Document:

EX-10.5

 Exhibit 10.5 
  

 
  

ASSET REPRESENTATIONS REVIEW AGREEMENT 

DRIVE AUTO RECEIVABLES TRUST 2018-5, 

as Issuer 
 and 

SANTANDER CONSUMER USA INC., 
 as
Sponsor and Servicer 
 and 

CLAYTON FIXED INCOME SERVICES LLC, 

as Asset Representations Reviewer 
  

 
 Dated as of
November 20, 2018 
  
  

 
  

 

 TABLE OF CONTENTS 

 

							
	 	 	 	  	Page	 
	 ARTICLE I.         DEFINITIONS
	  	 	1	 
			
	 Section 1.01
	 	 Definitions
	  	 	1	 
		
	 ARTICLE II.        ENGAGEMENT;
ACCEPTANCE
	  	 	3	 
			
	 Section 2.01
	 	 Engagement; Acceptance
	  	 	3	 
			
	 Section 2.02
	 	 Eligibility of Asset Representations Reviewer
	  	 	3	 
			
	 Section 2.03
	 	 Independence of the Asset Representations Reviewer
	  	 	3	 
		
	 ARTICLE III.       DUTIES OF THE ASSET
REPRESENTATIONS REVIEWER
	  	 	3	 
			
	 Section 3.01
	 	 Review Scope
	  	 	3	 
			
	 Section 3.02
	 	 Review Notices
	  	 	3	 
			
	 Section 3.03
	 	 Review Materials
	  	 	4	 
			
	 Section 3.04
	 	 Missing or Incomplete Review Materials
	  	 	4	 
			
	 Section 3.05
	 	 The Asset Review
	  	 	5	 
			
	 Section 3.06
	 	 Review Period
	  	 	5	 
			
	 Section 3.07
	 	 Review Report
	  	 	5	 
			
	 Section 3.08
	 	 Completion of Review for Certain Subject Receivables
	  	 	5	 
			
	 Section 3.09
	 	 Termination of Review
	  	 	6	 
			
	 Section 3.10
	 	 Review and Procedure Limitations
	  	 	6	 
			
	 Section 3.11
	 	 Review Systems
	  	 	6	 
			
	 Section 3.12
	 	 Representatives
	  	 	6	 
			
	 Section 3.13
	 	 Dispute Resolution
	  	 	7	 
			
	 Section 3.14
	 	 Records Retention
	  	 	7	 
			
	 Section 3.15
	 	 No Delegation
	  	 	7	 
		
	 ARTICLE IV.       PAYMENTS TO ASSET REPRESENTATIONS
REVIEW
	  	 	7	 
			
	 Section 4.01
	 	 Annual Fee
	  	 	7	 
			
	 Section 4.02
	 	 Review Fee
	  	 	8	 
			
	 Section 4.03
	 	 Dispute Resolution Expenses
	  	 	8	 
			
	 Section 4.04
	 	 Payment
	  	 	9	 
			
	 Section 4.05
	 	 Payments by the Issuer
	  	 	9	 

  
 -i- 

 TABLE OF CONTENTS 

(continued) 
  

							
	 	 	 	  	Page	 
	 ARTICLE V.       OTHER MATTERS PERTAINING TO THE
ASSET REPRESENTATIONS REVIEWER
	  	 	9	 
			
	 Section 5.01
	 	
Representations and Warranties of the Asset Representations Reviewer
	  	 	9	 
			
	 Section 5.02
	 	 Limitation of Liability of Asset Representations Reviewer
	  	 	10	 
			
	 Section 5.03
	 	 Indemnification of Asset Representations Reviewer
	  	 	10	 
			
	 Section 5.04
	 	 Indemnification by Asset Representations Reviewer
	  	 	11	 
		
	 ARTICLE VI.       REMOVAL, RESIGNATION; SUCCESSOR ASSET
REPRESENTATION REVIEWER
	  	 	12	 
			
	 Section 6.01
	 	 Eligibility Requirements for Asset Representations Reviewer
	  	 	12	 
			
	 Section 6.02
	 	 Resignation and Removal of Asset Representations Reviewer
	  	 	12	 
			
	 Section 6.03
	 	 Successor Asset Representations Reviewer
	  	 	12	 
			
	 Section 6.04
	 	 Merger, Consolidation or Succession
	  	 	13	 
		
	 ARTICLE VII.     TREATMENT OF CONFIDENTIAL INFORMATION
	  	 	13	 
			
	 Section 7.01
	 	 Confidential Information
	  	 	13	 
			
	 Section 7.02
	 	 Safeguarding Personally Identifiable Information
	  	 	15	 
		
	 ARTICLE VIII.    OTHER MATTERS PERTAINING TO THE ISSUER
	  	 	16	 
			
	 Section 8.01
	 	 Termination of this Agreement
	  	 	16	 
			
	 Section 8.02
	 	 Limitation of Liability
	  	 	16	 
		
	 ARTICLE IX.      MISCELLANEOUS PROVISIONS
	  	 	17	 
			
	 Section 9.01
	 	 Amendment
	  	 	17	 
			
	 Section 9.02
	 	 Notices, Etc
	  	 	18	 
			
	 Section 9.03
	 	 Severability Clause
	  	 	18	 
			
	 Section 9.04
	 	 Governing Law
	  	 	18	 
			
	 Section 9.05
	 	 Headings
	  	 	19	 
			
	 Section 9.06
	 	 Counterparts
	  	 	19	 
			
	 Section 9.07
	 	 Waivers
	  	 	19	 
			
	 Section 9.08
	 	 Entire Agreement
	  	 	19	 
			
	 Section 9.09
	 	 Severability of Provisions
	  	 	19	 
			
	 Section 9.10
	 	 Binding Effect
	  	 	19	 
			
	 Section 9.11
	 	 Cumulative Remedies
	  	 	19	 
			
	 Section 9.12
	 	 Nonpetition Covenant
	  	 	19	 
			
	 Section 9.13
	 	 Submission to Jurisdiction; Waiver of Jury Trial
	  	 	20	 
			
	 Section 9.14
	 	 Third-Party Beneficiaries
	  	 	20	 
		
	 Exhibit A – Agreed Upon Procedures
	  			

  
 -ii- 

 ASSET REPRESENTATIONS REVIEW AGREEMENT 

This ASSET REPRESENTATIONS REVIEW AGREEMENT is made and entered into as of November 20, 2018 (this “Agreement”), by and
between Drive Auto Receivables Trust 2018-5, a Delaware statutory trust (the “Issuer”), Santander Consumer USA Inc., an Illinois corporation (“SC”, and in its capacity as
sponsor, the “Sponsor”, and in its capacity as servicer, the “Servicer”), and Clayton Fixed Income Services LLC, a Delaware limited liability company (“Clayton”, and in its capacity as asset
representations reviewer, the “Asset Representations Reviewer”). 
 WHEREAS, the Issuer will engage the Asset
Representations Reviewer to perform reviews of Receivables for compliance with the representations and warranties made by the Sponsor regarding such Receivables. 

NOW, THEREFORE, in consideration of the mutual agreements herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows: 
 ARTICLE I.

 DEFINITIONS 

Section 1.01    Definitions. Except as otherwise defined herein or as the context may otherwise require,
capitalized terms used but not otherwise defined herein are defined in Appendix A to the Sale and Servicing Agreement dated as of the date hereof (as from time to time amended, supplemented or otherwise modified and in
effect, the “Sale and Servicing Agreement”) between the Issuer, the Servicer, Santander Drive Auto Receivables LLC and Wilmington Trust, National Association, as indenture trustee, which also contains rules as to usage that
are applicable herein. 
 Whenever used in this Agreement, the following words and phrases shall have the following meanings: 

“Annual ARR Fee” has the meaning set forth in Section 4.01. 

“Asset Review” means the completion by the Asset Representations Reviewer of the “Tests” set forth in Exhibit A for
each Subject Receivable as further described in Section 3.05. 
 “Client Records” has the meaning
set forth in Section 3.14. 
 “Confidential Information” has the meaning set forth in
Section 7.01. 
 “Disclosing Party” has the meaning set forth in
Section 7.01. 
 “Eligible Asset Representations Reviewer” means a Person who (i) is not,
and is not Affiliated with, the Sponsor, the Depositor, the Servicer, the Indenture Trustee, the Owner Trustee or any of their Affiliates and (ii) was not engaged or Affiliated with a Person that was engaged by the Sponsor or any Underwriter to
perform any due diligence on the Receivables prior to the Closing Date. 

  

					
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 “Eligibility Representations” shall mean those representations identified
in Exhibit A. 
 “Indemnified Person” has the meaning set forth in Section 5.03. 

“Personally Identifiable Information” or “PII” has the meaning set forth in
Section 7.02. 
 “Privacy Laws” has the meaning set forth in
Section 7.02. 
 “Receiving Party” has the meaning set forth in
Section 7.01. 
 “Representatives” has the meaning set forth in
Section 7.01. 
 “Review Fee” has the meaning set forth in
Section 4.02. 
 “Review Invoice” means, with respect to any Asset Review, a detailed invoice
prepared by the Asset Representations Reviewer setting forth the calculation of the applicable Review Fee for such Asset Review. 

“Review Materials” means the documents, data, and other information required for each “Test” in Exhibit A. 

“Review Period” has the meaning set forth in Section 3.06. 

“Review Report” has the meaning set forth in Section 3.07. 

“Subject Receivables” means, for any Asset Review, all Receivables which are 60-Day
Delinquent Receivables as of the related Review Satisfaction Date; provided, that any Receivable repurchased by the Sponsor or the Servicer in accordance with the Transaction Documents or paid in full by the related obligor after the Review
Satisfaction Date will no longer be a Subject Receivable. 
 “Tests” mean the procedures listed in Exhibit A as applied to
the process described in Section 3.05. 
 “Test Complete” has the meeting set forth in
Section 3.08. 
 “Test Fail” has the meaning set forth in Section 3.05.

 “Test Incomplete” has the meaning set forth in Section 3.05. 

“Test Pass” has the meaning set forth in Section 3.05. 

  

					
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 ARTICLE II. 

ENGAGEMENT; ACCEPTANCE 

Section 2.01    Engagement; Acceptance. 

The Issuer hereby engages Clayton to act as the Asset Representations Reviewer for the Issuer. Clayton hereby accepts the engagement and agrees
to perform the obligations of the Asset Representations Reviewer on the terms stated in this Agreement. 

Section 2.02    Eligibility of Asset Representations Reviewer. 

Clayton represents and warrants to the Issuer and the Sponsor that it is an Eligible Asset Representations Reviewer. The Asset Representations
Reviewer will notify the Issuer, the Sponsor and the Servicer promptly if it is not, or on the occurrence of any action that would result in it not being, an Eligible Asset Representations Reviewer. 

Section 2.03    Independence of the Asset Representations Reviewer. 

The Asset Representations Reviewer will be an independent contractor and will not be subject to the supervision of the Issuer, the Indenture
Trustee or the Owner Trustee for the manner in which it accomplishes the performance of its obligations under this Agreement. Unless expressly authorized by the Issuer, the Indenture Trustee or the Owner Trustee, the Asset Representations Reviewer
will have no authority to act for or represent the Issuer, the Indenture Trustee or the Owner Trustee, respectively, and will not be considered an agent of the Issuer, the Indenture Trustee or the Owner Trustee. Nothing in this Agreement will make
the Asset Representations Reviewer and any of the Issuer, the Indenture Trustee or the Owner Trustee members of any partnership, joint venture or other separate entity or impose any liability as such on any of them. 

ARTICLE III. 
 DUTIES OF
THE ASSET REPRESENTATIONS REVIEWER 
 Section 3.01    Review Scope. 

The parties confirm that the Asset Representations Review is not responsible for (a) reviewing the Receivables for compliance with the
representations and warranties under the Transaction Documents, except as described in this Agreement or (b) determining whether noncompliance with the representations and warranties constitutes a breach of the Eligibility Representations. For
the avoidance of doubt, the parties confirm that the review is not designed to determine why an Obligor is delinquent or the creditworthiness of the Obligor, either at the time of any Asset Review or at the time of origination of the related
Receivable. Further, the Asset Review is not designed to establish cause, materiality or recourse for any Test Fail (as defined in Section 3.05). 

Section 3.02    Review Notices. 

Upon receipt of (i) a Review Notice from the Indenture Trustee in accordance with Section 7.6(b) of the
Indenture and (ii) the Review Materials in accordance with Section 3.03 of this Agreement, the Asset Representations Reviewer will start an Asset Review. The Asset Representations Reviewer will not be obligated to
begin, and may not begin, an Asset Review until the Asset Representations Reviewer receives a Review Notice. Within ten Business Days of receipt of a Review Notice, the Servicer shall provide the list of Subject Receivables to the Asset
Representations Reviewer in the format selected by the Servicer to the address specified in Section 9.02. 

  

					
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 None of the Issuer, the Servicer, the Sponsor or the Asset Representations Reviewer is
obligated to verify whether the Indenture Trustee properly determined that a Review Notice was required. None or the Issuer, the Sponsor or the Asset Representations Reviewer is obligated to verify the accuracy or completeness of the list of Subject
Receivables provided by the Servicer. 
 Section 3.03    Review Materials. 

