Document:

ex10-1.htm

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”), is entered into as of this 28th day of September, 2015 (the “Effective Date”) by and between The Providence Service Corporation, a Delaware corporation, with its corporate headquarters located at 64 East Broadway Blvd., Tucson, Arizona, 85701 (the “Company”), and David Shackelton, an individual currently residing at ----------------------------------- (“Employee”). 

 

BACKGROUND

 

WHEREAS, the Company desires to employ and appoint Employee as the Company’s Senior Vice President and Chief Financial Officer;

 

WHEREAS, effective as of the Effective Date, the Company’s Board of Directors (the “Board”) has appointed Employee as Senior Vice President and Chief Financial Officer, and Employee desires to accept such employment and position; and

 

WHEREAS, the Company and Employee are entering into this Agreement to set out the agreement between them regarding the terms of Employee’s employment.

 

NOW, THEREFORE, in consideration of the facts, mutual promises and covenants contained herein and intending to be legally bound hereby, the parties hereto agree as of the Effective Date:

 

1. Employment and Term. The Company hereby agrees to employ Employee and Employee hereby agrees to work in the employ of the Company. Such employment will have a term (the “Term”) commencing as of the Effective Date and, if not previously terminated in accordance with the terms of this Agreement, ending at the close of business on December 31, 2017. Employee’s employment may continue hereunder following the Term. Employee’s employment, whether during the Term or thereafter, shall be subject in all respects to the terms and conditions set forth in this Agreement, as well as to all of the Company’s policies and rules that are binding on executive employees generally.

 

2. Office and Duties.

 

(a) During the Term, Employee shall serve as the Senior Vice President and Chief Financial Officer of the Company, and shall report directly to the Company’s Chief Executive Officer (the “CEO”) and be subject to the CEO’s supervision and direction. 

 

(b) In his capacity as Senior Vice President and Chief Financial Officer of the Company, Employee shall have such authority, perform such duties, discharge such responsibilities and render such services as are designated from time to time by the CEO or the Board of Directors of the Company (the “Board”). 

 

(c) While employed by the Company or any Affiliate (as hereinafter defined), Employee shall render his services diligently, faithfully and to the best of his ability, and shall devote substantially all of his working time, energy, skill and best efforts to the performance of his duties hereunder, in a manner that will further the business and interests of the Company.

 

(d) While employed by the Company or any Affiliate, Employee shall not be engaged in any business activity which, in the reasonable judgment of the CEO or the Board, conflicts with Employee’s duties hereunder, whether or not such activity is in breach of Section 7 or pursued for pecuniary advantage.

 

3. Compensation.

 

(a) Base Salary. In consideration of the services rendered by Employee to the Company during the Term, effective as of the Effective Date, Employee shall receive an annual base salary of Four Hundred Fifty Thousand and 00/100 Dollars ($450,000.00) (the “Base Salary”), payable in equal periodic installments in accordance with the Company’s regular payroll practices in effect from time to time. 

 

 

 

 

  

(b) Bonus Plans/Incentive Compensation Programs. 

 

(i) In addition to the annual Base Salary, during the Term, Employee shall be eligible to participate in bonus plans or incentive compensation programs, if any, as may be approved by the Board from time to time (“Bonus”). 

 

(ii) For calendar year 2015, Employee will participate in the following Bonus program: Employee shall be paid an amount equal to twenty-five percent (25%) of the 2015 Pre-CFO Base Salary upon the achievement of one hundred percent (100%) of the Company’s budgeted EBITDA performance for 2015. The “2015 Pre-CFO Base Salary” shall mean the Base Salary to which Employee was entitled starting on January 1, 2015 and ending on August 5, 2015. Employee shall be paid an amount equal to seventy-five percent (75%) of the 2015 CFO Aggregate Base Salary upon the achievement of one hundred percent (100%) of the Company’s budgeted EBITDA performance for 2015, and up to an additional twenty-five percent (25%) of the 2015 Aggregate Base Salary if the Company exceeds such budgeted performance, with the precise amount of such additional Bonus to be calculated on a basis consistent with additional EBITDA-based bonus opportunity payments made to other executive officers of the Company in respect of 2015. For the purposes hereof, Employee’s “2015 CFO Aggregate Base Salary” shall mean the total Base Salary to which Employee was entitled starting on August 6, 2015 and ending on December 31, 2015. Unless otherwise specified in respect of a Bonus, (x) the Bonus shall be paid, net of any required withholdings, during calendar year 2016 promptly following the completion and filing of the Company’s annual audited financial statements for 2015, and (y) Employee’s rights to receive the Bonus shall be contingent upon being employed by the Company on the date that payment of the Bonus is due, except as otherwise expressly provided in this Agreement. Employee hereby acknowledges and agrees that the amount to which Employee is entitled under this Section 3(b)(ii) is in lieu of any amounts that Employee would otherwise have been entitled to receive in connection with his employment for the calendar year 2015 with the Company as Head of Corporate Development.

 

(iii) For both the 2016 and 2017 calendar years, Employee shall be eligible to receive a Bonus. The percentage of the Base Salary such Bonuses represent as well as the goals to be achieved before such Bonuses are paid out will be determined by the Board or compensation committee of the Board.

 

(c) Benefits. 

 

(i) During his employment hereunder, Employee also shall be entitled to participate in all fringe benefits, if any, as may be in effect from time to time that are generally available to the Company’s senior executive officers, and such other fringe benefits as the Board and/or Compensation Committee shall deem appropriate, subject to eligibility requirements thereof (collectively, the “Benefits”).

 

(ii) During the Term, in addition to the foregoing Benefits, the Company shall, subject to the terms hereof (including as set forth in Section 3(c)(iii)), use its reasonable efforts to procure and maintain term life insurance (“Life Insurance”) on the life of Employee (if such term insurance is not already in effect on the date of this Agreement). Such Life Insurance shall be in the amount of Nine Hundred Thousand and 00/100 Dollars ($900,000.00). Employee shall be the owner of the Life Insurance policy and shall have the absolute right to designate the beneficiaries thereunder. The premiums in respect of such Life Insurance policy shall be paid by the Company for the shorter of (A) the period of five (5) years commencing on the later of (1) the date of this Agreement and (2) the date the Life Insurance goes into effect and (B) the period Employee is employed by the Company hereunder; premiums in respect thereof shall thereafter be paid by Employee.

 

(iii) Employee agrees to submit to any physical examination required by the insurer of any such policy and will otherwise cooperate with the Company in connection with any life insurance on Employee’s life the Company may wish to obtain, provided, however, that the results of any such physical examination shall not be shared with the Company or used in any way in connection with Employee’s employment other than the procurement of insurance pursuant to this Subsection. Employee agrees to execute any HIPAA or other privacy waiver in favor of the Company that the Company considers necessary or appropriate for sharing of such information, or to waive the coverage otherwise under this Section 3(c). In the event Employee is determined to be suffering from a congenital defect or other illness or condition which would preclude the Company from obtaining the insurance referred to in the preceding paragraph at a cost substantially equivalent to the cost of obtaining such insurance for a healthy individual of Employee’s age and gender, the Company shall, in lieu of purchasing the insurance in the amount set forth in the preceding paragraph, purchase the amount of insurance, if any, that can be purchased at a cost substantially equivalent to the cost of obtaining such insurance for a healthy individual of Employee’s age and gender.

 

 

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(d) Vacation. During his employment hereunder, Employee shall be entitled to the number of paid vacation days in each calendar year as determined by the Company from time to time for its senior executive officers. Vacation days which are not used during any calendar year may not be accrued or carried over to the next year, nor shall Employee be entitled to compensation for unused vacation days.

 

(e) Business Expenses. During his employment hereunder, the Company shall pay or reimburse Employee for all reasonable expenses incurred or paid by Employee in the performance of Employee’s duties hereunder, upon timely presentation of expense statements or vouchers and such other information as the Company may reasonably require and in accordance with the generally applicable policies and practices of the Company, in each case to the extent such expenses are consistent with Company policies; provided that the Company may at any time, further limit, or eliminate, Employee’s right to incur such expenses. Any reimbursement due hereunder shall be separately requested and paid as soon as practicable and in any case within one (1) year after Employee incurs the expense for which reimbursement is requested.

 

(f) Withholding. All payments made pursuant to this Agreement shall be subject to such withholding taxes as may be required by any applicable law.

 

4. Representations of Employee. Employee represents to the Company that: (a) there are no restrictions, agreements or understandings whatsoever to which Employee is a party that would prevent, or make unlawful, Employee’s execution of this Agreement and his employment hereunder; (b) Employee’s execution of this Agreement and Employee’s employment hereunder shall not constitute a breach of any contract, agreement or understanding, oral or written, to which Employee is a party, or by which Employee is bound; and (c) Employee is of full capacity, free and able to execute this Agreement and to enter into this Agreement with the Company.

 

5. Termination. This Agreement and Employee’s employment hereunder shall continue during the Term and thereafter until terminated as provided herein. Upon termination of this Agreement and Employee’s employment hereunder, Employee shall immediately resign from any officer, director or other position in which he is serving on behalf of the Company or any Affiliate, and shall tender his resignation as a director of any and all Affiliates of the Company.

 

(a) Termination by Company for Cause. The Company shall have the right, during the Term and thereafter, to terminate this Agreement and Employee’s employment hereunder at any time for “Cause”, effective immediately or as of a date specified by the Company in a notice of termination. For purposes of this Agreement, the term “Cause” shall mean the following:

 

(i) Employee commits fraud or theft against the Company or any of its subsidiaries, affiliates, joint ventures and related organizations, including any entity managed by the Company (collectively referred to as “Affiliates”), or is convicted of, or pleads guilty or nolo contendere to, a felony or any crime involving fraud or moral turpitude; 

 

(ii) In carrying out his duties hereunder, Employee engages in conduct that constitutes gross neglect or willful misconduct and that results, in either case, in material financial or reputational harm to the Company or its Affiliates; 

 

(iii) Employee materially breaches any provision of this Agreement (including but not limited to the restrictive covenants contained in Section 7) or breaches any fiduciary duty or duty of loyalty owed to the Company or its Affiliates or shareholders; 

 

(iv) Employee engages in any wrongful or questionable conduct which does or which is reasonably likely to bring the Company or its Affiliates into public disgrace or embarrassment, or which is reasonably likely to cause one or more of its customers or clients to cease doing business with, or reduce the amount of business with, the Company or its Affiliates; 

 

 

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(v) Employee repeatedly neglects or refuses to perform his duties or responsibilities as directed by the CEO or the Board or any committee established by the Board, or violates any express direction of any lawful rule, regulation or policy established by the Company, the CEO, the Board or any committee established by the Board which is consistent with the scope of Employee’s duties under this Agreement, and such failure, refusal or violation continues uncured for a period ten (10) days after written notice from the Company to Employee specifying the failure, refusal or violation and the Company’s intention to terminate this Agreement for Cause; 

 

(vi) Employee commits any act or omission resulting in or intended to result in direct material personal gain to Employee at the expense of the Company or its Affiliates; or

 

(vii) Employee materially compromises trade secrets or other confidential and proprietary information of the Company or its Affiliates.

 

Action or inaction by Employee shall not be considered “willful” unless done or omitted by him intentionally and without his reasonable belief that his action or inaction was in the best interests of the Company or its Affiliates, and shall not include failure to act by reason of total or partial incapacity due to physical or mental illness.

 

(b) Termination upon Death/Termination by Company upon Disability of Employee. Employee’s employment will terminate upon his death. The Company shall have the right to terminate this Agreement and Employee’s employment hereunder at any time upon the Disability of Employee. The term, “Disability”, as used herein, means any physical or mental illness, disability or incapacity which prevents Employee from performing the essential functions of his job, with or without reasonable accommodations, hereunder for a period of not less than one hundred fifty (150) consecutive days or for an aggregate of one hundred eighty (180) days during any period of twelve (12) consecutive months. Periods where Employee can perform the essential functions of his job with a reasonable accommodation shall not be included in the determination of a Disability hereunder. During any period of Disability, Employee agrees to submit to reasonable medical examinations upon the reasonable request, and at the expense, of the Company.

 

(c) Termination By Company Without Cause. The Company shall have the right to terminate this Agreement and Employee’s employment hereunder at any time without Cause and/or without the occurrence of Employee’s death or Disability by giving written notice which shall be effective on the date specified in such notice of termination.

