-----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, IoO3TaweaEuJj7JgjpqctGBY7zb3mofElKAlAAAVy1N0nEAgOsD+zRKLD/+wtsP7 2jnYUlzUmyGgwD4sotlISg== 0000834071-00-000036.txt : 20001221 0000834071-00-000036.hdr.sgml : 20001221 ACCESSION NUMBER: 0000834071-00-000036 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 14 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001220 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: 0331 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-09961 FILM NUMBER: 792631 BUSINESS ADDRESS: STREET 1: 19300 GRAMERCY PLACE STREET 2: NORTH BUILDING CITY: TORRANCE STATE: CA ZIP: 90509 BUSINESS PHONE: 3107871310 MAIL ADDRESS: STREET 1: 19300 GRAMERCY PLACE STREET 2: NORTH BUILDING CITY: TORRANCE STATE: CA ZIP: 90509 10-K 1 0001.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the fiscal year ended September 30, 2000 ------------------ OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from to -------- -------- Commission file number 1-9961 ---------- TOYOTA MOTOR CREDIT CORPORATION - --------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) California 95-3775816 - ---------------------------------------- ----------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 19001 S. Western Avenue Torrance, California 90509 - ---------------------------------------- ----------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (310) 468-1310 ----------------------- Securities registered pursuant to section 12(b) of the Act: Name of each exchange Title of each class on which registered ------------------- ----------------------- 5.25% Fixed Rate Medium-Term Notes due January 19, 2001 New York Stock Exchange - ---------------------------------------- ----------------------- Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] As of November 30, 2000, the number of outstanding shares of capital stock, par value $10,000 per share, of the registrant was 91,500, all of which shares were held by Toyota Financial Services Americas Corporation. -1- PART I ITEM 1. BUSINESS. General Toyota Motor Credit Corporation ("TMCC") was incorporated in California in 1982 as a wholly-owned subsidiary of Toyota Motor Sales, USA, Inc. ("TMS") and commenced operations in 1983. TMS is an indirect wholly-owned subsidiary of Toyota Motor Corporation ("TMC"). On October 1, 2000, ownership of TMCC was transferred from TMS to Toyota Financial Services Americas Corporation ("TFSA"), a holding company owned 100% by Toyota Financial Services Corporation ("TFSC"). TFSC, in turn, is a wholly-owned subsidiary of TMC. TFSC was incorporated in July 2000 and its corporate headquarters is located in Nagoya, Japan. The purpose of TFSC is to control and manage Toyota's finance operations worldwide. TMCC provides retail and wholesale financing, retail leasing and certain other financial services to authorized Toyota and Lexus vehicle and Toyota industrial equipment dealers and their customers in the United States (excluding Hawaii) and the Commonwealth of Puerto Rico. TMCC has four wholly-owned subsidiaries, one of which is engaged in the insurance business, one limited purpose subsidiary formed primarily to acquire and securitize retail finance receivables, one limited purpose subsidiary formed primarily to acquire and securitize lease finance receivables and one subsidiary which provides retail and wholesale financing and certain other financial services to authorized Toyota and Lexus vehicle dealers and their customers in the Commonwealth of Puerto Rico. TMCC does business as Toyota Motor Credit Corporation and Lexus Financial Services and markets products under the service mark "Toyota Financial Services". TMCC and its wholly-owned subsidiaries are collectively referred to as the "Company". Toyota Credit Argentina S.A. ("TCA") provides retail and wholesale financing to authorized Toyota vehicle dealers and their customers in Argentina. TMCC owns a 33% interest in TCA. Banco Toyota do Brasil ("BTB") provides retail and lease financing to authorized Toyota vehicle dealers and their customers in Brazil. BTB is owned 15% by TMCC. The remaining interests in TCA and BTB are owned by TFSC. The Company's earnings are primarily impacted by the level of average earning assets, comprised primarily of investments in finance receivables and operating leases, and asset yields as well as outstanding borrowings and the cost of funds. The Company's business is substantially dependent upon the sale of Toyota and Lexus vehicles in the United States. For the year ended September 30, 2000, TMS sold approximately 1,629,000 automobiles and light trucks in the United States (excluding Hawaii), of which approximately 1,033,000 were manufactured in the United States; TMS exported approximately 36,100 automobiles. TMS' sales represented approximately 31% of TMC's worldwide unit sales volume for the year ended March 31, 2000. For the years ended September 30, 2000 and 1999, Toyota and Lexus vehicles accounted for approximately 9.1% and 8.7%, respectively, of all retail automobile and light truck unit sales volume in the United States. Changes in the volume of sales of such vehicles resulting from governmental action, changes in consumer demand, changes in pricing of imported units due to currency fluctuations, or other events, could impact the level of finance and insurance operations of the Company. To date, the level of the Company's operations has not been restricted by the level of sales of Toyota and Lexus vehicles. -2- In connection with the creation of TFSC and the transfer of ownership of TMCC from TMS to TFSC, a new credit support agreement (the "TMC Credit Support Agreement") has been entered into between TMC and TFSC, and a new credit support agreement (the "TFSC Credit Support Agreement") has been entered into between TFSC and TMCC. Under the terms of the TMC Credit Support Agreement, TMC has agreed to: 1) maintain 100% ownership of TFSC; 2) cause TFSC and its subsidiaries to have a net worth of at least Japanese yen 10 million; and 3) make sufficient funds available to TFSC so that TFSC will be able to (i) service the obligations arising out of its own bonds, debentures, notes and other investment securities and commercial paper and (ii) honor its obligations incurred as a result of guarantees or credit support agreements that it has extended. The agreement is not a guarantee by TMC of any securities or obligations of TFSC. Under the terms of the TFSC Credit Support Agreement, TFSC agreed to: 1) maintain 100% ownership of TMCC; 2) cause TMCC and its subsidiaries to have a net worth of at least U.S. $100,000; and 3) make sufficient funds available to TMCC so that TMCC will be able to service the obligations arising out of its own bonds, debentures, notes and other investment securities and commercial paper (collectively, "TMCC Securities"). The agreement is not a guarantee by TFSC of any TMCC Securities or other obligations of TMCC. The TMC Credit Support Agreement and the TFSC Credit Support Agreement are governed by, and construed in accordance with, the laws of Japan. Both agreements are filed as exhibits in Item 14. Holders of TMCC Securities will have the right to claim directly against TFSC and TMC to perform their respective obligations under the credit support agreements by making a written claim together with a declaration to the effect that the holder will have recourse to the rights given under the credit support agreement. If TFSC and/or TMC receives such a claim from any holder of TMCC Securities, TFSC and/or TMC shall indemnify, without any further action or formality, the holder against any loss or damage resulting from the failure of TFSC and/or TMC to perform any of their respective obligations under the credit support agreements. The holder of TMCC Securities who made the claim may then enforce the indemnity directly against TFSC and/or TMC. TMC files periodic reports and other information with the Securities and Exchange Commission ("SEC"), which can be read and copied at the public reference facilities maintained by the SEC at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of the SEC located at 7 World Trade Center, 13th Floor, New York, New York 10048 and at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material may also be obtained by mail from the Public Reference Section of the SEC, at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 at prescribed rates. A Repurchase Agreement was entered into between TMCC and TMS in October 2000 which provides that TMCC is under no obligation to TMS to finance wholesale obligations from any dealers or retail obligations of any customers. In addition, TMS will arrange for the repurchase of new Toyota and Lexus vehicles financed at wholesale by TMCC at the aggregate cost financed in the event of dealer default. The Repurchase Agreement is filed as an exhibit in Item 14. On June 6, 2000, the Executive Committee of the Board of Directors of TMCC approved a change in TMCC's year-end from September 30 to March 31. A report covering the six-month transition period beginning October 1, 2000 and ending March 31, 2001 will be filed with the SEC on Form 10-K. -3- Retail Leasing TMCC purchases primarily new vehicle lease contracts originated by Toyota and Lexus dealers. Lease contracts purchased must first meet TMCC's credit standards after which TMCC assumes ownership of the leased vehicles and is generally permitted to take possession of vehicles upon lessee default. TMCC is responsible for contract collection and administration during the lease period and for the value of the vehicle at lease maturity if the vehicle is not purchased by the lessee or dealer. Off-lease vehicles returned to TMCC are sold through a network of auction sites located throughout the United States as well as through the internet. TMCC requires lessees to carry fire, theft, collision and liability insurance on leased vehicles covering the interests of both TMCC and the lessee. Leasing revenues contributed 72%, 76% and 80% to total financing revenues for the fiscal years ended September 30, 2000, 1999 and 1998, respectively. In October 1996, TMCC created Toyota Lease Trust, a Delaware business trust (the "Titling Trust"), to act as lessor and to hold title to leased vehicles in specified states in connection with a lease securitization program. TMCC acts as the servicer for lease contracts purchased by the Titling Trust from Toyota and Lexus dealers and services such lease contracts in the same manner as contracts owned directly by TMCC. TMCC holds an undivided trust interest in lease contracts owned by the Titling Trust, and such lease contracts are included in TMCC's lease assets, until such time as the beneficial interests in such contracts are transferred in connection with a securitization transaction. Retail Financing TMCC purchases primarily new and used vehicle installment contracts from Toyota and Lexus dealers. Certain of the used vehicle contracts purchased by TMCC are "Certified" Toyota and Lexus used vehicle contracts which relate to vehicles purchased by dealers, reconditioned and certified to meet certain Toyota and Lexus standards, and sold or leased with an extended warranty from the manufacturer. Installment contracts purchased must first meet TMCC's credit standards and thereafter TMCC retains responsibility for contract collection and administration. TMCC acquires security interests in the vehicles financed and generally can repossess vehicles if customers fail to meet contract obligations. Substantially all of TMCC's retail financings are non-recourse which relieves the dealers from financial responsibility in the event of repossession. TMCC requires retail financing customers to carry fire, theft and collision insurance on financed vehicles covering the interests of both TMCC and the customer. Retail financing revenues contributed 23%, 20% and 16% to total financing revenues for the fiscal years ended September 30, 2000, 1999 and 1998, respectively. During fiscal 2000, TMCC completed the national launch of an expanded tiered pricing program for retail vehicle contracts. The objective of the expanded program is to better match customer risk with contract rates charged to allow profitable purchases of a wider range of risk levels. A national launch of an expanded tiered pricing program for lease vehicle contracts is planned for fiscal 2001. Implementation of these expanded programs is expected to increase contract yields and as the portfolio matures, increase credit losses in connection with purchases of higher risk contracts. TMS has historically and continues to sponsor special lease and retail programs by subsidizing below market lease and retail contract rates. -4- A summary of vehicle retail leasing and financing activity follows:
Years Ended September 30, ------------------------------------------------ 2000 1999 1998 1997 1996 -------- -------- -------- -------- -------- Contract volume: Lease................ 240,000 249,000 312,000 262,000 276,000 Retail............... 412,000 333,000 282,000 247,000 229,000 ------- ------- ------- ------- ------- Total............. 652,000 582,000 594,000 509,000 505,000 ======= ======= ======= ======= ======= Average amount financed: Lease................ $25,500 $24,700 $24,600 $24,200 $23,300 Retail............... $17,600 $17,600 $17,100 $16,500 $16,200 Outstanding portfolio at period end ($Millions): Lease............. $13,084 $11,605 $11,872 $11,622 $11,917 Retail............ $10,235 $8,916 $7,834 $5,866 $5,105 Number of accounts 1,426,000 1,234,000 1,193,000 1,061,000 1,069,000
Retail receivables and interests in lease finance receivables sold, totaling $3.8 billion as of September 30, 2000 and $4.1 billion as of September 30, 1999, which TMCC continues to service, are excluded from the outstanding portfolio amounts in the above table. Wholesale Financing TMCC provides wholesale financing primarily to qualified Toyota and Lexus vehicle dealers to finance inventories of new Toyota and Lexus vehicles and used Toyota, Lexus and other vehicles. TMCC acquires security interests in vehicles financed at wholesale, and substantially all such financings are backed by corporate or individual guarantees from or on behalf of participating dealers. In the event of dealer default, TMCC has the right to liquidate any assets acquired and seek legal remedies pursuant to the guarantees. Pursuant to the Repurchase Agreement, TMS will arrange for the repurchase of new Toyota and Lexus vehicles financed at wholesale by TMCC at the aggregate cost financed in the event of dealer default. A summary of vehicle wholesale financing activity follows:
Years Ended September 30, ------------------------------------------------ 2000 1999 1998 1997 1996 -------- -------- -------- -------- -------- Dealer loans ($Millions)..... $13,950 $11,093 $9,802 $8,573 $8,017 Dealer repayments ($Millions) $13,421 $10,983 $9,600 $8,684 $8,221 Outstanding portfolio at period end ($Millions).... $1,410 $855 $746 $563 $668 Average amount financed per vehicle............... $22,534 $22,120 $21,562 $20,695 $19,926
TMCC also makes term loans to dealers for business acquisitions, facilities refurbishment, real estate purchases and working capital requirements. These loans are typically secured with liens on real estate, other dealership assets and/or personal guarantees of the dealers. Wholesale and other dealer financing revenues contributed 5%, 4% and 4% to total financing revenues for each of the fiscal years ended September 30, 2000, 1999 and 1998, respectively. -5- Insurance The principal activities of TMCC's insurance subsidiary, Toyota Motor Insurance Services, Inc. ("TMIS"), include marketing, underwriting, claims administration and providing certain coverages related to vehicle service agreements and contractual liability agreements sold by or through Toyota and Lexus vehicle dealers and affiliates to customers. In addition, TMIS insures and reinsures certain TMS and TMCC risks. Income before income taxes from insurance operations contributed 22%, 13% and 16% to total income before income taxes for the fiscal years ended September 30, 2000, 1999 and 1998, respectively. Servicing TMCC remains as servicer on accounts included in its asset-backed securitization transactions and is paid a servicing fee. Field Operations During the first quarter of fiscal 2001, TMCC announced plans to restructure the Company's field operations. The branch offices of TMCC will be converted to serve only dealer business which includes the purchasing of contracts from dealers, financing inventories, loans to dealers for business acquisitions, facilities refurbishment, real estate purchases and working capital requirements, as well as consulting on finance and insurance operations. The other functions that the branch offices currently cover, such as customer service, collections, lease termination and administrative functions, will be handled by three regional call centers. The new structure is expected to be completed in fiscal 2003. Funding Funding to support the Company's level of earning assets is provided by access to the capital markets as well as earning asset liquidations and funds provided by operating activities. Capital market funding has generally been in the form of commercial paper, extendible commercial notes, domestic and euro medium-term notes and bonds and transactions through the Company's asset-backed securitization programs. The Company uses a variety of derivative financial instruments to manage interest rate and currency exchange exposures. The derivative instruments used include cross currency and interest rate swap agreements, indexed note swap agreements and option-based products. The Company does not use any of these instruments for trading purposes. Competition and Government Regulations TMCC's primary competitors for retail leasing and financing are commercial banks, savings and loan associations, credit unions, finance companies and other captive automobile finance companies. Commercial banks and other captive automobile finance companies also provide wholesale financing for Toyota and Lexus dealers. Competition for the principal products and services provided through the insurance operations is primarily from national and regional independent service contract providers. TMCC's strategy is to supplement, with competitive financing and insurance programs, the overall commitment of TMS to offer a complete package of services to authorized Toyota and Lexus dealers and their customers. -6- The finance and insurance operations of the Company are regulated under both federal and state law. A majority of states have enacted legislation establishing licensing requirements to conduct retail and other finance and insurance activities. Most states also impose limits on the maximum rate of finance charges. In certain states, the margin between the present statutory maximum interest rates and borrowing costs is sufficiently narrow that, in periods of rapidly increasing or high interest rates, there could be an adverse effect on the Company's operations in these states if the Company were unable to pass on increased interest costs to its customers. In addition, 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, TMCC may be subject to liability to such an injured party. However, the laws of most 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 some states, the lessor was permitted to maintain), but failed to maintain. TMCC's lease contracts contain provisions requiring the lessees to maintain levels of insurance satisfying applicable state law and TMCC maintains certain levels of contingent liability insurance for protection from catastrophic claims. TMCC currently does not monitor ongoing insurance compliance in connection with its customary servicing procedures. The Company's operations are also subject to regulation under federal and state consumer protection statutes. The Company continually reviews its operations for compliance with applicable laws. Future administrative rulings, judicial decisions and legislation may require modification of the Company's business practices and documentation. Employee Relations At November 30, 2000, the Company had approximately 2,700 full-time employees. The Company considers its employee relations to be good. Segment Information Financial information regarding industry segments is set forth in Note 17 of the Notes to Consolidated Financial Statements. -7- ITEM 2. PROPERTIES. The headquarters of the Company for both finance and insurance operations is located in Torrance, California. In addition, as of November 30, 2000, the finance operation has three regional offices and 32 branch offices in cities throughout the United States and one branch office in the Commonwealth of Puerto Rico. The insurance operation has six regional sales offices; five of these premises are shared with the finance operation's branch offices. A finance and insurance service center is located in Cedar Rapids, Iowa. All premises are occupied under lease. ITEM 3. LEGAL PROCEEDINGS. Various legal actions, governmental proceedings and other claims are pending or may be instituted or asserted in the future against TMCC and its subsidiaries with respect to matters arising from the ordinary course of business. Certain of these actions are or purport to be class action suits, seeking sizeable damages and/or changes in TMCC's business operations, policies and practices. Certain of these actions are similar to suits, which have been filed against other financial institutions and captive finance companies. Management and internal and external counsel perform periodic reviews of pending claims and actions to determine the probability of adverse verdicts and resulting amounts of liability. The amounts of liability on pending claims and actions as of September 30, 2000 were not determinable; however, in the opinion of management, the ultimate liability resulting therefrom should not have a material adverse effect on TMCC's consolidated financial position or results of operations. The foregoing is a forward looking statement within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended, which represents the Company's expectations and beliefs concerning future events. The Company cautions that its discussion of Legal Proceedings is further qualified by important factors that could cause actual results to differ materially from those in the forward looking statement, including but not limited to the discovery of facts not presently known to the Company or determinations by judges, juries or other finders of fact which do not accord with the Company's evaluation of the possible liability from existing litigation. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not applicable. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. TMCC is a wholly-owned subsidiary of TFSA and, accordingly, all shares of the Company's stock are owned by TFSA. There is no market for TMCC's stock. No dividends have been declared or paid to date. -8- ITEM 6. SELECTED FINANCIAL DATA.
Years Ended September 30, ------------------------------------------- 2000 1999 1998 1997 1996 ------- ------- ------- ------- ------- (Dollars in Millions) INCOME STATEMENT DATA Financing Revenues: Leasing.......................... $ 2,402 $ 2,397 $ 2,595 $ 2,743 $ 2,453 Retail financing................. 768 645 531 433 402 Wholesale and other dealer financing.............. 182 123 114 101 122 ------- ------- ------- ------- ------- Total financing revenues......... 3,352 3,165 3,240 3,277 2,977 Depreciation on leases........... 1,440 1,664 1,681 1,793 1,625 Interest expense................. 1,289 940 994 918 820 ------- ------- ------- ------- ------- Net financing revenues........... 623 561 565 566 532 Insurance premiums earned and contract revenues............. 138 122 112 97 86 Investment and other income...... 99 88 79 66 41 Loss on asset impairment......... 74 19 - - - ------- ------- ------- ------- ------- Net financing revenues and other revenues............ 786 752 756 729 659 ------- ------- ------- ------- ------- Expenses: Operating and administrative..... 400 376 323 259 235 Provision for credit losses...... 135 83 127 136 115 Insurance losses and loss adjustment expenses........... 81 63 55 51 49 ------- ------- ------- ------- ------- Total expenses................... 616 522 505 446 399 ------- ------- ------- ------- ------- Income before income taxes....... 170 230 251 283 260 Equity in net loss of subsidiary. 1 - - - - Provision for income taxes....... 65 98 107 121 108 ------- ------- ------- ------- ------- Net Income....................... $ 104 $ 132 $ 144 $ 162 $ 152 ======= ======= ======= ======= ======= Ratio of earnings to fixed charges................. 1.13 1.24 1.25 1.31 1.32
-9-
Years Ended September 30, ------------------------------------------- 2000 1999 1998 1997 1996 ------- ------- ------- ------- ------- (Dollars in Millions) BALANCE SHEET DATA Finance receivables, net......... $18,168 $13,856 $11,521 $8,452 $7,474 Investments in operating leases, net.................... $ 7,964 $ 8,605 $ 9,765 $10,257 $10,831 Total assets..................... $28,036 $24,578 $23,225 $19,830 $19,309 Notes and loans payable.......... $21,098 $18,565 $17,597 $14,745 $15,014 Capital stock.................... $915 $915 $915 $915 $915 Retained earnings................ $1,539 $1,435 $1,303 $1,159 $997
Certain prior period amounts have been reclassified to conform with the current period presentation. -10- ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. FINANCIAL CONDITION AND RESULTS OF OPERATIONS Net Income - ---------- The following table summarizes TMCC's net income by business segment for the fiscal years ended September 30, 2000, 1999 and 1998:
Years Ended September 30, ------------------------- 2000 1999 1998 ---- ---- ---- (Dollars in Millions) Net income: Financing operations................ $ 70 $113 $119 Insurance operations................ 34 19 25 ---- ---- ---- Total net income................. $104 $132 $144 ==== ==== ====
Net income from financing operations decreased 38% in fiscal 2000, primarily due to lower interest margin as a result of higher interest expense, the recognition of asset impairment losses, higher provision for credit losses, and higher operating and administrative expenses. The decrease in fiscal 1999 financing operations net income from fiscal 1998 reflects lower financing revenues and higher operating and administrative expenses, substantially offset by lower interest expense, lower provision for credit losses and lower depreciation on leases. Net income from insurance operations increased 79% in fiscal 2000, primarily due to higher insurance premiums earned and contract revenues, higher investment income and lower provision for income taxes, partially offset by higher insurance losses and loss adjustment expenses. The decrease in fiscal 1999 net income reflects higher operating and administrative expenses and lower investment income. -11- Earning Assets - -------------- The composition of TMCC's net earning assets (which excludes retail receivables and interests in lease finance receivables sold through securitization transactions), as of the balance sheet dates reported herein and TMCC's vehicle lease and retail contract volume and finance penetration for the years ended September 30, 2000, 1999, and 1998 are summarized below:
September 30, --------------------------- 2000 1999 1998 ------- ------- ------- (Dollars in Millions) Vehicle lease Investment in operating leases, net........ $ 7,580 $ 8,290 $ 9,559 Finance leases, net........................ 5,504 3,315 2,313 ------- ------- ------- Total vehicle leases......................... 13,084 11,605 11,872 Vehicle retail finance receivables, net...... 10,235 8,916 7,834 Vehicle wholesale and other financing........ 3,043 2,142 1,800 Allowance for credit losses.................. (230) (202) (220) ------- ------- ------- Total net earning assets..................... $26,132 $22,461 $21,286 ======= ======= =======
Years Ended September 30, --------------------------- 2000 1999 1998 ------- ------- ------- Total contract volume: Vehicle lease............................. 240,000 249,000 312,000 Vehicle retail............................ 412,000 333,000 282,000 ------- ------- ------- Total........................................ 652,000 582,000 594,000 ======= ======= ======= TMS sponsored contract volume: Vehicle lease............................. 59,000 96,000 170,000 Vehicle retail............................ 44,000 46,000 80,000 ------- ------- ------- Total........................................ 103,000 142,000 250,000 ======= ======= ======= Used contract volume: Vehicle lease............................. 8,000 6,000 7,000 Vehicle retail............................ 149,000 112,000 94,000 ------- ------- ------- Total........................................ 157,000 118,000 101,000 ======= ======= ======= Finance penetration (excluding fleet): Vehicle lease............................. 15.4% 17.7% 25.3% Vehicle retail............................ 17.5% 16.0% 15.7% ------- ------- ------- Total........................................ 32.9% 33.7% 41.0% ======= ======= =======
-12- TMCC's net earning assets as of September 30, 2000 increased from September 30, 1999 due to growth in retail, finance lease and wholesale earning assets, partially offset by a decline in operating lease earning assets. The increase in retail earning assets was primarily due to higher retail contract volume, partially offset by the sale of $1.5 billion of retail finance receivables during fiscal 2000. Finance lease earning assets increased from September 30, 1999 as fiscal 2000 volume exceeded liquidations. Wholesale earning assets increased from September 30, 1999 primarily due to an increase in the number of dealers receiving wholesale financing. The increase in allowance for credit losses reflects asset growth. TMCC's net earning assets as of September 30, 1999 increased from September 30, 1998 primarily due to growth in retail and wholesale earning assets, partially offset by a decline in lease earning assets. In October 1996, TMCC created Toyota Lease Trust, a Delaware business trust (the "Titling Trust"), to act as a lessor and to hold title to leased vehicles in specified states. The value of the lease contracts purchased by the Titling Trust in fiscal 2000 and 1999 represented approximately 43% and 41%, respectively, of all lease contracts purchased by both TMCC and the Titling Trust. TMCC holds an undivided trust interest in lease contracts owned by the Titling Trust, and such lease contracts are included in TMCC's lease assets, until such time as the beneficial interests in such contracts are transferred in connection with a securitization transaction. Substantially all leases owned by the Titling Trust are classified as finance receivables due to certain residual value insurance arrangements in place with respect to such leases, while leases of similar nature originated outside of the Titling Trust are classified as operating leases. The continued acquisition of leases by the Titling Trust has changed the composition of earning assets resulting in an increasing mix of finance receivables relative to operating lease assets due to the classification differences described above. TMS sponsors special lease and retail programs which subsidize reduced monthly payments on certain Toyota and Lexus new vehicles and Toyota industrial equipment to qualified lease and retail customers. Support amounts received from TMS in connection with these programs approximate the balances required by TMCC to maintain revenues at standard program levels and are earned over the expected lease and retail installment contract terms. The level of sponsored program activity varies based on TMS marketing strategies, and revenues earned vary based on the mix of Toyota and Lexus vehicles, timing of programs and the level of support provided. Support amounts earned from TMS sponsored special lease and retail contracts totaled $108 million, $126 million and $142 million for fiscal years 2000, 1999 and 1998, respectively. TMCC's lease contract volume for the year ended September 30, 2000 declined from 1999 reflecting lower levels of programs sponsored by TMS. TMCC's retail contract volume for the year ended September 30, 2000 increased from 1999 levels due to competitive pricing and the strong sales of Toyota and Lexus vehicles. The increase in used vehicle retail contract volume during fiscal 2000 and 1999 reflects a large supply of used vehicles due to the volume of vehicles coming off-lease as well as a shift from leasing to retail financing. Lower lease contract volume in 1999 compared to 1998 was primarily due to lower finance penetration due to changes in lease programs and the residual value setting policy, as well as lower levels of programs sponsored by TMS. Higher retail contract volume in 1999 compared to 1998 was primarily due to competitive pricing and strong sales of Toyota and Lexus vehicles. -13- Net Financing Revenue and Other Revenues - ---------------------------------------- TMCC's net financing revenues increased in fiscal 2000 primarily due to lower depreciation expenses and higher retail and wholesale revenues, substantially offset by higher interest expense. The decrease in fiscal 1999 net financing revenues was primarily due to lower leasing revenues, offset by lower interest expense and increased retail and wholesale revenues. TMCC's continued use of the Titling Trust to purchase leases has caused a shift in the composition of earning assets from operating leases to finance receivables, as discussed earlier, and resulted in increased revenues from finance leases and reduced operating lease revenues and depreciation on operating leases. Insurance premiums earned and contract revenues increased 13% and 9% in fiscal 2000 and 1999, respectively, due to higher underwriting revenues associated with in-force agreements. The following table summarizes TMCC's investment and other income for the fiscal years ended September 30, 2000, 1999 and 1998:
Years Ended September 30, -------------------------- 2000 1999 1998 ---- ---- ---- (Dollars in Millions) Investment income................................... $ 60 $ 34 $ 32 Servicing fee income................................ 34 39 26 Gains on assets sold................................ 5 15 21 ---- ---- ---- Investment and other income...................... $ 99 $ 88 $ 79 ==== ==== ====
The increase in investment and other income from fiscal 1999 to fiscal 2000 is primarily due to higher investment income, partially offset by lower gains on assets sold and lower servicing fee income. The increase in investment and other income from fiscal 1998 to fiscal 1999 is primarily due to higher servicing fee income, partially offset by lower gains on assets sold. The increase in investment income in fiscal 2000 reflects higher market interest rates and an increase in TMCC's portfolio of marketable securities. Servicing fee income decreased 13% in fiscal 2000 due to the reduction in the average balance of sold interests in lease and retail finance receivables as well as the temporary waiver of servicing fee income related to the fiscal 1997 sale of interests in lease finance receivables. Servicing fee income increased 50% in fiscal 1999 due to the growth in the combined balance of sold interests in lease finance and sold retail receivables. Gains recognized on asset-backed securitization transactions generally accelerate the recognition of income on lease and retail contracts, net of servicing fees and other related deferrals, into the period the assets are sold. Numerous factors can affect the timing and amounts of these gains, such as the type and amount of assets sold, the structure of the sale, key assumptions used and current financial market conditions. Gains on assets sold decreased $10 million and $6 million during fiscal years 2000 and 1999, respectively, primarily due to increases in market interest rates which result in narrower spreads being retained by the Company. -14- TMCC performs a quarterly review of the fair market value of assets retained in the sale of interests in lease finance receivables. The fair market value of these retained assets are impacted by management's expectations as to future losses on vehicle disposition, credit losses and prepayment rates. During the third quarter of fiscal 2000, the Company refined its methodology for forecasting losses on vehicle disposition to better reflect recent and expected loss experience. TMCC recognized losses due to the permanent impairment of assets retained in the sale of interests in lease finance receivables totaling $74 million and $19 million during the years ended September 30, 2000 and 1999, respectively, resulting from an increase in vehicle disposition loss assumptions related to leases originated prior to model year 1999 and terminating fiscal years 2000 through 2002. Depreciation on Leases - ---------------------- The following table sets forth the items included in TMCC's depreciation on leases for the years ended September 30, 2000, 1999 and 1998:
September 30, --------------------------- 2000 1999 1998 ------ ------ ------ (Dollars in Millions) Straight-line depreciation on operating leases.... $1,273 $1,378 $1,501 Provision for residual value losses............... 202 286 260 TMS support for certain vehicle disposition losses........................................ (35) - (80) ------ ------ ------ Total depreciation on leases...................... $1,440 $1,664 $1,681 ====== ====== ======
Straight-line depreciation expense decreased 8% during fiscal 2000 and 1999 corresponding with a decline in average operating lease assets. As discussed earlier, the acquisition of leases by the Titling Trust has increased the ratio of lease finance receivables relative to operating lease assets, which results in reduced operating lease revenues and depreciation on operating leases. TMCC is subject to residual value risk in connection with its lease portfolio. TMCC's residual value exposure is a function of the number of off- lease vehicles returned for disposition and any shortfall between the net disposition proceeds and the estimated unguaranteed residual values on returned vehicles. If the market value of a leased vehicle at contract termination is less than its contract residual value, the vehicle is more likely to be returned to TMCC. A higher rate of vehicle returns exposes TMCC to a risk of higher aggregate losses. Total unguaranteed residual values related to TMCC's vehicle lease portfolio increased from approximately $6.5 billion at September 30, 1999 to $7.0 billion at September 30, 2000. TMCC maintains an allowance for estimated losses on lease vehicles returned to the Company for disposition at lease termination. The level of allowance required to cover future vehicle disposition losses is based upon projected vehicle return rates and projected residual value losses derived from market information on used vehicle sales, historical factors, including lease return trends, and general economic factors. -15- The decrease in the provision for residual value losses in fiscal 2000 reflects reduced losses at vehicle disposition, as well as management's estimate that current reserve levels are considered adequate to cover expected losses at vehicle disposition as of September 30, 2000. Losses at vehicle disposition decreased $30 million and $42 million during fiscal 2000 and fiscal 1999, respectively. The decrease in vehicle disposition losses was primarily due to a decrease in the number of vehicles scheduled to terminate resulting from the sale of interests in lease finance receivables during fiscal 1997 and 1998, partially offset by a higher rate of vehicle returns. The Company has taken action to reduce vehicle disposition losses by developing strategies to increase dealer and lessee purchases of off- lease vehicles, expanding marketing of off-lease vehicles through the internet and maximizing proceeds on vehicles sold through auction. In addition, TMCC implemented a new residual value setting policy for new model year 1999 Toyota vehicles that separately calculates the residual value applicable to the base vehicle and the residual value applicable to certain specified optional accessories and optional equipment. The number of returned leased vehicles sold by TMCC during a specified period as a percentage of the number of lease contracts that as of their origination dates were scheduled to terminate ("full term return ratio") was 50% for fiscal 2000 as compared to 47% and 40% for fiscal 1999 and 1998, respectively. TMCC believes that industry-wide record levels of incentives on new vehicles and a large supply of late model off-lease vehicles have put downward pressure on used car prices. In addition, TMCC's increased vehicle return rates reflect the impact of competitive new vehicle pricing for core Toyota and Lexus models. Return rates and losses may also be affected by the amount and types of accessories or installed optional equipment included in leased vehicles. Although vehicle loss rates are typically the result of a combination of factors, to the extent certain types of optional equipment depreciate more quickly than the value of the base vehicle, leased vehicles having a greater portion of their manufacturer's suggested retail price attributable to such optional equipment will experience relatively higher levels of loss. TMCC expects the large supply of vehicles coming off-lease to continue through fiscal 2001 and that the full term return ratio and losses will remain at or near current levels. Under an arrangement with TMS, TMCC received support for vehicle disposition losses in fiscal years 2000 and 1998; no assurance can be provided as to either the level of support or the continuation of the support arrangement in future periods. TMCC's lease portfolio includes contracts with original terms ranging from 12 to 60 months; the average original contract term in TMCC's lease portfolio was 42 months and 40 months at September 30, 2000 and 1999, respectively. Interest Expense - ---------------- Interest expense increased 37% in fiscal 2000 compared with fiscal 1999 primarily due to higher average cost of borrowings and an increase in average debt outstanding. Interest expense decreased 5% in fiscal 1999 reflecting lower average cost of borrowings, partially offset by an increase in average debt outstanding. The weighted average cost of borrowings was 6.30%, 5.34% and 5.85% for the years ended September 30, 2000, 1999 and 1998, respectively. Increases in TMCC's interest costs are expected to continue through fiscal 2001 reflecting the increases in market interest rates during fiscal 2000 and 1999. -16- Operating and Administrative Expenses - ------------------------------------- Operating and administrative expenses increased 6% and 16% in fiscal 2000 and 1999, respectively. The increase in fiscal 2000 reflects expenses associated with technology-related projects, as well as costs to support TMCC's growing customer base. The increase in fiscal 1999 reflects primarily additional personnel and operating costs required to support TMCC's growing customer base, growth in the Company's insurance operations, as well as costs in connection with technology upgrades and software modifications to address year 2000 issues. Included in operating and administrative expenses are charges allocated by TMS for certain technological and administrative services provided to TMCC. On October 1, 2000, TMS and TMCC entered into a Shared Services Agreement covering the services TMS will continue to provide after the ownership of TMCC was transferred to TFSA. During fiscal 2000, charges reimbursed by TMCC to TMS totaled $25 million. Net charges to be reimbursed by TMCC to TMS during the six months ended March 31, 2001 are estimated to range between $22 million and $28 million. The Shared Services Agreement is filed as an exhibit in Item 14. A credit support fee agreement expected to be entered into between TMCC and TFSC provides that TMCC will pay to TFSC a semi-annual fee equal to a percentage of the outstanding amount of TMCC's Securities entitled to credit support, as described under Item 1. Credit support fees to be included in operating and administrative expenses for the six months ended March 31, 2001 are estimated to be $6 million. Operating and administrative expenses are also expected to increase as a result of the planned restructuring of TMCC's field operations. The branch offices of TMCC will be converted to serve only dealer business which includes the purchasing of contracts from dealers, financing inventories, loans to dealers for business acquisitions, facilities refurbishment, real estate purchases and working capital requirements, as well as consulting on finance and insurance operations. The other functions that the branch offices currently cover, such as customer service, collections, lease termination and administrative functions, will be handled by three regional call centers. The new structure is expected to be completed in fiscal 2003. Restructuring charges to be recognized during the six months ended March 31, 2001 are not expected to exceed $10 million. Additional restructuring charges are expected through fiscal 2003. Provision for Credit Losses - --------------------------- TMCC's provision for credit losses increased 63% during fiscal 2000 reflecting growth in earning assets. The provision for credit losses decreased 35% during fiscal 1999 based on improved credit loss experience, portfolio composition and other factors. Allowances for credit losses are evaluated periodically, considering historical loss experience and other factors, and are considered adequate to cover expected credit losses as of September 30, 2000. During fiscal 2000, TMCC completed the national launch of an expanded tiered pricing program for retail vehicle contracts. The objective of the expanded program is to better match customer risk with contract rates charged to allow profitable purchases of a wider range of risk levels. A national launch of an expanded tiered pricing program for lease vehicle contracts is planned for fiscal 2001. Implementation of these expanded programs is expected to increase contract yields and as the portfolio matures, increase credit losses in connection with purchases of higher risk contracts. -17- An analysis of credit losses and the related allowance follows, excluding net losses on receivables sold subject to limited recourse provisions:
Years ended September 30, ------------------------------------ 2000 1999 1998 1997 1996 ---- ---- ---- ---- ---- (Dollars in Millions) Allowance for credit losses at beginning of period......... $202 $220 $213 $203 $171 Provision for credit losses....... 135 83 127 136 115 Charge-offs....................... (116) (104) (120) (116) (81) Recoveries........................ 19 17 17 12 12 Other Adjustments................. (10) (14) (17) (22) (14) ---- ---- ---- ---- ---- Allowance for credit losses at end of period............... $230 $202 $220 $213 $203 ==== ==== ==== ==== ==== Allowance for credit losses as a percent of gross earning assets................ 0.87% 0.89% 1.02% 1.13% 1.10% Net credit losses as a percent of average earning assets.. .. .39% .40% .51% .55% .41% Aggregate balances at end of period for lease rentals and installments 60 or more days past due.......... $54 $35 $30 $30 $29 Aggregate balances at end of period for lease rentals and installments 60 or more days past due as a percent of net investments in operating leases and gross receivables outstanding.................... .20% .15% .14% .15% .15%
-18- LIQUIDITY AND CAPITAL RESOURCES The Company requires, in the normal course of business, substantial funding to support the level of its earning assets. Significant reliance is placed on the Company's ability to obtain debt funding in the capital markets in addition to funding provided by earning asset liquidations and cash provided by operating activities as well as transactions through the Company's asset-backed securitization programs. Debt issuances have generally been in the form of commercial paper, extendible commercial notes ("ECNs") and domestic and euro medium-term notes ("MTNs") and bonds. Commercial paper and ECN issuances are used to meet short-term funding needs. Commercial paper outstanding under TMCC's commercial paper program ranged from approximately $1.5 billion to $4.0 billion during fiscal 2000, with an average outstanding balance of $2.7 billion. The outstanding balance of ECNs at September 30, 2000 totaled $195 million. For additional liquidity purposes, TMCC maintains syndicated bank credit facilities with certain banks, which aggregated $3.0 billion at November 30, 2000. No loans were outstanding under any of these bank credit facilities during fiscal 2000. TMCC also maintains, uncommitted, unsecured lines of credit with banks totaling $125 million. At November 30, 2000, TMCC had issued approximately $1 million in letters of credit. Long-term funding requirements are met through the issuance of a variety of debt securities underwritten in both the United States and international capital markets. Domestic and euro MTNs and bonds have provided TMCC with significant sources of funding. During fiscal 2000, TMCC issued approximately $4.9 billion of domestic and euro MTNs and bonds all of which had original maturities of one year or more. The original maturities of all MTNs and bonds outstanding at September 30, 2000 ranged from nine months to eleven years. As of September 30, 2000, TMCC had total MTNs and bonds outstanding of $17.5 billion, of which $7.0 billion was denominated in foreign currencies. TMCC anticipates continued use of MTNs and bonds in both the United States and international capital markets. The Company maintains a shelf registration with the SEC providing for the issuance of MTNs and other debt securities. At November 30, 2000, approximately $3.3 billion was available for issuance under this registration statement. The maximum aggregate principal amount authorized to be outstanding at any time under TMCC's euro MTN program is $16.0 billion. Approximately $4.8 billion was available for issuance under the euro MTN program as of November 30, 2000. The United States and euro MTN programs may be expanded from time to time to allow for the continued use of these sources of funding. In addition, TMCC may issue bonds in the domestic and international capital markets that are not issued under its MTN programs. Additionally, TMCC uses its asset-backed securitization programs to generate funds for investment in earning assets as described in Note 7 to the Consolidated Financial Statements. TMCC maintains a shelf registration statement with the SEC relating to the issuance of asset-backed notes secured by, and certificates representing interests, in retail receivables. During the year ended September 30, 2000, TMCC sold retail receivables totaling $1.5 billion in connection with securities issued under the shelf registration statement. As of November 30, 2000, $1.5 billion remained available for issuance under the registration statement. -19- In March 2000, certain nationally recognized statistical rating organizations placed several classes of TMCC's lease securitizations under review for possible downgrade as a result of higher than expected residual value losses. In May 2000, TMCC made a cash capital contribution totaling $102 million to Toyota Leasing, Inc., a wholly-owned subsidiary of TMCC, for deposit into the reserve funds of the lease securitizations under review. In addition, a portion of the monthly excess cash flows in the transactions are being retained in these reserve funds to supplement the capital contribution. As a result of TMCC's actions, the rating organizations affirmed the original credit ratings for the lease asset-backed securities. TMCC's long term unsecured ratings were unaffected by these events. TMCC does not believe that the rating organization actions have had a material adverse effect on its liquidity or access to capital markets. TMCC's ratio of earnings to fixed charges was 1.13, 1.24 and 1.25 in the years ended September 30, 2000, 1999, and 1998, respectively. TMCC believes that the decline in the ratio has not affected its ability to maintain liquidity or access to outside funding sources. The decline in the ratio during fiscal 2000 was due to several factors including lower interest margin as a result of higher interest expense, the recognition of asset impairment losses, higher provision for credit losses and higher operating and administrative expenses. Cash flows provided by operating, investing and financing activities have been used primarily to support earning asset growth. Cash provided by the liquidation and sale of earning assets, totaling $23.0 billion and $21.0 billion during fiscal 2000 and 1999, respectively, was used to purchase additional investments in operating leases and finance receivables, totaling $28.2 billion and $23.9 billion during fiscal 2000 and 1999, respectively. Investing activities resulted in a net use of cash of $5.1 billion and $3.3 billion in fiscal 2000 and 1999, respectively, as the purchase of additional earning assets exceeded cash provided by the liquidation of earning assets. Net cash provided by operating activities totaled $1.9 billion and $2.3 billion in fiscal 2000 and 1999, and net cash provided by financing activities totaled $3.1 billion and $1.1 billion, during fiscal 2000 and 1999, respectively. The Company believes that cash provided by operating and investing activities as well as access to domestic and international capital markets, the issuance of commercial paper and ECNs, and asset-backed securitization transactions will provide sufficient liquidity to meet its future funding requirements. -20- Euro Conversion - --------------- On January 1, 1999, eleven of the fifteen member countries of the European Union (the "participating countries") established fixed conversion rates between their existing sovereign currencies (the "legacy currencies") and the euro. The participating countries agreed to adopt the euro as their common legal currency on the date that the euro began trading on currency exchanges and was available for non-cash transactions. The legacy currencies are scheduled to remain legal tender in the participating countries as denominations of the euro until January 1, 2002 (the "transition period"). During the transition period, public and private parties may pay for goods and services using either the euro or the participating country's legacy currency. Beginning January 1, 2002, the participating countries will issue new euro-denominated bills and coins for use in cash transactions and legacy currencies will be withdrawn from circulation, signifying the completion of the euro conversion process. As TMCC does not currently support Toyota finance operations in Europe, the impact of the euro conversion is limited to issues in connection with raising funds in the European capital markets. TMCC generally hedges all foreign exchange exposure associated with its funding activities which limits its exposure to movements in foreign exchange rates. In addition, payments in foreign currencies owed by TMCC are made by its counterparties under International Swaps and Derivatives Association, Inc. ("ISDA") master agreements governing swap transactions. Accordingly, TMCC did not need to make any material changes to its systems to accommodate these types of payments. TMCC has provided changes to its standard settlement instructions to the extent necessary to reflect changes in account information and payment instructions occurring as a result of the introduction of the euro. TMCC does not believe that it will experience significant issues relating to the continuity of TMCC's contracts arising from the introduction of the euro. The ISDA Master Agreements entered into by TMCC are generally governed by New York law. New York has adopted legislation which prevents a party to a contract from unilaterally breaking or changing its contractual obligations as a result of the euro conversion. In addition, TMCC is a party to the EMU Protocol published by ISDA designed to clarify the effects of certain issues surrounding the introduction of the euro including continuity of contracts, price source changes, payment netting and certain definitions. The introduction of the euro has not had a material adverse effect on the Company's operations or financial results. The Company plans to continue to consider the euro in future funding strategies and will continue to fund in all markets which are cost-effective. -21- Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995 The foregoing Business description and Management's Discussion and Analysis contain various "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which represent the Company's expectations or beliefs concerning future events, including the following: that the Company considers its employee relations to be good; that increases in interest costs are expected to continue through fiscal 2001; that TMCC anticipates continued growth in operating and administrative expenses reflecting costs associated with technology initiatives and operating and administrative services provided by TMS, credit support fees and the restructuring of TMCC's field operations; that the implementation of the expanded tiered pricing programs may result in increased contract yields and as the portfolio matures, increased credit losses in connection with purchases of higher risk contracts; that TMCC expects the large supply of vehicles coming off-lease to continue through fiscal 2001 and that the full term return ratio and losses will remain at or near current levels; that allowances for credit losses are considered adequate to cover expected credit losses; that TMCC anticipates continued use of MTNs and bonds in the United States and the international capital markets; that TMCC may issue bonds in the domestic and international capital markets that are not issued under its MTN programs; that the decline in the ratio of earnings to fixed charges has not affected its ability to maintain liquidity or access to outside funding sources; that cash provided by operating and investing activities as well as access to domestic and international capital markets, the issuance of commercial paper and ECNs, and asset-backed securitization transactions will provide sufficient liquidity to meet its future funding requirements; that TMCC does not believe that it will experience significant issues relating to the continuity of TMCC's contracts arising from the introduction of the euro; that the Company does not currently anticipate non-performance by any of its counterparties; The Company cautions that these statements are further qualified by important factors that could cause actual results to differ materially from those in the forward looking statements, including, without limitation, the following: decline in demand for Toyota and Lexus products; the effect of economic conditions; a decline in the market acceptability of leasing; the effect of competitive pricing on interest margins; increases in prevailing interest rates; changes in pricing due to the appreciation of the Japanese yen against the United States dollar; the effect of governmental actions; the effect of competitive pressures on the used car market and residual values and the continuation of the other factors causing an increase in vehicle returns and disposition losses; the continuation of, and if continued, the level and type of special programs offered by TMS; the ability of the Company to successfully access the United States and international capital markets; the effects of any rating agency actions; increases in market interest rates; the monetary policies exercised by the European Central Bank and other monetary authorities; increased costs associated with the Company's debt funding efforts; with respect to the effects of litigation matters, the discovery of facts not presently known to the Company or determination by judges, juries or other finders of fact which do not accord with the Company's evaluation of the possible liability from existing litigation; and the ability of the Company's counterparties to perform under interest rate and cross currency swap agreements. Results actually achieved thus may differ materially from expected results included in these statements. -22- New Accounting Standards In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", effective for fiscal years beginning after June 15, 1999. SFAS No. 133 requires companies to record derivatives on the balance sheet as assets and liabilities, measured at fair value. Gains and losses resulting from changes in the values of those derivatives would be accounted for as either components of earnings or accumulated other comprehensive income depending on the use of the derivative and whether it qualifies for hedge accounting. In June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133", which defers the effective date of SFAS No. 133 to fiscal years beginning after June 15, 2000. In June 2000, the FASB issued SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities - an Amendment of FASB Statement No. 133", which amends the accounting and reporting standards of Statement No. 133. The Company adopted SFAS Nos. 133 and 138 on October 1, 2000. The adoption of these new accounting standards will result in cumulative after-tax reductions in net income of approximately $2 million. The adoption will also impact assets and liabilities recorded on the balance sheet. In September 2000, the FASB issued SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities". This statement replaces SFAS No. 125 and revises the standards for accounting for securitizations and other transfers of financial assets and collateral. SFAS No. 140 is effective for transfers and servicing of financial assets and extinguishments of liabilities occurring after March 31, 2001. This statement is effective for recognition and reclassification of collateral and for disclosures relating to securitization transactions and collateral for fiscal years ending after December 15, 2000. The Company has not determined the impact that adoption of this standard will have on its consolidated financial statements. -23- ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK TMCC utilizes a variety of interest rate and currency derivative financial instruments to manage interest rate and currency exchange exposures. The derivative instruments used include cross currency and interest rate swaps, indexed note swaps and option-based products. TMCC does not use any of these instruments for trading purposes. The total notional amounts of TMCC's derivative financial instruments at September 30, 2000 and 1999 were $32.0 billion and $26.0 billion, respectively. The notional amounts of interest rate and indexed note swap agreements and option-based products do not represent amounts exchanged by the parties and, thus, are not a measure of the Company's exposure through its use of derivatives. The only market rate risk related to TMCC's portfolio is interest rate risk as foreign currency risks are entirely hedged through cross currency interest rate swap agreements. TMCC utilizes interest rate swap agreements in managing its exposure to interest rate fluctuations. Interest rate swap agreements are executed as an integral part of specific debt transactions or on a portfolio basis. TMCC's interest rate swap agreements involve agreements to pay fixed and receive a floating rate, or receive fixed and pay a floating rate, at specified intervals, calculated on an agreed-upon notional amount. Interest rate swap agreements may also involve basis swap contracts which are agreements to exchange the difference between certain floating interest amounts, such as the net payment based on the commercial paper rate and the London Interbank Offered Rate ("LIBOR"), calculated on an agreed-upon notional amount. TMCC also utilizes option-based products in managing its exposure to interest rate fluctuations. Option-based products are executed on a portfolio basis and consist primarily of purchased interest rate cap agreements and, to a lesser extent, corridor agreements. Option-based products are agreements which either grant TMCC the right to receive, or require TMCC to make payments at, specified interest rate levels. TMCC utilizes indexed note swap agreements in managing its exposure in connection with debt instruments whose interest rate and/or principal redemption amounts are derived from other underlying instruments. Indexed note swap agreements involve agreements to receive interest and/or principal amounts associated with the indexed notes, denominated in either U.S. dollars or a foreign currency, and to pay fixed or floating rates on fixed U.S. dollar liabilities. TMCC utilizes cross currency interest rate swap agreements to entirely hedge exposure to exchange rate fluctuations on principal and interest payments for borrowings denominated in foreign currencies. Notes and loans payable issued in foreign currencies are hedged by concurrently executed cross currency interest rate swap agreements which involve the exchange of foreign currency principal and interest obligations for U.S. dollar obligations at agreed-upon currency exchange and interest rates. Derivative financial instruments used by TMCC involve, to varying degrees, elements of credit risk in the event a counterparty should default and market risk as the instruments are subject to rate and price fluctuations. Credit risk is managed through the use of credit standard guidelines, counterparty diversification, monitoring of counterparty financial condition and master netting agreements in place with all derivative counterparties. Credit exposure of derivative financial instruments is represented by the fair value of contracts with a positive fair value at September 30, 2000 reduced by the effects of master netting agreements. The credit exposure of TMCC's derivative financial instruments at September 30, 2000 was $95 million on an aggregate notional amount of $32.0 billion. Additionally, at September 30, 2000, approximately 89% of TMCC's derivative financial instruments, based on notional amounts, were with commercial banks and investment banking firms assigned investment grade ratings of "AA" or better by national rating agencies. TMCC does not currently anticipate non-performance by any of its counterparties and has no reserves related to non-performance as of September 30, 2000; TMCC has not experienced any counterparty default during the three years ended September 30, 2000. -24- TMCC uses a value-at-risk methodology, in connection with other management tools, to assess and manage the interest rate risk of aggregated loan and lease assets and financial liabilities, including interest rate derivatives and option-based products. Value-at-risk represents the potential losses in fair value for a portfolio from adverse changes in market factors for a specified period of time and likelihood of occurrence (i.e. level of confidence). TMCC's value-at-risk methodology incorporates the impact from adverse changes in market interest rates but does not incorporate any impact from other market changes, such as foreign currency exchange rates or commodity prices, which do not affect the value of TMCC's portfolio. The value-at-risk methodology excludes changes in fair values related to investments in marketable securities and equipment financing as these amounts are not significant to TMCC's total portfolio. The value-at-risk methodology uses five years of historical interest rate data to build a database of prediction errors in forward rates for a one month holding period. These prediction errors are then applied randomly to current forward rates through a Monte Carlo process to simulate 500 potential future yield curves. The portfolio is then re-priced with these curves to develop a distribution of future portfolio values. Options in the portfolio are priced with current market implied volatilities and the simulated yield curves using the Black Scholes method. The lowest portfolio value at the 95% confidence interval is compared with the current portfolio value to derive the value-at-risk number. The value-at-risk and the average value-at-risk of TMCC's portfolio as of and for the fiscal years ended September 30, 2000 and 1999, measured as the potential 30 day loss in fair value from assumed adverse changes in interest rates are as follows:
Average for the As of Fiscal Year Ending September 30, 2000 September 30, 2000 ------------------ ------------------- Mean portfolio value..................... $4,536.0 million $4,742.0 million Value-at-risk............................ $129.9 million $113.5 million Percentage of the mean portfolio value... 2.9% 2.4% Confidence level......................... 95.0% 95.0% Average for the As of Fiscal Year Ending September 30, 1999 September 30, 1999 ------------------ ------------------- Mean portfolio value..................... $3,300.0 million $3,600.0 million Value-at-risk............................ $86.3 million $71.6 million Percentage of the mean portfolio value... 2.6% 2.0% Confidence level......................... 95.0% 95.0%
TMCC's calculated value-at-risk exposure represents an estimate of reasonably possible net losses that would be recognized on its portfolio of financial instruments assuming hypothetical movements in future market rates and is not necessarily indicative of actual results which may occur. It does not represent the maximum possible loss nor any expected loss that may occur, since actual future gains and losses will differ from those estimated, based upon actual fluctuations in market rates, operating exposures, and the timing thereof, and changes in the composition of TMCC's portfolio of financial instruments during the year. The increase in the mean portfolio value and value-at-risk levels from fiscal 1999 primarily reflects an increase in TMCC's portfolio and changes in market rates. -25- ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. INDEX TO FINANCIAL STATEMENTS Page ------- Report of Independent Accountants................................ 27 Consolidated Balance Sheet at September 30, 2000 and 1999........ 28 Consolidated Statement of Income for the years ended September 30, 2000, 1999 and 1998................. 29 Consolidated Statement of Shareholder's Equity for the years ended September 30, 2000, 1999 and 1998............. 30 Consolidated Statement of Cash Flows for the years ended September 30, 2000, 1999 and 1998................. 31 Notes to Consolidated Financial Statements....................... 32-60 All schedules have been omitted because they are not required, not applicable, or the information has been included elsewhere. -26- REPORT OF INDEPENDENT ACCOUNTANTS --------------------------------- To the Board of Directors and Shareholder of Toyota Motor Credit Corporation In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, shareholder's equity and cash flows present fairly, in all material respects, the financial position of Toyota Motor Credit Corporation and its subsidiaries at September 30, 2000 and 1999, and the results of their operations and their cash flows for each of the three years in the period ended September 30, 2000, in conformity with accounting principles generally accepted in the United States. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. /S/ PRICEWATERHOUSECOOPERS LLP Los Angeles, California October 31, 2000 -27- TOYOTA MOTOR CREDIT CORPORATION CONSOLIDATED BALANCE SHEET (Dollars in Millions)
September 30, ----------------------- 2000 1999 -------- -------- ASSETS ------ Cash and cash equivalents.................. $ 170 $ 180 Investments in marketable securities....... 871 450 Finance receivables, net................... 18,168 13,856 Investments in operating leases, net....... 7,964 8,605 Receivable from Parent and Affiliate....... - 717 Other receivables.......................... 468 366 Deferred charges........................... 133 131 Other assets............................... 262 242 Income taxes receivable.................... - 31 ------- ------- Total Assets...................... $28,036 $24,578 ======= ======= LIABILITIES AND SHAREHOLDER'S EQUITY ------------------------------------ Notes and loans payable.................... $21,098 $18,565 Accrued interest........................... 195 161 Accounts payable and accrued expenses...... 1,943 1,096 Deposits................................... 160 201 Income taxes payable....................... 3 - Deferred income............................ 681 636 Deferred income taxes...................... 1,483 1,554 ------- ------- Total Liabilities.................... 25,563 22,213 ------- ------- Commitments and Contingencies Shareholder's Equity: Capital stock, $l0,000 par value (100,000 shares authorized; issued and outstanding 91,500 in 2000 and 1999)................................ 915 915 Retained earnings....................... 1,539 1,435 Accumulated other comprehensive income.. 19 15 ------- ------- Total Shareholder's Equity........... 2,473 2,365 ------- ------- Total Liabilities and Shareholder's Equity.............. $28,036 $24,578 ======= =======
See Accompanying Notes to Consolidated Financial Statements. -28- TOYOTA MOTOR CREDIT CORPORATION CONSOLIDATED STATEMENT OF INCOME (Dollars in Millions)
Years ended September 30, ---------------------------- 2000 1999 1998 ------ ------ ------ Financing Revenues: Leasing................................. $2,402 $2,397 2,595 Retail financing........................ 768 645 531 Wholesale and other dealer financing.... 182 123 114 ------ ------ ------ Total financing revenues................... 3,352 3,165 3,240 Depreciation on leases.................. 1,440 1,664 1,681 Interest expense........................ 1,289 940 994 ------ ------ ------ Net financing revenues..................... 623 561 565 Insurance premiums earned and contract revenues................................ 138 122 112 Investment and other income................ 99 88 79 Loss on asset impairment................... 74 19 - ------ ------ ------ Net financing revenues and other revenues.. 786 752 756 ------ ------ ------ Expenses: Operating and administrative............ 400 376 323 Provision for credit losses............. 135 83 127 Insurance losses and loss adjustment expenses............................. 81 63 55 ------ ------ ------ Total expenses............................. 616 522 505 ------ ------ ------ Income before income taxes................. 170 230 251 Equity in net loss of subsidiary........... 1 - - Provision for income taxes................. 65 98 107 ------ ------ ------ Net Income................................. $ 104 $ 132 $ 144 ====== ====== ======