The Servicer will provide reasonable assistance to the Asset Representations Reviewer to facilitate the Asset Review. Within 60 days of receipt
by the Servicer of the Review Notice, the Servicer will provide the Asset Representations Reviewer with the Review Materials for all Subject Receivables in one or more of the following ways, as elected by the Servicer: (i) by providing access
to the Servicer’s receivables system, either remotely or at one or more of the properties of the Servicer; (ii) by electronic posting of Review Materials to a password-protected website to which the Asset Representations Reviewer has
access; (iii) by providing originals or photocopies at one or more of the properties of the Servicer where the Receivable Files are located; (iv) by sending originals or photocopies of Review Materials to the Asset Representations Reviewer
at the address specified in Section 9.02; or (v) in another manner agreed to by the Servicer and the Asset Representations Reviewer. The Servicer may redact or remove Personally Identifiable Information from the Review
Materials so long as such redaction or removal does not result in a change in the meaning or usefulness of the Review Materials. The Asset Representations Reviewer shall not be liable for any failure of the Review Materials to be accurate and
complete, including any failure that results in the Review Materials being misleading in any material respect. 

Section 3.04    Missing or Incomplete Review Materials. 

The Asset Representations Reviewer will complete the Tests for each Eligible Representation only using documentation that is made available to
it. Upon receipt of the Review Materials, the Asset Representations Reviewer will complete an initial document inventory to verify there are no systemic documentation errors, including but not limited to consistently missing or incomplete
information in the Review Materials with respect to each Subject Receivable. Once the Asset Representations Reviewer has confirmed the majority of the Review Materials have been provided in accordance with Section 3.03, the
Asset Representations Reviewer will commence the Asset Review. In instances where Review Material is not accessible, clearly unidentifiable, and/or illegible, the Asset Representations Reviewer will request that the Servicer (with a copy to the
Sponsor) provide an updated copy of such Review Material. If the Servicer and the Sponsor have not provided the missing Review Material for a Subject Receivable to the Asset Representations Reviewer within 60 days of notification by the Asset
Representations Reviewer, the parties agree that such Subject Receivable will have a Test Incomplete for the related Test(s) and the Review Report will indicate the reason for the Test Incomplete. 

  

					
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 Section 3.05    The Asset Review. 

For an Asset Review, the Asset Representations Reviewer will perform the applicable procedures listed under “Tests” in Exhibit A for
each Eligibility Representation. In the course of its review, the Asset Representations Reviewer will use the Review Materials listed in Exhibit A. For each Test, the Asset Representations Reviewer will determine if the Test has been satisfied (a
“Test Pass”), if the Test has not been satisfied (a “Test Fail”) or if the Test could not be concluded as a result of missing or incomplete Review Materials (a “Test Incomplete”). 

If a Subject Receivable was included in a prior Asset Review, the Asset Representations Reviewer will not conduct additional Tests on any such
duplicate Subject Receivable unless such Subject Receivable was deemed a Test Incomplete as a result of the failure of the Servicer and the Sponsor to provide missing Review Materials for such Subject Receivable and the Sponsor elects to have such
Subject Receivable included in the current Asset Review. The Asset Representations Reviewer will include the previously reported Test results for any such duplicate Subject Receivable within the Review Report for the current Asset Review. 

Section 3.06    Review Period. 

The Asset Representations Reviewer will complete the Review within 60 days of receiving access to the Review Materials in accordance with
Section 3.03 (such time period, the “Review Period”); provided, that if additional Review Materials are provided to the Asset Representations Reviewer as described in
Section 3.04, the Review Period will be extended for an additional 30 days. 

Section 3.07    Review Report. 

Within five Business Days following the end of the applicable Review Period described in Section 3.06, the Asset
Representations Reviewer will provide the Issuer, the Sponsor, the Servicer and the Indenture Trustee with (i) a report (a “Review Report”) specifying for each Subject Receivable whether there was a Test Pass, a Test Fail, a
Test Incomplete (as contemplated by Section 3.05) or a Test Complete (as contemplated by Section 3.08) for each Test and Subject Receivable and (ii) the related Review Invoice. The Review
Report will include a summary of the findings and conclusions of the Asset Representations Reviewer with respect to the Asset Review to be included in the Form 10-D for the Issuer for the Collection Period in
which the Review Report is received. The Asset Representations Reviewer will ensure that the Review Report does not contain any Personally Identifiable Information. For the avoidance of doubt, the Indenture Trustee shall have no obligation to
forward the Review Report to any Noteholder or any other person. 
 Section 3.08    Completion of Review for
Certain Subject Receivables. 
 Following the delivery of the list of the Subject Receivables and before the delivery of the Review
Report by the Asset Representations Reviewer, the Servicer may notify the Asset Representations Reviewer if a Subject Receivable is paid in full by or on behalf of the Obligor or purchased from the Issuer by the Sponsor or the Servicer in accordance
with the Transaction Documents. On receipt of notice, the Asset Representations Reviewer will immediately terminate all Tests of such Receivables and the Asset Review of such Receivables will be considered complete (a “Test
Complete”). In this case, the Review Report will indicate a Test Complete for the Receivables and the related reason. 

  

					
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 Section 3.09    Termination of Review. 

If an Asset Review is in process and the Notes will be paid in full on the next Payment Date (including any payment in full as a result of any
early redemption of the Notes), the Servicer will notify the Asset Representations Reviewer and the Indenture Trustee no less than ten days before that Payment Date. On receipt of notice, the Asset Representations Reviewer will terminate the Asset
Review immediately and will not be obligated to deliver a Review Report. 
 Section 3.10    Review and Procedure
Limitations. 
 The Asset Representations Reviewer will have no obligation (i) to determine whether a Delinquency Trigger has
occurred, (ii) to determine whether the required percentage of Noteholders has voted to direct an Asset Review and may rely on the information in any Review Notice delivered by the Indenture Trustee, (iii) to determine which Receivables
are Subject Receivables and may rely on the list of Subject Receivables provided by the Servicer, (iv) to confirm the validity of the Review Materials, (v) other than as specified in Section 3.03, to obtain
missing or insufficient Review Materials, or (vi) to take any action or to cause any other party to take any action under any of the Transaction Documents to enforce any remedies for any breach of a representation, warranty or covenant,
including any Eligibility Representation. 
 The Asset Representations Reviewer shall only be required to perform the testing procedures
listed under “Tests” in Exhibit A, and shall have no obligation to perform additional testing procedures on any Subject Receivables or to consider any additional information provided by any party. The Asset Representations Reviewer
shall have no obligation to provide reporting or other information other than the Review Report described in Section 3.07. However, the Asset Representations Reviewer may provide additional information about any Subject
Receivable that it determines in good faith to be material to its performance of an Asset Review. 

Section 3.11    Review Systems. 

The Asset Representations Reviewer shall maintain and utilize an electronic case management system to manage the Tests and to provide
systematic control over each step in the Asset Review process and ensure consistency and repeatability for the Tests. The Asset Representations Reviewer will ensure that these systems allow for each Subject Receivable and the related Review
Materials to be individually tracked and stored as contemplated by this Agreement. The Asset Representations Reviewer will maintain adequate staff that is properly trained to conduct Asset Reviews as required by this Agreement. 

Section 3.12    Representatives. 

(a)    Servicer Representative. The Servicer will provide reasonable access to one or more designated
representatives to respond to reasonable requests and inquiries made by the Asset Representations Reviewer in its completion of an Asset Review. 

  

					
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 (b)    Asset Representations Review Representative. The Asset
Representations Reviewer will provide reasonable access to one or more designated representatives to respond to reasonable requests and inquiries made by the Servicer, the Sponsor, the Issuer or the Indenture Trustee during the Asset Representations
Reviewer’s completion of an Asset Review. The Asset Representations Reviewer shall have no obligation to respond to requests or inquires, and other than as specified in Section 3.13 shall not respond to requests or
inquiries, made by any Person not party to this Agreement other than the Indenture Trustee; provided, that if the Asset Representations Reviewer receives any request or inquiry from a Person not a party to this Agreement, then the Asset
Representations Reviewer may inform such Person that they may contact the Servicer and/or the Indenture Trustee with respect to such request or inquiry. 

Section 3.13    Dispute Resolution. 

If a Subject Receivable that was reviewed by the Asset Representations Reviewer during an Asset Review is the subject of a dispute resolution
proceeding under Section 9.24 of the Sale and Servicing Agreement, the Asset Representations Reviewer shall participate in the dispute resolution proceeding on request of a party to the proceeding. The reasonable out-of-pocket expenses and reasonable compensation of the Asset Representations Reviewer for its participation in any dispute resolution proceeding will be considered expenses
of the Requesting Party for the dispute resolution and (subject to Section 4.03) will be paid by a party to the dispute resolution as determined by the mediator or arbitrator for the dispute resolution according to
Section 9.24 of the Sale and Servicing Agreement. 
 Section 3.14    Records
Retention. 
 The Asset Representations Reviewer will maintain copies of Review Materials, Review Reports and internal work papers and
correspondence (collectively the “Client Records”) for a period of two years after the termination of this Agreement. At the expiration of the retention period, the Asset Representations Reviewer shall return all Client Records to
the Servicer, in electronic format or, to the extent held in tangible form, in that form. Upon the return of the Client Records, the Asset Representations Reviewer shall have no obligation to retain such Client Records or to respond to inquiries
concerning any Asset Review. 
 Section 3.15    No Delegation. 

The Asset Representations Reviewer may not delegate or subcontract its obligations under this Agreement to any Person without the consent of
the Issuer, the Sponsor and the Servicer. 
 ARTICLE IV. 

PAYMENTS TO ASSET REPRESENTATIONS REVIEW 

Section 4.01    Annual Fee. 

As compensation for its activities hereunder, the Asset Representations Reviewer shall be entitled to receive an annual fee in an amount equal
to $5,000 (the “Annual ARR Fee”) during the term of this Agreement, which shall be paid by or on behalf of the Sponsor within 30 days of 

  

					
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the date hereof, with respect to the initial Annual ARR Fee, and within 30 days of the annual anniversary of this Agreement with respect to each subsequent Annual ARR Fee; provided, however, that
if the Asset Representations Reviewer resigns or is removed in accordance with Section 6.02, then the Asset Representations Reviewer shall refund to the Sponsor the portion of the Annual ARR Fee attributable to the portion
of the annual period during which Clayton will no longer act as the Asset Representations Reviewer, assuming for purposes of such calculation that the Annual ARR Fee for each day during the annual period is an amount equal to the Annual ARR Fee
divided by 365. 
 Section 4.02    Review Fee. 

Following the completion of an Asset Review and delivery to the Indenture Trustee, the Sponsor, the Servicer and the Issuer of the Review
Report and the related Review Invoice, the Sponsor shall pay to the Asset Representations Reviewer a fee of $200.00 for each Subject Receivable for which the Asset Review was completed plus reasonable out-of-pocket expenses incurred in connection with travel to the location at which Review Materials are made available in accordance with Section 3.03 (the “Review
Fee”). However, no Review Fee will be charged for any Subject Receivable which was included in a prior Asset Review or for which no Tests were completed prior to the Asset Representations Reviewer being notified of a termination of the
Asset Review according to Section 3.09. To the extent not paid by the Sponsor and outstanding for at least 90 days after receipt by the Indenture Trustee, the Sponsor, the Servicer and the Issuer of the Review Invoice, the
Review Fee shall be paid by the Issuer pursuant to the priority of payments sets forth in Section 4.4 of the Sale and Servicing Agreement or Section 5.4(b) of the Indenture, as applicable. For the
avoidance of doubt, there shall be no aggregate limit on the Review Fee paid by the Sponsor to the Asset Representations Reviewer pursuant to this Section 4.02. 

Section 4.03    Dispute Resolution Expenses. 

If the Asset Representations Reviewer participates in a dispute resolution proceeding under Section 3.13 and its
reasonable out-of-pocket expenses and reasonable compensation for the time it incurs in participating in the proceeding are not paid by a party to the dispute resolution
within ninety (90) days of the end of the proceeding, the Sponsor will reimburse the Asset Representations Reviewer for such expenses upon receipt of a detailed invoice. 

  

					
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 Section 4.04    Payment. 

All payments made to the Asset Representations Reviewer shall be made to the account specified by the Asset Representations Reviewer from time
to time in writing to the Indenture Trustee, the Sponsor, the Servicer and the Issuer. 

Section 4.05    Payments by the Issuer. 

The Asset Representations Reviewer acknowledges and agrees that any payments payable by the Issuer under this Agreement, including pursuant to
this Article IV or Section 5.03, shall be limited to amounts available to make such payments pursuant to Section 4.4 of the Sale and Servicing Agreement and Section 5.4(b)
of the Indenture, as applicable. 
 ARTICLE V. 

OTHER MATTERS PERTAINING TO THE ASSET REPRESENTATIONS REVIEWER 

Section 5.01    Representations and Warranties of the Asset Representations Reviewer. 

Clayton hereby makes the following representations and warranties as of the date hereof: 

(a)    Existence and Power. Clayton is a limited liability company validly existing and in good standing under the
laws of its state of formation and has, in all material respects, full power and authority to own its assets and operate its business as presently owned or operated, and to execute, to deliver and to perform its obligations under this Agreement.
Clayton has obtained all necessary licenses and approvals in each jurisdiction where the failure to do so would materially and adversely affect the ability of Clayton to perform its obligations under this Agreement. 