 

(d) Termination by Employee; Termination Following Term. In the event Employee terminates his employment, whether or not during the Term, or if the Company terminates this Agreement and Employee’s employment hereunder effective following the end of the Term, Employee shall give the Company not less than sixty (60) days prior written notice of termination. Upon a termination of Employee’s employment with the Company under this Section 5(d), the effective date of termination shall be the date set forth in Employee’s resignation notice (assuming such date is in compliance with the notice provisions of this Section 5(d)) or an earlier date as determined by the Company after the Company’s receipt of such notice, in its sole discretion, but not earlier than the date on which the Company learned of Employee’s decision to terminate his employment.

 

(e) Notice of Termination. Any termination, except for death, pursuant to this Section 5 shall be communicated by a Notice of Termination. For purposes of this Agreement, a “Notice of Termination” shall mean a written notice which shall indicate those specific termination provisions in this Agreement relied upon and which sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Employee’s employment under the provisions so indicated. The Notice of Termination shall also set forth that Employee’s employment is terminated and be delivered in accordance with the terms of this Agreement.

Notwithstanding anything to the contrary set forth herein, Sections 7, 8 and 9 shall survive the end of the Term and/or the termination of Employee’s employment hereunder for any reason, and shall remain in full force and effect thereafter.

 

 

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6. Payments Upon Termination and Change in Control.

 

(a) Termination for Cause. In the event Employee’s employment hereunder is terminated for Cause at any time, whether or not during the Term, all of Employee’s rights to his Base Salary, Benefits and Bonus, if any, shall immediately terminate as of the date of such termination, except that Employee shall be entitled to any earned and unpaid portion of Employee’s Base Salary and accrued Benefits up to the date of termination, less all deductions or offsets for amounts owed by Employee to the Company. Employee shall not be entitled to any Bonus, prorated or otherwise. The Company shall have no further obligations to Employee under this Agreement.

 

(b) Termination Due to Death or Disability. In the event Employee’s employment hereunder is terminated at any time, whether or not during the Term, due to his death or Disability, all of Employee’s rights to his Base Salary, Benefits (except to the extent that any Benefits are expressly available following termination of employment) and Bonus, if any, shall immediately terminate as of the effective date of such termination, except that Employee (or, in the event that Employee’s employment hereunder is terminated due to Employee’s death, Employee’s heirs, personal representatives or estate) shall be entitled to any earned and unpaid portion of Employee’s Base Salary, any Bonus (if earned) relating to a fiscal year which was completed before Employee’s death or Disability and accrued Benefits up to the date of termination, in each case less all deductions or offsets for amounts owed by Employee to the Company. Subject to the provisions of the applicable Company stock option or stock incentive plan, should Employee’s death occur within one (1) year following his termination for Disability, but prior to his exercise of any options vested at the date of termination, Employee’s estate shall be entitled to exercise Employee’s options for the earlier of (i) the remainder of the one (1) year period or (ii) the date upon which the option would have expired by its terms. The foregoing clause (ii) shall apply to the extent needed to avoid adverse tax consequences under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). The Company shall have no further obligations to Employee under this Agreement.

 

(c) Termination By the Company Without Cause. If, during the Term, the Company terminates Employee’s employment other than for Cause or the occurrence of Employee’s death or Disability, Employee shall be entitled to continue to receive (i) any Bonus (if earned) relating to a fiscal year which was completed before the effectiveness of such termination (payable as set forth in Section 3(b)), (ii) any Bonus for the fiscal year through the date of effectiveness of such termination, to the extent earned, pro-rated (based on a percentage defined by a fraction, the numerator of which is the number of days during the fiscal year prior and through the date of effectiveness of the termination, and the denominator of which is three hundred sixty-five (365)), payable following the completion and filing of the Company’s annual audited financial statements in respect of such fiscal year, and (iii) an amount equal to twelve months of Employee’s Base Salary in effect as of the date of effectiveness of such termination (in the case of clause (iii), Employee’s Base Salary will be paid in periodic payments which correspond to the Company’s regular payroll periods) (the period during which Employee’s Base Salary will continue as provided in this Clause (iii), the “Post Employment Payment Period”); provided that any payments set out in clauses (i), (ii) and (iii) shall only be made so long as Employee is not in breach of this Agreement and shall be net of appropriate tax and other withholdings. Notwithstanding the foregoing, the Company may suspend payments of such Bonus or Base Salary until seven (7) days following the date on which Employee executes and delivers to the Company a general release of all claims relating to Employee’s employment and termination from employment (the “General Release”) in a form provided by the Company (which General Release shall not affect any rights Employee may have under COBRA or under any vested award previously issued to Employee by the Company under any Company benefit plan) assuming such General Release is not revoked during such seven (7) day period and assuming Employee is not in breach of this Agreement. Employee understands that if the conditions set forth in the preceding sentence are not met, Employee shall not be entitled to a Bonus or any payments of Base Salary relating to periods of time following the effective date of the termination of Employee’s employment under this Section 6(c) or otherwise. The Company shall have no further obligations to Employee under this Agreement. Notwithstanding any other provision in this Agreement to the contrary, by notice to Employee during the Post-Employment Payment Period, the Company may elect to continue to pay Employee’s Base Salary for any additional period ending no later than the second anniversary of the effectiveness of termination of Employee’s employment hereunder by the Company without Cause (“Continuing Payment Period”).

 

(d) Termination By Employee During Term. In the event Employee terminates his employment during the Term, all of Employee’s rights to his Base Salary, Benefits (except to the extent any Benefits are expressly available following such event) and Bonus, if any, shall immediately terminate as of the effective date of termination, except that Employee shall be entitled to any earned and unpaid portion of his Base Salary and accrued Benefits up to the date of termination. Employee shall not be entitled to any Bonus, prorated or otherwise. The Company shall have no further obligations to Employee under this Agreement.

 

 

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(e) Payment Upon Change in Control. Notwithstanding any other provision in this Agreement to the contrary, if a “Change in Control” of the Company (as defined herein) shall occur during the Term, and after such Change in Control but prior to the end of the Term the Company terminates Employee’s employment without Cause with such termination being effective during the Term, in lieu of any other amounts payable under this Agreement, Employee shall be entitled to receive (i) an amount equal to twelve months of Employee’s Base Salary in effect as of the date of effectiveness of such termination in a lump sum payment, payable immediately upon cessation of employment, and (ii) a pro-rata portion of the Bonus, contingent on the Company’s achievement of any performance criteria relating to such Bonus, payable promptly following completion and filing of the Company’s year-end audit for the applicable year (such payments shall be net of appropriate tax and other withholdings, and are referred to collectively as the “Change in Control Payments”); provided, however, that if such Change in Control Payments, either alone or together with other payments or benefits, either cash or non-cash, that Employee has the right to receive from the Company, including, but not limited to, accelerated vesting or payment of any deferred compensation, options, stock appreciation rights or any benefits payable to Employee under any plan for the benefit of employees, which would constitute an “excess parachute payment” (as defined in Section 280G of the Code), then such Change in Control Payments or other benefits shall be reduced to the largest amount that will not result in receipt by Employee of an excess parachute payment. A Change in Control will have no other effect on this Agreement, which will remain in full force and effect.

 

(i) Definition of Change in Control. For purposes of this Agreement, the term “Change in Control” shall mean an event or events, in which:

 

(A) any “person” as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the “1934 Act”) (other than (1) the Company, (2) any subsidiary of the Company, (3) any trustee or other fiduciary holding securities under an employee benefit plan of the Company or of any subsidiary of the Company or (4) any company owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company), is or becomes the “beneficial owner” (as defined in Section 13(d) of the 1934 Act), together with all affiliates and Associates (as such terms are used in Rule 12b-2 of the General Rules and Regulations under the 1934 Act) of such person, directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding securities;

 

(B) the consummation of a merger or consolidation of the Company with any other company, other than (1) a merger or consolidation which would result in the holders of voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any subsidiary of the Company, having at least 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation or (2) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) after which no “person” (with the method of determining “beneficial ownership” used in clause (A) of this definition) owns more than 50% of the combined voting power of the securities of the Company or the surviving entity of such merger or consolidation; or

 

(C) the Company consummates its liquidation or sale or disposition by the Company of all or substantially all of the Company’s assets.

 

(f) Recognition. Employee recognizes and accepts that the Company shall not, in any case, be responsible for any additional amount, severance pay, termination pay, severance obligation or other payments or damages whatsoever arising from the termination of Employee’s employment above and beyond those specifically provided for herein.

 

 

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7. Restrictive Covenants. 

 

(a) Business of the Company. The term “Business of the Company”, as used in this Section 7, shall mean the provision by the Company or its Affiliates of social services, counseling, client monitoring and mentoring, substance abuse treatment and counseling, school support services, case management and foster care services to children, adults and families in community based settings such as a client’s home, school or workplace, intake, assessment and referral, case management and network management services to governmental agencies and provider networks, and educational tutoring, job readiness and private parole or probation, non-emergency medical transportation, health risk assessments and any other business in which the Company or its Affiliates have been, plan or have planned to be engaged during Employee’s employment with the Company or its Affiliates.

 

(b) Non-Competition. During Employee’s employment with the Company or any of its Affiliates and thereafter, as applicable, during (i) the Post-Employment Payment Period or, if applicable, during the Continuing Payment Period (as defined in Section 6(c)) or (ii) the two (2) year period following the effectiveness of the Company’s termination of Employee for Cause or Employee’s termination of his employment hereunder, Employee will not, in any capacity (including, but not limited to, owner, partner, member shareholder, consultant, advisor, financier, agent, employee, officer, director, manager or otherwise), directly or indirectly, for his own account or for the benefit of any natural person, corporation, partnership, trust, estate, joint venture, sole proprietorship, association, cooperative or other entity (any of the foregoing, a “Person”), establish, engage in, finance, advise, work for, or be connected with, except as an employee of the Company, any business in competition with the Business of the Company if such business competes with the Business of the Company or any Affiliate in any country, State, county, or municipality where the Company or its Affiliates conduct business, are preparing to conduct business or have conducted business during Employee’s employment with the Company or any of its Affiliates (a “Competitive Business”). Notwithstanding the foregoing, (A) nothing in this Section 7(b) shall preclude Employee from serving in any capacity (i.e., whether as an employee, partner, principal, member, investor, consultant or otherwise) to or in respect of a business or entity (including, without limitation, an investment trust or investment partnership) that provides investment services or is otherwise engaged in the business of investing capital for third parties, or any manager or affiliate of any of the foregoing (any such entity, manager or affiliate hereafter called an “Investment Firm”), so long as Employee does not have personal, direct and material responsibilities for the day to day operations of any Competitive Business in which such Investment Firm has made or directed an investment and (B) this Section 7(b) shall not apply, and therefore Employee shall not be subject to any covenant in this Section 7(b), in the event that, within one (1) year following the effectiveness of a Change in Control (I) Employee is terminated by the Company during or following the Term without Cause or (II) the Term has expired and Employee’s employment with the Company is terminated due to resignation by Employee at a time that the Company has no basis to terminate Employee with Cause.   

 

(c) Non-Solicitation/Non-Piracy. During Employee’s employment with the Company or any of its Affiliates and for a period of two (2) years thereafter, Employee will not, directly or indirectly, for his own account or for the benefit of any Person or entity:

 

(i) solicit, service, supply or sell to, contact, or aid in the solicitation, servicing, supplying or selling to any Person or entity which is or was a customer, prospective customer, client, prospective client, contractor, subcontractor or supplier of the Company or its Affiliates within three (3) years prior to Employee’s termination of employment (“Company Customers/Clients”), for the purpose of (A) selling services or goods in competition with the Business of the Company; (B) inducing Company Customers/Clients to cancel, transfer or cease doing business in whole or in part with the Company or any of its Affiliates or (C) inducing Company Customers/Clients to do business with any Person in competition with the Business of the Company; or

 

(ii) solicit, aid in solicitation of, induce, contact for the purpose of, encourage or in any way cause any employee of the Company or any of its Affiliates to leave the employ of the Company or its Affiliates, or otherwise interfere with such employee’s relationship with the Company or any of its Affiliates.