See Accompanying Notes to Consolidated Financial Statements. -29- TOYOTA MOTOR CREDIT CORPORATION CONSOLIDATED STATEMENT OF SHAREHOLDER'S EQUITY (Dollars in Millions)
Accumulated Other Capital Retained Comprehensive Stock Earnings Income Total ------- -------- ------------- ------ - - Balance at September 30, l997.... $ 915 $ 1,159 $ 7 $2,081 ------ ------- ---------- ------ Net income in 1998............... - 144 - 144 Change in net unrealized gains on available-for-sale marketable securities......... - - 6 6 ------ -------- ---------- ------ Total - 144 6 150 ------ -------- ---------- ------ Balance at September 30, 1998.... 915 1,303 13 2,231 ------ -------- ---------- ------ Net income in 1999............... - 132 - 132 Change in net unrealized gains on available-for-sale marketable securities......... - - 2 2 ------ -------- ---------- ------ Total - 132 2 134 ------ -------- ---------- ------ Balance at September 30, 1999.... 915 1,435 15 2,365 ------ -------- ---------- ------ Net income in 2000............... - 104 - 104 Change in net unrealized gains on available-for-sale marketable securities......... - - 4 4 ------ -------- ---------- ------ Total - 104 4 108 ------ -------- ---------- ------ Balance at September 30, 2000.... $ 915 $ 1,539 $ 19 $2,473 ====== ======= ========== ======
See Accompanying Notes to Consolidated Financial Statements. -30- TOYOTA MOTOR CREDIT CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (Dollars in Millions)
Years ended September 30, --------------------------------- 2000 1999 1998 ------ ------ ------ Cash flows from operating activities: Net income............................................. $ 104 $ 132 $ 144 ------ ------ ------ Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization..................... 1,557 1,711 1,826 Provision for credit losses....................... 135 83 127 Gain from sale of finance receivables, net........ (5) (15) (21) Gain from sale of marketable securities, net...... (8) (1) (5) Loss on asset impairment.......................... 74 19 - (Decrease) increase in other assets............... (58) 125 (471) Increase (decrease) in accrued interest........... 34 (15) (37) (Decrease) increase in deferred income taxes...... (68) 173 420 Increase in other liabilities..................... 165 42 139 ------ ------ ------ Total adjustments...................................... 1,826 2,122 1,978 ------ ------ ------ Net cash provided by operating activities................. 1,930 2,254 2,122 ------ ------ ------ Cash flows from investing activities: Addition to investments in marketable securities.......................................... (1,409) (705) (996) Disposition of investments in marketable securities.......................................... 985 694 906 Purchase of finance receivables........................ (25,161) (20,309) (19,034) Liquidation of finance receivables..................... 19,238 15,802 14,003 Proceeds from sale of finance receivables.............. 1,476 2,042 1,830 Addition to investments in operating leases............ (3,085) (3,577) (4,552) Disposition of investments in operating leases......... 2,262 3,137 3,303 Decrease (increase) in receivable from Parent.......... 644 (396) (143) ------ ------ ------ Net cash used in investing activities..................... (5,050) (3,312) (4,683) ------ ------ ------ Cash flows from financing activities: Proceeds from issuance of notes and loans payable...... 6,783 6,634 6,039 Payments on notes and loans payable.................... (5,582) (4,985) (4,250) Net increase (decrease) in commercial paper, with original maturities less than 90 days.......... 1,909 (567) 751 ------ ------ ------ Net cash provided by financing activities................. 3,110 1,082 2,540 ------ ------ ------ Net (decrease) increase in cash and cash equivalents...... (10) 24 (21) Cash and cash equivalents at the beginning of the period.......................................... 180 156 177 ------ ------ ------ Cash and cash equivalents at the end of the period................................................. $ 170 $ 180 $ 156 ====== ====== ====== Supplemental disclosures: Interest paid.......................................... $1,240 $979 $995 Income taxes paid...................................... $22 $17 $6
See Accompanying Notes to Consolidated Financial Statements. -31- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 - Nature of Operations - ----------------------------- Toyota Motor Credit Corporation ("TMCC") provides retail and wholesale financing, retail leasing and certain other financial services to authorized Toyota and Lexus vehicle and Toyota industrial equipment dealers and their customers in the United States (excluding Hawaii) and the Commonwealth of Puerto Rico. As of September 30, 2000, TMCC was a wholly-owned subsidiary of Toyota Motor Sales, U.S.A., Inc. ("TMS" or the "Parent"). TMS is primarily engaged in the wholesale distribution of automobiles, trucks, industrial equipment and related replacement parts and accessories throughout the United States (excluding Hawaii). Substantially all of TMS's products are purchased from Toyota Motor Corporation ("TMC") or its affiliates. TMCC has four wholly-owned subsidiaries, Toyota Motor Insurance Services, Inc. ("TMIS"), Toyota Motor Credit Receivables Corporation ("TMCRC"), Toyota Leasing, Inc. ("TLI") and Toyota Credit de Puerto Rico Corporation ("TCPR"). TMCC and its wholly-owned subsidiaries are collectively referred to as the "Company". TMIS provides certain insurance services along with certain insurance and contractual coverages in connection with the sale and lease of vehicles. In addition, the insurance subsidiaries insure and reinsure certain TMS and TMCC risks. TMCRC, a limited purpose subsidiary, operates primarily to acquire retail finance receivables from TMCC for the purpose of securitizing such receivables. TLI, a limited purpose subsidiary, operates primarily to acquire lease finance receivables from TMCC for the purpose of securitizing such leases. TCPR provides retail and wholesale financing and certain other financial services to authorized Toyota and Lexus vehicle dealers and their customers in Puerto Rico. Toyota Credit Argentina S.A. ("TCA") provides retail and wholesale financing to authorized Toyota vehicle dealers and their customers in Argentina. TMCC owns a 33% interest in TCA. TMCC's investment in TCA is accounted for using the equity method. Banco Toyota do Brasil ("BTB") provides retail and lease financing to authorized Toyota vehicle dealers and their customers in Brazil. BTB is owned 15% by TMCC. TMCC's investment in BTB is accounted for using the cost method. The remaining interests in TCA and BTB are owned by TMC, the ultimate parent of TMCC. The Company's earnings are primarily impacted by the level of average earning assets, comprised primarily of investments in finance receivables and operating leases, and asset yields as well as outstanding borrowings and the cost of funds. The Company's business is substantially dependent upon the sale of Toyota and Lexus vehicles in the United States. Changes in the volume of sales of such vehicles resulting from governmental action, changes in consumer demand, changes in pricing of imported units due to currency fluctuations, or other events could impact the level of finance and insurance operations of the Company. -32- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 2 - Summary of Significant Accounting Policies - --------------------------------------------------- Use of Estimates ---------------- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Principles of Consolidation --------------------------- The consolidated financial statements include the accounts of TMCC and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated. Cash and Cash Equivalents ------------------------- Cash equivalents, consisting primarily of money market instruments and debt securities, represent highly liquid investments with original maturities of three months or less. Investments in Marketable Securities ------------------------------------ Investments in marketable securities consist of debt and equity securities. Debt securities designated as held-to-maturity are carried at amortized cost and are reduced to net realizable value for other than temporary declines in market value. Debt and equity securities designated as available-for-sale are carried at fair value with unrealized gains or losses included in accumulated other comprehensive income, net of applicable taxes. Realized investment gains and losses, which are determined on the specific identification method, are reflected in income. Investments in Operating Leases ------------------------------- Investments in operating leases are recorded at cost and depreciated on a straight-line basis, over the lease terms to the estimated residual value. Revenue from operating leases is recognized on a straight-line basis over the lease terms. Finance Receivables ------------------- Finance receivables are recorded at the present value of the related future cash flows including residual values for finance leases. Revenue associated with finance receivables is recognized on a level-yield basis over the contract terms. -33- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 2 - Summary of Significant Accounting Policies (Continued) - --------------------------------------------------- Allowance for Credit Losses --------------------------- Allowances for credit losses are evaluated periodically, considering historical loss experience and other factors, and are maintained in amounts considered by management to be appropriate in relation to receivables outstanding and expected future loss experience. Losses are charged to the allowance for credit losses when it has been determined that collateral cannot be recovered and any shortfall between proceeds received and the carrying cost of repossessed collateral is charged to the allowance. Recoveries are credited to the allowance for credit losses. Allowance for Residual Value Losses ----------------------------------- Allowances for estimated losses on lease vehicles returned to TMCC for disposition at lease termination are established based upon projected vehicle return rates and projected residual value losses derived from historical and market information as well as general economic factors. The provision for residual value losses is included in lease depreciation expense. Deferred Charges ---------------- Deferred charges consist primarily of premiums paid for option-based products, underwriters' commissions and other debt issuance costs which are amortized to interest expense over the life of the related instruments on a straight-line basis, which is not materially different from the effective interest method. Derivative Financial Instruments -------------------------------- TMCC uses a variety of derivative financial instruments to manage funding costs and risks associated with changes in interest and foreign currency exchange rates. The derivative instruments used include interest rate, cross currency interest rate and indexed note swap agreements and option-based products. TMCC does not use any of these instruments for trading purposes. The derivative financial instruments are specifically designated to the underlying debt obligations or to portfolio level risks. Cash flows related to these instruments are classified in the same categories as cash flows from related borrowing activities. Interest Rate Swap Agreements ----------------------------- Interest rate swap agreements are executed as an integral part of specific debt transactions or on a portfolio basis. The differential paid or received on interest rate swap agreements is recorded on an accrual basis as an adjustment to interest expense over the term of the agreements. Cross Currency Interest Rate Swap Agreements -------------------------------------------- Cross currency interest rate swap agreements are executed as an integral part of foreign currency debt transactions. The differential between the contract rates and the foreign currency spot exchange rates as of the reporting dates is classified in other receivables or accounts payable and accrued expenses; the differential paid or received on the interest rate swap portion of the agreements is recorded on an accrual basis as an adjustment to interest expense over the term of the agreements. -34- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 2 - Summary of Significant Accounting Policies (Continued) - --------------------------------------------------- Indexed Note Swap Agreements ---------------------------- Indexed note swap agreements are executed as an integral part of indexed note transactions. Any differential between contract rates and foreign currency spot exchange rates as of the reporting dates is classified in other receivables or accounts payable and accrued expenses; the interest differential paid or received on indexed note swap agreements is recorded on an accrual basis as an adjustment to interest expense over the term of the agreements. Option-Based Products --------------------- Option-based products are executed on a portfolio basis. Premiums paid for option-based products are included in deferred charges and are amortized to interest expense over the life of the instruments on a straight-line basis. Amounts receivable under option-based products are recorded on an accrual basis as a reduction to interest expense. Insurance Operations -------------------- Revenues from providing coverage under various contractual agreements are recognized over the term of the agreement in relation to the timing and level of anticipated expenses. Revenues from insurance premiums are earned over the terms of the respective policies in proportion to estimated claims activity. Certain costs of acquiring new business, consisting primarily of commissions and premium taxes, are deferred and amortized over the terms of the related policies on the same basis as revenues are earned. The liability for reported losses and the estimate of unreported losses are recorded in accounts payable and accrued expenses. Commissions and fees from services provided are recognized in relation to the timing and level of services performed. Income Taxes ------------ TMCC uses the liability method of accounting for income taxes under which deferred tax assets and liabilities are adjusted to reflect changes in tax rates and laws in the period such changes are enacted resulting in adjustments to the current period's provision for income taxes. The Company joins with TMS in filing consolidated federal income tax returns and combined or consolidated income tax returns in certain states. Federal and state income tax expense is generally recognized as if the Company filed its tax returns on a stand alone basis. In those states where TMCC joins in the filing of consolidated or combined income tax returns, TMCC is allocated its share of the total income tax expense based on the Company's income or loss which would be allocable to such states if the Company filed separate returns. Based on an informal tax sharing agreement with TMS and other members of the TMS group, the Company pays TMS for its share of the consolidated federal and consolidated or combined state income tax expense and is reimbursed for the benefit of any of its tax basis losses utilized in the consolidated federal and consolidated or combined state income tax returns. -35- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 2 - Summary of Significant Accounting Policies (Continued) - --------------------------------------------------- Asset-Backed Securitization Transactions ---------------------------------------- TMCC periodically sells retail receivables and interests in lease finance receivables through limited purpose subsidiaries TMCRC and TLI, respectively. TMCC retains servicing rights for sold assets and receives a servicing fee which is recognized over the remaining term of the related sold retail receivables or interests in lease finance receivables. TMCRC and TLI retain subordinated interests in the excess cash flows of these transactions, certain cash deposits and other related amounts which are held as restricted assets subject to limited recourse provisions. The Company's retained interests in such receivables are included in investments in marketable securities and are classified as available for sale. Pre-tax gains on sold retail receivables and interests in lease finance receivables are recognized in the period in which the sale occurs and are included in other income. In determining such gains, the investment in sold retail receivables and interests in lease finance receivables are allocated between the portion sold and the portion retained based on their relative fair values on the date sold. New Accounting Standards ------------------------ In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", effective for fiscal years beginning after June 15, 1999. SFAS No. 133 requires companies to record derivatives on the balance sheet as assets and liabilities, measured at fair value. Gains and losses resulting from changes in the values of those derivatives would be accounted for as either components of earnings or accumulated other comprehensive income depending on the use of the derivative and whether it qualifies for hedge accounting. In June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133", which defers the effective date of SFAS No. 133 to fiscal years beginning after June 15, 2000. In June 2000, the FASB issued SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities - an Amendment of FASB Statement No. 133", which amends the accounting and reporting standards of Statement No. 133. The Company adopted SFAS Nos. 133 and 138 on October 1, 2000. The adoption of these new accounting standards will result in cumulative after-tax reductions in net income of approximately $2 million. The adoption will also impact assets and liabilities recorded on the balance sheet. In September 2000, the FASB issued SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities". This statement replaces SFAS No. 125 and revises the standards for accounting for securitizations and other transfers of financial assets and collateral. SFAS No. 140 is effective for transfers and servicing of financial assets and extinguishments of liabilities occurring after March 31, 2001. This statement is effective for recognition and reclassification of collateral and for disclosures relating to securitization transactions and collateral for fiscal years ending after December 15, 2000. The Company has not determined the impact that adoption of this standard will have on its consolidated financial statements. Reclassifications ----------------- Certain 1999 and 1998 amounts have been reclassified to conform with the 2000 presentation. -36- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 3 - Investments in Marketable Securities - --------------------------------------------- TMCC records its investments in marketable securities which are designated as available-for-sale at fair value estimated using quoted market prices or discounted cash flow analysis. Unrealized gains, net of income taxes, related to available-for-sale securities are included in comprehensive income. Securities designated as held-to-maturity are recorded at amortized cost. The estimated fair value and amortized cost of investments in marketable securities are as follows:
September 30, 2000 ---------------------------------------- Gross Gross Fair Unrealized Unrealized Cost Value Gains Losses ---- ----- ---------- ---------- (Dollars in Millions) Available-for-sale securities: Asset-backed securities............. $620 $631 $ 22 $ (11) Corporate debt securities........... 102 101 1 (2) Equity securities................... 71 92 22 (1) U.S. debt securities................ 40 40 - - ---- ---- ---- ---- Total available-for-sale securities.... $833 $864 $ 45 $(14) ==== ==== Held-to-maturity securities: U.S. debt securities................ 7 7 ---- ---- Total marketable securities............ $840 $871 ==== ====
September 30, 1999 ---------------------------------------- Gross Gross Fair Unrealized Unrealized Cost Value Gains Losses ---- ----- ---------- ---------- (Dollars in Millions) Available-for-sale securities: Asset-backed securities............. $220 $229 $ 17 $ (8) Corporate debt securities........... 90 87 - (3) Equity securities................... 68 87 20 (1) U.S. debt securities................ 33 33 - - ---- ---- ---- ---- Total available-for-sale securities.... $411 $436 $ 37 $(12) ==== ==== Held-to-maturity securities: U.S. debt securities................ 14 14 ---- ---- Total marketable securities............ $425 $450 ==== ====
-37- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 3 - Investments in Marketable Securities (Continued) - --------------------------------------------- The contractual maturities of investments in marketable securities at September 30, 2000 are as follows:
Available-for-Sale Held-to-Maturity Securities Securities ------------------ ---------------- Fair Fair Cost Value Cost Value ---- ----- ---- ----- (Dollars in Millions) Within one year...................... $256 $259 $ 2 $ 2 After one year through five years.... 360 368 5 5 After five years through ten years... 60 60 - - After ten years...................... 86 85 - - Equity securities.................... 71 92 - - ---- ---- ---- ---- Total............................. $833 $864 $ 7 $ 7 ==== ==== ==== ====
The proceeds from sales of available-for-sale securities were $740 million and $562 million for the years ended September 30, 2000 and 1999, respectively. Realized gains on sales of available-for-sale securities were $13 million, $6 million and $6 million for the years ended September 30, 2000, 1999 and 1998, respectively. Realized losses on sales of available-for-sale securities were $5 million, $5 million and $1 million for the years ended September 30, 2000, 1999 and 1998, respectively. -38- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 4 - Finance Receivables - ---------------------------- Finance receivables, net consisted of the following:
September 30, ---------------------- 2000 1999 ------- ------- (Dollars in Millions) Retail............................... $ 10,630 $ 9,267 Finance leases....................... 6,742 4,065 Wholesale and other dealer loans..... 2,325 1,549 ------- ------- 19,697 14,881 Unearned income...................... (1,361) (888) Allowance for credit losses.......... (168) (137) ------- ------- Finance receivables, net.......... $18,168 $13,856 ======= =======
Contractual maturities are as follows:
Due in the Wholesale Years Ending and Other September 30, Retail Dealer Loans ------------- ------- ------------ (Dollars in Millions) 2001.................. $ 3,093 $ 1,745 2002.................. 2,761 226 2003.................. 2,304 77 2004.................. 1,635 97 2005.................. 675 139 Thereafter............ 162 41 ------- ------ Total.............. $10,630 $2,325 ======= ======
Finance leases, net consisted of the following:
September 30, --------------------- 2000 1999 ------ ------ (Dollars in Millions) Minimum lease payments.................. $5,433 $3,242 Estimated unguaranteed residual values.. 1,309 823 ------ ------ Finance leases....................... 6,742 4,065 Unearned income......................... (1,092) (627) Allowance for credit losses............. (67) (46) ------ ------ Finance leases, net.................. $5,583 $3,392 ====== ======
-39- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 4 - Finance Receivables (Continued) - ---------------------------- The aggregate balances related to finance receivables 60 or more days past due totaled $32 million and $20 million at September 30, 2000 and 1999, respectively. Future minimum finance lease payments for each of the five succeeding years ending September 30, are: 2001 - $1,400 million; 2002 - $1,493 million; 2003 - $1,342 million; 2004 - $796 million and 2005 - $402 million. A substantial portion of TMCC's finance receivables have historically been repaid prior to contractual maturity dates; contractual maturities and future minimum lease payments as shown above should not be considered as necessarily indicative of future cash collections. The majority of retail and finance lease receivables do not involve recourse to the dealer in the event of customer default. Note 5 - Investments in Operating Leases - ---------------------------------------- Investments in operating leases, net consisted of the following:
September 30, ---------------------- 2000 1999 ------- ------- (Dollars in Millions) Vehicles................................. $9,553 $10,246 Equipment and other...................... 646 548 ------- ------- 10,199 10,794 Accumulated depreciation................. (2,173) (2,124) Allowance for credit losses.............. (62) (65) ------- ------- Investments in operating leases, net.. $ 7,964 $ 8,605 ======= =======
Rental income from operating leases was $2,013 million, $2,185 million and $2,372 million for the years ended September 30, 2000, 1999 and 1998, respectively. Future minimum rentals on operating leases for each of the five succeeding years ending September 30, are: 2001 - $1,530 million; 2002 - $943 million; 2003 - $447 million; 2004 - $101 million; 2005 - $9 million and thereafter - $1 million. A substantial portion of TMCC's operating lease contracts have historically been terminated prior to maturity; future minimum rentals as shown above should not be considered as necessarily indicative of future cash collections. -40- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 6 - Allowance for Credit Losses - ------------------------------------ An analysis of the allowance for credit losses follows:
Years ended September 30, -------------------------- 2000 1999 1998 ---- ---- ---- (Dollars in Millions) Allowance for credit losses at beginning of period........... $202 $220 $213 Provision for credit losses......... 135 83 127 Charge-offs......................... (116) (104) (120) Recoveries.......................... 19 17 17 Other adjustments................... (10) (14) (17) ---- ---- ---- Allowance for credit losses at end of period................. $230 $202 $220 ==== ==== ====
Note 7 - Sale of Retail Receivables and Interests in Lease Finance Receivables - ----------------------------------------------------------------------------- - - TMCC maintains programs to sell retail receivables and interests in lease finance receivables through limited purpose subsidiaries TMCRC and TLI, respectively. During fiscal year 2000, TMCC sold interests in retail finance receivables totaling $1.5 billion, as described below. Following is a summary of amounts included in investment in marketable securities and other receivables:
September 30, --------------------- 2000 1999 ---- ---- (Dollars in Millions) Interest in trusts.................. 404 54 Interest only strips................ 57 54 ---- ---- Total........................... $461 $108 ==== ==== Other Receivables.................... $166 $108 ==== ====
-41- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 7 - Sale of Retail Receivables and Interests in Lease Finance Receivables - ----------------------------------------------------------------------------- - - (Continued) The pretax gain resulting from the sale of retail receivables and interests in lease finance receivables totaled approximately $5 million, $8 million and $15 million in fiscal 2000, 1999 and 1998, respectively, after providing an allowance for estimated credit and residual value losses. The pretax gain of $5 million for fiscal 2000 included a $3.9 million loss on the termination of interest rate swaps issued in conjunction with the transaction. In addition, TMCC exercised its clean-up call option to purchase the outstanding receivables sold in the April 1997 retail securitization transaction. TMCC recorded an adjustment to other receivables totaling $74 million and $19 million in fiscal years 2000 and 1999, respectively, to recognize the impairment of an asset retained in the fiscal 1997, 1998 and 1999 sales of interests in lease finance receivables. These impairments were recognized when the future undiscounted cash flows of the assets were estimated to be insufficient to recover the related carrying values. The outstanding balance of sold retail finance receivables which TMCC continues to service totaled $1.9 billion and $1.0 billion at September 30, 2000 and 1999, respectively. The outstanding balance of sold interests in lease finance receivables which TMCC continues to service totaled $1.9 billion and $3.1 billion at September 30, 2000 and 1999, respectively. -42- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 8 - Notes and Loans Payable - -------------------------------- Notes and loans payable at September 30, 2000 and 1999, which consisted of senior debt, included the following:
September 30, ---------------------- 2000 1999 ------- ------- (Dollars in Millions) Commercial paper, net................... $ 3,292 $ 1,427 Extendible commercial notes, net.......... 195 146 - ------- ------- Other senior debt, due in the years ending September 30,: 2000.............................. - 4,077 2001.............................. 4,658 3,213 2002.............................. 2,975 2,718 2003.............................. 3,434 2,095 2004.............................. 3,623 2,466 2005.............................. 851 420 Thereafter........................ 1,995 1,916 ------- ------- 17,536 16,905 Unamortized premium..................... 75 87 ------- ------- Total other senior debt........... 17,611 16,992 ------- ------- Notes and loans payable........ $21,098 $18,565 ======= =======
Short-term borrowings include commercial paper, extendible commercial notes and certain domestic and euro medium-term notes ("MTNs"). The weighted average remaining term of commercial paper was 15 days and 21 days at September 30, 2000 and 1999, respectively. The weighted average interest rate on commercial paper was 6.56% and 5.33% at September 30, 2000 and 1999, respectively. The weighted average remaining term of extendible commercial notes was 47 days and 18 days at September 30, 2000 and 1999, respectively. The weighted average interest rate on extendible commercial notes was 6.64% and 5.39% at September 30, 2000 and 1999, respectively. Short-term MTNs with original terms of one year or less, included in other senior debt, were $775 million and $1,358 million at September 30, 2000 and 1999, respectively. The weighted average interest rate on these short-term MTNs was 5.93% and 5.57% at September 30, 2000 and 1999, respectively, including the effect of interest rate swap agreements. The weighted average interest rate on other senior debt was 6.52% and 5.45% at September 30, 2000 and 1999, respectively, including the effect of interest rate swap agreements. The rates have been calculated using rates in effect at September 30, 2000 and 1999, some of which are floating rates that reset periodically. Less than one percent of other senior debt at September 30, 2000 had interest rates, including the effect of interest rate swap agreements, that were fixed for a period of more than one year. Approximately 62% of other senior debt at September 30, 2000 had floating interest rates that were covered by option-based products. The weighted average strike rate on these option- based products was 6.45% at September 30, 2000. TMCC manages interest rate risk through continuous adjustment of the mix of fixed and floating rate debt using interest rate swap agreements and option-based products. -43- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 8 - Notes and Loans Payable (Continued) - -------------------------------- Included in notes and loans payable at September 30, 2000 and 1999 were unsecured notes denominated in various foreign currencies as follows:
September 30, ------------------------------ 2000 1999 ----------- ----------- (Amounts in Millions) British pound sterling.............. 525 675 Danish kroner....................... 400 400 Dutch guilder....................... - 250 Euro....................... ........ 1,000 - French franc........................ 1,545 1,545 German deutsche mark................ 2,842 3,342 Greek drachma....................... 5,000 5,000 Hong Kong dollar.................... 618 618 Italian lire........................ 434,000 477,300 Japanese yen........................ 173,000 140,268 Luxembourg franc.................... 2,000 2,000 New Zealand dollar.................. 200 200 Norwegian Krone..................... 500 - Singapore dollar.................... 200 200 South African rand.................. 250 250 Swedish kronor...................... 1,060 1,060 Swiss franc......................... 2,350 3,110
Concurrent with the issuance of these unsecured notes, TMCC entered into cross currency interest rate swap agreements to convert these obligations at maturity into U.S. dollar obligations which in aggregate total a principal amount of $8.2 billion at September 30, 2000. TMCC's foreign currency debt was translated into U.S. dollars in the financial statements at the various foreign currency spot exchange rates in effect at September 30, 2000. The receivables or payables arising as a result of the differences between the September 30, 2000 foreign currency spot exchange rates and the contract rates applicable to the cross currency interest rate swap agreements are classified in other receivables or accounts payable and accrued expenses, respectively, and would in aggregate total a net payable position of $1.2 billion at September 30, 2000. -44- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 9 - Fair Value of Financial Instruments - -------------------------------------------- The fair value of financial instruments at September 30, 2000 and 1999, was estimated using the valuation methodologies described below. Considerable judgement was employed in interpreting market data to develop estimates of fair value; accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Company could realize in a current market exchange. The use of different market assumptions or valuation methodologies could have a material effect on the estimated fair value amounts. The carrying amounts and estimated fair values of the Company's financial instruments at September 30, 2000 and 1999 are as follows:
September 30, --------------------------------------------------- 2000 1999 ------------------------ ------------------------ Carrying Fair Carrying Fair Amount Value Amount Value ----------- ---------- ----------- ---------- (Dollars in Millions) Balance sheet financial instruments: Assets: Cash and cash equivalents........... $170 $170 $180 $180 Investments in marketable securities....................... $871 $871 $450 $450 Retail finance receivables, net..... $12,584 $12,301 $10,464 $10,279 Other receivables................... $278 $278 $271 $271 Receivables from cross currency interest rate swap agreements.... $190 $38 $95 $117 Liabilities: Notes and loans payable............. $21,098 $20,834 $18,565 $19,401 Payables from cross currency interest rate swap agreements.... $1,428 $1,402 $716 $466 Other payables...................... $484 $484 $380 $380
-45- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 9 - Fair Value of Financial Instruments (Continued) - --------------------------------------------
September 30, ------------------------------------------------- 2000 1999 ----------------------- ------------------------ Contract or Unrealized Contract or Unrealized Notional Gains/ Notional Gains/ Amount (Losses) Amount (Losses) ----------- ---------- ----------- ---------- (Dollars in Millions) Off-balance sheet financial instruments: Cross currency interest rate swap agreements.... $8,378 $(1,330) $8,764 $(453) Interest rate swap agreements.............. $10,467 $(109) $8,980 $24 Option-based products...... $11,700 $46 $6,850 $41 Indexed note swap agreements.............. $1,366 $27 $1,318 $2
The fair value estimates presented herein are based on information available to management as of September 30, 2000 and 1999. The methods and assumptions used to estimate the fair value of financial instruments are summarized as follows: Cash and Cash Equivalents ------------------------- The carrying amount of cash and cash equivalents approximates market value due to the short maturity of these investments. Investments in Marketable Securities ------------------------------------ The fair value of marketable securities was estimated using quoted market prices or discounted cash flow analysis. Retail Finance Receivables -------------------------- The carrying amounts of $2.1 billion and $1.1 billion of variable rate finance receivables at September 30, 2000 and 1999, respectively, were assumed to approximate fair value as these receivables reprice at prevailing market rates. The fair value of fixed rate finance receivables was estimated by discounting expected cash flows using the rates at which loans of similar credit quality and maturity would be originated as of September 30, 2000 and 1999. -46- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 9 - Fair Value of Financial Instruments (Continued) - -------------------------------------------- Other Receivables and Other Payables ------------------------------------ The carrying amount and fair value of other receivables and other payables are presented separately from the receivables and payables arising from cross currency interest rate swap agreements. The carrying amount of the remaining other receivables and payables approximate market value due to the short maturity of these instruments. Notes and Loans Payable ----------------------- The fair value of notes and loans payable was estimated by discounting expected cash flows using the interest rates at which debt of similar credit quality and maturity would be issued as of September 30, 2000 and 1999. The carrying amount of commercial paper and extendible commercial notes were assumed to approximate fair value due to the short maturity of these instruments. Cross Currency Interest Rate Swap Agreements -------------------------------------------- The estimated fair value of TMCC's outstanding cross currency interest rate swap agreements was derived by discounting expected cash flows using quoted market exchange rates and quoted market interest rates as of September 30, 2000 and 1999. Interest Rate Swap Agreements ----------------------------- The estimated fair value of TMCC's outstanding interest rate swap agreements was derived by discounting expected cash flows using quoted market interest rates as of September 30, 2000 and 1999. Option-based Products --------------------- The estimated fair value of TMCC's outstanding option-based products was derived by discounting expected cash flows using market exchange rates and market interest rates as of September 30, 2000 and 1999. Indexed Note Swap Agreements ---------------------------- The estimated fair value of TMCC's outstanding indexed note swap agreements was derived using quoted market prices as of September 30, 2000 and 1999. -47- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 10 - Financial Instruments with Off-Balance Sheet Risk - ----------------------------------------------------------- Inventory Lines of Credit - ------------------------- TMCC has extended inventory floorplan lines of credit to dealers, the unused portion of which amounted to $1.3 billion and $1.5 billion at September 30, 2000 and 1999, respectively. Security interests are acquired in vehicles and equipment financed and substantially all such financings are backed by corporate or individual guarantees from or on behalf of the participating dealers. Derivative Financial Instruments - -------------------------------- TMCC utilizes a variety of derivative financial instruments to manage its currency exchange rate risk arising as a result of borrowings denominated in foreign currencies and its interest rate risk as explained in this note. TMCC does not enter into these arrangements for trading purposes. A reconciliation of the activity of TMCC's derivative financial instruments for the years ended September 30, 2000 and 1999 is as follows:
September 30, ---------------------------------------------------------------- Cross Currency Interest Interest Indexed Rate Swap Rate Swap Option-based Note Swap Agreements Agreements Products Agreements ------------ ------------ ------------- ------------ 2000 1999 2000 1999 2000 1999 2000 1999 ---- ---- ---- ---- ---- ---- ---- ---- (Dollars in Billions) Beginning Notional Amount... $8.8 $9.0 $9.0 $7.3 $6.9 $6.3 $1.3 $0.8 Add: New agreements........... 2.1 0.5 14.8 4.7 7.4 2.7 0.3 0.8 Less: Terminated agreements.... - - 1.5 - - - - - Expired agreements....... 2.5 0.7 11.8 3.0 2.6 2.1 0.2 0.3 ---- ---- ---- ---- ---- ---- ---- ---- Ending Notional Amount...... $8.4 $8.8 $10.5 $9.0 $11.7 $6.9 $1.4 $1.3 ==== ==== ===== ==== ===== ==== ==== ====
-48- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 10 - Financial Instruments with Off-Balance Sheet Risk (Continued) - ----------------------------------------------------------- Interest Rate Risk Management - ----------------------------- TMCC utilizes interest rate swap agreements in managing its exposure to interest rate fluctuations. Interest rate swap agreements are executed as an integral part of specific debt transactions or on a portfolio basis. TMCC's interest rate swap agreements involve agreements to pay fixed and receive a floating rate, or receive fixed and pay a floating rate, at specified intervals, calculated on an agreed-upon notional amount. Interest rate swap agreements may also involve basis swap contracts which are agreements to exchange the difference between certain floating interest amounts, such as the net payment based on the commercial paper rate and the London Interbank Offered Rate ("LIBOR"), calculated on an agreed-upon notional amount. The original maturities of interest rate swap agreements ranged from one to ten years at September 30, 2000. TMCC also utilizes option-based products in managing its exposure to interest rate fluctuations. Option-based products are executed on a portfolio basis and consist primarily of purchased interest rate cap agreements and to a lesser extent corridor agreements. Option-based products are agreements which either grant TMCC the right to receive or require TMCC to make payments at specified interest rate levels. Approximately 62% of TMCC's other senior debt at September 30, 2000 had floating interest rates that were covered by option- based products which had an average strike rate of 6.45%. The premiums paid for option-based products are included in deferred charges and are amortized to interest expense over the life of the instruments on a straight-line basis. Amounts receivable under option-based products are recorded as a reduction to interest expense. The original maturities of option-based products ranged from one to four years at September 30, 2000. The aggregate notional amounts of interest rate swap agreements and option- based products outstanding at September 30, 2000 and 1999 were as follows:
September 30, --------------------- 2000 1999 ---- ---- (Dollars in Billions) Floating rate swaps............................ $ 9.0 $8.3 Fixed rate swaps............................... 1.2 0.1 Basis swaps.................................... 0.3 0.6 ----- ---- Total interest rate swap agreements........ $10.5 $9.0 ===== ==== Option-based products.......................... $11.7 $6.9 ===== ====
-49- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 10 - Financial Instruments with Off-Balance Sheet Risk (Continued) - ----------------------------------------------------------- Interest Rate Risk Management (Continued) - ----------------------------- TMCC utilizes indexed note swap agreements in managing its exposure in connection with debt instruments whose interest rate and/or principal redemption amounts are derived from other underlying instruments. Indexed note swap agreements involve agreements to receive interest and/or principal amounts associated with the indexed notes, denominated in either U.S. dollars or a foreign currency, and to pay fixed or floating rates on fixed U.S. dollar liabilities. At September 30, 2000, TMCC was the counterparty to $1.4 billion of indexed note swap agreements, of which $0.4 billion was denominated in foreign currencies and $1.0 billion was denominated in U.S. dollars. At September 30, 1999, TMCC was the counterparty to $1.3 billion of indexed note swap agreements, of which $0.4 billion was denominated in foreign currencies and $0.9 billion was denominated in U.S. dollars. The original maturities of indexed note swap agreements ranged from two to ten years at September 30, 2000. The notional amounts of interest rate and indexed note swap agreements and option-based products do not represent amounts exchanged by the parties and, thus, are not a measure of the Company's exposure through its use of derivatives. The amounts exchanged are calculated based on the notional amounts and other terms of the derivatives which relate to interest rates or financial or other indexes. Foreign Exchange Risk Management - -------------------------------- TMCC utilizes cross currency interest rate swap agreements to manage exposure to exchange rate fluctuations on principal and interest payments for borrowings denominated in foreign currencies. Notes and loans payable issued in foreign currencies are hedged by concurrently executed cross currency interest rate swap agreements which involve the exchange of foreign currency principal and interest obligations for U.S. dollar obligations at agreed-upon currency exchange and interest rates. The aggregate notional amounts of cross currency interest rate swap agreements at September 30, 2000 and 1999 were $8.4 billion and $8.8 billion, respectively. The original maturities of cross currency interest rate swap agreements ranged from two to nine years at September 30, 2000. -50- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 10 - Financial Instruments with Off-Balance Sheet Risk (Continued) - ----------------------------------------------------------- Credit Risk Management - ---------------------- TMCC manages the risk of counterparty default through the use of credit standard guidelines, counterparty diversification and monitoring of counterparty financial condition. At September 30, 2000, approximately 89% of TMCC's derivative financial instruments, based on notional amounts, were with commercial banks and investment banking firms assigned investment grade ratings of "AA" or better by national rating agencies. TMCC does not anticipate non- performance by any of its counterparties and has no reserves related to non- performance as of September 30, 2000; TMCC has not experienced any counterparty default during the three years ended September 30, 2000. Additionally, TMCC's loss in the event of counterparty default is partially mitigated as a result of master netting agreements in place with all derivative counterparties which allow the net difference between TMCC and each counterparty to be exchanged in the event of default. Credit exposure of derivative financial instruments is represented by the fair value of contracts with a positive fair value at September 30, 2000 reduced by the effects of master netting agreements. The credit exposure of TMCC's derivative financial instruments at September 30, 2000 was $95 million on an aggregate notional amount of $32 billion. Note 11 - Pension and Other Benefit Plans - ----------------------------------------- All full-time employees of the Company are eligible to participate in the TMS pension plan commencing on the first day of the month following hire. Benefits payable under this non-contributory defined benefit pension plan are based upon the employees' years of credited service and the highest sixty consecutive months' compensation, reduced by a percentage of social security benefits. The Company's pension expense was $5 million, $6 million and $4 million for the years ended September 30, 2000, 1999, and 1998, respectively. At September 30, 2000, 1999 and 1998, the accumulated benefit obligation and plan net assets for employees of the Company were not determined separately from TMS; however, the plan's net assets available for benefits exceeded the accumulated benefit obligation. TMS funding policy is to contribute annually the maximum amount deductible for federal income tax purposes. -51- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 12 - Provision for Income Taxes - ------------------------------------ The provision for income taxes consisted of the following:
Years ended September 30, -------------------------- 2000 1999 1998 ---- ---- ---- (Dollars in Millions) Current Federal........................... $ 71 $(130) $(317) State............................. 41 17 (16) ---- ----- ----- Total current ................. 112 (113) (333) ---- ----- ----- Deferred Federal........................... (21) 202 399 State............................. (26) 9 41 ---- ----- ----- Total deferred................. (47) 211 440 ---- ----- ----- Provision for income taxes.. $ 65 $ 98 $ 107 ==== ===== =====
A reconciliation between the provision for income taxes computed by applying the federal statutory tax rate to income before income taxes and actual income taxes provided is as follows:
Years ended September 30, ------------------------- 2000 1999 1998 ---- ---- ---- (Dollars in Millions) Provision for income taxes at federal statutory tax rate......... $ 56 $ 81 $ 88 State and local taxes (net of federal tax benefit)............... 10 17 17 Other, including changes in applicable state tax rates......... (1) _ 2 ---- ---- ---- Provision for income taxes......... $ 65 $ 98 $107 ==== ==== ==== Effective tax rate.................... 38.45% 42.53% 42.81%
-52- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 12 - Provision for Income Taxes (Continued) - ------------------------------------ The deferred federal and state income tax liabilities are as follows:
September 30, --------------------- 2000 1999 ---- ---- (Dollars in Millions) Federal........................................ $1,350 $1,403 State.......................................... 133 151 ------ ------ Net deferred income tax liability........... $1,483 $1,554 ====== ======
The Company's deferred tax assets and liabilities consisted of the following:
September 30, --------------------- 2000 1999 ---- ---- (Dollars in Millions) Assets: Alternative minimum tax..................... $ - $ 137 Provision for losses........................ 66 59 Deferred administrative fees................ 97 82 NOL carryforwards........................... 21 34 Deferred acquisition costs.................. 29 21 Unearned insurance premiums................. 3 4 Revenue recognition......................... 2 1 Other....................................... - 2 ------ ------ Deferred tax assets...................... 218 340 ------ ------ Liabilities: Lease transactions.......................... 1,525 1,696 State taxes................................. 150 188 Other....................................... 26 10 ------ ------ Deferred tax liabilities................. 1,701 1,894 ------ ------ Valuation allowance...................... - - ------ ------ Net deferred income tax liability..... $1,483 $1,554 ====== ======
TMCC has state tax net operating loss carryforwards of $279 million which expire beginning in fiscal 2001 through 2016. -53- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 13 - Comprehensive Income - ------------------------------ The Company's total comprehensive earnings were as follows:
Years Ended September 30, ------------------------------- 2000 1999 1998 ------ ------ ------ (Dollars in Millions) Net income.................................... $ 104 $ 132 $ 144 Other comprehensive income: Net unrealized gains arising during period (net of tax of $5, $2 and $4 in 2000, 1999 and 1998).............. 9 4 9 Less: reclassification adjustment for net gains included in net income (net of tax of $3, $1 and $2 in 2000, 1999 and 1998)........... (5) (2) (3) ------ ------ ------ Net unrealized gain on available-for-sale marketable securities................... 4 2 6 ------ ------ ------ Total Comprehensive Income................. $ 108 $ 134 $ 150 ====== ====== ======
-54- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 14 - Related Party Transactions - ------------------------------------ During fiscal 2000, an operating agreement with TMS and Toyota Motor Manufacturing North America Inc. ("TMMNA") (the "Operating Agreement") provided that 100% ownership of TMCC would be retained by TMS as long as TMCC had any funded debt outstanding and that TMS and TMMNA would provide necessary equity contributions or other financial assistance it deemed appropriate to ensure that TMCC maintained a minimum coverage on fixed charges of 1.10 times such charges in any fiscal quarter. The coverage provision of the Operating Agreement was solely for the benefit of the holders of TMCC's commercial paper and extendible commercial notes. The Operating Agreement may be amended or terminated at any time without notice to, or the consent of, holders of other TMCC obligations. The Operating Agreement did not constitute a guarantee by TMS of any obligations of TMCC. During fiscal 2000, TMCC had an arrangement to borrow and invest funds with TMS at short term market rates. For the years ended September 30, 2000, 1999 and 1998, TMCC had no borrowings from TMS for the years ended September 30, 1999 and 1998. For the years ended September 30, 2000, 1999 and 1998, the highest amounts of funds invested with TMS were $797 million, $2 billion and $567 million, respectively; interest earned on these investments totaled $13 million, $41 million and $3 million for the years ended September 30, 2000, 1999 and 1998, respectively. During fiscal 2000 and 1998, TMS provided support to TMCC for certain vehicle disposition losses. TMS support amounts included in the Consolidated Statement of Income related to this arrangement totaled $35 million and $80 million for the years ended September 30, 2000 and 1998, respectively. TMCC did not receive any Parent support for vehicle disposition losses for the year ended September 30, 1999. TMS provides certain technical and administrative services and incurs certain expenses on the Company's behalf. Payments and reimbursements to TMS for such services totaled $25 million, $25 million and $13 million for the years ended September 30, 2000, 1999 and 1998, respectively. In addition, TMS sponsors special retail and lease programs offered by TMCC; for the years ended September 30, 2000, 1999 and 1998, TMCC recognized revenue of $108 million, $126 million and $142 million, respectively, related to TMS sponsored programs. The Company leases its headquarters facility and Iowa Service Center from TMS; rent expense paid to TMS for these facilities totaled $5 million, $4 million and $3 million for the years ended September 30, 2000, 1999 and 1998, respectively. TMCC leases a corporate aircraft to TMS and provides wholesale financing for TMS affiliates; TMCC recognized revenue related to these arrangements of $6 million, $6 million and $7 million for the years ended September 30, 2000, 1999 and 1998, respectively. TMIS provides certain insurance services, and insurance and reinsurance coverages, respectively, to TMS. Premiums, commissions and fees earned on these services for the years ended September 30, 2000, 1999 and 1998 totaled $33 million, $24 million and $18 million, respectively. During fiscal 1999, Toyota Credit Canada Inc., an affiliate of the Company, paid off $201 million in intercompany loans. Interest charged on these loans reflected market rates and totaled $8 million for the year ended September 30, 1999. -55- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 15 - Lines of Credit/Standby Letters of Credit - --------------------------------------------------- To support its commercial paper program, TMCC maintains syndicated bank credit facilities with certain banks which aggregated $3.0 billion and $2.7 billion at September 30, 2000 and 1999, respectively. No loans were outstanding under any of these bank credit facilities as of September 30, 2000 or 1999. To facilitate and maintain letters of credit, TMCC maintains, along with TMS, uncommitted, unsecured lines of credit with banks totaling $175 million as of September 30, 2000 and 1999. Approximately $11 million and $13 million in letters of credit had been issued as of September 30, 2000, and 1999, respectively. Note 16 - Commitments and Contingent Liabilities - ------------------------------------------------ At September 30, 2000, the Company was a lessee under lease agreements for facilities with minimum future commitments as follows: years ending September 30, 2001 - $15 million; 2002 - $13 million; 2003 - $9 million; 2004 - $5 million; 2005 - $2 million and thereafter - $3 million. TMCC has guaranteed payments of principal and interest on $58 million principal amount of flexible rate demand pollution control revenue bonds maturing in 2006, issued in connection with the Kentucky manufacturing facility of an affiliate. TMCC has guaranteed payments of principal, interest and premiums, if any, on $88 million principal amount of flexible rate demand solid waste disposal revenue bonds issued by Putnam County, West Virginia, of which $40 million matures in June 2028, $27.5 million matures in August 2029, and $20.5 million matures in April 2030. The bonds were issued in connection with the West Virginia manufacturing facility of an affiliate. TMCC has guaranteed payments of principal, interest and premiums, if any, on $40 million principal amount of flexible rate demand pollution control revenue bonds issued by Gibson County, Indiana, of which $10 million matures in October 2027, January 2028, January 2029 and January 2030. The bonds were issued in connection with the Indiana manufacturing facility of an affiliate. TMCC has guaranteed $50 million of the debt of TCA. TMCC has guaranteed the obligations of TMIS relating to vehicle service insurance agreements issued in several states. These guarantees have been given without regard to any security and without any limitation as to duration or amount. An operating agreement between TMCC and TCPR (the "Agreement"), provides that TMCC will make necessary equity contributions or provide other financial assistance TMCC deems appropriate to ensure that TCPR maintains a minimum coverage on fixed charges of 1.10 times such fixed charges in any fiscal quarter. The Agreement does not constitute a guarantee by TMCC of any obligations of TCPR. The fixed charge coverage provision of the Agreement is solely for the benefit of the holders of TCPR's commercial paper, and the Agreement may be amended or terminated at any time without notice to, or the consent of, holders of other TCPR obligations. -56- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 16 - Commitments and Contingent Liabilities (Continued) - ------------------------------------------------ Various legal actions, governmental proceedings and other claims are pending or may be instituted or asserted in the future against TMCC and its subsidiaries with respect to matters arising from the ordinary course of business. Certain of these actions are or purport to be class action suits, seeking sizeable damages and/or changes in TMCC's business operations, policies and practices. Certain of these actions are similar to suits which have been filed against other financial institutions and captive finance companies. Management and internal and external counsel perform periodic reviews of pending claims and actions to determine the probability of adverse verdicts and resulting amounts of liability. The amounts of liability on pending claims and actions as of September 30, 2000 were not determinable; however, in the opinion of management, the ultimate liability resulting therefrom should not have a material adverse effect on TMCC's consolidated financial position or results of operations. Note 17 - Segment Information - ----------------------------- The Company's operating segments include finance and insurance operations. Finance operations include 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. Insurance operations are performed by TMIS and subsidiaries. The principal activities of TMIS include marketing, underwriting, claims administration and providing certain coverages related to vehicle service agreements and contractual liability agreements sold by or through Toyota and Lexus vehicle dealers and affiliates to customers in the United States (excluding Hawaii). In addition, the insurance subsidiaries insure and reinsure certain TMS and TMCC risks. The accounting policies of the operating segments are the same as those described in Note 2 of the Notes to Consolidated Financial Statements. The Company reports consolidated financial information for both external and internal purposes. Currently, TMCC's finance and insurance segments operate only in the United States and Puerto Rico. -57- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 17 - Segment Information (Continued) - ----------------------------- Financial results for the Company's operating segments are summarized below:
September 30, --------------------------------------- 2000 1999 1998 --------- --------- --------- (Dollars in Millions) Assets: Financing operations.................... $ 27,525 $ 24,156 $ 22,858 Insurance operations.................... 863 732 630 Eliminations/reclassifications.......... (352) (310) (263) --------- --------- --------- Total assets.......................... $ 28,036 $ 24,578 $ 23,225 ========= ========= ========= Gross revenues: Financing operations.................... $ 3,424 $ 3,234 $ 3,295 Insurance operations.................... 165 141 136 Eliminations............................ - - - --------- --------- --------- Total gross revenues.................. $ 3,589 $ 3,375 $ 3,431 ========= ========= ========= Depreciation and amortization: Financing operations.................... $ 1,556 $ 1,710 $ 1,825 Insurance operations.................... 1 1 1 --------- --------- --------- Total depreciation and amortization... $ 1,557 $ 1,711 $ 1,826 ========= ========= ========= Interest Expense: Financing operations.................... $ 1,289 $ 940 $ 994 Insurance operations.................... - - - --------- --------- --------- Total interest expense $ 1,289 $ 940 $ 994 ========= ========= ========= Interest Income: Financing operations.................... $ 26 $ 9 $ 1 Insurance operations.................... 23 20 19 --------- --------- --------- Total interest income $ 49 $ 29 $ 20 ========= ========= ========= Income tax expense: Financing operations.................... $ 62 $ 87 $ 92 Insurance operations.................... 3 11 15 --------- --------- --------- Total income tax expense.............. $ 65 $ 98 $ 107 ========= ========= ========= Net Income: Financing operations.................... $ 70 $ 113 $ 119 Insurance operations.................... 34 19 25 --------- --------- --------- Net Income............................ $ 104 $ 132 $ 144 ========= ========= ========= Capital expenditures: Financing operations.................... $ 18 $ 33 $ 32 Insurance operations.................... 2 4 1 --------- --------- --------- Total capital expenditures............ $ 20 $ 37 $ 33 ========= ========= =========
-58- TOYOTA MOTOR CREDIT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 18 - Selected Quarterly Financial Data (Unaudited) - -------------------------------------------------------
Total Financing Interest Depreciation Net Revenues Expense on Leases Income ---------- -------- ------------ ------- - - (Dollars in Millions) Year Ended September 30, 2000: First quarter.............. $ 797 $ 277 $ 383 $ 32 Second quarter............. 830 317 367 25 Third quarter.............. 861 347 322 23 Fourth quarter............. 864 348 368 24 ------ ------ ------ ---- Total................... $3,352 $1,289 $1,440 $104 ====== ====== ====== ==== Year Ended September 30, 1999: First quarter.............. $ 805 $243 $ 431 $ 35 Second quarter............. 786 220 427 28 Third quarter.............. 788 230 410 39 Fourth quarter............. 786 247 396 30 ------ ---- ------ ---- Total................... $3,165 $940 $1,664 $132 ====== ==== ====== ==== Year Ended September 30, 1998: First quarter.............. $ 796 $234 $ 422 $ 37 Second quarter............. 800 239 414 30 Third quarter.............. 812 249 423 32 Fourth quarter............. 832 272 422 45 ------ ---- ------ ---- Total................... $3,240 $994 $1,681 $144 ====== ==== ====== ====
Note 19 - Subsequent Events - --------------------------- On October 1, 2000, TMCC, formerly a subsidiary of TMS, became a wholly-owned subsidiary of Toyota Financial Services Americas Corporation ("TFSA"), a holding company owned 100% by Toyota Financial Services Corporation ("TFSC") on October 1, 2000. TFSC, in turn, is a wholly-owned subsidiary of TMC. TFSC was incorporated in July 2000 and its corporate headquarters is located in Nagoya, Japan. The purpose of TFSC is to control and manage Toyota's finance operations worldwide. -59- Note 19 - Subsequent Events (Continued) - --------------------------- In connection with the creation of TFSC and the transfer of ownership of TMCC from TMS to TFSC, the Operating Agreement with TMS and TMMNA was terminated, a new credit support agreement (the "TMC Credit Support Agreement") was entered into between TMC and TFSC, and a new credit support agreement (the "TFSC Credit Support Agreement") was entered into between TFSC and TMCC. Under the terms of the TMC Credit Support Agreement, TMC agreed to: 1) maintain 100% ownership of TFSC; 2) cause TFSC and its subsidiaries to have a net worth of at least Japanese yen 10 million; and 3) make sufficient funds available to TFSC so that TFSC will be able to (i) service the obligations arising out of its own bonds, debentures, notes and other investment securities and commercial paper and (ii) honor its obligations incurred as a result of guarantees or credit support agreements that it has extended. The agreement is not a guarantee by TMC of any securities or obligations of TFSC. Under the terms of the TFSC Credit Support Agreement, TFSC agreed to: 1) maintain 100% ownership of TMCC; 2) cause TMCC and its subsidiaries to have a net worth of at least U.S. $100,000; and 3) make sufficient funds available to TMCC so that TMCC will be able to service the obligations arising out of its own bonds, debentures, notes and other investment securities and commercial paper (collectively, "TMCC Securities"). The agreement is not a guarantee by TFSC of any TMCC Securities or other obligations of TMCC. The TMC Credit Support and the TFSC Credit Support Agreements are governed by, and construed in accordance with, the laws of Japan. On October 1, 2000, TMS and TMCC entered into a Shared Services Agreement covering the services TMS will continue to provide after the ownership of TMCC was transferred to TFSA. Additionally, a Repurchase Agreement was entered into between TMCC and TMS in October 2000 which provides that TMCC is under no obligation to TMS to finance wholesale obligations from any dealers or retail obligations of any customers. In addition, TMS will arrange for the repurchase of new Toyota and Lexus vehicles financed at wholesale by TMCC at the aggregate cost financed in the event of dealer default. During the first quarter of fiscal 2001, TMCC announced plans to restructure the Company's field operations. The branch offices of TMCC will be converted to serve only dealer business which includes the purchasing of contracts from dealers, financing inventories, loans to dealers for business acquisitions, facilities refurbishment, real estate purchases and working capital requirements, as well as consulting on finance and insurance operations. The other functions that the branch offices currently cover, such as customer service, collections, lease termination and administrative functions, will be handled by three regional call centers. The new structure is expected to be completed in fiscal 2003. -60- ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. There is nothing to report with regard to this item. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. The following table sets forth certain information regarding the directors and executive officers of TMCC as of November 30, 2000. Name Age Position ---- --- -------- George Borst ............. 52 Director, President and Chief Executive Officer, TMCC; Director, Secretary and Chief Financial Officer, TFSA Nobukazu Tsurumi.......... 52 Director, Executive Vice President and Treasurer, TMCC Michael Deaderick......... 54 Director, Senior Vice President and Secretary, TMCC Ryuji Araki............... 60 Director, TMCC; Director, TFSA; Director, TFSC; Senior Managing Director, TMC Hideto Ozaki.............. 54 Director, TMCC; Director and President, TFSA; President and Director, TFSC Yoshio Ishizaka........... 60 Director, TMCC; Senior Managing Director, TMC Yoshimi Inaba............. 54 Director, TMCC Director, TMC James Press............... 54 Director, TMCC All directors of TMCC are elected annually and hold office until their successors are elected and qualified. Officers are elected annually and serve at the pleasure of the Board of Directors. Mr. Borst was named Director, President and Chief Executive Officer of TMCC and Director, Secretary and Chief Financial Officer of TFSA in October 2000. Mr. Borst was named Senior Vice President of TMS in June 1997. From April 1997 to September 2000, Mr. Borst was Director and Senior Vice President and General Manager of TMCC. From January 1993 to May 1997, Mr. Borst was Group Vice President of TMS. Mr. Borst has been employed with TMCC and TMS, in various positions, since 1985. Mr. Tsurumi was named Director and Executive Vice President of TMCC in October 2000. From January 2000 to September 2000, Mr. Tsurumi was Director, Senior Vice President and Treasurer of TMCC and Group Vice President of TMS. From January 1999 to December 1999, Mr. Tsurumi was Group Vice President of TMCC and Vice President of TMS. From January 1996 to December 1998, Mr. Tsurumi was Managing Director for Toyota Finance Australia. Mr. Tsurumi has been employed with TMC, in various positions worldwide, since 1971. -61- Mr. Deaderick was named Director and Senior Vice President and Secretary of TMCC in October 2000. From April 1998 to September 2000, Mr. Deaderick was Group Vice President - Operations of TMCC. From April 1997 to September 2000, Mr. Deaderick was Assistant Secretary of TMCC. From April 1995 to April 1998, Mr. Deaderick was Vice President - Marketing and Operations of TMCC. Mr. Deaderick has been employed with TMCC and TMS, in various positions, since 1971. Mr. Araki was named Director of TFSA in August 2000, Director of TFSC in July 2000, and Director of TMCC in September 1995. Mr. Araki was named Senior Managing Director of TMC's Board of Directors in June 1999 and has served on TMC's Board of Directors since September 1992. From June 1997 to May 1999, Mr. Araki was Managing Director of TMC. Mr. Araki has been employed with TMC, in various positions, since 1962. Mr. Ozaki was named Director and President of TFSA in August 2000, President and Director of TFSC in July 2000, and Director of TMCC in October 1999. From September 1997 to June 1999, Mr. Ozaki was the general manager of the finance division of TMC. From January 1997 to August 1997, Mr. Ozaki was the Project General Manager of the Finance Division of TMC. From January 1994 to December 1996, Mr. Ozaki was the Project General Manager of the Accounting Division of TMC. Mr. Ozaki has been employed with TMC, in various positions, since 1968. Mr. Ishizaka was named Director of TMCC in July 2000, and Senior Managing Director of TMC in June 1999. From June 1996 to June 1999, Mr. Ishizaka was President of TMS. From September 1992 to May 1999, Mr. Ishizaka was Director of TMC. Mr. Ishizaka has been employed with TMC, in various positions, since 1964. Mr. Inaba was named Director of TMCC and TMS and President of TMS in June 1999, and was named Director of TMC in June 1997. From June 1999 to September 2000, Mr. Inaba was President of TMCC. From June 1997 to June 1999, Mr. Inaba was the General Manager of the Europe, Africa and United Kingdom Division of TMC. From June 1996 to May 1997, Mr. Inaba was Senior Vice President of TMS. Mr. Inaba has been employed with TMC, in various positions worldwide, since 1968. Mr. Press was named Director of TMCC in July 1999. He is also a Director and Executive Vice President of TMS, positions he has held since June 1996 and July 1999, respectively. From March 1998 to July 1999, he was a Senior Vice President of TMS. From April 1995 to March 1998, Mr. Press was Senior Vice President and General Manager of Lexus. Mr. Press has been employed with TMS, in various positions, since 1970. -62- ITEM 11. EXECUTIVE COMPENSATION. Summary Compensation Table The following table sets forth all compensation awarded to, earned by, or paid to the Company's Principal Executive Officer and the most highly compensated executive officers whose salary and bonus for the latest fiscal year exceeded $100,000, for services rendered in all capacities to the Company for the fiscal years ended September 30, 2000, 1999 and 1998.