(b)    Authorization and No Contravention. The execution, delivery and performance by Clayton of the Transaction
Documents to which it is a party have been duly authorized by all necessary limited liability company action on the part of Clayton and do not contravene or constitute a default under (i) any applicable law, rule or regulation, (ii) its
organizational documents or (iii) any material indenture or material agreement or instrument to which Clayton is a party or by which its properties are bound (other than violations of such laws, rules, regulations, organizational documents,
indentures, agreements or instruments which do not affect the legality, validity or enforceability of any of such agreements and which, individually or in the aggregate, would not materially and adversely affect the transactions contemplated by, or
Clayton’s ability to perform its obligations under, this Agreement). 
 (c)    No Consent Required. No
approval or authorization by, or filing with, any Governmental Authority is required in connection with the execution, delivery and performance by Clayton of this Agreement other than (i) approvals and authorizations that have previously been
obtained and filings that have previously been made and (ii) approvals, authorizations or filings which, if not obtained or made, would not have a material adverse effect on the ability of Clayton to perform its obligations under this
Agreement. 

  

					
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 (d)    Binding Effect. This Agreement constitutes the legal,
valid and binding obligation of Clayton enforceable against Clayton in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, receivership, conservatorship or other
similar laws affecting the enforcement of creditors’ rights generally and, if applicable, the rights of creditors of corporations from time to time in effect or by general principles of equity. 

(e)    No Proceedings. There are no actions, orders, suits or proceedings pending or, to the knowledge of Clayton,
threatened against Clayton before or by any Governmental Authority that (i) assert the invalidity or unenforceability of this Agreement or (ii) seek any determination or ruling that would materially and adversely affect the performance by
Clayton of its obligations under this Agreement. 
 (f)    Eligibility. The Asset Representations Reviewer is an
Eligible Asset Representations Reviewer. 
 Section 5.02    Limitation of Liability of Asset Representations
Reviewer. 
 To the fullest extent permitted by applicable law, the Asset Representations Reviewer shall not be under any liability to
the Issuer, the Servicer, the Depositor, the Indenture Trustee, the Owner Trustee, any Noteholder or any other Person for any action taken or for refraining from the taking of an action in its capacity as Asset Representations Reviewer pursuant to
this Agreement, or for errors in judgment, whether arising from express or implied duties under this Agreement; provided, however, that this provision shall not protect the Asset Representations Reviewer against any liability which
would otherwise be imposed by reason of willful misconduct, bad faith, breach of this Agreement or negligence in the performance of its duties. In no event will the Asset Representations Reviewer be liable for special, indirect or consequential loss
or damage (including loss of profit) even if the Asset Representations Reviewer has been advised of the likelihood of the loss or damage and regardless of the form of action. 

The Asset Representations Reviewer and any director, officer, employee, or agent may rely in good faith on any document of any kind prima
facie properly executed and submitted by any Person respecting any matters arising hereunder. The Asset Representations Reviewer shall not be under any obligation to appear in, prosecute or defend any legal action which is not incidental to its
duties as Asset Representations Reviewer hereunder. 
 Section 5.03    Indemnification of Asset Representations
Reviewer. 
 (a)    The Sponsor will indemnify the Asset Representations Reviewer and its officers, directors,
employees and agents (each, an “Indemnified Person”), for all costs, expenses, losses, damages and liabilities resulting from the performance of the Asset Representations Reviewer’s obligations under this Agreement (including
the costs and expenses of defending itself against any loss, damage or liability), but excluding any cost, expense, loss, damage or liability resulting from (i) the Asset Representations Reviewer’s willful misconduct, bad faith or
negligence or (ii) the Asset Representations Reviewer’s breach of any of its representations, warranties or covenants in this Agreement. To the extent not paid by the Sponsor, any such indemnification amounts shall be paid by the Issuer
pursuant to the priority of payments set forth in Section 4.4 of the Sale and Servicing Agreement or Section 5.4(b) of the Indenture, as applicable. 

  

					
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 (b)    The indemnification set forth in this
Section 5.03 will survive the termination of this Agreement and the resignation or removal of the Asset Representations Reviewer. 

(c)    If the Sponsor or the Issuer makes any payment under this Section 5.03 and the
Indemnified Person later collects any of the amounts for which the payments were made to it from others, the Indemnified Person will promptly repay the amount to the Sponsor or the Issuer, as applicable. 

Section 5.04    Indemnification by Asset Representations Reviewer. 

(a)    To the fullest extent permitted by law, the Asset Representations Reviewer shall indemnify and hold harmless each of
the Issuer, the Owner Trustee, the Servicer, the Sponsor and the Indenture Trustee, and its officers, directors, successors, assigns, legal representatives, agents, and servants (each an “Indemnified Person”), from and against any
and all liabilities, obligations, losses, damages, penalties, taxes, claims, actions, investigations, proceedings, costs, expenses or disbursements (including reasonable legal fees and expenses) of any kind and nature whatsoever which may be imposed
on, incurred by, or asserted at any time against an Indemnified Person (whether or not also indemnified against by any other person) which arose out of the negligence, willful misconduct or bad faith of the Asset Representations Reviewer in the
performance of its obligations and duties under this Agreement; provided, however, that the Asset Representations Reviewer shall not be liable for or required to indemnify an Indemnified Person from and against expenses arising or
resulting from (i) the Indemnified Person’s own willful misconduct, bad faith or negligence, or (ii) the breach of any representation, warranty or covenant made by the Indemnified Person. 

(b)    In case any such action, investigation or proceeding will be brought involving an Indemnified Person as
contemplated by Section 5.04(a), the Asset Representations Reviewer will assume the defense thereof, including the employment of counsel and the payment of all expenses. The Issuer, the Servicer, the Sponsor and the
Indenture Trustee each will have the right to employ separate counsel in any such action, investigation or proceeding and to participate in the defense thereof and the reasonable fees and expenses of such counsel will be paid by the Asset
Representations Reviewer. In the event of any claim, action, or proceeding for which indemnity will be sought pursuant to this Section 5.04, the Issuer’s, the Servicer’s, the Sponsor’s and the Indenture
Trustee’s choice of legal counsel shall be subject to the good faith objection by the Asset Representations Reviewer to a conflict of interest under the applicable rules of professional conduct. 

(c)    The indemnification set forth in this Section 5.04 will survive the termination or
assignment of this Agreement and the resignation or removal of the Asset Representations Reviewer or any Indemnified Person. 

  

					
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 ARTICLE VI. 

REMOVAL, RESIGNATION; SUCCESSOR ASSET REPRESENTATION REVIEWER 

Section 6.01    Eligibility Requirements for Asset Representations Reviewer. The Asset Representations
Reviewer must be an Eligible Asset Representations Reviewer. 
 Section 6.02    Resignation and Removal of Asset
Representations Reviewer. 
 (a)    No Resignation of Asset Representations Reviewer. The Asset
Representations Reviewer may not resign as Asset Representations Reviewer except (i) if the Asset Representations Reviewer is no longer an Eligible Asset Representations Reviewer, (ii) upon a determination that the performance of its
duties under this Agreement is no longer permissible under applicable law or (iii) if it does not receive payment in full of any amounts required to be paid to the Asset Representations Reviewer in accordance with Article IV and pursuant to an
undisputed invoice, which failure continues unremedied for a period of ninety (90) days after written notice of such failure shall have been given to the Issuer, the Sponsor and the Indenture Trustee. Without limiting the foregoing, the Asset
Representations Review shall promptly resign if it is no longer an Eligible Asset Representations Reviewer. If the Asset Representations Reviewer resigns pursuant to clause (ii) above, the Asset Representations Reviewer shall deliver a notice
of resignation to the Issuer and the Servicer, with a copy to the Indenture Trustee, no less than thirty (30) days prior to the date of its resignation. 

(b)    Removal of Asset Representations Reviewer. If any of the following events occur, the Indenture Trustee may,
or, at the direction of Noteholders evidencing a majority of the aggregate Outstanding Amount of the Notes shall, by notice to the Asset Representations Reviewer, remove the Asset Representations Reviewer and terminate its rights and obligations
under this Agreement: 
 (i)    the Asset Representations Reviewer is no longer an Eligible Asset
Representations Reviewer; 
 (ii)    the Asset Representations Reviewer breaches any of its
representations, warranties, covenants or obligations in this Agreement; or 
 (iii)    a Bankruptcy
Event of the Asset Representations Reviewer occurs. 
 (c)    Notice of Resignation or Removal. The Servicer will
notify the Issuer, the Owner Trustee and the Indenture Trustee of any resignation or removal of the Asset Representations Reviewer. 

Section 6.03    Successor Asset Representations Reviewer. 

(a)    Engagement of Successor Asset Representations Reviewer. Following the resignation or removal of the Asset
Representations Reviewer, (i) if the Delinquency Percentage has exceeded the Delinquency Trigger as of the most recent Payment Date, the Indenture Trustee (at the direction of the Noteholders, provided, that if the Indenture Trustee has
received conflicting or inconsistent requests from two or more groups of Noteholders, each representing 

  

					
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less than the majority of the Note Balance, the Indenture Trustee shall follow the direction of the Noteholders representing the greater percentage of the Note Balance) and (ii) if the
Delinquency Percentage has not exceeded the Delinquency Trigger as of the most recent Payment Date, the Sponsor, will appoint a successor Asset Representations Reviewer which is an Eligible Asset Representations Reviewer. 

(b)    Effectiveness of Resignation or Removal. No resignation or removal of the Asset Representations Reviewer
will be effective until the successor Asset Representations Reviewer has executed and delivered to the Issuer, the Sponsor and the Servicer an agreement accepting its engagement and agreeing to perform the obligations of the Asset Representations
Reviewer under this Agreement or entered into a new agreement with the Issuer, the Sponsor and the Servicer on substantially the same terms as this Agreement. 

(c)    Transition and Expenses. If the Asset Representations Review resigns or is removed, the Asset
Representations Reviewer will cooperate with the Issuer and take all actions reasonably requested to assist the Issuer in making an orderly transition of the Asset Representations Reviewer’s rights and obligations under this Agreement to the
successor Asset Representations Reviewer. The Asset Representations Reviewer will pay the reasonable expenses (including the fees and expenses of counsel) of transitioning the Asset Representations Reviewer’s obligations under this Agreement
and preparing the successor Asset Representations Reviewer to take on such obligations on receipt of an invoice with reasonable detail of the expenses from the Issuer or the successor Asset Representations Reviewer. 

Section 6.04    Merger, Consolidation or Succession. Any Person (a) into which the Asset Representations
Reviewer is merged or consolidated, (b) resulting from any merger or consolidation to which the Asset Representations Reviewer is a party or (c) succeeding to the business of the Asset Representations Reviewer, if that Person is an
Eligible Asset Representations Reviewer, will be the successor to the Asset Representations Reviewer under this Agreement. Such Person will execute and deliver to the Issuer, the Sponsor and the Servicer an agreement to assume the Asset
Representations Reviewer’s obligations under this Agreement (unless the assumption happens by operation of law). 
 ARTICLE VII.

 TREATMENT OF CONFIDENTIAL INFORMATION 

Section 7.01    Confidential Information. 

(a)    Confidential Information Defined. For the purposes of this Agreement, “Confidential
Information” means nonpublic proprietary information of a party (the “Disclosing Party”) that is disclosed to the other party (the “Receiving Party”), including but not limited to: (i) business or
technical processes, formulae, source codes, object code, product designs, sales, cost and other unpublished financial information, customer information, product and business plans, projections, marketing data or strategies, trade secrets,
intellectual property rights, know-how, expertise, methods and procedures for operation, information about employees, customer names, business or technical proposals, and any other information which is or
should reasonably be understood to be confidential or proprietary to the Disclosing Party; (ii) PII (as defined in 

  

					
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Section 7.02 of this Agreement). The foregoing definition of Confidential Information applies to: (i) all such information, whether tangible or intangible and
regardless of the medium in which it is stored or presented; and (ii) all copies of such information, as well as all memoranda, notes, summaries, analyses, computer records, and other materials prepared by the Receiving Party or any of its
employees, agents, advisors, directors, officers, and subcontractors (collectively “Representatives”) that contain or reflect the Confidential Information. 

(b)    Use of Confidential Information. Each party acknowledges that during the term of this Agreement it may be
exposed to or acquire Confidential Information of the other party or its Affiliates. The Receiving Party shall hold the Confidential Information of the Disclosing Party in strict confidence and will not disclose such information except to its
Representatives who have a need to know such information for the purpose of effecting the terms and conditions of this Agreement and who have entered into an agreement with the Receiving Party with confidentiality restrictions materially equivalent
to those contained herein. The Receiving Party shall be responsible for the breach of this Agreement by any of its Representatives. The Receiving Party will protect the Disclosing Party’s Confidential Information using the same degree of care
that it uses to protect its own information of like import, but in no event with less than a commercially reasonable standard of care. 

(c)    Exceptions. Confidential Information shall not include, and this Agreement imposes no obligations with
respect to, information that: 
  

	 	(i)	 is or becomes part of the public domain other than by disclosure by a party in violation of this Agreement;

  

	 	(ii)	 was disclosed to a party prior to the effective date of this Agreement without a duty of confidentiality;

  

	 	(iii)	 is independently developed by a party outside of this Agreement and without reference to or reliance on any
Confidential Information of the other party; or 

  

	 	(iv)	 was obtained from a third party not known after reasonable inquiry to be under a duty of confidentiality.