 

 

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(d) Non-Disclosure. Other than in furtherance of the Business of the Company, in the ordinary course in Employee’s capacity as an employee hereunder, Employee will not, at any time, except with the express prior written consent of the Board, directly or indirectly, disclose, communicate or divulge to any Person, or use for the benefit of any Person, any secret, confidential or proprietary knowledge or information relating to the Company or any of its Affiliates including, but not limited to, customer and client lists, customer and client accounts and information, prospective client, customer, contractor or subcontractor lists and information, services, techniques, methods of operation, pricing, costs, sales, sales strategies or methods, marketing, marketing strategies or methods, products, product development, research, know-how, policies, financial information, financial condition, business strategies or plans or other information of the Company or its Affiliates which is not generally available to the public. Upon the expiration or termination of Employee’s employment with the Company or any Affiliate, Employee shall immediately deliver to the Company all memoranda, books, papers, letters and other data (whether in written form or computer stored), and all copies of same, which were made by Employee or came into Employee’s possession or under his control at any time prior to the expiration or termination of Employee’s employment, and which in any way relate to the business, assets or properties of the Company or any of its Affiliates as conducted or as planned to be conducted by the Company or its Affiliates; provided that Employee can keep such documents and information as are pertinent to the terms of his employment and the compensation payable to him in respect thereof subject to other restrictions and provisions set forth in this Section 7.

 

(e) Intellectual Property. Employee will promptly communicate to the Company, in writing when requested, all software, designs, techniques, concepts, methods and ideas, other technical information, marketing strategies and other ideas and creations pertaining to the Business of the Company which are conceived of or developed by Employee alone or with others, at any time (during or after business hours) while Employee is employed by the Company or any of its Affiliates. Employee acknowledges that all of those ideas and creations are inventions and works for hire, and will be the Company’s or its Affiliates’ exclusive property. Employee will sign any documents which the Company deems necessary to confirm its ownership of those ideas and creations and Employee will cooperate with the Company to facilitate the ability of the Company to own or exploit all of those ideas and creations.

 

(f) Non-Disparagement. Employee will not at any time publish or communicate disparaging or derogatory statements or opinions about the Company or its Affiliates, including but not limited to, disparaging or derogatory statements or opinions about the Company’s or its Affiliates’ management, products or services to any third party. It shall not be a breach of this Section 7(f) for Employee to testify truthfully in any judicial or administrative proceeding or to make statements or allegations in legal filings, including, without limitation, any such filings made by Employee to enforce his rights against the Company or any of its affiliates, that are based on Employee’s reasonable belief and are not made in bad faith.

 

(g) Enforcement. Employee acknowledges that the covenants and agreements of this Section 7 (the “Covenants”) herein are of a special and unique character, which gives them peculiar value, the loss of which cannot be reasonably or adequately compensated for in an action at law. Employee further acknowledges that any breach or threat of breach by him of any of the Covenants will result in irreparable injury to the Company for which money damages could not be adequate to compensate the Company. Therefore, in the event of any such breach or threatened breach, the Company shall be entitled, in addition to all other rights and remedies which the Company may have at law or in equity, to have an injunction issued by any competent court enjoining and restraining Employee and/or all other Persons involved therein from committing a breach or continuing such breach. The remedies granted to the Company in this Agreement are cumulative and are in addition to remedies otherwise available to the Company at law or in equity. The Covenants contained in this Section 7 are independent of any other provision of this Agreement, and the existence of any claim or cause of action which Employee or any such other Person may have against the Company shall not constitute a defense or bar to the enforcement of any of the Covenants. If the Company is obliged to resort to litigation to enforce any of the Covenants which has a fixed term, then such term shall be extended for a period of time equal to the period during which a breach of such Covenant was occurring, beginning on the date of a final court order (without further right of appeal) holding that such a breach occurred, or, if later, the last day of the original fixed term of such Covenant.

 

(h) Acknowledgements. Employee expressly acknowledges that the Covenants are a material part of the consideration bargained for by the Company and, without the agreement of Employee to be bound by the Covenants, the Company would not have agreed to enter into this Agreement. Employee further acknowledges and agrees that the Business of the Company and its services are highly competitive, and that the Covenants contained in this Section 7 are reasonable and necessary to protect the Company’s legitimate business interests. In addition, Employee acknowledges that in the event his employment with the Company terminates, he will still be able to earn a livelihood without violating this Agreement, and that the Covenants contained in this Section 7 are material conditions to his employment and continued employment with the Company.

 

 

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(i) Scope. If any portion of any Covenant or its application is construed to be invalid, illegal or unenforceable, then the remaining portions and their application shall not be affected thereby, and shall be enforceable without regard thereto. If any of the Covenants is determined to be unenforceable because of its scope, duration, geographical area or similar factor, then the court or other trier of fact making such determination shall modify, reduce or limit such scope, duration, area or other factor, and enforce such Covenant to the extent it believes such factor(s) to be lawful and appropriate.

 

(j) Costs; Expenses in the Event of Breach. In the event that Employee breaches or attempts to breach the Covenants contained, the Company shall be entitled to reimbursement from Employee for all costs and expenses associated with any successful action to enforce any of the Covenants, including but not limited to reasonable attorneys’ fees and costs of litigation. Should the Company file an action against Employee relating to a breach of the Covenants, and a court of competent jurisdiction determines that Employee did not breach any of the Covenants, Employee shall be entitled to reimbursement from the Company of all costs and expenses associated with defending against such action asserting a breach, including reasonable attorneys’ fees and costs.

 

8. Section 409A of the Code.

 

(a) Amounts payable under this Agreement are intended either to be exempt from the rules of Section 409A of the Code or to satisfy those rules and shall be construed accordingly. The Company shall not be liable to Employee with respect to any adverse tax consequences arising under Section 409A or other provision of the Code by reason of the operation of this Agreement or any benefit provided to Employee under any employee benefit plan sponsored or maintained by the Company, in either case, in accordance with its terms.

 

(b) If any provision of this Agreement contravenes any regulations or Treasury guidance promulgated under Code Section 409A or could cause an amount payable hereunder to be subject to the interest and penalties under Code Section 409A, such provision of this Agreement shall be deemed automatically modified to maintain, to the maximum extent practicable, the original intent of the applicable provision without violating the provisions of Code Section 409A. A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a “Separation from Service” within the meaning of Code Section 409A and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean Separation from Service.

 

(c) Notwithstanding any provisions of this Agreement to the contrary, if Employee is a “specified employee” (as such term is defined for purposes of Code Section 409A), no payment of amounts not exempt from Code Section 409A shall be made under Section 6(c) or 6(e) hereof prior to the six (6) month anniversary of Employee’s separation of service to the extent such six (6) month delay in payment is required to comply with Code Section 409A. To the extent that this Section 8(c) applies to any Severance Payment under Section 6(c) hereof, and the actions described in this sentence do not cause adverse tax consequences to be imposed under the Code, the Company shall, as soon as practicable following Employee’s termination of employment, and after Employee executes and does not revoke the General Release, deposit an amount equal to the gross amount of such Severance Payment into an irrevocable Rabbi Trust in the form prescribed by Internal Revenue Service Revenue Procedure 92-64. Such Rabbi Trust shall be established and maintained by the Company, at its own expense, pending the distribution of such amount to Employee under this Agreement. The Trustee shall be a financial institution selected by the Company and the Trustee shall invest all amounts deposited therein with the purpose of preserving the Trust principal. All principal and income from the Rabbi Trust shall be paid to Employee on the first day following the six-month anniversary of Employee’s Separation from Service. The Trustee shall withhold or cause to be withheld all withholding taxes as may be required by applicable law.

 

9. Miscellaneous.

 

(a) Indulgences, Etc. Neither the failure, nor any delay, on the part of either party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same, or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.

 

 

9

 

  

(b) Controlling Law; Consent to Arbitration; Service of Process.

 

(i) This Agreement and all questions relating to its validity, interpretation, performance and enforcement (including, without limitation, provisions concerning limitations of actions), shall be governed by and construed in accordance with the laws of the State of Arizona (notwithstanding any conflict of laws doctrines of such state or other jurisdiction to the contrary), and without the aid of any canon, custom or rule of law requiring construction against the draftsman.

 

(ii) Except to the extent provided for in Section 7 above (relating to injunctive relief and other equitable remedies), the Company and Employee agree that any claim, dispute or controversy arising under or in connection with this Agreement, or otherwise in connection with Employee’s employment by the Company or termination of his employment (including, without limitation, any such claim, dispute or controversy arising under any federal, state or local statute, regulation or ordinance or any of the Company’s employee benefit plans, policies or programs) shall be resolved solely and exclusively by binding, confidential, arbitration. The arbitration shall be held in Tucson, Arizona (or at such other location as shall be mutually agreed by the parties). The arbitration shall be conducted in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association (the “AAA”) in effect at the time of the arbitration, except that the arbitrator shall be selected by alternatively striking from a list of five arbitrators supplied by the AAA. All fees and expenses of the arbitration, including a transcript if either requests, shall be borne equally by the parties, however, all costs for the services of the arbitrator shall be borne solely by the Company.

 

(iii) Each party is responsible for the fees and expenses of its own attorneys, experts, witnesses, and preparation and presentation of proofs and post-hearing briefs (unless the party prevails on a claim for which attorney’s fees are recoverable under law). In rendering a decision, the arbitrator shall apply all legal principles and standards that would govern if the dispute were being heard in court. This includes the availability of all remedies that the parties could obtain in court. In addition, all statutes of limitation and defenses that would be applicable in court, will apply to the arbitration proceeding. The decision of the arbitrator shall be set forth in writing, and be binding and conclusive on all parties. Any action to enforce or vacate the arbitrator’s award shall be governed by the Federal Arbitration Act, if applicable, and otherwise by applicable state law. If either the Company or Employee improperly pursues any claim, dispute or controversy against the other in a proceeding other than the arbitration provided for herein, the responding party shall be entitled to dismissal or injunctive relief regarding such action and recovery of all costs, losses and attorney’s fees related to such action.

 

(iv) Each of the parties hereto hereby consents to process being served in any suit, action or proceeding of any nature, by the mailing of a copy thereof by registered or certified first-class mail, postage prepaid, return receipt requested, to them at their respective addresses set forth in Section 9(c) hereof. Each of parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, all claims of error by reason of any such service pursuant to the terms hereof (but does not waive any right to assert lack of subject matter jurisdiction) and agrees that such service shall (A) be deemed in every respect effective service of process in any such suit, action or proceeding and (B) to the fullest extent permitted by applicable law, be taken and held to be valid personal service.

 

(v) Nothing in this Section 9(b) shall affect the right of any party hereto to serve process in any manner permitted by law or affect the right of any party to bring proceedings against any other party in the courts of any jurisdiction or jurisdictions.

 

(c) Notices. All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given, made and received only when delivered (personally, by courier service such as Federal Express, or by other messenger) or when deposited in the United States mails, registered or certified mail, postage prepaid, return receipt requested, addressed as set forth below.

 

 

10

 

  

(i) If to Employee:

 

David Shackelton 
---------------------------------------------

---------------------------------------------

 

(ii) If to the Company:

 

The Providence Service Corporation 
64 East Broadway Blvd.
Tucson, AZ 85701 
Attention: Chief Executive Officer

 

In addition, notice by mail shall be by air mail if posted outside of the continental United States.

 

Any party may alter the addresses to which communications or copies are to be sent by giving notice of such change of address in conformity with the provisions of this Section 9(c) for the giving of notice.

 

(d) Assignment of Agreement. The rights and obligations of both parties under this Agreement shall inure to the benefit of and shall be binding upon their heirs, successors and assigns. The Company may assign or otherwise transfer its rights under this Agreement, including but not limited to all Covenants contained in Section 7 above, to any successor or affiliated business or corporation whether by sale of stock, merger, consolidation, sale of assets or otherwise. This Agreement may not, however, be assigned by Employee to a third party, nor may Employee delegate his duties under this Agreement.

 

(e) Execution in Counterparts. This Agreement may be executed in any number of counterparts, including by a counterpart in electronic format, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories.

 

(f) Provisions Separable. The provisions of this Agreement are independent of and separable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part.

 

(g) Entire Agreement. This Agreement contains the entire understanding among the parties hereto with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements and understandings between the parties, inducements or conditions, express or implied, oral or written, except as herein contained. The express terms hereof control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms hereof. This Agreement may not be modified or amended other than by an agreement in writing.

 

(h) Section Headings. The section headings in this Agreement are for convenience only; they form no part of this Agreement and shall not affect its interpretation.

