is not the Registrar, in accordance with Section 312(a) of the TIA, the Company shall furnish or cause to be furnished to the Trustee semiannually not less than 30 days nor more than 60 days before each Interest Payment Date and at such times as the Trustee may request in writing a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Securityholders including an identification of the Securities and the aggregate amount thereof. SECTION 2.06. TRANSFER AND EXCHANGE. When Securities are presented to the Registrar or a co-Registrar with a request to register the transfer of such Securities or to exchange such Securities for an equal principal amount of Securities in other authorized denominations, the Registrar or co-Registrar shall register the transfer or make 5 the exchange if its reasonable requirements for such transactions (which may include a requirement that any Security presented or surrendered for registration of transfer or exchange shall be duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Registrar and the Trustee duly executed by the Holder thereof or his attorney duly authorized in writing) are met. To permit registration of transfers and exchanges as provided herein, the Company shall execute and the Trustee shall authenticate and deliver Securities at the Registrar's or a co-Registrar's request. All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company evidencing the same debt and entitling the Holders thereof to the same benefits under this Indenture as the Securities surrendered upon such registration of transfer or exchange. No service charge shall be made to a Holder for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith, other than in the case of exchanges under Sections 2.10 and 9.05 not involving any transfer. SECTION 2.07. REPLACEMENT SECURITIES. If a defaced or mutilated Security is surrendered to the Trustee or if the Holder of a Security presents evidence to the reasonable satisfaction of the Trustee that the Security has been lost, destroyed or stolen the Company shall execute and the Trustee shall authenticate a replacement Security if the Company's and the Trustee's reasonable requirements are met. The Trustee or the Company may require an indemnity bond, sufficient in the reasonable judgment of both the Company and the Trustee, to protect the Company, the Trustee or any Agent from any loss which any of them may suffer if a Security is replaced. The Company and the Trustee may charge such Holder for their reasonable expenses in replacing a Security. Every replacement Security is an additional obligation of the Company, whether or not the apparently destroyed, lost or stolen Security shall be at any time enforceable by anyone, and such replacement Security shall be entitled to the benefits of and subject to the limitations of rights set forth in this Indenture. The provisions of this Section, as amended or supplemented pursuant to this Indenture with respect to particular Securities or generally, shall be exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. SECTION 2.08. OUTSTANDING SECURITIES. Securities outstanding at any time under this Indenture are all Securities that have been theretofore authenticated and delivered under this Indenture, except (a) those cancelled by the Trustee, (b) those delivered to the Trustee for cancellation, (c) those in exchange for or in lieu of which other Securities have been authenticated and delivered under this Indenture and (d) those described in this Section as not outstanding. 6 Except as provided in Section 2.09 hereof, a Security does not cease to be outstanding because the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor holds the Security. If a Security is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Security is held by a bona fide purchaser. If on the Stated Maturity of the Securities, the Paying Agent (other than the Company or a Subsidiary) holds U.S. Legal Tender sufficient to pay all of the principal, premium, if any, and interest due on the Securities payable on that date, then on and after that date such Securities shall cease to be outstanding and interest on them shall cease to accrue. SECTION 2.09. TREASURY SECURITIES NOT OUTSTANDING. In determining whether the Holders of the required principal amount of outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder or whether a quorum is present at a meeting of Holders of Securities, Securities owned by the Company or an other obligor on the Securities or any Affiliate of the Company or of such other obligor shall be disregarded and deemed not to be outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver or upon any such determination as to the presence of a quorum, only Securities which a Trust Officer knows to be so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or an Affiliate of the Company or of such other obligor. The Trustee may require an Officer's Certificate listing Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor. SECTION 2.10. TEMPORARY SECURITIES. Until definitive Securities are ready for delivery, the Company shall execute and, upon the written order of the Company signed by two Officers or by an Officer and either an Assistant Treasurer, the Secretary or an Assistant Secretary of the Company, the Trustee shall authenticate temporary Securities. Temporary Securities shall be substantially in the form of definitive Securities but may have variations that the Company considers appropriate for temporary Securities. Without unreasonable delay, the Company shall execute and the Trustee shall authenticate definitive Securities which shall be exchangeable for temporary Securities upon surrender of the temporary Securities at the office or agency of the Company designated for such purpose pursuant to Section 4.02 for the purpose of exchanges of Securities without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Securities 7 of authorized denominations. Until such exchange, temporary Securities shall be entitled to the same rights, benefits and privileges as definitive Securities and shall be subject to the same limitation of rights as definitive Securities. SECTION 2.11. CANCELLATION. The Company at any time may deliver Securities to the Trustee for cancellation. The Registrar, each co-Registrar and the Paying Agent shall forward to the Trustee any Securities surrendered to them for transfer, exchange or payment. The Trustee shall cancel all Securities surrendered for registration of transfer, exchange, payment, replacement or cancellation. Subject to Section 2.07 hereof, the Company may not execute new Securities to replace Securities it has paid or delivered to the Trustee for cancellation. All cancelled Securities held by the Trustee shall be destroyed and certification of their destruction delivered to the Company, unless by a written order signed by an Officer of the Company shall direct that cancelled Securities be returned to it. SECTION 2.12. DEFAULTED INTEREST. If the Company fails to pay any principal of, premium if any, or interest on any Security on the due date therefor (whether upon acceleration, at Stated Maturity or otherwise), the Company shall pay interest thereon, at the rate per annum borne by the Securities, to the extent permitted by law. Any interest on any Security which shall be payable, but shall not be punctually paid or duly provided for, on any Interest Payment Date for such Security (herein called "Defaulted Interest") shall forthwith cease to be payable to the Holder thereof on the relevant Record Date by virtue of having been such Holder; and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in clause (1) or (2) below: (1) The Company may elect to make payment of any Defaulted Interest to the Person in whose name such Security (or a Predecessor Security thereof) shall be registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on such Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of U.S. Legal Tender equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit on or prior to the date of the proposed payment, such U.S. Legal Tender when so deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon, the Trustee shall fix a "Special Record Date" for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record 8 Date therefor to be mailed, first-class, postage prepaid, to each Holder of Securities at his address as it appears in the Security register not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the Person in whose name such Security (or a Predecessor Security thereof) shall be registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (2). (2) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon registration of transfer or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security. SECTION 2.13. PERSONS DEEMED OWNERS. Prior to due presentment of a Security for registration of transfer, the Company, the Trustee and any Agent may treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving payments of principal of, premium, if any, and, subject to Section 2.12, interest on such Security and for all other purposes whatsoever (whether or not such Security is overdue), and neither the Company nor the Trustee or any other Agent shall be affected by notice to the contrary. SECTION 2.14. COMPUTATION OF INTEREST. Interest on the Securities shall be computed on the basis of a 360-day year of twelve 30-day months. ARTICLE THREE REDEMPTION SECTION 3.01. REDEMPTION. The Securities may not be redeemed at the option of the Company, in whole or in part at any time prior to their respective Stated Maturities. 9 ARTICLE FOUR COVENANTS SECTION 4.01. PAYMENT OF SECURITIES. The Company will punctually pay the principal of and premium, if any, and interest on the Securities on the dates and in the manner provided in the Securities and this Indenture. The Company will, on or prior to the day when any principal of or premium or interest on any of the Securities becomes payable, whether at the Stated Maturity thereof, by demand for payment by the Trustee, surrender for repurchase, declaration of acceleration or otherwise, deposit with the Paying Agent (or, if the Company or a Subsidiary of the Company is acting as Paying Agent, segregate and hold in trust), in immediately available funds, no later than 12:00 noon (New York City time), a sum in U.S. Legal Tender sufficient to pay the principal, premium and interest becoming due. Such sum shall be held in trust for the benefit of the Holders entitled to such payment and (unless such Paying Agent is the Trustee) the Company shall promptly notify the Trustee of its action or failure so to act, and of the amount of each such payment made to each Paying Agent. SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY. The Company will maintain in Chicago, Illinois, an office or agency where Securities may be presented or surrendered for payment ("Paying Agent"), where Securities may be surrendered for registration of transfer or exchange ("Registrar") and where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served. Unless otherwise expressly provided herein, the Trustee, the Company or a Subsidiary of the Company may act as Registrar, co-Registrar or Paying Agent. The Company shall give prompt written notice to the Trustee and the Holders of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee. The Company initially appoints the Trustee, as the initial Registrar and Paying Agent in Chicago, Illinois, and designates such agent as an agency where notices and demands to or upon the Company in respect to the Securities and this Indenture may be served. SECTION 4.03. COMPANY STATEMENT AS TO COMPLIANCE; NOTICE OF CERTAIN DEFAULTS. The Company shall deliver to the Trustee, within 120 days after the end of each fiscal year, a written statement (which need not be contained in or accompanied by an Officer's Certificate) signed by the principal executive officer, the principal financial officer or the principal accounting 10 officer of the Company, stating that (a) a review of the activities of the Company during such year and of its performance under this Indenture has been made under his or her supervision, and (b) to the best of his or her knowledge, based on such review, (a) the Company has complied with all the conditions and covenants imposed on it under this Indenture throughout such year, or, if there has been a default in the fulfillment of any such condition or covenant, specifying each such default known to him or her and the nature and status thereof, and (b) no event has occurred and is continuing which is, or after notice or lapse of time or both would become, an Event of Default, or, if such an event has occurred and is continuing, specifying each such event known to him and the nature and status thereof. (c) The Company shall deliver to the Trustee, within five days after the occurrence thereof, written notice of any event which after notice or lapse of time or both would become an Event of Default pursuant to clause (c) of Section 6.01. ARTICLE FIVE CONSOLIDATIONS AND MERGERS, ETC. SECTION 5.01. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS. Nothing contained in this Indenture or in any of the Securities shall prevent any consolidation or merger of the Company with or into any other Person or Persons (whether or not affiliated with the Company), or successive consolidations or mergers in which the Company or its successor or successors shall be a party or parties, or shall prevent any conveyance, transfer or lease of the property of the Company as an entirety or substantially as an entirety, to any other Person (whether or not affiliated with the Company); provided, however, that: (1) in case the Company shall consolidate with or merge into another Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the entity formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Company substantially as an entirety shall be a Corporation organized and existing under the laws of the United States of America, any state thereof or the District of Columbia and shall expressly assume, by an indenture (or indentures, if at such time there is more than one Trustee) supplemental hereto, executed by the successor Person and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of, any premium and interest on all the Securities and the performance of every other covenant of this Indenture on the part of the Company to be performed or observed; (2) immediately after giving effect to such transaction, no event which, after notice or 11 lapse of time, would become an Event of Default, shall have occurred and be continuing; (3) either the Company or the successor Person shall have delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, stating that such consolidation, merger, conveyance, transfer or lease and such supplemental indenture comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with. SECTION 5.02. SUCCESSOR PERSON SUBSTITUTED FOR COMPANY. Upon any consolidation or merger or any conveyance, transfer or lease of the properties and assets of the Company substantially as an entirety to any Person in accordance with Section 5.01, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein; and thereafter, except in the case of a lease to another Person, the predecessor Person shall be released from all obligations and covenants under this Indenture and the Securities. ARTICLE SIX DEFAULT AND REMEDIES SECTION 6.01. EVENTS OF DEFAULT. The occurrence of any one of the following events for any reason whatsoever, and whether voluntary, involuntary or by operation of law, shall constitute an "Event of Default": (a) default in the payment of any interest on any Security when such interest becomes due and payable, and continuance of such default for a period of 30 days; or (b) default in the payment of the principal of and any premium on any Security of such series when it becomes due and payable at its Maturity; or (c) default in the performance, or breach, of any covenant or warranty of the Company in this Indenture or the Securities, and continuance of such default or breach for a period of 60 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or (d) the entry by a court having competent jurisdiction of: 12 (i) a decree or order for relief in respect of the Company 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 (ii) a decree or order adjudging the Company to be insolvent, or approving a petition seeking reorganization, arrangement, adjustment or composition of the Company and such decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or (iii) a final and non-appealable order appointing a custodian, receiver, liquidator, assignee, trustee or other similar official of the Company or of any substantial part of the property of the Company, or ordering the winding up or liquidation of the affairs of the Company; or (e) the commencement by the Company 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 by the Company 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 the Company of a petition or answer or consent seeking reorganization or relief under any applicable law, or the consent by the Company 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 the Company or any substantial part of the property of the Company or the making by the Company of an assignment for the benefit of creditors, or the taking of corporate action by the Company in furtherance of any such action. SECTION 6.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If an Event of Default with respect to Securities occurs and is continuing, then the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities may declare the principal of all the Securities to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by the Holders), and upon any such declaration such principal amount shall become immediately due and payable. At any time after such a declaration of acceleration with respect to Securities has been made and before a judgment or decree for payment of the Money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of not less than a majority in principal amount of the Outstanding Securities, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if (1) the Company has paid or deposited with the Trustee a sum of Money sufficient to pay: 13 (A) all overdue installments of interest on all Securities; (B) the principal of any Securities which have become due otherwise than by such declaration of acceleration and interest thereon at the rate borne by or provided for in such Securities; (C) to the extent that payment of such interest is lawful, interest upon overdue installments of interest at the rate borne by or provided for in such Securities; and (D) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and (2) all Events of Default with respect to Securities, other than the non-payment of the principal of, and interest on Securities which shall have become due solely by such declaration of acceleration, shall have been cured or waived as provided in Section 6.13. No such rescission shall affect any subsequent default or impair any right consequent thereon. SECTION 6.03. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE. The Company covenants that if: (1) default is made in the payment of any installment of interest on any Security when such interest shall have become due and payable and such default continues for a period of 30 days, or (2) default is made in the payment of the principal of any Security at its Maturity, the Company shall, upon demand of the Trustee, pay to the Trustee, for the benefit of the Holders of such Securities, the whole amount of Money then due and payable with respect to such Securities with interest upon the overdue principal, and, to the extent that payment of such interest shall be legally enforceable, upon any overdue installments of interest at the rate borne by or provided for in such Securities, and, in addition thereto, such further amount of Money as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. If the Company fails to pay the Money it is required to pay the Trustee pursuant to the preceding paragraph forthwith upon the demand of the Trustee, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the Money so due and unpaid, and may prosecute such proceeding to judgment or final decree, and may enforce the same against the Company or any other obligor upon such Securities and collect the Money 14 adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon such Securities wherever situated. If an Event of Default with respect to Securities occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or such Securities or in aid of the exercise of any power granted herein or therein, or to enforce any other proper remedy. SECTION 6.04. TRUSTEE MAY FILE PROOFS OF CLAIM. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Securities or the property of the Company or such other obligor or their creditors, the Trustee (irrespective of whether the principal of the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of any overdue principal and/or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise, (i) to file and prove a claim for the whole amount, or such lesser amount as may be provided for in the Securities, of the principal, interest owing and unpaid in respect of the Securities and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents or counsel) and of the Holders of Securities allowed in such judicial proceeding, and (ii) to collect and receive any Money or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder of Securities to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders of Securities, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and any other amounts due the Trustee under Section 7.07. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder of a Security any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder of a Security in any such proceeding. 15 SECTION 6.05. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES. All rights of action and claims under this Indenture or any of the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery or judgment, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, shall be for the ratable benefit of each and every Holder of a Security in respect of which such judgment has been recovered. SECTION 6.06. APPLICATION OF MONEY COLLECTED. Any Money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such Money on account of principal or interest, upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: To the payment of all amounts due the Trustee and any predecessor Trustee under Section 7.07; SECOND: To the payment of the amounts then due and unpaid upon the Securities for principal and interest in respect of which or for the benefit of which such Money has been collected, ratably, without preference or priority of any kind, according to the aggregate amounts due and payable on such Securities and Coupons for principal and interest, respectively; THIRD: The balance, if any, to the Person or Persons entitled thereto. SECTION 6.07. LIMITATION ON SUITS. No Holder of any Security shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless: (1) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities; (2) the Holders of not less than 25% in principal amount of the Outstanding Securities shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; (3) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; 16 (4) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Securities; it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture or any Security to affect, disturb or prejudice the rights of any other such Holders, or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all such Holders. SECTION 6.08. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL AND INTEREST. Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of and interest on such Security, as the case may be, on the respective Stated Maturity or Maturities therefor specified in such Security and to institute suit for the enforcement of any such payment, and such right shall not be impaired without the consent of such Holder. SECTION 6.09. RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or any Holder of a Security has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case the Company, the Trustee and each such Holder shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee and each such Holder shall continue as though no such proceeding had been instituted. SECTION 6.10. RIGHTS AND REMEDIES CUMULATIVE. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in the last paragraph of Section 2.07, no right or remedy herein conferred upon or reserved to the Trustee or to each and every Holder of a Security is intended to be exclusive of any other right or remedy, and every right and remedy, to the extent permitted by law, shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. 17 SECTION 6.11. DELAY OR OMISSION NOT WAIVER. No delay or omission of the Trustee or of any Holder of any Security to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to any Holder of a Security may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by such Holder, as the case may be. SECTION 6.12. CONTROL BY HOLDERS OF SECURITIES. The Holders of a majority in principal amount of the Outstanding Securities shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee with respect to the Securities of such series provided that: (1) such direction shall not be in conflict with any rule of law, with this Indenture or with the Securities of such series; (2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction; and (3) such direction is not unduly prejudicial to the rights of the other Holders of Securities of such series not joining in such action. SECTION 6.13. WAIVER OF PAST DEFAULTS. The Holders of not less than a majority in principal amount of the Outstanding Securities on behalf of the Holders of all the Securities may waive any past default hereunder with respect to such series and its consequences, except a default: (1) in the payment of the principal of or interest on any Security; or (2) in respect of a covenant or provision hereof which under Article Nine cannot be modified or amended without the consent of the Holder of each Outstanding Security affected. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. SECTION 6.14. UNDERTAKING FOR COSTS. All parties to this Indenture agree, and each Holder of any Security by his acceptance thereof 18 shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Company, the Trustee or by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the Outstanding Securities, or to any suit instituted by any Holder of any Security for the enforcement of the payment of the principal of or interest on any Security on or after the respective Stated Maturities expressed in such Security or interest on any overdue principal of any Security. ARTICLE SEVEN TRUSTEE The Trustee hereby accepts the trust imposed upon it by this Indenture and covenants and agrees to perform the same, as herein expressed. SECTION 7.01. DUTIES OF TRUSTEE. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of his own affairs. (b) Except during the continuance of an Event of Default: (1) The Trustee need perform only those duties as are specifically set forth in this Indenture and no covenants or obligations shall be implied in this Indenture which are adverse to the Trustee. (2) In the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture, but need not verify the accuracy of the contents thereof. (c) The Trustee shall not be relieved from liability for its own negligent action, its own negligent failure to act, or its own misconduct, except that: (1) This paragraph does not limit the effect of paragraph (b) of this Section 7.01. 19 (2) The Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts. (3) The Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.12 hereof. (d) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (e) Whether or not expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section 7.01. (f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. (g) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liability which might be incurred by the Trustee in compliance with such request or direction. SECTION 7.02. RIGHTS OF TRUSTEE. Subject to the provisions of Section 7.01 hereof: (a) The Trustee may rely on any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document. (b) Before the Trustee acts or refrains from acting, it may require an Officer's Certificate and an Opinion of Counsel, which shall conform to Section 11.05. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such certificate or opinion. The Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon. (c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. 20 (d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers. SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or its Subsidiaries or Affiliates with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. However, the Trustee must comply with Sections 7.10 and 7.11 hereof. SECTION 7.04. TRUSTEE'S DISCLAIMER. The Trustee makes no representation as to the validity or adequacy of this Indenture or the Securities or any money paid to the Company or upon the Company's direction under any provision hereof, and the Trustee shall not be accountable for the Company's use of the proceeds from the Securities, and the Trustee shall not be responsible for any statement in the Securities other than its certificate of authentication. SECTION 7.05. NOTICE OF DEFAULTS. If a Default or an Event of Default occurs and is continuing and it is known to the Trustee, the Trustee shall mail to each Securityholder notice of the Default or Event of Default within 90 days after it occurs; provided that, except in the case of a Default or an Event of Default in payment of principal of, or premium, if any, or interest on any Security, the Trustee may withhold the notice if and so long as a committee of its Trust Officers in good faith determines that withholding the notice is in the interest of the Securityholders. SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS. Within 60 days after each May 15 beginning with the May 15 following the date of this Indenture, the Trustee shall mail to each Securityholder, and each other Person so entitled under TIA (Section)313(c), a brief report dated as of such May 15 that shall comply with TIA (Section)313(a). The Trustee need not send such report if such report is not required by TIA (Section)313(a). The Trustee also shall comply with TIA (Section)313(b)(2). A copy of each report at the time of its mailing to Securityholders shall be mailed to the Company and filed with the Commission and each stock exchange, if any, on which the Securities are listed. The Company shall notify the Trustee if the Securities become listed on any stock exchange prior to such listing. 21 SECTION 7.07. COMPENSATION AND INDEMNITY. The Company shall pay to the Trustee from time to time reasonable compensation for its services hereunder. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee upon request for all reasonable disbursements, expenses and advances incurred or made by it. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee's agents and counsel. The Company shall indemnify the Trustee for, and hold it harmless against, any loss, liability or expense incurred by it including, without limitation, the cost and expense of enforcement of this Indenture against the Company and of defending itself against any claim (whether asserted by any Holder or the Company or otherwise) without negligence, willful misconduct or bad faith on its part, arising out of or in connection with the administration of this trust or any trust created under Section 8.01 or 8.02 and its duties hereunder. The Trustee shall notify the Company promptly of any claim asserted against the Trustee for which it may seek indemnity. The Company need not reimburse any expense or indemnify against any loss or liability incurred by the Trustee through negligence, wilful misconduct or bad faith. To secure the Company's payment obligations in this Section 7.07, the Trustee shall have a lien prior to the Securities on all money or Property held or collected by the Trustee, in its capacity as Trustee, except money or Property held in trust to pay principal of, premium, if any, or interest on particular Securities. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(d) or (e) hereof occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under any bankruptcy law. SECTION 7.08. REPLACEMENT OF TRUSTEE. The Trustee may resign by so notifying the Company in writing and mailing notice of such resignation to the Securityholders. The Holders of at least a majority in principal amount of the outstanding Securities may remove the Trustee by so notifying the Company and the Trustee in writing and may appoint a successor Trustee. The Company may remove the Trustee if: (1) the Trustee fails to comply with Section 7.10 hereof; (2) the Trustee is adjudged a bankrupt or an insolvent; (3) a receiver or other public officer takes charge of the Trustee or its Property; or (4) the Trustee becomes incapable of acting. 22 If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee, unless the Holders have appointed a successor Trustee in accordance with the previous paragraph. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the Securities may appoint a successor Trustee to replace the successor Trustee appointed by the Company. A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of appointment as provided in this Section 7.08 and payment to the prior Trustee of all sums due under Section 7.07 hereof. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Immediately after that, the retiring Trustee shall transfer all Property held by it as Trustee to the successor Trustee, subject to the lien provided in Section 7.07 hereof, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. A successor Trustee shall mail notice of its succession to each Securityholder. If a successor Trustee does not take office within 30 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of at least 10% in principal amount of the outstanding Securities may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee fails to comply with Section 7.10 hereof, any Securityholder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Company's obligations under Section 7.07 above shall continue for the benefit of the retiring Trustee. SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the resulting, surviving or transferee corporation without any further act shall, if such resulting, surviving or transferee corporation is otherwise eligible hereunder, be the successor Trustee. SECTION 7.10. ELIGIBILITY; DISQUALIFICATION. This Indenture shall always have a Trustee who satisfies the requirements of TIA (Section)310(a)(1). The Trustee shall have a combined capital and surplus of at least $25,000,000 as set forth in its most recent published annual report of condition. Neither the Company nor any Person directly or indirectly controlling, controlled by, or under common control with the Company shall serve as Trustee. The Trustee shall comply with TIA (Section)310(b). 