 The foregoing exceptions shall not apply to any PII, which shall remain confidential in all circumstances, except as
required or permitted to be disclosed by applicable law, statute, or regulation. 
 (d)    Disclosure by Operation of
Law. If either party is requested to disclose all or any part of any Confidential Information under a subpoena, or inquiry issued by a court of competent jurisdiction or by a judicial or administrative agency or legislative body or committee,
such party shall (i) to the extent permitted by law, promptly notify the other party of the existence, terms and circumstances surrounding such request; (ii) consult with the other party on the advisability of taking legally available
steps to resist or narrow such request and cooperate with such Party on any steps it considers advisable; and (iii) if disclosure of the Confidential Information is required or deemed advisable, exercise commercially reasonable efforts to
obtain an order, stipulation or other reliable assurance that confidential treatment shall be accorded to such portion of the Confidential Information to be disclosed. Each party shall reimburse the other party for reasonable legal fees and expenses
incurred in connection with such party’s effort to comply with this section. 

  

					
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 (e)    Return of Confidential Information. Upon the request of
the Disclosing Party, the Receiving Party shall return all Confidential Information to the Disclosing Party provided to it pursuant to this Agreement; provided, however, (i) the Receiving Party shall be permitted to retain copies of the
Disclosing Party’s Confidential Information solely for archival, audit, disaster recovery, legal and/or regulatory purposes, and (ii) neither party will be required to search archived electronic
back-up files of its computer systems for the other party’s Confidential Information in order to purge the other party’s Confidential Information from its archived files; provided further, that any
Confidential Information so retained will (x) remain subject to the obligations and restrictions contained in this Agreement, (y) will be maintained in accordance with the retaining party’s document retention policies and procedures,
and (z) the retaining party will not use the retained Confidential Information for any other purpose. 

(f)    Remedies. The parties agree that an actual or threatened breach of this Section by it or its Representatives
may cause irreparable damage to the Disclosing Party and that damages may not be an adequate remedy for any such breach. Accordingly, each party shall be entitled to seek injunctive relief to restrain any such breach, threatened or actual, without
the necessity of posting bond, in addition to any other remedies available to such party at law or in equity. 

Section 7.02    Safeguarding Personally Identifiable Information. 

(a)    Definition. “Personally Identifiable Information”, or “PII”, means
information in any format about an identifiable individual, including, name, address, phone number, e-mail address, account number(s), identification number(s), any other actual or assigned attribute
associated with or identifiable to an individual and any information that when used separately or in combination with other information could identify an individual, as further described in § 501(b) of the Gramm-Leach-Bliley Act and the
Interagency Guidelines Establishing Standards for Safeguarding Customer Information (12 C.F.R. Section 208, Appendix D-2) (collectively, the “Privacy Laws”), that is provided or made
available to the Asset Representations Reviewer pursuant to this Agreement. 

(b)    Non-Disclosure. To the extent the Asset Representations Reviewer
receives Personally Identifiable Information in the performance its obligations hereunder, the Asset Representations Reviewer agrees that it will not disclose or use any Personally Identifiable Information except (i) to the extent necessary to
carry out its obligations under the Agreement and for no other purpose; or (ii) as may be required by valid operation of law. 

(c)    Safeguards. To the extent the Asset Representations Reviewer receives Personally Identifiable Information in
the performance of services under this Agreement, the Asset Representations Reviewer represents and warrants that it has, and will continue to have adequate administrative, technical, and physical safeguards: (i) to ensure the security and
confidentiality of Personally Identifiable Information; (ii) to protect against any anticipated threats or hazards to the security or integrity of Personally Identifiable Information; and (iii) to protect against unauthorized acquisition
of, access to or use of Personally Identifiable Information which could result in a “breach” as that term is defined under applicable Privacy Laws. 

  

					
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 (d)    Information. The Asset Representations Reviewer agrees to
provide the Issuer and the Sponsor with information regarding its privacy and information security systems, policies and procedures as the Issuer may reasonably request relating to compliance with this Agreement and applicable Privacy Laws. The
Asset Representations Reviewer agrees to provide training in the Privacy Laws and the Asset Representations Reviewer’s information security policies to all personnel whose duties pursuant to this Agreement could bring them in contact with
Personally Identifiable Information. 
 (e)    Breach. In the event of any actual or apparent theft, unauthorized
use or disclosure of any Personally Identifiable Information, the Asset Representations Reviewer will commence all reasonable efforts to investigate and correct the causes and remediate the results thereof, and as soon as practicable following
discovery of any such event, provide the Issuer and the Sponsor notice thereof, and such further information and assistance as may be reasonably requested. 

ARTICLE VIII. 
 OTHER
MATTERS PERTAINING TO THE ISSUER 
 Section 8.01    Termination of this Agreement. 

This Agreement will terminate, except for obligations under Section 5.03, Section 5.04,
Section 9.13 and Article VII, on the earlier of (a) the payment in full of all outstanding Notes and the satisfaction and discharge of the Indenture and (b) the date the Issuer is terminated under the Trust
Agreement. 
 Section 8.02    Limitation of Liability. It is expressly understood and agreed by the parties
that (a) this document is executed and delivered by Wells Fargo Delaware Trust Company, N.A., not individually or personally, but solely as Owner Trustee of the Issuer, in the exercise of the powers and authority conferred and vested in it,
pursuant to the Trust Agreement, (b) each of the representations, warranties, covenants, undertakings and agreements herein made on the part of the Issuer is made and intended not as personal representations, warranties, covenants undertakings
and agreements by Wells Fargo Delaware Trust Company, N.A., but is made and intended for the purpose of binding only the Issuer, (c) nothing herein contained shall be construed as creating any liability on Wells Fargo Delaware Trust Company,
N.A., individually or personally, to perform any covenant either expressed or implied contained herein, all such liability, if any, being expressly waived by the parties hereto and by any person claiming by, through or under the parties hereto,
(d) Wells Fargo Delaware Trust Company, N.A. has made no investigation as to the accuracy or completeness of any representations or warranties made by the Issuer or any other Person in this Agreement and (e) under no circumstances shall
Wells Fargo Delaware Trust Company, N.A. be personally liable for the payment of any indebtedness, indemnities or expenses of the Issuer or be liable for the breach or failure of any obligation, representation, warranty or covenant made or
undertaken by the Issuer under this Agreement or under the Notes or any of the other Transaction Documents or in any of the certificates, notices or agreements delivered pursuant thereto, as to all of which recourse shall be had solely to the assets
of the Issuer. 

  

					
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 ARTICLE IX. 

MISCELLANEOUS PROVISIONS 

Section 9.01    Amendment. 

(a)    Any term or provision of this Agreement may be amended by the Sponsor, the Servicer and the Asset Representations
Reviewer without the consent of the Indenture Trustee, any Noteholder, the Issuer, the Owner Trustee or any other Person subject to the satisfaction of one of the following conditions: 

(i)    the Sponsor or the Servicer delivers an Opinion of Counsel to the Indenture Trustee to the effect
that such amendment will not materially and adversely affect the interests of the Noteholders; or 

(ii)    the Rating Agency Condition is satisfied with respect to such amendment and the Sponsor or the
Servicer notifies the Indenture Trustee in writing that the Rating Agency Condition is satisfied with respect to such amendment; 
 provided, that no
amendment pursuant to this Section 9.01(a) shall be effective which affects the rights, protections or duties of the Indenture Trustee or the Owner Trustee without the prior written consent of such Person. 

(b)    This Agreement may also be amended from time to time by the Sponsor, the Servicer and the Asset Representations
Reviewer, with the consent of the Holders of Notes evidencing not less than a majority of the aggregate principal balance of the Controlling Class, for the purpose of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the Noteholders, provided, that no amendment pursuant to this Section 9.01(b) shall be effective which affects the rights, protections or
duties of the Indenture Trustee or the Owner Trustee without the prior written consent of such Person. It will not be necessary for the consent of Noteholders to approve the particular form of any proposed amendment or consent, but it will be
sufficient if such consent approves the substance thereof. The manner of obtaining such consents (and any other consents of Noteholders provided for in this Agreement) and of evidencing the authorization of the execution thereof by Noteholders will
be subject to such reasonable requirements as the Indenture Trustee may prescribe, including the establishment of record dates pursuant to the Depository Agreement. 

(c)    Any term or provision of this Agreement may also be amended from time to time by the Sponsor, the Servicer and the
Asset Representations Reviewer for the purpose of conforming the terms of this Agreement to the description thereof in the Prospectus or, to the extent not contrary to the Prospectus, to the description thereof in an offering memorandum with respect
to the 144A Notes or the Certificates without the consent of the Indenture Trustee, any Noteholder, the Issuer, the Owner Trustee or any other Person, provided, however, that the Sponsor, the Servicer and the Asset Representations
Reviewer shall provide written notification 

  

					
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of the substance of such amendment to the Indenture Trustee, the Issuer and the Owner Trustee and promptly after the execution of such amendment, the Sponsor and the Servicer shall furnish a copy
of such amendment to the Indenture Trustee, the Issuer and the Owner Trustee. 
 (d)    Prior to the execution of any
amendment or consent pursuant to this Section 9.01, the Sponsor shall provide written notification of the substance of such amendment to each Rating Agency; and promptly after the execution of any such amendment or consent,
the Sponsor shall furnish a copy of such amendment or consent to each Rating Agency and the Indenture Trustee. 

(e)    Prior to the execution of any amendment to this Agreement, the Owner Trustee and the Indenture Trustee shall be
entitled to receive and conclusively rely upon an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this Agreement and that all conditions precedent to the execution and delivery of such amendment have
been satisfied. The Owner Trustee and the Indenture Trustee may, but shall not be obligated to, enter into any such amendment which adversely affects the Owner Trustee’s or the Indenture Trustee’s, as applicable, own rights, duties or
immunities under this Agreement. 
 Section 9.02    Notices, Etc. All demands, notices and communications
hereunder shall be in writing and shall be delivered or mailed by registered or certified first-class United States mail, postage prepaid, hand delivery, prepaid courier service, or by facsimile or by electronic transmission, and addressed in each
case as specified on Schedule I to the Sale and Servicing Agreement or at such other address as shall be designated by any of the specified addressees in a written notice to the other parties hereto. Delivery shall occur only upon receipt or
reported tender of such communication by an officer of the recipient entitled to receive such notices located at the address of such recipient for notices hereunder. 

Section 9.03    Severability Clause. 

This Agreement constitutes the entire agreement between the Asset Representations Reviewer, the Issuer, Servicer, and the Sponsor. All prior
representations, statements, negotiations and undertakings with regard to the subject matter hereof are superseded hereby. 
 If any term or
provision of this Agreement or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remaining terms and provisions of this Agreement, or the application of such terms or provisions to persons
or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision of this Agreement shall be valid and enforced to the fullest extent permitted by law. 

Section 9.04    Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL, SUBSTANTIVE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE RULES THEREOF RELATING TO CONFLICTS OF LAW, OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW
YORK GENERAL OBLIGATIONS LAW, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. 

  

					
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 Section 9.05    Headings. The article and section headings
hereof have been inserted for convenience only and shall not be construed to affect the meaning, construction or effect of this Agreement. 

Section 9.06    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 of such counterparts shall together constitute but one and the same instrument. 

Section 9.07    Waivers. No failure or delay on the part of the Sponsor, the Servicer, the Asset
Representations Reviewer, the Issuer or the Indenture Trustee in exercising any power or right hereunder (to the extent such Person has any power or right hereunder) shall operate as a waiver thereof, nor shall any single or partial exercise of any
such power or right preclude any other or further exercise thereof or the exercise of any other power or right. No notice to or demand on the any party hereto in any case shall entitle it to any notice or demand in similar or other circumstances. No
waiver or approval by either party under this Agreement shall, except as may otherwise be stated in such waiver or approval, be applicable to subsequent transactions. No waiver or approval under this Agreement shall require any similar or dissimilar
waiver or approval thereafter to be granted hereunder. 
 Section 9.08    Entire Agreement. This Agreement
contains a final and complete integration of all prior expressions by the parties hereto with respect to the subject matter thereof and shall constitute the entire agreement among the parties hereto with respect to the subject matter thereof,
superseding all prior oral or written understandings. There are no unwritten agreements among the parties. 

Section 9.09    Severability of Provisions. If any one or more of the covenants, agreements, provisions or
terms of this Agreement shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Agreement and shall in no
way affect the validity or enforceability of the other provisions of this Agreement. 
 Section 9.10    Binding
Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. This Agreement shall create and constitute the continuing obligations of the parties hereto in
accordance with its terms, and shall remain in full force and effect until such time as the parties hereto shall agree. 

Section 9.11    Cumulative Remedies. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law. 
 Section 9.12    Nonpetition Covenant. Each party hereto agrees that, prior to
the date which is one year and one day after payment in full of all obligations of each Bankruptcy Remote Party in respect of all securities issued by any Bankruptcy Remote Party (i) such party hereto shall not authorize any Bankruptcy Remote
Party to commence a voluntary winding-up or other voluntary case or other Proceeding seeking liquidation, reorganization or other relief with respect to such Bankruptcy Remote Party or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect in any jurisdiction or seeking the appointment of an 

  

					
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administrator, a trustee, receiver, liquidator, custodian or other similar official with respect to such Bankruptcy Remote Party or any substantial part of its property or to consent to any such
relief or to the appointment of or taking possession by any such official in an involuntary case or other Proceeding commenced against such Bankruptcy Remote Party, or to make a general assignment for the benefit of its creditors generally, any
party hereto or any other creditor of such Bankruptcy Remote Party, and (ii) such party shall not commence, join with any other Person in commencing or institute with any other Person, any Proceeding against such Bankruptcy Remote Party under
any bankruptcy, reorganization, liquidation or insolvency law or statute now or hereafter in effect in any jurisdiction. This Section shall survive the termination of this Agreement. 