 

(i) Gender, Etc. Words used herein, regardless of the number and gender specifically used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context indicates is appropriate.

 

(j) Independent Review and Consultation. Employee is hereby advised to consult with an attorney before signing this Agreement. Employee acknowledges that it is his decision whether or not to do so.

 

 

11

 

  

(k) Number of Days. In computing the number of days for purposes of this Agreement, all days shall be counted, including Saturdays, Sundays and holidays; provided, however, that if the final day of any time period falls on a Saturday, Sunday or holiday on which entities which are provincially regulated are or may elect to be closed, then the final day shall be deemed to be the next day which is not a Saturday, Sunday or such holiday.

 

[Signature Page Follows]

 

 

12

 

  

IN WITNESS WHEREOF, the parties have executed and delivered this Agreement, intending to be legally bound hereby, as of the date first above written.

 

	
 
	
THE PROVIDENCE SERVICE CORPORATION
	
 

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	
By: 
	
  /s/ James Lindstrom
	
 

	
 
	
Name:
	
James Lindstrom
	
 

	
 
	
Title: 
	
Chief Executive Officer
	
 

	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	DAVID SHACKELTON	 
	 	 	 	 
	 	 	 	 
	 	  /s/ David Shackelton	 

 

 

 

[Signature Page to Employment Agreement of David Shackelton]exhibit4-7.htm

Exhibit 4.7

 

 

 

 

ASSET REPRESENTATIONS REVIEW AGREEMENT

 

 

among

 

 

TOYOTA AUTO RECEIVABLES 20[__]-[__] OWNER TRUST,

as Issuer,

 

 

 

TOYOTA MOTOR CREDIT CORPORATION,

as Servicer and Administrator,

 

 

 

and

 

 

[__________],

as Asset Representations Reviewer

 

 

 

 

Dated as of [__________], 20[__]

 

 

 

 

 

 

TABLE OF CONTENTS

 

	
ARTICLE I USAGE AND DEFINITIONS

	
1

	
Section 1.1.

	
Usage and Definitions

	
1

	
Section 1.2.

	
Additional Definitions

	
1

	
ARTICLE II ENGAGEMENT OF ASSET REPRESENTATIONS REVIEWER

	
2

	
Section 2.1.

	
Engagement; Acceptance

	
2

	
Section 2.2.

	
Confirmation of Status

	
2

	
ARTICLE III ASSET REPRESENTATIONS REVIEW PROCESS

	
3

	
Section 3.1.

	
Review Notice and Identification of Review Receivables

	
3

	
Section 3.2.

	
Review Materials

	
3

	
Section 3.3.

	
Performance of Reviews

	
3

	
Section 3.4.

	
Review Reports

	
4

	
Section 3.5.

	
Review Representatives

	
4

	
Section 3.6.

	
Dispute Resolution

	
5

	
Section 3.7.

	
Limitations on Review Obligations

	
5

	
ARTICLE IV ASSET REPRESENTATIONS REVIEWER

	
6

	
Section 4.1.

	
Representations and Warranties

	
6

	
Section 4.2.

	
Covenants

	
7

	
Section 4.3.

	
Fees and Expenses

	
7

	
Section 4.4.

	
Limitation on Liability

	
8

	
Section 4.5.

	
Indemnification by Asset Representations Reviewer

	
8

	
Section 4.6.

	
Indemnification of Asset Representations Reviewer

	
8

	
Section 4.7.

	
Inspections of Asset Representations Reviewer

	
9

	
Section 4.8.

	
Delegation of Obligations

	
9

	
Section 4.9.

	
Confidential Information

	
10

	
Section 4.10.

	
Personally Identifiable Information

	
11

	
ARTICLE V RESIGNATION AND REMOVAL; SUCCESSOR ASSET REPRESENTATIONS REVIEWER

	
13

	
Section 5.1.

	
Eligibility Requirements for Asset Representations Reviewer

	
13

	
Section 5.2.

	
Resignation and Removal of Asset Representations Reviewer

	
13

	
Section 5.3.

	
Successor Asset Representations Reviewer

	
14

	
Section 5.4.

	
Merger, Consolidation or Succession

	
14

	
ARTICLE VI OTHER AGREEMENTS

	
15

	
Section 6.1.

	
Independence of Asset Representations Reviewer

	
15

	
Section 6.2.

	
No Petition

	
15

	
Section 6.3.

	
Limitation of Liability of Owner Trustee

	
15

	
Section 6.4.

	
Termination of Agreement

	
15

	
ARTICLE VII MISCELLANEOUS PROVISIONS

	
15

	
Section 7.1.

	
Amendments

	
15

	
Section 7.2.

	
Assignment; Benefit of Agreement; Third Party Beneficiaries

	
16

	
Section 7.3.

	
Notices

	
16

	
Section 7.4.

	
GOVERNING LAW

	
16

	
Section 7.5.

	
WAIVER OF JURY TRIAL

	
17

	
Section 7.6.

	
No Waiver; Remedies

	
17

	
Section 7.7.

	
Severability

	
17

	
Section 7.8.

	
Headings

	
17

 

 

 

 

 

 

	
Section 7.9.

	
Counterparts

	
17

 

Schedule A – Review Materials

Schedule B – Representations, Warranties and Tests

 

 

 

ASSET REPRESENTATIONS REVIEW AGREEMENT, dated as of [__________], 20[__] (this “Agreement”), among TOYOTA AUTO RECEIVABLES 20[__]-[__] OWNER TRUST, a Delaware statutory trust (the “Issuer”), TOYOTA MOTOR CREDIT CORPORATION, a California corporation, as servicer (in such capacity, the “Servicer”) and administrator (in such capacity, the “Administrator”), and [__________], a [__________] (the “Asset Representations Reviewer”).

 

WITNESSETH

 

WHEREAS, the Issuer desires to engage the Asset Representations Reviewer to perform reviews of certain Receivables for compliance with certain representations and warranties made with respect thereto; and

 

WHEREAS, the Asset Representations Reviewer desires to perform such reviews of Receivables in accordance with the terms of this Agreement.

 

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

USAGE AND DEFINITIONS

 

Section 1.1.      Usage and Definitions.  Capitalized terms used but not defined in this Agreement shall have the meanings ascribed to such terms in the Sale and Servicing Agreement.

 

Section 1.2.      Additional Definitions.  The following terms have the meanings given below:

 

“Annual Fee” has the meaning stated in Section 4.3(a).

 

“Confidential Information” has the meaning stated in Section 4.9(b).

 

“Contract” has the meaning stated in Schedule A.

 

“Information Recipients” has the meaning stated in Section 4.9(a).

 

“Indemnified Parties” has the meaning stated in Section 4.6(a).

 

“Indenture” means the Indenture, dated as of [__________], 20[__], between the Issuer and the Indenture Trustee, as the same may be amended, supplemented or modified from time to time.

“Indenture Trustee” means [__________], as indenture trustee under the Indenture, and any successor thereto.

 

“Issuer PII” has the meaning stated in Section 4.10(a).

 

 

 

 

“PII” has the meaning stated in Section 4.10(a).

 

“Review” means the performance by the Asset Representations Reviewer of the testing procedures for each Test and each Review Receivable according to Section 3.3.

 

“Review Fee” has the meaning stated in Section 4.3(b).

 

“Review Materials” means, for a Review and a Review Receivable, the documents and other materials listed in Schedule A.

 

“Review Notice” means a notice delivered to the Asset Representations Reviewer pursuant to Section 4.1(c) of the Servicing Supplement.

 

“Review Receivables” means those certain Receivables identified by the Servicer to the Asset Representations Reviewer following receipt of a Review Notice as not having been paid in full by the Obligor or purchased from the Issuer in accordance with the terms of the Basic Documents at or prior to the date of such Review Notice.

 

“Review Report” means, for a Review, the report of the Asset Representations Reviewer as described in Section 3.4.

 

“Sale and Servicing Agreement” means the Sale and Servicing Agreement, dated as of [__________], 20[__], among the Issuer, the Seller and TMCC.

 

“Test” has the meaning stated in Section 3.4(a).

 

“Test Complete” has the meaning stated in Section 3.3(c).

 

“Test Fail” has the meaning stated in Section 3.3(a).

 

“Test Pass” has the meaning stated in Section 3.3(a).

 

ARTICLE II

ENGAGEMENT OF ASSET REPRESENTATIONS REVIEWER

 

Section 2.1.      Engagement; Acceptance.  The Issuer hereby engages [__________] to act as the Asset Representations Reviewer for the Issuer.  [__________] hereby accepts the engagement and agrees to perform the obligations of the Asset Representations Reviewer on the terms set forth in this Agreement.

 

Section 2.2.      Confirmation of Status.  The parties confirm that the Asset Representations Reviewer is not responsible for (a) reviewing the Receivables for compliance with the representations and warranties under the Basic Documents, except as described in this Agreement, or (b) determining whether noncompliance with the representations or warranties constitutes a breach of the Basic Documents.

 

 

2

 

 

ARTICLE III

ASSET REPRESENTATIONS REVIEW PROCESS

 

Section 3.1.      Review Notice and Identification of Review Receivables.  Within [ten] ([10]) Business Days after delivery of a Review Notice to the Asset Representations Reviewer, the Servicer will deliver a list of the Review Receivables to the Asset Representations Reviewer.  Upon receipt of a Review Notice and the related list of Review Receivables from the Servicer, the Asset Representations Reviewer will start a Review.

 

Section 3.2.      Review Materials.

 

(a)           Access to Review Materials.  Within sixty (60) days of the delivery of a Review Notice to the Asset Representations Reviewer, the Servicer will give the Asset Representations Reviewer access to the Review Materials for all of the Review Receivables in one or more of the following ways, to be determined in the sole discretion of the Servicer: (i) by providing access to the Servicer’s receivables systems, either remotely or at an office of the Servicer, (ii) by electronic posting to a password-protected website to which the Asset Representations Reviewer has access, (iii) by providing scanned copies at an office of the Servicer where the Receivable Files are located or (iv) in another manner agreed to between the Servicer and the Asset Representations Reviewer.  The Servicer may redact or remove PII from the Review Materials, but will use commercially reasonable efforts not to change the meaning or usefulness of the Review Materials for the Review.

 

(b)           Missing or Insufficient Review Materials.  The Asset Representations Reviewer will review the Review Materials to determine if any Review Materials are missing or insufficient for the Asset Representations Reviewer to perform any Test.  If the Asset Representations Reviewer determines that there are missing or insufficient Review Materials, the Asset Representations Reviewer will notify the Servicer and the Administrator promptly, and in any event no less than twenty (20) Business Days before completing the Review.  The Servicer will have fifteen (15) Business Days to give the Asset Representations Reviewer access to the missing Review Materials or other documents or information to correct any such insufficiency.  If the missing or insufficient Review Materials or other documents or information have not been provided by the Servicer within such fifteen (15) Business Day period, the related Review Report will report a Test Fail for each Test in respect of which such missing or insufficient Review Materials is necessary to determine whether a Test Pass result is appropriate.

 

Section 3.3.      Performance of Reviews.

 

(a)           Test Procedures.  For a Review, the Asset Representations Reviewer will perform, for each Review Receivable, the procedures listed under “Tests” in Schedule B for each representation and warranty (each, a “Test”), using the Review Materials necessary to perform the procedures described for such Test in Schedule B.  For each Test and Review Receivable, the Asset Representations Reviewer will determine if the Test has been satisfied (a “Test Pass”) or if the Test has not been satisfied (a “Test Fail”).

 

(b)           Review Period.  The Asset Representations Reviewer will complete the Review of all of the Review Receivables within sixty (60) days after having received access to the Review

 

 

3

 

Materials pursuant to Section 3.2(a).  However, if additional Review Materials are provided to the Asset Representations Reviewer in respect of any Review Receivables pursuant to Section 3.2(b), the Review period will be extended for an additional thirty (30) days in respect of any such Review Receivables.

 

(c)           Completion of Review for Certain Review Receivables.  Following the delivery of the list of the Review Receivables and before the delivery of the Review Report by the Asset Representations Reviewer, the Servicer may notify the Asset Representations Reviewer if a Review Receivable is paid in full by the Obligor or purchased from the Issuer in accordance with the terms of the Basic Documents.  On receipt of such notice, the Asset Representations Reviewer will immediately terminate all Tests of the related Review Receivable, and the Review of such Review Receivables will be considered complete (a “Test Complete”).  In this case, the related Review Report will indicate a Test Complete for such Review Receivable and the related reason.