23 SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The Trustee shall comply with TIA (Section)311(a), excluding any creditor relationship listed in TIA (Section)311(b). A Trustee who has resigned or been removed shall be subject to TIA (Section)311(a) to the extent indicated. ARTICLE EIGHT DEFEASANCE; SATISFACTION AND DISCHARGE SECTION 8.01. DEFEASANCE OF THE INDENTURE. The Company shall be deemed to have terminated all of its obligations under this Indenture (subject to Section 8.03 hereof) if: (1) the Company irrevocably shall have deposited in trust with the Trustee, pursuant to an irrevocable trust agreement in form and substance reasonably satisfactory to the Trustee, as trust funds in trust solely for the benefit of the Holders for that purpose, U.S. Legal Tender, or U.S. Government Obligations maturing as to principal and interest in such amounts and at such times, as are sufficient, without consideration of the investment of any such U.S. Legal Tender or the reinvestment of the proceeds from any such U.S. Government Obligations and after payment of all federal, state and local taxes or other charges or assessments in respect thereof payable by the Trustee, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to, and in form and substance reasonably satisfactory to, the Trustee, to pay the principal of, premium, if any, and interest on the outstanding Securities on the dates on which such payments are due and payable in accordance with the terms of this Indenture and of the Securities, provided that the Trustee shall have been irrevocably instructed to apply such U.S. Legal Tender and the proceeds of such U.S. Government Obligations to the payment of said principal, premium, if any, and interest on the Securities; (2) no Default or Event of Default shall have occurred or be continuing on the date of such deposit or shall occur on or before the 366th day after the date of such deposit; (3) such deposit shall not result in a breach or violation of, or constitute a default under, this Indenture or any other instrument or agreement to which the Company is a party or by which it or its Property is bound; (4) the Company shall have delivered to the Trustee an Opinion of Counsel in form and substance satisfactory to the Trustee to the effect that Holders of the Securities will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit and the defeasance contemplated hereby and will be subject to Federal income tax in the 24 same amounts and in the same manner and at the same time as would have been the case if such deposit and defeasance had not occurred and that the deposit is not subject to the control of any bankruptcy court; (5) Such defeasance shall not cause the Securities, if then listed on any national securities exchange registered under the Exchange Act, to be delisted; (6) Such deposit shall not result in the Company, the Trustee or the irrevocable trust becoming or being deemed an "investment company" under the Investment Company Act of 1940, as amended; and (7) the Company shall have delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that all conditions precedent specified herein relating to the defeasance contemplated by this Section 8.01 have been complied with. In the event all or any portion of the Securities are to be redeemed through such irrevocable trust, the Company shall make arrangements satisfactory to the Trustee, at the time of such deposit, for the giving of notice of such redemption or redemptions by the Trustee in the name and at the expense of the Company. SECTION 8.02. SATISFACTION AND DISCHARGE OF THE INDENTURE. In addition to its rights under Section 8.01 above, the Company may terminate all of its obligations under this Indenture (subject to Section 8.03 hereof) if: (1) either (A) all Securities theretofore authenticated and delivered (other than Securities which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.07 hereof) have been delivered to the Trustee for cancellation; or (B) all Securities not theretofore delivered to the Trustee for cancellation (i) have become due and payable, or (ii) will become due and payable at their Stated Maturity within one year, or (iii) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, 25 and the Company, in the case of (i), (ii) or (iii) above, has irrevocably deposited in trust with the Trustee, pursuant to an irrevocable trust agreement in form and substance reasonably satisfactory to the Trustee, as trust funds in trust solely for the benefit of the Holders for that purpose, an amount of U.S. Legal Tender sufficient, without consideration of the investment thereof and after payment of all federal, state and local taxes or other charges or assessments in respect thereof payable by the Trustee, to pay the principal of, premium, if any, and interest on the outstanding Securities on the dates on which such payments are due and payable in accordance with the terms of this Indenture and of the Securities, provided that the Trustee shall have been irrevocably instructed to apply such U.S. Legal Tender to the payment of said principal, premium, if any, and interest on the Securities; (2) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and (3) the Company has delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that all conditions precedent specified herein relating to the satisfaction and discharge of this Indenture pursuant to this Section 8.02 have been complied with. SECTION 8.03. SURVIVAL OF CERTAIN OBLIGATIONS. Notwithstanding the defeasance of this Indenture or the satisfaction and discharge of this Indenture referred to in Section 8.01 and Section 8.02 above, respectively, the respective obligations of the Company and the Trustee under Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 2.09, 2.11, 2.13, 2.14, Sections 4.01, 4.02, 4.03, 6.08, 7.07, 7.08, 7.09, 7.10, 7.11, 8.03, 8.04, 8.05, 8.06 and 8.07, Article Nine, and Sections 11.01, 11.02, 11.06, 11.07 and 11.08 hereof shall survive until the Securities are no longer outstanding. Thereafter the obligations of the Company and the Trustee under Sections 7.07, 8.05, 8.06 and 8.07 hereof shall survive. SECTION 8.04. ACKNOWLEDGMENT OF DISCHARGE BY TRUSTEE. Subject to Section 8.07 below and after the Company has delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that all conditions precedent referred to in Section 8.01 or Section 8.02, as the case may be, relating to the defeasance or satisfaction and discharge of this Indenture have been complied with, the Trustee upon request of the Company shall acknowledge in writing the defeasance or the satisfaction and discharge, as the case may be, of this Indenture and the discharge of the Company's obligations under this Indenture except for those surviving obligations specified in Section 8.03 above. 26 SECTION 8.05. APPLICATION OF TRUST MONEY. The Trustee shall hold any U.S. Legal Tender or U.S. Government Obligations deposited with it in the irrevocable trust established pursuant to Section 8.01 or 8.02, as the case may be. The Trustee shall apply the deposited U.S. Legal Tender and (in the case of a deposit pursuant to Section 8.01) any U.S. Government Obligations through the Paying Agent (other than the Company or a Subsidiary or Affiliate of the Company), in accordance with this Indenture and the terms of the irrevocable trust agreement, to the payment of principal of, premium, if any, and interest on the Securities as and when the same become due and payable. The U.S. Legal Tender and U.S. Government Obligations so held in trust shall not be part of the trust estate under this Indenture, but shall constitute a separate trust fund for the benefit of all Holders entitled thereto. The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the U.S. Government Obligations deposited pursuant to Section 8.01 or the principal and interest received in respect thereof, other than any such tax, fee or other charge which by law is for the account of the Holders of the Securities. SECTION 8.06. REPAYMENT TO THE COMPANY. The Trustee and the Paying Agent shall pay to the Company upon written request, and, if applicable, in accordance with the irrevocable trust established pursuant to Section 8.01 or 8.02 above, any U.S. Legal Tender or U.S. Government Obligations held by them for the payment of principal of, premium, if any, or interest on the Securities that remains unclaimed for two years after the date on which such payment shall have become due; provided, however, that, before being required to make any such payment to the Company, the Trustee may, at the expense of the Company, cause to be mailed to the Holders of such Securities, at their last addresses as they appear on the Securities register, notice that such moneys or U.S. Government Securities remain unclaimed and that, after a date specified in said notice, the balance of such moneys then unclaimed will be returned to the Company. After payment to the Company as aforesaid, Holders entitled to such moneys or U.S. Government Obligations must look to the Company for such payment unless an applicable abandoned property law designates another Person. SECTION 8.07. REINSTATEMENT. If the Trustee or Paying Agent is unable to apply any U.S. Legal Tender or U.S. Government Obligations in accordance with Section 8.01 or 8.02 hereof by reason of any legal proceeding or by reason of any order or judgment of any court or Governmental Authority enjoining, restraining or otherwise prohibiting such application, the Company's obligations under this Indenture shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.01 or 8.02, as the case may be until such time as the Trustee or Paying Agent is permitted to apply all such funds in accordance with Section 8.01 or 8.02, as the case may be, and 8.05; provided, however, that if the Company has made any payment of principal of, premium, if any, or interest on 27 any Securities because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Securities to receive such payment from the U.S. Legal Tender or U.S. Government Obligations held by the Trustee. ARTICLE NINE AMENDMENTS, SUPPLEMENTS AND WAIVERS SECTION 9.01. WITHOUT CONSENT OF HOLDERS. The Company, when authorized by a resolution of its Board of Directors, and the Trustee, together, may amend or supplement this Indenture or the Securities without notice to or consent of any Securityholder for any one or more of the following: (1) to cure any ambiguity, defect or inconsistency, or to make any other provisions with respect to matters or questions arising under this Indenture, provided that such action does not adversely affect the rights or interests of any Holder of Securities; (2) to add to or change or eliminate any provision of this Indenture as shall be necessary or desirable in accordance with any amendments to the Trust Indenture Act, provided such action does not adversely affect the rights or interests of any Holder of Securities; (3) to provide for uncertificated Securities in addition to certificated Securities; (4) to evidence the succession of another corporation to the Company, or successive successions, and the assumption by the successor corporation of the covenants, agreements and obligations of the Company pursuant to Article Five; (5) to secure all of the Securities; (6) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities; (7) to comply with the rules or regulations of any securities exchange on which any of the Securities may be listed; or (8) to add to the covenants and agreements of the Company such further covenants and agreements as the Board of Directors of the Company shall consider to be for the protection or benefit of the Holders or to add any Events of Default or to surrender any right or power reserved to or conferred upon the Company. 28 SECTION 9.02. WITH CONSENT OF HOLDERS. Subject to Section 6.08 and the next succeeding paragraph, the Company, when authorized by a resolution of its Board of Directors, and the Trustee, together, with the written consent of the Holders of at least a majority in aggregate principal amount of the outstanding Securities may amend or supplement this Indenture or the Securities without notice to any other Securityholders. Subject to Section 6.08 and the next succeeding paragraph, the Holders of at least a majority in aggregate principal amount of the outstanding Securities may waive compliance by the Company with any provision of or obligation under this Indenture or the Securities without notice to any other Securityholders. Notwithstanding anything to the contrary in the foregoing provisions of this Section 9.02, without the consent of each Securityholder affected, no amendment, supplement or waiver, including a waiver pursuant to Section 6.02, may: (1) reduce the percentage in principal amount of the outstanding Securities the consent of whose Holders is required for any amendment or supplement to this Indenture, for any waiver (of compliance with any obligation or provision of this Indenture or of certain Defaults or Events of Default hereunder or their consequences) provided for in this Indenture, or for a rescission of acceleration of the Securities pursuant to Section 6.02, or reduce the requirements pursuant to Section 10.05 for a quorum or voting; (2) reduce the rate or change the time for payment of interest on any Security; (3) reduce the principal amount of or premium on any Security; (4) alter the redemption or repurchase provisions of any Security in a manner adverse to any Holder thereof, or change the Stated Maturity of any Security; (5) waive any default in the payment of the principal of, premium, if any, or interest on any Security; (6) impair the right of Holders to institute suit for the enforcement of any payment of the principal of, premium, if