Section 9.13    Submission to Jurisdiction; Waiver of Jury Trial. Each of the parties hereto hereby
irrevocably and unconditionally: 
 (a)    submits for itself and its property in any Proceeding relating to this
Agreement or any documents executed and delivered in connection herewith, or for recognition and enforcement of any judgment in respect thereof, to the nonexclusive general jurisdiction of the courts of the State of New York, the courts of the
United States of America for the Southern District of New York and appellate courts from any thereof; 
 (b)    consents
that any such Proceeding may be brought and maintained in such courts and waives any objection that it may now or hereafter have to the venue of such Proceeding in any such court or that such Proceeding was brought in an inconvenient court and
agrees not to plead or claim the same; 
 (c)    agrees that service of process in any such Proceeding may be effected
by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such Person at its address determined in accordance with Section 9.02 of this Agreement; 

(d)    agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law
or shall limit the right to sue in any other jurisdiction; and 
 (e)    to the extent permitted by applicable law,
each party hereto irrevocably waives all right of trial by jury in any Proceeding or counterclaim based on, or arising out of, under or in connection with this Agreement, any other Transaction Document, or any matter arising hereunder or
thereunder. 
 Section 9.14    Third-Party Beneficiaries. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective successors and permitted assigns and each of the Owner Trustee and the Indenture Trustee shall be an express third-party beneficiary hereof and may enforce the provisions hereof as if it
were a party hereto. Except as otherwise provided in this Section, no other Person will have any right hereunder. 

  

					
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 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first written above. 
  

					
	SANTANDER CONSUMER USA INC.

 
					
		
	By:	 	  

		 	Name:	 	Corey Henry
		 	Title:	 	Vice President
	
	DRIVE AUTO RECEIVABLES TRUST 2018-5

 
					
		
	By:	 	Wells Fargo Delaware Trust Company, N.A., not in its individual capacity but solely as Owner Trustee
		
	By:	 	  

		 	Name:
		 	Title:
	
	 CLAYTON FIXED INCOME SERVICES LLC,

as Asset Representations Reviewer

 
					
		
	By:	 	  

		 	Name:
		 	Title:

  

					
		 	S-1	 	 Asset Representations Review Agreement

(Drive 2018-5)

 EXHIBIT A 
  

 
  
  

Santander Consumer USA Agreed Upon Procedures 

Representation 
  

	 	a)	 Characteristics of Receivables 

As of the Cut-Off Date (or such other date as may be specifically set forth below), each Receivable: 

(i) has been fully and properly executed or electronically authenticated by the Obligor thereto; 

(ii) either (A) has been originated by a Dealer to finance the retail sale by that Dealer of the related Financed Vehicle and has been purchased by
Santander Consumer in accordance with the terms of a dealer agreement between Santander Consumer and that Dealer, (B) has been originated by Santander Consumer or (C) has been acquired by Santander Consumer in accordance with the terms of
a purchase agreement between the applicable originator and Santander Consumer; 
 (iii) as of the Closing Date, is secured by a first priority validly
perfected security interest in the Financed Vehicle in favor of the Originator, as secured party, or all necessary actions have been commenced that would result in a first priority security interest in the Financed Vehicle in favor of the
Originator, as secured party; 
 (iv) contains customary and enforceable provisions such that the rights and remedies of the holder thereof are adequate for
realization against the collateral of the benefits of the security; 
 (v) provided, at origination, for level monthly payments which fully amortize the
initial Principal Balance over the original term; provided, that the amount of the first or last payment may be different from the level payment but in no event more than three times the level monthly payment; 

(vi) provides for interest at the Contract Rate specified in the Schedule of Receivables; 

(vii) was originated in the United States and denominated in Dollars; 

(viii) is secured by a new or used automobile, light-duty truck or van; 

(ix) has a Contract Rate of at least 0.00%; 
 (x) had an
original term to maturity of not more than 75 months and each Receivable has a remaining term to maturity, as of the Cut-Off Date, of not more than 75 months and not less than 4 months; 

  
 Exh. A - 1 

 

 
  
  

Santander Consumer USA Agreed Upon Procedures 
  

 (xi) has an outstanding Principal Balance of at least $500.00 and no more than $69,878.17; 

(xii) has a final scheduled payment due on or before February 9, 2025; 

(xiii) was not more than 30 days past due as of the Cut-Off Date; 

(xiv) was not noted in the records of the Originator or the Servicer as being the subject of any bankruptcy or insolvency proceeding; 

(xv) is not subject to a force-placed Insurance Policy on the related Financed Vehicle; 

(xvi) is a Simple Interest Receivable, and scheduled payments under such Receivable have been applied in accordance with the method for allocating principal
and interest set forth in such Receivable; and 
 (xvii) provides that a prepayment by the related Obligor will fully pay the Principal Balance and accrued
interest through the date of prepayment based on the Receivable’s Contract Rate. 
 Documents 

Retail Sale Contract 
 Title Documents 

Receivable File 
 Schedule of Receivables 

Servicing System/Data Tape 
 Procedures to be Performed

  

	i)	 Confirm the contract was signed or electronically authenticated by the obligor 

 

	ii)	 Origination of the Receivable 

a) Review the Retail Sale Contract and confirm that Santander Consumer USA or another Approved Party is listed as the Assignee within the
Assignment Section.1 
  

	iii)	 Security Interest Enforcement 

 

	 	a)	 Confirm the title documents show Santander Consumer USA or another Approved Party as the first lienholder

  

	 	b)	 Review the servicing system and confirm the Pool ID in the system matches the Pool ID for the transaction
related to the deal 

  
  

	1 	 “Approved Party” means a party specified as an “Approved Party” on the list of Approved
Parties provided by Santander Consumer to Clayton. 

  
 Exh. A - 2 

 

 
  
  

Santander Consumer USA Agreed Upon Procedures 
  

	iv)	 Customary and Enforceable Provisions 

 

	 	a)	 Confirm the Contract form number is listed on the Approved Contract Form List2 

  

	v)	 Fully Amortizing Payment Schedule 

 

	 	a)	 Confirm all payments are equivalent with the possible exception that the first and last payments may be
different from the level monthly payment 

  

	 	I)	 If the first and last payments are different from the level monthly payment, confirm that these payments are no
more than three times the level monthly payment amount 

  

	 	b)	 Review the Truth in Lending section of the Retail Sale Contract and calculate the product of the Amount of
Payments with the Number of Payments and confirm that this amount is equal to the Total of Payments 

  

	vi)	 Provides for Interest at the Contract Rate 

 

	 	a)	 Review the Schedule of Receivables and confirm that the stated rate is equal to the APR as shown in the Federal
Truth in Lending section of the Retail Sale Contract 

  

	vii)	 Origination of the Receivable 

 

	 	a)	 Review the Retail Sale Contract and confirm the Dealer address is in the United States 

 

	 	b)	 Review the Retail Sale Contract and confirm that the amounts stated within the Truth in Lending section are
denominated in US dollars 

  

	viii)	 Condition, Make and Model of Financed Vehicle 

 

	 	a)	 Review the New/Used section of the Retail Sale Contract and confirm that the Financed Vehicle is stated to be
new or used 

  

	 	b)	 Review the “Year and Make” and “Model” sections of the Retail Sale Contract and confirm
that the Financed Vehicle constitutes a light-duty truck or van 

  

	ix)	 Contract Annual Percentage Rate 

 

	 	a)	 Review the Federal Truth in Lending Section of the Retail Sale Contract and Confirm that the Annual Percentage
Rate is greater than the minimum allowed percentage rate 

  

	x)	 Remaining Maturity Date 

 

	 	a)	 Confirm that the Number of Payments section within the Truth in Lending section of the Retail Sale Contract
indicates a number of payments that does not exceed the maximum allowable number of payments 

  

	 	b)	 Review the Data Tape and confirm that the remaining term to maturity is within the stated allowable limits

  

	xi)	 Outstanding Principal Balance 

 

	 	a)	 Review the Data and confirm that the Unpaid Principal Balance as of the Cutoff Date is within the stated
allowable limits 

  

	xii)	 Final Schedule Payment Date 

 

	 	a)	 Review the Data Tape and confirm that the Final Scheduled Payment Due Date will occur on or before the latest
allowable final payment date 

  

	xiii)	 Days Past Due 

  

 

	2 	 “Approved Contract Form List” means a list of Approved Contract Forms provided by Santander Consumer
to Clayton. 

  
 Exh. A - 3 

 

 
  
  

Santander Consumer USA Agreed Upon Procedures 
  

	 	a)	 Review the data file and confirm the Receivable was not more than 30 days past due as of the Cutoff Date

  

	xiv)	 Bankruptcy 

  

	 	a)	 Review the Receivable File and any applicable servicing notes and confirm there is no indication of pending
bankruptcy or insolvency proceedings 

  

	xv)	 Force Place Insurance 

 

	 	a)	 Review the servicing system and confirm the Receivable did not have Force Place Insurance as of the Cutoff Date

  

	xvi)	 Simple Interest Receivable 

 

	 	a)	 Confirm the Contract is a Simple Interest Contract 

 

	 	b)	 Review the payment history and confirm the first payment was appropriately applied to principal and interest

  

	xvii)	 Prepayment 

  

	 	a)	 Confirm the contract contains the appropriate Prepayment Disclosures 

 

	xviii)	 If sections i through xvii are confirmed, then Test Pass 

  
 Exh. A - 4 

 

 
  
  

Santander Consumer USA Agreed Upon Procedures 
  

 Representation 
  

	 	b)	 Compliance with Law 

The Receivable complied at the time it was originated or made in all material respects with all requirements of applicable federal, state and local laws, and
regulations thereunder. 
 Document 
 Retail Sale
Contract 
 Servicing System/Data Tape 
 Approved Contract
Form List 
 Procedures to be Performed 
  

	i)	 Confirm the Contract Form number and revision date are on the Approved Contract Form List

  

	ii)	 Confirm the Contract is complete 

 

	 	a)	 Confirm that all lines in the contract are filled out appropriately 

 

	 	b)	 Confirm the Name and address of Creditor, APR, Finance Charge, Amount of Payments, Total of Payments and Total
Sale Price are properly filled out 

  

	 	c)	 Confirm all lines on the contract are completed or properly left blank 

 

	iii)	 Confirm the Amount Financed is correctly calculated 

 

	 	a)	 Calculate the Amount Financed using the Cash Price, Total Down Payment and Total Amount Paid on Buyer’s
Behalf 

  

	 	b)	 Confirm the Calculated Amount Financed matches the Amount Financed as stated within the Truth in Lending
section of the Contract 

  

	iv)	 Confirm the Total Sale Price is correctly calculated 

 

	 	a)	 Calculate the Total Sale Price by taking the difference of the Total of Payments as stated within the Truth in
Lending section and the Total Down Payment as stated within the Itemization of Amount Financed 

  

	 	b)	 Confirm the Calculated Total Sale Price matches the Total Sale Price as stated within the Truth in Lending
section of the Contract 

  

	v)	 Confirm the Total of Payments is correctly calculated 

 

	 	a)	 Calculate the Total of Payments by taking the product of the Number of Payments and Amount of Payments as
stated within the Truth in Lending section of the Contract 

  

	 	b)	 Confirm the Calculated Total of Payments from step (a) is equal to the Total of Payments as stated within
the Truth in Lending section of the Contract 

  

	 	c)	 Calculate the Total of Payment by taking the sum of the Finance Charge and Amount Financed as stated within the
Truth in Lending section of the Contract 

  
 Exh. A - 5 

 

 
  
  

Santander Consumer USA Agreed Upon Procedures 
  

	 	d)	 Confirm the Calculated Total of Payments from step (c) is equal to the Total of Payments as stated within
the Truth in Lending section of the Contract 

  

	vi)	 Confirm the APR is correctly calculated 

 

	 	a)	 Calculate the APR using information within the Truth in Lending section of the Contract 

 

	 	b)	 Confirm the Calculated APR is within an acceptable range of the APR as stated within the Truth in Lending
Section of the Contract 

  

	vii)	 Confirm the first payment due date as stated within the When Payments are Due section of the Truth in Lending
section of the Contract is within an acceptable timeframe of the Contract Date 

  

	viii)	 If Steps i through vii are confirmed, then Test Pass 

  
 Exh. A - 6 

 

 
  
  

Santander Consumer USA Agreed Upon Procedures 
  

 Representation 
  

	 	c)	 Binding Obligation 

The Receivable constitutes the legal, valid and binding payment obligation in writing of the related Obligor, enforceable by the holder thereof in accordance
with its terms, except (i) as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, liquidation or other similar laws and equitable principles relating to or affecting the enforcement of creditors’ rights
generally and (ii) as such Receivable may be modified by the application after the Cut-Off Date of the Servicemembers Civil Relief Act, as amended, to the extent applicable to the related Obligor. 

Documents 
 Retail Sale Contract 

Procedures to be Performed 
  

	i)	 Confirm the Contract Form number is on the Approved Contract Form List. 