 

(d)           Previously Reviewed Receivable; Duplicative Tests.  If any Review Receivable was included in a prior Review, the Asset Representations Reviewer will not conduct additional Tests on such Review Receivable, but will include the previously reported Test results in the Review Report for the current Review.  If the same Test is required for more than one representation and warranty, the Asset Representations Reviewer will only perform the Test once for each Review Receivable, but will report the results of the Test for each applicable representation and warranty on the Review Report.

 

(e)           Termination of Review.  If a Review is in process and the Notes will be paid in full on the next Payment Date, the Servicer or the Administrator will notify the Asset Representations Reviewer no less than ten (10) days before that Payment Date.  On receipt of such notice, the Asset Representations Reviewer will terminate the Review immediately and will not be obligated to deliver a Review Report.

 

Section 3.4.      Review Reports.  Within five (5) days after the end of the applicable Review period under Section 3.3(b), the Asset Representations Reviewer will deliver to the Issuer, the Servicer, the Administrator and the Indenture Trustee a Review Report indicating for each Review Receivable whether there was a Test Pass, Test Fail or Test Complete for each related Test.  For each Test Fail or Test Complete, the Review Report will indicate the related reason, including (for example) whether the Review Receivable was a Test Fail as a result of missing or incomplete Review Materials.  The Review Report will contain a summary of the Review results to be included in the Issuer’s Form 10-D report 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 PII.  On reasonable request of the Servicer or the Administrator, the Asset Representations Reviewer will provide additional details on the Test results.

 

Section 3.5.      Review Representatives.

 

(a)           Servicer Representative.  The Servicer will designate one or more representatives who will be available to assist the Asset Representations Reviewer in performing the Review, including responding to requests and answering questions from the Asset Representations Reviewer about access to Review Materials on the Servicer’s originations, receivables or other

 

 

4

 

systems, obtaining missing or insufficient Review Materials and/or providing clarification of any Review Materials or Tests.

 

(b)           Asset Representations Reviewer Representative.  The Asset Representations Reviewer will designate one or more representatives who will be available to the Issuer, the Servicer and the Administrator during the performance of a Review.

 

(c)           Questions About Review.  The Asset Representations Reviewer will make appropriate personnel available to respond in writing to written questions or requests for clarification of any Review Report from the Indenture Trustee, the Servicer or the Administrator until the earlier of (i) the payment in full of the Notes and (ii) [two years] after the delivery of the Review Report.  The Asset Representations Reviewer will not be obligated to respond to questions or requests for clarification from Noteholders or any other Person and will direct such Persons to submit written questions or requests to the Indenture Trustee.

 

Section 3.6.      Dispute Resolution.  If a Review Receivable that was the subject of a Review becomes the subject of a dispute resolution proceeding under Section 11.02 of the Sale and Servicing Agreement, the Asset Representations Reviewer will participate in the dispute resolution proceeding on request of a party to the proceeding.  The reasonable out-of-pocket expenses 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 will be paid by a party to the dispute resolution as determined by the mediator or arbitrator for the dispute resolution according to Section 11.02 of the Sale and Servicing Agreement.  If not paid by a party to the dispute resolution, the expenses will be reimbursed by the Issuer according to Section 4.3(d) of this Agreement.

 

Section 3.7.      Limitations on Review Obligations.

 

(a)           Review Process Limitations.  The Asset Representations Reviewer will have no obligation: (i) to determine whether a Delinquency Trigger has occurred or whether the required percentage of Noteholders has voted to direct a Review under the Indenture; (ii) to determine which Receivables are the subject of a Review; (iii) to obtain or confirm the validity of the Review Materials; (iv) to obtain missing or insufficient Review Materials; (v) to take any action or cause any other party to take any action under any of the Basic Documents to enforce any remedies for breaches of representations or warranties; or (vi) to establish cause, materiality or recourse for any failed Test as described in Section 3.3.

 

(b)           Testing Procedure Limitations.  The Asset Representations Reviewer will only be required to perform the “Tests” described in Schedule B, and will not be obligated to perform additional procedures on any Review Receivable other than as specified in this Agreement.  However, the Asset Representations Reviewer may, in its discretion, (i) perform other tests that it deems reasonable and appropriate in determining whether the Review Receivables were in compliance with the representations and warranties made by TMCC and the Seller about the Review Receivables in the Basic Documents and (ii) provide additional information about any Review Receivable that it determines in good faith to be material to the related Review.

 

 

5

 

ARTICLE IV

ASSET REPRESENTATIONS REVIEWER

 

Section 4.1.      Representations and Warranties.  The Asset Representations Reviewer represents and warrants to the Issuer as of the Closing Date:

 

(a)           Organization and Qualification.  The Asset Representations Reviewer is duly organized and validly existing as a [__________] in good standing under the laws of State of [__________].  The Asset Representations Reviewer is qualified as a foreign [__________] in good standing and has obtained all necessary licenses and approvals in all jurisdictions in which the ownership or lease of its properties or the conduct of its activities requires the qualification, license or approval, unless the failure to obtain the qualifications, licenses or approvals would not reasonably be expected to have a material adverse effect on the Asset Representations Reviewer’s ability to perform its obligations under this Agreement.

 

(b)           Power, Authority and Enforceability.  The Asset Representations Reviewer has the power and authority to execute, deliver and perform its obligations under this Agreement.  The Asset Representations Reviewer has authorized the execution, delivery and performance of this Agreement.  This Agreement is the legal, valid and binding obligation of the Asset Representations Reviewer enforceable against the Asset Representations Reviewer, except as may be limited by insolvency, bankruptcy, reorganization or other laws relating to the enforcement of creditors’ rights or by general equitable principles.

 

(c)           No Conflicts and No Violation.  The completion of the transactions  contemplated by this Agreement and the performance of the Asset Representations Reviewer’s obligations under this Agreement will not (i) conflict with, or be a breach or default under, any indenture, mortgage, deed of trust, loan agreement, guarantee or similar document under which the Asset Representations Reviewer is a debtor or guarantor, (ii) result in the creation or imposition of a Lien on the properties or assets of the Asset Representations Reviewer under the terms of any indenture, mortgage, deed of trust, loan agreement, guarantee or similar document, (iii) violate the organizational documents of the Asset Representations Reviewer or (iv) violate a law or, to the Asset Representations Reviewer’s knowledge, an order, rule or regulation of a federal or State court, regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Asset Representations Reviewer or its properties that applies to the Asset Representations Reviewer, which, in each case, would reasonably be expected to have a material adverse effect on the Asset Representations Reviewer’s ability to perform its obligations under this Agreement.

 

(d)           No Proceedings.  To the Asset Representations Reviewer’s knowledge, there are no proceedings or investigations pending or threatened in writing before a federal or State court, regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Asset Representations Reviewer or its properties (i) asserting the invalidity of this Agreement, (ii) seeking to prevent the completion of the transactions contemplated by this Agreement or (iii) seeking any determination or ruling that would reasonably be expected to have a material adverse effect on the Asset Representations Reviewer’s ability to perform its obligations under, or the validity or enforceability of, this Agreement.

 

 

6

 

(e)           Eligibility.  The Asset Representations Reviewer meets the eligibility requirements in Section 5.1.

 

Section 4.2.      Covenants.  The Asset Representations Reviewer covenants and agrees that:

 

(a)           Eligibility.  It will notify the Issuer, the Servicer and the Administrator promptly if it no longer meets, or reasonably expects that it will no longer meet, the eligibility requirements in Section 5.1.

 

(b)           Review Systems; Personnel.  It will maintain business process management and/or other systems necessary to ensure that it can perform each Test and, on execution of this Agreement, will load each Test into these systems. The Asset Representations Reviewer will ensure that these systems allow for each Review 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 Reviews as required by this Agreement.

 

(c)           Maintenance of Review Materials.  It will maintain copies of any Review Materials, Review Reports and other documents relating to a Review, including internal correspondence and work papers, for a period of at least two years after any termination of this Agreement.

 

(d)           Compliance with Applicable Law.  The Asset Representations Reviewer will act in accordance with all requirements applicable to an asset representations reviewer under applicable law (as amended from time to time) and other state or federal securities law applicable to asset representations reviewers in effect during the term of this Agreement.

 

Section 4.3.      Fees and Expenses.

 

(a)           Annual Fee.  As compensation for its activities hereunder, the Asset Representations Reviewer shall be entitled to receive an annual fee (the “Annual Fee”) with respect to each Annual Period prior to the termination of the Issuer, in an amount equal to $[_____].  The Annual Fee will be paid on the Closing Date and on each anniversary of the Closing Date until this Agreement is terminated.

 

(b)           Review Fee.  Following the completion of a Review and the delivery of the related Review Report pursuant to Section 3.4, or the termination of a Review according to Section 3.3(e), and the delivery to the Indenture Trustee, the Servicer and the Administrator of a detailed invoice, the Asset Representations Reviewer will be entitled to a fee of $[____] for each Review Receivable for which the Review was started (the “Review Fee”).  However, no Review Fee will be charged for any Review Receivable which was included in a prior Review or for which no Tests were completed prior to the Asset Representations Reviewer being notified of a termination of the Review according to Section 3.3(e) or due to missing or insufficient Review Materials under Section 3.2(b).  If the detailed invoice is submitted on or before the first day of a month, the Review Fee will be paid by the Issuer according to the priority of payments in the Sale and Servicing Agreement or the Indenture, as applicable, on the Payment Date in that month.  However, if a Review is terminated according to Section 3.3(e), the Asset

 

 

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Representations Reviewer must submit its invoice for the Review Fee for the terminated Review no later than ten (10) Business Days before the final Payment Date to be reimbursed on such final Payment Date.

 

(c)           Reimbursement of Travel Expenses.  If the Servicer provides access to the Review Materials at one of its properties, the Issuer will reimburse the Asset Representations Reviewer for its reasonable travel expenses incurred in connection with the Review upon receipt of a detailed invoice; provided that such reimbursable expenses may not exceed [_______].

 

(d)           Dispute Resolution Expenses.  If the Asset Representations Reviewer participates in a dispute resolution proceeding under Section 3.6 of this Agreement and its reasonable out-of-pocket expenses for participating in the proceeding are not paid by a party to the dispute resolution within ninety (90) days after the end of the proceeding, the Issuer will reimburse the Asset Representations Reviewer for such expenses upon receipt of a detailed invoice.

 

Section 4.4.      Limitation on Liability.  The Asset Representations Reviewer will not be liable to any Person for any action taken, or not taken, in good faith under this Agreement or for errors in judgment.  However, the Asset Representations Reviewer will be liable for its willful misconduct, bad faith or negligence in performing its obligations under this Agreement.  In no event will the Asset Representations Reviewer be liable for special, indirect or consequential losses or damages (including lost 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.

 

Section 4.5.      Indemnification by Asset Representations Reviewer.  The Asset Representations Reviewer will indemnify each of the Issuer, the Seller, the Servicer, the Administrator, the Owner Trustee and the Indenture Trustee and their respective directors, officers, employees and agents for all fees, expenses, losses, damages and liabilities resulting from (a) the willful misconduct, bad faith or negligence of the Asset Representations Reviewer in performing its obligations under this Agreement and (b) the Asset Representations Reviewer’s breach of any of its representations or warranties in this Agreement.  The Asset Representations Reviewer’s obligations under this Section 4.5 will survive the termination of this Agreement, the termination of the Issuer and the resignation or removal of the Asset Representations Reviewer.

 

Section 4.6.      Indemnification of Asset Representations Reviewer.

 

(a)           Indemnification.  The Issuer 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 its obligations under this Agreement (including the fees 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 or warranties in this Agreement.