any, or interest on the Securities on or after the respective due dates therefor; (7) make any changes in Section 6.02, 6.08 or this second paragraph of Section 9.02; (8) change any obligation of the Company to maintain an office or agency in the place and for the purpose specified in Section 4.02 or make the Securities payable in any coin or currency other than U.S. Legal Tender; or 29 (9) make any change to or modify the priority between the Holders of the Securities and any other creditors of the Company. It shall not be necessary for the consent of the Holders under this Section to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if such consent approves the substance thereof. After an amendment, supplement or waiver under this Section becomes effective, the Company shall mail to the Holders affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amendment, supplement or waiver. SECTION 9.03. COMPLIANCE WITH TIA. Every amendment to or waiver or supplement of this Indenture or the Securities shall comply with the TIA as then in effect. SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS. Until an amendment, waiver or supplement becomes effective, a consent to it by a Holder is a continuing consent by the Holder and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder's Security, even if notation of the consent is not made on any such Security. However, any such Holder or subsequent Holder may revoke the consent as to his Security or portion of a Security if the Trustee receives written notice of revocation before the date on which the Trustee receives an Officer's Certificate certifying that the Holders of the requisite principal amount of Securities have consented to the amendment, supplement or waiver. Such amendment, waiver or supplement, as the case may be, shall be effective upon receipt by the Trustee of such Officer's Certificate. The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to consent to any amendment, supplement or waiver. If a record date is fixed, then notwithstanding the last two sentences of the immediately preceding paragraph, those Persons who were Holders at the close of business on such record date (or their duly designated proxies), and only those Persons, shall be entitled to revoke any consent previously given, whether or not such Persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 90 days after such record date. All Holders that consent to such modification, waiver or action in the manner and within the time period requested shall be entitled to receive the consideration, if any, offered for such consent. 30 SECTION 9.05. NOTATION ON OR EXCHANGE OF SECURITIES. If an amendment, supplement or waiver changes the terms of a Security, the Trustee may require the Holder of the Security to deliver it to the Trustee. The Trustee may place an appropriate notation on the Security about the changed terms and return it to the Holder. Alternatively, if the Company or the Trustee has so determined, the Company in exchange for the Security may execute and the Trustee shall authenticate a new Security of like kind that reflects the changed terms. SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC. The Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of any amendment, supplement or waiver authorized pursuant to this Article Nine is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, execute any such amendment, supplement or waiver which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. In signing or refusing to sign such amendment or supplement, the Trustee shall be entitled to receive and, subject to Section 7.01 hereof, shall be fully protected in relying upon, an Officer's Certificate and an Opinion of Counsel as conclusive evidence that such amendment or supplement is authorized or permitted by this Indenture, that it is not inconsistent herewith, and that it will be valid and binding upon the Company in accordance with its terms. The Company shall not sign an amendment or supplement until its Board of Directors approves thereof. SECTION 9.07. EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution of any supplement or amendment to this Indenture in accordance with this Article, this Indenture shall be modified in accordance therewith and such supplement or amendment shall form a part of the Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered shall be bound thereby. Any Holder and every subsequent Holder of a Security (or portion thereof) shall be bound by any waivers authorized or obtained by this Article. ARTICLE TEN MEETINGS OF AND ACTIONS BY SECURITYHOLDERS SECTION 10.01. PURPOSES FOR WHICH MEETINGS MAY BE CALLED. A meeting of Securityholders may be called at any time and from time to time pursuant to the provisions of this Article Ten for any of the following purposes: (a) to give any notice to the Company or to the Trustee, or to give any directions to the Trustee, or to waive or to consent to the waiving of any Default or Event of Default 31 hereunder and its consequences, or to take any other action authorized to be taken by Securityholders pursuant to any of the provisions of Article Six; (b) to remove the Trustee or appoint a successor Trustee pursuant to the provisions of Article Seven; (c) to consent to an amendment, supplement or waiver pursuant to the provisions of Section 9.02; or (d) to take any other action (i) authorized to be taken by or on behalf of the Holders of any specified aggregate principal amount of the Securities under any other provision of this Indenture, or authorized or permitted by law or (ii) which the Trustee deems necessary or appropriate in connection with the administration of this Indenture. SECTION 10.02. MANNER OF CALLING MEETINGS. The Trustee may at any time call a meeting of Securityholders to take any action specified in Section 10.01 hereof, to be held at such time and at such place in The City of New York or elsewhere as the Trustee shall determine. Notice of every meeting of Securityholders, setting forth the time and place of such meeting and in general terms the action proposed to be taken at such meeting, shall be mailed by the Trustee, first-class postage prepaid, to the Company, and to the Holders of the Securities at their last addresses as they shall appear on the registration books of the Registrar, not less than 10 nor more than 60 days prior to the date fixed for a meeting. Any meeting of Securityholders shall be valid without notice if the Holders of all Securities then outstanding are present in Person or by proxy, or if notice is waived before or after the meeting by the Holders of all Securities outstanding, and if the Company and the Trustee are either present by duly authorized representatives or have, before or after the meeting, waived notice. SECTION 10.03. CALL OF MEETINGS BY COMPANY OR HOLDERS. In case at any time the Company, pursuant to a Certified Resolution of its Board of Directors delivered to the Trustee, or the Holders of not less than 10% in aggregate principal amount of the Securities then outstanding, shall have requested the Trustee to call a meeting of Securityholders to take any action specified in Section 10.01 hereof, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have mailed the notice of such meeting within 20 days after receipt of such request, then the Company or the Holders of Securities in the amount above specified may determine the time and place in The City of New York or elsewhere for such meeting and may call such meeting for the purpose of taking such action, by notice given as provided in Section 10.02. 32 SECTION 10.04. WHO MAY ATTEND AND VOTE AT MEETINGS. To be entitled to vote at any meeting of Securityholders, a Person shall (a) be a registered Holder of one or more Securities, or (b) be a Person appointed by an instrument in writing as proxy for the registered Holder or Holders of Securities. The only Persons who shall be entitled to be present or to speak at any meeting of Securityholders shall be the Persons entitled to vote at such meeting and their counsel and any representatives of the Trustee and its counsel and any representatives of the Company and its counsel. SECTION 10.05. REGULATIONS MAY BE MADE BY TRUSTEE; CONDUCT OF THE MEETING; VOTING RIGHTS; ADJOURNMENT. Notwithstanding any other provision of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Securityholders, in regard to proof of the holding of Securities and of the appointment of proxies, and in regard to the appointment and duties of inspectors of votes, and submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall think appropriate. Such regulations may fix a record date and time for determining the Holders of record of Securities entitled to vote at such meeting, in which case those and only those Persons who are Holders of Securities at the record date and time so fixed, or their proxies, shall be entitled to vote at such meeting whether or not they shall be such Holders at the time of the meeting. The Trustee shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or by Securityholders as provided in Section 10.03, in which case the Company or the Securityholders calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by vote of the Holders of a majority in principal amount of the Securities represented at the meeting and entitled to vote. At any meeting each Securityholder or proxy shall be entitled to vote with respect to the outstanding Securities held or represented by him; provided, however, that no vote shall be cast or counted at any meeting in respect of any Securities challenged as not outstanding and ruled by the chairman of the meeting to be not outstanding. The chairman of the meeting shall not have the right to vote other than by virtue of Securities held by him or instruments in writing as aforesaid duly designating him as the proxy to vote on behalf of other Securityholders. At any meeting of Securityholders, the presence of Persons holding or representing a majority of the principal amount of the outstanding Securities shall be sufficient for a quorum. Any meeting of Securityholders duly called pursuant to the provisions of Sections 10.02 or 10.03 may be adjourned from time to time by vote of the Holders of a majority in aggregate principal amount of the Securities represented at the meeting and entitled to vote, and the meeting may be held as so adjourned without further notice. 33 Except as limited by Sections 6.02 and 6.08 and the second paragraph of Section 9.02, any resolution presented to a meeting at which a quorum is present as aforesaid may be adopted by the affirmative vote of the Holders of a majority in principal amount of the outstanding Securities. SECTION 10.06. VOTING AT THE MEETING AND RECORD TO BE KEPT. The vote upon any resolution submitted to any meeting of Securityholders shall be by written ballots on which shall be subscribed the signatures of the Holders of Securities or of their representatives by proxy and the principal amount of the Securities voted by the ballot. The permanent chairman of the meeting shall appoint two inspectors of votes, who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in duplicate of all votes cast at the meeting. A record in duplicate of the proceedings of each meeting of Securityholders shall be prepared by the secretary of the meeting and there shall be attached to such record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more Persons having knowledge of the facts, setting forth a copy of the notice of the meeting and showing that such notice was mailed as provided in Section 10.02 or Section 10.03. The record shall be signed and verified by the affidavits of the meeting and one of the duplicates shall be delivered to the Company and the other to the Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting. Any record so signed and verified shall be conclusive evidence of the matters therein stated. SECTION 10.07. EXERCISE OF RIGHTS OF TRUSTEE OR SECURITYHOLDERS MAY NOT BE HINDERED OR DELAYED BY CALL OF MEETING. Nothing contained in this Article Ten shall be deemed or construed to authorize or permit, by reason of any call of a meeting of Securityholders or any rights expressly or impliedly conferred hereunder to make such call, any hindrance or delay in the exercise of any right or rights conferred upon or reserved to the Trustee or to the Securityholders under any of the provisions of this Indenture or of the Securities. SECTION 10.08. EVIDENCE OF ACTION TAKEN BY SECURITYHOLDERS. (a) In addition to the foregoing provisions of this Article Ten, any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Securityholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Securityholders in person or by agent duly appointed 34 in writing, or by combination of such instrument or instruments and the record of a meeting of Securityholders duly called and held in accordance with this Article Ten. Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee. Proof of execution of any such instrument or of a writing appointing any such agent, or of the holding by any Person of a Security, shall be sufficient for any purpose of this Indenture and (subject to Section 7.01) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Article. (b) Any request, demand, authorization, direction, notice, consent, waiver or other action of the Holder of any Security in accordance with this Section 10.08 shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security. (c) If the Company shall solicit from the Holders any request, demand, authorization, direction, notice, consent, waiver or other action in accordance with this Section 10.08, the Company may, at its option, by or pursuant to an Officer's Certificate delivered to the Trustee, fix in advance a record date for the determination of Holders entitled to give such request, demand, authorization, direction, notice, consent, waiver or such other act, but the Company shall have no obligation to do so. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other act may be given before or after such record date, but only those Persons who were Holders of record at the close of business on such record date shall be deemed to be Holders for the purposes of determining whether Holders of the requisite percentage of outstanding Securities have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other act, and for that purpose the outstanding Securities shall be computed as of such record date; provided, that no such authorization, agreement or consent by the Holders on the record date shall be deemed effective unless such request, demand, authorization, direction, notice, consent, waiver or other act shall become effective pursuant to the provisions of paragraph (a) of this Section 10.08 not later than 90 days after the record date. SECTION 10.09. PROOF OF EXECUTION OF INSTRUMENTS AND OF HOLDING OF SECURITIES. The execution of any instrument by a Securityholder or his agent or proxy may be proved in accordance with such reasonable rules and regulations as may be prescribed by the Trustee or in such manner as shall be satisfactory to the Trustee, and the holding of Securities shall be proved by the Security register or by a certificate of the Registrar. SECTION 10.10. RIGHT OF REVOCATION OF ACTION TAKEN. At any time prior to (but not after) the evidencing to the Trustee, as provided in Section 10.08, of the taking of any action by the Holders of the percentage in aggregate principal amount of the Securities specified in this Indenture in connection with such action, any Holder of a Security 35 the serial number of which is shown by the evidence to be included among the serial numbers of the Securities the Holders of which have consented to such action may, by filing written notice at the Corporate Trust Office and upon proof of holding as provided in this Article, revoke such action so far as concerns such Security. After such time, such action shall be conclusive and binding upon such Holder and the Securities issued in exchange or substitution therefor, irrespective of whether or not any notation in regard thereto is made upon any such Security. ARTICLE ELEVEN MISCELLANEOUS SECTION 11.01. TIA CONTROLS. If any provision of this Indenture limits, qualifies, or conflicts with another provision which is required to be included in this Indenture by the TIA, the required provision shall control. SECTION 11.02. NOTICES. Any notices or other communications required or permitted hereunder shall be in writing, and shall be sufficiently given if made by hand delivery, by telecopier or registered or certified mail, postage prepaid, return receipt, addressed as follows: if to the Company: Toyota Motor Credit Corporation 19001 South Western Avenue Torrance, California 90501 Attention: Treasury Department if to the Trustee: U.S. Bank National Association c/o First Trust, National Association One Illinois Center 111 E. Wacker Drive, Suite 3000 Chicago, Illinois 60601 Telecopier: (312) 228-9401 Attention: TMCC Demand Notes The Company or the Trustee by notice to the other may designate additional or different addresses as shall be furnished in writing by either party. Any notice or communication to the 36 Company or the Trustee shall be deemed to have been given or made as of the date so delivered if personally delivered; when receipt is acknowledged, if telecopied; and five days after mailing if sent by registered or certified mail (except that a notice of change of address shall not be deemed to have been given until actually received by the addressee). Any notice or communication mailed to a Securityholder shall be mailed to him by first class mail, postage prepaid, at his address as it appears on the register of the Registrar and shall be sufficiently given to such Holder if so mailed within the time prescribed. If the Company mails a notice or communication to Securityholders, it shall simultaneously mail a copy to the Trustee. Failure to mail a notice or communication to a Securityholder or any defect in it shall not affect its sufficiency with respect to other Securityholders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it. SECTION 11.03. COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS. Securityholders may communicate pursuant to TIA Section 312(b) with other Securityholders with respect to their rights under this Indenture or the Securities. The Company, the Trustee, the Registrar and any other Person shall have the protection of TIA Section 312(c). SECTION 11.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee: (1) an Officer's Certificate (which shall include the statements set forth in Section 11.05 hereof) stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with (and, if applicable, setting forth in reasonable detail any financial calculations providing the basis of such opinion); and (2) an Opinion of Counsel (which shall include the statements set forth in Section 11.05 hereof) stating that, in the opinion of such counsel, all such conditions precedent have been complied with. SECTION 11.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each Officer's Certificate or Opinion of Counsel with respect to compliance with a condition or covenant provided for in this Indenture shall include: (1) a statement that the Person making such certificate or opinion has read such covenant or condition; 37 (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such Person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of each such Person, such condition or covenant has been complied with; provided, however, that with respect to matters of fact an Opinion of Counsel may rely on an Officer's Certificate or certificates of public officials. At the request of the Trustee, any Officer's Certificate or Opinion of Counsel shall address any particular condition precedent to such action. SECTION 11.06. RULES BY TRUSTEE, PAYING AGENT, REGISTRAR. The Trustee may make reasonable rules for action by or at a meeting of Securityholders. The Paying Agent or Registrar may make reasonable rules for its functions. SECTION 11.07. LEGAL HOLIDAYS. If a payment date is not a Business Day at a particular place where the principal of, premium, if any, or interest on the Securities is payable, payment may be made on the next succeeding day that is a Business Day at such place of payment, and no interest shall accrue for the intervening period. SECTION 11.08. GOVERNING LAW. THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD (TO THE EXTENT PERMITTED BY LAW) TO PRINCIPLES OF CONFLICTS OF LAW. SECTION 11.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company or any of its Subsidiaries. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. 38 SECTION 11.10. NO RECOURSE AGAINST OTHERS. A director, officer, employee, stockholder, Affiliate or incorporator, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or this Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Securityholder by accepting a Security waives and releases all such Persons from such liability. Such waivers and releases are part of the consideration for the issuance of the Securities. SECTION 11.11. SUCCESSORS. All agreements of the Company in this Indenture and the Securities shall bind their successors. All agreements of the Trustee in this Indenture shall bind its successor. SECTION 11.12. DUPLICATE ORIGINALS. All parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. SECTION 11.13. SEVERABILITY. In case any provision in this Indenture or in the Securities shall be invalid, illegal or enforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby, and a Holder shall have no claim thereunder for or against any party hereto. SECTION 11.14. HEADINGS AND TABLE OF CONTENTS. The headings, Table of Contents and Cross-Reference Table in this Indenture are for convenience of reference only and shall not be deemed a part of this Indenture or limit or otherwise affect the meaning hereof. 39 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the date first written above. TOYOTA MOTOR CREDIT CORPORATION [Seal] By: ------------------------------------ Name: Title: Attest: By: ------------------------------------ Name: Title: U.S. BANK NATIONAL ASSOCIATION as Trustee By: ------------------------------------ Name: Title: Attest: By: ------------------------------------ Name: Title: 40 State of_______________________ ) ) ss. County of______________________ ) On -, 1997, before me, ________________________________, Notary Public, personally appeared _________________________________, personally known to me to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. _______________________________________ Notary Public State of_______________________ ) ) ss. County of______________________ ) On -, 1997, before me, ________________________________, Notary Public, personally appeared _________________________________, personally known to me to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. _______________________________________ Notary Public 41 ANNEX I TO INDENTURE DATED AS OF SEPTEMBER 1, 1997 BETWEEN TOYOTA MOTOR CREDIT CORPORATION AND U.S. BANK NATIONAL ASSOCIATION as Trustee Definitions The following terms have the respective meanings set forth below for all purposes of the Indenture, and Section and Article references are to Sections and Articles in the Indenture. Capitalized terms used in the Indenture and the Securities not otherwise defined shall have the respective meanings assigned thereto in the Annex of Definitions attached to the Amended and Restated Trust and Servicing Agreement dated as of October 1, 1996 among Toyota Motor Credit Corporation, TMTT, Inc. and (for certain limited purposes only) First Bank National Association, the Supplemental Annex of Definitions attached to the 1997-A SUBI Supplement to the Amended and Restated Trust and Servicing Agreement) dated as of September 1, 1997, between Toyota Leasing, Inc. and U.S. Bank National Association, as securitization trustee; capitalized terms used herein and therein inconsistently shall have the meaning assigned to such term herein. "Affiliate" means, as to any Person, any other Person which directly or indirectly controls or is controlled by, or is under direct or indirect common control with, such Person. For the purposes of this definition, "control", when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have the meanings correlative to the foregoing. For purposes of this Indenture, the 1997-A Securitization Trust (and the 1997-A Secuitization Trustee