 

	ii)	 Confirm the borrower and co-borrower (if applicable) signed the
contract 

  

	iii)	 If Steps i and ii are confirmed, then Test Pass 

  
 Exh. A - 7 

 

 
  
  

Santander Consumer USA Agreed Upon Procedures 
  

 Representation 
  

	 	d)	 Receivable in Force 

The Receivable has not been satisfied, subordinated or rescinded nor has the related Financed Vehicle been released from the lien of such Receivable in whole
or in part. 
 Documents 
  

	Servicing	 System/Data Tape 

  

	Title	 Documents 

Procedures to be Performed 
 i) Confirm the
Receivable exists on the Servicing System as an active Receivable 
 ii) Confirm the title documents show Santander Consumer USA or another Approved Party
as the first lienholder 
 iii) If Steps i and ii are confirmed, then Test Pass 

  
 Exh. A - 8 

 

 
  
  

Santander Consumer USA Agreed Upon Procedures 
  

 Representation 
  

	 	e)	 No Default; No Waiver 

Except for payment delinquencies continuing for a period of not more than 30 days as of the Cut-Off Date, the records
of the Servicer did not disclose that any default, breach, violation or event permitting acceleration under the terms of the Receivable existed as of the Cut-Off Date or that any continuing condition that with
notice or lapse of time, or both, would constitute a default, breach, violation or event permitting acceleration under the terms of the Receivable had arisen as of the Cut-Off Date and the Seller has not
waived any of the foregoing. 
 Documents 

Receivable File 
 Servicing System/Data Tape 

Procedures to be Performed 
  

	i)	 Confirm there is no indication of a default, breach, violation or event that would permit acceleration under
the terms of the Receivable except for payment default within 30 days of the Cut-Off Date 

  

	ii)	 Confirm that no continuing condition would constitute a default, breach, violation or event permitting
acceleration under the terms of the Receivable 

  

	iii)	 If Steps (i) and (ii) are confirmed, then Test Pass 

  
 Exh. A - 9 

 

 
  
  

Santander Consumer USA Agreed Upon Procedures 
  

 Representation 
  

	 	f)	 Insurance 

The Receivable requires that the Obligor thereunder obtain comprehensive and collision insurance covering the related Financed Vehicle. 

Documents 
 Retail Sale Contract 

Procedures to be Performed 
  

	i)	 Confirm the Retail Sale Contract contains language that required the Obligor to obtain and maintain insurance
against physical damage to the Financed Vehicle 

  

	ii)	 If confirmed, then Test Pass 

  
 Exh. A - 10 

 

 
  
  

Santander Consumer USA Agreed Upon Procedures 
  

 Representation 
  

	 	g)	 No Government Obligor 

The Obligor on the Receivable is not the United States of America or any state thereof or any local government, or any agency, department, political
subdivision or instrumentality of the United States of America or any state thereof or any local government. 
 Documents 

Retail Sale Contract 
 Procedures to be Performed

  

	i)	 Review the buyer section on the Contract and confirm a person’s or business name is reported

  

	ii)	 If the buyer section on the Contract does not report a person’s or business name, confirm internet search
results do not indicate the buyer to be a government agency, department, political subdivision or instrumentality. 

  

	iii)	 If (i) and (ii) are confirmed, then Test Pass 

  
 Exh. A - 11 

 

 
  
  

Santander Consumer USA Agreed Upon Procedures 
  

 Representation 
  

	 	h)	 Assignment 

No Receivable has been originated in, or is subject to the laws of, any jurisdiction under which the sale, transfer, assignment, setting over, conveyance or
pledge of such Receivable would be unlawful, void, or voidable. 
 Documents 

Retail Sale Contract 
 Receivable File 

Servicing System 
 Procedures to be Performed 

 

	i)	 Confirm the Retail Sale Contract was completed on a contract form included in the Approved Contract Form List

  

	ii)	 If Step (i) is confirmed, then Test Pass 

  
 Exh. A - 12 

 

 
  
  

Santander Consumer USA Agreed Upon Procedures 
  

 Representation 
  

	 	i)	 Good Title 

As of the Closing Date and immediately prior to the sale and transfer contemplated in the Sale and Servicing Agreement, the Seller had good and marketable
title to and was the sole owner of each Receivable free and clear of all Liens (except any Lien which will be released prior to assignment of such Receivable thereunder), and, immediately upon the sale and transfer thereof, the Issuer will have good
and marketable title to each Receivable, free and clear of all Liens (other than Permitted Liens). 
 Documents 

Title Documents 
 Procedures to be Performed 

 

	i)	 Confirm the title documents show Santander Consumer USA or another Approved Party as the first lienholder

  

	ii)	 Review the servicing system and confirm the Pool ID in the system matches the Pool ID for the transaction
related to the deal 

  

	iii)	 If (i) and (ii) are confirmed, then Test Pass 

  
 Exh. A - 13 

 

 
  
  

Santander Consumer USA Agreed Upon Procedures 
  

 Representation 
  

	 	j)	 Characterizations of Receivables 

Each Receivable constitutes either “tangible chattel paper”, “electronic chattel paper”, an “account”, an “instrument”,
or a “general intangible”, each defined in the UCC. 
 Documents 

Contract 
 Title Documents 

Approved Contract Form List 
 Procedures to be Performed

  

	i)	 Confirm the Contract form number is on the Approved Contract Form List 

 

	ii)	 Confirm the Amount Financed as reported on the Contract is greater than zero 

 

	iii)	 Confirm there is documentation of a lien against the financed vehicle 

 

	iv)	 If tests (i) through (iii) are confirmed, then Test Pass 

  
 Exh. A - 14 

 

 
  
  

Santander Consumer USA Agreed Upon Procedures 
  

 Representation 
  

	 	k)	 One Original 

There is only one executed original, electronically authenticated original or authoritative copy of the Contract (in each case within the meaning of the UCC)
related to each Receivable. 
 Documents 

Contract 
 Procedures to be Performed 

 

	i)	 Confirm there is a final version of the Contract available for review 

 

	ii)	 Confirm the Contract was signed by the buyer(s) and the Dealer 

 

	iii)	 If (i) and (ii) are confirmed, then Test Pass 

  
 Exh. A - 15 

 

 
  
  

Santander Consumer USA Agreed Upon Procedures 
  

 Representation 
  

	 	l)	 No Defenses 

The records of the Servicer do not reflect any facts which would give rise to any right of rescission, offset, claim, counterclaim or defense with respect to
such Receivable or the same being asserted or threatened with respect to such Receivable. 
 Documents 

Receivable File 
 Procedures to be Performed 

 

	i)	 Review the Receivable File and servicing system and confirm there is no evidence of litigation or other
attorney involvement as of the Cut-Off Date. 

  

	ii)	 If confirmed, then Test Pass. 

  
 Exh. A - 16 

 

 
  
  

Santander Consumer USA Agreed Upon Procedures 
  

 Representation 
  

	 	m)	 Early Payments 

The Obligor on the Receivable has made, or will make, the first two monthly payments under such Receivable. 

Documents 
 Servicing System/Data Tape 

Procedures to be Performed 
  

	i)	 Confirm that there is no indication that the Obligor did not make the first two monthly payments on the
Receivable by verifying that the payments made field in the Data Tape is at least two as of the Review Date. 

  

	ii)	 If Step i is confirmed, then Test Pass. 

  
 Exh. A - 17EMPLOYMENT AGREEMENT

THIS AGREEMENT, dated as of November 13th, 2018 (the "Effective Date") by and between Protective Insurance Corporation, an Indiana corporation (together with its successors and assigns, the "Company"), and Jay Nichols (the "Executive");

WITNESSETH:

WHEREAS, the Company desires to employ the Executive as its Chief Executive Officer, and to have the Executive continue to serve as a member of the Board of Directors of the Company (the "Board"); and

WHEREAS, the Executive desires to accept employment with the Company, and continue to serve on the Board, subject to the terms and provisions of this Agreement.

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the receipt of which is mutually acknowledged, the Company and the Executive (collectively, the "Parties") agree as follows:

1. Definitions.  Capitalized terms not otherwise defined herein shall have the meanings set forth in Exhibit A.

2. Term.  The Company hereby employs the Executive under this Agreement, and the Executive hereby accepts such employment, for the "Term".  The Term shall commence as of the Effective Date and shall end on October 17, 2019.  Notwithstanding the foregoing, the Term and the Executive's employment hereunder may be earlier terminated in accordance with the provisions of Section 9.

3. Positions, Duties and Location.

(a) During the Term, the Executive shall serve as the Interim Chief Executive Officer of the Company ("Interim CEO"), as well as similar position(s) with the Company's Subsidiaries.  The Executive shall (i) have all authorities, duties and responsibilities customarily exercised by a chief executive officer serving at an entity of the size and nature of the Company; (ii) be assigned no duties or responsibilities that are materially inconsistent with the foregoing duties and responsibilities; and (iii) have such additional duties and responsibilities, consistent with the foregoing, as may be from time to time assigned to him by the Board.  In his capacity as Interim CEO, the Executive shall report solely and directly to the Board.  During the Term, the Executive agrees to serve as Chairman of the Board and, during his service as Interim CEO, shall serve as a member of the Board without additional compensation.  The terms of this Agreement shall remain in full force and effect regardless of whether additional titles or roles currently held by the Executive (either for the Company or any of its Subsidiaries) change by reason of position elimination, reassignment, removal, or otherwise.

(b) During the Term, the Executive shall devote substantially all of his business time and efforts to the business and affairs of the Company. However, nothing in this Agreement shall preclude the Executive from: (i) serving on the boards of a reasonable number of business entities, trade associations and charitable organizations; (ii) engaging in charitable activities and community affairs; (iii) accepting and fulfilling a reasonable number of speaking engagements; and (iv) managing his personal investments and affairs; provided that such activities do not either individually or in the aggregate materially interfere with the proper performance of his duties and responsibilities hereunder, or in any way create or present a conflict of interest.  If, during the Term, the Executive choses to serve on the board of another business entity, trade association, or charitable organization, such position must receive prior approval from the Board's Nominating & Governance Committee to ensure no potential conflict is present; such approval shall not be unreasonably withheld.

 

- 1 -

(c) During the Term, the Executive's principal office, and principal place of employment, shall be in Carmel, Indiana, or within 40 miles thereof; provided, however, that the Executive understands and agrees that he will be required to travel from time to time for business reasons.

(d) During the three-year period following the Effective Date, the Executive agrees to continue to serve as Chairman of the Board.  At each annual meeting of the Company's stockholders during the three-year period following the Effective Date, the Company will nominate the Executive to serve as a member of the Board.  The Executive's service as a member of the Board will be subject to any required stockholder approval.

4. Base Salary.  Effective as of October 17, 2018, the Executive shall receive an annualized Base Salary of $600,000, payable in biweekly installments in accordance with the Company's regular payroll practices.  During the Term, Executive shall not be entitled to any fees or other compensation for his services as member of the Board.

5. Stock Grant.    Commencing as of the Effective Date, the Executive shall receive 85,000 restricted shares of the Company's Class B Common Stock (the "Stock Grant').  The Stock grant shall vest on the basis of time according to the following schedule unless otherwise provided within this Agreement or the applicable award documents: (i) 42,500 shares shall vest as of October 17, 2019; (ii) 21,500 shares shall vest as of October 17, 2020; and (iii) the remaining 21,5000 shares will vest as of October 17, 2021.   The Executive shall be entitled to all dividends earned on the shares during the vesting period.

6. Other Benefits.

(a) Employee Benefits.  During the Term, the Executive shall be eligible to participate in all employee benefit plans, programs and arrangements, and all fringe benefit arrangements, made available generally to other employees of the Company, in each case in accordance with their terms; provided, that the Company reserves the right to unilaterally revise, amend, suspend or terminate any employee benefit and fringe plans, programs, and arrangements the Company makes available from time to time to its employees generally.

(b) Reimbursement of Business Expenses.  The Executive shall be promptly reimbursed for all expenses reasonably incurred by him in connection with his service under this Agreement, including travel expenses incurred in the Indianapolis/Carmel, Indiana area, subject to documentation in accordance with standard policies and procedures adopted by the Company.

 

- 2 -

(c) Reimbursement of Certain Travel Expenses.   The Executive shall be promptly reimbursed for up to $5,000 per month in supported additional commuting travel expenses incurred by the Executive and/or his immediate family for personal travel to/from the Indianapolis/Carmel, Indiana area.

(d) Housing Expenses.  The Company shall, at its sole expense, provide the Executive with an apartment in the Indianapolis/Carmel Indiana area during the Term.

(e) Key Man Life Insurance.  During the Term, the Company shall procure and maintain key man life insurance for the Executive in such amounts and with such terms as may be determined by the Board, in its sole discretion, and the Executive shall assist and cooperate with the Company in procuring, maintaining and renewing such key man life insurance, including submitting to an annual physical exam.  All of the premiums for any such insurance policy shall be paid solely by the Company. The Company shall be the sole beneficiary of any such key man life insurance policy, and neither the Executive nor his heirs or personal representatives shall have any interest in or to any proceeds, cash surrender value or other payments associated with any such key man life insurance policy.

(f) Annual Physical.  During the Term, the Executive shall be entitled to reimbursement for the expense of an annual physical in accordance with the Company's business expense reimbursement policy.

7. Transition Period. The Executive and the Company agree that in the event the Company hires a successor Chief Executive Officer (the "Successor CEO") during the Term, the Executive agrees to remain employed by Company for a period not to exceed six months ("Transition Period") following the hire date of the successor CEO to provide such services as reasonably requested by the Board to facilitate a successful transition (the "Transition Services").  During this Transition Period, the Executive shall not be compensated for any Transition Services that he may provide and shall only be entitled to fees or compensation with respect to his services as member of the Board.  The Transition Period may be terminated by the Company, in its sole discretion, at any time.

8. Change of Control.  If, during the Term, a Change of Control of the Company occurs, (i) any restrictions imposed on any unvested equity awards (other than stock options) held by the Executive shall be deemed to have expired and (ii) any and all outstanding and unvested stock options shall become immediately exercisable.