Annual Compensation -------------------------------------------- Other Annual All Name and Fiscal Compensation Other Principal Position Year Salary ($) Bonus ($) ($) ($) - --------------------- ------ ---------- --------- ------------ ------- George Borst 2000 $316,290 $179,200 - $10,300 Chief Executive Officer 1999 $273,400 $162,300 - $ 8,700 Principal Executive 1998 $237,700 $150,300 - $ 3,300 Officer Nobukazu Tsurumi 2000 $247,124 $55,948 $36,060 - Executive 1999 $117,700 $25,300 $23,800 - Vice President 1998 N/A N/A N/A N/A Michael Deaderick 2000 $236,025 $122,740 - $8,600 Senior 1999 $215,300 $120,000 - $7,900 Vice President 1998 $193,200 $94,400 - $7,000 - ------------ The amounts in this column represent housing allowances and relocation costs. The amounts in this column represent the Company's allocated contribution under the TMS Savings Plan (the "Plan"), a tax-qualified 401(k) Plan. Participants in the Plan may elect, subject to applicable law, to contribute up to 15% of their base compensation on a pre-tax basis to which the Company adds an amount equal to two-thirds of the first 6% of the employee's contribution. Participants are vested 25% each year with respect to the Company's contribution and are fully vested after four years. Subject to the limitations of the Plan, employee and Company contributions are invested in various investment options at the discretion of the employee. TMS also maintains a 401(k) Excess Plan, a non-qualified deferred compensation plan which has similar provisions to the Saving Plan. Effective January 1, 1999, Mr. Tsurumi was appointed as Group Vice President and Treasurer. The compensation presented for Mr. Tsurumi for fiscal year 1999 reflects amounts earned for services to the Company during the partial period of the fiscal year served.
-63- Employee Benefit Plan The following pension plan table presents typical annual retirement benefits under the TMS Pension Plan for various combinations of compensation and years of credited service for participants who retire at age 62, assuming no final average bonus and excluding Social Security offset amounts. The amounts are subject to Federal statutory limitations governing pension calculations and benefits.
Annual Benefits for Final Average Years of Credited Service Annual ------------------------------------ Compensation 15 20 25 ------------- -------- -------- -------- $50,000 $15,000 $20,000 $25,000 $100,000 $30,000 $40,000 $50,000 $150,000 $45,000 $60,000 $75,000 $200,000 $60,000 $80,000 $100,000 $250,000 $75,000 $100,000 $125,000 $300,000 $90,000 $120,000 $150,000 $350,000 $105,000 $140,000 $175,000 $400,000 $120,000 $160,000 $200,000 $450,000 $135,000 $180,000 $225,000 $500,000 $150,000 $200,000 $250,000
All full-time employees of the Company are eligible to participate in the TMS Pension Plan commencing on the first day of the month following hire. Benefits payable under this non-contributory defined benefit pension plan are based upon final average compensation, final average bonus and years of credited service. Final average compensation is defined as the average of the participant's base rate of pay, plus overtime, during the highest-paid 60 consecutive months prior to the earlier of termination or normal retirement. Final average bonus is defined as the highest average of the participant's fiscal year bonus, and basic seniority-based cash bonus for non-managerial personnel, over a period of 60 consecutive months prior to the earlier of termination or normal retirement. A participant generally becomes eligible for the normal retirement benefit at age 62, and may be eligible for early retirement benefits starting at age 55. The annual normal retirement benefit under the Pension Plan, payable monthly, is an amount equal to the number of years of credited service (up to 25 years) multiplied by the sum of (i) 2% of the participant's final average compensation less 2% of the estimated annual Social Security benefit payable to the participant at normal retirement and (ii) 1% of the participant's final average bonus. The normal retirement benefit is subject to reduction for certain benefits under any union-sponsored retirement plan and benefits attributable to employer contributions under any defined-contribution retirement plan maintained by TMS and its subsidiaries or any affiliate that has been merged into the TMS Pension Plan. -64- The TMS Supplemental Executive Retirement Plan (TMS SERP), a non-qualified non- contributing benefit plan, authorizes a benefit to be paid to eligible executives, including Mr. Borst and Mr. Deaderick. Benefits under the TMS SERP, expressed as an annuity payable monthly, are based on 2% of the executive's compensation recognized under the plan multiplied by the years of service credited under the plan (up to a maximum of 30), offset by benefits payable under the TMS Pension Plan and the executive's primary Social Security benefit. A covered participant's compensation may include base pay and a percentage (not in excess of 100%) of bonus pay, depending on the executive's length of service in certain executive positions. Similarly, years of service credited under the plan are determined by reference, in part, to the executive's length of service in certain executive positions. No benefit is payable under the TMS SERP to an executive unless the executive's termination of employment occurs on a date, after the executive reaches age 55, that is agreed in writing by the President of TMS and the executive; and the executive is vested in benefits under the TMS Pension Plan, or unless the executive accepts an invitation to retire extended by the President of TMS. Mr. Borst is a participant in the TMS Pension Plan and the TMS SERP, and had 15 years of total credited service as of September 30, 2000. Based upon years of credited service allocable to TMCC, Mr. Borst may be entitled to receive approximately $36,000 in annual pension plan benefits when Mr. Borst reaches age 62. Mr. Borst also may be entitled to receive pension benefits from TMS based upon services to and compensation by TMS. Mr. Deaderick is a participant in the TMS Pension Plan and the TMS SERP, and had 26 years of total credited service as of September 30, 2000. Based upon years of credited service allocable to TMCC, Mr. Deaderick may be entitled to receive approximately $93,000 in annual pension plan benefits when Mr. Deaderick reaches age 62. Mr. Deaderick also may be entitled to receive pension benefits from TMS based upon services to and compensation by TMS. Compensation of Directors No amounts are paid to members of the TMCC Board of Directors for their services as directors. Compensation Committee Interlocks and Insider Participation Members of the Executive Committee of the Board of Directors, which consists of the directors of TMCC other than Mr. Araki and Mr. Ishizaka, participate in decisions regarding the compensation of the executive officers of the Company. Certain of the members of the Executive Committee are current or former executive officers of the Company. Certain of the members of the Executive Committee are also current executive officers and directors of TMS and its affiliates and participate in compensation decisions for those entities. -65- ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. As of the date hereof, all of TMCC's capital stock is owned by TFSA. ITEM 13. CERTAIN RELATIONSHIPS AND TRANSACTIONS. Transactions between the Company, TFSA, TFSC, TMS and TMMNA are included in Note 2, Note 11, Note 14, Note 15 and Note 16 of the Notes to the Consolidated Financial Statements as well as Item 1 and Item 7. Certain directors and executive officers of TMCC are also directors and executive officers of TFSA, TFSC, TMS and TMC as described in Item 10. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. (a)(1)Financial Statements Included in Part II, Item 8 of this Form 10-K. See Index to Financial Statements on page 26. (2)Exhibits The exhibits listed on the accompanying Exhibit Index, starting on page 68, are filed as part of, or incorporated by reference into, this Report. (b)Reports on Form 8-K There were no reports on Form 8-K filed by the registrant during the quarter ended September 30, 2000. -66- SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Torrance, State of California, on the 20th day of December, 2000. TOYOTA MOTOR CREDIT CORPORATION By /S/ GEORGE E. BORST ------------------------------ George E. Borst President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities indicated on the 20th day of December, 2000. Signature Title --------- ----- President and Chief Executive Officer and Director /S/ GEORGE E. BORST (Principal Executive Officer) - ------------------------------------ George E. Borst Executive Vice President and Treasurer and Director /S/ NOBUKAZU TSURUMI (Principal Financial Officer) - ------------------------------------ Nobukazu Tsurumi Vice President - Finance and Affiliated Operations /S/ ROBERT M. ALLEN (Principal Accounting Officer) - ------------------------------------ Robert M. Allen /S/ MICHAEL DEADERICK Director - ------------------------------------ Michael Deaderick /S/ YOSHIMI INABA Director - ------------------------------------ Yoshimi Inaba /S/ JAMES PRESS Director - ------------------------------------ James Press -67- EXHIBIT INDEX Method Exhibit of Number Description Filing - ------- ----------- -------- 3.1(a) Articles of Incorporation filed with the California Secretary of State on October 4, 1982. (1) 3.1(b) Certificate of Amendment of Articles of Incorporation filed with the California Secretary of State on January 24, 1984. (1) 3.1(c) Certificate of Amendment of Articles of Incorporation filed with the California Secretary of State on January 25, 1985. (1) 3.1(d) Certificate of Amendment of Articles of Incorporation filed with the California Secretary of State on September 6, 1985. (1) 3.1(e) Certificate of Amendment of Articles of Incorporation filed with the California Secretary of State on February 28, 1986. (1) 3.1(f) Certificate of Amendment of Articles of Incorporation filed with the California Secretary of State on December 3, 1986. (1) 3.1(g) Certificate of Amendment of Articles of Incorporation filed with the California Secretary of State on March 9, 1987. (1) 3.1(h) Certificate of Amendment of Articles of Incorporation filed with the California Secretary of State on December 20, 1989. (2) 3.2 Bylaws as amended through January 16, 1993. (6) 4.1 Issuing and Paying Agency Agreement dated August 1, 1990 between TMCC and Bankers Trust Company. (3) 4.2(a) Indenture dated as of August 1, 1991 between TMCC and The Chase Manhattan Bank, N.A. (4) - ----------------- (1) Incorporated herein by reference to the same numbered Exhibit filed with TMCC's Registration Statement on Form S-1, File No. 33-22440. (2) Incorporated herein by reference to the same numbered Exhibit filed with TMCC's Report on Form 10-K for the year ended September 30, 1989, Commission File number 1-9961. (3) Incorporated herein by reference to Exhibit 4.2 filed with TMCC's Report on Form 10-K for the year ended September 30, 1990, Commission File number 1-9961. (4) Incorporated herein by reference to Exhibit 4.1(a), filed with TMCC's Registration Statement on Form S-3, File No. 33-52359. (6) Incorporated herein by reference to the same numbered Exhibit filed with TMCC's Report on Form 10-K for the year ended September 30, 1993, Commission File number 1-9961. -68- EXHIBIT INDEX Method Exhibit of Number Description Filing - ------- ----------- ------ 4.2(b) First Supplemental Indenture dated as of October 1, 1991 among TMCC, Bankers Trust Company and The Chase Manhattan Bank, N.A. (5) 4.3 Third Amended and Restated Agency Agreement dated October 4, 2000 among TMCC, The Chase Manhattan Bank, Filed and Chase Manhattan Bank Luxembourg S.A. Herewith 4.4 TMCC has outstanding certain long-term debt as set forth in Note 8 of the Notes to Consolidated Financial Statements. Not filed herein as an exhibit, pursuant to Item 601(b) (4)(iii)(A) of Regulation S-K under the Securities Act of 1933, is any instrument which defines the rights of holders of such long-term debt, where the total amount of securities authorized thereunder does not exceed 10% of the total assets of TMCC and its subsidiaries on a consolidated basis. TMCC agrees to furnish copies of all such instruments to the Securities and Exchange Commission upon request. 10.1(a) Operating Agreement dated January 16, 1984 between TMCC and TMS. (15) 10.1(b) Amendment No. 1 to Operating Agreement dated May 14, 1996 between TMCC and TMS. (11) 10.1(c) Amendment No. 2 to Operating Agreement dated December 1, 1997 between TMCC, TMS and TMMNA. (20) - ----------------- (5) Incorporated herein by reference to Exhibit 4.1 filed with TMCC's Current Report on Form 8-K dated October 16, 1991, Commission File No. 1-9961. (11) Incorporated herein by reference to Exhibit 10.1 filed with TMCC's Report on Form 10-Q for the quarter ended March 31, 1996, Commission File No. 1-9961. (15) Incorporated herein by reference to Exhibit 10.1 filed with TMCC's Registration Statement on Form S-1, File No. 33-22440. (20) Incorporated herein by reference to Exhibit 10.1(c) filed with TMCC's Current Report on Form 10-K for the year ended September 30, 1997, Commission File No. 1-9961. -69- EXHIBIT INDEX Method Exhibit of Number Description Filing - ------- ----------- ------ 10.1(d) Amendment No. 3 to Operating Agreement dated June 1, 1999 between TMCC, TMS and TMMNA. (22) 10.1(e) Amendment No. 4 to Operating Agreement dated August 1, Filed 2000 between TMCC, TMS and TMMNA. Herewith 10.1(f) Termination of Operating Agreement dated October 1, 2000 Filed between TMCC, TMS and TMMNA. Herewith 10.4 Form of Indemnification Agreement between TMCC and its directors and officers. (12) 10.5(a) Three-year Credit Agreement (the "Three-year Agreement") dated as of September 29, 1994 among TMCC, Morgan Guaranty Trust Company of New York, as agent, and Bank of America National Trust and Savings Association, The Bank of Tokyo, Ltd., The Chase Manhattan Bank, N.A., Citicorp USA, Inc. and Credit Suisse, as Co-Agents. (13) 10.5(b) Amendment No. 1 dated September 28, 1995 to the Three-year Agreement. (14) 10.5(c) Amended and Restated Three-Year Credit Agreement dated September 24, 1996. (16) 10.5(d) Amended and Restated Three-Year Credit Agreement dated September 23, 1997. (17) 10.5(e) Amendment dated March 19, 1999 to the Three-year Agreement. (8) 10.5(f) Amended and Restated Three-Year Credit Agreement dated September 17, 1999. (8) - ---------------- (8) Incorporated herein by reference to the same numbered Exhibit filed with TMCC's Current Report on Form 10-K for the year ended September 30, 1999, Commission File No. 1-9961. (12) Incorporated herein by reference to Exhibit 10.6 filed with TMCC's Registration Statement on Form S-1, Commission File No. 33-22440. (13) Incorporated herein by reference to Exhibit 10.10 filed with TMCC's Report on Form 10-K for the year ended September 30, 1994, Commission File No. 1-9961. (14) Incorporated herein by reference to Exhibit 10.10(a) filed with TMCC's Report on Form 10-K for the year ended September 30, 1995, Commission File No. 1-9961. (16) Incorporated herein by reference to Exhibit 10.9(d) filed with TMCC's Report on Form 10-K for the year ended September 30, 1996, Commission File No. 1-9961. (17) Incorporated herein by reference to Exhibit 10.5(f) filed with TMCC's Report on Form 10-K for the year ended September 30, 1997, Commission File No. 1-9961. (22) Incorporated herein by reference to Exhibit 10.1 filed with TMCC's Report on Form 10-Q for the quarter ended June 30, 1999, Commission File No. 1-9961. -70- EXHIBIT INDEX Method Exhibit of Number Description Filing - ------- ----------- ------ 10.5(g) Fourth Amended and Restated Three-Year Credit Agreement Filed dated September 14, 2000. Herewith 10.5(h) Fourth Amended and Restated 364-Day Credit Agreement dated September 17, 1999 among TMCC, Bank of America N.A. as Administrative Agent, The Chase Manhattan Bank as Syndication Agent, The Bank of Tokyo-Mitsubishi Ltd., and Citicorp USA, Inc. as Documentation Agents, Banc of America Securities LLC as Sole Lead Arranger and Sole Book Manager and the other Banks named therein. (23) 10.5(i) Fifth Amended and Restated 364-Day Credit Agreement dated September 14, 2000 among TMCC, Bank of America N.A. as Administrative Agent, The Chase Manhattan Bank as Syndication Agent, The Bank of Tokyo-Mitsubishi Ltd., and Citicorp USA, Inc. as Documentation Agents, Banc of America Securities LLC as Sole Lead Arranger Filed and Sole Book Manager and the other Banks named therein. Herewith 10.6 Toyota Motor Sales, U.S.A., Inc. Supplemental Executive Retirement Plan. * (9) 10.7 Toyota Motor Sales, U.S.A., Inc. 401(k) Excess Plan. * (10) 10.8 Amended and Restated Trust and Servicing Agreement dated as of October 1, 1996 by and among TMCC, TMTT, Inc., as titling trustee and U.S. Bank National Association, as trust agent. (18) 10.9 Credit Support Agreement dated July 14, 2000 between Filed TFSC and TMC. Herewith 10.10 Credit Support Agreement dated October 1, 2000 between Filed TMCC and TFSC. Herewith - ---------------- (9) Incorporated herein by reference to Exhibit 10.1 filed with TMCC's Report on Form 10-Q for the quarter ended December 31, 1995, Commission File No. 1-9961. (10) Incorporated herein by reference to Exhibit 10.2 filed with TMCC's Report on Form 10-Q for the quarter ended December 31, 1995, Commission File No. 1-9961. (18) Incorporated herein by reference to Exhibit 4.1 filed with Toyota Auto Lease Trust 1997-A's Report on Form 8-A dated December 23, 1997, Commission File No. 333-26717 *- Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to applicable rules of the Securities and Exchange Commission. (23) Incorporated herein by reference to Exhibit 10.5(g)filed with TMCC's Current Report on Form 10-K for the year ended September 30, 1999, Commission File No. 1-9961. -71- EXHIBIT INDEX Method Exhibit of Number Description Filing - ------- ----------- ------ 10.11 Repurchase Agreement dated October 1, 2000 between Filed TMCC and TMS. Herewith 10.12 Shared Services Agreement dated October 1, 2000 Filed between TMCC and TMS. Herewith 12.1 Calculation of ratio of earnings to fixed charges. Filed Herewith 21.1 TMCC's list of subsidiaries. Filed Herewith 23.1 Consent of Independent Accountants. Filed Herewith 27.1 Financial Data Schedule. Filed Herewith -72- EX-4.3 2 0002.txt Exhibit 4.3 FINAL THIRD AMENDED AND RESTATED AGENCY AGREEMENT BY AND AMONG TOYOTA MOTOR CREDIT CORPORATION as Issuer -and- The Chase Manhattan Bank as Agent -and- Chase Manhattan Bank Luxembourg S.A. as Paying Agent Dated as of October 4, 2000 in respect of a EURO MEDIUM-TERM NOTE PROGRAM 1.Definitions and Interpretations 2 2.Appointment of Agent and Paying Agents 7 3.Issue of Temporary Global Notes 8 4.Issue of Permanent Global Notes 9 5.Issue of Definitive Notes 10 6.Exchanges 11 7.Terms of Issue 11 8.Payments 13 9.Determinations and Notifications in Respect of Notes 15 10.Notice of Any Withholding or Deduction 16 11.Duties of the Agent in Connection with Early Redemption 17 12.Publication of Notices 17 13.Cancellation, RESALE AND REISSUANCE of Notes, Receipts, Coupons and Talons 17 14.Issue of Replacement Notes, Receipts, Coupons and Talons 19 15.Copies of this Agreement and Each Pricing Supplement Available for Inspection 20 16.Commissions and Expenses 20 17.Indemnity 21 18.Repayment by the Agent 21 19.Conditions of Appointment 22 20.Communication Between the Parties 23 21.Changes in Agent and Paying Agents 23 22.Merger and Consolidation 25 23.Notifications 25 24.Change of Specified Office 26 25.Notices 26 26.Taxes and Stamp Duties 26 27.Currency Indemnity 27 28.Amendments: Meetings of Holders 27 29.Calculation Agency Agreement 29 -i- 30.redenomination and exchange 29 31.Descriptive Headings 32 32.Governing Law 32 33.Counterparts 32 -ii- APPENDICES Page APPENDIX A Terms and Conditions of the Notes A-1 APPENDIX B Forms of Global and Definitive Notes, Coupons, Receipts and Talons B-1 Appendix B-1-Form of Temporary Global Notes B-1-1 Schedule One-Part I-Interest Payments B-1-6 Schedule One-Part II-Installment Payments B-1-7 Schedule Two-Schedule of Exchanges for Notes Represented by a Permanent Global Note or Definitive Notes, or Redemptions or Purchases and Cancellations B-1-8 Schedule Three-Form of Certificate to be Presented by Appropriate Clearing System B-1-9 Certificate "A"-Form of Certificate to be Presented to Appropriate Clearing System B-1-11 Appendix B-2-Form of Permanent Global Note B-2-1 Schedule One-Part I-Interest Payments B-2-6 Schedule One-Part II-Installment Payments B-2-7 Schedule Two-Schedule of Exchanges of a Temporary Global Note and for Definitive Notes, or Redemptions or Purchases and Cancellations B-2-9 Appendix B-3-Definitive Note B-3-1 Appendix B-4-Form of Coupon B-4-1 Appendix B-5-Form of Receipt B-5-1 Appendix B-6-Form of Talon B-6-1 APPENDIX C Form of Calculation Agency Agreement C-1 -iii- APPENDIX D Form of Operating & Administrative Procedures Memorandum D-1 Annex A-Settlement Procedures D-3 Annex B to Appendix D-Form of Pricing Supplement D-6 Annex C-Form Letter from Lead Manager/Dealer D-17 Annex D-Trading Desk Information D-18 APPENDIX E Form of the Notes E-1 -iv- THIRD AMENDED AND RESTATED AGENCY AGREEMENT in respect of a EURO MEDIUM-TERM NOTE PROGRAM WHEREAS, the Company has entered into the Third Amended and Restated Program Agreement dated October 4, 2000 (the "Program Agreement") with Merrill Lynch International, BNP Paribas, Credit Suisse First Boston (Europe) Limited, Goldman Sachs International, J.P. Morgan Securities Ltd., Morgan Stanley & Co. International Limited, Nomura International plc, and UBS AG, acting through its business group UBS Warburg (the "Dealers") pursuant to which the Company may issue notes (the "Notes") in an aggregate principal amount of up to U.S.$16,000,000,000 (or its equivalent in other currencies or currency units) outstanding at any time; WHEREAS, the Company entered into an Agency Agreement dated October 30, 1992 with The Chase Manhattan Bank (formerly known as The Chase Manhattan Bank, N.A.), as agent (the "Agent") and Chase Manhattan Bank Luxembourg S. A., as paying agent (the "Paying Agent") in connection with the issuance of Notes under the Program Agreement (the "Original Agreement"), which Original Agreement was amended by Amendment No. 1 dated July 26, 1993; WHEREAS, the Company entered into an Amended and Restated Agency Agreement dated July 28, 1994 with the Agent and the Paying Agent, as amended by Amendment No. 1 dated as of July 27, 1995 and Amendment No. 2 dated July 19, 1996 (the "First Amended and Restated Agency Agreement"); WHEREAS, the Company entered into a Second Amended and Restated Agency Agreement dated July 24, 1997 with Agent and Paying Agent, as amended by Amendment No. 1 dated July 24, 1998, Amendment No. 2 dated July 23, 1999, and Amendment No. 3 dated July 28, 2000 (as amended, the "Second Amended and Restated Agency Agreement"); and WHEREAS, as permitted by Clause 28 of the Second Amended and Restated Agency Agreement, the parties desire to amend and restate in its entirety the Second Amended and Restated Agency Agreement. NOW, THEREFORE, BE IT RESOLVED that the Second Amended and Restated Agency Agreement is hereby amended and restated in its entirety to read as follows: THIS THIRD AMENDED AND RESTATED AGENCY AGREEMENT (the "Agreement") is made as of October 4, 2000 BY AND AMONG: (1)Toyota Motor Credit Corporation of Torrance, California, U.S.A. (the "Company"); (2)The Chase Manhattan Bank of Trinity Tower, 9 Thomas More Street, London E1W 1YT (the "Agent", which expression shall include any successor agent appointed in accordance with Clause 21); and -1- (3)Chase Manhattan Bank Luxembourg S.A. of 5 Rue Plaetis, L-2338 Luxembourg (together with the Agent, the "Paying Agents", which expression shall include any additional or successor paying agent appointed in accordance with Clause 21 and "Paying Agent" shall mean any of the Paying Agents). (1)Definitions and Interpretations TC The following expressions shall have the following meanings: "BALO" means the Bulletin des Annonces Legales Obligatoires; "CBV" means the Conseil des Bourses de Valeurs; "Clearstream" and "Clearstream, Luxembourg" means Clearstream Banking, societe anonyme; "COB" means the Commission des Operations de Bourse; "Conditions" means, in respect of any Series of Notes, the terms and conditions of the Notes of such Series, such terms and conditions being in the form or substantially in the form set out in Appendix A hereto or in such other form, having regard to the terms of the relevant Series, as may be agreed between the Company, the Agent and the relevant Purchaser or Purchasers as from time to time; "Coupon" has the meaning ascribed thereto in the Conditions; "Dealer" means each of Merrill Lynch International, BNP Paribas, Credit Suisse First Boston (Europe) Limited, Goldman Sachs International, J.P. Morgan Securities Ltd., Morgan Stanley & Co. International Limited, Nomura International plc, and UBS AG, acting through its business group UBS Warburg, and any other entities appointed as dealers from time to time pursuant to the Program Agreement; "Definitive Note" means a Note in definitive form substantially in the form set out in Appendix B-3 hereto (or in such other form as may be agreed between the Company, the Agent and the relevant Purchaser or Purchasers) issued or to be issued by the Company pursuant to this Agreement in exchange for the whole or part of a Temporary Global or a Permanent Global Note; "Dual Currency Notes" means Notes in respect of which principal and/or interest is payable in one or more Specified Currencies other than the Specified Currency in which they are denominated; "Established Rate" means the rate for the conversion of the Specified Currency (including compliance with rules relating to roundings in accordance with applicable European Community regulations) into Euro established by the Council of the European Union pursuant to Article 109l(4) of the Treaty; "Euro" and "euro" mean the currency introduced at the start of the third -2- stage of European economic and monetary union pursuant to the Treaty; "Euroclear" means Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear System; "French francs" and "FRF" mean the lawful currency for the time being of France, in addition to the euro. (Pursuant to the Treaty, French francs will cease to exist on January 1, 2002.); "French Franc Note" means a Note denominated in French Francs or denominated in another currency or currencies but linked directly or indirectly to French Francs; "FSA" means the Financial Services Act 1986 of the United Kingdom; "Global Note" means a Temporary Global Note or a Permanent Global Note; "ISDA Definitions" means the 1991 ISDA Definitions, as supplemented by the 1998 Supplement and the 1998 ISDA Euro Definitions, each as published by the International Swaps and Derivatives Association, Inc., as amended, supplemented or updated from time to time; "Issue Date" means, in respect of any Note, the date of issue and purchase of such Note pursuant to Clause 2 of the Program Agreement, being in the case of any Note in the form of a Definitive Note, the same date as the date of issue of the Global Note which initially represented such Note; "Listing Agent" means Merrill Lynch International of Ropemaker Place, 25 Ropemaker Street, London EC2Y 9LY or such other London listing agent as the Company may from time to time appoint for the purposes of liaising with the UK Listing Authority and the London Stock Exchange, or, in relation to any Notes which are, or are to be, listed on a Stock Exchange other than the Official List and admitted for trading by the London Stock Exchange, such listing agent as the Company may from time to time appoint for purposes of liaising with such Stock Exchange or other relevant authority; "Listing Particulars" means, with regard to the issue of Notes to be listed on a Stock Exchange, any listing particulars (including supplementary listing particulars) approved under the Listing Rules by the relevant Stock Exchange; (a) in accordance with the provisions of section 144 of the FSA (including any supplementary listing particulars published in accordance with the provisions of this Agreement or otherwise) in the case of Notes which are, or are to be, listed on the Official List and admitted for trading by the London Stock Exchange; and/or (b) in accordance with their equivalent in the case of Notes which are, or are to be, listed on a Stock Exchange other than the London Stock Exchange; 3 "Listing Rules" means: in the case of Notes which are, or are to be, listed on the Official List and admitted for trading by the London Stock Exchange, the listing rules made by the Financial Services Authority under section 142 of the FSA; and in the case of Notes which are, or are to be, listed on a Stock Exchange other than the Official List and admitted for trading by the London Stock Exchange, the listing rules and regulations for the time being in force for such Stock Exchange; "London Stock Exchange" means the London Stock Exchange plc; "Note" means any note issued or to be issued by the Company pursuant to the Program Agreement, which Note may be represented by a Global Note or a Definitive Note; "Noteholders" means the several persons who are for the time being holders of outstanding Notes save that for so long as any of the Notes are represented by a Global Note, each person who is for the time being shown in the records of Euroclear, Clearstream, or such other applicable clearing agency as the holder of a particular principal amount of such Notes (other than a clearing agency (including Clearstream and Euroclear) that is itself an account holder of Clearstream, Euroclear or any other applicable clearing agency for a Series of Notes) (in which regard any certificate or other document issued by Euroclear, Clearstream or such other applicable clearing agency as to the nominal amount of such Notes standing to the account of any person shall be conclusive and binding for all purposes save in the case of manifest error) shall be treated by the Company, the Agent and any other Paying Agent as a holder of such nominal amount of such Notes for all purposes other than for the payment of principal (including premium (if any)) or interest on such Notes, the right to which shall be vested, as against the Company, the Agent and any other Paying Agent, solely in the bearer of the Global Note in accordance with and subject to its terms (and the expressions "Noteholder", "holder of Notes" and related expressions shall be construed accordingly); "Offering Circular" means the Offering Circular relating to the Program as revised, supplemented, amended or updated, including in relation to each Series of Notes, the Pricing Supplement relating to such Series and such other documents as are from time to time incorporated therein by reference; "Official List" has the meaning ascribed thereto in section 142 of the FSA; "Outstanding" means, in relation to the Notes, all the Notes issued other than (a) those which have been redeemed in full in accordance with this Agreement or the Conditions, (b) those in respect of which the date for redemption in accordance with the Conditions has occurred and the redemption moneys therefor (including all interest (if any) accrued thereon to the date for such redemption and any interest (if any) payable under the Conditions after such date) have been duly paid to the Agent as provided herein (and, where appropriate, notice has been given to the Noteholders in accordance with Condition 16) and remain available for payment against presentation of 4 Notes, (c) those which have become void under Condition 15, (d) those which have been purchased or otherwise acquired and cancelled as provided in Condition 5 and those which have been purchased or otherwise acquired and are being held by the Company for subsequent resale or reissuance as provided in Condition 5 during the time so held, (e) those mutilated or defaced Notes which have been surrendered in exchange for replacement Notes pursuant to Condition 14, (f) (for the purposes only of determining how many Notes are outstanding and without prejudice to their status for any other purpose) those Notes alleged to have been lost, stolen or destroyed and in respect of which replacement Notes have been issued pursuant to Condition 14 and (g) Temporary Global Notes to the extent that they shall have been duly exchanged in whole for Permanent Global Notes or Definitive Notes and Permanent Global Notes to the extent that they shall have been duly exchanged in whole for Definitive Notes, in each case pursuant to their respective provisions; "Permanent Global Note" means a Global Note substantially in the form set out in Appendix B-2 hereto (or in such other form as may be agreed between the Company, the Agent and the relevant Purchaser or Purchasers) comprising Notes issued or to be issued by the Company in exchange for the whole or part of a Temporary Global Note issued in respect of the Notes of the same Series; "Pricing Supplement" means the pricing supplement issued in relation to each Series of Notes (substantially in the form of Annex B to the Procedures Memorandum) as a supplement to the Offering Circular and giving details of that Tranche; "Procedures Memorandum" means the Operating & Administrative Procedures Memorandum attached as Appendix D to this Agreement as amended or varied from time to time by agreement between the parties hereto with written approval of the Agent. "Program" means the Euro Medium-Term Note Program established by the Program Agreement; "Program Agreement" means the Third Amended and Restated Program Agreement dated October 4, 2000 between the Company and the Dealers concerning the purchase of Notes to be issued by the Company and includes any subsequent amendment or supplement thereto; "Purchaser" means a Dealer or any third party other than a dealer (as defined in Section 2(12) of the United States Securities Act of 1933, as amended), who agrees to purchase Notes pursuant to the Program Agreement and references to a relevant Purchaser or Purchasers mean in relation to any Note, the Purchaser or Purchasers to whom the Company has agreed to issue and sell such Note; "Receipt" has the meaning ascribed thereto in the Conditions; "Redenomination Date" means in the case of interest bearing Notes, any date for payment of interest under the Notes or in the case of Zero Coupon Notes, any date, in each case specified by the Company in the notice given to Noteholders pursuant to Condition 17 and which falls on or after the start of the third stage of European economic and monetary union pursuant to the 5 Treaty, or if the country of the Specified Currency is not one of the countries then participating in such third stage, which falls on or after such later date as it does so participate and which falls before the date on which the Specified Currency ceases to be a sub-division of the Euro; "Series" means all Notes which are denominated in the same currency and which have the same Maturity Date, Interest Basis, Redemption/Payment Basis and interest payment dates (if any) (all as indicated in the applicable Pricing Supplement) and the terms of which (except for the Issue Date or Interest Commencement Date (as the case may be) and/or the Issue Price (all as indicated as aforesaid)) are otherwise identical (including whether or not the Notes are listed); and the expressions "Notes of the relevant Series" and "holders of Notes of the relevant Series" and related expressions shall be construed accordingly; "SBF" means SBF - Bourse de Paris; "Specified Currency" means the currency (which expression shall include European Currency Units ("ECUs"), Euro and other currency units) in which Notes are denominated and, in the case of Dual Currency Notes, the currency or currencies in which payment in respect of the Notes is to be made; "Stock Exchange" means the Official List, the London Stock Exchange or any other or further stock exchange(s) or relevant authority on which any Notes may from time to time be listed or admitted to trading; and references in this Agreement to the "relevant Stock Exchange" shall, in relation to any Notes, be references to the Stock Exchange on which such Notes are from time to time, or are intended to be, listed or admitted to trading; "Talon" has the meaning ascribed thereto in the Conditions; "TARGET system" means the Trans-European Automated Real-time Gross Settlement Express Transfer System; "Temporary Global Note" means a Global Note substantially in the form set out in Appendix B-1 hereto (or in such other form as may be agreed between the Company, the Agent and the relevant Purchaser or Purchasers) comprising Notes issued or to be issued by the Company pursuant to the Program Agreement and issued in respect of the Notes of the same Series; "Tranche" means all Notes of the same Series with the same Issue Date and Interest Commencement Date; "Treaty" means the Treaty establishing the European Community, as amended by the Treaty on Economic Union; "UK Listing Authority" means the name by which the Financial Services Authority is known being the body appointed under the Official Listing of 6 Securities (Change of Competent Authority) Regulations 2000 as "competent authority" to decide on the admission of securities to the Official List; and "U.S.$" and "U.S. dollar" mean the lawful currency for the time being of the United States. (2)Terms and expressions (including the definitions of currencies or composite currencies) defined in the Conditions or Appendices or used in the applicable Pricing Supplement shall have the same meanings in this Agreement, except where the context requires otherwise. (3)Any references to Notes shall, unless the context otherwise requires, include any Temporary Global Notes, Permanent Global Notes and Definitive Notes. 2.Appointment of Agent and Paying Agents TC (1) The Agent is hereby appointed as agent of the Company, to act as issuing and principal paying agent, upon the terms and subject to the conditions set out below, for the purposes of, inter alia: a)completing, authenticating and issuing Notes; b)exchanging Temporary Global Notes for Permanent Global Notes or Definitive Notes and in the case where Temporary Global Notes are initially exchanged for Permanent Global Notes, exchanging Permanent Global Notes for Definitive Notes in accordance with the terms of such Global Notes; c)paying sums due on Global Notes and Definitive Notes, Receipts and Coupons; d)determining the interest and/or other amounts payable in respect of the Notes in accordance with the Conditions; e)arranging on behalf of the Company for notices to be communicated to the Noteholders and the relevant Stock Exchanges; f)ensuring that all necessary action is taken to comply with the periodic reporting and notification requirements of the Bank of England, the German Central Bank (including the monthly notification as to the amounts, issue dates and other terms of each Tranche of DM-denominated Notes issued by the Company during such month), the Ministry of Finance of Japan (including any monthly reports as to the amounts, issue dates and other terms of each Tranche of Yen-denominated Notes) and other applicable Japanese authorities, the Direction du Tresor of France or any other competent authority of any relevant currency with respect to the Notes to be issued under the Program; 7 g)receiving notice from Euroclear, Clearstream and/or such other applicable clearing agency relating to the certificates of non-U.S. beneficial ownership of the Notes; h)upon certification by the participating Dealer or Dealers to the Agent that the distribution with respect to a particular Tranche of Notes has been completed, determining and certifying to Clearstream, Euroclear or such other applicable clearing agency the applicable Exchange Date; i)performing all other obligations and duties imposed upon it by the Conditions and this Agreement. j)Any of the duties and obligations of the Agent in its capacity of issuing and principal paying agent set forth in Subclauses (a), (b), (c), (d), (e), (g), (h) and (i) may, with the consent of the Company, be delegated by the Agent with respect to a particular Series of Notes to a third party, provided such third party's performance is subject to the overall supervision and control of the Agent. (2)Each Paying Agent is hereby appointed as paying agent of the Company, upon the terms and subject to the conditions set out below, for the purposes of paying sums due on Notes, Receipts and Coupons. 3.Issue of Temporary Global Notes TC (1)Subject to Subclause 3(2), following receipt of the applicable Pricing Supplement signed by the Company with respect of an issue of Notes in accordance with the provisions of the Procedures Memorandum set out in Appendix D hereto (as from time to time varied, with the prior approval of the Agent, by the Company and the relevant Purchaser or Purchasers of the Notes of such issue), the Agent will take the steps required of the Agent in the Procedures Memorandum. For this purpose the Agent is authorized on behalf of the Company: (a)to prepare a Temporary Global Note or Temporary Global Notes containing the relevant Conditions and to complete, in accordance with such Pricing Supplement, the necessary details on such Temporary Global Note(s); (b)to authenticate such Temporary Global Note(s); and (c)to deliver such Temporary Global Note(s) (i) to the specified common depositary of Euroclear, Clearstream and/or such other applicable clearing agency as is specified in the related Pricing Supplement against receipt from such common depositary of confirmation that such common depositary is holding the Temporary Global Note(s) in safe custody for the account of Euroclear, Clearstream or such other applicable clearing agency and to instruct Euroclear, Clearstream and/or such other applicable clearing agency (as the case may be) to credit the Notes represented by such Temporary Global 8 Notes(s), unless otherwise agreed in writing between the Agent and the Company, to the Agent's distribution account (or in the case of a syndicated bond issue, the lead manager's account), or (ii) as otherwise agreed in writing between the Company and the Agent. (2)The Agent shall only be required to perform its obligations under Subclause 3(1) if it holds a master Temporary Global Note duly executed by a person or persons authorized to execute the same on behalf of the Company, which may be used by the Agent for the purpose of preparing Temporary Global Note(s) in accordance with Subclause 3(1)(a). (3)The Agent shall provide Euroclear, Clearstream and/or such other applicable clearing agency with the notifications, instructions or other information to be given by the Agent to Euroclear, Clearstream and/or such other applicable clearing agency. (4)Any of the duties and obligations of the Agent set forth in this Clause 3 may, with the consent of the Company, be delegated by the Agent with respect to a particular Series of Notes to a third party, provided such third party's performance is subject to the overall supervision and control of the Agent. 4.Issue of Permanent Global Notes TC (1)Subject to Subclause 4(2), upon the occurrence of any event which pursuant to the terms of a Temporary Global Note requires the issue of a Permanent Global Note, the Agent shall issue a Permanent Global Note in accordance with the terms of the Temporary Global Note. For this purpose the Agent is authorized on behalf of the Company: (a)to prepare a Permanent Global Note containing the relevant Conditions and to complete, in accordance with the terms of the Temporary Global Note, the necessary details on such Permanent Global Note and attach a copy of the applicable Pricing Supplement to such Permanent Global Note; (b)to authenticate such Permanent Global Note; and (c)(i) where the Temporary Global Note is being held by a common depositary as aforesaid, to deliver such Permanent Global Note to the specified common depositary that is holding the Temporary Global Note for the time being on behalf of Euroclear, Clearstream and/or such other applicable clearing agency as is specified in the related Pricing Supplement in exchange for such Temporary Global Note or, in the case of a partial exchange, after noting the details of such exchange in the appropriate spaces on both the Temporary Global Note and the Permanent Global Note, and in either case against receipt from the common depositary of confirmation that such common depositary is holding the Permanent Global Note in safe custody for the account of 9 Euroclear, Clearstream and/or such other applicable clearing agency (as the case may be); or (ii) where the Temporary Global Note is not being held by a common depositary, as otherwise agreed in writing between the Company and the Agent. (2)The Agent shall only be required to perform its obligations under Subclause 4(l) if it holds a master Permanent Global Note duly executed by a person or persons authorized to execute the same on behalf of the Company, which may be used by the Agent for the purpose of preparing Permanent Global Notes(s) in accordance with Subclause 4(1)(a). (3)The Agent shall provide Euroclear, Clearstream or such other applicable clearing agency with the notifications, instructions or other information to be given by the Agent to Euroclear, Clearstream or such other applicable clearing agency. (4)Any of the duties and obligations of the Agent set forth in this Clause 4 may, with the consent of the Company, be delegated by the Agent with respect to a particular Series of Notes to a third party, provided such third party's performance is subject to the overall supervision and control of the Agent. 5.Issue of Definitive Notes TC (1)Upon notice from Euroclear, Clearstream or such applicable clearing agency pursuant to the terms of a Temporary Global Note or Permanent Global Note, as the case may be, requiring the issue of one or more Definitive Note(s), the Agent shall deliver the relevant Definitive Note(s) in accordance with the terms of the relevant Global Note. For this purpose, the Agent is hereby authorized on behalf of the Company: (a)to authenticate or arrange for authentication on its behalf (if so instructed by the Company) such Definitive Note(s); and (b)to deliver such Definitive Note(s) to or to the order of Euroclear, Clearstream and/or such other applicable clearing agency as is specified in the related Pricing Supplement either in exchange for such Global Note or, in the case of a partial exchange, on entering details of any partial exchange of the Global Note in the relevant space in Schedule Two of such Global Note; provided that the Agent shall only permit a partial exchange of Notes represented by a Permanent Global Note for Definitive Notes if the Notes which continue to be represented by such Permanent Global Note are regarded as fungible by Euroclear, Clearstream and/or such other applicable clearing agency with the Definitive Notes issued in partial exchange therefor. The Agent shall notify the Company forthwith upon receipt of a request for issue of Definitive Note(s) in accordance with the provisions of a Global Note (and the aggregate principal amount of such Temporary Global Note or Permanent Global Note, as the case may be, to be exchanged in connection therewith). 10 (2)The Company undertakes to deliver to the Agent, pursuant to a request for the issue of Definitive Notes under the terms of the relevant Global Note, sufficient numbers of executed Definitive Notes to enable the Agent to comply with its obligations under this Clause 5. (3)Any of the duties and obligations of the Agent set forth in this Clause 5 may, with the consent of the Company, be delegated by the Agent with respect to a particular Series of Notes to a third party, provided such third party's performance is subject to the overall supervision and control of the Agent. 6.Exchanges TC Upon any exchange of all or a portion of an interest in a Temporary Global Note for an interest in a Permanent Global Note or for Definitive Notes or upon any exchange of all or a portion of an interest in a Permanent Global Note for Definitive Notes, the Global Note shall be endorsed to reflect the reduction of its principal amount by the aggregate principal amount so exchanged. Until exchanged in full, the holder of an interest in any Global Note shall in all respects be entitled to the same benefits as the holder of Notes, Receipts and Coupons authenticated and delivered hereunder, subject as set out in the Conditions. The Agent is hereby authorized on behalf of the Company (a) to endorse or to arrange for the endorsement of the relevant Global Note to reflect the reduction in the principal amount represented thereby by the amount so exchanged and, if appropriate, to endorse the Permanent Global Note to reflect any increase in the principal amount represented thereby, and in either case, to sign in the relevant space on the relevant Global Note recording such exchange or increase; and (b) in the case of a total exchange, to cancel or arrange for the cancellation of the relevant Global Note. Any of the duties and obligations of the Agent set forth in this Clause 6 may, with the consent of the Company, be delegated by the Agent with respect to a particular Series of Notes to a third party, provided such third party's performance is subject to the overall supervision and control of the Agent. 7.Terms of Issue TC (1)The Agent shall cause all Temporary Global Notes, Permanent Global Notes and Definitive Notes delivered to and held by it under this Agreement to be maintained in safe custody and shall ensure that such Notes are issued only in accordance with the provisions of this Agreement and the relevant Global Note and Conditions. (2)Subject to the procedures set out in the Procedures Memorandum, for the purposes of Subclause (1) the Agent is entitled to treat a telephone, telex or facsimile communication from a person purporting to be (and who the Agent, after making reasonable investigation, believes in good faith to be) the authorized representative of the Company named in the list referred to in, or notified pursuant to, Subclause 19(7) as sufficient instructions and authority of the Company for the Agent to act in accordance with Subclause 7(1). 11 (3)In the event that a person who has signed on behalf of the Company a master Temporary Global Note, a master Permanent Global Note or Definitive Notes not yet issued but held by the Agent in accordance with Subclause 5(1) ceases to be authorized as described in Subclause 19(7), the Agent shall (unless the Company gives notice to the Agent that Notes signed by that person do not constitute valid and binding obligations of the Company or otherwise until replacements have been provided to the Agent) continue to have authority to issue any such Notes, and the Company hereby warrants to the Agent that such Notes shall, unless notified as aforesaid, be valid and binding obligations of the Company. Promptly upon such person ceasing to be authorized, the Company shall provide the Agent with replacement master Temporary Global Notes, master Permanent Global Notes and Definitive Notes and the Agent shall cancel and destroy the master Temporary Global Notes, master Permanent Global Notes and Definitive Notes held by it which are signed by such person and shall provide to the Company a confirmation of destruction in respect thereof specifying the Notes so cancelled and destroyed. (4)Unless otherwise agreed in writing between the Company and the Agent, each Note credited to the Agent's distribution account with Euroclear, Clearstream or such other applicable clearing agency following the delivery of a Temporary Global Note or Permanent Global Note to a common depositary pursuant to Subclause 3(1)(c) or Subclause 4(l)(c), respectively, shall be held to the order of the Company. The Agent shall procure that the principal amount of Notes which the relevant Purchaser has agreed to purchase is: a)debited from the Agent's distribution account; and b)credited to the securities account of such Purchaser with Euroclear, Clearstream or such other clearing agency (as specified in the Letter from Lead Manager/Dealer as provided for in Annex C to the Procedures Memorandum set forth in Appendix D to this Agreement), in each case only upon receipt by the Agent on behalf of the Company of the purchase price due from the relevant Purchaser in respect of such Notes. (5)Unless otherwise agreed in writing between the Company and the Agent, if on the relevant Issue Date a Purchaser does not pay the full purchase price due from it in respect of any Note (the "Defaulted Note") and, as a result, the Defaulted Note remains in the Agent's distribution account with Euroclear, Clearstream or other applicable clearing agency after such Issue Date, the Agent will continue to hold the Defaulted Note to the order of the Company. The Agent shall notify the Company forthwith of the failure of the Purchaser to pay the full purchase price due from it in respect of any Defaulted Note and, subsequently, shall notify the Company forthwith upon receipt from the Purchaser of the full purchase price in respect of such Defaulted Note. (6)Unless otherwise agreed in writing between the Company and the Agent, if the Agent pays an amount (the "Advance") to the Company on the basis that a 12 payment (the "Payment") will be received from a Purchaser and if the Payment is not received by the Agent on the date the Agent pays the Company, the Agent shall notify the Company by telex or facsimile that the Payment has not been received and the Company shall repay to the Agent the Advance and shall pay interest on the Advance (or the unreimbursed portion thereof) from (and including) the date such Advance is made to (but excluding) the earlier of repayment of the Advance and receipt by the Agent of the Payment (at a rate quoted at that time by the Agent as its cost of funding the Advance). (7)In the event of an issue of Notes, the Agent will promptly, and in any event prior to the Issue Date in respect of such issue, send the Pricing Supplement to the Company, relevant Stock Exchange and the relevant Dealers. 8.Payments TC (1)The Agent shall advise the Company, no later than ten Business Days (as defined below) immediately preceding the date on which any payment is to be made to the Agent pursuant to this Subclause 8(1), of the payment amount, value date and payment instructions and the Company shall on each date on which any payment in respect of any Notes becomes due, transfer to an account specified by the Agent not later than the Payment Time such amount in the relevant currency as shall be sufficient for the purposes of such payment in funds settled through such payment system as the Agent and the Company may agree. As used in this Subclause 8(1), the term "Payment Time" means 2:00 p.m. local time in the principal financial center of the country of the currency in which the payment falls is to be made (which in the case of payment of Euro is London). (2)The Agent shall advise the Company, no later than ten Business Days immediately preceding the date on which any payment is to be made to the Agent pursuant to Subclause 8(l), of the payment amount, value date and payment instructions and the Company shall ensure that, no later than the third Business Day immediately preceding the date on which any payment is to be made to the Agent pursuant to Subclause 8(1), the Agent shall receive a confirmation from the Company that payment will be made. For the purposes of this Clause 8, "Business Day" means (unless otherwise stated in the applicable Pricing Supplement) a day which is: (a)a day (other than a Saturday or a Sunday) on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealings in foreign exchange and foreign currency deposits) in London; (b)either (i) in relation to a payment to be made in a Specified Currency other than euro, a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealings in foreign exchange and foreign currency deposits) in the principal financial center of the country of the relevant Specified Currency (if other than 13 London), or (ii) in relation to a payment to be made in euro, a day on which the TARGET system is open; and (c)a day (other than a Saturday or Sunday) on which banks are open for business in the relevant place of business of the Agent. Unless otherwise provided in the applicable Pricing Supplement, the principal financial center of any country for any Series of Notes for the purposes of this Subclause 8(2) shall be as provided in the ISDA Definitions on the Issue Date of such Series of Notes (except in the case of New Zealand and Australia, where the principal financial center will be as specified in the applicable Pricing Supplement). (3)Subject to the Agent being satisfied in its sole discretion that payment will be duly made as provided in Subclause 8(1), the Agent or the relevant Paying Agent shall pay or cause to be paid all amounts due in respect of the Notes on behalf of the Company in the manner provided in the Conditions. If any payment provided for in Subclause 8(1) is made late but otherwise in accordance with the provisions of this Agreement, the Agent and each Paying Agent shall nevertheless make payments in respect of the Notes as aforesaid following receipt by it of such payment. (4)If for any reason the Agent considers in its sole discretion that the amounts to be received by the Agent pursuant to Subclause 8(1) will be, or the amounts actually received by it pursuant thereto are, insufficient to satisfy all claims in respect of all payments then falling due in respect of the Notes, the Agent shall then forthwith notify the Company of such insufficiency and, until such time as the Agent has received the full amount of all such payments, neither the Agent nor any Paying Agent shall be obliged to pay any such claims. (5)Without prejudice to Subclauses 8(3) and 8(4), if the Agent pays any amounts to the holders of Notes, Receipts or Coupons or to any Paying Agent at a time when it has not received payment in full in respect of the relevant Notes in accordance with Subclause 8(1) (the excess of the amounts so paid over the amounts so received being the "Shortfall"), the Company shall, in addition to paying amounts due under Subclause 8(1), pay to the Agent on demand interest (at a rate which represents the Agent's actual overnight cost of funding the Shortfall) on the Shortfall (or the unreimbursed portion thereof) until the receipt in full by the Agent of the Shortfall. The Agent shall notify the Company by tested telex or facsimile as soon as practicable, it being understood that the Company shall have the right to make such payment subsequently with good value as of such Business Day. (6)The Agent shall on demand promptly reimburse each Paying Agent for payments in respect of Notes properly made by such Paying Agent in accordance with this Agreement and the Conditions unless the Agent has notified the Paying Agent, prior to the opening of business in the location of the office of the Paying Agent through which payment in respect of the Notes can be made 14 on the due date of a payment in respect of the Notes, that the Agent does not expect to receive sufficient funds to make payment of all amounts falling due in respect of such Notes. 9.Determinations and Notifications in Respect of Notes TC (1)The Agent shall make all such determinations and calculations (howsoever described) as it is required to do under the Conditions, all subject to and in accordance with the Conditions provided that certain calculations with respect to any Series of Notes may be made by an agent (the "Calculation Agent") appointed by the Company and acceptable to the Agent. The Agent may decline to act in the capacity described above in relation to a particular Series of Notes if (i) the Agent does not have the capacity to determine the rate of interest or redemption amount or any other calculation to be made in relation to such Series of Notes and (ii) such decision to decline is notified to the Issuer by the Agent as soon as reasonably practicable after receipt by the Agent of the terms of such Series of Notes and, in any event, prior to the issue of such Series of Notes. (2)The Agent shall not be responsible to the Company or to any third party (except in the event of negligence, willful default or bad faith) as a result of the Agent having acted on any quotation given by any Reference Bank which subsequently may be found to be incorrect. (3)The Agent shall promptly notify the Company, the other Paying Agents and (in respect of a Series of Notes listed on a Stock Exchange) the relevant Stock Exchange of, inter alia, each Rate of Interest, Interest Amount and Interest Payment Date and all other amounts, rates and dates which it is obliged to determine or calculate under the Conditions as soon as practicable after the determination thereof (and in any event no later than the tenth Business Day (as defined in Clause 8) immediately preceding the date on which any payment is to be made to the Agent pursuant to Subclause 8(1)) and of any subsequent amendment thereto pursuant to the Conditions. (4)The Agent shall use its best efforts to cause each Rate of Interest, Interest Amount and Interest Payment Date and all other amounts, rates and dates which it is obliged to determine or calculate under the Conditions (or which is provided to the Agent by any other Calculation Agent appointed by the Company as provided in Subclause 9(1)) to be published as required in accordance with the Conditions as soon as possible after their determination or calculation. (5)If the Agent does not at any material time for any reason determine and/or calculate and/or publish the Rate of Interest, Interest Amount and/or Interest Payment Date in respect of any Interest Period or any other amount, rate or date as provided in this Clause 9, it shall forthwith notify the Company and the other Paying Agents of such fact. 15 (6)The Agent shall provide to the German Central Bank, at the end of each calendar month, information on the amount, interest rate and other terms of each issue of Deutsche Mark denominated Notes during the month, and such other information as the German Central Bank may require from time to time. (7)The Agent shall comply with the reporting procedures and requirements from time to time of the Direction du Tresor, COB, CBV, SBF and the Comite des Emissions relating to the Marche de 1'Euro-Franc or any successor authority with respect to issues of Notes denominated in, or directly or indirectly linked with, the French Franc. (8)The Agent shall provide to the Dealer or Dealers with respect to any Series of Notes certification as to the completion of distribution of such Series of Notes. (9)For purposes of monitoring the aggregate principal amount of Notes issued under the Program, the Agent shall determine the U.S. dollar equivalent of the principal amount of each issue of Notes denominated in another currency, each issue of Dual Currency Notes and each issue of Index Linked Notes as follows: (a)the U.S. dollar equivalent of Notes denominated in a currency other than U.S. dollars shall be determined by the Agent as of 2:30 p.m. London time on the Issue Date for such Notes by reference to the spot rate displayed on a page on the Reuters Monitor Money Rates Service or the Dow Jones Markets Limited or such other service as is agreed between the Agent and the Company from time to time; (b)the U.S. dollar equivalent of Dual Currency Notes and Index Linked Notes shall be determined in the manner specified above by reference to the original principal amount of such Notes; (c)the U.S. dollar equivalent of Zero Coupon Notes and other Notes issued at a discount shall be calculated in the manner specified above by reference to the net proceeds received by the Company for the relevant issue; and (d)the U.S. dollar equivalent of Partly Paid Notes shall be the principal amount regardless of the amount paid up on such Notes. The Agent shall promptly notify the Company of each determination made as aforesaid. 