on behalf of the 1997-A Securitization Trust) shall not be considered to be "Affiliates" of the Company. "Agent" means any Registrar, Paying Agent or co-Registrar or other agent of the Company acting under the Indenture. "Board of Directors" means the board of directors of the Company or any committee thereof authorized generally or in any particular respect to exercise the power of the board of directors of the Company. "Business Day" means a day other than a Saturday, Sunday or other day on which banking institutions in New York, New York, Los Angeles, California, or Chicago, Illinois are authorized or obligated by law, regulation, executive order or decree to be closed. "Certified Resolution" means a copy of a resolution of the Board of Directors of the Company, certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted and to be in full force and effect on the date of such certification. I-1 "Commercial Paper Rate" means the Money Market Yield on the Calculation Date for commercial paper maturing in one month as published by the Board of Governors of the Federal Reserve System in Statistical Release II.15(519), Selected Interest Rates, or any successor publication, under the caption "Commercial Paper-Non Financial". If by 3:00 p.m., New York City time, on the related Calculation Date such rate is not yet published in H.15(519), then the Commercial Paper Rate will be the Money Market Yield of the arithmetic mean of the offered rates at approximately 11:00 a.m., New York City time, on such date of three leading dealers of commercial paper in The City of New York for commercial paper having a maturity date of one month placed for an industrial issuer whose bond rating is "AA", or the equivalent, from a nationally recognized securities rating agency; provided, however, that if such dealers are not quoting as mentioned in this sentence, the Commercial Paper Rate for such date shall be the Commercial Paper Rate as in effect as of the immediately preceding Calculation Date. For purposes of these definitions, "Calculation Date" shall mean each of the original dates of investment in the Security, and each Monthly Allocation Date thereafter, and "Money Market Yield" shall mean a yield (expressed as a percentage rounded upwards to the nearest one hundred-thousandth of a percentage point) calculated in accordance with the following formula: Money Market Yield = ([D x 360]/[360-{D x M}) x 100 where "D" refers to the applicable per annum rate for commercial paper rate quoted on a bank discount basis and expressed as a decimal, and "M" refers to the actual number of days in the interest period for which interest is being calculated. "Commission" means the Securities and Exchange Commission, or any successor thereto. "Company" means Toyota Motor Credit Corporation, a California corporation, the issuer of the Securities under the Indenture, until a successor replaces it pursuant to the Indenture and thereafter means such successor. "Corporate Trust Office" means an office of the Trustee at which at any particular time its corporate trust business shall be administered, which at the date of execution of the Indenture is located at One Illinois Center, 111 E. Wacker Drive, Suite 3000, Chicago, Illinois 60601 "Default" means any event that is or with the passing of time or giving of notice or both would be an Event of Default. "Defaulted Interest" has the meaning specified in Section 2.12. "Event of Default" has the meaning specified in Section 6.01. "Exchange Act" means the Securities Exchange Act of 1934, as amended, or any successor thereto, and the regulations promulgated thereunder. I-2 "GAAP" means generally accepted accounting principles in the United States which are applied by the Company as of the date of the Indenture. "Governmental Authority" means any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing. "Indenture" means the Indenture dated as of September 1, 1997 between the Company and U.S. Bank National Association, as trustee, relating to $1,600,000,000 aggregate principal amount of the Company's TMCC Demand Notes, including Exhibit A and this Annex I thereto, as the same may be amended or supplemented from time to time in accordance with its terms. "Interest Payment Date" is the date on which interest is payable as set forth in the Security. "Maturity", with respect to any Security, means the date on which the principal of such Security or an installment of principal becomes due and payable as provided in or pursuant to this Indenture, whether (x) at the Stated Maturity Date thereof, (y) on the date specified in a demand for the payment of 100% of the outstanding principal amount of the TMCC Demand Notes by any holder following the occurrence of a Monthly Payment Event on which the Securitization Trustee demands payment of all amounts due and payable on all outstanding Securities or (z) upon declaration of acceleration upon the occurrence of an Event of Default hereunder. A Maturity pursuant to clause (x) or (y) of this definition, in and of itself, shall not be an Event of Default or Default hereunder. "Officer" means the Chairman, the President, any Vice Chairman or Vice President, the Chief Financial Officer, the Chief Accounting Officer, the Treasurer or the Controller of the Company. "Officers' Certificate" means a certificate signed by any two Officers of the Company, and otherwise complying with the applicable requirements of Sections 11.04 and 11.05 of the Indenture. "Opinion of Counsel" means a written opinion from legal counsel who, in the case of an Opinion of Counsel addressed to the Trustee, is reasonably acceptable to the Trustee. The counsel may be an employee of or counsel to the Company. Each opinion shall comply with the applicable requirements of Sections 11.04 and 11.05 of the Indenture. "Paying Agent" has the meaning specified in Section 4.02. "Person" means an individual, partnership, corporation, business trust, joint stock company, trust, unincorporated association, joint venture or governmental authority. I-3 "Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security. For purposes of this definition, any Security authenticated and delivered under Section 2.07 in exchange for or in lieu of a defaced, mutilated, lost, destroyed or stolen Security shall be deemed to evidence the same debt as the defaced, mutilated, lost, destroyed or stolen Security. "Record Date" means the day immediately preceding the related Interest Payment Date (whether or not a Business Day). "Registrar" has the meaning specified in Section 4.02. "Required Rate" with respect to any Monthly Allocation Date and the principal amount outstanding as set forth on any of the Schedules attached to a Security, means a per annum rate of interest which shall be calculated as follows: (x) with respect to the certificates representing Principal Collections, the Certificate Rate for the related Class of Certificates, and (y) with respect to any certificate representing Interest Collections, the Commercial Paper Rate as such rate shall be adjusted on each Calculation Date. "Securities" means the Company's TMCC Demand Notes. "Securities Act" means the Securities Act of 1933, as amended, or any successor thereto, and the regulations promulgated thereunder. "Special Record Date" has the meaning specified in Section 2.12. "Stated Maturity Date" when used with respect to (A) the principal on the Securities means the date specified on the Schedule attached to the certificate representing such Security as the fixed date on which the principal thereof is due and payable, which date shall be (x) with respect to the certificates representing Principal Collections, the related Targeted Maturity Date (or in the event the Certificate Balance of a Class of Certificates has not been reduced to zero on the related Targeted Maturity Date as set forth in the Securitization Trust Agreement, the Stated Maturity Date for such Class shall thereafter be the Monthly Allocation Date next succeeding the date of investment), and (y) with respect to any certificate representing Interest Collections, the Certificate Payment Date next succeeding the date of investment and (B) any installment of interest on the Securities, means the Business Day next preceding the Certificate Payment Date (including a Targeted Maturity Date) next succeeding the date of investment. I-4 "Subsidiary" means any Corporation of which at the time of determination the Company or one or more Subsidiaries owns or controls directly or indirectly more than 50% of the shares of Voting Stock. "TIA" and "Trust Indenture Act" mean the Trust Indenture Act of 1939, as amended, and any reference herein to the Trust Indenture Act or a particular provision thereof shall mean such Act or provision, as the case may be, as amended or replaced from time to time or as supplemented from time to time by rules or regulations adopted by the Commission under or in furtherance of the purposes of such Act or provision, as the case may be. "Trustee" means U.S. Bank National Association, as trustee under the Indenture until a successor replaces it in accordance with the provisions of the Indenture, and thereafter means such successor. "Trust Officer," when used with respect to the Trustee, means any officer within the Corporate Trust Office of the Trustee, or any other officer of the Trustee customarily performing functions similar to those performed by the persons who at the time shall be such officers or to whom any corporate trust matter is referred because of his or her knowledge of and familiarity with the particular subject. "United States" and "U.S." each mean the United States of America. "U.S. Government Obligations" means securities which are (i) direct obligations of the United States of America for the payment of which its full faith and credit is pledged or (ii) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank or trust company as custodian with respect to any such U.S. Government Obligation or a specific payment of interest on or principal of any such U.S. Government Obligation held by such custodian for the account of the holder of a depository receipt, provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of interest on or principal of the U.S. Government Obligation evidenced by such depository receipt. "U.S. Legal Tender" means such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts. I-5 EXHIBIT A [FORM OF FACE OF SECURITY] TOYOTA MOTOR CREDIT CORPORATION TMCC Demand Notes [For Principal Collections allocable to the Class A-1 Certificates](1) [For Principal Collections allocable to the Class A-2 Certificates] [For Principal Collections allocable to the Class A-3 Certificates] [For Principal Collections allocable to the Class B Certificates] [For Interest Collections] No. _________________________ Toyota Motor Credit Corporation, a California corporation (the "Company," which term includes any successor corporation under the Indenture referred to on the reverse hereof), for value received, hereby promises to pay to U.S. Bank National Association, in its capacity as trustee under the Securitization Trust Agreement dated as of September 1, 1997, or registered assigns, the principal sum of U.S. Dollars as shall be set forth on the Schedule attached hereto as of the date of Maturity, and to pay interest on the outstanding amount of principal, as set forth on the Schedule from time to time, from the date such principal amount is originally issued and outstanding (or from the most recent Interest Payment Date to which interest has been paid or duly provided for), on the Business Day next preceding the Certificate Payment Date (including a Targeted Maturity Date) next succeeding the date of investment (each an "Interest Payment Date"), at the then applicable Required Rate [as such rate shall be adjusted on each Calculation Date](2), to but excluding the date on which the principal hereof is paid or duly provided for. Interest on this Security will be computed on the basis of a 360-day year of twelve 30-day months. The interest so payable and punctually paid or duly provided for on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the date that is one day (whether or not a Business Day), next preceding such Interest