(a) If (i) the aggregate of all amounts and benefits due to the Executive, under this Agreement or under any other Company Arrangement, would, if received by the Executive in full and valued under Section 280G of the Code, constitute "parachute payments" as such term is defined in and under Section 280G of the Code (collectively, "280G Benefits"), and if (ii) such aggregate would, if reduced by all federal, state and local taxes applicable thereto, including the excise tax imposed pursuant to Section 4999 of the Code, be less than the amount the Executive would receive, after all taxes, if the Executive received aggregate 280G Benefits equal (as valued under Section 280G of the Code) to only three times the Executive's "base amount", as defined in and under Section 280G of the Code, less $1.00, then (iii) such cash 280G Benefits (in reverse order of maturity, to the extent that the reduction of such cash 280G Benefits can achieve the intended result) shall be reduced or eliminated to the extent necessary so that the 280G Benefits received by the Executive will not constitute parachute payments. The determinations with respect to this Section 10(a) shall be made by an independent auditor (the "Auditor") paid by the Company. The Auditor shall be the Company's regular independent auditor unless the Executive reasonably objects to the use of that firm, in which event the Auditor will be a nationally recognized firm chosen by the Parties.

 

- 3 -

(b) It is possible that the Executive will receive 280G Benefits that are, in the aggregate, either more or less than the amount provided under Section 9(a) (hereafter referred to as an "Excess Payment" or "Underpayment" respectively).  If it is established, pursuant to a final determination of a court or an Internal Revenue Service proceeding that has been finally and conclusively resolved, that an Excess Payment has been made, such Excess Payment shall be deemed for all purposes to be a loan to the Executive made on the date the Executive received the Excess Payment and the Executive shall promptly repay the Excess Payment to the Company, together with interest on the Excess Payment at the applicable federal rate (as defined in and under Section 1274(d) of the Code) from the date of the Executive's receipt of such Excess Payment until the date of such repayment. In the event that it is determined (x) by arbitration pursuant to Section 15, (y) by a court or (z) by the Auditor upon request by any of the Parties, that an Underpayment has occurred, the Company shall promptly pay an amount equal to the Underpayment to the Executive, together with interest on such amount at the applicable federal rate from the date such amount would have been paid to the Executive had the provisions of Section 9(a) not been applied until the date of payment.

9. Termination of Employment.

(a) The Company may terminate the Executive's employment hereunder at any time, or for any reason, by delivering written notice to the Executive.  The Executive agrees that prior to April 17, 2019 he will not terminate his employment hereunder without the written consent of the Board.  On or after April 17, 2019, the Executive may terminate his employment hereunder by delivering at least sixty (60) days advance written notice to the Company.  During any such notice period, the Company reserves the right to suspend any or all of the Executive's duties or responsibilities and limit the Executive's communications with any customers, suppliers, agents, or employee of the Company, as the Company determines in its sole discretion.

(b) Subject to the terms and conditions of this Agreement, in the event that the Executive's employment hereunder is terminated by the Company, the Term shall expire and the Executive shall be entitled to the following:

(i) Base Salary earned, but unpaid through the Termination Date; provided, however, that the Executive shall be a paid total of six (6) months' Base Salary (including any Base Salary earned prior to the termination of the Agreement by Company), if the Company terminates his employment prior to April 17, 2019 (the "Salary Continuation").  Payment of the Salary Continuation will be subject to the Executive's timely execution and delivery (and non-revocation) of a general waiver and release of claims in a form reasonably satisfactory to the Company.  The Salary Continuation shall be paid in installments in accordance with the Company's regular payroll practices.  Notwithstanding the foregoing, if the Company terminates the Executive's employment for Cause during the Term, any unvested equity based awards held by the Executive on the Termination Date shall be cancelled without payment otherwise, the Stock Grant will continue to vest according to the schedule in Section 5

(ii) Any other vested benefits in accordance with the terms of any applicable Company retirement or benefit plan, program, policy or arrangement (the "Company Arrangements").

 

- 4 -

11. Indemnification.  If the Executive is made a party, is threatened to be made a party, or reasonably anticipates being made a party, to any Proceeding by reason of the fact that he is or was a director, officer, member, employee, agent, manager, trustee, consultant or representative of the Company or any of its Affiliates or is or was serving at the request of the Company or any of its Affiliates, or in connection with his service hereunder, as a director, officer, member, employee, agent, manager, trustee, consultant or representative of another Person, or if any Claim is made, is threatened to be made, or is reasonably anticipated to be made, that arises out of or relates to the Executive's service in any of the foregoing capacities, then the Executive shall promptly be indemnified and held harmless (and advanced expenses) to the fullest extent permitted or authorized by the Certificate of Incorporation or Bylaws of the Company.

12. Restrictive Covenants.

(a) Confidentiality. The Executive acknowledges and agrees that he shall maintain the confidentiality of this Agreement and shall not disclose it to any other employee of the Company or other person; provided, however, he/she may disclose it to his/her spouse and/or legal counsel or as required by law and he/she may disclose or discuss any items of this Agreement which the Company has disclosed in its annual proxy statement filed in accordance with applicable law.

The Executive acknowledges and agrees that the Confidential Information, and all physical embodiments thereof, are valuable, special and unique assets of the business of the Company and its Subsidiaries (the "Company Group") and have been developed by the Company Group at considerable time and expense. Such Confidential Information is the sole property of the Company Group and the Executive has no individual right or ownership interest in any of the Confidential Information. The Executive further acknowledges that access to Confidential Information will be needed in connection with the performance of his duties and responsibilities during his employment with the Company. Therefore, the Executive agrees that, except as necessary in regard to his assigned duties and responsibilities with the Company, he shall hold in confidence all Confidential Information and will not reproduce, use, distribute, disclose, publish, or otherwise disseminate any Confidential Information, in whole or in part, and will take no action causing, or fail to take any reasonable action necessary to prevent causing, any Confidential Information to lose its character as Confidential Information, nor willfully make use of such information for his/her own purposes or for the benefit of any person, firm, corporation, association, or other entity (except the Company Group) under any circumstances.

Notwithstanding the above, the Executive may disclose Confidential Information pursuant to a court order, subpoena, or other legal process, provided that, at least ten (10) days (or such lesser period as is practicable given the terms of any order, subpoena or other legal process) in advance of any legal disclosure, he shall furnish the Company with a copy of the judicial or administrative order requiring that such information be disclosed together with a written description of the information to be disclosed (which description shall be in sufficient detail to allow the Company to determine the nature and scope of the information proposed to be disclosed), and the Executive agrees to cooperate with the Company Group to deliver the minimum amount of information necessary to comply with such order.

 

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Executive agrees to maintain in trust, as the Company's property, all documents, information and Confidential Information, both in tangible and intangible form, concerning the Company's Business or the Executive's role for Company. The Executive agrees to return to Company all documents or other property belonging to the Company, including any and all copies thereof (whether in tangible or intangible form) in the possession or under the control of the Executive upon separation of employment or at any other time upon request of Company.

The provisions of this Section 12(a) shall apply to Confidential Information during the Term and at all times thereafter, and shall survive the termination of the Executive's employment. This Agreement supplements and does not supersede Executive's obligations under all statute(s) and common law(s) that protect the Company's trade secrets and/or property. However, nothing in this Agreement or elsewhere shall prohibit the Executive from making disclosures of Confidential Information (w) when requested to do so by a governmental or quasi-governmental agency with apparent jurisdiction, or when disclosure is protected by law (e.g., by whistleblower statutes), (x) in the course of any proceeding under Section 12(c) or 15 of this Agreement, (y) in confidence to an attorney for the purpose of securing legal advice, or (z) retaining (for personal use only) copies of documents relating to his personal rights, obligations and tax liabilities.

(b) Unless otherwise determine by the Board in writing, the Executive shall not, for his own benefit or the benefit of any other Person, without the prior written consent of the Company and other than in connection with his services hereunder during the Term:

	
(i)

	
during the Term and for a period of twelve (12) months thereafter, serve as an employee or executive officer of any Competitor.

	
(ii)

	
during the Term and for a period of twelve (12) months thereafter, personally solicit, aid in the solicitation of, induce or otherwise encourage (whether directly or indirectly) any individual who is or was, at the time of such encouragement or within the six (6) months prior to such encouragement, employed as an executive, highly-compensated employee, or managerial/supervisory employee of the Company or a Subsidiary, to cease such employment or interfere in any way with the relationship between the Company or a Subsidiary and such employee; or

	
(iii)

	
during the Term and for a period of twelve (12) months thereafter, directly or indirectly solicit, aid in the solicitation of, induce, or otherwise encourage (whether directly or indirectly) any Customer for the purpose of (a) selling Competitive Services or Products to such Person in competition with the Company or (b) inducing such Person to cancel, transfer or cease doing their business with the Company; provided, that the restrictions set forth in clauses (i), (ii) and (iii) of this Section 12(b) shall immediately expire in the event that the Company, or any of its Affiliates, shall have materially breached, on or after the Termination Date, any of their material obligations to the Executive under this Agreement or otherwise, which breach shall have continued uncured for 10 days after the Executive has given written notice requesting cure.

 

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(c) The Executive acknowledges and agrees that the business of the Company is highly competitive, and that the restrictions contained in this Section 12 are reasonable and necessary to protect the Company's legitimate business interests. The Executive further acknowledges that any actual or prospective breach may irreparably cause damage to the Company for which money damages may not be adequate. Therefore, in the event of any actual or threatened breach by the Executive of any of the provisions of Section 12(a) or 12(b) above, the Company shall each be entitled to seek, through arbitration in accordance with Section 15 or from any court with jurisdiction over the matter and the Executive, temporary, preliminary and permanent equitable/injunctive relief restraining the Executive from violating such provision and to seek money damages, together with any and all other remedies available under applicable law.

(d) The purpose of this Section 12, among other things, is to protect the Company from unfair or inappropriate competition, to protect its confidential information and trade secrets, and to prevent competitors from raiding employees of the Company. If the scope or enforcement of this Section 12 is ever disputed, a court, arbitrator or other trier of fact may modify and enforce its provisions to the extent it believes is lawful and appropriate. If any provision of this Section 10 is construed to be invalid, illegal or unenforceable, then the remaining provisions therein shall not be affected thereby and shall be enforceable without regard thereto.

13. Assignability; Binding Nature.

(a) This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors, heirs (in the case of the Executive) and assigns.

(b) No rights or obligations of the Company under this Agreement may be assigned or transferred by the Company except that such rights and obligations may be assigned or transferred pursuant to a merger, consolidation or other combination in which the Company is not the continuing entity, or a sale or liquidation of all or substantially all of the business and assets of the Company.  In the event of any merger, consolidation, other combination, sale of business and assets, or liquidation as described in the preceding sentence, the Company shall use its best reasonable efforts to cause such assignee or transferee to promptly and expressly assume the liabilities, obligations and duties of the Company hereunder.

(c) No rights or obligations of the Executive under this Agreement may be assigned or transferred by the Executive other than his rights to compensation and benefits, which may be transferred only by will or by operation of law, or as otherwise provided in Section 17(e).

14. Representations.

(a) The Company represents and warrants that (i) it is fully authorized by action of its Board (and of any other Person or body whose action is required) to enter into this Agreement and to perform its obligations under this Agreement, (ii) the execution, delivery and performance of this Agreement by it does not violate any applicable law, regulation, order, judgment or decree or any agreement, arrangement, plan or corporate governance document to which it is a party or by which it is bound and (iii) upon the execution and delivery of this Agreement by the Parties, this Agreement shall be its valid and binding obligation, enforceable against the Company in accordance with its terms, except to the extent that enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally.

 

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(b) The Executive represents and warrants that (i) to the best of his knowledge and belief, delivery and performance of this Agreement by him does not violate any law or regulation applicable to the Executive, (ii) delivery and performance of this Agreement by him does not violate any applicable order, judgment or decree or any agreement to which the Executive is a party or by which he is bound and (iii) upon the execution and delivery of this Agreement by the Parties, this Agreement shall be a valid and binding obligation of the Executive, enforceable against him in accordance with its terms, except to the extent that enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally.

15. Resolution of Disputes. Any Claim arising out of or relating to this Agreement, any other agreement between the Executive and the Company or its Affiliates, the Executive's employment with the Company, or any termination thereof (collectively, "Covered Claims" shall (except to the extent otherwise provided in Section 11(c) with respect to certain requests for injunctive relief) be resolved by binding confidential arbitration, to be held in Indianapolis, Indiana, in accordance with the Commercial Arbitration Rules (and not the National Rules for Resolution of Employment Disputes) of the American Arbitration Association and this Section 15. Judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. Promptly upon written request by the Executive, accompanied by appropriate supporting documentation, the Company shall pay (or, if already paid, shall reimburse the Executive for) any reasonable expense (including, without limitation, attorney's fees and other charges of counsel) incurred by him in connection with a Covered Claim, subject to prompt repayment by the Executive to the Company to the extent that Company substantially prevails on the Covered Claim at issue. Pending the resolution of any Covered Claim, the Executive (and his beneficiaries) shall continue to receive all payments and benefits due under this Agreement or otherwise, except to the extent that the arbitrators otherwise provide.