10.Notice of Any Withholding or Deduction TC If the Company is, in respect of any payments, compelled to withhold or deduct any amount for or on account of taxes, duties, assessments or governmental charges as specifically contemplated under the Conditions, the Company shall give notice thereof to the Agent as soon as it becomes aware of the requirement to make such withholding or deduction and shall give to the Agent such information as it shall require to enable it to comply with such requirement. 16 11.Duties of the Agent in Connection with Early Redemption TC (1)If the Company decides to redeem any Notes for the time being outstanding prior to their Maturity Date in accordance with the Conditions, the Company shall give notice of such decision to the Agent not less than 15 days before the relevant redemption date or such shorter period that is acceptable to the Agent and is set forth in the applicable Pricing Supplement. (2)If only some of the Notes of like tenor and of the same Series are to be redeemed on such date the Agent shall make the required drawing in accordance with the Conditions. (3)The Agent shall publish the notice required in connection with any such redemption and shall at the same time also publish a separate list of serial numbers of any Notes previously drawn and not presented for redemption. Such notice shall specify the date fixed for redemption, the redemption amount, the manner in which redemption will be effected and, in the case of a partial redemption, the serial numbers of the Notes to be redeemed. Such notice will be published in accordance with the Conditions. 12.Publication of Notices TC On behalf of and at the request and expense of the Company, the Agent shall cause to be published all notices required to be given by the Company in accordance with the Conditions. Forthwith upon the receipt by the Agent of a demand or notice from any Noteholder in accordance with the Conditions, the Agent shall forward a copy thereof to the Company. 13.Cancellation, Resale and Reissuance of Notes, Receipts, Coupons and Talons TC (1)All Notes which are purchased or otherwise acquired pursuant to the Conditions by the Company, together (in the case of Definitive Notes) with all unmatured Receipts, Coupons or Talons (if any) attached thereto or purchased therewith, may, at the option of the Company, either be (i) resold or reissued, or held by the Company for subsequent resale or reissuance, or (ii) cancelled in which event such Notes, Receipts and Coupons may not be resold or reissued. Where any Notes, Receipts, Coupons or Talons are purchased and cancelled, resold or reissued, or held by the Company for subsequent resale or reissuance, as aforesaid, the Company shall procure that all relevant details are promptly given to the Agent and that all Notes, Receipts, Coupons or Talons so cancelled are delivered to the Agent. (2)A certificate stating: (a) the aggregate principal amount of Notes which have been redeemed and the aggregate amount paid in respect thereof; 17 (b)the number of Notes cancelled together (in the case of Definitive Notes) with details of all unmatured Receipts, Coupons or Talons (if any) attached thereto or delivered therewith; (c)the aggregate amount paid in respect of interest on the Notes; (d)the total number by maturity date of Receipts, Coupons and Talons so cancelled; and (e)(in the case of Definitive Notes) the serial numbers of such Notes, shall be given to the Company by the Agent as soon as reasonably practicable and in any event within 30 days after the date of such repayment or, as the case may be, payment or exchange. (3)Subject to being duly notified in due time, the Agent shall give a certificate to the Company, within three months of the date of purchase and cancellation or purchase and subsequent resale or reissuance of Notes as aforesaid, stating: (a)the principal amount of Notes so purchased and cancelled, resold or reissued; (b)the serial numbers of such Notes; and (c)the total number by maturity date of the Receipts, Coupons and Talons (if any) appertaining thereto and surrendered therewith or attached thereto. (4)The Agent shall destroy all cancelled Notes, Receipts, Coupons and Talons (unless otherwise instructed by the Company) and, forthwith upon destruction, furnish the Company with a certificate of the serial numbers of the Notes and the number by maturity date of Receipts, Coupons and Talons so destroyed. (5)Without prejudice to the obligations of the Agent pursuant to Subclause 13(2), the Agent shall keep a full and complete record of all Notes, Receipts, Coupons and Talons (other than serial numbers of Coupons, except those which have been replaced pursuant to Condition 14) and of all replacement Notes, Receipts, Coupons or Talons issued in substitution for mutilated, defaced, destroyed, lost or stolen Notes, Receipts, Coupons or Talons and of all Notes, Receipts, Coupons or Talons which have been resold or reissued. The Agent shall at all reasonable times make such record available to the Company and any person authorized by the Company for inspection and for the taking of copies thereof or extracts therefrom. (6)All records and certificates made or given pursuant to this Clause 13 and Clause 14 shall make a distinction between Notes, Receipts, Coupons and Talons of each Series. 18 14. Issue of Replacement Notes, Receipts, Coupons and Talons TC (1)The Company will cause a sufficient quantity of additional forms of Notes, Receipts, Coupons and Talons to be available, upon request, to the Agent at its specified office for the purpose of issuing replacement Notes, Receipts, Coupons and Talons as provided below. (2)The Agent will, subject to and in accordance with the Conditions and the following provisions of this Clause 14, cause to be delivered any replacement Notes, Receipts, Coupons and Talons which the Company may determine to issue in place of Notes, Receipts, Coupons and Talons which have been lost, stolen, mutilated, defaced or destroyed. (3)In the case of a mutilated or defaced Note, the Agent shall ensure that (unless otherwise covered by such indemnity as the Company may require) any replacement Note will only have attached to it Receipts, Coupons and Talons corresponding to those (if any) attached to the mutilated or defaced Note which is presented for replacement. (4)The Agent shall not issue any replacement Note, Receipt, Coupon or Talon unless and until the applicant therefor shall have: (a)paid such costs as may be incurred in connection therewith; (b)furnished it with such evidence (including evidence as to the serial number of such Note, Receipt, Coupon or Talon) and indemnity or other security (which may include a bank guarantee and/or security) or otherwise as the Company and the Agent may reasonably require; and (c)in the case of any mutilated or defaced Note, Receipt, Coupon or Talon, surrendered the same to the Agent. (5)The Agent shall cancel any mutilated or defaced Notes, Receipts, Coupons and Talons in respect of which replacement Notes, Receipts, Coupons and Talons have been issued pursuant to this Clause 14 and shall furnish the Company with certificate stating the serial numbers of the Notes, Receipts, Coupons and Talons so cancelled and, unless otherwise instructed by the Company in writing, shall destroy such cancelled Notes, Receipts, Coupons and Talons and furnish the Company with a destruction certificate containing the information specified in Subclause 13(3). (6)The Agent shall, on issuing any replacement Note, Receipt, Coupon or Talon, forthwith inform the Company and the Paying Agents of the serial number of such replacement Note, Receipt, Coupon or Talon issued and (if known) of the serial number of the Note, Receipt, Coupon or Talon in place of which such replacement Note, Receipt, Coupon or Talon has been issued. Whenever replacement Receipts, Coupons or Talons are issued pursuant to the provisions of this Clause 14, the Agent shall also notify the Paying Agents of the maturity dates of the lost, stolen, mutilated, defaced or destroyed 19 Receipts, Coupons or Talons and of the replacement Receipts, Coupons or Talons issued. (7)The Agent shall keep a full and complete record of all replacement Notes, Receipts, Coupons and Talons issued and shall make such record available all at reasonable times to the Company and any persons authorized by the Company for inspection and for the taking of copies thereof or extracts therefrom. (8)Whenever any Note, Receipt, Coupon or Talon for which a replacement Note, Receipt, Coupon or Talon has been issued and in respect of which the serial number is known is presented to the Agent or any of the Paying Agents for payment, the Agent or, as the case may be, the relevant Paying Agent shall immediately send notice thereof to the Company and the Agent. (9)Notwithstanding any of the foregoing in this Clause 14, no issue of replacement Notes, Receipts, Coupons and Talons shall be made or delivered in the United States. 15.Copies of this Agreement and Each Pricing Supplement Available for Inspection TC The Agent and the Paying Agents shall, for as long as any Note remains outstanding, hold copies of this Agreement, each Pricing Supplement, the Company's Articles of Incorporation as amended and restated from time to time and the latest annual and any interim reports of the Company available for inspection; provided, however, that if a Paying Agent acts as a Paying Agent for only some of the Series of Notes issued under the Program, such Paying Agent need only hold the Pricing Supplements for the Series of Notes for which it acts as Paying Agent (and any documents specified in the applicable Pricing Supplements) and the other documents referenced in this Clause 15 shall be obtained by Noteholders from the Agent or from Paying Agents that act as Paying Agents for all Series of Notes issued under the Program. For this purpose, the Company shall furnish the Agent and the Paying Agents with sufficient copies of the documents they are required to hold. 16.Commissions and Expenses TC (1)The Company shall pay to the Agent such fees and commissions as the Company and the Agent may separately agree in respect of the services of the Agent and the Paying Agents hereunder together with any reasonable out-of- pocket expenses (including legal, printing, postage, tax, cable and advertising expenses required in connection with the Notes issued hereunder) incurred by the Agent and the Paying Agents in connection with their said services. (2)The Agent shall make payment of the fees and commissions due hereunder to the Paying Agents and shall reimburse their expenses promptly after the receipt of the relevant moneys from the Company. The Company shall not be responsible for any such payment or reimbursement by the Agent to the Paying Agents. 20 17. Indemnity TC (1)The Company shall indemnify the Agent and each of the Paying Agents against any direct losses, liabilities, costs, claims, actions, demands or expenses (including, but not limited to, all reasonable costs, charges and expenses paid or incurred in disputing or defending any of the foregoing but excluding loss of profits) which it may incur or which may be made against the Agent or any Paying Agent as a result of or in connection with its appointment by the Company or the exercise of its powers and duties hereunder except such as may result from its own willful default, negligence or bad faith or that of its officers, directors or employers or the breach by it of the terms of this Agreement. (2)The Agent and the Paying Agents shall not be liable for any action taken or omitted hereunder except for their own willful default, negligence or bad faith or that of their respective officers, directors or employees or the breach by any of them of the terms of this Agreement. (3)Neither the Agent nor any of the Paying Agents shall be responsible for the acts or failure to act of any other of them and each of the Agent and the Paying Agents shall indemnify the Company against any loss, liability, cost, claim, action, demand or expense (including, but not limited to, all reasonable costs, legal fees, charges and expenses paid or incurred in disputing or defending any of the foregoing) which the Company may incur or which may be made against it as a result of the breach by the Agent or such Paying Agents of the terms of this Agreement or its willful default, negligence or bad faith or that of its officers, directors or employees. 18.Repayment by the Agent TC The Agent shall, forthwith on demand, upon the Company being discharged from its obligation to make payments in respect of any Notes under the Conditions, provided that there is no outstanding, bona fide and proper claim in respect of any such payments, pay to the Company sums equivalent to any amounts paid to it by the Company in respect of such Notes. 19.Conditions of Appointment TC (1)The Agent shall be entitled to deal with money paid to it by the Company for the purpose of this Agreement in the same manner as other money paid to a banker by its customers except: (a)that it shall not exercise any right of set-off, lien or similar claim in respect thereof; (b)as provided in Subclause 19(2) below; and (c)that it shall not be liable to account to the Company for any interest thereon except as otherwise agreed between the Company and the Agent. 21 (2)In acting hereunder and in connection with the Notes, the Agent and the Paying Agents shall act solely as agents of the Company and will not thereby assume any obligations towards or relationship of agency or trust for or with any of the owners or holders of the Notes, Receipts, Coupons or Talons, except that all funds held by the Agent or the Paying Agents for payment to the Noteholders shall be held in trust, to be applied as set forth herein, but need not be segregated from other funds except as required by law; provided, however, that monies paid by the Company to the Agent for the payment of principal or interest on Notes remaining unclaimed at the end of five years after such principal or interest shall become due and payable shall be repaid to the Company as provided and in the manner set forth in the Notes whereupon all liability of the Agent with respect thereto shall cease. (3)The Agent and the Paying Agents hereby undertake to the Company to perform such obligations and duties, and shall be obliged to perform such duties and only such duties, as are herein, in the Conditions and in the Procedures Memorandum specifically set forth, or are otherwise agreed to in writing by the Company, the Agent and the Paying Agents as applicable, and no implied duties or obligations shall be read into this Agreement or the Notes against the Agent and the Paying Agents. (4)The Agent may consult with legal and other professional advisers and the opinion of such advisers shall be full and complete protection in respect of any action taken, omitted or suffered hereunder in good faith and in accordance with the opinion of such advisers. (5)Each of the Agent and the Paying Agents shall be protected and shall incur no liability for or in respect of any action taken, omitted or suffered in reliance upon any instruction, request or order from the Company or any notice, resolution, direction, consent, certificate, affidavit, statement, cable, telex or other paper or document which it reasonably believes to be genuine and to have been delivered, signed or sent by the proper party or parties or upon written instructions from the Company. (6)Any of the Agent and the Paying Agents and their officers, directors and employees may become the owner of, or acquire any interest in, any Notes, Receipts, Coupons or Talons with the same rights that it, he or she would have if the Agent or the relevant Paying Agent, as the case may be, concerned were not appointed hereunder, and may engage or be interested in any financial or other transaction with the Company and may act on, or as depositary, trustee or agent for, any committee or body of holders of Notes or Coupons or in connection with any other obligations of the Company as freely as if the Agent or the relevant Paying Agent, as the case may be, were not appointed hereunder. (7)The Company shall provide the Agent with a certified copy of the list of persons authorized to execute documents and take action on behalf of the Company in connection with this Agreement and shall notify the Agent promptly 22 in writing if any of such persons ceases to be so authorized or if any additional person becomes so authorized together, in the case of an additional authorized person, with evidence satisfactory to the Agent that such person has been so authorized. 20.Communication Between the Parties TC A copy of all communications relating to the subject matter of this Agreement between the Company and any holders of Notes, Receipts or Coupons and any of the Paying Agents shall be sent to the Agent by the relevant Paying Agent and the Agent shall forthwith promptly deliver a copy of any such communication to the Company. 21.Changes in Agent and Paying Agents TC (1)The Company agrees that, until no Note is outstanding or until moneys for the payment of all amounts in respect of all outstanding Notes have been made available to the Agent (whichever is the later): (a)so long as any Notes (i) are listed on the London Stock Exchange, there will at all times be a Paying Agent (or the Agent) having a specified office in London; (ii) are listed on the Paris Bourse, there will at all times be a Paying Agent having a specified office in Paris; and (iii) are listed on any other Stock Exchange, there will at all times be a Paying Agent in any such location as may be required by the rules and regulations of the relevant Stock Exchange; (b)there will at all times be a Paying Agent (or the Agent) with a specified office in a city approved by the Company and the Agent in continental Europe; and (c)there will at all times be an Agent. In addition, the Company shall appoint a Paying Agent having a specified office in New York City in the circumstances described in the final paragraph of Condition 6(b). Any variation, termination, appointment or change shall only take effect (other than in the case of insolvency, when it shall be of immediate effect) after not less than 30 nor more than 45 days prior notice thereof shall have been given to the Noteholders in accordance with Condition 16. (2)The Agent may (subject as provided in Subclause 21(4)) at any time resign as Agent by giving written notice to the Company of such intention on its part, specifying the date on which its desired resignation shall become effective; provided that such date shall never be less than three months after the receipt of such notice by the Company unless the Company agrees to accept less notice. (3)The Agent may (subject as provided in Subclause 21(4)) be removed at any time by the filing with it of an instrument in writing signed on behalf of the Company specifying such removal and the date when it shall become effective. 23 (4)Any resignation under Subclause 21(2) or removal under Subclause 21(3) shall only take effect upon the appointment by the Company of a successor Agent and (other than in cases of insolvency of the Agent) on the expiry of the notice to be given under Clause 23. If, by the day falling 10 days before the expiry of any notice under Subclause 21(2), the Company has not appointed a successor Agent, then the Agent shall be entitled, on behalf of the Company, to appoint as a successor Agent in its place such reputable financial institution of good standing as it may reasonably determine to be capable of performing the duties of the Agent hereunder. (5)In case at any time the Agent resigns, or is removed, or becomes incapable of action or is adjudged bankrupt or insolvent, or files a voluntary petition in bankruptcy or makes an assignment for the benefit of its creditors or consents to the appointment of an administrator, liquidator or administrative or other receiver of all or a substantial part of its property, or if an administrator, liquidator or administrative or other receiver of it or all or a substantial part of its property is appointed, or it admits in writing its inability to pay or meet its debts as they become due, or if an order of any court is entered approving any petition filed by or against it under the provisions of any applicable bankruptcy or insolvency law or if any officer takes charge or control of it or of its property or affairs for the purpose of rehabilitation, administration or liquidation, a successor Agent may be appointed by the Company by an instrument in writing filed with the successor Agent. Upon the appointment as aforesaid of a successor Agent and acceptance by the latter of such appointment and (other than in the case of insolvency of the Agent) upon expiry of the notice to be given under Clause 23, the Agent so superseded shall cease to be the Agent hereunder. (6)Subject to Subclause 21(1), the Company may, after prior consultation with the Agent, terminate the appointment of any of the Paying Agents at any time and/or appoint one or more further Paying Agents located outside the United States (either for all Notes issued under the Program or with respect to a particular Series of Notes) by giving to the Agent, and to the relevant Paying Agent, at least 45 days notice in writing to that effect, or such lesser notice as is agreed to by the Agent, the Company and the relevant Paying Agent. (7)Subject to Subclause 21(1), all or any of the Paying Agents may resign their respective appointments hereunder at any time by giving the Company and the Agent at least 45 days written notice to that effect. (8)Upon its resignation or removal becoming effective, the Agent or the relevant Paying Agent: (a)shall, in the case of the Agent, forthwith transfer all moneys held by it hereunder and the records referred to in Subclauses 13(5) and 14(7) to the successor Agent hereunder; and 24 (b)shall be entitled to the payment by the Company of its commissions and fees for the services theretofore rendered hereunder in accordance with the terms of Clause 16 and to the reimbursement of all reasonable out-of-pocket expenses (including legal fees and together with any applicable value added tax or similar tax thereon) incurred in connection therewith. (9)Upon its appointment becoming effective, a successor Agent and any new Paying Agent shall, without further act, deed or conveyance, become vested with all the authority, rights, powers, trust, immunities, duties and obligations of such predecessor with like effect as if originally named as Agent or (as the case may be) a Paying Agent hereunder. 22.Merger and Consolidation TC Any corporation into which the Agent or any Paying Agent may be merged, or any corporation with which the Agent or any of the Paying Agents may be consolidated, or any corporation resulting from any merger or consolidation to which the Agent or any of the Paying Agents shall be a party, or any corporation to which the Agent or any of the Paying Agents shall sell or otherwise transfer all or substantially all the assets of the Agent or any Paying Agent shall, on the date when such merger, consolidation or transfer becomes effective and to the extent permitted by any applicable laws, become the successor Agent or, as the case may be, Paying Agent under this Agreement without the execution or filing of any paper or any further act on the part of the parties hereto, unless otherwise required by the Company, and after the said effective date all references in this Agreement to the Agent or, as the case may be, such Paying Agent shall be deemed to be references to such corporation. Notice of any such merger, consolidation or transfer shall forthwith be given to the Company by the relevant Agent or Paying Agent. 23.Notifications TC Following receipt of notice of resignation from the Agent or any Paying Agent and forthwith upon appointing a successor Agent or, as the case may be, further or other Paying Agents for any Series of Notes outstanding prior to the date of such appointment or on giving notice to terminate the appointment of any Agent or, as the case may be, Paying Agent, the Company shall give or cause to be given not more than 45 days nor less than 30 days notice thereof to any Noteholders affected by such termination or appointment in accordance with the Conditions. 24.Change of Specified Office TC If the Agent or any Paying Agent determines to change its specified office, it shall give to the Company and (if applicable) the Agent written notice of such determination giving the address of the new specified office which shall be in the same city and stating the date on which such change is to take effect, which shall not be less than 45 days thereafter. The Agent (on behalf of the Company) shall within 15 days of receipt of such notice (unless the appointment of the Agent or the relevant Paying Agent, as the case may be, is to terminate pursuant to Clause 21 on or prior to the date of such 25 change) give or cause to be given not more than 45 days nor less than 30 days notice thereof to the Noteholders in accordance with the Conditions; provided, however, that if a Paying Agent acts as Paying Agent for only some of the Series of Notes under the Program, notice need be given only to Noteholders for whom the Paying Agent acts as Paying Agent. 25.Notices TC Any notice or communication given hereunder shall be sufficiently given or served: (a)if delivered in person to the relevant address specified on the signature pages hereof (or to such other address as is specified in writing and delivered to all parties to this Agreement) and, if so delivered, shall be deemed to have been delivered at time of receipt; or (b)if sent by facsimile or telex to the relevant number specified on the signature pages hereof (or to such other facsimile or telex numbers as are specified in writing and delivered to all parties to this Agreement) and, if so sent, shall be deemed to have been delivered upon transmission provided such transmission is confirmed by the answer back of the recipient (in the case of telex) or when an acknowledgment of receipt is received (in the case of facsimile). 26.Taxes and Stamp Duties TC The Company agrees to pay any and all stamp and other documentary taxes or duties (other than any interest or penalties arising as a result of a failure by any other person to account promptly to the relevant authorities for any such duties or taxes after such person shall have received from the Company the full amount payable in respect thereof) which may be payable in connection with the execution, delivery, performance and enforcement of this Agreement. 27.Currency Indemnity TC If, under any applicable law and whether pursuant to a judgment being made or registered against the Company or for any other reason, any payment under or in connection with this Agreement is made or is to be satisfied in a currency (the "other currency") other than that in which the relevant payment is expressed to be due (the "required currency") under this Agreement, then, to the extent that the payment (when converted into the required currency at the rate of exchange on the date of payment or, if it is not practicable for the Agent or the relevant Paying Agent to purchase the required currency with the other currency on the date of payment, at the rate of exchange as soon thereafter as it is practicable for it to do so or, in the case of a liquidation, insolvency or analogous process at the rate of exchange on the latest date permitted by applicable law for the determination of liabilities in such liquidation, insolvency or analogous process) actually received by the Agent or the relevant Paying Agent falls short of the amount due under the terms of this Agreement, the Company shall, as a separate and independent obligation, indemnify and hold harmless the Agent against the amount of such shortfall. 26 For the purposes of this Clause 27, "rate of exchange" means the rate at which the Agent is able on the relevant date to purchase the required currency with the other currency and shall take into account any premium and other costs of exchange. 28.Amendments: Meetings of Holders TC For purposes of this Clause 28, the term "outstanding" excludes those Notes which have been purchased or otherwise acquired and are being held by the Company for subsequent resale or reissuance as provided in Condition 5 during the time so held. (1)This Agreement, the Notes and any Receipts and Coupons attached to the Notes may be amended by the Company and the Agent, without consent of the holder of any Note, Receipt or Coupons (a) for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained herein or therein, or to evidence the succession of another corporation to the Company as provided in Condition 11, (b) to make any further modifications of the terms of this Agreement necessary or desirable to allow for the issuance of any additional Notes (which modifications shall not be materially adverse to holders of outstanding Notes), or (c) in any manner which the Company (and, in the case of this Agreement, the Agent) may deem necessary or desirable and which shall not materially adversely affect the interests of the holders of the Notes, Receipts and Coupons. In addition, with the consent of the holders of not less than a majority in aggregate principal amount of the Notes then outstanding affected thereby, or by a resolution adopted by a majority in aggregate principal amount of such outstanding Notes affected thereby present or represented at a meeting of such holders at which a quorum is present, this Agreement and the terms and conditions of the Notes, Receipts and Coupons may be modified or amended by the parties hereto, and future compliance and past defaults waived, in each case as provided in Conditions 12 and 13 and subject to the limitations therein provided. (2)A meeting of holders of Notes may be called by the holders of at least 10 per cent in principal amount of the outstanding Notes at any time and from time to time to make, give or take any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Agreement or the Notes to be made, given or taken by holders of Notes. (3)The Agent may at any time call a meeting of holders of Notes for any purpose specified in Subclause 28(1) to be held at such time and at such place in The City of New York or in London, as the Agent and the Company shall determine. Notice of every meeting of holders of Notes, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting, shall be given by the Agent to the Company and to the holders of the Notes, in the same manner as provided in Condition 16, not less than 21 nor more than 180 days prior to the date fixed for the meeting. In the case at any time the Company or the holders of at least 10 per cent in principal amount of the outstanding Notes shall have requested the Agent to call a meeting of the holders to take any action authorized in Subclause 28(1), by written request setting forth in reasonable 27 detail the action proposed to be taken at the meeting, and the Agent shall not have given notice of such meeting within 21 days after receipt of such request or shall not thereafter proceed to cause the meeting to be held as provided herein, then the Company, or the holders of Notes in the amount above-specified, as the case may be, may determine the time and the place in The City of New York or London for such meeting and may call such meeting by giving notice thereof as provided in this Subclause 28(3). (4)To be entitled to vote at any meeting of holders of Notes, a person shall be a holder of outstanding Notes at the time of such meeting, or a person appointed by an instrument in writing as proxy for such holder. (5)The persons entitled to vote a majority in principal amount of the outstanding Notes shall constitute a quorum. In the absence of a quorum, within 30 minutes of the time appointed for any such meeting, the meeting may be adjourned for a period of not less than 10 days as determined by the chairman of the meeting prior to the adjournment of such meeting. In the absence of a quorum at any such adjourned meeting, such adjourned meeting may be further adjourned for a period of not less than 10 days as determined by the chairman of the meeting prior to the adjournment of such adjourned meeting. Notice of the reconvening of any adjourned meeting shall be given as provided in Subclause 28(3) except that such notice need be given not less than five days prior to the date on which the meeting is scheduled to be reconvened. Notice of the reconvening of an adjourned meeting shall state expressly the percentage of the principal amount of the outstanding Notes which shall constitute a quorum. Subject to the foregoing, at the reconvening of any meeting adjourned for a lack of a quorum, the persons entitled to vote 25 percent in principal amount of the outstanding Notes shall constitute a quorum for the taking of any action set forth in the notice of the original meeting. Any meeting of holders of Notes at which a quorum is present may be adjourned from time to time by vote of a majority in principal amount of the outstanding Notes represented at the meeting, and the meeting may be held as so adjourned without further notice. At a meeting or an adjourned meeting duly reconvened and at which a quorum is present as aforesaid, any resolution and all matters shall be effectively passed and decided if passed or decided by the persons entitled to vote a majority in principal amount of the outstanding Notes represented and voting at such meeting, provided that such amount approving such resolution shall be not less than 25 percent in principal amount of the outstanding Notes. (6)The Agent may make such reasonable regulations as it may deem advisable for any meeting of holders of Notes in regard to proof of the holding of Notes and of the appointment of proxies and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall deem appropriate. The Agent shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or holders 28 of Notes as provided above, in which case the Company or the holders of Notes calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by vote of the persons entitled to vote a majority in principal amount of the outstanding Notes represented at the meeting. The chairman of the meeting shall have no right to vote, except as a holder of Notes or proxy. A record, at least in triplicate, of the proceedings of each meeting of holders of Notes shall be prepared, and one such copy shall be delivered to the Company and another to the Agent to be preserved by the Agent. 29.Calculation Agency Agreement TC A form of calculation agency agreement is set out in Appendix C to this Agreement. Where the Conditions require functions to be carried out by a Calculation Agent other than the Agent, the Company may execute such an agreement or an agreement in such other form as the Company and the Calculation Agent may agree. 30.Redenomination and Exchange TC (1)Redenomination Where redenomination ("Redenomination") is specified in the applicable Pricing Supplement as being applicable, and unless otherwise specified in the applicable Pricing Supplement, the Company may, without the consent of any Noteholder, Receiptholder or Couponholder, on giving prior notice to Euroclear, Clearstream and the Agent and at least 30 days' prior notice to Noteholders as provided in Condition 16, designate a Redenomination Date. With effect from the Redenomination Date, notwithstanding the other provisions of the Conditions: (a)The Notes and Receipts shall (unless already so provided by mandatory provisions of applicable law) be deemed to be redenominated in Euro in the denomination of Euro 0.01 with a principal amount for each Note and Receipt equal to the principal amount of the Note or Receipt in the original Specified Currency, converted into Euro at the Established Rate, and the Specified Currency shall be deemed to be Euro; provided that, if the Company determines, after consultation with the Agent, that the then market practice in respect of the redenomination into Euro of internationally offered securities is different from the provisions specified above in this Subclause 30(1)(a) or in the applicable Pricing Supplement, such provisions shall be deemed to be amended so as to comply with such market practice and the Company shall promptly notify the Noteholders, the stock exchange (if any) on which the Notes may be listed and the Agent and Paying Agent(s) of such deemed amendments. (b)If definitive Notes are required to be issued after the Redenomination Date, they shall be issued at the expense of the Company in the denominations of Euro 1,000, Euro 10,000 and Euro 100,000 and (but only to the extent of 29 any remaining amounts less than Euro 1,000 or such smaller denominations as the Agent may approve) Euro 0.01 and such other denominations as the Company, after consultation with the Agent, shall determine and notify to Noteholders. (c)If definitive Notes have been issued, all unmatured Coupons and Receipts denominated in the original Specified Currency (whether or not attached to the Notes) will become void and no payments will be made in respect of them with effect from the date on which the Company gives notice (the "Exchange Notice") that Euro-denominated Notes, Receipts and Coupons are available for exchange (provided that such securities are so available). New certificates in respect of Euro-denominated Notes, Receipts and Coupons will be issued in exchange for Notes, Receipts and Coupons in the original Specified Currency in such manner as the Company, after consultation with the Agent, may specify and shall be notified to Noteholders in the Exchange Notice. No Exchange Notice may be given less than 15 days prior to any date for payment of principal or interest on the Notes. (d)After the Redenomination Date, all payments in respect of the Notes, the Receipts and the Coupons (other than, unless the Redenomination Date is on or after such date as the original Specified Currency ceases to be a subdivision of the Euro, payments of interest in respect of periods commencing before the Redenomination Date) will be made solely in Euro as though references in the Notes, the Receipts and the Coupons to the Specified Currency were to Euro. Such payments will be made in Euro by credit or transfer to a Euro account (or any other account to which Euro may be credited or transferred) specified by the payee or by check; provided, however, that a check may not be delivered to an address in, and an amount may not be transferred to an account at a bank located in, the United States of America or its possessions except as provided in Condition 6(b). (e)After the Redenomination Date, "Business Day" in relation to any sum payable in euro shall mean a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealings in foreign exchange and foreign currency deposits) in London and New York and a day on which the TARGET system is open. After the Redenomination Date, "Payment Business Day" shall mean (A) a "Business Day" as defined herein and (B) a day on which commercial banks are open for general business (including dealings in foreign exchange and foreign currency deposits) in the relevant place of presentation. (f)If definitive Notes have been issued, after the Redenomination Date, the amount of interest due in respect of Notes will be calculated by reference to the aggregate nominal amount of Notes presented (or, as the case may be, in 30 respect of which Receipts or Coupons are presented) for payment by the relevant holder and the amount of such payment shall be rounded down to the nearest euro 0.01. If the Notes are in global form, after the Redenomination Date, the amount of interest due in respect of Notes represented by the Global Note will be calculated by reference to the aggregate nominal amount of such Notes and the amount of such payment shall be rounded down to the nearest euro 0.01. (g)The applicable Pricing Supplement will specify any relevant changes to the provisions relating to interest, including without limitation, any change to the applicable Day Count Fraction and Business Day Convention. (2)Exchange Where exchange ("Exchange") is specified in the applicable Pricing Supplement as being applicable, and unless otherwise specified in the applicable Pricing Supplement, the Company may, without the consent of any Noteholder, Receiptholder or Couponholder, on giving prior notice to Euroclear, Clearstream and the Agent and at least 30 days' prior notice to the Noteholders as provided in Condition 16, elect that, with effect from the Redenomination Date specified in the notice, the Notes shall be exchangeable for Notes expressed to be denominated in euro in accordance with such arrangements as the Company may decide, after consultation with the Agent, and as may be specified in the notice, including arrangements under which Receipts and Coupons (which expression shall for this purpose include Coupons to be issued on an exchange of matured Talons) unmatured at the date so specified become void. (3)Amendments and Modifications The applicable Pricing Supplement in relation to any Notes may specify other Terms and Conditions which shall, to the extent so specified or to the extent inconsistent with the provisions herein, replace or modify the provisions for the purpose of such Notes. In addition, the Company and the Agent may make any changes, without the consent of, but with notification to (in accordance with Condition 16 and Condition 17), any Noteholder, Receiptholder or Couponholder, to this Agreement necessary to implement the provisions of Condition 17. Notwithstanding anything to the contrary contained in Condition 17, if the Company determines, after consultation with the Agent, that the then market practice in respect of the redenomination into Euro of internationally offered securities or Euro-denominated internationally offered securities is different from that specified in Condition 17, the Company may (but shall not be required to) amend the provisions of Condition 17 and any other provision of the Conditions, as applicable, so as to comply with such market practice, and the Company shall promptly notify Noteholders, the stock exchange (if any) on which the Notes may be listed, the Paying Agents and the Agent of such deemed amendments. Such changes will not take effect until after they 31 have been notified to Noteholders in accordance with Condition 16 and Condition 17. 31.Descriptive Headings TC The descriptive headings in this Agreement are for convenience of reference only and shall not define or limit the provisions hereof. 32.Governing Law TC This Agreement is governed by, and shall be construed in accordance with, the laws of the State of New York, United States of America, applicable to agreements made and to be performed wholly within such jurisdiction. 33.Counterparts TC This Agreement may be executed in one or more counterparts all of which shall constitute one and the same agreement. 32 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. The Company TOYOTA MOTOR CREDIT CORPORATION 19001 South Western Avenue Torrance, California 90509 Telephone:(310) 468-4001 Telefax:(310) 468-6194 Attention:Vice President, Treasury By: George E. Borst President and Chief Executive Officer 33 The Agent The Chase Manhattan Bank Trinity Tower 9 Thomas More Street London E1W 1YT Telephone:01202 347430 Fax: 01202 347438 Telex: 8954681 CMB G Attention: Manager, Capital Market Fiduciary Services, Operations By: The Other Paying Agent Chase Manhattan Bank Luxembourg S.A. 5 Rue Plaetis L-2338 Luxembourg Telephone: 00 352 4626 85236 Fax: 00 352 4626 85380 Telex: 1233 CHASE LU Attention: Manager, Capital Market Fiduciary Services, Operations By: 34 APPENDIX A TERMS AND CONDITIONS OF THE NOTES The following are the Terms and Conditions (the "Terms and Conditions" or the "Conditions") of the Notes issued on or after the date of this Offering Circular which (subject to completion and amendment and to the extent applicable) will be attached to or incorporated by reference into each global Note and which will be incorporated by reference or endorsed upon each definitive Note. The applicable Pricing Supplement in relation to any Notes may specify other terms and conditions which shall, to the extent so specified or to the extent inconsistent with the following Terms and Conditions, replace or modify the following Terms and Conditions for the purpose of such Notes. The applicable Pricing Supplement will be endorsed upon, or attached to, each temporary global Note, permanent global Note and definitive Note. Reference should be made to "Form of the Notes" in the Offering Circular dated October 4, 2000 (the "Offering Circular") for the form of Pricing Supplement which will include the definitions of certain terms used in the following Terms and Conditions. This Note is one of a Series (as defined below) of Notes (the "Notes," which expression shall mean (i) in relation to any Notes represented by a global Note, units of the lowest Specified Denomination in the Specified Currency of the relevant Notes, (ii) definitive Notes issued in exchange (or partial exchange) for a temporary or permanent global Note, and (iii) any global Note) issued subject to, and with the benefit of, a Third Amended and Restated Agency Agreement dated as of October 4, 2000, as amended (the "Agency Agreement"), and made between Toyota Motor Credit Corporation ("TMCC", which reference does not include the subsidiaries of TMCC) and The Chase Manhattan Bank, London Office, as issuing agent and (unless specified otherwise in the applicable Pricing Supplement) principal paying agent and (unless specified otherwise in the applicable Pricing Supplement) as calculation agent (the "Agent", which expression shall include any successor agent or any other Calculation Agent specified in the applicable Pricing Supplement) and the other paying agents named therein (together with the Agent, the "Paying Agents", which expression shall include any additional or successor paying agents). The Notes, Receipts and Coupons also have the benefits of certain Credit Support Agreements governed by Japanese law, one between Toyota Motor Corporation ("TMC") and Toyota Financial Services Corporation ("TFS") dated July 14, 2000 and the other between TFS and TMCC, dated October 1, 2000. Interest-bearing definitive Notes will (unless otherwise indicated in the applicable Pricing Supplement) have interest coupons ("Coupons") and, if indicated in the applicable Pricing Supplement, talons for further Coupons ("Talons") attached on issue. Any reference herein to Coupons or coupons shall, unless the context otherwise requires, be deemed to include a reference to Talons or talons. Definitive Notes repayable in installments will have receipts ("Receipts") for the payment of the installments of principal (other than the final installment) attached on issue. As used herein, "Series" means all Notes which are denominated in the same currency and which have the same Maturity Date, Interest Basis, Redemption/Payment Basis and Interest Payment Dates (if any) (all as indicated in the applicable Pricing Supplement) and the terms of which (except for the Issue Date or the Interest Commencement Date (as the case may be) and/or the Issue Price (as indicated as aforesaid)) are otherwise identical (including Appendix A-1 whether or not the Notes are listed) and the expressions "Notes of the relevant Series" and "holders of Notes of the relevant Series" and related expressions shall be construed accordingly. As used herein, "Tranche" means all Notes of the same Series with the same Issue Date and Interest Commencement Date (if applicable). The Pricing Supplement applicable to any particular Note or Notes is attached hereto or endorsed hereon and supplements these Terms and Conditions and may specify other terms and conditions which shall, to the extent so specified or to the extent inconsistent with these Terms and Conditions, replace or modify these Terms and Conditions for the purposes of such Note or Notes. References herein to the "applicable Pricing Supplement" shall mean the Pricing Supplement attached hereto or endorsed hereon. Copies of the Agency Agreement (which contains the form of Pricing Supplement), the Offering Circular and the Pricing Supplement applicable to any particular Note or Notes (if listed) are available for inspection at the specified offices of the Agent and each of the other Paying Agents. The holders of the Notes (the "Noteholders"), which expression shall, in relation to any Notes represented by a global Note, be construed as provided in Condition 1, the holders of the Coupons (the "Couponholders") and the holders of Receipts (the "Receiptholders") are deemed to have notice of the Agency Agreement, the applicable Pricing Supplement and the Offering Circular, and are entitled to the benefit of all the provisions of the Agency Agreement and the applicable Pricing Supplement, which are binding on them. A temporary or permanent global Note will be exchangeable in whole, but not in part, for security printed definitive Notes with, where applicable, Receipts, Coupons and Talons attached not earlier than the date (the "Exchange Date") which is 40 days after completion of the distribution of the relevant Tranche, provided that certification of non-U.S. beneficial ownership has been received: (i) at the option of TMCC; (ii) unless stated otherwise in the applicable Pricing Supplement, at the option of holders of an interest in the temporary or permanent global Note upon such notice as is specified in the applicable Pricing Supplement from Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear System ("Euroclear") or Clearstream Banking, societe anonyme, ("Clearstream, Luxembourg") (as the case may be) acting on instructions of the holders of interest in the temporary or permanent global Note and/or subject to the payment of costs in connection with the printing and distribution of the definitive Notes, if specified in the applicable Pricing Supplement; (iii) if, after the occurrence of an Event of Default, holders representing at least a majority of the outstanding principal amount of the Notes of a Series, acting together as a single class, advise the Agent through Euroclear and Clearstream, Luxembourg that they wish to receive definitive Notes; or (iv) Euroclear, Clearstream, Luxembourg and any other relevant clearance system for the temporary or permanent global Note are all no longer willing or able to discharge properly their responsibilities with respect to such Notes and the Agent and TMCC are unable to locate a qualified successor. Words and expressions defined in the Agency Agreement, defined elsewhere in the Offering Circular or used in the applicable Pricing Supplement shall have the same meanings where used in these Terms and Conditions unless the context otherwise requires or unless otherwise stated and provided that, in the event of inconsistency between the Agency Agreement and the applicable Pricing Supplement, the applicable Pricing Supplement will prevail. Appendix A-2 1. Form, Denomination and Title The Notes in this Series are in bearer form and, in the case of definitive Notes, serially numbered in the Specified Currency (or Currencies in the case of Dual Currency Notes) and in the Specified Denomination(s) specified in the applicable Pricing Supplement. This Note may be a Note bearing interest on a fixed rate basis ("Fixed Rate Note"), a Note bearing interest on a floating rate basis ("Floating Rate Note"), a Note issued on a non-interest bearing basis ("Zero Coupon Note"), a Note with respect to which interest is calculated by reference to an index and/or a formula ("Index Linked Interest Note) or any combination of the foregoing, depending upon the Interest Basis specified in the applicable Pricing Supplement. This Note may be a Note with respect to which principal is calculated by reference to an index and/or a formula ("Index Linked Redemption Note"), a Note redeemable in installments ("Installment Note"), a Note with respect to which principal and/or interest is payable in one or more Specified Currencies other than the Specified Currency in which it is denominated ("Dual Currency Note"), a Note which is issued on a partly paid basis ("Partly Paid Note") or a combination of any of the foregoing, depending on the Redemption/Payment Basis shown in the applicable Pricing Supplement. (Where appropriate in the context, "Index Linked Interest Notes" and "Index Linked Redemption Notes" are referred to collectively as "Index Linked Notes".) The appropriate provisions of these Terms and Conditions will apply accordingly. Notes in definitive form are issued with Coupons attached, unless they are Zero Coupon Notes in which case references to interest (other than interest due after the Maturity Date), Coupons and Couponholders in these Terms and Conditions are not applicable. Wherever Dual Currency Notes or Index Linked Notes are issued to bear interest on a fixed or floating rate basis or on a non-interest bearing basis, the provisions in these Terms and Conditions relating to Fixed Rate Notes, Floating Rate Notes and Zero Coupon Notes, respectively, shall, where the context so admits, apply to such Dual Currency Notes or Index Linked Notes. Except as set out below, title to the Notes, Receipts and Coupons will pass by delivery. The holder of each Coupon or Receipt, whether or not such Coupon or Receipt is attached to a Note, in his capacity as such, shall be subject to and bound by all the provisions contained in the relevant Note. TMCC and any Paying Agent may deem and treat the bearer of any Note, Receipt or Coupon as the absolute owner thereof (whether or not overdue and notwithstanding any notice to the contrary, including any notice of ownership or writing thereon or notice of any previous loss or theft thereof) for all purposes but, in the case of any global Note, without prejudice to the provisions set out in the next succeeding paragraph. For so long as any of the Notes are represented by a global Note, each person who is for the time being shown in the records of Euroclear or of Clearstream, Luxembourg as the holder of a particular principal amount of Notes other than a clearing agency (including Clearstream, Luxembourg and Euroclear) that is itself an account holder of Clearstream, Luxembourg or Euroclear (in which regard any certificate or other document issued by Euroclear or Clearstream, Luxembourg as to the nominal amount of such Notes standing to the account of any person shall be conclusive and binding for all purposes except in the case of manifest error) shall be treated by TMCC, the Agent and any other Paying Appendix A-3 Agent as the holder of such nominal amount of such Notes for all purposes other than with respect to the payment of principal (including premium (if any)) or interest on the Notes, the right to which shall be vested, as against TMCC, the Agent and any other Paying Agent solely in the bearer of the relevant global Note in accordance with and subject to its terms (and the expressions "Noteholder" and "holder of Notes" and related expressions shall be construed accordingly). Notes which are represented by a global Note will be transferable only in accordance with the rules and procedures for the time being of Euroclear or of Clearstream, Luxembourg, as the case may be. Any reference herein to Euroclear and/or Clearstream, Luxembourg shall, whenever the context so permits, be deemed to include a reference to any additional or alternative clearance system approved by TMCC and the Agent. If the Specified Currency of this Note is a currency of one of the member states participating in European economic and monetary union, and if specified in the applicable Pricing Supplement, this Note shall permit Redenomination, Exchange and Consolidation (as defined, and in the manner set forth, in Condition 17 below or in such other manner as set forth in the applicable Pricing Supplement) at the option of TMCC. 2. Status of the Notes and the Credit Support Agreements The Notes will be unsecured general obligations of TMCC and will rank pari passu with all other unsecured and unsubordinated indebtedness for borrowed money of TMCC from time to time outstanding. The Notes are not guaranteed by any affiliate of TMCC. Holders of the Notes, Receipts and Coupons have the benefits of the Credit Support Agreements governed by Japanese law, one between TMC and TFS dated July 14, 2000 and the other between TFS and TMCC dated October 1, 2000. 3. Further Issues If indicated in the applicable Pricing Supplement, TMCC may from time to time, without the consent of the holders of Notes, Receipts or Coupons of a Series, create and issue further Notes of the same Series having the same terms and conditions as the Notes (or the same terms and conditions save for the first payment of interest thereon and the Issue Date thereof) so that the same shall be consolidated and form a single Series with the outstanding Notes and references in the Conditions to "Notes" shall be construed accordingly. 