 

(b)           Proceedings.  Promptly on receipt by an Indemnified Person of notice of a Proceeding against it, the Indemnified Person will, if a claim is to be made under Section 4.6(a), notify the Issuer, the Servicer and the Administrator of the Proceeding.  The Issuer, the Servicer and the Administrator may participate in and assume the defense and settlement of a Proceeding

 

 

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at its expense.  If the Issuer, the Servicer or the Administrator notifies the Indemnified Person of its intention to assume the defense of the Proceeding with counsel reasonably satisfactory to the Indemnified Person, and so long as the Issuer, the Servicer or the Administrator assumes the defense of the Proceeding in a manner reasonably satisfactory to the Indemnified Person, the Issuer, the Servicer and the Administrator will not be liable for fees and expenses of counsel to the Indemnified Person unless there is a conflict between the interests of the Issuer, the Servicer or the Administrator, as applicable, and an Indemnified Person.  If there is a conflict, the Issuer, the Servicer or the Administrator will pay for the reasonable fees and expenses of separate counsel to the Indemnified Person.  No settlement of a Proceeding may be made without the approval of the Issuer, the Servicer and the Administrator and the Indemnified Person, which approval will not be unreasonably withheld, conditioned or delayed.

 

(c)           Survival of Obligations.  The Issuer’s, the Servicer’s and the Administrator’s obligations under this Section 4.6 will survive the resignation or removal of the Asset Representations Reviewer and the termination of this Agreement.

 

(d)           Repayment.  If the Issuer, the Servicer or the Administrator makes any payment under this Section 4.6 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 amounts to the Issuer, the Servicer or the Administrator, as applicable.

 

Section 4.7.      Inspections of Asset Representations Reviewer.  The Asset Representations Reviewer agrees that, with reasonable prior notice not more than once during any year, it will permit authorized representatives of the Issuer, the Servicer and the Administrator, during the Asset Representations Reviewer’s normal business hours, to examine and review the books of account, records, reports and other documents and materials of the Asset Representations Reviewer relating to (a) the performance of the Asset Representations Reviewer’s obligations under this Agreement, (b) payments of fees and expenses of the Asset Representations Reviewer for its performance and (c) a claim made by the Asset Representations Reviewer under this Agreement.  In addition, the Asset Representations Reviewer will permit the Issuer’s, the Servicer’s and the Administrator’s representatives to make copies and extracts of any of those documents and to discuss them with the Asset Representations Reviewer’s officers and employees.  Each of the Issuer, the Servicer and the Administrator will, and will cause its authorized representatives to, hold in confidence the information except if disclosure may be required by law or if the Issuer, the Servicer or the Administrator reasonably determines that it is required to make the disclosure under this Agreement or the other Basic Documents.  The Asset Representations Reviewer will maintain all relevant books, records, reports and other documents and materials for a period of at least two years after the termination of its obligations under this Agreement.

 

Section 4.8.      Delegation of Obligations.  The Asset Representations Reviewer may not delegate or subcontract its obligations under this Agreement to any Person without the consent of the Issuer, the Servicer and the Administrator.

 

 

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Section 4.9.                      Confidential Information.

 

(a)           Treatment.  The Asset Representations Reviewer agrees to hold and treat Confidential Information given to it under this Agreement in confidence and under the terms and conditions of this Section 4.9, and will implement and maintain safeguards to further assure the confidentiality of the Confidential Information.  The Confidential Information will not, without the prior consent of the Issuer, the Servicer and the Administrator, be disclosed or used by the Asset Representations Reviewer, or its officers, directors, employees, agents, representatives or affiliates, including legal counsel (collectively, the “Information Recipients”) other than for the purposes of performing Reviews of Review Receivables or performing its obligations under this Agreement.  The Asset Representations Reviewer agrees that it will not, and will cause its Affiliates to not (i) purchase or sell securities issued by TMCC, the Issuer or any of their respective Affiliates or special purpose entities formed by any of the foregoing Persons on the basis of Confidential Information or (ii) use the Confidential Information for the preparation of research reports, newsletters or other publications or similar communications.

 

(b)           Definition.  “Confidential Information” means oral, written and electronic materials (irrespective of its source or form of communication) furnished before, on or after the date of this Agreement to the Asset Representations Reviewer for the purposes contemplated by this Agreement, including:

 

(i)       lists of Review Receivables and any related Review Materials;

 

(ii)      origination and servicing guidelines, policies and procedures, and form contracts; and

 

(iii)     notes, analyses, compilations, studies or other documents or records prepared by the Servicer or the Administrator, which contain information supplied by or on behalf of the Servicer, the Administrator or their respective representatives.

 

However, Confidential Information will not include information that (A) is or becomes generally available to the public other than as a result of disclosure by the Information Recipients, (B) was available to, or becomes available to, the Information Recipients on a non-confidential basis from a Person or entity other than the Issuer, the Servicer or the Administrator before its disclosure to the Information Recipients who, to the knowledge of the Information Recipient is not bound by a confidentiality agreement with the Issuer, the Servicer or the Administrator and is not prohibited from transmitting the information to the Information Recipients, (C) is independently developed by the Information Recipients without the use of the Confidential Information, as shown by the Information Recipients’ files and records or other evidence in the Information Recipients’ possession or (D) the Issuer, the Servicer or the Administrator provides permission to the applicable Information Recipients to release.

 

(c)           Protection.  The Asset Representations Reviewer will take reasonable measures to protect the secrecy of and avoid disclosure and unauthorized use of Confidential Information, including those measures that it takes to protect its own confidential information and not less than a reasonable standard of care.  The Asset Representations Reviewer acknowledges that PII is also subject to the additional requirements in Section 4.10.

 

 

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(d)           Disclosure.  If the Asset Representations Reviewer is required by applicable law, regulation, rule or order issued by an administrative, governmental, regulatory or judicial authority to disclose part of the Confidential Information, it may disclose the Confidential Information.  However, before a required disclosure, the Asset Representations Reviewer, if permitted by law, regulation, rule or order, will use its reasonable efforts to provide the Issuer, the Servicer and the Administrator with notice of the requirement and will cooperate, at the Issuer’s or the Servicer’s expense, as applicable, in the Issuer’s or the Servicer’s pursuit of a proper protective order or other relief for the disclosure of the Confidential Information.  If the Issuer or the Servicer is unable to obtain a protective order or other proper remedy by the date that the information is required to be disclosed, the Asset Representations Reviewer will disclose only that part of the Confidential Information that it is advised by its legal counsel it is legally required to disclose.

 

(e)           Responsibility for Information Recipients.  The Asset Representations Reviewer will be responsible for a breach of this Section 4.9 by its Information Recipients.

 

(f)           Violation.  The Asset Representations Reviewer agrees that a violation of this Agreement may cause irreparable injury to the Issuer, the Servicer and the Administrator, and the Issuer, the Servicer and the Administrator may seek injunctive relief in addition to legal remedies.  If an action is initiated by the Issuer, the Servicer or the Administrator to enforce this Section 4.9, the prevailing party will be reimbursed for its fees and expenses, including reasonable attorney’s fees, incurred for the enforcement.

 

Section 4.10.      Personally Identifiable Information.

 

(a)           Definitions.  “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.  “Issuer PII” means PII furnished by the Issuer, the Servicer, the Administrator or their respective Affiliates to the Asset Representations Reviewer and PII developed or otherwise collected or acquired by the Asset Representations Reviewer in performing its obligations under this Agreement.

 

(b)           Use of Issuer PII.  The Issuer does not grant the Asset Representations Reviewer any rights to Issuer PII except as provided in this Agreement.  The Asset Representations Reviewer will use Issuer PII only to perform its obligations under this Agreement or as specifically directed in writing by the Issuer and will only reproduce Issuer PII to the extent necessary for these purposes.  The Asset Representations Reviewer must comply with all laws applicable to PII, Issuer PII and the Asset Representations Reviewer’s business, including any legally required codes of conduct, including those relating to privacy, security and data protection.  The Asset Representations Reviewer will protect and secure Issuer PII.  The Asset Representations Reviewer will implement privacy or data protection policies and procedures that comply with applicable law and this Agreement.  The Asset Representations Reviewer will implement and maintain reasonable and appropriate practices, procedures and systems, including administrative, technical and physical safeguards to (i) protect the security, confidentiality and integrity of Issuer PII, (ii) ensure against anticipated threats or hazards to the security or integrity

 

 

11

 

of Issuer PII, (iii) protect against unauthorized access to or use of Issuer PII and (iv) otherwise comply with its obligations under this Agreement.  These safeguards include a written data security plan, employee training, information access controls, restricted disclosures, systems protections (e.g., intrusion protection, data storage protection and data transmission protection) and physical security measures.

 

(c)           Additional Limitations.  In addition to the use and protection requirements described in Section 4.10(b), the Asset Representations Reviewer’s disclosure of Issuer PII is also subject to the following requirements:

 

(i)      The Asset Representations Reviewer will not disclose Issuer PII to its personnel or allow its personnel access to Issuer PII except (A) for the Asset Representations Reviewer personnel who require Issuer PII to perform a Review, (B) with the prior consent of the Issuer or (C) as required by applicable law.  When permitted, the disclosure of or access to Issuer PII will be limited to the specific information necessary for the individual to complete the assigned task.  The Asset Representations Reviewer will inform personnel with access to Issuer PII of the confidentiality requirements in this Agreement and train its personnel with access to Issuer PII on the proper use and protection of Issuer PII.

 

(ii)      The Asset Representations Reviewer will not sell, disclose, provide or exchange Issuer PII with or to any third party without the prior consent of the Issuer.

 

(iii)     Notwithstanding anything to the contrary contained in this Agreement, the Asset Representations Reviewer’s use and handling of Issuer PII shall also be subject to the terms and limitations described in that separate letter agreement between TMCC and the Asset Representations Reviewer dated [__________], 2015 (the “Letter Agreement”) and, in the event of any conflict between the terms of the Letter Agreement and the terms this Agreement related to the Asset Representations Reviewer’s use and handling of Issuer PII, the most restrictive of such terms shall govern.

 

(d)           Notice of Breach.  The Asset Representations Reviewer will notify the Issuer, the Servicer and the Administrator promptly in the event of an actual or reasonably suspected security breach, unauthorized access, misappropriation or other compromise of the security, confidentiality or integrity of Issuer PII and, where applicable, immediately take action to prevent any further breach.

 

(e)           Return or Disposal of Issuer PII.  Except where return or disposal is prohibited by applicable law, promptly on the earlier of the completion of the Review or the request of the Issuer, all Issuer PII in any medium in the Asset Representations Reviewer’s possession or under its control will be (i) destroyed in a manner that prevents its recovery or restoration or (ii) if so directed by the Issuer, returned to the Issuer without the Asset Representations Reviewer retaining any actual or recoverable copies, in both cases, without charge to the Issuer.  Where the Asset Representations Reviewer retains Issuer PII, the Asset Representations Reviewer will limit the Asset Representations Reviewer’s further use or disclosure of Issuer PII to that required by applicable law.

 

 

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(f)           Compliance; Modification.  The Asset Representations Reviewer will cooperate with and provide information to the Issuer, the Servicer and the Administrator regarding the Asset Representations Reviewer’s compliance with this Section 4.10.  The Asset Representations Reviewer, the Issuer, the Servicer and the Administrator agree to modify this Section 4.10 as necessary for any party to comply with applicable law.

 

(g)           Audit of Asset Representations Reviewer.  The Asset Representations Reviewer will permit the Issuer, the Servicer and the Administrator and their authorized representatives to audit the Asset Representations Reviewer’s compliance with this Section 4.10 during the Asset Representations Reviewer’s normal business hours on reasonable advance notice to the Asset Representations Reviewer, and not more than once during any year unless circumstances necessitate additional audits.  The Issuer, the Servicer and the Administrator agree to make reasonable efforts to schedule any audit described in this Section 4.10 with the inspections described in Section 4.7.  The Asset Representations Reviewer will also permit the Issuer, the Servicer and the Administrator, during normal business hours on reasonable advance written notice, to audit any service providers used by the Asset Representations Reviewer to fulfill the Asset Representations Reviewer’s obligations under this Agreement.

 

(h)           Affiliates and Third Parties.  If the Asset Representations Reviewer processes the PII of the Issuer’s, the Servicer’s or the Administrator’s Affiliates or a third party when performing a Review, and if such Affiliate or third party is identified to the Asset Representations Reviewer, such Affiliate or third party is an intended third-party beneficiary of this Section 4.10, and this Agreement is intended to benefit the Affiliate or third party.  The Affiliate or third party may enforce the PII-related terms of this Section 4.10 against the Asset Representations Reviewer as if each were a signatory to this Agreement.

