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.
▇.▇▇▇▇▇▇ 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 ▇▇▇▇
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.
▇.▇▇▇▇▇▇▇▇▇; 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.
▇▇.▇▇ 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/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President and Title: Senior Vice President
Chief Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Notice Address: Notice Address:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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 ▇▇▇▇ 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.