4. Interest (a) Interest on Fixed Rate Notes and Business Day Convention for Notes other than Floating Rate Notes and Index Linked Interest Notes Each Fixed Rate Note bears interest on its outstanding nominal amount (or if it is a Partly Paid Note, the amount paid up) from (and including) the Interest Commencement Date which is specified in the applicable Pricing Supplement (or the Issue Date, if no Interest Commencement Date is separately specified) to but excluding the Maturity Date specified in the applicable Pricing Supplement Appendix A-4 at the rate(s) per annum equal to the Fixed Rate(s) of Interest specified in the applicable Pricing Supplement payable in arrears on the Interest Payment Date(s) in each year and on the Maturity Date so specified if it does not fall on a Interest Payment Date. Except as provided in the applicable Pricing Supplement, the amount of interest payable on each Interest Payment Date in respect of the Fixed Interest Period ending on such date will amount to the Fixed Coupon Amount as specified in the applicable Pricing Supplement. Payments of interest on any Interest Payment Date will, if so specified in the applicable Pricing Supplement, amount to the Broken Amount(s) so specified. As used in these Conditions, "Fixed Interest Period" means the period from (and including) an Interest Payment Date (or the Interest Commencement Date or Issue Date, as applicable) to (but excluding) the next (or first) Interest Payment Date or Maturity Date. Unless specified otherwise in the applicable Pricing Supplement, the "Following Business Day Convention" will apply to the payment of all Notes other than Floating Rate Notes or Indexed Linked Interest Notes, meaning that if the Interest Payment Date or Maturity Date would otherwise fall on a day which is not a Business Day (as defined in Condition 4(b)(i) below), the related payment of principal or interest will be made on the next succeeding Business Day as if made on the date such payment was due. If the "Modified Following Business Day Convention" is specified in the applicable Pricing Supplement for any Note (other than a Floating Rate Note or an Index Linked Interest Note), it shall mean that if the Interest Payment Date or Maturity Date would otherwise fall on a day which is not a Business Day (as defined in Condition 4(b)(i) below), the related payment of principal or interest will be made on the next succeeding Business Day as if made on the date such payment was due unless it would thereby fall into the next calendar month in which event the full amount of payment shall be made on the immediately preceding Business Day as if made on the day such payment was due. Unless specified otherwise in the applicable Pricing Supplement, the amount of interest due shall not be changed if payment is made on a day other than an Interest Payment Date or the Maturity Date as a result of the application of a Business Day Convention specified above or other Business Day Convention specified in the applicable Pricing Supplement. If interest is required to be calculated for a period ending other than on an Interest Payment Date (which for this purpose shall not include a period where a payment is made on a day other than an Interest Payment Date or the Maturity Date as a result of the application of a Business Day Convention as provided in the immediately preceding paragraph, unless specified otherwise in the applicable Pricing Supplement), such interest shall be calculated by applying the Fixed Rate of Interest to each Specified Denomination, multiplying such sum by the applicable Fixed Day Count Fraction or other Day Count Fraction specified in the Pricing Supplement, and rounding the resultant figure to the nearest sub-unit of the relevant Specified Currency, half of any such sub-unit being rounded upwards or otherwise in accordance with applicable market convention. In these Conditions, "Fixed Day Count Fraction" means: 1)if "Actual/Actual (ISMA)" is specified in the applicable Pricing Supplement, the number of days in the relevant period from and including the most recent Interest Payment Date (or, if none, the Interest Commencement Date) to but excluding the relevant payment date divided by (x) in the case of Notes where Appendix A-5 interest is scheduled to be paid only by means of regular annual payments, the number of days in the period from and including the most recent Interest Payment Date (or, if none, the Interest Commencement Date or Issue Date, as applicable) to but excluding the next scheduled Interest Payment Date or (y) in the case of Notes where interest is scheduled to be paid other than only by means of regular annual payments, the product of the number of days in the period from and including the most recent Interest Payment Date (or, if none, the Interest Commencement Date or Issue Date, as applicable) to but excluding the next scheduled Interest Payment Date and the number of Interest Payment Dates that would occur in one calendar year assuming interest was to be payable in respect of the whole of that year; (2)if "Actual/Actual (ISDA)" is specified in the applicable Pricing Supplement, the actual number of days in the relevant period from and including the most recent Interest Payment Date (or, if none, the Interest Commencement Date or Issue Date, as applicable) to but excluding the next scheduled Interest Payment Date divided by 365 (or, if any portion of that period falls in a leap year, the sum of (x) the actual number of days in that portion of the period falling in a leap year divided by 366; and (y) the actual number of days in that portion of the period falling in a non-leap year divided by 365); and (3)if "30/360" is specified in the applicable Pricing Supplement, the number of days in the period from and including the most recent Interest Payment Date (or, if none, the Interest Commencement Date or Issue Date, as applicable) to but excluding the next scheduled Interest Payment Date (such number of days being calculated on the basis of 12 30-day months) divided by 360 and, in the case of an incomplete month, the number of days elapsed; and "sub-unit" means, with respect to any currency other than euro, the lowest amount of such currency that is available as legal tender in the country of such currency and, with respect to euro, means one cent. (b) Interest on Floating Rate Notes and Index Linked Interest Notes (i) Interest Payment Dates Each Floating Rate Note and Index Linked Interest Note bears interest on its outstanding nominal amount (or, if it is a Partly Paid Note, the amount paid up) from (and including) the Interest Commencement Date specified in the applicable Pricing Supplement (or the Issue Date, if no Interest Commencement Date is separately specified) and, unless specified otherwise in the applicable Pricing Supplement, such interest will be payable in arrears on the Maturity Date and on either: (A)the Specified Interest Payment Date(s) (each, together with the Maturity Date, an "Interest Payment Date") in each year specified in the applicable Pricing Supplement; or (B)if no Specified Interest Payment Date(s) is/are specified in the applicable Pricing Supplement, each date (each, together with the Maturity Date, an Appendix A-6 "Interest Payment Date") which falls the number of months or other period specified as the Specified Period in the applicable Pricing Supplement after the preceding Interest Payment Date or, in the case of the first Interest Payment Date, after the Interest Commencement Date or Issue Date, as applicable. Such interest will be payable in respect of each Interest Period (which expression shall, in these Terms and Conditions, mean the period from (and including) an Interest Payment Date (or the Interest Commencement Date or Issue Date, as applicable) to (but excluding) the next (or first) Interest Payment Date). If a Business Day Convention is specified in the applicable Pricing Supplement and (x) if there is no numerically corresponding day in the calendar month in which an Interest Payment Date should occur or (y) if any Interest Payment Date would otherwise fall on a day which is not a Business Day (as defined below), then, if the Business Day Convention specified is: (1)in any case where Specified Periods are specified in accordance with Condition 4(b)(i)(B) above, the Floating Rate Convention, such Interest Payment Date (i) in the case of (x) above, shall be the last day that is a Business Day in the relevant month and the provisions of (B) below in this subparagraph (1) shall apply mutatis mutandis or (ii) in the case of (y) above, shall be postponed to the next day which is a Business Day unless it would thereby fall into the next calendar month, in which event (A) such Interest Payment Date shall be brought forward to the immediately preceding Business Day and (B) each subsequent Interest Payment Date shall be the last Business Day in the month which falls the Specified Period after the preceding applicable Interest Payment Date occurred; or (2)the Following Business Day Convention, such Interest Payment Date shall be postponed to the next day which is a Business Day; or (3)the Modified Following Business Day Convention, such Interest Payment Date shall be postponed to the next day which is a Business Day unless it would thereby fall into the next calendar month, in which event such Interest Payment Date shall be brought forward to the immediately preceding Business Day; or (4)the Preceding Business Day Convention, such Interest Payment Date shall be brought forward to the immediately preceding Business Day. If the accrual periods for calculating the amount of interest due on any Interest Payment Date are not to be changed even though an Interest Payment Date is changed because the originally scheduled Interest Payment Date falls on a day which is not a Business Day (as defined below), this will be specified in the Pricing Supplement by the notation "no adjustment for period end dates." In these Conditions, "Business Day" means (unless otherwise stated in the applicable Pricing Supplement) a day which is both: Appendix A-7 (A)a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealings in foreign exchange and foreign currency deposits) in London and any other Applicable Business Center specified in the applicable Pricing Supplement; and (B)either (1) in relation to Notes denominated in a Specified Currency other than euro, a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealings in foreign exchange and foreign currency deposits) in the principal financial center of the country of the relevant Specified Currency (if other than London and any other Applicable Business Center specified in the applicable Pricing Supplement), or (2) in relation to Notes denominated in euro, a day on which the Trans- European Automated Real-Time Gross Settlement Express Transfer System (the "TARGET system") is open. Unless otherwise provided in the applicable Pricing Supplement, the principal financial center of any country for the purpose of these Terms and Conditions shall be as provided in the 1991 ISDA Definitions, as supplemented by the 1998 Supplement and the 1998 ISDA Euro Definitions (each as published by the International Swaps and Derivatives Association, Inc.), as amended and updated as of the first Issue Date of the Notes of this Series (the "ISDA Definitions") (except in the case of New Zealand and Australia, where the principal financial center will be as specified in the Pricing Supplement). (ii) Rate of Interest The Rate of Interest payable from time to time in respect of each Series of Floating Rate Notes and Index Linked Interest Notes shall be determined in the manner specified in the applicable Pricing Supplement. (iii) ISDA Determination (A)Where ISDA Determination is specified in the applicable Pricing Supplement as the manner in which the Rate of Interest is to be determined, the Rate of Interest for each Interest Period will be the relevant ISDA Rate plus or minus (as indicated in the applicable Pricing Supplement) the Margin (if any) as determined by the Agent (or such other Calculation Agent specified in the applicable Pricing Supplement). For the purposes of this sub-paragraph (A), "ISDA Rate" for an Interest Period means a rate equal to the Floating Rate that would be determined under an interest rate swap transaction for that swap transaction governed by an agreement (regardless of any event of default or termination event thereunder) in the form of the 1992 ISDA Master Agreement (Multicurrency-Cross Border)(the "ISDA Agreement")(copyright 1992) and evidenced by a Confirmation (as defined in the ISDA Agreement) incorporating the ISDA Definitions with the holder of the relevant Note and under which: (1)the manner in which the Rate of Interest is to be determined is the "Floating Rate Option" as specified in the applicable Pricing Supplement; Appendix A-8 (2)TMCC is the "Floating Rate Payer"; (3)the Agent or other person specified in the applicable Pricing Supplement is the "Calculation Agent"; (4)the Interest Commencement Date is the "Effective Date"; (5)the aggregate principal amount of the Series is the "Notional Amount"; (6)the relevant Interest Period is the "Designated Maturity" as specified in the applicable Pricing Supplement; (7)the Interest Payment Dates are the "Floating Rate Payer Payment Dates"; (8)the Margin is the "Spread"; (9)the relevant Reset Date is either (i) if the applicable Floating Rate Option is based on the London inter-bank offered rate ("LIBOR") or on the Euro-zone inter-bank offered rate ("EURIBOR") for a currency, the first day of that Interest Period or (ii) in any other case, as specified in the applicable Pricing Supplement; and (10)all other terms are as specified in the applicable Pricing Supplement. (B)When Condition 4(b)(iii)(A) applies, with respect to each relevant Interest Payment Date: (1)the amount of interest determined for such Interest Payment Date shall be the Interest Amount for the relevant Interest Period for the purposes of these Terms and Conditions as though calculated under Condition 4(b)(vi) below; and (2)(i) "Floating Rate", "Floating Rate Option", "Floating Rate Payer", "Effective Date", "Notional Amount", "Floating Rate Payer Payment Dates", "Spread", "Calculation Agent", "Designated Maturity" and "Reset Date" have the meanings given to those terms in the ISDA Definitions, (ii) the definition of "Banking Day" in the ISDA Definitions shall be amended to insert after the words "are open for" in the second line the word "general" and (iii) "Euro-zone" means the region comprised of Member States of the European Union that adopt the single currency in accordance with the Treaty establishing the European Communities, as amended by the Treaty on European Union (the "Treaty"). Appendix A-9 (iv) Screen Determination Where Screen Rate Determination is specified in the applicable Pricing Supplement as the manner in which the Rate of Interest is to be determined, the Rate of Interest for each Interest Period will, subject as provided below, be either: (x)the offered quotation; or (y)the arithmetic mean (rounded, if necessary, to the fifth decimal place with 0.000005 being rounded upwards) of the offered quotations, (expressed as a percentage rate per annum), for the Reference Rate (as specified in the applicable Pricing Supplement) which appears or appear, as the case may be, on the Relevant Screen Page (as set forth in the applicable Pricing Supplement) as at 11:00 a.m. (London time, in the case of LIBOR, or Brussels time, in the case of EURIBOR) on the Interest Determination Date (as defined below) in question plus or minus (as specified in the applicable Pricing Supplement) the Margin (if any), all as determined by the Agent (or such other Calculation Agent specified in the applicable Pricing Supplement). Unless specified otherwise in the applicable Pricing Supplement, if five or more of such offered quotations are available on the Relevant Screen Page, the highest (or, if there is more than one such highest quotation, one only of such quotations) and the lowest (or, if there is more than one such lowest quotation, one only of such quotations) shall be disregarded by the Agent for the purpose of determining the arithmetic mean (rounded as provided above) of such offered quotations. In addition: (A)if, in the case of (x) above, no such rate appears or, in the case of (y) above, fewer than two of such offered rates appear at such time or if the offered rate or rates which appears or appear, as the case may be, as at such time do not apply to a period of a duration equal to the relevant Interest Period, the Rate of Interest for such Interest Period shall, subject as provided below and except as otherwise indicated in the applicable Pricing Supplement, be the arithmetic mean (rounded, if necessary, to the fifth decimal place with 0.000005 being rounded upwards) of the offered quotations (expressed as a percentage rate per annum), of which the Agent (or such other Calculation Agent specified in the applicable Pricing Supplement) is advised by all Reference Banks (as defined below) as at 11:00 a.m. (London time) on the Interest Determination Date plus or minus (as specified in the applicable Pricing Supplement) the Margin (if any), all as determined by the Agent (or such other Calculation Agent specified in the applicable Pricing Supplement); (B)except as otherwise indicated in the applicable Pricing Supplement, if on any Interest Determination Date to which Condition 4(b)(iv)(A) applies two or three only of the Reference Banks advise the Agent (or such other Calculation Agent specified in the applicable Pricing Supplement) of such offered quotations, the Rate of Interest for the next Interest Period shall, subject as provided below, be determined as in Condition 4(b)(iv)(A) on the basis of the rates of those Reference Banks advising such offered quotations; Appendix A-10 (C)except as otherwise indicated in the applicable Pricing Supplement, if on any Interest Determination Date to which Condition 4(b)(iv)(A) applies one only or none of the Reference Banks advises the Agent (or such other Calculation Agent specified in the applicable Pricing Supplement) of such rates, the Rate of Interest for the next Interest Period shall, subject as provided below and except as otherwise indicated in the applicable Pricing Supplement, be whichever is the higher of: (1)the Rate of Interest in effect for the last preceding Interest Period to which Condition 4(b)(iv)(A) shall have applied (plus or minus (as specified in the applicable Pricing Supplement), where a different Margin is to be applied to the next Interest Period than that which applied to the last preceding Interest Period, the Margin relating to the next Interest Period in place of the Margin relating to the last preceding Interest Period); or (2)the reserve interest rate (the "Reserve Interest Rate") which shall be the rate per annum which the Agent (or such other Calculation Agent specified in the applicable Pricing Supplement) determines to be either (x) the arithmetic mean (rounded, if necessary, to the fifth decimal place with 0.000005 being rounded upwards) of the lending rates for the Specified Currency which banks selected by the Agent (or such other Calculation Agent specified in the applicable Pricing Supplement) in the principal financial center of the country of the Specified Currency (which, if Australian dollars, shall be Sydney, if New Zealand dollars, shall be Auckland and if euro, shall be London, unless specified otherwise in the applicable Pricing Supplement) are quoting on the relevant Interest Determination Date for the next Interest Period to the Reference Banks or those of them (being at least two in number) to which such quotations are, in the opinion of the Agent (or such other Calculation Agent specified in the applicable Pricing Supplement), being so made plus or minus (as specified in the applicable Pricing Supplement) the Margin (if any), or (y) in the event that the Agent (or such other Calculation Agent specified in the applicable Pricing Supplement) can determine no such arithmetic mean, the lowest lending rate for the Specified Currency which banks selected by the Agent (or such other Calculation Agent specified in the applicable Pricing Supplement) in the principal financial center of the country of the Specified Currency (which, if Australian dollars, shall be Sydney, if New Zealand dollars, shall be Auckland and if euro, shall be London, unless specified otherwise in the applicable Pricing Supplement) are quoting on such Interest Determination Date to leading European banks for the next Interest Period plus or minus (as specified in the applicable Pricing Supplement) the Margin (if any), provided that if the banks selected as aforesaid by the Agent (or such other Calculation Agent specified in the applicable Pricing Supplement) are not quoting as mentioned above, the Rate of Interest shall be the Rate of Interest specified in (1) above; Appendix A-11 (D)the expression "Reference Screen Page" means such page, whatever its designation, on which the Reference Rate that is for the time being displayed on the Reuters Monitor Money Rates Service or Dow Jones Markets Limited or other such service, as specified in the applicable Pricing Supplement; (E)unless otherwise specified in the applicable Pricing Supplement, the Reference Banks will be the principal London offices of The Chase Manhattan Bank, National Westminster Bank PLC, UBS AG and The Bank of Tokyo-Mitsubishi International PLC. TMCC shall procure that, so long as any Floating Rate Note or Index Linked Interest Note to which Condition 4(b)(iv)(A) is applicable remains outstanding, in the case of any bank being unable or unwilling to continue to act as a Reference Bank, TMCC shall specify the London office of some other leading bank engaged in the eurodollar market to act as such in its place; (F)the expression "Interest Determination Date" means, unless otherwise specified in the applicable Pricing Supplement, (x) other than in the case of Condition 4(b)(iv)(A), with respect to Notes denominated in any Specified Currency other than Sterling or euro, the second Banking Day in London prior to the commencement of the relevant Interest Period and, in the case of Condition 4(b)(iv)(A), the second Banking Day in the principal financial center of the country of the Specified Currency (which, if Australian dollars, shall be Sydney, if New Zealand dollars, shall be Auckland and if euro, shall be London) prior to the commencement of the relevant Interest Period; (y) with respect to Notes denominated in Sterling, the first Banking Day in London of the relevant Interest Period; and (z) with respect to Notes denominated in euro, the second day on which the TARGET system is open prior to the commencement of the relevant Interest Period. (G)the expression "Banking Day" means, in respect of any place, any day on which commercial banks are open for general business (including dealings in foreign exchange and foreign currency deposits) in that place or, as the case may be, as indicated in the applicable Pricing Supplement; and (H)if the Reference Rate from time to time in respect of Floating Rate Notes or Index Linked Interest Notes is specified in the applicable Pricing Supplement as being other than LIBOR or EURIBOR, any additional provisions relevant in determining the Rate of Interest in respect of such Notes will be set forth in the applicable Pricing Supplement. (v) Minimum and/or maximum Rate of Interest If the applicable Pricing Supplement specifies a Minimum Rate of Interest for any Interest Period, then in no event shall the Rate of Interest for such Interest Period be less than such Minimum Rate of Interest. If the applicable Pricing Supplement specifies a Maximum Rate of Interest for any Interest Period, then in no event shall the Rate of Interest for such Interest Period be greater than such Maximum Rate of Interest. Appendix A-12 (vi) Determination of Rate of Interest and calculation of Interest Amount The Agent (or, if the Agent is not the Calculation Agent, the Calculation Agent specified in the applicable Pricing Supplement) will, at or as soon as practicable after each time at which the Rate of Interest is to be determined, determine the Rate of Interest (subject to any Minimum or Maximum Rate of Interest specified in the applicable Pricing Supplement) and calculate the amount of interest (the "Interest Amount") payable on the Floating Rate Notes or Index Linked Interest Notes in respect of each Specified Denomination for the relevant Interest Period. Each Interest Amount shall be calculated by applying the Rate of Interest to each Specified Denomination, multiplying such product by the applicable Day Count Fraction, as specified in the applicable Pricing Supplement, and rounding the resultant figure to the nearest sub-unit of the relevant Specified Currency, half of any sub-unit being rounded upwards or otherwise in accordance with applicable market convention or as specified in the applicable Pricing Supplement. "Day Count Fraction" means, in respect of the calculation of an amount of interest for any Interest Period: (i)if "Actual/365" or "Actual/Actual" is specified in the applicable Pricing Supplement, the actual number of days in the Interest Period divided by 365 (or, if any portion of that Interest Period falls in a leap year, the sum of (A) the actual number of days in that portion of the Interest Period falling in a leap year divided by 366 and (B) the actual number of days in that portion of the Interest Period falling in a non-leap year divided by 365); (ii)if "Actual/365 (Fixed)" is specified in the applicable Pricing Supplement, the actual number of days in the Interest Period divided by 365; (iii)if "Actual/360" is specified in the applicable Pricing Supplement, the actual number of days in the Interest Period divided by 360; (iv)if "30/360", "360/360" or "Bond Basis" is specified in the applicable Pricing Supplement, the number of days in the Interest Period divided by 360 (the number of days to be calculated on the basis of a year of 360 days with 12 30-day months (unless (a) the last day in the Interest Period is the 31st day of a month but the first day of the Interest Period is a day other than the 30th or 31st day of a month, in which case the month that includes that last day shall not be considered to be shortened to a 30-day month, or (b) the last day of the Interest Period is the last day of the month of February, in which case the month of February shall not be considered to be lengthened to a 30-day month); (v)if "30E/360" or "Eurobond Basis" is specified in the applicable Pricing Supplement, the number of days in the Interest Period divided by 360 (the number of days to be calculated on the basis of a year of 360 days with 12 30-day months, without regard to the date of the first day or last day of the Interest Period unless, in the case of an Interest Period ending on the Appendix A-13 Maturity Date, the Maturity Date is the last day of the month of February, in which case the month of February shall not be considered to be lengthened to a 30-day month); and (vi)if "Sterling/FRN" is specified in the applicable Pricing Supplement, the number of days in the Interest Period divided by 365 or, in the case of an Interest Payment Date falling in a leap year, 366. (vii) Notification of Rate of Interest and Interest Amount The Agent will notify or cause to be notified TMCC and any stock exchange on which the relevant Floating Rate Notes or Index Linked Interest Notes are listed of the Rate of Interest and each Interest Amount for each Interest Period and the relevant Interest Payment Date and will cause the same to be published in accordance with Condition 16 as soon as possible after their determination but in no event later than the fourth London Business Day after their determination. Each Interest Amount and Interest Payment Date so notified may subsequently be amended (or appropriate alternative arrangements made by way of adjustment) without publication as aforesaid or prior notice in the event of an extension or shortening of the Interest Period in accordance with the provisions hereof. Each stock exchange on which the relevant Floating Rate Notes or Index Linked Interest Notes are for the time being listed will be promptly notified of any such amendment. For the purposes of this subparagraph (vii), the expression "London Business Day" means a day (other than a Saturday or a Sunday) on which banks and foreign exchange markets are open for general business in London. (viii) Certificates to be final All certificates, communications, opinions, determinations, calculations, quotations and decisions given, expressed, made or obtained for the purposes of the provisions of this paragraph (b), whether by the Agent or other Calculation Agent, shall (in the absence of wilful default, bad faith or manifest error) be binding on TMCC, the Agent, the Calculation Agent the other Paying Agents and all Noteholders, Receiptholders and Couponholders and (in the absence as aforesaid) no liability to TMCC, the Noteholders, the Receiptholders or the Couponholders shall attach to the Agent or the Calculation Agent in connection with the exercise or non-exercise by it of its powers, duties and discretions pursuant to such provisions. (ix) Limitations on Interest In addition to any Maximum Rate of Interest which may be applicable to any Floating Rate Note or Index Linked Interest Notes pursuant to Condition 4(b)(v) above, the interest rate on Floating Rate Notes or Index Linked Interest Notes shall in no event be higher than the maximum rate permitted by New York law, as the same may be modified by United States law of general application. Appendix A-14 (c) Index Linked Notes and Dual Currency Notes In the case of Index Linked Notes or Dual Currency Notes, if the Rate of Interest or Interest Amount cannot be determined by reference to an index and/or a formula or, as the case may be, an exchange rate, such Rate of Interest or Interest Amount payable shall be determined in the manner specified in the applicable Pricing Supplement. (d) Zero Coupon Notes When a Zero Coupon Note becomes due and repayable prior to the Maturity Date and is not paid when due, the amount due and repayable shall be the Amortized Face Amount of such Note as determined in accordance with Condition 5(f)(iii). As from the Maturity Date, any overdue principal of such Note shall bear interest at a rate per annum equal to the Accrual Yield set forth in the applicable Pricing Supplement. (e) Partly Paid Notes In the case of Partly Paid Notes (other than Partly Paid Notes which are Zero Coupon Notes), interest will accrue as aforesaid on the paid up nominal amount of such Notes and otherwise as specified in the applicable Pricing Supplement. (f) Accrual of Interest Each Note (or in the case of the redemption in part only of a Note, such part to be redeemed) will cease to bear interest (if any) from the due date for its redemption unless, upon due presentation thereof, payment of principal is improperly withheld or refused. In such event, interest will continue to accrue (as well after as before judgment) until whichever is the earlier of (i) the day on which all sums due in respect of such Note up to that day are received by or on behalf of the holder of such Note; and (ii) the day on which the Agent has notified the holder thereof (either in accordance with Condition 16 or individually) of receipt of all sums due in respect thereof up to that date. 5. Redemption and Purchase (a) At Maturity Unless otherwise indicated in the applicable Pricing Supplement and unless previously redeemed or purchased and cancelled as specified below, Notes will be redeemed by TMCC at their Final Redemption Amount specified in, or determined in the manner specified in, the applicable Pricing Supplement in the relevant Specified Currency on the Maturity Date specified in the applicable Pricing Supplement. (b) Redemption for Tax Reasons TMCC may redeem the Notes of this Series as a whole but not in part at any time at their Early Redemption Amount, together, if appropriate, with accrued interest to but excluding the date fixed for redemption, if TMCC shall determine that as a result of any change in or amendment to the laws (or any Appendix A-15 regulations or rulings promulgated thereunder) of the United States of America or of any political subdivision or taxing authority thereof or therein affecting taxation, or any change in application or official interpretation of such laws, regulations or rulings, which amendment or change is effective on or after the latest Issue Date of the Notes of this Series, TMCC would be required to pay Additional Amounts, as provided in Condition 9, on the occasion of the next payment due in respect of the Notes of this Series. The Notes of this Series are also subject to redemption as a whole but not in part in the other circumstances described in Condition 9. Notice of intention to redeem Notes will be given at least once in accordance with Condition 16 not less than 30 days nor more than 60 days prior to the date fixed for redemption, provided that no such notice of redemption shall be given earlier than 90 days prior to the effective date of such change or amendment and that at the time notice of such redemption is given, such obligation to pay such Additional Amounts remains in effect. From and after any redemption date, if monies for the redemption of Notes shall have been made available for redemption on such redemption date, such Notes shall cease to bear interest, if applicable, and the only right of the holders of such Notes and any Receipts or Coupons appertaining thereto shall be to receive payment of the Early Redemption Amount and, if appropriate, all unpaid interest accrued to such redemption date. (c) Pricing Supplement The Pricing Supplement applicable to the Notes of this Series shall indicate either: (i)that the Notes of this Series cannot be redeemed prior to their Maturity Date (except as otherwise provided in paragraph (b) above and in Condition 13); or (ii)that such Notes will be redeemable at the option of TMCC and/or the holders of the Notes prior to such Maturity Date in accordance with the provisions of paragraphs (d) and/or (e) below on the date or dates and at the amount or amounts indicated in the applicable Pricing Supplement. (d) Redemption at the Option of TMCC If so specified in the applicable Pricing Supplement, TMCC may, having given: (i)not more than 60 nor less than 30 days notice to the holders of the Notes of this Series in accordance with Condition 16, or such other notice as is specified in the applicable Pricing Supplement; and (ii)not less than 15 days before the date the notice referred to in (i) is required to be given (or such other notice as is specified in the applicable Pricing Supplement), notice to the Agent; (which notice shall be irrevocable), repay all or some only of the Notes of this Series then outstanding on the Optional Redemption Date(s) and at the Appendix A-16 Optional Redemption Amount(s) indicated in the applicable Pricing Supplement together, if appropriate, with accrued interest. In the event of a redemption of some only of such Notes of this Series, such redemption must be for an amount being the Minimum Redemption Amount or a Higher Redemption Amount, as indicated in the applicable Pricing Supplement. In the case of a partial redemption of definitive Notes of this Series, the Notes of this Series to be repaid will be selected individually by lot not more than 60 days prior to the date fixed for redemption and a list of the Notes of this Series called for redemption will be published in accordance with Condition 16 not less than 30 days prior to such date, or such other period as is specified in the applicable Pricing Supplement. In the case of a partial redemption of Notes which are represented by a global Note, the relevant Notes will be redeemed in accordance with the rules of Euroclear and/or Clearstream, Luxembourg. Unless specified otherwise in the applicable Pricing Supplement, if an Optional Redemption Date would otherwise fall on a day which is not a Business Day (as defined in Condition 4(b)(i)), it shall be subject to adjustment in accordance with the Business Day Convention applicable to the Notes or such other Business Day Convention specified in the applicable Pricing Supplement. (e) Redemption at the Option of the Noteholders Unless otherwise specified in the applicable Pricing Supplement, the Notes will not be subject to repayment at the option of the Noteholders. The term of any such option shall be set forth in the applicable Pricing Supplement. (f) Early Redemption Amounts For the purposes of paragraph (b) above and Condition 13, Notes will be redeemed at an amount (the "Early Redemption Amount") calculated as follows: (i)in the case of Notes with a Final Redemption Amount equal to the Issue Price, at the Final Redemption Amount thereof; or (ii)in the case of Notes (other than Zero Coupon Notes) with a Final Redemption Amount which is or may be greater or less than the Issue Price or which is payable in a Specified Currency other than that in which the Notes are denominated, at the amount set out in, or determined in the manner set out in, the applicable Pricing Supplement or, if no such amount or manner is set out in the applicable Pricing Supplement, at their nominal amount; or (iii)in the case of Zero Coupon Notes, at an amount (the "Amortized Face Amount") equal to: (A)the sum of (x) the Reference Price specified in the applicable Pricing Supplement and (y) the product of the Accrual Yield specified in the applicable Pricing Supplement (compounded annually) being applied to the Reference Price from (and including) the Issue Date of the first Tranche of the Notes to (but excluding) the date fixed for redemption or (as the case may be) the date upon which such Note becomes due and repayable; or Appendix A-17 (B)if the amount payable in respect of any Zero Coupon Note upon redemption of such Zero Coupon Note pursuant to paragraph (b) above or upon its becoming due and repayable as provided in Condition 13 is not paid or available for payment when due, the amount due and repayable in respect of such Zero Coupon Note shall be the Amortized Face Amount of such Zero Coupon Note calculated as provided above as though the references in sub-paragraph (A) to the date fixed for redemption or the date upon which the Zero Coupon Note becomes due and repayable were replaced by references to the date (the "Reference Date") which is the earlier of: (1)the date on which all amounts due in respect of the Note have been paid; and (2)the date on which the full amount of the moneys repayable has been received by the Agent and notice to that effect has been given in accordance with Condition 16. The calculation of the Amortized Face Amount in accordance with this sub-paragraph (B) will continue to be made, after as well as before judgment, until the Reference Date unless the Reference Date falls on or after the Maturity Date, in which case the amount due and repayable shall be the nominal amount of such Note together with interest at a rate per annum equal to the Accrual Yield. Unless specified otherwise in the applicable Pricing Supplement, where any such calculation is to be made for a period which is not a whole number of years, it shall be made (I) in the case of a Zero Coupon Note other than a Zero Coupon Note payable in euro, on the basis of a 360-day year consisting of 12 months of 30 days each (or 365/366 days in the case of Notes denominated in Sterling) and, in the case of an incomplete month, the number of days elapsed or (II) in the case of a Zero Coupon Note payable in euro, on the basis of the actual number of days elapsed divided by 365 (or, if any of the days elapsed falls in a leap year, the sum of (x) the number of those days falling in a leap year divided by 366 and (y) the number of those days falling in a non-leap year divided by 365) or (in either case) on such other calculation basis as may be specified in the applicable Pricing Supplement. (g) Installments Any Note which is repayable in installments will be redeemed in the Installment Amounts and on the Installment Dates specified in the applicable Pricing Supplement. (h) Partly Paid Notes If the Notes are Partly Paid Notes, they will be redeemed, whether at maturity, early redemption or otherwise in accordance with the provisions of this Condition 5 as amended or varied by the applicable Pricing Supplement. Appendix A-18 (i) Purchases TMCC may at any time purchase or otherwise acquire Notes in the open market or otherwise at any price. If purchases are made by tender, tenders must be available to all holders of Notes of a Series alike. (j) Cancellation, Resale or Reissuance at the Option of TMCC All Notes redeemed shall be, and all Notes purchased or otherwise acquired as aforesaid (together, in the case of definitive Notes, with all unmatured Coupons or Receipts attached thereto or purchased or acquired therewith) may, at the option of TMCC, either be (i) resold or reissued, or held by TMCC for subsequent resale or reissuance, or (ii) cancelled, in which event such Notes, Receipts and Coupons may not be resold or reissued. 6. Payments (a) Method of Payment Subject as provided below, payments in a currency other than euro will be made by transfer to an account in the Specified Currency (which, in the case of a payment in Yen to a non-resident of Japan, shall be a non-resident account) maintained by the payee with, or by a check in the Specified Currency drawn on, a bank (which, in the case of a payment in Yen to a non-resident of Japan, shall be an authorized foreign exchange bank) in the principal financial center of the country of such Specified Currency (which, if Australian dollars, shall be Sydney and if New Zealand dollars, shall be Auckland). Payments in euro will be made by credit or transfer to a euro account (or any other account to which euro may be credited or transferred) specified by the payee or by euro check. Notwithstanding the above provisions of this Condition 6(a), a check may not be delivered to an address in, and an amount may not be transferred to an account at a bank located in, the United States of America or its possessions by any office or agency of TMCC, the Agent or any Paying Agent, except as provided in Condition 6(b). Payments will be subject in all cases to any fiscal or other laws and regulations applicable thereto in the place of payment, but without prejudice to the provisions of Condition 9. (b) Presentation of Notes, Receipts, Coupons and Talons Payments of principal in respect of definitive Notes will (subject as provided below) be made in the Specified Currency in the manner provided in paragraph (a) against presentation and surrender (or, in the case of part payment of a sum due only, endorsement) of definitive Notes and payments of interest in respect of the definitive Notes will (subject as provided below) be made in the Specified Currency in the manner provided in paragraph (a) against presentation and surrender (or, in the case of part payment of a sum due only, endorsement) of Coupons, in each case at the specified office of any Paying Agent outside the United States of America and its possessions. Appendix A-19 In the case of definitive Notes, payments of principal with respect to installments (if any), other than the final installment, will (subject as provided below) be made in the manner provided in paragraph (a) against presentation and surrender (or, in the case of part payment of a sum due only, endorsement) of the relevant Receipt. Each Receipt must be presented for payment of the relevant installment together with the relevant definitive Note against which the amount will be payable with respect to that installment. If any definitive Note is redeemed or becomes repayable prior to the stated Maturity Date, principal will be payable in the manner provided in paragraph (a) on presentation and surrender of such definitive Note together with all unmatured Receipts appertaining thereto. Receipts presented without the definitive Note to which they appertain and unmatured Receipts do not constitute valid obligations of TMCC. Upon the date on which any definitive Note becomes due and repayable, unmatured Receipts (if any) appertaining thereto (whether or not attached) shall become void and no payment shall be made in respect thereof. Upon the date on which any Fixed Rate Notes in definitive form (other than Dual Currency Notes or Index Linked Notes) become due and repayable, such Notes should be presented for payment together with all unmatured Coupons appertaining thereto (which expression shall for this purpose include Coupons to be issued on exchange of matured Talons) failing which the amount of any missing unmatured Coupon (or, in the case of payment not being made in full, the same proportion of the aggregate amount of such missing unmatured Coupon as the sum so paid bears to the sum due) will be deducted from the sum due for payment. Unless otherwise specified in the applicable Pricing Supplement, each amount of principal so deducted will be paid in the manner mentioned above against surrender of the related missing Coupon at any time before the expiry of five years after the Relevant Date (as defined in Condition 15) in respect of such principal (whether or not such Coupon would otherwise have become void under Condition 15). Upon any Fixed Rate Note becoming due and repayable prior to its Maturity Date, all unmatured Talons (if any) appertaining thereto will become void and no further Coupons will be issued in respect thereof. Upon the date on which any Floating Rate Note, Dual Currency Note or Index Linked Note in definitive form becomes due and repayable, all unmatured Coupons and Talons (if any) relating thereto (whether or not attached) shall become void and no payment or, as the case may be, exchange for further Coupons, shall be made in respect thereof. If the due date for redemption of any Note in definitive form is not an Interest Payment Date, interest (if any) accrued with respect to such Note from and including the preceding Interest Payment Date or, as the case may be, the Interest Commencement Date or Issue Date (as applicable) shall be payable only against surrender of the relevant definitive Note. Payments of principal and interest (if any) in respect of Notes of this Series represented by any global Note will (subject as provided below) be made in the manner specified above and otherwise in the manner specified in the relevant global Note against presentation or surrender, as the case may be, of such global Note at the specified office of any Paying Agent located outside the United States except as provided below. A record of each payment made against presentation or surrender of such global Note, distinguishing between any payment of principal and any payment of interest, will be made on such global Note by the Agent and such record shall be prima facie evidence that the payment in question has been made. Appendix A-20 The holder of the relevant global Note shall be the only person entitled to receive payments in respect of Notes represented by such global Note and TMCC will be discharged by payment to, or to the order of, the holder of such global Note with respect to each amount so paid. Each of the persons shown in the records of Euroclear or Clearstream, Luxembourg as the beneficial holder of a particular nominal amount of Notes must look solely to Euroclear and/or Clearstream, Luxembourg, as the case may be, for his share of each payment so made by TMCC to, or to the order of, the holder of the relevant global Note. No person other than the holder of the relevant global Note shall have any claim against TMCC in respect of payments due on that global Note. Notwithstanding the foregoing, payments in respect of the Notes denominated in U.S. dollars will only be made at the specified office of a Paying Agent in the United States (which expression, as used herein, means the United States of America (including the States and the District of Columbia), its territories, its possessions and other areas subject to its jurisdiction) if: (i)TMCC has appointed Paying Agents with specified offices outside the United States with the reasonable expectation that such Paying Agents would be able to make payment at such specified offices outside the United States of the full amount owing in respect of the Notes in the manner provided above when due; (ii)payment of the full amount owing in respect of the Notes at such specified offices outside the United States is illegal or effectively precluded by exchange controls or other similar restrictions; and (iii)such payment is then permitted under United States law without involving, in the opinion of TMCC, adverse tax consequences to TMCC. (c) Payment Business Day Unless specified otherwise in the applicable Pricing Supplement, if the date for payment of any amount in respect of any Note, Receipt or Coupon is not a Payment Business Day in a place of presentation, the holder thereof shall not be entitled to payment until the next following Payment Business Day in the relevant place and shall not be entitled to further interest or other payment in respect of such delay. For these purposes, unless otherwise specified in the applicable Pricing Supplement, "Payment Business Day" means any day which is: (i)a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in: (A)the relevant place of presentation; (B)London; and (C)any other Applicable Business Center specified in the applicable Pricing Supplement; and Appendix A-21 (ii)either (A) in relation to any sum payable in a Specified Currency other than euro, a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealings in foreign exchange and foreign currency deposits) in the principal financial center of the country of the relevant Specified Currency (if other than the place of presentation, London and any other Applicable Business Center and which if the Specified Currency is Australian dollars or New Zealand dollars shall be Sydney or Auckland, respectively, unless specified otherwise in the applicable Pricing Supplement) or (B) in relation to any sum payable in euro, a day on which the TARGET system is open. (d) Interpretation of Principal and Interest Any reference in these Terms and Conditions to principal in respect of the Notes shall be deemed to include, as applicable: (i)any Additional Amounts which may be payable under Condition 9 in respect of principal; (ii)the Final Redemption Amount of the Notes; (iii)the Early Redemption Amount of the Notes; (iv)in relation to Notes redeemable in installments, the Installment Amounts; (v)any premium and any other amounts which may be payable under or in respect of the Notes; (vi)in relation to Zero Coupon Notes, the Amortized Face Amount; and (vii)the Optional Redemption Amount(s) (if any) of the Notes. Any reference in these Terms and Conditions to interest in respect of the Notes shall be deemed to include, as applicable, any Additional Amounts which may be payable under Condition 9, except as provided in clause (i) above. 7. Agent and Paying Agents The names of the initial Agent and the other initial Paying Agent and their initial specified offices are set out on the inside back cover page of the Offering Circular. In acting under the Agency Agreement, the Agent and the Paying Agents will act solely as agents of TMCC and do not assume any obligations or relationships of agency or trust to or with the Noteholders, Receiptholders or Couponholders, except that (without affecting the obligations of TMCC to the Noteholders, Receiptholders and Couponholders to repay Notes and pay interest thereon) funds received by the Agent for the payment of the principal of or interest on the Notes shall be held in trust by it for the Noteholders and/or Receiptholders and/or Couponholders until the expiration of the relevant period of prescription under Condition 15. TMCC agrees to perform Appendix A-22 and observe the obligations imposed upon it under the Agency Agreement and to use its best efforts to cause the Agent and the Paying Agents to perform and observe the obligations imposed upon them under the Agency Agreement. The Agency Agreement contains provisions for the indemnification of the Agent and the Paying Agents and for relief from responsibility in certain circumstances, and entitles any of them to enter into business transactions with TMCC without being liable to account to the Noteholders, Receiptholders or the Couponholders for any resulting profit. TMCC is entitled to vary or terminate the appointment of any Paying Agent or any other Paying Agent appointed under the terms of the Agency Agreement and/or appoint additional or other Paying Agents and/or approve any change in the specified office through which any Paying Agent acts, provided that: (i)so long as the Notes of this Series are listed on any stock exchange, there will at all times be a Paying Agent with a specified office in each location required by the rules and regulations of the relevant stock exchange or listing authority; (ii)there will at all times be a Paying Agent with a specified office in a city approved by the Agent in continental Europe; and (iii)there will at all times be an Agent. In addition, with respect to Notes denominated in U.S. dollars, TMCC shall forthwith appoint a Paying Agent having a specified office in New York City in the circumstances described in the final paragraph of Condition 6(b). Any variation, termination, appointment or change shall only take effect (other than in the case of insolvency, when it shall be of immediate effect) after not less than 30 nor more than 45 days prior notice thereof shall have been given to the Agent and the Noteholders in accordance with Condition 16. 8. Exchange of Talons On and after the Interest Payment Date on which the final Coupon comprised in any Coupon sheet matures, the Talon (if any) forming part of such Coupon sheet may be surrendered at the specified office of the Agent or any other Paying Agent in exchange for a further Coupon sheet including (if such further Coupon sheet does not include Coupons to, and including, the final date for the payment of interest due in respect of the Note to which it appertains) a further Talon, subject to the provisions of Condition 15. Each Talon shall, for the purposes of these Terms and Conditions, be deemed to mature on the Interest Payment Date on which the final Coupon comprised in the relative Coupon sheet matures. 9. Payment of Additional Amounts TMCC will, subject to certain limitations and exceptions (set forth below), pay to a Noteholder, Receiptholder or Couponholder who is a United States Alien (as defined below) such amounts ("Additional Amounts") as may be necessary so that every net payment of principal or interest in respect of the Notes, Receipts or Coupons, after deduction or withholding for or on account of any present or Appendix A-23 future tax, assessment or other governmental charge imposed upon such Noteholder, Receiptholder or Couponholder, or by reason of the making of such payment, by the United States or any political subdivision or taxing authority thereof or therein, will not be less than the amount provided for in the Notes, Receipts or Coupons. However, TMCC shall not be required to make any payment of Additional Amounts for or on account of: (a)any tax, assessment or other governmental charge which would not have been imposed but for (i) the existence of any present or former connection between such Noteholder, Receiptholder or Couponholder (or between a fiduciary, settlor, beneficiary, member or shareholder of, or possessor of a power over, such Noteholder, Receiptholder or Couponholder, if such Noteholder, Receiptholder or Couponholder is an estate, trust, partnership or corporation) and the United States, including, without limitation, such Noteholder, Receiptholder or Couponholder (or such fiduciary, settlor, beneficiary, member, shareholder or possessor) being or having been a citizen or resident thereof or being or having been present or engaged in trade or business therein or having or having had a permanent establishment therein, or (ii) such Noteholder's, Receiptholder's or Couponholder's past or present status as a personal holding company, foreign personal holding company or controlled foreign corporation or a private foundation (as those terms are defined for United States tax purposes) or as a corporation which accumulates earnings to avoid United States federal income tax; (b)any estate, inheritance, gift, sales, transfer, personal property or similar tax, assessment or other governmental charge; (c)any tax, assessment or other governmental charge that would not have been so imposed but for the presentation of a Note, Receipt or Coupon for payment on a date more than 15 days after the date on which such payment became due and payable or the date on which payment thereof is duly provided for, whichever occurs later; (d)any tax, assessment or other governmental charge which is payable otherwise than by withholding from payments of principal or interest in respect of the Notes, Receipts or Coupons; (e)any tax, assessment or other governmental charge imposed on interest received by (i) a 10% shareholder of TMCC within the meaning of Internal Revenue Code Section 871(h)(3)(b) or Section 881(c)(3)(b) or (ii) a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business; (f)any tax, assessment or other governmental charge required to be withheld or deducted by any Paying Agent from any payment of principal or interest in respect of any Note, Receipt or Coupon, if such payment can be made without such withholding or deduction by any other Paying Agent with respect to the Notes in a Western European city; (g)any tax, assessment or other governmental charge which would not have been imposed but for the failure to comply with certification, information, documentation, or other reporting requirements concerning the nationality, residence, identity or connection with the United States of the Noteholder, Receiptholder or Couponholder or of the beneficial owner of such Note, Receipt Appendix A-24 or Coupon, if such compliance is required by statute or by regulation of the United States Treasury Department as a precondition to relief or exemption from such tax, assessment or other governmental charge; or (h)any combination of items (a), (b), (c), (d), (e), (f) and (g); nor shall Additional Amounts be paid to any Noteholder, Receiptholder or Couponholder who is a fiduciary or partnership or other than the sole beneficial owner of the Note, Receipt or Coupon to the extent a beneficiary or settlor with respect to such fiduciary or a member of such partnership or a beneficial owner of the Note, Receipt or Coupon would not have been entitled to payment of the Additional Amounts had such beneficiary, settlor, member or beneficial owner been the holder of the Note, Receipt or Coupon. The term "United States Alien" means any corporation, individual, fiduciary or partnership that for United States federal income tax purposes is a foreign corporation, nonresident alien individual, nonresident alien fiduciary of a foreign estate or trust, or foreign partnership one or more members of which is a foreign corporation, nonresident alien individual or nonresident alien fiduciary of a foreign estate or trust. If TMCC shall determine that any payment made outside the United States by TMCC or any of its Paying Agents of the full amount of the next scheduled payment of either principal or interest due in respect of any Note, Receipt or Coupon of this Series would, under any present or future laws or regulations of the United States affecting taxation or otherwise, be subject to any certification, information or other reporting requirements of any kind, the effect of which requirements is the disclosure to TMCC, any of its Paying Agents or any governmental authority of the nationality, residence or identity (as distinguished from status as a United States Alien) of a beneficial owner of such Note, Receipt or Coupon who is a United States Alien (other than such requirements which (i) would not be applicable to a payment made to a custodian, nominee or other agent of the beneficial owner, or which can be satisfied by such a custodian, nominee or other agent certifying to the effect that such beneficial owner is a United States Alien; provided, however, in each case that payment by such custodian, nominee or agent to such beneficial owner is not otherwise subject to any requirements referred to in this sentence, (ii) are applicable only to payment by a custodian, nominee or other agent of the beneficial owner to or on behalf of such beneficial owner, or (iii) would not be applicable to a payment made by any other paying agent of TMCC), TMCC shall redeem the Notes of this Series as a whole but not in part at a redemption price equal to the Early Redemption Amount together, if appropriate, with accrued interest to, but excluding, the date fixed for redemption, such redemption to take place on such date not later than one year after the publication of notice of such determination. If TMCC becomes aware of an event that might give rise to such certification, information or other reporting requirements, TMCC shall, as soon as practicable, solicit advice of independent counsel selected by TMCC to establish whether such certification, information or other reporting requirements will apply and, if such requirements will apply, TMCC shall give prompt notice of such determination (a "Tax Notice") in accordance with Condition 16 stating in such notice the effective date of such certification, information or other reporting requirements and, if applicable, the date by which the redemption shall take place. Notwithstanding the foregoing, TMCC shall not redeem Notes if TMCC shall subsequently determine not less than 30 days prior to the date fixed for redemption that subsequent Appendix A-25 payments would not be subject to any such requirements, in which case TMCC shall give prompt notice of such determination in accordance with Condition 16 and any earlier redemption notice shall thereby be revoked and of no further effect. Notwithstanding the foregoing, if and so long as the certification, information or other reporting requirements referred to in the preceding paragraph would be fully satisfied by payment of a backup withholding tax or similar charge, TMCC may elect prior to publication of the Tax Notice to have the provisions described in this paragraph apply in lieu of the provisions described in the preceding paragraph, in which case the Tax Notice shall state the effective date of such certification, information or reporting requirements and that TMCC has elected to pay Additional Amounts rather than redeem the Notes. In such event, TMCC will pay as Additional Amounts such amounts as may be necessary so that every net payment made following the effective date of such certification, information or reporting requirements outside the United States by TMCC or any of its Paying Agents of principal or interest due in respect of a Note, Receipt or Coupon to a holder who certifies to the effect that the beneficial owner of such Note, Receipt or Coupon is a United States Alien (provided that such certification shall not have the effect of communicating to TMCC or any of its Paying Agents or any governmental authority the nationality, residence or identity of such beneficial owner) after deduction or withholding for or on account of such backup withholding tax or similar charge (other than a backup withholding tax or similar charge which (i) is imposed as a result of certification, information or other reporting requirements referred to in the second parenthetical clause of the first sentence of the preceding paragraph, or (ii) is imposed as a result of the fact that TMCC or any of its Paying Agents has actual knowledge that the holder or beneficial owner of such Note, Receipt or Coupon is not a United States Alien but is within the category of persons, corporations or other entities described in clause (a)(i) of the third preceding paragraph, or (iii) is imposed as a result of presentation of such Note, Receipt or Coupon for payment more than 15 days after the date on which such payment becomes due and payable or on which payment thereof is duly provided for, whichever occurs later), will not be less than the amount provided for in such Note, such Receipt or such Coupon to be then due and payable. In the event TMCC elects to pay such Additional Amounts, TMCC will have the right, at its sole option, at any time, to redeem the Notes of this Series, as a whole but not in part at a redemption price equal to their Early Redemption Amount, together, if appropriate, with accrued interest to the date fixed for redemption including any Additional Amounts required to be paid under this paragraph. If TMCC has made the determination described in the preceding paragraph with respect to certification, information or other reporting requirements applicable to interest only and subsequently makes a determination in the manner and of the nature referred to in such preceding paragraph with respect to such requirements applicable to principal, TMCC will redeem the Notes of this Series in the manner and on the terms described in the preceding paragraph (except as provided below), unless TMCC elects to have the provisions of this paragraph apply rather than the provisions of the immediately preceding Appendix A-26 paragraph. If in such circumstances the Notes are to be redeemed, TMCC will be obligated to pay Additional Amounts with respect to interest, if any, accrued to the date of redemption. If TMCC has made the determination described in the preceding paragraph and subsequently makes a determination in the manner and of the nature referred to in such preceding paragraph that the level of withholding applicable to principal or interest has been increased, TMCC will redeem the Notes of this Series in the manner and on the terms described in the preceding paragraph (except as provided below), unless TMCC elects to have the provisions of this paragraph apply rather than the provisions of the immediately preceding paragraph. If in such circumstances the Notes are to be redeemed, TMCC will be obligated to pay Additional Amounts with respect to the original level of withholding on principal and interest, if any, accrued to the date of redemption. 