 

ARTICLE V

RESIGNATION AND REMOVAL;

SUCCESSOR ASSET REPRESENTATIONS REVIEWER

 

Section 5.1.      Eligibility Requirements for Asset Representations Reviewer.  The Asset Representations Reviewer must be a Person who (a) is not an Affiliate of TMCC, the Seller, the Issuer, the Servicer, the Administrator, the Indenture Trustee or the Owner Trustee and (b) is not an Affiliate of any Person that was engaged by TMCC or any underwriter of the Notes to perform any due diligence on the Receivables prior to the Closing Date.

 

Section 5.2.      Resignation and Removal of Asset Representations Reviewer.

 

(a)           No Resignation.  The Asset Representations Reviewer will not resign as Asset Representations Reviewer unless it determines it is legally unable to perform its obligations under this Agreement and there is no reasonable action that it could take to make the performance of its obligations under this Agreement permitted under applicable law.  In such event, the Asset Representations Reviewer will deliver a notice of its resignation to the Issuer, the Servicer and the Administrator, together with an Opinion of Counsel supporting its determination.

 

 

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(b)           Removal.  If any of the following events occur, the Issuer, by notice to the Asset Representations Reviewer, may remove the Asset Representations Reviewer and terminate its rights and obligations under this Agreement:

 

(i)      the Asset Representations Reviewer no longer meets the eligibility requirements in Section 5.1;

 

(ii)      the Asset Representations Reviewer breaches of any of its representations, warranties, covenants or obligations in this Agreement; or

 

(iii)     an Insolvency Event of the Asset Representations Reviewer occurs.

 

(c)           Notice of Resignation or Removal.  The Issuer will notify the Servicer, the Administrator, the Owner Trustee and the Indenture Trustee of any resignation or removal of the Asset Representations Reviewer.

 

(d)           Continue to Perform After Resignation or Removal.  No resignation or removal of the Asset Representations Reviewer will be effective, and the Asset Representations Reviewer will continue to perform its obligations under this Agreement, until a successor Asset Representations Reviewer has accepted its engagement according to Section 5.3(b).

 

Section 5.3.      Successor Asset Representations Reviewer.

 

(a)           Engagement of Successor Asset Representations Reviewer.  Following the resignation or removal of the Asset Representations Reviewer, the Issuer will engage a successor Asset Representations Reviewer who meets the eligibility requirements of Section 5.1.

 

(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 Servicer and the Administrator an agreement accepting its engagement and agreeing to perform the obligations of the Asset Representations Reviewer under this Agreement or entering into a new agreement with the Issuer on substantially the same terms as this Agreement.

 

(c)           Transition and Expenses.  If the Asset Representations Reviewer resigns or is removed, the Asset Representations Reviewer will cooperate with the Issuer, the Servicer and the Administrator 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 of transitioning the Asset Representations Reviewer’s obligations under this Agreement and preparing the successor Asset Representations Reviewer to take on the obligations on receipt of an invoice with reasonable detail of the expenses from the Issuer, the Servicer, the Administrator or the successor Asset Representations Reviewer.

 

Section 5.4.      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 meets the eligibility requirements

 

 

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in Section 5.1, will be the successor to the Asset Representations Reviewer under this Agreement.  Such Person will execute and deliver to the Issuer, the Servicer and the Administrator an agreement to assume the Asset Representations Reviewer’s obligations under this Agreement (unless the assumption happens by operation of law).

 

ARTICLE VI

OTHER AGREEMENTS

 

Section 6.1.      Independence of Asset Representations Reviewer.  The Asset Representations Reviewer will be an independent contractor and will not be subject to the supervision of the Issuer for the manner in which it accomplishes the performance of its obligations under this Agreement.  Unless authorized by the Issuer, the Servicer or the Administrator, the Asset Representations Reviewer will have no authority to act for or represent the Issuer, the Servicer or the Administrator, respectively, and will not be considered an agent of any such Person.  Nothing in this Agreement will make the Asset Representations Reviewer and the Issuer, the Servicer or the Administrator members of any partnership, joint venture or other separate entity or impose any liability as such on any of them.

 

Section 6.2.      No Petition.  Each of the parties agrees that, before the date that is one year and one day (or, if longer, any applicable preference period) after payment in full of all securities issued by the Seller, the Issuer or by a trust for which the Seller was a depositor, it will not start or pursue against, or join any other Person in starting or pursuing against the Seller or the Issuer, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other proceedings under any bankruptcy or similar law.  This Section 6.2 will survive the termination of this Agreement.

 

Section 6.3.      Limitation of Liability of Owner Trustee.  This Agreement has been signed on behalf of the Issuer by [__________], not in its individual capacity but solely in its capacity as Owner Trustee of the Issuer.  In no event will [__________] in its individual capacity or a beneficial owner of the Issuer be liable for the Issuer’s obligations under this Agreement.  For all purposes under this Agreement, the Owner Trustee will be subject to, and entitled to the benefits of, the Trust Agreement.

 

Section 6.4.      Termination of Agreement.  This Agreement will terminate, except for the obligations under Section 4.6, 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.

 

ARTICLE VII

MISCELLANEOUS PROVISIONS

 

Section 7.1.      Amendments.  The parties may amend this Agreement:

 

(i)      to clarify an ambiguity, correct an error or correct or supplement any term of this Agreement that may be defective or inconsistent with the other terms of this Agreement or to provide for, or facilitate the acceptance of this Agreement by, a successor Asset Representations Reviewer, in each case without the consent of the Noteholders or any other Person;

 

 

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(ii)      to add, change or eliminate terms of this Agreement, in each case without the consent of the Noteholders or any other Person, if the Administrator delivers an Officer’s Certificate to the Issuer, the Owner Trustee and the Indenture Trustee stating that the amendment will not have a material adverse effect on the Noteholders; or

 

(iii)     to add, change or eliminate terms of this Agreement for which an Officer’s Certificate is not or cannot be delivered under Section 7.1(a)(ii), with the consent of a majority of the principal amount of the Notes of the Controlling Class then outstanding, acting together as a single class.

 

Section 7.2.      Assignment; Benefit of Agreement; Third Party Beneficiaries.

 

(a)           Assignment.  Except as stated in Section 5.4, this Agreement may not be assigned by the Asset Representations Reviewer without the consent of the Issuer, the Servicer and the Administrator.

 

(b)           Benefit of Agreement; Third-Party Beneficiaries.  This Agreement is for the benefit of and will be binding on the parties and their permitted successors and assigns.  The Owner Trustee and the Indenture Trustee, for the benefit of the Noteholders, will be third-party beneficiaries of this Agreement and may enforce this Agreement against the Asset Representations Reviewer, the Servicer and the Administrator.  No other Person will have any right or obligation under this Agreement.

 

Section 7.3.      Notices.

 

(a)           Notices to Parties.  All notices, requests, demands, consents, waivers or other communications to or from the parties must be in writing and will be considered given:

 

(i)      for overnight mail, on delivery or, for registered first class mail, postage prepaid, three (3) days after deposit in the mail;

 

(ii)      for a fax, when receipt is confirmed by telephone, reply email or reply fax from the recipient;

 

(iii)     for an email, when receipt is confirmed by telephone or reply email from the recipient; and

 

(iv)     for an electronic posting to a password-protected website to which the recipient has access, on delivery of an email (without the requirement of confirmation of receipt) stating that the electronic posting has occurred.

 

(b)           Notice Addresses.  Any notice, request, demand, consent, waiver or other communication will be addressed as stated in the Sale and Servicing Agreement or the Administration Agreement, as applicable, or to another address as a party may give by notice to the other parties.

 

Section 7.4.      GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE

 

 

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STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

 

Section 7.5.      WAIVER OF JURY TRIAL.  EACH PARTY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN LEGAL PROCEEDING RELATING TO THIS AGREEMENT.

 

Section 7.6.      No Waiver; Remedies.  No party’s failure or delay in exercising a power, right or remedy under this Agreement will operate as a waiver.  No single or partial exercise of a power, right or remedy will preclude any other or further exercise of the power, right or remedy or the exercise of any other power, right or remedy.  The powers, rights and remedies under this Agreement are in addition to any powers, rights and remedies under law.

 

Section 7.7.      Severability.  If a part of this Agreement is held invalid, illegal or unenforceable, then it will be deemed severable from the remaining Agreement and will not affect the validity, legality or enforceability of the remaining Agreement.

 

Section 7.8.      Headings.  The headings in this Agreement are included for convenience and will not affect the meaning or interpretation of this Agreement.

 

Section 7.9.      Counterparts.  This Agreement may be executed in multiple counterparts. Each counterpart will be an original and all counterparts will together be one document.

 

[Remainder of Page Left Blank]

 

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IN WITNESS WHEREOF, the Issuer, the Servicer, the Administrator and the Asset Representations Reviewer have caused their names to be signed hereto by their respective officers thereunto duly authorized as of the date first above written.

 

 

	 	
TOYOTA AUTO RECEIVABLES 20[__]-[__] OWNER TRUST, 

          as Issuer

 

	 	
By:    [__________], not in its individual capacity, but 

          solely as Owner Trustee

 

	 	  
	 	
By:    ________________________________ 

          Name:

          Title:

 

	 	  
	 	
TOYOTA MOTOR CREDIT CORPORATION,

           as Servicer and Administrator

 

	 	  
	 	

By:  ________________________________ 

          Name:

          Title:

 

	 	  
	 	
[__________],

          as Asset Representations Reviewer

 

	 	  
	 	

By:  ________________________________ 

          Name:

          Title:

 

 

 

 

Schedule A

Review Materials

 

[“Review Materials” means, with respect to each Receivable:

 

	 	
(a)

	
the original tangible record constituting or forming a part of such Receivable, or a copy or image of such original tangible record;

 

	 	
(b)

	
the original credit application executed by the related Obligor (or a photocopy or other image or electronic record thereof;

 

	 	
(c)

	
the original certificate of title (or evidence that such certificate of title has been applied for), or a photocopy or other image thereof, and of such documents that the Servicer shall keep on file evidencing the security interest in the related Financed Vehicle;

 

	 	
(d)

	
an electronic data tape describing certain characteristics of the Receivables as of the Cutoff Date or such other applicable date of determination (the “Data Tape”);

 

	 	
(e)

	
a list of approved contract forms for the Review Receivables, as provided by TMCC; and

 

	 	
(f)

	
such other documentation or information (whether tangible or electronic, and including, without limitation, screen prints or reports of the Servicer’s receivables and securitization systems) as the Servicer, as the case may be, may maintain and which the Servicer shall have determined to be relevant to any Test with respect to such Receivable.]

 

 

Sch. A-1

 

Schedule B

Representations, Warranties and Tests

 

	
Representations and Warranties

Made as of the Cutoff Date and the Closing Date (unless otherwise specified)

 

	
Tests

 

	
1.     Characteristics of Receivables.  Each Receivable (i) shall have been originated in the United States by a Dealer for the retail sale of the related Financed Vehicle in the ordinary course of such Dealer’s business, shall have been fully and properly executed by the parties thereto, shall have been purchased by TMCC from such Dealer under an existing agreement with TMCC and shall have been validly assigned by such Dealer to TMCC in accordance with the terms of such agreement and shall have been subsequently sold by TMCC to the Seller pursuant to this Agreement, (ii) on the Closing Date, shall have created or shall create a valid, subsisting and enforceable first priority security interest in favor of TMCC in the related Financed Vehicle, which security interest shall be assignable, and shall be so assigned, by the Seller to the Purchaser hereby, (iii) shall, except as otherwise provided in the Sale and Servicing Agreement, provide for scheduled monthly payments that fully amortize the Amount Financed by maturity (except for minimally different payments in the first or last month in the life of the Receivable and except pursuant to the Servicer’s Customary Servicing Practices, including Permitted Modifications that re-amortize the term of the Receivable) and provide for a finance charge or yield interest at its APR, in either case calculated based on the Simple Interest Method, (iv) shall contain customary and enforceable provisions, such that the rights and remedies of the holder thereof shall be adequate for realization against the collateral of the benefits of the security, (v) shall provide for, in the event that such Receivable is prepaid, a prepayment that fully pays the Principal Balance and includes accrued but unpaid interest and (vi) allows for prepayment and partial prepayment without penalty.