16. Tax Matters.  Notwithstanding anything anywhere to the contrary, this Agreement is intended to be interpreted and applied so that the payment and the benefits set forth herein shall either be exempt from the requirements of Section 409A of the Code or any regulations or guidance thereunder ("Section 409A") or shall comply with the requirements of Section 409A. To the extent that any amounts payable in accordance with this Agreement are subject to Section 409A, this Agreement shall be interpreted and administered in such a way as to comply with Section 409A to the maximum extent possible. Notwithstanding anything anywhere to the contrary, if the Executive is a "specified employee" (within the meaning of Section 409A), any payments or arrangements due upon a termination of the Executive's employment under any arrangement that constitutes a "deferral of compensation" (within the meaning of Section 409A), and which do not otherwise qualify under the exemptions under Treas. Regs. Section 1.409A, shall be delayed and paid or provided on the earlier of (i) the date which is six months after the Executive's "separation from service" (as such term is defined in Section 409A) for any reason other than death, and (ii) the date of the Executive's death. Each series of payments under this Agreement or otherwise shall be treated as separate payments for purposes of Section 409A. "Termination of employment," "resignation" or words of similar import, as used in this Agreement shall mean with respect to any payments subject to Section 409A, the Executive's "separation from service" as defined by Section 409A. If any payment subject to Section 409A is contingent on the delivery of a release by the Executive and could occur in either of two calendar years, the payment will occur in the second calendar year. To the extent that reimbursements or other in-kind benefits under this Agreement constitute "nonqualified deferred compensation" subject to Section 409A, all such expenses or other reimbursements hereunder shall be paid on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by the Executive, no such reimbursement, expenses eligible for reimbursement, or in-kind benefits provided in any taxable year shall in any way affect the expenses eligible for reimbursement, or in-kind benefits to provided, in any other taxable year, and (iii) the Executive's right to such reimbursement or in-kind benefits shall not be subject to liquidation or exchange for any other benefit. Nothing in this Agreement shall be construed as a guarantee of any particular tax treatment to the Executive. The Executive shall be solely responsible for the tax consequences with respect to all amounts payable under this Agreement, and in no event shall the Company have any responsibility or liability if this Agreement does not meet any applicable requirements of Section 409A.

 

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17. Notices. Any notice, consent, demand, request, or other communication given to a Person in connection with this Agreement shall be in writing and shall be deemed to have been given to such Person (x) when delivered personally to such Person or (y), provided that a written acknowledgment of receipt is obtained, five days after being sent by prepaid certified or registered mail, or two days after being sent by a nationally recognized overnight courier, to the address (if any) specified below for such Person (or to such other address as such Person shall have specified by ten days' advance notice given in accordance with this Section 17) or (z), on the first business day after it is sent by portable document format ("pdf") to the email address set forth below (or to such other email address as shall have specified by ten days' advance notice given in accordance with this Section 17).

If to the Company:               Protective Insurance Corporation

111 Congressional Blvd., Suite 500

Carmel, IN 46032

Attention: General Counsel

Email: swignall@protectiveinsurance.com

		If to the Executive:	
The address of the Executive's principal residence (or his personal email address) as it appears in the Company's records, with a copy to him (during the Term) at the Company's office in Carmel, IN.

18. Miscellaneous.

(a) Entire Agreement. This Agreement contains the entire understanding and agreement among the Parties concerning the subject matter hereof and supersedes in its entirety, as of the Effective Date, any prior agreement (written or oral) between the Executive and the Company with respect to its subject matter.

(b) Amendment or Waiver. No provision in this Agreement may be amended unless such amendment is set forth in a writing that expressly refers to the provision of this Agreement that is being amended and that is signed by the Executive and by an authorized officer of the Company. No waiver by any Party of any breach of any condition or provision contained in this Agreement shall be deemed a waiver of any similar or dissimilar condition or provision at the same or any prior or subsequent time. To be effective, any waiver must be set forth in a writing signed by the waiving Party.

(c) Inconsistencies. In the event of any inconsistency between any provision of this Agreement and any provision of any Company Arrangement, the provisions of this Agreement shall control unless the Executive otherwise agrees in a writing that expressly refers to the provision of this Agreement whose control he is waiving.

 

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(d) Headings. The headings of the Sections and sub-sections contained in this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any provision of this Agreement.

(e) Survivorship. Except as otherwise set forth in this Agreement, the respective rights and obligations of the Parties hereunder shall survive any termination of the Executive's employment.

(f) Severability. To the extent that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, in whole or in part, the remaining provisions of this Agreement shall remain in full force and effect so as to achieve the intentions of the Parties, as set forth in this Agreement, to the maximum extent possible.

(g) Withholding Taxes. The Company may withhold from any amount or benefit payable under this Agreement taxes that it is required to withhold pursuant to any applicable law or regulation.

(h) Cooperation. During the Term and thereafter, the Executive agrees to cooperate with the Company and be available to the Company with respect to continuing and/or future matters related to his employment with the Company (if occurring after termination of employment, to the extent not interfering with the Executive's other business endeavors or personal commitments), whether such matters are business-related, legal, regulatory or otherwise (including, without limitation, the Executive appearing at the Company's request to give testimony without requiring service of a subpoena or other legal process, volunteering to the Company all pertinent information and turning over to the Company all relevant documents which are or may come into the Executive's possession). Following the Term, the Company shall reimburse the Executive for all reasonable out of pocket expenses incurred by the Executive in rendering such services that are approved by the Company.

(j) Governing Law. This Agreement shall be governed, construed, performed and enforced in accordance with its express terms, and otherwise in accordance with the laws of the State of Indiana, without reference to principles of conflict of laws.

(k) Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall be deemed to be one and the same instrument. Signatures delivered by facsimile (including, without limitation, by "pdf") shall be effective for all purposes.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first set forth above.

Protective Insurance Corporation

By:  _________________________

Name: _______________________

Title:  _______________________

The Executive

________________________

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EXHIBIT A

DEFINITIONS

(a) "Affiliate" of a Person shall mean any Person that directly or indirectly controls, is controlled by, or is under common control with, such Person.

(b)  "Cause" shall mean, for purposes of this Agreement, the occurrence of any of the following events:

	
i.

	
the Executive is convicted of, or pleads guilty or nolo contendere to, a felony;

	
ii.

	
the Executive's perpetration of an act of fraud, embezzlement, theft or any other material violation of law that occurs in the course of the Executive's employment with the Company;

	
iii.

	
the Executive's intentional damage to the assets of the Company or any of its Affiliates;

	
iv.

	
the Executive's intentional and material disclosure of Confidential Information contrary to this Agreement or any agreements between the Executive and the Company or any of its Affiliates;

	
v.

	
the Executive's material breach of his obligations under this Agreement or any agreement between the Executive and the Company or any of its Affiliates;

	
vi.

	
the Executive's engagement in any competitive activity which would constitute a breach of the Executive's duty of loyalty or of his obligations under this Agreement or any agreement between the Executive and the Company or any of its Affiliates;

	
vii.

	
the Executive's material breach of any of the Company's material written policies.

	
viii.

	
the Executive's willful and continued failure to substantially perform his duties under this Agreement (other than as a result of incapacity due to physical or mental illness); or

	
ix.

	
any regulatory agency recommends or determines that Executive is ineligible, unauthorized, or unfit to hold any director or officer position with the Company or any of its subsidiaries or Affiliates; or

	
x.

	
any misconduct by the Executive that is materially injurious to the business or financial reputation of the Company or any of its Affiliates.

 

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For purposes of determining whether an event of Cause has occurred, an act, or a failure to act, shall not be deemed willful or intentional, as those terms are defined herein, unless it is done, or omitted to be done, by the Executive in bad faith or without a reasonable belief that his action or omission was in the best interest of the Company. Failure to meet performance standards or objectives, by itself, shall not constitute "Cause". "Cause" also includes any of the above grounds for dismissal regardless of whether the Company learns of it before or after terminating the Executive's employment.

(c)  "Change of Control" shall mean the occurrence of any of the following events:

	
(1)

	
Any Person (as defined below) acquires ownership of the Class A Common Stock that, together with Class A Common Stock previously held by the acquirer, constitutes more than fifty percent (50%) of the total market value or Voting Securities of the Company's outstanding stock  If any Person is considered to own more than fifty percent (50%) of the total market value or Voting Securities of the Company's outstanding stock, the acquisition of additional stock by the same Person does not cause such a change in ownership.  An increase in the percentage of stock owned by any Person as a result of a transaction in which the Company acquires its stock in exchange for property, is treated as an acquisition of stock;  

	
(2)

	
Any Person acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by that Person) ownership of the Company's stock possessing at least thirty percent (30%) of the Company's Voting Securities;

	
(3)

	
Individuals who are Continuing Independent Directors cease for any reason to constitute a 2/3 majority of the independent members of the Board;

	
a.

	
"Continuing Independent Director" means an individual (i) who is as of the Effective Date, an independent director of the Company, or (ii) who becomes an independent director of the Company after the Effective Date and whose initial election, or nomination for election by the Company's shareholders, was vetted and recommended by the Nominating & Governance Committee and approved by at least a 2/3 majority of the then Continuing Independent Directors, but excluding, for the purposes of this clause (ii), an individual whose initial assumption of office occurs as a result of an actual or threatened proxy contest relating to the election of directors.

	
(4)

	
The size of the Board of Directors increases above ten (10) members as a result of a vote of the Board in which a 2/3 majority of the Continuing Independent Directors did not vote in favor of such increase;

	
(5)

	
(x) The Company combines with another entity and is the surviving entity, or (y) all or substantially all of the assets or business of the Company is disposed of pursuant to a sale, merger, consolidation, liquidation, dissolution or other transaction or series of transactions (each of (x) and (y) being a "Triggering Event") unless the holders of Voting Securities of the Company immediately prior to such Triggering Event own, directly or indirectly, more than two-thirds of the Voting Securities (measured both by number of Voting Securities and by voting power) of  (1) in the case of a combination in which the Company is the surviving entity, the surviving entity and (2) in any other case, the entity (if any) that succeeds to all or substantially all of the Company's business and assets; or

	
(6)

	
Any Person acquires (or has acquired during the twelve (12) month period ending on a date of the most recent acquisition by that Person) assets from a corporation that have a total gross fair market value equal to at least forty percent (40%) of the total gross fair market value of all the Company's assets immediately prior to the acquisition or acquisitions.  Gross fair market value means the value of the Company's assets, or the value of the assets being disposed of, without regard to any liabilities associated with these assets.

 

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In determining whether a Change of Control occurs, the attribution rules of Code Section 318 apply to determine stock ownership.  For purposes of the definition of Change of Control, a "Person" shall mean any person, entity or "group" within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, except that such term shall not include (a) the Company or any of its subsidiaries, (b) a trustee or other fiduciary holding securities under an employee benefit plan of any member of the Company Group, (c) an underwriter temporarily holding securities pursuant to an offering of such securities or (d) an entity owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of shares of the Company. 

	
(d)

	
Claim" shall include, without limitation, any claim, demand, request, investigation, dispute, controversy, threat, discovery request, or request for testimony or information.

(e) "Code" shall mean the Internal Revenue Code of 1986, as amended. Any reference to a particular section of the Code shall include any provision that modifies, replaces or supersedes such section.

(f) "Competitive Services or Products" shall mean those products offered by or in development by the Company, as provided in a list of Competitive Services and Products to be provided to Executive no later than seven (7) days after the Effective Date, which list may be updated during the Term only by mutual written agreement of the Parties.

(g) "Competitor" shall mean any existing or newly-formed Person or entity, including divisions or subsidiaries thereof that offers, markets or administers Competitive Products or Services.

(h) "Confidential Information" shall mean all confidential or proprietary information developed or used by the Company or its Affiliates relating to their business, operations, employees, customers, suppliers or distributors including, but not limited to: confidential or proprietary customer lists, purchase orders, financial data, pricing information and price lists; confidential or proprietary business plans and market strategies and arrangements; confidential or proprietary books, records, manuals, advertising materials, catalogues, correspondence, mailing lists, production data, sales materials, sales records, purchasing materials, purchasing records, personnel records and quality control records; confidential or proprietary trademarks, copyrights and patents, and applications therefor; trade secrets; confidential or proprietary inventions, processes, procedures, research records, market surveys and marketing know-how; and confidential or proprietary technical papers, software, computer programs, data bases and documentation thereof, including but not limited to source codes, algorithms, processes, formulae and flow charts. The term "Confidential Information" shall not include any document, record, data compilation, or other information that (x) has previously been disclosed to the public, or is in the public domain, other than as a result of the Executive's breach of Section 12(a), or (y) is known or generally available to the public or within any trade or industry of the Company or any of its Affiliates.

(i) "Customer" shall mean any Person to whom the Company or a Subsidiary sold or distributed products or services during the two years prior to the Termination Date, and any prospective customer who the Company has provided a proposal for products or services at the time of Termination (or within the prior six (6) month period).

(j)  "Person" shall mean any individual, corporation, partnership, limited liability company, joint venture, trust, estate, board, committee, agency, body, employee benefit plan, or other person or entity.

(k) "Proceeding" shall include, without limitation, any actual, threatened or reasonably anticipated action, suit or proceeding, whether civil, criminal, administrative, investigative, appellate, formal, informal or other.

(l) "Subsidiary" shall mean any entity for which the Company owns a majority of the entity's Voting Securities.

(m) "Termination Date" shall mean the date on which the Executive's employment hereunder terminates in accordance with this Agreement.

(n) "Voting Securities" shall mean issued and outstanding securities of any class or classes having general voting power, under ordinary circumstances in the absence of contingencies, to elect, the members of the board of directors (or similar governing body) of the issuer.

 

 

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