10. Negative Pledge The Notes will not be secured by any mortgage, pledge or other lien. TMCC shall not pledge or otherwise subject to any lien any property or assets of TMCC unless the Notes are secured by such pledge or lien equally and ratably with all other obligations secured thereby so long as such obligations shall be so secured; provided, however, that such covenant will not apply to liens securing obligations which do not in the aggregate at any one time outstanding exceed 5 percent of Consolidated Net Tangible Assets (as defined below) of TMCC and its consolidated subsidiaries and also will not apply to: (a)the pledge of any assets of TMCC to secure any financing by TMCC of the exporting of goods to or between, or the marketing thereof in, countries other than the United States in connection with which TMCC reserves the right, in accordance with customary and established banking practice, to deposit, or otherwise subject to a lien, cash, securities or receivables, for the purpose of securing banking accommodations or as the basis for the issuance of bankers' acceptances or in aid of other similar borrowing arrangements; (b)the pledge of receivables payable in currencies other than United States dollars to secure borrowings in countries other than the United States; (c)any deposit of assets of TMCC with any surety company or clerk of any court, or in escrow, as collateral in connection with, or in lieu of, any bond on appeal by TMCC from any judgment or decree against it, or in connection with other proceedings in actions at law or in equity by or against TMCC or in favor of any governmental bodies to secure progress, advance or other payments in the ordinary course of TMCC's business; (d)any lien or charge on any property of TMCC, tangible or intangible, real or personal, existing at the time of acquisition or construction of such property (including acquisition through merger or consolidation) or given to secure the payment of all or any part of the purchase or construction price thereof or to secure any indebtedness incurred prior to, at the time of, or within one year after, the acquisition or completion of construction thereof for the purpose of financing all or any part of the purchase or construction price thereof; (e)any lien in favor of the United States of America or any state thereof or the District of Columbia, or any agency, department or other instrumentality thereof, to secure progress, advance or other payments pursuant to any contract or provisions of any statute; Appendix A-27 (f)any lien securing the performance of any contract or undertaking not directly or indirectly in connection with the borrowing of money, obtaining of advances or credit or the securing of debt, if made and continuing in the ordinary course of business; (g)any lien to secure non-recourse obligations in connection with TMCC's engaging in leveraged or single- investor lease transactions; and (h)any extension, renewal or replacement (or successive extensions, renewals or replacements), in whole or in part, of any lien, charge or pledge referred to in clauses (a) through (g) above; provided, however, that the amount of any and all obligations and indebtedness secured thereby will not exceed the amount thereof so secured immediately prior to the time of such extension, renewal or replacement, and that such extension, renewal or replacement will be limited to all or a part of the property which secured the charge or lien so extended, renewed or replaced (plus improvements on such property). "Consolidated Net Tangible Assets" means the aggregate amount of assets (less applicable reserves and other properly deductible items) after deducting therefrom (i) all current liabilities and (ii) all goodwill, trade names, trademarks, patents, unamortized debt discount and expense and other like intangibles of TMCC and its consolidated subsidiaries, all as set forth on the most recent balance sheet of TMCC and its consolidated subsidiaries prepared in accordance with generally accepted accounting principles as practiced in the United States. 11. Consolidation or Merger TMCC may consolidate with, or sell, lease or convey all or substantially all of its assets as an entirety to, or merge with or into any other corporation provided that in any such case, (i) either TMCC shall be the continuing corporation, or the successor corporation shall be a corporation organized and existing under the laws of the United States of America or any state thereof and such successor corporation shall expressly assume the due and punctual payment of the principal of and interest (including Additional Amounts as provided in Condition 9) on all the Notes, Receipts and Coupons, according to their tenor, and the due and punctual performance and observance of all of the covenants and conditions of this Note to be performed by TMCC by an amendment to the Agency Agreement executed by such successor corporation, TMCC and the Agent, and (ii) immediately after giving effect to such transaction, no Event of Default under Condition 13, and no event which, with notice or lapse of time or both, would become such an Event of Default shall have happened and be continuing. In case of any such consolidation, merger, sale, lease or conveyance and upon any such assumption by the successor corporation, such successor corporation shall succeed to and be substituted for TMCC, with the same effect as if it had been named herein as TMCC, and the predecessor corporation, except in the event of a conveyance by way of lease, shall be relieved of any further obligation under this Note and the Agency Agreement. 12. Meetings, Modifications and Waivers The Agency Agreement contains provisions which, unless otherwise provided in the Pricing Supplement, are binding on TMCC, the Noteholders, the Receiptholders and the Couponholders, for convening meetings of holders of Notes, Receipts and Coupons to consider matters affecting their interests, Appendix A-28 including the modification or waiver of the Terms and Conditions applicable to the Notes. The Agency Agreement, the Notes and any Receipts and Coupons attached to the Notes may be amended by TMCC (and, in the case of the Agency Agreement, the Agent) (i) for the purpose of curing any ambiguity, or for curing, correcting or supplementing any defective provision contained therein, or to evidence the succession of another corporation to TMCC as provided in Condition 11, (ii) to make any further modifications of the terms of the Agency Agreement necessary or desirable to allow for the issuance of any additional Notes (which modifications shall not be materially adverse to holders of outstanding Notes) or (iii) in any manner which TMCC (and, in the case of the Agency Agreement, the Agent) may deem necessary or desirable and which shall not materially adversely affect the interests of the holders of the Notes, Receipts and Coupons, to all of which each holder of Notes, Receipts and Coupons shall, by acceptance thereof, consent. In addition, with the written consent of the holders of not less than a majority in aggregate principal amount of the Notes then outstanding affected thereby, or by a resolution adopted by a majority in aggregate principal amount of such outstanding Notes affected thereby present or represented at a meeting of such holders at which a quorum is present, as provided in the Agency Agreement (provided that such resolution shall be approved by the holders of not less than 25 percent of the aggregate principal amount of Notes affected thereby then outstanding), TMCC and the Agent may from time to time and at any time enter into agreements modifying or amending the Agency Agreement or the terms and conditions of the Notes, Receipts and Coupons for the purpose of adding any provisions to or changing in any manner or eliminating any provisions of the Agency Agreement or of modifying in any manner the rights of the holders of Notes, Receipts and Coupons; provided, however, that no such agreement shall, without the consent or the affirmative vote of the holder of each Note affected thereby, (i) change the stated maturity of the principal of or any installment of interest on any Note, (ii) reduce the principal amount of or interest on any Note, (iii) change the obligation of TMCC to pay Additional Amounts as provided in Condition 9, (iv) reduce the percentage in principal amount of outstanding Notes the consent of the holders of which is necessary to modify or amend the Agency Agreement or the terms and conditions of the Notes or to waive any future compliance or past default, or (v) reduce the percentage in principal amount of outstanding Notes the consent of the holders of which is required at any meeting of holders of Notes at which a resolution is adopted. The quorum at any meeting called to adopt a resolution will be persons holding or representing a majority in aggregate principal amount of the Notes at the time outstanding affected thereby and at any adjourned meeting will be one or more persons holding or representing 25 percent in aggregate principal amount of such Notes at the time outstanding affected thereby. Any instrument given by or on behalf of any holder of a Note in connection with any consent to any such modification, amendment or waiver will be irrevocable once given and will be conclusive and binding on all subsequent holders of such Note. Any modifications, amendments or waivers to the Agency Agreement or to the terms and conditions of the Notes, Receipts and Coupons will be conclusive and binding on all holders of Notes, Receipts and Coupons, whether or not they have given such consent or were present at any meeting, and whether or not notation of such modifications, amendments or waivers is made upon the Notes, Receipts and Coupons. It shall not be necessary for the consent of the holders of Notes under this Condition 12 to approve the particular form of any proposed amendment, but it shall be sufficient if such consent shall approve the substance thereof. Appendix A-29 Notes authenticated and delivered after the execution of any amendment to the Agency Agreement, Notes, Receipts or Coupons may bear a notation in form approved by the Agent as to any matter provided for in such amendment to the Agency Agreement. New Notes so modified as to conform, in the opinion of the Agent and TMCC, to any modification contained in any such amendment may be prepared by TMCC, authenticated by the Agent and delivered in exchange for the Notes then outstanding. For the purposes of this Condition 12 and Condition 13 below, the term "outstanding" means, in relation to the Notes, all Notes issued under the Agency Agreement other than (i) those which have been redeemed in full in accordance with the Agency Agreement or these Terms and Conditions, (ii) those in respect of which the date for redemption in accordance with these Terms and Conditions has occurred and the redemption moneys therefor (including all interest (if any) accrued thereon to the date for such redemption and any interest (if any) payable under these Terms and Conditions after such date) have been duly paid to the Agent as provided in the Agency Agreement (and, where appropriate, notice has been given to the Noteholders in accordance with Condition 16) and remain available for payment against presentation of the Notes, (iii) those which have become void under Condition 15, (iv) those which have been purchased or otherwise acquired and cancelled as provided in Condition 5, and those which have been purchased or otherwise acquired and are being held by TMCC for subsequent resale or reissuance as provided in Condition 5 during the time so held, (v) those mutilated or defaced Notes which have been surrendered in exchange for replacement Notes pursuant to Condition 14, (vi) (for the purposes only of determining how many Notes are outstanding and without prejudice to their status for any other purpose) those Notes alleged to have been lost, stolen or destroyed and in respect of which replacement Notes have been issued pursuant to Condition 14 and (vii) temporary global Notes to the extent that they shall have been duly exchanged in whole for permanent global Notes or definitive Notes and permanent global Notes to the extent that they shall have been duly exchanged in whole for definitive Notes, in each case pursuant to their respective provisions. 13. Default and Acceleration (a) In the event that (each an "Event of Default"): (i)default shall be made in the payment when due of any installment of interest or any Additional Amounts on any of the Notes continued for a period of 30 days after the date when due; or (ii)default shall be made for more than three days in the payment when due of the principal of any Note (whether at maturity or upon redemption or otherwise); or (iii)default in the deposit of any sinking fund payment with respect to any Note when and as due; or (iv)TMCC shall fail to perform or observe any other term, covenant or agreement contained in the Terms and Conditions applicable to any of the Notes or in the Agency Agreement for a period of 60 days after the date on which written notice of such failure, requiring TMCC to remedy the same, first shall have been given to the Agent and TMCC by the holders of at least 25 percent in aggregate principal amount of the Notes then outstanding; or Appendix A-30 (v)there is an acceleration of, or failure to pay when due and payable, any indebtedness for money borrowed of TMCC exceeding $10,000,000 and such acceleration is not rescinded or annulled, or such indebtedness is not discharged, within 10 days after written notice thereof has first been given to TMCC and the Agent by the holders of not less than 10 percent in aggregate principal amount of Notes then outstanding; or (vi)the entry by a court having competent jurisdiction of (a) a decree or order granting relief in respect of TMCC in an involuntary proceeding under any applicable bankruptcy, insolvency, reorganization or other similar law and such decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or (b) a decree or order adjudging TMCC to be insolvent, or approving a petition seeking reorganization, arrangement, adjustment or composition of TMCC and such decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or (c) a final and non-appealable order appointing a custodian, receiver, liquidator, assignee, trustee or other similar official of TMCC or of any substantial part of the property of TMCC, or ordering up the winding up or liquidation of the offices of TMCC; or (vii)the commencement by TMCC of a voluntary proceeding under any applicable bankruptcy, insolvency, reorganization or other similar law or of a voluntary proceeding seeking to be adjudicated insolvent or the consent of TMCC to the entry of a decree or order for relief in an involuntary proceeding under any applicable bankruptcy, insolvency, reorganization or other similar law or to the commencement of any insolvency proceedings against it, or the filing by TMCC of a petition or answer or consent seeking reorganization or relief under any applicable law, or the consent by TMCC to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee or similar official of TMCC or any substantial part of the property of TMCC or the making by TMCC of an assignment for the benefit of creditors, or the taking of corporate action by TMCC in furtherance of any such action; then the holder of any Note may, at its option, declare the principal of such Note and the interest, if any, accrued thereon to be due and payable immediately by written notice to TMCC and the Agent at its main office in London, and unless all such defaults shall have been cured by TMCC prior to receipt of such written notice, the principal of such Note and the interest, if any, accrued thereon shall become and be immediately due and payable. At any time after such a declaration of acceleration with respect to the Notes has been made and before a judgment or decree for payment of the money due with respect to any Note has been obtained by any Noteholder, such declaration and its consequences may be rescinded and annulled upon the written consent of holders of a majority in aggregate principal amount of the Notes then outstanding, or by resolution adopted by a majority in aggregate principal amount of the Notes present or represented at a meeting of holders of the Notes at which a quorum is present, as provided in the Agency Agreement, if: (1) TMCC has paid or deposited with the Agent a sum sufficient to pay (A)all overdue installments of interest on the Notes, and Appendix A-31 (B)the principal of Notes which has become due otherwise than by such declaration of acceleration; and (2) all Events of Default with respect to the Notes, other than the non-payment of the principal of such Notes which has become due solely by such declaration of acceleration, have been cured or waived as provided in paragraph (b) below. No such rescission shall affect any subsequent default or impair any right consequent thereon. (b) Any Events of Default by TMCC, other than the events described in paragraph (a)(i) or (a)(ii) above or in respect of a covenant or provision which cannot be modified and amended without the written consent of the holders of all outstanding Notes, may be waived by the written consent of holders of a majority in aggregate principal amount of the Notes then outstanding affected thereby, or by resolution adopted by the holders of a majority in aggregate principal amount of such Notes then outstanding present or represented at a meeting of holders of the Notes affected thereby at which a quorum is present, as provided in the Agency Agreement. 14. Replacement of Notes, Receipts, Coupons and Talons Should any Note, Receipt, Coupon or Talon be mutilated, defaced or destroyed or be lost or stolen, it may be replaced at the specified office of the Agent in London (or such other place outside the United States as may be notified to the Noteholders), in accordance with all applicable laws and regulations, upon payment by the claimant of the expenses incurred by TMCC and the Agent in connection therewith and on such terms as to evidence, indemnity, security or otherwise as TMCC and the Agent may require. Mutilated or defaced Notes, Receipts, Coupons or Talons must be surrendered before replacements will be issued. 15. Prescription Unless provided otherwise in the applicable Pricing Supplement, the Notes, Receipts and Coupons will become void unless presented for payment within a period of five years from the Relevant Date (as defined below) relating thereto. Any moneys paid by TMCC to the Agent for the payment of principal or interest in respect of the Notes and remaining unclaimed for a period of five years shall forthwith be repaid to TMCC and holders shall thereafter look only to TMCC for payment thereof. All liability with respect thereto shall cease when the Notes, Receipts and Coupons become void. As used herein, the "Relevant Date" means: (A)the date on which such payment first becomes due; or (B)if the full amount of the moneys payable has not been received by the Agent on or prior to such due date, the date on which the full amount of such moneys having been so received, notice to that effect shall have been given to the Noteholders in accordance with Condition 16. Appendix A-32 16. Notices All notices regarding the Notes shall be published in one leading English language daily newspaper with circulation in the United Kingdom (which is expected to be the Financial Times) or, if this is not practicable, one other such English language newspaper as TMCC, in consultation with the Agent, shall decide. TMCC shall also ensure that notices are duly published in a manner which complies with the rules and regulations of any stock exchange on which the Notes are for the time being listed or any other relevant authority. Any such notice shall be deemed to have been given on the date of the first publication. Any notice published as aforesaid shall be deemed to have been given on the date of such publication or, if published more than once, on the date of the first such publication. Receiptholders and Couponholders will be deemed for all purposes to have notice of the contents of any notice given to the holders of the Notes in accordance with this Condition. Until such time as any definitive Notes are issued, there may, so long as the global Notes for this Series are held in their entirety on behalf of Euroclear and Clearstream, Luxembourg, be substituted for such publication in such newspaper the delivery of the relevant notice to Euroclear and Clearstream, Luxembourg for communication by them to the holders of the Notes of this Series. Any such notice shall be deemed to have been given to the holders of the Notes of this Series on the seventh day after the day on which the said notice was given to Euroclear and Clearstream, Luxembourg, or on such other day as is specified in the applicable Pricing Supplement. Notices to be given by any holder of the Notes of this Series shall be in writing and given by lodging the same, together with the relevant Note or Notes, with the Agent. While any of the Notes of this Series are represented by a global Note, such notice may be given by any holder of a Note of this Series to the Agent via Euroclear and/or Clearstream, Luxembourg, as the case may be, in such manner as the Agent and Euroclear and/or Clearstream, Luxembourg, as the case may be, may approve for this purpose. 17. Redenomination and Exchange TMCC may (if so specified in the applicable Pricing Supplement) without the consent of the holder of any Note, Receipt, Coupon or Talon, redenominate all, but not some only, of the Notes of any Series on or after the date on which the member state of the European Union in whose national currency such Notes are denominated has become a participant member in the third stage of the European economic and monetary union as more fully set out in the applicable Pricing Supplement. TMCC may (if so specified in the applicable Pricing Supplement) without the consent of the holder of any Note, Receipt, Coupon or Talon, elect that the Notes shall be exchangeable for Notes expressed to be denominated in euro in accordance with such arrangements as TMCC may decide. 18. Governing Law The Agency Agreement and the Notes, the Receipts and the Coupons are governed by, and shall be construed in accordance with, the laws of the State of New York, United States of America, applicable to agreements made and to be performed wholly within such jurisdiction. Appendix A-33 APPENDIX B FORMS OF GLOBAL AND DEFINITIVE NOTES, COUPONS, RECEIPTS AND TALONS Appendix B-1 APPENDIX B-1 FORM OF TEMPORARY GLOBAL NOTE OF TOYOTA MOTOR CREDIT CORPORATION [THE ISSUER IS NOT AN INSTITUTION AUTHORIZED UNDER THE BANKING ACT 1987 (EXEMPT TRANSACTIONS) REGULATIONS 1997 (THE "BANKING ACT OF 1987") AND THIS IS A [SHORTER TERM DEBT SECURITY/LONGER TERM DEBT SECURITY][ ] ISSUED IN ACCORDANCE WITH REGULATIONS MADE UNDER SECTION 4 OF THE BANKING ACT 1987. REPAYMENT OF THE PRINCIPAL AND THE PAYMENT OF ANY INTEREST IN CONNECTION WITH THIS [SHORTER TERM DEBT SECURITY/LONGER TERM DEBT SECURITY]1 HAVE NOT BEEN GUARANTEED.] ANY UNITED STATES PERSON (AS DEFINED IN THE INTERNAL REVENUE CODE OF THE UNITED STATES) WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.[3] TOYOTA MOTOR CREDIT CORPORATION (Incorporated under the laws of the State of California, U.S.A.) TEMPORARY GLOBAL NOTE representing [Specified Currency and Principal Amount of Series] EURO MEDIUM-TERM NOTES DUE [Year of Maturity] Series No. [ ] The Notes represented by this Temporary Global Note have been listed on the Official List and admitted for trading by The London Stock Exchange plc (the "London Stock Exchange") This Note is a Temporary Global Note in respect of a duly authorized issue of [Specified Currency and Principal Amount of Series] Euro Medium-Term Notes Dues [Year of Maturity] (the "Notes") of [Specified Currency and Specified Denomination] each of Toyota Motor Credit Corporation (the "Company"). References herein to the Conditions shall be to the Terms and Conditions of the Notes (the "Conditions") as set out in Appendix A to the Agency Agreement (as defined below) as modified and supplemented by the information set out in the Pricing Supplement (the "Pricing Supplement") (which is attached hereto), provided that, in the event of any conflict between the provisions of the Conditions and the information set out in the Pricing Supplement, the latter shall prevail. Words and expressions defined in the Conditions and the Pricing Supplement and not otherwise defined herein shall have the same meanings when used herein. This Temporary Global Note is issued subject to, and with the benefit of, the Conditions and the Third Amended and Restated Agency Agreement (the "Agency Agreement," which expression shall be construed as a reference to that agreement as the same may be amended or supplemented from time to time) dated as of October 4, 2000, between the Company and The Chase Manhattan Bank (the "Agent") and the other agents named therein; provided, however, that the reference to the Conditions shall mean the Conditions in effect on the date of this Temporary Global Note and shall not be affected by any amendments to the Conditions which occur thereafter. This Temporary Global Note is to be held by a common depositary for Morgan Guaranty Trust Company of New York, Brussels Office, as operator of the Euroclear System ("Euroclear"), Clearstream Banking, societe anonyme ("Clearstream") and/or such other relevant clearing agency as is specified in the related Pricing Supplement on behalf of account holders which have the Notes represented by this Temporary Global Note credited to their respective securities accounts therewith from time to time. For value received, the Company, subject to and in accordance with the Conditions, promises to pay to the bearer hereof on [each Installment Date the relevant Installment Amount] the [Maturity Date], or on such earlier date as the Notes may become due and repayable in accordance with the Conditions, the amount payable under the Conditions on redemption of the Notes then represented by this Temporary Global Note and to pay interest (if any) on the principal amount of the Notes from time to time represented by this Temporary Global Note calculated and payable as provided in the Conditions together with any other sums payable under the Conditions, upon presentation and, at maturity, surrender of this Temporary Global Note at the principal office of the Agent in London, England, or at the offices of any of the other paying agents located outside the United States (as defined below) (except as provided in the Conditions) from time to time appointed by the Company in respect of the Notes, but in each case subject to the requirements as to certification provided herein. Any monies paid by the Company to the Agent for the payment of or interest on any Notes and remaining unclaimed at the end of one year after such principal or interest shall have become due and payable (whether at maturity, upon call for redemption or otherwise) shall then be repaid to the Company and upon such repayment all liability of the Agent with respect thereto shall thereupon cease, without, however, limiting in any way any obligation the Company may have to pay the principal of or interest on this Note as the same shall become due. On any payment of an Appendix B-1-2 installment or interest being made, details of such payment shall be entered by or on behalf of the Company in Schedule One hereto and the relevant space in Schedule One hereto recording any such payment shall be signed by or on behalf of the Company. On any redemption or purchase and cancellation of any of the Notes represented by this Temporary Global Note, details of such redemption or purchase and cancellation shall be entered by or on behalf of the Company in Schedule Two hereto and the relevant space in Schedule Two hereto recording any such redemption or purchase and cancellation shall be signed by or on behalf of the Company. Upon any such redemption or purchase and cancellation, the principal amount of this Temporary Global Note and the Notes represented by this Temporary Global Note shall be reduced by the principal amount so redeemed or purchased and canceled. Prior to the Exchange Date (as defined below), all payments (if any) on this Temporary Global Note will only be made to the bearer hereof to the extent that there is presented to the Agent by Euroclear, Clearstream and/or such other relevant clearing agency, a certificate, substantially in the form set out in Schedule Three hereto, to the effect that it has received from or in respect of a person entitled to a particular principal amount of the Notes (as shown by its records) a certificate from such person in or substantially in the form of Certificate "A" as set out in Schedule Three hereto. After the Exchange Date the holder of this Temporary Global Note will not be entitled to receive any payment of interest hereon. On or after the date which is 40 days after the completion of the distribution of the Notes represented by this Temporary Global Note (the "Exchange Date"), this Temporary Global Note may, under the circumstances set forth in the Conditions and the Pricing Supplement (including, without limitation, certification as to the date on which the distribution of the Notes of this Series was completed), be exchanged, in whole or in part for either Definitive Notes and (if applicable) Receipts, Coupons and Talons in or substantially in the forms set out in Appendices B-3, B-4, B-5 and B-6, respectively, to the Agency Agreement (on the basis that all appropriate details have been included on the face of such Definitive Notes and (if applicable) Receipts, Coupons and Talons and the Pricing Supplement (or the relevant provisions of the Pricing Supplement) have either been endorsed on or attached to such Definitive Notes) and/or, a Permanent Global Note in the form set out in Appendix B-2 to the Agency Agreement (together with the Pricing Supplement attached thereto) upon presentation of this Temporary Global Note by the bearer hereof at the offices of the Agent in London, England (or at such other place outside the United States of America, its territories and possessions, any State of the United States and the District of Columbia (the "United States") as the Agent may agree). As specified in the Pricing Supplement, the exchange of this Temporary Global Note for Definitive Notes may also require written notice being given to the Agent by Euroclear, Clearstream or other relevant clearing agency on behalf of holders of Notes and/or the payment of certain costs each of which shall be specified in the Pricing Supplement. Definitive Notes or the Permanent Global Note shall be so issued and delivered in exchange for only that portion of this Temporary Global Note in respect of which there shall have been presented to the Agent by Euroclear, Clearstream and/or such other relevant clearing agency, a certificate, substantially in the form set out in Schedule Three Appendix B-1-3 hereto, to the effect that it has received from or in respect of a person entitled to a particular principal amount of the Notes (as shown by its records) a certificate from such person in or substantially in the form of Certificate "A" as set out in Schedule Three hereto and, in the case of Definitive Notes, subject to such notice period and payment of costs as may be specified in the Pricing Supplement. If Definitive Notes and (if applicable) Receipts, Coupons and Talons have already been issued in exchange for all the Notes represented for the time being by the Permanent Global Note, then this Temporary Global Note may only thereafter be exchanged for Definitive Notes and (if applicable) Receipts, Coupons and Talons pursuant to the terms hereof. On an exchange of the whole of this Temporary Global Note, this Temporary Global Note shall be surrendered to the Agent. On an exchange of part only of this Temporary Global Note, details of such exchange shall be entered by or on behalf of the Company in Schedule Two hereto and the relevant space in Schedule Two hereto recording such exchange shall be signed by or on behalf of the Company. If, following the issue of a Permanent Global Note in exchange for some of the Notes represented by this Temporary Global Note, further Notes represented by this Temporary Global Note are to be exchanged pursuant to this paragraph, such exchange may be effected, without the issue of a new Permanent Global Note, by the Company or its agent endorsing Schedule Two of the Permanent Global Note previously issued to reflect an increase in the aggregate principal amount of the Permanent Global Note which would otherwise have been issued on such exchange. Until the exchange of the whole of this Temporary Global Note as aforesaid, the bearer hereof shall in all respects (except as otherwise provided herein) be entitled to the same benefits as if it were bearer of Definitive Notes, Coupons and Receipts in the form set out in Appendices B-3, B-4 and B-5 to the Agency Agreement. [The Company has complied with its obligations under the relevant rules (as defined in the Banking Act 1987 (Exempt Transactions) Regulations 1997 (the "Regulations") and under rules made under Section 142(6) of the Financial Services Act 1986 in respect of its debt securities listed on the Official List and admitted for trading by the London Stock Exchange. Since information was last provided in compliance with those obligations, the Company, having made all reasonable enquiries, has not become aware of any change in circumstances which could reasonably be regarded as significantly and adversely affecting its ability to meet its obligations in respect hereof as they fall due.][ ] This Temporary Global Note is governed by, and shall be construed in accordance with, the laws of the State of New York, United States of America, applicable to agreements made and to be performed wholly within such jurisdiction. This Temporary Global Note shall not be valid unless authenticated by the Agent. This Temporary Global Note may be duly executed on behalf of the Company by manual or facsimile signature. - ------------------------- [5] Delete in the case of all Notes other than Notes denominated in Sterling and Notes in respect of which the issue proceeds are accepted by the Company in the United Kingdom. Appendix B-1-4 IN WITNESS WHEREOF, the Company has caused this Temporary Global Note to be duly executed on its behalf. Dated: TOYOTA MOTOR CREDIT CORPORATION By: _____________________ George E. Borst President and Chief Executive Officer FISCAL AGENT'S CERTIFICATE ATTEST: OF AUTHENTICATION This is one of the Temporary _________________________ Global Notes described in the Michael Deaderick within mentioned Agency Agreement Secretary By or on behalf of THE CHASE MANHATTAN BANK as Fiscal Agent By:_______________________ (Authorized Signatory) Appendix B-1-5 SCHEDULE ONE PART I INTEREST PAYMENTS CONFIRMATION OF PAYMENT TOTAL AMOUNT BY OR ON INTEREST DATE OF OF INTEREST AMOUNT OF BEHALF OF PAYMENT DATE PAYMENT PAYABLE INTEREST PAID THE COMPANY First _______ ____________ _____________ ____________ Second _______ ____________ _____________ ____________ Appendix B-1-6 SCHEDULE ONE PART II INSTALLMENT PAYMENTS CONFIRMATION TOTAL AMOUNT OF OF AMOUNT OF PAYMENT BY INTEREST DATE OF INSTALLMENTS INSTALLMENTS OR ON BEHALF PAYMENT DATE PAYMENT PAYABLE PAID OF THE COMPANY First _______ ____________ ____________ ______________ Second _______ ____________ ____________ ______________ Appendix B-1-7 SCHEDULE TWO SCHEDULE OF EXCHANGES FOR NOTES REPRESENTED BY A PERMANENT GLOBAL NOTE OR DEFINITIVE NOTES, OR REDEMPTIONS OR PURCHASES AND CANCELLATIONS The following exchanges of a part of this Temporary Global Note for Notes represented by a Permanent Global Note or Definitive Notes or redemptions or purchases and cancellation of this Temporary Global Note have been made: Part of principal Amount of this Temporary Global Note Remaining Remaining Exchanged for principal amount amount payable Notes of this under this Represented by a Temporary Temporary Permanent Global Note Global Note Date of Global Note or following such following such exchange, or Definitive Notes exchange, or exchange, or redemption or or redeemed or redeemed or redemption or Notation purchase and purchased and purchase and purchase and made by cancellation canceled cancellation cancellation or on behalf of the Company ____________ _______________ ______________ ___________ ________ Appendix B-1-8 SCHEDULE THREE FORM OF CERTIFICATE TO BE PRESENTED BY APPROPRIATE CLEARING SYSTEM TOYOTA MOTOR CREDIT CORPORATION (the "Securities") This is to certify that, based solely on certifications we have received in writing, by telex or by electronic transmission from member organizations appearing in our records as persons being entitled to a portion of the principal amount set forth below (our "Member Organizations") substantially to the effect set forth in the Agency Agreement, as of the date hereof, [ ] principal amount of above-captioned Securities (i) is owned by persons that are not citizens or residents of the United States, partnerships, corporations or other entities created or organized under the laws of the United States or any estate or trust the income of which is subject to United States federal income taxation regardless of its source ("United States persons"), (ii) is owned by United States persons that (a) are foreign branches of United States financial institutions (as defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(v)) ("financial institutions") purchasing for their own account or for resale, or (b) acquired the Securities through foreign branches of United States financial institutions and hold the securities through such United States financial institutions on the date hereof (and in either case (a) or (b), each such United States financial institution has agreed, on its own behalf, or through its agent, that we may advise the Company or the Company's agent that it will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and the U.S. Treasury Regulations thereunder), or (iii) is owned by the United States or foreign financial institutions for purposes of resale during the restricted period (as defined in U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)), and to the further effect that United States or foreign financial institutions described in clause (iii) (whether or not also described in clauses (i) or (ii)) have certified that they have not acquired the Securities for purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions. As used herein, "United States" means the United States of America (including the States and the District of Columbia); and its "possessions" include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands. We further certify (i) that we are not making available herewith for exchange (or, if relevant, exercise of any rights or collection of any interest) any portion of the temporary global Security excepted in such Member Organization certifications and (ii) that as of the date hereof we have not received any notification from any of our Member Organizations to the effect that the statements made by such Member Organizations with respect to any portion of the part submitted herewith for exchange (or, if relevant, exercise of any rights or collection of any interest) are no longer true and cannot be relied upon at the date hereof. Appendix B-1-9 We will retain all certificates received from Member Organizations for the period specified in U.S. Treasury Regulation Section 1.163- 5(c)(2)(i)(D)(3)(i)(C). We understand that this certification is required in connection with certain tax laws of the United States. In connection therewith, if administrative and legal proceedings are commenced or threatened in connection with which this certification is or would be relevant, we irrevocably authorize you to produce this certification to any interested party in such proceedings. Dated: , ____. Yours faithfully, [APPROPRIATE CLEARING SYSTEM] By: *This certificate is not to be dated earlier than five days prior to the Exchange Date or relevant payment date, as applicable. Appendix B-1-10 CERTIFICATE "A" FORM OF CERTIFICATE TO BE PRESENTED TO APPROPRIATE CLEARING SYSTEM TOYOTA MOTOR CREDIT CORPORATION (the "Securities") This is to certify that as of the date hereof, and except as set forth below, the above-captioned Securities held by you for our account (i) are owned by person(s) that are not citizens or residents of the United States, partnerships, corporations or other entities created or organized in the United States or under the law of the United States or of any State thereof, or any estate or trust the income of which is subject to United States federal income taxation regardless of its source ("United States person(s)"), (ii) are owned by United States person(s) that (a) are foreign branches of United States financial institutions (as defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(v)) ("financial institutions") purchasing for their own account or for resale, or (b) acquired the Securities through foreign branches of United States financial institutions and hold the Securities through such United States financial institutions on the date hereof (and in either case (a) or (b), each such United States financial institution hereby agrees, on its own behalf or through its agent, that you may advise the Company or the Company's agent that it will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and the U.S. Treasury Regulations thereunder), or (iii) are owned by United States or foreign financial institutions for purposes of resale during the restricted period (as defined in U.S. Treasury Regulations Section 1.163- 5(c)(2)(i)(D)(7)), and in addition if the owner of the Securities is a United States or foreign financial institution described in clause (iii) (whether or not also described in clauses (i) or (ii)) this is further to certify that such financial institution has not acquired the Securities for purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions. As used herein, "United States" means the United States of America (including the States and the District of Columbia); and its "possessions" include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands. We undertake to advise you promptly by tested telex or facsimile on or prior to the date on which you intend to submit your certification relating to the Securities held by you for our account in accordance with your documented procedures if any applicable statement herein is not correct on such date, and in the absence of any such notification it may be assumed that this certification applies as of such date. This certification excepts and does not relate to [ ] of such interest in the above Securities in respect of which we are not able to certify and as to which we understand exchange and delivery of definitive Securities and/or an interest in a Permanent Global Note (or, if relevant, exercise of any right or collection of any interest) cannot be made until we do so certify. Appendix B-1-11 We understand that this certification is required in connection with certain tax laws of the United States. In connection therewith, if administrative and legal proceedings are commenced or threatened in connection with which this certification is or would be relevant, we irrevocably authorize you to produce this certification to any interested party in such proceedings. Dated: , _____. Yours faithfully, [Name of Person Making Certification] By: *This certificate is not to be dated earlier than fifteen days prior to the Exchange Date or relevant payment date, as applicable. Appendix B-1-12 APPENDIX B-2 FORM OF PERMANENT GLOBAL NOTE OF TOYOTA MOTOR CREDIT CORPORATION [THE ISSUER IS NOT AN INSTITUTION AUTHORIZED UNDER THE BANKING ACT 1987 (EXEMPT TRANSACTIONS) REGULATIONS 1997 (THE "BANKING ACT OF 1987") AND THIS IS A [SHORTER TERM DEBT SECURITY/LONGER TERM DEBT SECURITY]1 ISSUED IN ACCORDANCE WITH REGULATIONS MADE UNDER SECTION 4 OF THE BANKING ACT 1987. REPAYMENT OF THE PRINCIPAL AND THE PAYMENT OF ANY INTEREST IN CONNECTION WITH THIS [SHORTER TERM DEBT SECURITY/LONGER TERM DEBT SECURITY]1 HAVE NOT BEEN GUARANTEED.]2 ANY UNITED STATES PERSON (AS DEFINED IN THE INTERNAL REVENUE CODE OF THE UNITED STATES) WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNATIONAL REVENUE CODE.3 TOYOTA MOTOR CREDIT CORPORATION (Incorporated under the laws of the State of California, U.S.A.) PERMANENT GLOBAL NOTE Representing [Specified Currency and Principal Amount of Series] EURO MEDIUM-TERM NOTES DUE [Year of Maturity] Series No. [ ] The Notes represented by this Permanent Global Note have been listed on the Official List and admitted for trading by The London Stock Exchange plc (the "London Stock Exchange")4 Appendix B-2-1 This Note is a Permanent Global Note in respect of a duly authorized issue of [Specified Currency and Principal Amount of Series] Euro Medium-Term Notes Due [Year of Maturity] (the "Notes") of [Specified Currency and Specified Denomination] each of Toyota Motor Credit Corporation (the "Company"). References herein to the Conditions shall be to the Terms and Conditions of the Notes (the "Conditions") as set forth out in Appendix A to the Agency Agreement (as defined below) as modified and supplemented by the information set out in the Pricing Supplement (the "Pricing Supplement") (which is attached hereto) and, in the event of any conflict between the provisions of the Conditions and the information set out in the Pricing Supplement, the latter shall prevail. Words and expressions defined in the Conditions and the Pricing Supplement and not otherwise defined herein shall have the same meanings when used herein. This Permanent Global Note is issued subject to, and with the benefit of, the Conditions and the Third Amended and Restated Agency Agreement (the "Agency Agreement," which expression shall be construed as a reference to that agreement as the same may be amended or supplemented from time to time) dated as of October 4, 2000, between the Company and The Chase Manhattan Bank (the "Agent") and the other agents named therein; provided, however, that the reference to the Conditions shall mean the Conditions in effect on the date of issue of the Temporary Global Note that originally represented this Note and shall not be affected by any amendments to the Conditions which occur thereafter. This Permanent Global Note is to be held by a common depositary for Morgan Guaranty Trust Company of New York, Brussels Office, as operator of the Euroclear System ("Euroclear"), Clearstream Banking, societe anonyme ("Clearstream") and/or such other relevant clearing agency as is specified in the related Pricing Supplement on behalf of account holders which have the Notes represented by this Permanent Global Note credited to their respective securities accounts therewith from time to time. For value received, the Company, subject to and in accordance with the Conditions, promises to pay to the bearer hereof on [each Installment Date the relevant Installment Amount] the [Maturity Date], or on such earlier date as the Notes may become due and repayable in accordance with the Conditions, the amount payable under the Conditions on redemption of the Notes then represented by this Permanent Global Note and to pay interest (if any) on the principal amount of the Notes from time to time represented by this Permanent Global Note calculated and payable as provided in the Conditions together with any other sums payable under the Conditions, upon presentation and, at maturity, surrender of this Permanent Global Note at the principal office of the Agent in London, England, or at the offices of any of the other paying agents located outside of the United States (as defined below) (except as provided in the Conditions) from time to time appointed by the Company in respect of the Notes. Any monies paid by the Company to the Agent for the payment of or interest on any Notes and remaining unclaimed at the end of one year after such principal or interest shall have become due and payable (whether at maturity, upon call for redemption or otherwise) shall then be repaid to the Company and upon such repayment all liability of the Agent with respect thereto shall thereupon cease, without, limiting in any way any obligation the Company may have to pay the principal of or interest on this Note as the same shall become due. On any payment of an installment or Appendix B-2-2 interest being made details of such payment shall be entered by or on behalf of the Company in Schedule One hereto and the relevant space in Schedule One hereto recording any such payment shall be signed by or on behalf of the Company. On any redemption or purchase and cancellation of any of the Notes represented by this Permanent Global Note, details of such redemption or purchase and cancellation shall be entered by or on behalf of the Company in Schedule Two hereto and the relevant space in Schedule Two hereto recording any such redemption or purchase and cancellation shall be signed by or on behalf of the Company. Upon any such redemption or purchase and cancellation, the principal amount of this Permanent Global Note and the Notes represented by this Permanent Global Note shall be reduced by the principal amount so redeemed or purchased and canceled. The Notes represented by this Permanent Global Note were originally represented by a Temporary Global Note. Unless such Temporary Global Note was exchanged in whole on the issue hereof, such Temporary Global Note may be further exchanged, on the terms and conditions set out therein, for this Permanent Global Note. If any such exchange occurs following the issue hereof, the Company or its agent shall endorse Schedule Two hereto to reflect the increase in the aggregate principal amount of this Permanent Global Note due to each such exchange, whereupon the principal amount hereof shall be increased for all purposes by the amount so exchanged and endorsed. This Permanent Global Note may (under the circumstances set forth in the Conditions and the Pricing Supplement, be exchanged, in whole, but not in part, for security-printed Definitive Notes and (if applicable) Coupons, Receipts and Talons in or substantially in the forms set out in Appendices B- 3, B-4, B-5 and B-6, respectively, of the Agency Agreement (on the basis that all appropriate details have been included on the face of such Definitive Notes and (if applicable) Coupons, Receipts and Talons and the Pricing Supplement (or the relevant provisions of the Pricing Supplement) have been either endorsed on or attached to such Definitive Notes) in denominations of [Specified Currency and Specified Denomination] each. As specified in the Pricing Supplement, such exchange may also require written notice being given to the Agent by Euroclear, Clearstream or such other relevant clearing agency on behalf of the holders of the Notes and/or the payment of certain costs, each of which shall be specified in the Pricing Supplement. Such exchange, if any, will be made upon presentation of this Permanent Global Note by the bearer hereof on any day (other than a Saturday or a Sunday) on which banks are open for business in London at the principal office of the Agent in London, England; provided, however, the first notice given to the Agent by Euroclear, Clearstream and/or such other relevant clearing agency shall give rise to the issue of Definitive Notes for the total amount of Notes represented by this Global Note. The aggregate principal amount of Definitive Notes issued upon an exchange of this Permanent Global Note will be equal to the aggregate principal amount of this Permanent Global Note submitted by the bearer hereof for exchange (to the extent that such principal amount does not exceed the aggregate principal amount of this Permanent Global Note, as adjusted, as shown in Schedule Two hereto). On an exchange of the whole of this Permanent Global Note, this Permanent Global Note shall be surrendered to the Agent. Appendix B-2-3 Until the exchange of the whole of this Permanent Global Note as aforesaid, the bearer hereof shall in all respects be entitled to the same benefits as if it were the bearer of Definitive Notes, Coupons, Receipts and Talons in the form set out in Appendices B-3, B-4, B-5 and B-6, respectively, to the Agency Agreement. [The Company has complied with its obligations under the relevant rules (as defined in the Banking Act 1987 (Exempt Transactions) Regulations 1997 (the "Regulations") and under rules made under Section 142(6) of the Financial Services Act 1986 in respect of its debt securities listed on the Official List and admitted for trading by the London Stock Exchange. Since information was last provided in compliance with those obligations, the Company, having made all reasonable enquiries, has not become aware of any change in circumstances which could reasonably be regarded as significantly and adversely affecting its ability to meet its obligations in respect hereof as they fall due.]5 This Permanent Global Note is governed by, and shall be construed in accordance with, the laws of the State of New York, United States of America, applicable to agreements made and to be performed wholly within such jurisdiction. This Permanent Global Note shall not be valid unless authenticated by the Agent. This Permanent Global Note may be duly executed on behalf of the Company by manual or facsimile signature. 5 Delete in the case of all Notes other than Notes denominated in Sterling and Notes in respect of which the proceeds are accepted by the Company in the United Kingdom. Appendix B-2-4 IN WITNESS WHEREOF, the Company has caused this Permanent Global Note to be duly executed on its behalf. Dated: TOYOTA MOTOR CREDIT CORPORATION By: _______________________________ George E. Borst President and Chief Executive Officer FISCAL AGENT'S CERTIFICATE ATTEST: OF AUTHENTICATION This is one of the Permanent ___________________________________ Global Notes described Michael Deaderick in the within mentioned Secretary Agency Agreement By or on behalf of THE CHASE MANHATTAN BANK as Fiscal Agent By: ____________________________ (Authorized Signatory) Appendix B-2-5 SCHEDULE ONE PART I INTEREST PAYMENTS CONFIRMATION OF PAYMENT TOTAL AMOUNT BY OR ON INTEREST DATE OF OF INTEREST AMOUNT OF BEHALF OF PAYMENT DATE PAYMENT PAYABLE INTEREST PAID THE COMPANY First _______ ____________ _____________ ____________ Second _______ ____________ _____________ ____________ Appendix B-2-6 SCHEDULE ONE PART II INSTALLMENT PAYMENTS CONFIRMATION TOTAL AMOUNT OF OF AMOUNT OF PAYMENT BY INTEREST DATE OF INSTALLMENTS INSTALLMENTS OR ON BEHALF PAYMENT DATE PAYMENT PAYABLE PAID OF THE COMPANY First _______ ____________ ____________ ______________ Second _______ ____________ ____________ ______________ Appendix B-2-7 SCHEDULE TWO SCHEDULE OF EXCHANGES OF A TEMPORARY GLOBAL NOTE AND FOR DEFINITIVE NOTES OR REDEMPTIONS OR PURCHASES AND CANCELLATIONS The following increases of this Permanent Global Note, exchanges of this Permanent Global Note for Definitive Notes or redemptions or purchases and cancellations of this Permanent Global Note have been made: Increase in Principal Part of Amount of this principal Remaining Permanent amount of this amount payable Global Note Permanent under this Due to Global Note Permanent Exchanges of a exchanged for Global Note Date of Temporary Definitive following such Exchange, or Global Note Notes or exchange, or Notation made Redemption or for this redeemed or redemption or by or on Purchase and Permanent purchased and purchase and behalf of the Cancellation Global Note canceled Cancellation Company. ____________ ____________ _____________ _____________ ____________ ____________ ____________ _____________ _____________ ____________ Appendix B-2-8 APPENDIX B-3 DEFINITIVE NOTE OF TOYOTA MOTOR CREDIT CORPORATION [THE ISSUER IS NOT AN INSTITUTION AUTHORIZED UNDER THE BANKING ACT 1987 (EXEMPT TRANSACTIONS) REGULATIONS 1997 (THE "BANKING ACT OF 1987") AND THIS IS A [SHORTER TERM DEBT SECURITY/LONGER TERM DEBT SECURITY]1 ISSUED IN ACCORDANCE WITH REGULATIONS MADE UNDER SECTION 4 OF THE BANKING ACT 1987. REPAYMENT OF THE PRINCIPAL AND THE PAYMENT OF ANY INTEREST IN CONNECTION WITH THIS [SHORTER TERM DEBT SECURITY/LONGER TERM DEBT SECURITY][1] HAVE NOT BEEN GUARANTEED.][2] ANY UNITED STATES PERSON (AS DEFINED IN THE INTERNAL REVENUE CODE OF THE UNITED STATES) WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE. [3] TOYOTA MOTOR CREDIT CORPORATION (Incorporated under the laws of the State of California, U.S.A.) representing [Specified Currency and Principal Amount of Series] EURO MEDIUM-TERM NOTES DUE [Year of Maturity] Series No. [ ] The Notes represented by this Definitive Note have been listed on the Official List and admitted for trading by The London Stock Exchange plc (the "London Stock Exchange")[4] - ------------------------------ [1] Use the term "Shorter Term Debt Securities" in the case of Notes with a maturity of one year to two years and 364 days and use the term "Longer Term Debt Security" in the case of Notes with a maturity of three years or more. [2] Delete entire paragraph in the case of all Notes other than Notes denominated in Sterling and Notes of which the issue proceeds are accepted by the Company in the United Kingdom. [3] Use this legend in the case of Notes with a maturity of more than 183 days. In the case of Notes with a maturity of 183 days or less, the following legend should be used: By accepting this obligation, the holder represents and warrants that it is not a United States person (other than an exempt recipient described in Section 6049(b)(4) of the Internal Revenue Code and the regulations thereunder) and that it is not acting for or on behalf of a United States person (other than an exempt recipient described in Section 6049(b)(4) of the Internal Revenue Code and the regulations thereunder. [4] Delete in the case of all Notes other than Notes listed on the London Stock Exchange, or add reference to other Stock Exchange, if applicable. Appendix B-3-1 This Note is one of the series of notes of [Specified Currency and Principal Amount of Series] ("Notes") each of Toyota Motor Credit Corporation (the "Company"). References herein to the Conditions shall be to the Terms and Conditions of the Notes (the "Conditions") as set out in Appendix A to the Agency Agreement (as defined below) as modified and supplemented by the information set out in the Pricing Supplement (the "Pricing Supplement") (which is reproduced on the reverse hereof) and, in the event of any conflict between the provisions of the Conditions and the information set out in the Pricing Supplement, the latter shall prevail. Words and expressions defined in the Conditions and the Pricing Supplement and not otherwise defined herein shall have the same meanings when used herein. This Note is issued subject to, and with the benefit of, the Conditions and the Third Amended and Restated Agency Agreement (the "Agency Agreement." which expression shall be construed as a reference to that agreement as the same may be amended or supplemented from time to time) dated as of October 4, 2000, between the Company and The Chase Manhattan Bank (the "Agent") and the other agents named therein; provided, however, that references to the Conditions shall mean the Conditions in effect on the date of issue of the Temporary Global Note that originally represented this Note and shall not be affected by any amendments to the Conditions which occur thereafter. For value received, the Company, subject to and in accordance with the Conditions, promises to pay to the bearer hereof on [each Installment Date the relevant Installment Amount] the [Maturity Date], or on such earlier date as the Notes may become due and repayable in accordance with the Conditions, the amount payable on redemption of this Note and to pay interest (if any) on the principal amount of this Note calculated and payable as provided in the Conditions. Title to this Note and to any Coupon, Talon or Receipt appertaining hereto shall pass by delivery. The Company may treat the bearer hereof as the absolute owner of this Note for all purposes (whether or not this Note shall be overdue and notwithstanding any notation of ownership or writing hereof or notice of any previous loss or theft thereof). [The Company has complied with its obligations under the relevant rules (as defined in the Banking Act 1987 (Exempt Transactions) Regulations 1997 (the "Regulations") and under rules made under Section 142(6) of the Financial Services Act 1986 in respect of its debt securities listed on the Official List and admitted for trading by the London Stock Exchange. Since information was last provided in compliance with those obligations, the Company, having made all reasonable enquiries, has not become aware of any change in circumstances which could reasonably be regarded as significantly and adversely affecting its ability to meet its obligations in respect hereof as they fall due.][5] This Note is governed by, and shall be construed in accordance with, the laws of the State of New York, United States of America, applicable to agreements made and to be performed wholly within such jurisdiction. - ------------------------------ [5]Delete in the case of all Notes other than Notes denominated in Sterling and Notes in respect of which the issue proceeds are accepted by the Company in the United Kingdom. Appendix B-3-2 This Note may be duly executed on behalf of the Company by manual or facsimile signature. Appendix B-3-3 IN WITNESS WHEREOF, the Company has caused this Note to be duly executed on its behalf. Dated: TOYOTA MOTOR CREDIT CORPORATION By: George E. Borst President and Chief Executive Officer FISCAL AGENT'S CERTIFICATE ATTEST: AUTHENTICATION This is one of the Notes _________________ described in the within Michael Deaderick mentioned Agency Agreement Secretary By or on behalf of THE CHASE MANHATTAN BANK as Fiscal Agent By: (Authorized Signatory) [REVERSE OF NOTE - TERMS AND CONDITIONS OF THE NOTES] Appendix B-3-4 APPENDIX B-4 FORM OF COUPON PART A (Face of Coupon) TOYOTA MOTOR CREDIT CORPORATION (Incorporated under the laws of the State of California, U.S.A.) [Specified Currency and Principal Amount of Series] EURO MEDIUM-TERM NOTES DUE [Year of Maturity] Series No. [ ] Part A (Reverse of Coupon) For Fixed Rate Notes: This Coupon is payable to bearer, Coupon No. F Separately negotiable and subject to Coupon for [ ] The Terms and Conditions of the Note to due on [ ] Which it appertains [20 [ ]] [SEAL] ATTEST: TOYOTA MOTOR CREDIT CORPORATION By: __________________ By: __________________ Authorized Officer Authorized Officer ANY UNITED STATES PERSON (AS DEFINED IN THE INTERNAL REVENUE CODE OF THE UNITED STATES) WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.