Payment Date (each, a "Record Date"). Any such interest which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date shall forthwith cease to be payable to the Holder on such Record Date by virtue of having been such Holder, and may be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to the Holder of this Security not less than 10 days prior to such Special Record Date or may be paid in any other lawful - --------------------- (1) Specify depending on TMCC Demand Note allocation. (2) Insert for Interest Collections TMCC Demand Notes. A-1 manner, all as more fully provided in the Indenture. Payment of the principal of, premium, if any, and interest on this Security will be made at the office or agency of the Company maintained for that purpose in Chicago, Illinois, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that, except as otherwise provided in the Indenture, payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the register of Securities maintained by the Registrar. The date of Maturity with respect to the principal amount evidenced by this Security shall be, the earlier of (x) [the Business Day immediately preceding the Targeted Maturity Date for the Class A-1/A-2/A-3/B Certificates (or in the event the Certificate Balance of the Class A-1/A-2/A-3/B Certificates has not been reduced to zero on the related Targeted Maturity Date as set forth in the Securitization Trust Agreement, the Stated Maturity Date for the Class A-1/A-2/A-3/B Certificates shall thereafter be the Business Day immediately preceding the Monthly Allocation Date next succeeding the date of investment)]/[the Business Day immediately preceding the Certificate Payment Date next succeeding the date of investment], (1)(y) the date specified in a demand for the payment of 100% of the outstanding principal amount of the TMCC Demand Notes by any holder following the occurrence of a Monthly Payment Event on which the Securitization Trustee demands payment of all outstanding Securities or (z) the date upon which the entire principal and interest due on the Securities becomes due and payable due to the declaration of acceleration upon an Event of Default under the terms of the Indenture. Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. A-2 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal. Dated: TOYOTA MOTOR CREDIT CORPORATION By:______________________________________________ Name: Title: Attest: ____________________________________ Secretary [Corporate Seal] [FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION] This is one of the Securities described in the within-mentioned Indenture. U.S. Bank National Association, U.S. Bank National Association, as Trustee OR as Trustee By:___________________________ By:___________________________ Authorized Signatory as Authenticating Agent By:___________________________ Authorized Signatory A-3 [FORM OF REVERSE OF SECURITY] TOYOTA MOTOR CREDIT CORPORATION TMCC DEMAND NOTES 1. INDENTURE. This Security is one of the duly authorized issue of the Company's TMCC Demand Notes (the "Securities"), issued by the Company under an Indenture dated as of September 1, 1997 (as the same may be amended or supplemented from time to time, the "Indenture") between the Company and U.S. Bank National Association, as Trustee (the "Trustee," which term includes any successor trustee under the Indenture). The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act. Holders are referred to the Indenture and the Trust Indenture Act for a statement of such terms and for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of Securities. The Securities are general obligations of the Company, limited to an aggregate principal amount of $1,600,000,000, except as otherwise provided in the Indenture. No reference herein to the Indenture and no provision of this Security or the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, premium, if any, and interest on this Security at the times, places and rate and in the coin and currency herein and in the Indenture prescribed. The Company shall furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to: Toyota Motor Credit Corporation, Attention: Treasury Department. 2. CAPITALIZED TERMS. Capitalized terms used in this Security have the meanings assigned to them in the Indenture unless otherwise defined in this Security. 3. PAYING AGENT AND REGISTRAR. The Trustee has been appointed to act as initial Paying Agent and Registrar for the Securities in Chicago, Illinois. The Company may appoint additional Paying Agents and co-Registrars, and may change any Paying Agent, Registrar or co-Registrar, all as provided in the Indenture. Except as otherwise provided in the Indenture, the Trustee, the Company or any of its Subsidiaries may act as Paying Agent, Registrar or co-Registrar. 4. REDEMPTION. A-4 The Securities are not redeemable prior to their respective maturities at the option of the Company, in whole or from time to time in part. 5. DENOMINATIONS; TRANSFER; EXCHANGE. The Securities are issuable only in registered form, without coupons, in minimum denominations of U.S. $.01. A Holder may register the transfer of or exchange Securities in accordance with the Indenture, subject to the limitations provided therein. The Registrar or a co-Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents in form satisfactory to the Registrar and the Trustee. No service charge shall be made to a Holder for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith, except as otherwise provided in the Indenture. The Company will maintain in Chicago, Illinois, an office or agency where Securities may be surrendered for registration of transfer or exchange. 6. PERSONS DEEMED OWNERS. Prior to due presentment of a Security for registration of transfer, the Company, the Trustee and any Agent may treat the Person in whose name such Security is registered as the owner of such Security for all purposes. 7. UNCLAIMED MONEY. The Trustee and the Paying Agent shall pay to the Company upon written request any U.S. Legal Tender or U.S. Government Obligations held by them for the payment of the principal of, premium, if any, or interest on the Securities which remains unclaimed for two years after the date on which such payment shall have become due. After payment to the Company as aforesaid, Holders entitled to such moneys or U.S. Government Obligations must look to the Company for such payment unless an applicable abandoned property law designates another Person. 8. DISCHARGE PRIOR TO MATURITY. If the Company irrevocably deposits with the Trustee U.S. Legal Tender or, in certain cases, U.S. Government Obligations sufficient to pay the principal of, premium, if any, and interest on the Securities to maturity, or if all the outstanding Securities have been delivered to the Trustee for cancellation, and in either case if the Company complies with the other provisions of the Indenture relating thereto, the Company will be discharged from certain provisions of the Indenture and the Securities (including the financial covenants, but excluding its obligation to pay the principal of, premium, if any, and interest on the Securities). 9. AMENDMENT; SUPPLEMENT; WAIVER. A-5 Subject to certain exceptions and limitations set forth in the Indenture, the Indenture or the Securities may be amended or supplemented with the consent of the Holders of at least a majority in aggregate principal amount of the Securities then outstanding, and compliance with any provision or obligation under the Indenture or the Securities may be waived with the consent of the Holders of a majority in aggregate principal amount of the Securities then outstanding. The Indenture also permits the Company and the Trustee, without notice to or consent of any Holder, to enter into certain amendments or supplements to the Indenture or the Securities. 10. DEFAULTS AND REMEDIES. If an Event of Default occurs and is continuing, the Trustee, or the Holders of at least 25% in principal amount of the outstanding Securities, may declare all unpaid principal of and accrued interest on the Securities to be due and payable immediately in the manner and with the effect provided in the Indenture. The Indenture provides that the Holders of a majority in principal amount of the Securities outstanding may rescind an acceleration of the Securities and its consequences on the terms and subject to the conditions set forth in the Indenture. The Indenture also provides that the Holders of a majority in principal amount of the outstanding Securities may waive an existing Default or Event of Default and its consequences except, among other things, a default in the payment of the principal of or interest on any of the Securities. 11. TRUSTEE DEALINGS WITH THE COMPANY. The Trustee, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Company or its Subsidiaries or Affiliates with the same rights it would have if it were not the Trustee. The Trustee, however, must comply with the provisions of the Trust Indenture Act, including those relating to the Trustee acquiring any "conflicting interest" as defined therein. 12. NO RECOURSE AGAINST OTHERS. A director, officer, employee, stockholder or incorporator, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Holder by accepting a Security waives and releases all such Persons from such liability. Such waiver and release are part of the consideration for the issuance of the Securities. 13. AUTHENTICATION. This Security and the entries on the Schedule shall not be valid unless the Trustee or an authenticating agent has signed the certificate of authentication on this Security and such Schedule by manual signature. A-6 14. ABBREVIATION. Customary abbreviations may be used in the name of a Holder of a Security or an assignee, such as: TEN COM ( = tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 15. GOVERNING LAW; HEADINGS. THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD (TO THE EXTENT PERMITTED BY LAW) TO PRINCIPLES OF CONFLICTS OF LAW. The headings in this Security are for convenience of reference only and shall not be deemed a part of this Security or limit or otherwise affect the meaning hereof. A-7 [FORM OF ASSIGNMENT] FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto (insert social security or other identifying number of assignee) (Please print or typewrite name and address, including zip code, of assignee) the within Security and all rights thereunder, hereby irrevocably constituting and appointing attorney to transfer said Security on the books of the Company with full power of substitution in the premises. Dated: Signed: ------------ --------------------------------------------------- (Sign exactly as name(s) appear(s) on the face of this Security) A-8 SCHEDULE TO TMCC DEMAND NOTE
ADVANCES PAYMENTS -------- -------- Date of Initial Stated Principal Advance or Advance Principal Required Maturity Principal Interest Balance Payment No. Amount Rate Date Amount Amount Outstanding - --------- --------- --------- --------- --------- --------- --------- -----------
- --------------- A-9 EX-15.1 12 AWARENESS LETTER OF PRICE WATERHOUSE Exhibit 15.1 September 11, 1997 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Ladies and Gentlemen: We are aware that Toyota Motor Credit Corporation has incorporated by reference our reports dated February 12, 1997, May 12, 1997 and August 12, 1997 (issued pursuant to the provisions of Statement on Auditing Standards No. 71) in the Prospectus constituting part of the Registration Statement on Form S-3 (No. 333-26717). We are also aware of our responsibilities under the Securities Act of 1933. Yours very truly, /s/ PRICE WATERHOUSE LLP - ------------------------ EX-23.3 13 CONSENT OF INDEPENDENT ACCOUNTANTS Exhibit 23.3 We hereby consent to the incorporation by reference in the Prospectus constituting part of this Registration Statement on Form S-3 of our report dated October 31, 1996 appearing on page 19 of Toyota Motor Credit Corporation's Annual Report on Form 10-K for the year ended September 30, 1996. We also consent to the reference to us under the heading "Experts" in such Prospectus. /s/ PRICE WATERHOUSE LLP - ------------------------ Los Angeles, California September 11, 1997 -----END PRIVACY-ENHANCED MESSAGE-----