 

	
1.     Observe the Receivable and confirm that (i) it was on a form included in the list of approved forms of Receivables provided to [__________] by TMCC,  (ii) it contains a signature on behalf of each party thereto, (iii) its scheduled monthly payments fully amortize the Amount Financed by maturity (except for minimally different payments in the first or last month), (iv) it provides for a finance charge or yield interest at its APR, in either case calculated based on the Simple Interest Method, (v) it provides for, in the event that such Receivable is prepaid, a prepayment that fully pays the Principal Balance and includes accrued but unpaid interest and (vi) it allows for prepayment and partial prepayment without penalty.

 

 

 

 

Sch. B-1

 

 

	
Representations and Warranties

Made as of the Cutoff Date and the Closing Date (unless otherwise specified)

 

	
Tests

	
2.     Compliance with Law.  Each Receivable, including each form of contract used to originate each Receivable and each sale of the related Financed Vehicle, shall have complied at the time such form of contract was used or such sale was originated or made, and shall comply at the time of execution of this Agreement, in all material respects with all requirements of applicable federal, state and local laws, and regulations thereunder, including usury laws, the Federal Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Federal Trade Commission Act, the Magnuson-Moss Warranty Act, the Consumer Financial Protection Bureau’s Regulations B and Z (to the extent applicable), the Servicemembers Civil Relief Act of 2003, as amended, and state adaptations of the National Consumer Credit Protection Act and of the Uniform Consumer Credit Code and other consumer credit, equal credit opportunity and disclosure laws as applicable to such Receivable.

 

	
2.     Observe the Receivable and confirm that it was on a form included in the list of approved forms of Receivables provided to [__________] by TMCC.

 

	
3.     Binding Obligation.  Each Receivable is on a form contract that includes rights and remedies allowing the holder to enforce the obligation and realize on the related Financed Vehicle.  Each Receivable shall constitute the legal, valid and binding payment obligation in writing of the related Obligor, enforceable by the holder thereof in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting the enforcement of creditors’ rights in general and by general principles of equity and consumer protection laws, regardless of whether such enforceability shall be considered in a proceeding in equity or at law.

 

	
3.     Observe the Receivable and confirm that it was on a form included in the list of approved forms of Receivables provided to [__________] by TMCC.

 

	
4.     No Government Obligors.  None of the Receivables shall be due from the United States or any state or local government, or from any agency, department or instrumentality of the United States or any state or local government.

 

	
4.     Observe the Receivable and confirm that the related Obligor is not the United States or any state or local government, or from any agency, department or instrumentality of the United States or any state or local government.

 

 

 

 

Sch. B-2

 

 

	
Representations and Warranties

Made as of the Cutoff Date and the Closing Date (unless otherwise specified)

 

	
Tests

	
5.     Security Interest in Financed Vehicles.  Immediately prior to the sale, assignment and transfer thereof to the Purchaser on the Closing Date, each Receivable shall be secured by a validly perfected first priority security interest in the related Financed Vehicle in favor of TMCC as secured party or all necessary and appropriate action with respect to such Receivable shall have been taken to perfect a first priority security interest in such Financed Vehicle in favor of TMCC as secured party.

 

	
5.     Observe the related certificate of title documentation and confirm that (i)  it shows TMCC as the first lienholder thereon or (ii) there is evidence that a certificate of title naming TMCC as the first lienholder thereon has been applied for.

 

	
6.     Receivables in Force.  No Receivable shall have been satisfied, subordinated or rescinded, nor shall any Financed Vehicle have been released in whole or in part from the lien granted by the related Receivable.

 

	
6.     Observe the related Receivable File and confirm that the Receivable was not noted therein as having been satisfied, subordinated or rescinded, or released in whole or in part from the lien granted by such Receivable.

 

	
7.     No Waivers.  As of the Cutoff Date, no provision of a Receivable shall have been waived (except pursuant to the Servicer’s Customary Servicing Practices, including Permitted Modifications that re-amortize the term of the Receivable) in such a manner that such Receivable fails to meet all of the other representations and warranties made by the Seller herein with respect thereto.

 

	
7.     Observe the related Receivable File and confirm that, as of the Cutoff Date, there was no record therein of any waiver of any provision of the Receivable (except pursuant to the Servicer’s Customary Servicing Practices, including Permitted Modifications that re-amortize the term of the Receivable), that would cause the Receivable to not satisfy any other Test herein described.

 

	
8.     No Amendments.  No material provision of a Receivable has been affirmatively amended, except amendments and modifications that are contained in the related Receivable File.  As of the Cutoff Date, no Receivable shall have been amended or modified in such a manner that the total number of Scheduled Payments has been increased (except pursuant to the Servicer’s Customary Servicing Practices, including Permitted Modifications that re-amortize the term of the Receivable) or that the related Amount Financed has been increased or that such Receivable fails to meet all of the other representations and warranties made by the Seller herein with respect thereto.

 

	
8.     Observe the related Receivable File and confirm that, as of the Cutoff Date, there was no record therein of any amendment or modification of the Receivable in such a manner that the total number of Scheduled Payments had been increased (except pursuant to the Servicer’s Customary Servicing Practices, including Permitted Modifications that re-amortize the term of the Receivable) or that the related Amount Financed had been increased or that would cause the Receivable to not satisfy any other Test herein described.

 

	
9.     No Defenses.  No facts shall be known to the Seller which would give rise to any right of rescission, setoff, counterclaim or defense, nor shall the same have been asserted or threatened, with respect to any Receivable.

 

	
9.     Observe the related Receivable File and confirm that there was no record therein of any right of rescission, setoff, counterclaim or defense, nor any record of any assertion or threat thereof, with respect to the Receivable as of the Closing Date.

 

 

 

 

Sch. B-3

 

 

	
Representations and Warranties

Made as of the Cutoff Date and the Closing Date (unless otherwise specified)

 

	
Tests

	
10.  No Liens. The Seller has not received notice that any liens or claims have been filed as of the date of this Agreement, including liens for work, labor or materials relating to a Financed Vehicle, that shall be liens prior to, or equal or coordinate with, the security interest in such Financed Vehicle granted by the related Receivable, which Liens shall not have been released or satisfied as of the Closing Date.

 

	
10.     Observe the related Receivable File and confirm that, as of the Closing Date, there was no record therein of receipt of notice of, or record of, the existence on such date of any senior, equal or coordinate liens or claims with respect to the Financed Vehicle which have not been released as of such date.

 

	
11.   No Default; No Repossession.  Except for payment delinquencies that, as of the Cutoff Date, have been continuing for a period of not more than 29 days, no default, breach, violation or event permitting acceleration under the terms of any Receivable shall have occurred as of the Cutoff Date; no continuing condition that with notice or the lapse of time would constitute a default, breach, violation or event permitting acceleration under the terms of any Receivable shall have arisen; the Seller shall not have waived any of the foregoing; and no Financed Vehicle has been repossessed without reinstatement as of the Cutoff Date.

 

	
11.   Observe the Data Tape and confirm that, as of the Cutoff Date, the Receivable (i) was not noted therein as being more than 29 days delinquent and (ii) was not noted therein as having been repossessed without reinstatement. 

        Observe the related Receivable File and confirm that (i) as of the Cutoff Date, other than delinquencies of not more than 29 days,  there was no record therein of any default, breach, violation or event permitting acceleration under the terms of such Receivable, (ii) as of the Cutoff Date and as of the Closing Date, there was no record therein of the existence of any continuing condition that with notice or the lapse of time would constitute a default, breach, violation or event permitting acceleration under the terms of any Receivable, and (iii) as of the Cutoff Date and as of the Closing Date, there was no record therein of TMCC having waived any of the foregoing.

 

	
12.   Insurance.  The terms of each Receivable require the Obligor to obtain and maintain physical damage insurance covering the related Financed Vehicle in accordance with TMCC’s normal requirements.  The terms of each Receivable allow, but do not require TMCC to (and TMCC, in accordance with its Customary Servicing Practices, does not) obtain any such coverage on behalf of the Obligor.

 

	
12.   Observe the Receivable and confirm that (i) it was on a form included in the list of approved forms of Receivables provided to [__________] by TMCC, (ii) it required the related Obligor to obtain and maintain physical damage insurance covering the related Financed Vehicle and (iii) it does not require TMCC to obtain any such coverage on behalf of the related Obligor.

 

	
13.   Good Title.  No Receivable has been sold, transferred, assigned or pledged by the Seller to any Person other than the Purchaser, and no provision of a Receivable shall have been waived, except for a waiver that would not violate clause ([__]) or clause ([__]) above; immediately prior to the transfer and assignment herein contemplated, the Seller had good and marketable title to each Receivable free and clear of all Liens and rights of others; immediately upon the transfer and assignment thereof, the Purchaser shall have good and marketable title to each Receivable, free and clear of all Liens and rights of others.

 

	
13.   Observe the related Receivable File and confirm that there was no record therein of (i) TMCC or the Seller having sold, transferred, assigned or pledged the Receivable to any Person other than the Seller or the Issuer, respectively, or (ii) any provision of a Receivable having been waived, except in accordance with Representations and Warranties numbered [__] and [__] herein.

 

 

 

 

Sch. B-4

 

 

	
Representations and Warranties

Made as of the Cutoff Date and the Closing Date (unless otherwise specified)

 

	
Tests

	
14.   Lawful Assignment.  No Receivable shall have been originated in, or shall be subject to the laws of, any jurisdiction under which the sale, transfer and assignment of such Receivable under this Agreement or pursuant to a transfer of the related certificate of title shall be unlawful, void or voidable.  The terms of each Receivable do not limit the right of the owner of such Receivable to sell such Receivable.  The Seller has not entered into any agreement with any Person that prohibits, restricts or conditions the sale of any Receivable by the Seller.

 

	
14.   Observe the Receivable and confirm that it was on a form included in the list of approved forms of Receivables provided to [__________] by TMCC.

 

	
15.   Chattel Paper.  Each Receivable constitutes “chattel paper” that is in the form of either “tangible chattel paper” or “electronic chattel paper” as such terms are defined in the UCC.

 

	
15.   Observe the Receivable and confirm that it was on a form included in the list of approved forms of Receivables provided to [__________] by TMCC.

 

	
16.   Additional Representations and Warranties.  (A) Each Receivable shall have an original number of Scheduled Payments of not less than [__] nor more than [__] and, as of the Cutoff Date, a remaining number of Scheduled Payments of not less than [__] nor more than [__]; (B) each Receivable provides for the payment of a finance charge based on an APR ranging from [____]% to not more than [____]%; (C) each Receivable shall have had an original principal balance of not less than $[______] and not more than $[______] and, as of the Cutoff Date, an unpaid principal balance of not less than $[______] and not more than $[______]; (D) no Financed Vehicle was subject to force-placed insurance as of the Cutoff Date; (E) each Receivable is being serviced by TMCC as of the Closing Date; (F) each Receivable is secured by a new or used passenger car, minivan, light-duty truck or sport utility vehicle; (G) no Receivable was more than [__] days past due as of the Cutoff Date; (H) as of the Cutoff Date, no Receivable was noted in the records of the TMCC or the Servicer as being the subject of a bankruptcy proceeding or insolvency proceeding; (I) each Receivable is calculated with the Simple Interest Method; and (J) each Receivable has a first scheduled due date of not later than [__] days after the Cutoff Date; and (K) each Receivable shall have had a FICO score of at least [____] as of the Cutoff Date.

 

	
16.   Observe the Receivable and confirm that (i) it has an original number of Scheduled Payments of not less than [__] nor more than [__], (ii) it has, as of the Cutoff Date, a remaining number of Scheduled Payments of not less than [__] nor more than [__], (iii) it provides for the payment of a finance charge based on an APR ranging from [____]% to not more than [____]%, (iv) it had an original principal balance of not less than $[______] and not more than $[______] and, as of the Cutoff Date, an unpaid principal balance of not less than $[______] and not more than $[______], (v) it does not indicate that it was subject to force-placed insurance as of the Cutoff Date, (vi) it is being serviced by TMCC as of the Closing Date, (vii) it is secured by a new or used passenger car, minivan, light-duty truck or sport utility vehicle and (viii) it is calculated with the Simple Interest Method.

        Observe the Data Tape and confirm that (i) the Receivable has a first scheduled due date of not later than [__] days after the Cutoff Date, (ii) the Receivable was not more than [__] days past due as of the Cutoff Date, (iii) as of the Cutoff Date, the Receivable was not noted therein as being the subject of a bankruptcy proceeding or insolvency proceeding and (iv) the Receivable had a FICO score of at least [____] as of the Cutoff Date.

 

 

 

Sch. B-5

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