[1] - ------------------------------- [1]Use this legend in the case of Notes with a maturity of more than 183 days. In the case of Notes with a maturity of 183 days or less, the following legend should be used: By accepting this obligation, the holder represents and warrants that it is not a United States person (other than an exempt recipient described in Section 6049(b)(4) of the Internal Revenue Code and the regulations thereunder) and that it is not acting for or on behalf of a United States person (other than an exempt recipient described in Section 6049(b)(4) of the Internal Revenue Code and the regulations thereunder). Appendix B-4-1 APPENDIX B-4 FORM OF COUPON PART B (Face of Coupon) ANY UNITED STATES PERSON (AS DEFINED IN THE INTERNAL REVENUE CODE OF THE UNITED STATES) WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.[1] For Floating Rate, Dual Currency and Index Linked Notes: Coupon for the amount due in accordance Coupon No. F With the Terms and Conditions of the Coupon due in Said Notes. This Coupon is payable to [ ] Bearer, separately negotiable and [20[ ]] Subject to such Terms and Conditions of The Note to which it appertains, under Which it may become void before its due Date. [SEAL] ATTEST: TOYOTA MOTOR CREDIT CORPORATION By: By: Authorized Officer Authorized Officer [1]Use this legend in the case of Notes with a maturity of more than 183 days. In the case of Notes with a maturity of 183 days or less, the following legend should be used: By accepting this obligation, the holder represents and warrants that it is not a United States person (other than an exempt recipient described in Section 6049(b)(4) of the Internal Revenue Code and the regulations thereunder) and that it is not acting for or on behalf of a United States person (other than an exempt recipient described in Section 6049(b)(4) of the Internal Revenue Code and the regulations thereunder). Appendix B-4-2 (Reverse of Coupon) ISSUING AND PRINCIPAL PAYING AGENT AND AGENT BANK The Chase Manhattan Bank Trinity Tower 9 Thomas More Street London E1W 1YT PAYING AGENT Chase Manhattan Bank Luxembourg S.A. 5 Rue Plaetis L-2338 Luxembourg and/or such other or further Agent and other or further Paying Agents and/or specified offices as may from time to time be duly appointed by the Company and notice of which has been given to the Noteholders. Appendix B-4-3 APPENDIX B-5 FORM OF RECEIPT (On the front) ANY UNITED STATES PERSON (AS DEFINED IN THE INTERNAL REVENUE CODE OF THE UNITED STATES) WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.[5] TOYOTA MOTOR CREDIT CORPORATION (Incorporated under the laws of the State of California, U.S.A.) [Specified Currency and Principal Amount of Series] EURO MEDIUM-TERM NOTES DUE [Year of Maturity] Series No. [ ] Receipt for the sum of [ ] being the installment of principal payable in accordance with the Terms and Conditions endorsed on the Note to which this Receipt appertains (the "Conditions") on [ ]. This Receipt is issued subject to and in accordance with the Conditions which shall be binding upon the holder of this Receipt (whether or not it is for the time being attached to such Note) and is payable at the specified office of any of the Paying Agents set out on the reverse of the Note to which this Receipt appertains (and/or any other or further Paying Agents and/or specified offices as may from time to time be duly appointed and notified to the Noteholders). - ----------------------------- [5]Use this legend in the case of Notes with a maturity of more than 183 days. In the case of Notes with a maturity of 183 days or less, the following legend should be used: By accepting this obligation, the holder represents and warrants that it is not a United States person (other than an exempt recipient described in Section 6049(b)(4) of the Internal Revenue Code and the regulations thereunder) and that it is not acting for or on behalf of a United States person (other than an exempt recipient described in Section 6049(b)(4) of the Internal Revenue Code and the regulations thereunder). Appendix B-5-1 This Receipt must be presented for payment together with the Note to which it appertains. The Company shall have no obligation in respect of any Receipt presented without the Note to which it appertains or any unmatured Receipts. [SEAL] ATTEST: TOYOTA MOTOR CREDIT CORPORATION By: By: Authorized Officer Authorized Officer Appendix B-5-2 APPENDIX B-6 FORM OF TALON (On the front) ANY UNITED STATES PERSON (AS DEFINED IN THE INTERNAL REVENUE CODE OF THE UNITED STATES) WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES TAX LAWS INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE. TOYOTA MOTOR CREDIT CORPORATION (Incorporated under the laws of the State of California, U.S.A.) [Specified Currency and Principal Amount of Series] EURO MEDIUM-TERM NOTES DUE [Year of Maturity] Series No. [ ] On and after [ ] further Coupons [and a further Talon] appertaining to the Note to which this Talon appertains will be issued at the specified office of any of the Paying Agents set out on the reverse hereof (and/or any other or further Paying Agents and/or specified offices as may from time to time be duly appointed notified to the Noteholders) upon production and surrender of this Talon. This Talon may, in certain circumstances, become void under the Terms and Conditions endorsed on the Notes to which this Talon appertains. [SEAL] ATTEST: TOYOTA MOTOR CREDIT CORPORATION By: By: Authorized Officer Authorized Officer Appendix B-6-1 (Reverse of Talon) ISSUING AND PRINCIPAL PAYING AGENT The Chase Manhattan Bank Trinity Tower 9 Thomas More Street London E1W 1YT PAYING AGENT Chase Manhattan Bank Luxembourg S.A. 5 Rue Plaetis L-2338 Luxembourg and/or such other or further Agent and other or further Paying Agents and/or specified offices as may from time to time be duly appointed by the Company and notice of which has been given to the Noteholders. Appendix B-6-2 APPENDIX C FORM OF CALCULATION AGENCY AGREEMENT Dated ____________, 20__ TOYOTA MOTOR CREDIT CORPORATION U.S. $16,000,000,000 EURO MEDIUM-TERM NOTES CALCULATION AGENCY AGREEMENT Appendix C-1 TOYOTA MOTOR CREDIT CORPORATION U.S.$16,000,000,000 EURO MEDIUM-TERM NOTE CALCULATION AGENCY AGREEMENT THIS AGREEMENT is made on __________, 20__ BETWEEN: (1)TOYOTA MOTOR CREDIT CORPORATION of Torrance, California, U.S.A (the "Company"); and (2)[name of calculation agent] (the "Calculation Agent", which expression shall include its successor or successors for the time being as calculation agent hereunder). WHEREAS: A.The Company has entered into the Third Amended and Restated Program Agreement with Merrill Lynch International, BNP Paribas, Credit Suisse First Boston (Europe) Limited, Goldman Sachs International, J.P. Morgan Securities Ltd., Morgan Stanley & Co. International Limited, Nomura International plc, and UBS AG, acting through its business group UBS Warburg, dated October 4, 2000 (as amended, the "Program Agreement"), under which $16,000,000,000 (or its equivalent in other currencies) in aggregate principal amount of Notes ("Notes") may be outstanding. B.The Notes will be issued subject to and with the benefit of the Third Amended and Restated Agency Agreement, dated as October 4, 2000 (as amended, the "Agency Agreement") among the Company, The Chase Manhattan Bank (the "Agent," which expression shall include its successor or successors for the time being under the Agency Agreement) and Chase Manhattan Bank Luxembourg S.A. (the "Paying Agent," which expression shall include its successor or successors for the time being under the Agency Agreement). NOW IT IS HEREBY AGREED that: (1)Appointment of the Calculation Agent The Company hereby appoints [name of calculation agent] as Calculation Agent in respect of the Notes listed in the Schedule hereto which are for the time being outstanding (the "Relevant Notes") for the purposes set out in Clause 2 below, all upon terms and conditions hereinafter mentioned. (2)Duties of Calculation Agent (a)The Calculation Agent shall in relation to each series of Relevant Notes (each a "Series") perform all the functions and duties imposed on the Appendix C-2 Calculation Agent by the terms and conditions of the relevant Series (the "Conditions"). Without limiting the foregoing, the Calculation Agent shall calculate, to the extent applicable, the Rate of Interest, Interest Amount, Interest Payment Date, principal and all other amounts, rates and dates which are required to be determined or calculated under the Conditions for the Relevant Notes and shall communicate such calculations to the Company and the Agent as soon as practicable after such calculations are determined, but in any event, within time periods sufficient to enable the Agent to publish the results of such determinations in accordance with the terms of the Agency Agreement. (3)Expenses Except as provided in Clause 4 below, the Calculation Agent shall bear all expenses incurred by it in connection with its said services. (4)Indemnity (a)The Company shall indemnify and keep indemnified the Calculation Agent against any losses, liabilities, costs, claims, actions or demands (including but not limited to, all reasonable costs, legal fees, charges and expenses paid or incurred by the Calculation Agent in disputing or defending any of the foregoing) which the Calculation Agent may incur or which may be made against it (excluding consequential losses and losses of profit) as a result of or in connection with its appointment or the exercise of its powers and duties under this Agreement except such as may result from its own willful default, negligence or bad faith or that of its officers, directors or employees or any of them, or breach by it of the terms of this Agreement. (b)The Calculation Agent shall indemnify and keep indemnified the Company against any losses, liabilities, costs, claims, actions or demands (including, but not limited to, all reasonable costs, legal fees, charges and expenses paid or incurred by the Company in disputing or defending any of the foregoing) which the Company may incur or which may be made against it (excluding consequential losses and losses of profit) as a result of or in connection with the breach by the Calculation Agent of the terms of this Agreement or its willful default, negligence or bad faith or that of its officers, directors or employees or any of them. (5)Conditions of Appointment (a)In acting hereunder in connection with the Relevant Notes, the Calculation Agent shall not act as agent of the Company and shall not thereby assume any obligations towards or relationship of agency or trust for or with any of the owners or holders of the Relevant Notes or the coupons (if any) appertaining thereto (the "Coupons"). (b)In relation to each Series, the Calculation Agent shall be obliged to perform such duties and only such duties as are herein and in the Conditions Appendix C-3 specifically set forth and no implied duties or obligations shall be read into the Agreement or the Conditions against the Calculation Agent. (c)The Calculation Agent may consult with legal and other professional advisers and the opinion of such advisers shall be full and complete protection in respect of any action taken, omitted or suffered hereunder in good faith and in accordance with the opinion of such advisers. (d)The Calculation Agent shall be protected and shall incur no liability for or in respect of any action taken, omitted or suffered in reliance upon any instruction, request or order from the Company or the Agent, or any notice, resolution, direction, consent, certificate, affidavit, statement, cable, telex or other paper or document which it reasonably believes, after making reasonable investigation of the same, to be genuine and to have been delivered, signed or sent by the proper party or parties or upon written instructions from the Company. (e)The Calculation Agent, and any of its officers, directors and employees, may become the owner of, or acquire any interest in, any Notes or Coupons (if any) with the same rights that it or he or she would have if the Calculation Agent were not appointed hereunder, and may engage or be interested in any financial or other transaction with the Company and may act on, or as depositary, trustee or agent for, any committee or body of holders of Notes or Coupons (if any) or other obligations of the Company as freely as if the Calculation Agent were not appointed hereunder. (6)Termination of Appointment (a)The Company may terminate the appointment of the Calculation Agent at any time by giving to the Calculation Agent and the Agent at least 90 days prior written notice to that effect, provided that, so long as any of the Relevant Notes is outstanding, (i) such notice shall not expire less than 45 days before any date upon which any payment is due in respect of any Relevant Notes and (ii) notice shall be given in accordance with Condition 16 at least 30 days prior to any removal of the Calculation Agent. (b)Notwithstanding the provisions of Subclause 6(a) above, if at any time (i) the Calculation Agent becomes incapable of action, or is adjudged bankrupt or insolvent, or files a voluntary petition in bankruptcy or makes an assignment for the benefit of its creditors or consents to the appointment of an administrator, liquidator or administrative or other receiver of all or a substantial part of its property, or if an administrator, liquidator or administrative or other receiver of it or of all or a substantial part of its property is appointed, or it admits in writing its inability to pay or meet its debts as they may become due or suspends payment thereof or if any order of any court is entered approving any petition filed by or against it under the provisions of any applicable bankruptcy or insolvency law or if any public officer takes charge or control of the Calculation Agent or of its property or affairs for the purpose of rehabilitation, administration or Appendix C-4 liquidation or (ii) the Calculation Agent fails duly to perform any function or duty imposed on it by the Conditions and this Agreement, the Company may forthwith without notice terminate the appointment of the Calculation Agent, in which event notice thereof shall be given to the holders of the Relevant Notes in accordance with Condition 16 of the Relevant Notes as soon as practicable thereafter. (c)The termination of the appointment pursuant to Subclause 6(a) or 6(b) above of the Calculation Agent hereunder shall not entitle the Calculation Agent to any amount by way of compensation but will be without prejudice to any amount then accrued and due. (d)The Calculation Agent may resign its appointment hereunder at any time by giving to the Company and the Agent at least 90 days prior written notice to that effect. Following receipt of a notice of resignation from the Calculation Agent, the Company shall promptly give notice thereof to the holders of the Relevant Notes in accordance with Condition 16 of the Relevant Notes. (e)Notwithstanding the provisions of Subclauses 6(a), 6(b) and 6(d) above, so long as any of the Notes is outstanding, the termination of the appointment of the Calculation Agent (whether by the Company or by the resignation of the Calculation Agent) shall not be effective unless upon the expiry of the relevant notice a successor Calculation Agent has been appointed. (f)Any successor Calculation Agent appointed hereunder shall execute and deliver to its predecessor and the Company an instrument accepting appointment hereunder, and thereupon such successor Calculation Agent, without further act, deed or conveyance, shall become vested with all the authority, rights, powers, trusts, immunities, duties and obligations of such predecessor with like effect as if originally named as the Calculation Agent hereunder. (g)If the appointment of the Calculation Agent hereunder is terminated (whether by the Company or by the resignation of the Calculation Agent), the Calculation Agent shall on the date on which such termination takes effect deliver to the successor Calculation Agent all records concerning the Relevant Notes maintained by it (except such documents and records as it is obliged by law or regulation to retain or not to release), but shall have no other duties or responsibilities hereunder. (h)Any corporation into which the Calculation Agent for the time being may be merged or converted or any corporation with which the Calculation Agent may be consolidated or any corporation resulting from any merger, conversion or consolidation to which the Calculation Agent shall be a party shall, to the extent permitted by applicable law, be the successor Calculation Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto. Notice of any such merger, conversion or consolidation shall forthwith be given to the Company and the Agent. Appendix C-5 (i)Upon the termination of the appointment of the Calculation Agent, the Company shall make all reasonable efforts to appoint a further bank or investment bank as successor Calculation Agent. (7)Notices Any notice or communication given hereunder shall be sufficiently given or served: (a)if delivered in person to the relevant address specified below and, if so delivered, shall be deemed to have been delivered at time of receipt; or (b)if sent by facsimile or telex to the relevant number specified below, shall be deemed to have been delivered upon transmission provided such transmission is confirmed by the answerback of the recipient (in the case of telex) or when an acknowledgment of receipt is received (in the case of facsimile): The Company: TOYOTA MOTOR CREDIT CORPORATION 19001 South Western Avenue Torrance, California 90509 Telephone: (310) 468-4001 Telefax: (310) 468-6194 Attention: Vice President, Treasury The Calculation Agent: or to such other address and/or telex number of which notice in writing has been given to the parties hereto in accordance with the provisions of this Clause 7. (8)Descriptive Headings The descriptive headings in this Agreement are for convenience of reference only and shall not define or limit the provisions hereof. (9)Counterparts This Agreement may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute one instrument. (10)Governing Law This Agreement is governed by, and shall be construed in accordance with, the laws of the State of New York, United States of America, applicable to agreements made and to be performed wholly within such jurisdiction. Appendix C-6 IN WITNESS WHEREOF, this Agreement has been entered into as of the day and year first above written. TOYOTA MOTOR CREDIT CORPORATION By: George E. Borst President and Chief Executive Officer [NAME OF CALCULATION AGENT] By: Appendix C-7 SCHEDULE OF RELEVANT NOTES Annotation By Series Maturity Principal Calculation Number Issue Date Date Amount Agent ______ __________ ________ _________ ___________ ______ __________ ________ _________ ___________ Appendix C-8 APPENDIX D FORM OF OPERATING & ADMINISTRATIVE PROCEDURES MEMORANDUM [[[THIS WILL BE FINALIZED WHEN OFFERING CIRCULAR IS COMPLETED]]] Purchasers must confirm all trades directly with Toyota Motor Credit Corporation (the "Company") and the Agent. 1.RESPONSIBILITIES OF THE AGENT The Agent will be responsible for the following: (1)in the case of Notes which are to be listed on a stock exchange (the "relevant Stock Exchange"), distributing to the relevant Stock Exchange such number of copies of the Pricing Supplement as it may reasonably require; (2)where applicable, providing to the German Central Bank, at the end of each calendar month, information on the amount, interest rate and other terms of each issue of Deutsche Mark denominated Notes during the month, and such other information as the German Central Bank may require from time to time; (3)where applicable, providing the Ministry of Finance of Japan with all required notifications and reports (including any monthly reports as to amounts, issue dates and other terms of each Tranche of Yen-denominated Notes); and (4)where applicable, providing the Direction du Tresor with notification of the amount, interest rate and other terms of each issue of French Franc Notes and such other information as the Direction du Tresor may require from time to time. 2.RESPONSIBILITIES OF THE LISTING AGENT/LEAD MANAGER/DEALER (1)The Lead Manager/Dealer shall be responsible for preparing a Pricing Supplement (substantially in the form of Annex B hereto) to the Offering Circular giving details of the Notes to be issued and providing the Pricing Supplement and a letter in the form set out in Annex C attached hereto to the Agent and the Company; (2)In the case of Notes to be listed on a Stock Exchange, the Listing Agent or Lead Manager will be responsible for the following: (a)For Notes (including French Franc Notes) to be listed on the Paris Bourse, (i) obtaining the approval of the SBF to such listing, (ii) obtaining the approval of the COB to the Pricing Supplement relating to such Notes and (iii) publishing the notice legale relating to such Notes in the BALO; and Appendix D-1 (b)in the case of all other Notes to be listed on a Stock Exchange, ensuring compliance with the Listing Rules and obtaining all necessary approvals for listing the Notes on the relevant Stock Exchange. The Company recognizes with respect to this Clause 2(2)(b) its continuing obligation so long as any Notes under the Program are outstanding to apprise the applicable Dealers of any material adverse change in its consolidated financial position or its business operations. 3.RESPONSIBILITIES OF THE COMPANY (1)The Company shall execute and deliver the Pricing Supplement to the Agent and the Lead Manager/Dealer. 4.SETTLEMENT The settlement procedures set out in Annex A shall apply to each issue of Notes, unless otherwise agreed between the Company and the relevant Dealer or Dealers; with issues of Dual Currency or Index Linked Notes more time may be felt to be required to settle documentation which is not specifically included in the Agency Agreement. Trading Desk Information list is set out in Annex D. Appendix D-2 ANNEX A SETTLEMENT PROCEDURES**** DAY LATEST TIME ACTION No later 3:30 p.m. The Company or its designated agent may agree Than Issue to terms with one or more of the Purchasers Date minus 3 for the issue and purchase of Notes. Once agreement is reached, the Company or its designated agent telephones the Agent (to be confirmed by the telex or facsimile referred to below) to instruct it to prepare, complete, authenticate and issue a Temporary Global Note for each Series of Notes which are to be purchased by the relevant Purchaser(s), giving details of such Notes. 4:00 p.m. If a Purchaser has reached agreement with the Company by telephone, such Purchaser confirms the terms of the agreement by sending to the Company a Pricing Supplement (substantially in the form set out in Annex B) by telex or facsimile together with a letter in the form set forth in Annex C and copies the telex or facsimile to the Agent. 5:00 p.m. The Company or its designated agent confirms its instructions to the Agent (including, in the case of Floating Rate Notes, for the purposes of rate fixing) by executing the Pricing Supplement sent to the Company by the Purchaser and delivering such executed copy of the Pricing Supplement to the Agent and the Purchaser by telex or facsimile. The Agent telephones each of Euroclear, Clearstream or such other relevant clearing agency with a request for a common code and ISM number, if applicable, for each Series of Notes agreed to be issued, which Common Code and ISIN numbers, if applicable, are notified by the Agent by telephone to the Company or its designated agent and each Purchaser which has reached agreement with the Issuer. The Agent also notifies the relevant Stock Exchange by telex, facsimile or by hand of the details of the Notes to be issued by sending the Pricing Supplement to the relevant Stock Exchange. - ----------------------------- **** In the case of a syndicated bond issue, certain of the Settlement Procedures set forth below will be revised as appropriate. Appendix D-3 Issue Date 3:00 p.m. In the case of Floating Rate Notes or Index Minus 2 days Linked Interest Notes, the Agent notifies Euroclear, Clearstream or such other relevant clearing agency, the Company, the relevant Purchaser(s) and the relevant Stock Exchange by telex or facsimile of the interest rate for the first interest period (if already determined). Where the interest has not yet been determined, this will be notified in accordance with this paragraph as soon as it has been determined. The relevant Purchaser(s) instruct(s) Euroclear, Clearstream or such other relevant clearing agency to debit its account and pay the subscription price, against delivery of the Notes, to the Agent's account with Euroclear, Clearstream or such other relevant clearing agency on the Issue Date and copies the instructions to the Agent. Issue Date 3:00 p.m. The Agent prepares and authenticates a Minus 1 Temporary Global Note for each Series of Notes which are to be purchased by the relevant Purchaser(s) on the Issue Date. All Temporary Global Notes are then delivered by the Agent to a common depositary for Euroclear, Clearstream and/or such other relevant clearing agency specified in the related Pricing Supplement and instructions are given by the Agent to Euroclear, Clearstream or such other relevant clearing agency, as the case may be, to credit the Notes represented by such Temporary Global Notes to the Agent's distribution account. The Agent further instructs Euroclear, Clearstream or such other relevant clearing agency, as the case may be, to debit from the distribution account the principal amount of Notes of each Series which each Purchaser has agreed to purchase and to credit such principal amount to the account of such Purchaser with Euroclear, Clearstream or such other relevant clearing agency, against payment to the account of the Agent of the subscription price for the relevant Notes for value on the Issue Date. The Company, the Purchaser(s) and the Agent may agree to arrange for "free delivery" to be made through the relevant clearing system if specified in the relevant Pricing Supplement. Issue Date Euroclear, Clearstream or such other relevant clearing agency, as the case may be, debit and credit accounts in accordance with instructions received by them. Appendix D-4 The Agent pays to the Company the aggregate subscription moneys received by it to such account as the Company shall notify to the Agent. On or sub- The Agent notifies the Company of the issue Sequent to of Notes giving details of each Temporary The Issue Global Note and the principal sum represented Date thereby. Upon certification by the participating Dealer or Dealers to the Agent that the distribution with respect to a particular Tranche of Notes has been completed, the Agent shall determine and certify to Clearstream, Euroclear or such other relevant clearing agency the applicable Exchange Date. Explanatory Notes to Settlement Procedures (a)Each "Day" is a day on which banks and foreign exchange markets are open for general business in London (including dealings in foreign exchange and foreign currency deposits), counted in reverse order from the proposed Issue Date. (b)The "Issue Date" must be a Business Day. For the purposes of this Memorandum, "Business Day" means a day which is both: a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealings in foreign exchange and foreign currency deposits) in London; and (i) in relation to Notes denominated in a Specified Currency other than euro, a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealings in foreign exchange and foreign currency deposits) in the principal financial center of the country of the relevant Specified Currency (if other than London), or (ii) in relation to Notes denominated in euro, a day on which the TARGET system is open. Unless provided otherwise in the applicable Pricing Supplement, the principal financial center of any country shall be as provided in the ISDA Definitions (except in the case of New Zealand and Australia, where the principal financial center will be as specified in the Pricing Supplement). (c)Times given are the approximate times for the taking of the action in question and are references to London time. Such times can be modified upon the mutual agreement of the Purchaser, the Agent and the Company. (d)If at any time the Agent is notified by the Company or the relevant Stock Exchange that the listing of a Series of Notes has been refused or otherwise will not take place, the Agent shall immediately notify the Company, the Dealer and all the relevant Purchaser(s) (if not the Dealer). Appendix D-5 ANNEX B TO APPENDIX D FORM OF PRICING SUPPLEMENT (to be completed by the head Manager /Dealer and executed by the Company) PRICING SUPPLEMENT TOYOTA MOTOR CREDIT CORPORATION (Incorporated under the laws of the State of California) U.S. $16,000,000,000 Euro Medium-Term Note Program for the issue of Notes with maturities of 1 month or longer Series No. [aggregate nominal amount of issue] [title and due date of Notes] Issue price: [ ] per cent [Dealer name] The date of this Pricing Supplement is [ ] Appendix D-6 Toyota Motor Credit Corporation Issue of [Aggregate Nominal Amount of Tranche] [Title of Notes] under the U.S. $16,000,000,000 Euro Medium-Term Note Program [The Notes constitute [commercial paper/shorter term debt securities/longer term debt securities]* issued in accordance with regulations made under section 4 of the Banking Act 1987. The Issuer of the Notes is not an authorized institution or a European authorized institution (as such terms are defined in the Banking Act 1987 (Exempt Transactions) Regulations 1997). Repayment of the principal and payment of any interest or premium in connection with the Notes has not been guaranteed].** This document constitutes the Pricing Supplement relating to the issue of Notes described herein. Terms used herein shall be deemed to be defined as such for the purposes of the Terms and Conditions set forth in the Offering Circular dated October 4, 2000. This Pricing Supplement must be read in conjunction with such Offering Circular, including all documents incorporated by reference therein. [Include whichever of the following apply or specify as "Not Applicable" (N/A). Note that the numbering should remain as set out below, even if "Not Applicable" is indicated for individual paragraphs or sub-paragraphs. Italics denote directions for completing the Pricing Supplement.] [(i)] Series Number [ ] [(ii)] Tranche Number [Delete if not applicable] (If fungible with an existing Series, details of that Series, including the date on which the Notes become fungible) Specified Currency (or Currencies in the case of Dual Currency Notes): [ ] Aggregate Nominal Amount [i] Series: [ ] [ii]Tranche [Delete if not applicable] Issue Price of Tranche: [ ] per cent. - ---------------------------------------- *Include "commercial paper" if Notes must be redeemed before their first anniversary. Include "shorter term debt securities" if Notes may not be redeemed before their first anniversary but must be redeemed before their third anniversary. Include "longer term debt securities" if Notes may not be redeemed before their third anniversary. ** Unless otherwise permitted, text to be included for all Notes (including Notes denominated in Sterling) in respect of which the issue proceeds are accepted by TMCC in the United Kingdom. Appendix D-7 Specified Denominations: [ ] [(i)] Issue Date: [ ] [(ii)] Interest Commencement Date (if different from the Issue Date): [ ] Maturity Date: [ ] Interest Basis [Fixed Rate] [Floating Rate] [Zero Coupon] [Index Linked Interest] [specify other] (further particulars specified below) Redemption/Payment Basis: [Redemption at par] [Index Linked Redemption] [Dual Currency] [Partly Paid] [Installment] [specify other] Change of Interest Basis or [Specify details of any provision Redemption/Payment Basis: for change of Notes into another Interest Basis or Redemption/Payment Basis] Listing: [London/specify other/None] Method of distribution: [Syndicated/Non-syndicated] PROVISIONS RELATING TO INTEREST (IF ANY) PAYABLE Fixed Rate Note Provisions (and, to the extent applicable, Dual Currency [Applicable/Not Applicable] Notes, Index Linked Redemption Notes, (If not applicable, delete the Partly Paid Notes and Installment remaining sub-paragraphs of this Notes): paragraph) (i) Fixed Rate [(s)] of Interest: [ ] per cent. per annum [payable [annually/semi-annually/ quarterly] in arrear] (ii) Interest Payment Date(s): [ ] in each year (iii) Fixed Coupon Amount(s): [ ] per [ ] in nominal amount (iv) Broken Amount(s): [Insert particulars of any initial or final broken interest amounts which do not correspond with the Fixed Coupon Amount] (v) Fixed Day Count Fraction: [30/360 or Actual/Actual (ISMA) or Actual/Actual (ISDA) or specify other] Appendix D-8 (vi) Business Day Convention: [Following Business Day Convention/Modified Following Business Day Convention/specify other] (vii) Applicable Business Centers for purposes of "Business Day" Definition: [London/specify others] (viii)Other terms relating to the method of calculating interest for Fixed Rate Notes: [None/Give details] Floating Rate Note Provisions (and, to the extent applicable, Dual [Applicable/Not Applicable] Currency Notes, Index Linked Notes, (If not applicable, delete the Partly Paid Notes and Installment remaining sub-paragraphs of this Notes): paragraph) (i) Specified Period(s)/Specified Interest. Payment Dates: [ ] (ii) Business Day Convention: [Floating Rate Convention/Following Business Day Convention/Modified Following Business Day Convention/Preceding Business Day Convention/ [specify other]] (iii) Applicable Business Centers for purposes of "Business Day" Definition: [London/specify others] (iv) Manner in which the Rate of Interest and Interest Amount is to be [Screen Rate Determination/ISDA determined: Determination/[specify others]] (v) Calculation Agent responsible for calculating the Rate of Interest and Interest Amount (if not the Agent): [ ] (vi) Screen Rate Determination Reference Rate [ ] (Either LIBOR, EURIBOR or other, although additional information may be required if other - including any amendment to fallback provisions in the Conditions) Relevant Screen Page: [ ] (In the case of EURIBOR, if not Telerate 248 ensure it is a page which shows a composite rate) Appendix D-9 Applicable "Reference Banks" Definition (if different from that [Same as Condition In Condition 4(b)(iv)(E): 4(b)(iv)(E)/specify other] Applicable "Interest Determination Date" definition (if different from [Same as Condition that in Condition 4(b)(iv)(F)): 4(b)(iv)(F))/specify other] (vii) ISDA Determination Floating Rate Option: [ ] Designated Maturity: [ ] Reset Date: [ ] (viii)Margin(s): [+/-][ ] per cent. per annum (ix) Minimum Rate of Interest: [ ] per cent. per annum (x) Maximum Rate of Interest [ ] per cent. per annum (xi) Day Count Fraction: [Actual/365, Actual/Actual, Actual/365(Fixed), Actual/360, 30/360, 360/360, Bond Basis, 30E/360 or Eurobond Basis/specify other] (xii) Rounding provisions and any other terms relating to the method of calculating interest on Floating Rate Notes, if different from those set out in the Conditions: [ ] Zero Coupon Note Provisions: [Applicable/Not Applicable] (If not applicable, delete the remaining sub-paragraphs of this paragraph) (i) Accrual Yield: [ ] per cent. per annum (ii) Reference Price: [ ] (iii) Any other formula/basis of determining amount payable: [ ] (iv) Business Day Convention: [Following Business Day Convention/Modified Following Business Day Convention/specify other] (v) Applicable Business Centers for purposes of "Business Day" Definition: [London/specify others] Appendix D-10 (vi) Calculation Agent responsible for calculating the amount due (if not the Agent): [ ] Index Linked Interest Note [Applicable/Not Applicable] Provisions: (If not applicable, delete the remaining sub-paragraphs of this paragraph) (i) Index/Formula: [give or annex details] (ii) Calculation Agent responsible for calculating the principal and/or interest due (if not the Agent): [ ] (iii) Provisions for determining Coupon where calculation by reference to Index and/or Formula is impossible or impracticable: [ ] (iv) Specified Period(s)/Specified Interest Payment Dates: [ ] (v) Business Day Convention: [Floating Rate Convention/Following Business Day Convention/Modified Following Business Day Convention/Preceding Business Day Convention/specify other] (vi) Applicable Business Centers for purposes of "Business Day" definition: [London/specify other] (vii) Minimum Rate of Interest: [ ] per cent. per annum (viii) Maximum Rate of Interest: [ ] per cent. Per annum. (ix) Day Count Fraction: [ ] Index Linked Redemption Note [Applicable/Not Applicable] Provisions: (If not applicable, delete the remaining sub-paragraphs of this paragraph) (i) Index/Formula: [give or annex details] (ii) Calculation Agent responsible for calculating the principal and/or interest due (if not the Agent): [ ] (iii) Provisions for determining payments where calculation by reference to Index and/or Formula is impossible or impractical: [ ] Appendix D-11 Dual Currency Note Provisions: [Applicable/Not Applicable] (If not applicable, delete the remaining sub-paragraphs of this paragraph) (i) Rate of Exchange/method of calculating Rate of Exchange: [give details] (ii) Calculation Agent, if any, responsible for calculating the principal and/or interest payable (if not the Agent): [ ] (iii) Provisions applicable where calculation by reference to Rate(s) of Exchange impossible or impractical: [ ] (iv) Person at whose option Specified Currency(ies) is/are payable: [ ] PROVISIONS RELATING TO REDEMPTION TMCC's Optional Redemption: [Yes/No] (If not applicable, delete the remaining sub-paragraphs of this paragraph) (i) Optional Redemption Date(s): [ ] (ii) Optional Redemption Amount(s) and method, if any, of calculation of such amount(s): [ ] (iii) If redeemable in part: (a) Minimum Redemption Amount: [ ] (b) Higher Redemption Amount: [ ] (iv) The applicable period for notice to Noteholders (if different from that set out in Condition [Same as Condition 5(d)/specify 5(d)): other] (v) The applicable period for notice to the Agent (if different from that set out in Condition 5(d)): [Same as Condition 5(d)/specify other] Redemption at the option of the [Yes/No] Noteholders: (If not applicable, delete the remaining sub-paragraphs of this paragraph) (i) Optional Redemption Date(s): [ ] (ii) Optional Redemption Amount(s) and method, if any, of calculation of such amount(s): [ ] Appendix D-12 (iii) Other details: [ ] Final Redemption Amount: [Par/specify other/see Appendix] Early Redemption Amount(s) payable on redemption for taxation reasons or on event of default and/or the method of calculating the same (if required or if different from that set out in Condition 5(f)): [ ] GENERAL PROVISIONS APPLICABLE TO THE NOTES Form of Notes: [Temporary global Note exchangeable for a permanent global Note which is exchangeable for definitive Notes [only if (as described more fully in the Conditions) (a) there should be an Event of Default; (b) Euroclear, Clearstream, Luxembourg and any other relevant clearance system are all no longer willing or able to properly discharge their responsibilities and the Agent and TMCC are unable to locate a qualified successor; (c) upon the election of TMCC; or (d) upon 90 days written notice of any Noteholder, all as set forth more fully in the Conditions/specify other] [Temporary Global Note exchangeable for Definitive Notes on and after the Exchange Date.] Other special provisions relating to Payment Dates: [Not Applicable/give details] Talons for future Coupons to be attached to definitive Notes (and dates on which such Talons mature): [Yes/No. If yes, give details] Details relating to Partly Paid Notes: including, without limitation, amount of each payment comprising the Issue Price and date on which each payment is to be made and consequences (if any) of failure to pay, including any right of TMCC to forfeit the Notes and interest due on late payment: [Not Applicable/give details] Details relating to Installment Notes: [Applicable/Not Applicable] (If not applicable, delete the remaining subparagraphs of this Appendix D-13 paragraph) (i) Installment Amounts: [ ] (ii) Installment Dates: [ ] (iii) Other details: [ ] Whether the Notes will be subject to [Yes/No](If yes, specify redenomination or exchange into particular provision(s) euro: applicable in full) Whether Notes are convertible at option of TMCC/Holder into Notes of another Interest/Payment Basis, Date of Conversion or Option Exercise/Interest Payment Basis/other relevant terms: [ ] Further Issues and Consolidation: [TMCC may from time to time, without the consent of the holders of Notes, Receipts or Coupons of this Series, create and issue further Notes of this Series having the same terms and conditions as the Notes (or the same terms and conditions save for the first payment of interest thereon and the Issue Date thereof) so that the same shall be consolidated and form a single Series with the outstanding Notes and references in the Conditions to "Notes" shall be construed accordingly.] Cost, if any, to be borne by Noteholders in connection with exchanges for security printed definitive Notes: [ ] Other terms or special conditions: [Not Applicable/give details] DISTRIBUTION (i) If syndicated, names of Managers: [Not Applicable/give names] (ii) Stabilizing Manager (if any): [Not Applicable/give name] If non-syndicated, name of relevant Dealer: [ ] Additional selling restrictions: Selling restrictions, including those applicable to the United States and United Kingdom are set out in the Offering Circular and Appendix B to the Third Amended and Restated Program Agreement dated October 4, 2000, as amended [and Appendix D-14 the Syndicate Purchase Agreement dated [ ], among the Dealers and the Company]. OPERATIONAL INFORMATION Any clearing system(s) other than Euroclear and Clearstream, Luxembourg and the relevant [Not Applicable/give name(s) and identification numbers(s): number(s)] Delivery: Delivery [against/free of] payment Additional Paying Agent(s) (if any): [ ] Purchaser's account number with [Euroclear/Clearstream, Luxembourg] to which the Notes are to be credited: [ ] The text set out below is required only for Notes in respect of which the issue proceeds are accepted by TMCC in the United Kingdom and which are to be listed on the Official List and admitted for trading by the London Stock Exchange. The text set out below may be deleted if TMCC is relying on any of Regulation 13(4)(c) to (g) of the Banking Act 1987 (Exempt Transactions) Regulations 1997. TMCC confirms that: (a) as of the date hereof, it has complied with its obligations under the relevant rules (as defined in the Banking Act 1987 (Exempt Transactions) Regulations 1997) in relation to the admission to and continuing listing of the Program and of any previous issues made under it and listed on the same exchange as the Program; (b) it will have complied with its obligations under the relevant rules in relation to the admission to listing of the Notes by the time when the Notes are so admitted; and (c) as of the date hereof, it has not, since the last publication, if any, in compliance with the relevant rules of information about the Program, any previous issues made under it and listed on the same exchange as the Program, or the Notes, having made all reasonable enquires, become aware of any change in circumstances which could reasonably be regarded as significantly and adversely affecting its ability to meet its obligations as issuer in respect of the Notes as they fall due. ISIN: [ ] Common Code: [ ] Acceptance on behalf of TMCC of the terms of the Pricing Supplement as of the date above first written: TOYOTA MOTOR CREDIT CORPORATION By: The following information is to be included only in the version of the Pricing Supplement which is submitted to the UK Listing Authority and the London Stock Exchange in the case of Notes to be listed on the Official List and admitted for trading by the London Stock Exchange: Application is hereby made to list this issue of Notes pursuant to the listing of the U.S. $16,000,000,000 Euro Medium-Term Note Program of Toyota Motor Credit Corporation (as from [insert date of or prior to Settlement date for the issuance of the Notes]). THE CHASE MANHATTAN BANK (As Agent) By: cc: The Chase Manhattan Bank Appendix D-15 ANNEX C FORM LETTER FROM LEAD MANAGER/DEALER [Date] To:[Issuer] c.c.:[Agent] [ISSUER] [Title of relevant tranche of Notes (specifying type of Notes] issued pursuant to the U.S.$16,000,000,000 Euro Medium-Term Note Program of Toyota Motor Credit Corporation We hereby confirm the agreement for the issue to us of [describe issue] Notes due [ ] (the "Notes") under the above Program pursuant to the terms of issue set out in the Pricing Supplement which we are faxing herewith. [The selling commission in respect of the Notes will be [ ] per cent of the nominal amount of the Notes and will be deductible from the net proceeds of the issue.] The Notes are to be credited to [Euroclear/Clearstream] account number [ ] in the name of [Name of Dealer]. Please confirm your agreement to the terms of issue by signing and faxing to us a copy of the Pricing Supplement in the form attached hereto. For and on behalf of [Name of Dealers]. By: Authorized signatory Appendix D-16 ANNEX D TRADING DESK INFORMATION The Company TOYOTA MOTOR CREDIT CORPORATION 19001 South Western Avenue Torrance, California 90509 Telephone No: (310) 468-4001; Fax No: (310) 468-6194 Attention: Vice President, Treasury The Dealers MERRILL LYNCH BNP PARIBAS CREDIT SUISSE FIRST INTERNATIONAL 10 Harewood Avenue BOSTON Ropemaker Place London NW1 6AA (EUROPE) LIMITED 25 Ropemaker Street Telephone: 0207 595 One Cabot Square London EC2Y 9LY 2000 Canary Wharf Telephone: 0207 867 3995 Telefax: 0207 595 2555 London E14 4QJ TeleFax: 0207 867 4327 Attn: Euro Medium Term Telephone: 0207 888 4021 Attn: EMTN Trading Note Desk Telefax: 0207 888 3719 and Distribution Desk Attn: MTN Trading Desk GOLDMAN SACHS J.P. MORGAN SECURITIES MORGAN STANLEY & CO. INTERNATIONAL LTD INTERNATIONAL LIMITED Peterborough Court 60 Victoria Embankment 25 Cabot Square 133 Fleet Street London EC4Y 0JP Canary Wharf London EC4A 2BB Telephone: 0207 779 London E14 4QA Telephone: 0207 744 3469 Telephone: 0207 677 7799 1000 Telefax: 0207 325 8225 Telefax: 0207 677 7999 Telefax: 0207 774 Attn: Euro Medium Term Attn: Debt Capital 4123 Note Desk Markets-Head of Attn: Euro Medium Transaction Management Term Note Desk Group NOMURA INTERNATIONAL UBS AG, acting through PLC its business group UBS Nomura House Warburg 1 St. Martin's 1 Finsbury Avenue le-Grand London EC2M 2PP London EC1A 4NP Telephone: 0207 576 Telephone: 0207 236 2479 8056 Telefax: 0207 568 Telefax: 0207 521 3349 2616 Attn: MTNs and Attn: MTN Trading Private Placements Appendix D-17 APPENDIX E FORM OF THE NOTES Each Tranche of Notes will initially be represented by one or more temporary global Notes, without receipts, interest coupons or talons, which will be delivered to a common depositary for Euroclear and Clearstream. While any Note is represented by a temporary global Note, payments of principal and interest (if any) due prior to the Exchange Date (as defined below) will be made against presentation of the temporary global Note only to the extent that certification of non-U.S. beneficial ownership (in the form set out in the temporary global Note) has been received by Euroclear or Clearstream. Interests in the temporary global Note will be exchangeable for interests in a permanent global Note and/or for security printed definitive Notes (as specified under "Terms and Conditions of the Notes" and in the applicable Pricing Supplement) not earlier than the date (the "Exchange Date") which is 40 days after completion of the distribution of the relevant Tranche, provided that certification of non-U.S. beneficial ownership has been received. No interest or principal payments will be made on a temporary global Note after the Exchange Date. Payments of principal or interest (if any) in respect of a permanent global Note will be made through Euroclear and Clearstream against presentation or surrender, as the case may be, of the permanent global Note without any requirement for further certification. A permanent global Note will be exchangeable in whole, but not in part, for security printed definitive Notes with, where applicable, receipts, interest coupons and talons attached not earlier than the Exchange Date (i) at the option of TMCC; (ii) at the option of Noteholders, unless specified otherwise in the applicable Pricing Supplement and (iii) under certain other limited circumstances set forth under "Terms and Conditions of the Notes". If a portion of the Notes continue to be represented by the temporary global Note after the issuance of definitive Notes, the temporary global Note shall thereafter be exchangeable only for definitive Notes, subject to certification of non-U.S. beneficial ownership. Unless specified in the applicable Pricing Supplement, investors shall have the right to require the delivery of definitive Notes; provided, however, that such delivery may be conditioned on written notice, as specified in the applicable Pricing Supplement, from Euroclear or Clearstream (as the case may be) acting on instructions of the holders of interest in the temporary or permanent global Note and/or on the payment of costs in connection with the printing and distribution of the definitive Notes. No definitive Note delivered in exchange for a permanent or temporary global Note shall be mailed or otherwise delivered to any locations in the United States of America in connection with such exchange. Temporary and permanent global Notes and definitive Notes will be issued by The Chase Manhattan Bank, London Office, as issuing and (unless specified otherwise in the applicable Pricing Supplement) principal paying agent and, unless specified otherwise in the applicable Pricing Supplement, as calculation agent (the "Agent", which expression includes any successor agents or any other Calculation Agent specified in the applicable Pricing Supplement) pursuant to a Third Amended and Restated Agency Agreement dated as of October 4, 2000, as amended (the Appendix E-1 "Agency Agreement"), and made between TMCC, the Agent and the other paying agents named therein (together with the Agent, the "Paying Agents", which expression includes any additional or successor paying agents). If specified in the applicable Pricing Supplement, other clearance systems capable of complying with the certification requirements set forth in the temporary global Note may be used in addition to or in lieu of Euroclear and Clearstream, and any reference herein to Euroclear and/or Clearstream shall, whenever the context so permits, be deemed to include such other additional or alternative clearing system. The Pricing Supplement will contain such information (if any) as is necessary to comply with the Banking Act 1987 (Exempt Transactions) Regulations 1997. Temporary and permanent global Notes and definitive Notes will be issued in bearer form only. The following legend will appear on all global Notes, definitive Notes, receipts and interest coupons for Notes with a maturity of more than 183 days: "Any United States person (as defined in the Internal Revenue Code of the United States) who holds this obligation will be subject to limitations under the United States income tax laws, including the limitations provided in sections 165(j) and 1287(a) of the Internal Revenue Code." The following legend will appear on all global Notes, definitive Notes, receipts and interest coupons for Notes with maturities at issuance of 183 days or less: "By accepting this obligation, the holder represents and warrants that it is not a United States person (other than an exempt recipient described in Section 6049(b)(4) of the Internal Revenue Code and the regulations thereunder) and that it is not acting for or on behalf of a United States person (other than an exempt recipient described in Section 6049(b)(4) of the Internal Revenue Code and the regulations thereunder)." The sections referred to provide that United States holders, with certain exceptions, will not be entitled to deduct any loss on Notes, receipts or interest coupons and will not be entitled to capital gains treatment of any gain on any sale, disposition or payment of principal in respect of Notes, receipts or interest coupons. Applicable Pricing Supplement Set out below is the form of Pricing Supplement which will be completed for each Tranche of Notes issued under the Program. [See Annex B to Appendix D (Form of Operating & Administrative Procedures Memorandum) for the form of Pricing Supplement.] Appendix E-2 [1]Use the term "Shorter Term Debt Security" in the case of Notes with a maturity of one year to two years and 364 days and use the term "Longer Term Debt Security" in the case of Notes with a maturity of three years or more. [2]Delete entire paragraph in the case of all Notes other than Notes denominated in Sterling and Notes of which the issue proceeds are accepted by the Company in the United Kingdom. [3]Delete in the case of all Notes other than Notes listed on the London Stock Exchange, or add reference to other Stock Exchange, if applicable. Appendix B-1-1 [1] Use the term "Shorter Term Debt Security" in the case of Notes with a maturity of one year to two years and 364 days and use the term "Longer Term Debt Security" in the case of Notes with a maturity of three years or more. [2] Delete entire paragraph in the case of all Notes other than Notes denominated in Sterling and Notes in respect of which the issue proceeds are accepted by the Company in the United Kingdom. [3] Use this legend in the case of Notes with a maturity of more than 183 days. In the case of Notes with a maturity of 183 days or less, the following legend should be used: By accepting this obligation, the holder represents and warrants that it is not a United States person (other than an exempt recipient described in Section 6049(b)(4) of the Internal Revenue Code and the regulations thereunder) and that it is not acting for or on behalf of a United States person (other than an exempt recipient described in Section 6049(b)(4) of the Internal Revenue Code and the regulations thereunder). [4] Delete in the case of all Notes other than Notes listed on the London Stock Exchange, or add reference to other Stock Exchange, if applicable. Appendix D-1 LA1:901023 EX-10.1E 3 0003.txt Exhibit 10.1(e) AMENDMENT NO. 4 TO OPERATING AGREEMENT This Amendment No. 4 dated August 1, 2000 (the "Amendment") to the Operating Agreement dated January 16, 1984 as amended (the "Agreement") by and among Toyota Motor Sales, U.S.A., Inc. ("TMS USA"), a California corporation, Toyota Motor Credit Corporation ("TMCC"), a California corporation and Toyota Motor Manufacturing North America, Inc., a Kentucky corporation ("TMMNA"), is entered into with reference to the following facts: WHEREAS, TMS USA, TMMNA and TMCC desire to amend the Agreement to amend the provision governing amendments to the Agreement. NOW, THEREFORE, in consideration of the foregoing and the mutual promises herein contained, the parties hereto agree as follows: 1. Section 12 of the Agreement is hereby amended in its entirety as follows: "This Agreement may be modified, amended or terminated only by the written agreement of TMS, TMCC and TMMNA. Any modification, amendment or termination of this Agreement shall not require the consent of any holder of TMCC's commercial paper notes or extendible commercial notes as long as each statistical rating agency that upon the request of TMCC has issued a rating in respect of any then outstanding TMCC commercial paper notes and extendible commercial notes (a "Rating Agency"), has confirmed to TMCC that the debt ratings of all such outstanding TMCC commercial paper notes and extendible commercial notes will not be qualified, reduced or withdrawn as a result of such amendment, modification or termination." 2. Except as specifically set forth herein, all other provisions of the Agreement shall remain in full force and effect. 3. The provisions of this Amendment shall become effective only at such time as all commercial paper and extendible commercial notes issued prior to the date of this Amendment ceases to be outstanding. Until such time, the provisions of the Agreement, without taking into account the changes effected by this Amendment, shall continue in full force and effect. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered by their respective officers thereunto duly authorized as of the day and year first above written. TOYOTA MOTOR SALES, U.S.A., INC. By: /s/ Yoshimi Inaba ----------------- Name: Yoshimi Inaba Title: President & CEO TOYOTA MOTOR MANUFACTURING NORTH AMERICA, INC. By: /s/ Kazuo Nishida ----------------- Name: Kazuo Nishida Title: Vice President and Treasurer TOYOTA MOTOR CREDIT CORPORATION By: /s/ George E. Borst ------------------- Name: George E. Borst Title: Senior Vice President and General Manager EX-10.1F 4 0004.txt Exhibit 10.1(f) TERMINATION OF OPERATING AGREEMENT This TERMINATION is made effective as of the 1st day of October, 2000 by Toyota Motor Sales, U.S.A., Inc. ("TMS"), Toyota Motor Manufacturing North America, Inc. ("TMMNA") and Toyota Motor Credit Corporation ("TMCC"). RECITALS 1. TMS, TMMNA and TMCC are parties to an Operating Agreement dated January 16, 1984, as amended by an Amendment No. 1 dated May 14, 1996, an Amendment No. 2 dated December 1, 1997, an Amendment No. 3 dated June 1, 1999 and an Amendment No. 4 dated August 1, 2000 (the "Operating Agreement"), which Operating Agreement presently is in full force and effect. 2. TMS, TMMNA and TMCC now desire to terminate the Operating Agreement. TERMINATION NOW, THEREFORE, each of TMS, TMMNA and TMCC hereby terminate the Operating Agreement in its entirety effective as of October 1, 2000. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered by their respective officers thereunto duly authorized effective as of October 1, 2000. TOYOTA MOTOR SALES, U.S.A., INC. By: /s/ Yoshimi Inaba ----------------- Name: Yoshimi Inaba Title: President TOYOTA MOTOR MANUFACTURING NORTH AMERICA, INC. By: /s/ Teruyuki Minoura -------------------- Name: Teruyuki Minoura Title: President TOYOTA MOTOR CREDIT CORPORATION By: /s/ George E. Borst ------------------- Name: George E. Borst Title: Senior Vice President and General Manager EX-10.5G 5 0005.txt Exhibit 10.5(g) FOURTH AMENDED AND RESTATED THREE-YEAR CREDIT AGREEMENT FOURTH AMENDED AND RESTATED THREE-YEAR CREDIT AGREEMENT dated as of September 14, 2000 among TOYOTA MOTOR CREDIT CORPORATION (the "Borrower"), the BANKS listed on the signature pages hereof (the "Banks") and BANK OF AMERICA, N.A., as Agent (the "Agent"). W I T N E S S E T H WHEREAS, the parties hereto have heretofore entered into a Three-Year Credit Agreement dated as of September 29, 1994, as amended as of September 28, 1995, amended and restated as of September 24, 1996 and September 23, 1997, amended as of March 19, 1999 and amended and restated as of September 17, 1999 (collectively, the "Existing Agreement"); WHEREAS, no Loans are outstanding under the Existing Agreement on the date hereof; and WHEREAS, the parties hereto desire to amend the Existing Agreement as set forth herein and to restate the Existing Agreement in its entirety to read as set forth in the Existing Agreement with the amendments specified below; NOW, THEREFORE, the parties hereto agree as follows: SECTION 1. Definitions; References. Unless otherwise specifically defined herein, each term used herein which is defined in the Existing Agreement shall have the meaning assigned to such term in the Existing Agreement. Each reference to "hereof", "hereunder", "herein" and "hereby" and each other similar reference and each reference to "this Agreement" and each other similar reference contained in the Existing Agreement shall from and after the date hereof refer to the Existing Agreement as amended hereby. SECTION 2. Amendment of the Existing Agreement. (a) Each reference to "1996" in the definition of "Borrower's 1996 Form 10-K" and in Section 4.04(a) is changed to "1999". (b)Each reference to "1997" in the definition of "Borrower's Latest Form 10-Q" and in Sections 4.04(b) and (c) is changed to "2000". (c)Section 5.01(a) is amended to read in its entirety as follows: "(a)as soon as available and in any event within 120 days after the end of each fiscal year of the Borrower, a consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of such fiscal year and the related consolidated statements of income and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on in a manner acceptable to the Securities and Exchange Commission by independent public accountants of nationally recognized standing; provided, however, that for the Borrower's fiscal year ended March 31, 2001, in lieu of the financial statements described in the preceding clause, the Borrower shall deliver, as soon as available and in any event within 120 days after the end of such fiscal year, (i) an audited consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of such fiscal year and the related audited consolidated statements of income and cash flows for the six months ending at the end of such fiscal year (which financial statements shall be reported on in a manner acceptable to the Securities and Exchange Commission by independent public accountants of nationally recognized standing) and (ii) an unaudited consolidated balance sheet and unaudited consolidated statements of income and cash flows for the six month period ending March 31, 2000." (d)The following covenant is added as Section 5.08 of the Existing Agreement: "Section 5.08 Credit Support Agreement. On or before the date on which ownership of the Borrower's capital stock is transferred from Toyota Motor Sales, U.S.A., Inc. to Toyota Financial Services Americas Corporation, the Borrower agrees to enter into a Credit Support Agreement with Toyota Financial Services Corporation in the form previously provided to the Agent or in such other form as is acceptable to Moody's Investors Services, Inc. and Standard & Poors Ratings Services, a division of The McGraw-Hill Companies, Inc. (collectively, the "Rating Agencies") and which does not cause any Rating Agency to qualify, reduce or withdraw its then current rating of the Borrower's short or long-term debt." SECTION 3. Stock Transfer. The parties hereto acknowledge and agree that the transfer of all of the Borrower's capital stock by Toyota Motor Sales, U.S.A., Inc. to Toyota Motor North America, Inc., its sole shareholder and, thereafter, to Toyota Financial Services Americas Corporation, substantially as heretofore described to the Banks, does not constitute a material adverse change in the business, financial position, results of operations or prospects of the Borrower and its Consolidated Subsidiaries, considered as a whole, for purposes of Section 4.04(c) of the Existing Agreement and waive any violation, if any, of Sections 5.03 and 5.06 of the Existing Agreement that would otherwise be caused by such stock transfers. SECTION 4. Representations and Warranties. The Borrower hereby represents and warrants that as of the date hereof and after giving effect hereto: (a) no Default has occurred and is continuing; and (b) each representation and warranty of the Borrower set forth in the Existing Agreement, both before and after giving effect to this Fourth Amended and Restated Three-Year Credit Agreement, is true and correct as though made on and as of such date. SECTION 5. Governing Law. This Fourth Amended and Restated Three-Year Credit Agreement shall be governed by and construed in accordance with the laws of the State of New York. SECTION 6. Counterparts, Effectiveness. This Fourth Amended and Restated Three-Year Credit Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Fourth Amended and Restated Three-Year Credit Agreement shall become effective as of the date hereof when the Agent shall have received (i) duly executed counterparts hereof signed by the Borrower and the Banks (or, in the case of any party as to which an executed counterpart shall not have been received, the Agent shall have received telegraphic, telex or other written confirmation from such party of execution of a counterpart hereof by such party) and (ii) an opinion of the General Counsel of the Borrower (or such other counsel for the Borrower as may be acceptable to the Agent) substantially in the form of Exhibit E to the Existing Agreement with reference to this Fourth Amended and Restated Three-Year Credit Agreement and the Existing Agreement as amended and restated hereby. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. TOYOTA MOTOR CREDIT CORPORATION By:/s/ George E. Borst Name: George E. Borst Title: Senior Vice President and General Manager BANK OF AMERICA, N.A. By:/s/ Carolee Furukawa Name: Carolee Furukawa Title: Vice President MORGAN GUARANTY TRUST COMPANY OF NEW YORK By:/s/ Robert Bottamedi Name: Robert Bottamedi Title: Vice President THE BANK OF TOKYO-MITSUBISHI, LTD. LOS ANGELES BRANCH By:/s/ Masato Sekino Name: Masato Sekino Title: Deputy General Manager THE CHASE MANHATTAN BANK By:/s/ James W. Peterson Name: James W. Peterson Title: Vice President CITICORP USA, INC. By: /s/ Brian Ike Name: Brian Ike Title: Vice President CREDIT SUISSE FIRST BOSTON By:/s/ William S. Lutkins Name: William S. Lutkins Title: Vice President By: /s/ Robert N. Finney Name: Robert N. Finney Title: Managing Director ABN-AMRO BANK N.V. By: /s/ Ellen M. Coleman Name: Ellen M. Coleman Title: Group Vice President By: /s/ Mitsoo Iravani Name: Mitsoo Iravani Title: Assistant Vice President BNP PARIBAS By: /s/ Mitchell M. Ozawa Name: Mitchell M. Ozawa Title: Vice President By: /s/ James P. Culhane Name: James P. Culhane, CFA Title: Assistant Vice President BARCLAYS BANK PLC By: /s/ L. Peter Yetman Name: L. Peter Yetman Title: Director DEUTSCHE BANK AG, NEW YORK BRANCH and/or CAYMAN ISLAND BRANCH By: /s/ Andreas Rohde Name: Andreas Rohde Title: Director By: /s/ Christopher Howe Name: Christopher Howe Title: Director THE SAKURA BANK, LIMITED By: /s/ Tomoaki Nakamura Name: Tomoaki Nakamura Title: Vice President & Manager THE SANWA BANK, LIMITED, LOS ANGELES BRANCH By: /s/ Zenichi Muramoto Name: Zenichi Muramoto Title: Senior Vice President & Deputy General Manager THE TOKAI BANK, LIMITED By: /s/ Kazunori Nishimoto Name: Kazunori Nishimoto Title: General Manager UBS AG, STAMFORD BRANCH By: /s/ Gregory Raue Name: Gregory Raue Title: Director By: /s/ Wilfred V. Saint Name: Wilfred V. Saint Title: Associate Director Banking Products Services, US BANK OF AMERICA, N.A., as Agent By:/s/ David Price Name: David Price Title: Vice President EX-10.5I 6 0006.txt Exhibit 10.5(i) FIFTH AMENDED AND RESTATED 364-DAY CREDIT AGREEMENT FIFTH AMENDED AND RESTATED 364-DAY CREDIT AGREEMENT dated as of September 14, 2000 among TOYOTA MOTOR CREDIT CORPORATION (the "Borrower"), the BANKS listed on the signature pages hereof (the "Banks") and BANK OF AMERICA, N.A., as Administrative Agent (the "Administrative Agent"). W I T N E S S E T H WHEREAS, the parties hereto have heretofore entered into a Fourth Amended and Restated 364-Day Credit Agreement dated as of September 17, 1999 (the "Existing Agreement"); WHEREAS, no Loans are outstanding under the Existing Agreement on the date hereof; and WHEREAS, the parties hereto desire to amend the Existing Agreement as set forth herein and to restate the Existing Agreement in its entirety to read as set forth in the Existing Agreement with the amendments specified below; NOW, THEREFORE, the parties hereto agree as follows: SECTION 1. Definitions; References. Unless otherwise specifically defined herein, each term used herein which is defined in the Existing Agreement shall have the meaning assigned to such term in the Existing Agreement. Each reference to "hereof", "hereunder", "herein" and "hereby" and each other similar reference and each reference to "this Agreement" and each other similar reference contained in the Existing Agreement shall from and after the date hereof refer to the Existing Agreement as amended hereby. SECTION 2. Amendment of the Existing Agreement. (a) Each reference to "1998" in the definition of "Borrower's 1998 Form 10-K" and in Sections 4.4(a) and (c) is changed to "1999". (b)Each reference to "1999" in the definition of "Borrower's Latest Form 10-Q" and in Section 4.4(b) is changed to "2000". (c)The definition of "Commitment" is amended to read in its entirety as follows: "Commitment" means, with respect to each Bank, the amount set forth opposite the name of such Bank on Schedule I hereof, as such amount may be reduced from time to time pursuant to Section 2.9. (d)The definition of "New Banks" is deleted in its entirety. (e)The date "September 15, 2000" appearing in the definition of "Termination Date" is changed to "September 13, 2001". (f)The first sentence of Section 2.8 is amended by deleting the phrase "(including each New Bank from and after the date it becomes a Bank under this Agreement pursuant to Section 2.16)". (g)Section 2.16 is deleted in its entirety. (h)Section 5.1(a) is amended to read in its entirety as follows: "(a)as soon as available and in any event within 120 days after the end of each fiscal year of the Borrower, a consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of such fiscal year and the related consolidated statements of income and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on in a manner acceptable to the Securities and Exchange Commission by independent public accountants of nationally recognized standing; provided, however, that for the Borrower's fiscal year ended March 31, 2001, in lieu of the financial statements described in the preceding clause, the Borrower shall deliver, as soon as available and in any event within 120 days after the end of such fiscal year, (i) an audited consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of such fiscal year and the related audited consolidated statements of income and cash flows for the six months ending at the end of such fiscal year (which financial statements shall be reported on in a manner acceptable to the Securities and Exchange Commission by independent public accountants of nationally recognized standing) and (ii) an unaudited consolidated balance sheet and unaudited consolidated statements of income and cash flows for the six month period ending March 31, 2000." (i)The following covenant is added as Section 5.8 of the Existing Agreement: "Section 5.8 Credit Support Agreement. On or before the date on which ownership of the Borrower's capital stock is transferred from Toyota Motor Sales, U.S.A., Inc. to Toyota Financial Services Americas Corporation, the Borrower agrees to enter into a Credit Support Agreement with Toyota Financial Services Corporation in the form previously provided to the Administrative Agent or in such other form as is acceptable to Moody's Investors Services, Inc. and Standard & Poors Ratings Services, a division of The McGraw-Hill Companies, Inc. (collectively, the "Rating Agencies") and which does not cause any Rating Agency to qualify, reduce or withdraw its then current rating of the Borrower's short or long-term debt." (j)Section 8.4(d) is amended by deleting the phrase "(including each New Bank)". (k)The last sentence of Section 9.5 is deleted in its entirety. SECTION 3. Stock Transfer. The parties hereto acknowledge and agree that the transfer of all of the capital stock of the Borrower by Toyota Motor Sales, U.S.A., Inc. to Toyota Motor North America, Inc., its sole shareholder and, thereafter, to Toyota Financial Services Americas Corporation, substantially as heretofore described to the Banks, does not constitute a material adverse change in the business, financial position, results of operations or prospects of the Borrower and its Consolidated Subsidiaries, considered as a whole, for purposes of Section 4.4(c) of the Existing Agreement and waive any violation, if any, of Sections 5.3 and 5.6 of the Existing Agreement that would otherwise be caused by such stock transfers. SECTION 4. Representations and Warranties. The Borrower hereby represents and warrants that as of the date hereof and after giving effect hereto: (a) no Default has occurred and is continuing; and (b) each representation and warranty of the Borrower set forth in the Existing Agreement, both before and after giving effect to this Fifth Amended and Restated 364-Day Credit Agreement, is true and correct as though made on and as of such date. SECTION 5. Governing Law. This Fifth Amended and Restated 364-Day Credit Agreement shall be governed by and construed in accordance with the laws of the State of New York. SECTION 6. Counterparts, Effectiveness. This Fifth Amended and Restated 364-Day Credit Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Fifth Amended and Restated 364-Day Credit Agreement shall become effective as of the date hereof when the Administrative Agent shall have received (i) duly executed counterparts hereof signed by the Borrower and the Banks (or, in the case of any party as to which an executed counterpart shall not have been received, the Administrative Agent shall have received telegraphic, telex or other written confirmation from such party of execution of a counterpart hereof by such party), (ii) a duly executed Note for the account of each Bank dated on or before the date hereof complying with the provisions of Section 2.6 of the Existing Agreement and (iii) an opinion of the General Counsel of the Borrower (or such other counsel for the Borrower as may be acceptable to the Administrative Agent) substantially in the form of Exhibit E to the Existing Agreement with reference to this Fifth Amended and Restated 364-Day Credit Agreement and the Existing Agreement as amended and restated hereby. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. TOYOTA MOTOR CREDIT CORPORATION By: /s/ George E. Borst Name: George E. Borst Title: Senior Vice President and General Manager BANK OF AMERICA, N.A. By: /s/ Carolee Furukawa Name: Carolee Furukawa Title: Vice President THE CHASE MANHATTAN BANK By: /s/ James W. Peterson Name: James W. Peterson Title: Vice President THE BANK OF TOKYO-MITSUBISHI, LTD. By: /s/ Masato Sekino Name: Masato Sekino Title: Deputy General Manager CITICORP USA, INC. By: /s/ Brian Ike Name: Brian Ike Title: Vice President CREDIT SUISSE FIRST BOSTON By: /s/ Robert N. Finney Name: Robert N. Finney Title: Managing Director By: /s/ Bill O'Daly Name: Bill O'Daly Title: Vice President ABN-AMRO BANK N.V. By: /s/ Ellen M. Coleman Name: Ellen M. Coleman Title: Group Vice President By: /s/ Mitsoo Iravani Name: Mitsoo Iravani Title: Assistant Vice President BANK ONE, NA By: /s/ Keiji Nakanishi Name: Keiji Nakanishi Title: Vice President BARCLAYS BANK PLC By: /s/ L. Peter Yetman Name: L. Peter Yetman Title: Director BBL INTERNATIONAL (U.K.) LTD. By: /s/ M C Swinnen /s/ G. R. M. Walker Name: M C Swinnen G. R. M. Walker Title: Authorised Signatory Authorised Signatory BNP PARIBAS By: /s/ Mitchell M. Ozawa Name: Mitchell M. Ozawa Title: Vice President By: /s/ James P. Culhane Name: James P. Culhane, CFA Title: Assistant Vice President DEUTSCHE BANK AG, NEW YORK BRANCH and/or CAYMAN ISLAND BRANCH By: /s/ Andreas Rohde Name: Andreas Rohde Title: Director By: /s/ Christopher Howe Name: Christopher Howe Title: Director MELLON BANK, N.A. By: /s/ Andrew T. Kim Name: Andrew T. Kim Title: Banking Officer UBS AG, STAMFORD BRANCH By: /s/ Gregory Raue Name: Gregory Raue Title: Director By: /s/ Wilfred V. Saint Name: Wilfred V. Saint Title: Associate Director Banking Products Services, US THE BANK OF NEW YORK By: /s/ Jennifer S. Ellerman Name: Jennifer S. Ellerman Title: Vice President HSBC BANK USA By: /s/ John Rynne Name: John Rynne Title: Vice President THE INDUSTRIAL BANK OF JAPAN, LIMITED By: /s/ Yoshiaki Fujikawa Name: Yoshiaki Fujikawa Title: Vice President & Manager MERRILL LYNCH BANK USA By: /s/ Raymond J. Dardano Name: Raymond J. Dardano Title: Senior Credit Officer THE SAKURA BANK, LIMITED LOS ANGELES AGENCY By: /s/ Sumio Tanaka Name: Sumio Tanaka Title: Senior Vice President & Joint General Manager THE SANWA BANK, LIMITED By: /s/ Zenichi Muramoto Name: Zenichi Muramoto Title: Senior Vice President & Deputy General Manager THE TOKAI BANK, LIMITED By: /s/ Kazunori Nishimoto Name: Kazunori Nishimoto Title: General Manager U.S. BANK NATIONAL ASSOCIATION By: /s/ Aaron J. Gordon Name: Aaron J. Gordon Title: Vice President WELLS FARGO BANK, NATIONAL ASSOCIATION By: /s/ Catherine M. Wallace Name: Catherine M. Wallace Title: Vice President By: /s/ Eugene Fuentes Name: Eugene Fuentes Title: Vice President STATE STREET BANK AND TRUST COMPANY By: /s/ Jaynelle A. Landy Name: C. Jaynelle A. Landy Title: Loan Officer BANK OF AMERICA, N.A., as Administrative Agent By: /s/ David Price Name: David Price Title: Vice President SCHEDULE I COMMITMENTS NAME OF BANK COMMITMENT SHARE Bank of America, N.A. $ 200,000,000.00 10.00% The Chase Manhattan Bank $ 185,000,000.00 9.25% The Bank of Tokyo-Mitsubishi, Ltd. $ 185,000,000.00 9.25% Citicorp USA, Inc. $ 185,000,000.00 9.25% Credit Suisse First Boston $ 140,000,000.00 7.00% ABN AMRO Bank N.V. $ 85,000,000.00 4.25% Bank One, NA $ 85,000,000.00 4.25% Barclays Bank PLC $ 85,000,000.00 4.25% BBL International (U.K.) Ltd. $ 85,000,000.00 4.25% BNP Paribas $ 85,000,000.00 4.25% Deutsche Bank AG $ 85,000,000.00 4.25% Mellon Bank, N.A. $ 85,000,000.00 4.25% UBS AG $ 85,000,000.00 4.25% The Bank of New York $ 45,000,000.00 2.25% HSBC Bank USA $ 45,000,000.00 2.25% The Industrial Bank of Japan, Limited $ 45,000,000.00 2.25% Merrill Lynch Bank USA $ 45,000,000.00 2.25% The Sakura Bank, Limited $ 45,000,000.00 2.25% The Sanwa Bank, Limited $ 45,000,000.00 2.25% The Tokai Bank, Limited $ 45,000,000.00 2.25% U.S. Bank National Association $ 45,000,000.00 2.25% Wells Fargo Bank, National Association $ 40,000,000.00 2.00% State Street Bank and Trust Company $ 25,000,000.00 1.25% TOTAL $2,000,000,000.00 100.00%
EX-10.9 7 0007.txt Exhibit 10.9 CREDIT SUPPORT AGREEMENT This Credit Support Agreement (the "Agreement") is made as of July 14, 2000 by and between 1.TOYOTA MOTOR CORPORATION, a Japanese corporation having its principal office at 1, Toyota-cho, Toyota City, Aichi Prefecture, Japan (the "TMC"); AND 2.TOYOTA FINANCIAL SERVICES CORPORATION, a Japanese corporation having its principal office at 23-22, Izumi 1-chome, Higashi-ku, Nagoya City, Aichi Prefecture, Japan (the "TFS"). WHEREBY it is agreed as follows: 1.TMC will, directly or indirectly, own all of the outstanding shares of the capital stock of TFS and will not directly or indirectly pledge or in any way encumber or otherwise dispose of any such shares of stock so long as TFS has any outstanding bonds, debentures, notes and other investment securities and commercial paper (hereafter "Securities", which shall include, except for the purpose of clause 3, any securities issued by the subsidiaries or affiliates of TFS in respect of which TFS has guarantee or credit support obligations), unless required to dispose of any or all such shares of stock pursuant to a court decree or order of any governmental authority which, in the opinion of counsel to TMC, may not be successfully challenged. 2.TMC will cause TFS and TFS's subsidiaries, if any, to have a consolidated tangible net worth, as determined in accordance with generally accepted accounting principles in Japan and as shown on TFS's most recent audited annual consolidated balance sheet, of at least JPY 10,000,000 so long as Securities are outstanding. Tangible net worth means the aggregate amount of issued capital, capital surplus and retained earnings less any intangible assets. 3.If TFS at any time determines that it will run short of cash or other liquid assets to meet its payment obligations in respect of any Securities or obligation under any guarantee and credit support agreements then or subsequently to mature and that it shall have no unused commitments available under its credit facilities with lenders other than TMC, then TFS will promptly notify TMC of the shortfall and TMC will make available to TFS, before the due date in respect of such obligations, funds sufficient to enable it to pay such payment obligations in full as they fall due. TFS will use such funds made available to it by TMC solely for the payment of such payment obligations when they fall due. 4.This Agreement is not, and nothing herein contained and nothing done by TMC pursuant hereto shall be deemed to constitute a guarantee, direct or indirect, by TMC of any Securities. 5.This Agreement may be modified or amended only by the written agreement of TMC and TFS unless any holder of Securities has made a claim against TMC pursuant to clause 7, in which case any modification or amendment shall be subject to the consent of such a holder. No such modification or amendment shall have any adverse effect upon any holder of any Securities outstanding at the time of such modification or amendment. Either TMC or TFS will provide written notice to the other, with a copy to each statistical rating agency that, upon the request of TFS or TMC, has issued a rating in respect of TFS or any Securities (hereafter a "Rating Agency"), 30 days prior to such proposed modification or amendment. 6.Either TMC or TFS may terminate this Agreement upon 30 days written notice to the other, with a copy to each Rating Agency, subject to the limitation that termination will not take effect until or unless (i)all Securities issued on or prior to the date of such termination notice have been repaid or (ii)each Rating Agency has confirmed to TFS that the debt ratings of all such Securities will be unaffected by such termination. 7.This Agreement is executed for the benefit of the holders of Securities and such holders may rely on TMC's observance of the provisions of this Agreement. TMC and TFS hereby agree that the holders of Securities shall have the right to claim directly against TMC to perform any of its obligations under this Agreement. Such claim shall be made in writing with a declaration to the effect that such a holder will have recourse to the rights given under this Agreement. If TMC receives such a claim from any holder of Securities, TMC shall indemnify, without any further action or formality, such a holder against any loss or damage arising out of or as a result of the failure to perform any of its obligations under this Agreement. The holder of Securities who made the claim may enforce such indemnity directly against TMC. In relation to any Securities in respect of which a trustee has been appointed to act for the holders of such Securities, such trustee may make the above mentioned claim in favor of the holders of Securities directly against TMC and, where appropriate, it may enforce the indemnity against TMC in favor of such holders. Provided that, if the trustee, having become bound to proceed directly against TMC, fails to do so within a reasonable period thereafter to protect the interests of the holders of such Securities, and such failure shall be continuing, the holders of such Securities may take actions available under this clause. 8.This Agreement shall be governed by, and construed in accordance with, the laws of Japan. TMC and TFS hereby irrevocably submit to the jurisdiction of the Tokyo District Court over any action or proceeding arising out of this Agreement. IN WITNESS THEREOF, the parties hereto have caused this Agreement to be executed and delivered by their respective officers thereunto duly authorized as of the day and year first above written. TOYOTA MOTOR CORPORATION By:/s/ Fujio Cho ------------- Name: Fujio Cho Title: Representative Director TOYOTA FINANCIAL SERVICES CORPORATION By:/s/ Hideto Ozaki ---------------- Name: Hideto Ozaki Title: Representative Director EX-10.10 8 0008.txt Exhibit 10.10 CREDIT SUPPORT AGREEMENT This Credit Support Agreement (the"Agreement") is made as of October 1, 2000 by and between (1)TOYOTA FINANCIAL SERVICES CORPORATION, a Japanese corporation having its prinicpal office at 23-22, Izumi 1-chrome, Higashi-ku, Nagoya City, Aichi Prefecture, Japan ("TFS"); and (2)TOYOTA MOTOR CREDIT CORPORATION, a U.S. corporation having its principal office at 19001 South Western Avenue, Torrance, California 90509, U.S.A. ("TMCC"). WHEREBY it is agreed as follows: 1.TFS will, directly or indirectly, own all of the outstanding shares of capital stock of TMCC and will not directly or indirectly pledge or in any way encumber or otherwise dispose of any such shares of stock so long as TMCC has any outstanding bonds, debentures, notes and other investment securities and commercial paper (hereafter "Securities"), unless required to dispose of any or all such shares of stock pursuant to a court decree or order of any governmental authority which, in the opinion of counsel to TFS, may not be successfully challenged. 2.TFS will cause TMCC and TMCC's subsidiaries, if any, to have a consolidated tangible net worth, as determined in accordance with generally accepted accounting principles in the United States and as shown on TMCC's most recent audited annual consolidated balance sheet, of at least U.S.$100,000 so long as Securities are outstanding. Tangible net worth means the aggregate amount of issued capital, capital surplus and retained earnings less any intangible assets. 3.If TMCC at any time determines that it will run short of cash or other liquid assets to meet its payment obligations on any Securities then or subsequently to mature and that it shall have no unused commitments available under its credit facilities with lenders other than TFS, then TMCC will promptly notify TFS of the shortfall and TFS will make available to TMCC, before the due date of such Securities, funds sufficient to enable it to pay such payment obligations in full as they fall due. TMCC will use such funds made available to it by TFS solely for the payment of such payment obligations when they fall due. 4.This Agreement is not, and nothing herein contained and nothing done by TFS pursuant hereto shall be deemed to constitute a guarantee, direct or indirect, by TFS of any Securities. 5.This Agreement may be modified or amended only by the written agreement of TFS and TMCC unless any holder of Securities has made a claim against TFS pursuant to clause 7, in which case any modification or amendment shall be subject to the consent of such a holder. No such modification or amendment shall have any adverse effect upon any holder of any Securities outstanding at the time of such modification or amendment. Either TFS or TMCC will provide written notice to the other, with a copy to each statistical rating agency that, upon the request of TMCC or TFS, has issued a rating in respect of TMCC or any Securities (hereafter a "Rating Agency"), 30 days prior to such proposed modification or amendment. 6.Either TFS or TMCC may terminate this Agreement upon 30 days written notice to the other, with a copy to each Rating Agency, subject to the limitation that termination will not take effect until or unless (i) all Securities issued on or prior to the date of such termination notice have been repaid or (ii) each Rating Agency has confirmed to TMCC that the debt ratings of all such Securities will be unaffected by such termination. 7.This Agreement is executed for the benefit of the holders of Securities and such holders may rely on TFS's observance of the provisions of this Agreement. TFS and TMCC hereby agree that the holders of Securities shall have the right to claim directly against TFS to perform any of its obligations under this Agreement. Such claim shall be made in writing with a declaration to the effect that such a holder will have recourse to the rights given under this Agreement. If TFS receives such a claim from any holder of Securities, TFS shall indemnify, without any further action or formality, such a holder against any loss of damage arising out of or as a result of the failure to perform any of its obligations under this Agreement. The holder of Securities who made the claim may enforce such indemnity directly against TFS. In relation to any Securities in respect of which a trustee has been appointed to act for the holders of such Securities, such trustee may make the above mentioned claim in favor of the holders of Securities directly against TFS and, where appropriate, it may enforce the indemnity against TFS in favor of such holders. Provided that, if the trustee, having become bound to proceed directly against TFS, fails to do so within a reasonable period thereafter to protect the interests of the holders of such Securities, and such failure shall be continuing, the holders of such Securities may take actions available under this clause. 8.This Agreement shall be governed by, and construed in accordance with, the laws of Japan. TFS and TMCC hereby irrevocably submit to the jurisdiction of the Tokyo District Court over any action or proceeding arising out of this Agreement. IN WITNESS THEREOF, the parties hereto have caused this Agreement to be executed and delivered by their respective officers thereunto duly authorized as of the day and year first above written. TOYOTA FINANCIAL SERVICES CORPORATION By: /s/ Hideto Ozaki ---------------- Name: Hideto Ozaki Title: Representative Director TOYOTA MOTOR CREDIT CORPORATION By: /s/ George E. Borst ------------------- Name: George Borst Title: Representative Director EX-10.11 9 0009.txt Exhibit 10.11 REPURCHASE AGREEMENT This Repurchase Agreement is made between Toyota Motor Sales, USA, Inc. ("TMS") and Toyota Motor Credit Corporation ("TMCC"). WHEREAS, TMS is distributor of Toyota and Lexus motor vehicles; and WHEREAS, a condition of the TMS Dealer Agreement is that the Toyota and Lexus dealer (the "Dealer") have a floor plan line of credit for the purchase of new motor vehicles (the "Vehicles") from TMS; and WHEREAS, TMCC requires, prior to extending floor plan credit, that the distributor agree to repurchase any vehicles floor planned with TMCC where the dealer defaults on its line of credit with TMCC and TMCC exercises its remedies; and NOW THEREFORE, in consideration of the premises, TMS and TMCC agree as follows: 1.Upon a default by the Dealer of its obligations to TMCC under its floor plan line of credit with TMCC and after repossession of the vehicles by TMCC from the Dealer, TMS shall repurchase from TMCC any Vehicles originally purchased by Dealer from TMS that are the subject of such default, which Vehicles are in the possession of Dealer or TMCC. 2.If the Dealer has failed to cure or pay within the prescribed time, TMS will repurchase the Vehicles from TMCC within ten (10) days after receipt of written notice from TMCC. TMS shall take possession of the Vehicles at the Dealer's location or such other location as TMCC may reasonably select. 3.TMS's obligation to repurchase the Vehicles is limited to new and unused current and immediately preceding model year Vehicles, including Dealer trades, which Vehicles have not been titled or registered or reported as retail sale or lease. In the event TMCC is required to take legal action to recover possession of the Vehicles, TMS's obligations hereunder shall commence upon TMCC's recovery of the Vehicles. 4.TMS will repurchase such Vehicles at the aggregate cost that TMCC financed. 5.Upon TMS repurchasing Vehicles pursuant to this Agreement, TMCC agrees to subrogate its rights against the Dealer to those rights of TMS against Dealer for all amounts paid by TMS to TMCC with the exception of (i) any rights of TMCC against Dealer for attorneys' fees and costs by reason of Dealer's default, (ii) any right of TMCC against Dealer for any taxes, assessments, and governmental charges upon TMCC by reason of the execution, delivery and performance of this Agreement, and (iii) any right of TMCC against the Dealer arising from any other financial relationship. 6.TMCC will assign to TMS all instruments evidencing Dealer's indebtedness to TMCC covering such Vehicles. TMCC agrees to promptly execute and deliver to TMS such assignments and other documents as TMS may reasonably request. 7.This Agreement may be terminated at any time by either party giving ninety (90) days written notice to the other; provided, that such termination will not in any way affect the obligations of TMS or TMCC as to any transaction occurring prior to the effective date of termination. 8.Any notice required or permitted to be given must be in writing and personally served or sent by such means that there is a written receipt that the notice has been received by the other party. If to Toyota: Toyota Motor Sales, USA, Inc. 19001 South Western Avenue P.O. Box 2991 Torrance, CA 90509-2991 Attention: Donald Esmond Senior Vice President & General Manager - Toyota Division If to Lexus: Toyota Motor Sales, USA, Inc. Lexus Division 19001 South Western Avenue P.O. Box 2991 Torrance, CA 90509-2991 Attention: Dennis Clements Group Vice President and General Manager - Lexus Division If to TMCC: Toyota Motor Credit Corporation 19001 South Western Avenue P.O. Box 2958 Torrance, California 90509-2958 Attention: Mike Deaderick Senior Vice President 1.Should suit be commenced to enforce any provision of this Agreement or in respect of a dispute which has arisen between the parties to this Agreement, the prevailing party will be entitled to recover reasonable attorneys' fees and costs. 2.This Agreement will be interpreted and construed in accordance with and governed by the laws of the State of California. 3.Nothing contained herein shall obligate TMCC to finance any particular transaction, or require TMS to accept any Dealer order for Vehicles which has been approved by TMCC IN WITNESS WHEREOF, the parties have executed this Agreement effective October 1, 2000. TOYOTA MOTOR CREDIT CORPORATION TOYOTA MOTOR SALES USA, INC. ("TMCC") ("TMS") By:/s/ George E. Borst By:/s/ Yoshimi Inaba ------------------- ----------------- President President EX-10.12 10 0010.txt EXHIBIT 10.12 SHARED SERVICES AGREEMENT This Shared Services Agreement ("Agreement"), dated as of October 1, 2000, is between Toyota Motor Credit Corporation, a California corporation with its direct and indirect subsidiaries including specifically Toyota Motor Insurance Services (collectively referred to herein as "TMCC"), and Toyota Motor Sales, U.S.A., Inc., a California corporation, with its direct and indirect subsidiaries (collectively referred to herein as "TMS"). WHEREAS, prior to October 1, 2000, TMCC was a wholly-owned subsidiary of TMS; TMS provided certain services to TMCC, and TMCC provided certain services to TMS; WHEREAS, on October 1, 2000, ownership of TMCC is being transferred from TMS to Toyota Financial Services Americas Corporation; and WHEREAS, each party hereto desires to continue to use certain services of the other in exchange for arms-length compensation as more particularly described herein. NOW, THEREFORE, based upon the foregoing and in consideration of the mutual covenants and conditions contained in this Agreement, TMS and TMCC hereby agree as follows: 1.Effective Date of Agreement. This Agreement shall commence effective as of October 1, 2000 and continue thereafter until this Agreement is terminated pursuant to the terms of this Agreement. 2.Shared Services. (a)By TMS. If TMCC chooses to procure any of the facilities, equipment or services set forth on Attachment A hereto from any TMS entity, TMS agrees to perform such services and provide such facilities and equipment (the "TMS Services") to TMCC either directly or through an affiliate or third party vendor ("TMS Service Vendor") at fair, arm's length prices for such TMS Services as mutually agreed to by the parties. TMS agrees that the TMS Services to be performed by it will be performed in accordance with its normal procedures (as they may be amended from time to time) and using the same level of service and care that it follows in performing services for its own account. (b)By TMCC. If TMS chooses to procure any of the facilities, equipment or services set forth on Attachment B hereto from any TMCC entity, TMCC agrees to perform such services and provide such facilities and equipment (the "TMCC Services") to TMS either directly or through an affiliate or third party vendor ("TMCC Service Vendor") , at fair, arm's length prices for such TMCC Services as mutually agreed to by the parties. TMCC agrees that the TMCC Services to be performed by it will be performed in accordance with its normal procedures (as they may be amended from time to time) and using the same level of service and care that it follows in performing services for its own account. (c)Shared Services. The TMS Services and the TMCC Services are referred to as the "Shared Services". (d)Changes in Scope. The parties may at any time by mutual written agreement modify and amend the Shared Services to be provided hereunder. If any such change requires an increase or decrease in the cost of or in the time required for the performance of any Shared Service, or otherwise affects any other provision of this Agreement, the parties shall agree to an equitable adjustment to the compensation (consistent with arm's length pricing), terms of performance and such other provisions of this Agreement as may be affected, and this Agreement shall be changed or modified in writing accordingly. 3.Compensation for Shared Services. (a)Compensation to TMS. TMS shall be entitled to compensation (the "TMS Compensation") calculated on a fair, arm's length pricing basis for each particular TMS Service procured by TMCC hereunder, as mutually agreed to by the parties, as consideration for the TMS Services hereunder. (b)Compensation to TMCC. TMCC shall be entitled to compensation (the "TMCC Compensation") calculated on a fair, arm's length pricing basis for each particular TMCC Service procured by TMS hereunder, as mutually agreed to by the parties, as consideration for the TMCC Services hereunder. (c)Review of Prices and Services. TMS and TMCC periodically will review and evaluate the pricing and the fee methodology for each Shared Service, at least once a year, to ensure that said pricing and fee methodology fairly reflect arm's length pricing. In addition, at least once a year, TMS and TMCC will review the types of Shared Services provided and the service levels for such Shared Services. (d)Payment of Compensation. Payment of the TMS Compensation to TMS and of the TMCC Compensation to TMCC shall be made quarterly in United States dollars, and shall be due and owing to the party performing such Shared Services after the other party's receipt of the charges owed. (e)Proposed Change In Shared Service. In the event that the party providing a Shared Service ("Provider") intends to implement a change in a Shared Service (including any changes involving a TMS or TMCC Service Vendor or the services provider by such Service Vendor) which would have a material impact on the Shared Service being provided or the compensation payable by the other party, then the Provider shall give the other party hereto adequate notice (of at least 120 days) prior to implementation of such change, full and complete information about the change, and an opportunity to provide input and make an evaluation of such change. If the party receiving the Shared Service does not agree to the change, it may elect to cease procuring that Shared Service from the Provider. However, the Provider shall continue to provide the Shared Service (at the same service levels and for the same compensation) for a period of six months, or such other period as is mutually agreeable to the parties. (f)Records. Each party will maintain a record of the particular Shared Services rendered by it under this Agreement. Each party will keep these records throughout the term of this Agreement, which records shall be available for inspection by the other party on reasonable request. At the termination of this Agreement, all the records maintained hereunder by the party providing the Shared Services shall be given to the other party procuring such Shared Services. The Provider may retain copies of such records. 4.Direct Billing by Service Vendors. TMS will use its best efforts to arrange for direct billing to TMCC of fees and costs charged by TMS Service Vendors ("TMS Vendor Fees") performing services for TMCC. Where such direct billing is not possible, TMCC shall reimburse TMS for TMCC's allocated pro-rata share of the TMS Vendor Fees charged for performance of services for TMCC by a TMS Service Vendor. Such reimbursement shall be made by TMCC to TMS after TMCC's receipt of such allocation, accompanied by any supporting documentation. TMCC will use its best efforts to arrange for direct billing to TMS of fees and costs charged by TMCC Service Vendors ("TMCC Vendor Fees") performing services for TMS. Where such direct billing is not possible, TMS shall reimburse TMCC for TMS' allocated pro-rata share of the TMCC Vendor Fees charged for performance of services for TMS by a TMCC Service Vendor. Such reimbursement shall be made by TMS to TMCC after TMS' receipt of such allocation, accompanied by any supporting documentation. 5.Employees; Standard of Performance. Each party shall furnish, supervise, and control its personnel as is necessary to perform its respective Shared Services under this Agreement. Each party will pay all salaries and expenses of, and all federal, social security, unemployment (federal and state) taxes, and any other payroll or withholding taxes applicable to personnel assigned by the party to perform any Shared Services, and shall comply with all laws or regulations relating to employment of such personnel in connection with the Shared Services. Each party agrees that the Shared Services to be performed by it will be performed in accordance with its normal procedures (as they may be amended from time to time) and using the same level of service and care that it follows in performing services for its own account. Each party agrees that the Shared Services to be performed by it will be performed by qualified employees and in a competent manner. 6.Independent Contractor. Each party will be considered, for all purposes, an independent contractor of the other party, and neither party will, directly or indirectly, act as an agent, servant, or employee of the other party, or make any commitments or incur any liabilities on behalf of the other party without such other party's prior written consent except for those relating to Shared Services to be provided in accordance with this Agreement. 7.Termination. (a)Either party may terminate this Agreement in its entirety by giving the other party six months prior written notice. In addition, either party may terminate its obligation to provide or receive a particular Shared Service by giving the other party six months prior written notice. (b)In the event of default hereunder by either party, the nondefaulting party may give notice of the default to the defaulting party. If the defaulting party does not cure within thirty (30) days of the written notice, the nondefaulting party may terminate this Agreement by giving written notice of termination upon the expiration of thirty (30) days thereafter. (c)In the event of any termination of this Agreement, each party shall bill the other for all compensation owed for Shared Services performed prior to the termination of the Agreement, and each party shall pay such compensation after receipt of the charges. 8.Confidential Information. Except as required by law, each party agrees not to use or disclose (nor allow any third party (other than a TMS or TMCC Service Vendor) to use or disclose) to anyone other than its employees and designated authorized representatives and the employees and designated authorized representatives of a TMS or TMCC Service Vendor during the term of this Agreement and thereafter any Confidential Information of the other party. For purposes of this Agreement, "Confidential Information" is (a) non-public information of a party contained in any materials delivered to the other party pursuant to this Agreement, including, without limitation, all information transmitted in writing, orally, visually (i.e., video terminal display), electronically or through other means, and (b) non-public information that relates to the business, technologies, know-how, other intellectual property and financial affairs of a party or to that of any customers or affiliates of such party. "Confidential Information" shall not include information that: (a) is or becomes known to the public through no fault of the party charged with keeping such information confidential; (b) becomes known to a party by disclosure from a third party who has a lawful right to disclose the information; or (c) is authorized to be disclosed by the prior written consent of the other party. All Confidential Information of a party shall remain the property of such party. On termination of this Agreement, each party either shall deliver to the other party all Confidential Information of such other party and any other material obtained during the course of performance of the Services hereunder in which the other party has exclusive and proprietary rights, or certify the destruction thereof to the other party, or retain such Confidential Information in full compliance with the confidentiality requirements of this Agreement. 9.Insurance; Risk of Loss. During the term of this Agreement, each party at its own expense will obtain appropriate insurance coverage customarily carried by a company in its line of business and in its location Said insurance shall include: (a) commercial general liability insurance with minimum coverage of Ten Million Dollars ($10,000,000) combined single limit per occurrence for bodily injury and/or property damage; and (b) employer's liability insurance in a minimum amount of One Million Dollars ($1,000,000), and worker's compensation insurance in an amount satisfying applicable laws. Each party shall provide the other with proof of the insurance coverages required hereunder in the form of one or more Certificates of Insurance, upon request. All insurance coverages required hereunder shall be procured from insurers with an A.M. Best's performance rating of at least A- and with a financial size category of at least Class VII. TMCC, at its option, may choose to obtain its insurance coverage by participating in insurance programs obtained by TMS, in which case TMCC shall pay its fair share allocation as determined by the parties on a fair, arms length basis. 10.Indemnification. Each party does hereby agree to defend, indemnify, and hold harmless the other party (and its directors, officers, employees, agents, and contractors) from any and all claims and liabilities of any type whatsoever arising out of any negligent act or omission by such party in performing the Shared Services, its officers, employees, agents, or contractors (including with respect to TMS, any TMS Service Vendors and, with respect to TMCC, any TMCC Service Vendors) that may now or hereafter arise out of or result from or be related to the provision of the Shared Services pursuant to this Agreement. 11.Communications. Any and all notices among the parties hereto or in connection herewith shall be in writing, addressed to the party at the notice address set forth below each name on the signature page hereof or such other address as shall be given by either party to the other in writing. All such communications and notices shall be effective, if mailed, five (5) business days after being deposited in the mails with first class postage prepaid, or if given by fax, when sent to the fax number set forth below the names on the signature page hereof or if delivered by electronic mail, by actual delivery to the electronic mail address of the appropriate recipient under this Agreement or if personally delivered, upon such actual delivery to the appropriate recipient under this Agreement. 12.Dispute Resolution. (a)Escalation. (i)Except for claims for provisional equitable relief, if any party shall have any dispute with respect to the terms and conditions of this Agreement, or any subject matter referred to in or governed by this Agreement, that party shall provide written notification to the other party in the form of a claim identifying the issue and including a detailed reason for the claim. The receiving party shall respond in writing to the claim within thirty (30) days from the date of receipt of the claim document. The party filing the claim shall have an additional ten (10) days after the receipt of the response to either accept the resolution offered by the other party or request that the claim be escalated. (ii) If the above negotiation procedures do not lead to resolution of the claim, then either party by written notice to the other may elevate the dispute or claim for resolution to the next level of management ("Senior Manager") responsible for the project of each Party ("Second Level Escalation). Immediately upon issuance of a Second Level Escalation notice by a party, the Senior Managers of each Party shall negotiate in good faith and undertake to resolve such dispute or claim within thirty (30) days of the issuance of the Second Level Escalation notice. (iii) If the immediately preceding negotiation procedures do not lead to resolution of the claim, then either party by written notice to the other may elevate the dispute or claim again for resolution to the Executive Vice President (or similar title) of TMS and the Senior Vice President/General Manager (or similar title) of TMCC for resolution. Upon receipt by the other party of such written notice, the Executive Vice President of TMS and to the Senior Vice President/General Manager of TMCC shall negotiate in good faith and undertake to resolve such dispute or claim within thirty (30) days of the issuance of the notice of such escalation. The location, format, frequency, duration and conclusion of these elevated discussions shall be left to the discretion of the representatives involved. If the negotiations conducted pursuant to this subsection (a) do not lead to resolution of the underlying dispute or claim, then either party may seek alternate dispute resolution pursuant to subsection (b) below. The adherence to or failure to follow these dispute resolution procedures shall not waive either party's rights or duties under this Agreement. (b)Alternative Dispute Resolution. Except for claims for equitable relief, if any dispute should arise between the parties which cannot be resolved pursuant to subsection (a) above, then before resorting to any other legal remedy the parties shall attempt in good faith to resolve any such controversy or claim by mediation before and in compliance with the rules established by any mutually acceptable alternative dispute resolution organization, (including, but not limited to, Endispute, the Center for Public Resources ("CPR"), the Private Adjudication Center, or what is commonly referred to as Rent-a-Judge). The selection of an organization shall be made within ten (10) business days after notification from one party to the other. If an organization/judge and applicable rules have not been agreed upon within such ten-day period, then the dispute shall be mediated in accordance with the Center for Public Resources Model Procedure for Mediation of Business Disputes, and a single mediator will be chosen by CPR. If the parties are unable to resolve the dispute within sixty (60) days of submission to the mediation organization, then either party may file suit in any court of competent jurisdiction in the County of Los Angeles, State of California. 12.Assignment. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, provided that neither party hereto may assign any of its rights or obligations hereunder without the prior written consent of the other; provided further, however, that the foregoing shall not prevent a party from assigning its obligation to provide some or all of the Shared Services to an affiliated entity or a third party vendor. 13.Counterparts. This Agreement may be executed in counterparts, any and all of which when taken together shall constitute one and the same instrument, and each party may execute this Agreement by signing any such counterpart. 14.Entire Agreement. This Agreement constitutes the entire and only agreement between the parties hereto with respect to the subject matter hereof and supersedes any and all prior agreements, arrangements, communications or representations whether oral or written, between the parties relating to the subject matter hereof. 15.Amendments. Any amendment or waiver of any provision of this Agreement shall be in writing and signed by all the parties hereto. No failure or delay by any of the parties hereto in exercising any right, power or privilege hereunder shall operate as a waiver thereof, and any waiver of any breach of the provisions of this Agreement shall be without prejudice to any rights with respect to any other or further breach hereof. 16.Governing Law. This Agreement shall be governed by and construed in accordance with the laws of California. 17.Survival. Paragraphs 7(c), 8, 9, 10 and 12 above shall survive termination of this Agreement. 18.No Third Party Rights. Nothing in this Agreement, whether expressed or implied, is intended to confer any rights or remedies under or by reason of this Agreement on any persons other than the parties to it and their respective permitted successors and assigns, nor is anything in this Agreement intended to relieve or discharge the obligation or liability of any third persons to any party to this Agreement, nor shall any provision give any third persons any right of subrogation or action over or against any party to this Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered by their respective authorized representatives as of the date first indicated above. TOYOTA MOTOR CREDIT CORPORATION TOYOTA MOTOR SALES, U.S.A., INC. On behalf of itself and its direct On behalf of itself and its and indirect subsidiaries direct and indirect subsidiaries By: /s/ George E. Borst By:/s/ Douglas M. West Name: George E. Borst Name: Douglas M. West Title: President and Title: Senior Vice President Chief Executive Officer Fax: (310) 468-3501 Fax: (310) 468-7808 Notice Address: Notice Address: 19001 S. Western Avenue 19001 S. Western Avenue Torrance, California 90509 Torrance, California 90509 ATTACHMENT A TMS SERVICES TMS SERVICE RESPONSIBLE TMS DEPARTMENT FEE METHODOLOGY Pension and Savings Corporate Finance and 1) Direct costs Management Accounting billed for TMS Contributions to TMCC employees' pension and savings plans (i.e. annual pension cost and employer match); plus 2) TMS administration fee based on TMCC Headcount Ratio. Internal Audit Corporate Finance and TMS administration Accounting fee based on TMCC Headcount Ratio Accounts Payable Corporate Finance and Direct bill based Accounting upon annual volume of checks processed, on a per check charge Payroll Corporate Finance and 1)Vendor Fee; plus Accounting 2)TMS Administration fee Based on TMCC Headcount Ratio Tax administration, Corporate Tax TMS administration Processing and fee based on TMCC Reporting Headcount Ratio Associate Services Corporate Services Actual costs and (Dining facilities, expenses incurred fitness center, by TMCC cleaners) Vehicle Services Corporate Services Actual costs and (company car, expenses incurred employee lease, etc) by TMCC Material Distribution Corporate Services Actual costs and Center (copy services, expenses incurred Mail delivery and by TMCC Supplies at Torrance HQ) Real Estate and Corporate Services Actual pro rata Facilities costs per square (administration and foot of usable project Headquarters space based on facilities and Field TMCC occupancy facilities) Human Resources Human Resources Dept. TMS administration Administration fee based on (employee compensation estimated use by and benefits, HR systems) TMCC of TMS HR Dept Legal and Risk Legal Department Pro rata share of Management: actual TMS Business law, product associate costs per liability defense, risk use of TMS Legal management (insurance associate time by coverage for TMCC) TMCC. Information Systems: IS Department Charge by IS based Administration of on estimated use of Architecture and IS facilities Infrastructure for programs and Telecommunications, services by TMCC Network, mainframe systems, and production services and support University of Toyota University of Toyota Charge per course (education and training for courses programs for Associates attended or and Dealer personnel) requisitioned by TMCC TMS Purchasing/Contracts Corporate Services Allocation of costs Administration based on TMCC share Of total contracts Handled by Purchasing Travel Services Corporate Services Actual costs and Expenses incurred By TMCC Security, Disaster Corporate Safety and TMS administration Management, Emergency Environmental Management fee based on TMCC Planning Headcount Ratio. ATTACHMENT B TFS SERVICES TMCC SERVICE RESPONSIBLE TMCC DEPARTMENT FEE METHODOLOGY Customer Retention Toyota Financial Services 50% of the TFSC Services Center-Iowa Customer Services Department's annual Costs Associate lease and Vehicle Remarketing Administration fee Fleet vehicles Department based upon the Remarketing number of TMS units Relative to overall Units remarketed. Administer the Executive Commercial Finance Difference between Home Loan Program Department market and contract Interest rates for TMS VPs and above. EX-12.1 11 0011.txt EXHIBIT 12.1 TOYOTA MOTOR CREDIT CORPORATION CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
Years Ended September 30, ------------------------------------------ 2000 1999 1998 1997 1996 ------ ------ ------ ------ ------ (Dollars in Millions) Consolidated income before income taxes...... $ 170 $ 230 $ 251 $ 283 $ 260 ------ ------ ------ ------ ------ Fixed Charges Interest................. 1,289 940 994 918 820 Portion of rent expense representative of the interest factor (deemed to be one-third)....... 6 6 5 4 4 ------ ------ ------ ------ ------ Total fixed charges......... 1,295 946 999 922 824 ------ ------ ------ ------ ------ Earnings available for fixed charges........ $1,465 $1,176 $1,250 $1,205 $1,084 ====== ====== ====== ====== ====== Ratio of earnings to fixed charges........ 1.13 1.24 1.25 1.31 1.32 ==== ==== ==== ==== ==== - ----------------- TMCC has guaranteed certain obligations of affiliates and subsidiaries as discussed in Note 16 of the Consolidated Financial Statements. As of September 30, 2000, TMCC has not incurred any fixed charges in connection with such guarantees and no amount is included in any ratio of earnings to fixed charges. The ratio of earnings to fixed charges for TMS and subsidiaries was 1.87, 1.89, 1.99, 1.92 and 1.49 for the years ended September 30, 2000, 1999, 1998, 1997 and 1996, respectively. The ratio of earnings to fixed charges for TMMNA and subsidiaries was 39.74 and 22.37 for the years ended September 30, 2000 and 1999, respectively.
EX-21.1 12 0012.txt EXHIBIT 21.1 TOYOTA MOTOR CREDIT CORPORATION LIST OF SUBSIDIARIES State of Subsidiary Incorporation - ---------- ------------- Toyota Motor Insurance Services, Inc. California Toyota Motor Insurance Company Iowa Toyota Motor Insurance Corporation of Vermont Vermont Toyota Motor Insurance Agency of Ohio, Inc. Ohio Toyota Motor Insurance Services of Kentucky, Inc. Kentucky Toyota Motor Insurance Agency of Massachusetts, Inc. Massachusetts Toyota Motor Insurance Services of Rhode Island, Inc. Rhode Island Toyota Motor Insurance Services of Wyoming, Inc. Wyoming Toyota Motor Credit Receivables Corporation California Toyota Credit De Puerto Rico Corp. California Toyota Leasing, Inc. California EX-23.1 13 0013.txt EXHIBIT 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS ---------------------------------- We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (Nos. 333-76505, 333-41568 and 333-89659) of Toyota Motor Credit Corporation of our report dated October 31, 2000 relating to the financial statements and financial statement schedules, which appears in this Form 10-K. /S/ PRICEWATERHOUSECOOPERS LLP Los Angeles, California December 20, 2000 EX-27.1 14 0014.txt
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM TOYOTA MOTOR CREDIT CORPORATION'S SEPTEMBER 30, 2000 FINANCIAL STATEMENTS AND NOTES THERETO AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000,000 YEAR SEP-30-2000 SEP-30-2000 170 871 26,362 230 0 0 0 0 28,036 0 21,098 0 0 915 1,558 28,036 0 3,515 0 2,729 481 135 0 170 65 104 0 0 0 104 0 0 Receivables include Investments in Operating Leases net of Accumulated Depreciation and Finance Receivables net of Unearned Income. Toyota Motor Credit Corporation's Balance Sheet is not classified into Current and Long-Term Assets and Liabilities. Total Costs includes Interest Expense and Depreciation on Leases.
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