Document:

Exhibit 10.5

 

ASSET REPRESENTATIONS REVIEW AGREEMENT

 

among

 

HONDA AUTO RECEIVABLES 2017-3 OWNER TRUST,

as Issuer,

 

AMERICAN HONDA FINANCE CORPORATION,

as Sponsor and Servicer

 

and

 

CLAYTON FIXED INCOME SERVICES LLC,

 

as Asset Representations Reviewer

 

Dated as of September 29, 2017

 

    	 	 	 

     

    

 

Table
of Contents

 

	 	 	Page
	 	 	 
	ARTICLE I            USAGE AND DEFINITIONS	1
	 	 	 
	Section 1.1.	Usage and Definitions	1
	 	 	 
	Section 1.2.	Additional Definitions	2
	 	 	 
	ARTICLE II           ENGAGEMENT OF ASSET REPRESENTATIONS REVIEWER	2
	 	 	 
	Section 2.1.	Engagement; Acceptance	2
	 	 	 
	Section 2.2.	Confirmation of Scope	2
	 	 	 
	ARTICLE III          ASSET REPRESENTATIONS REVIEW PROCESS	2
	 	 	 
	Section 3.1.	Review Notices	2
	 	 	 
	Section 3.2.	Identification of Subject Receivables	3
	 	 	 
	Section 3.3.	Review Materials	3
	 	 	 
	Section 3.4.	Performance of Reviews	3
	 	 	 
	Section 3.5.	Review Reports	4
	 	 	 
	Section 3.6.	Limitations on Review Obligations	5
	 	 	 
	ARTICLE IV          ASSET REPRESENTATIONS REVIEWER	5
	 	 	 
	Section 4.1.	Representations and Warranties	5
	 	 	 
	Section 4.2.	Covenants	6
	 	 	 
	Section 4.3.	Fees, Expenses and Indemnities	7
	 	 	 
	Section 4.4.	Limitation on Liability	7
	 	 	 
	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	9
	 	 	 
	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	13
	 	 	 
	Section 5.4.	Merger, Consolidation or Succession	14

 

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Table
of Contents

(continued)

 

	 	 	Page
	 	 	 
	ARTICLE VI          OTHER AGREEMENTS	14
	 	 	 
	Section 6.1.	Independence of Asset Representations Reviewer	14
	 	 	 
	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	15
	 	 	 
	Section 7.3.	Notices	16
	 	 	 
	Section 7.4.	Governing Law; Submission to Jurisdiction; Waiver of Jury Trial	16
	 	 	 
	Section 7.5.	No Waiver; Remedies	17
	 	 	 
	Section 7.6.	Severability	17
	 	 	 
	Section 7.7.	Headings	17
	 	 	 
	Section 7.8.	Counterparts	17
	 	 	 
	Schedule A	Representations and Warranties, Review Materials and Tests	 

 

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ASSET REPRESENTATIONS REVIEW AGREEMENT,
dated as of September 29, 2017 (this “Agreement”), among HONDA AUTO RECEIVABLES 2017-3 OWNER TRUST,
a Delaware statutory trust, as Issuer (the “Issuer”), AMERICAN HONDA FINANCE CORPORATION, a California corporation
(“AHFC”), as Sponsor and Servicer, and CLAYTON FIXED INCOME SERVICES LLC, a Delaware limited liability company,
as Asset Representations Reviewer (the “Asset Representations Reviewer”).

 

BACKGROUND

 

WHEREAS, in the regular course of its business,
AHFC acquires certain motor vehicle retail installment sale contracts secured by new and used automobiles (including light-duty
trucks) from motor vehicle dealers.

 

WHEREAS, in connection with a securitization
transaction sponsored by AHFC, AHFC sold a pool of Receivables consisting of retail installment sale contracts to American Honda
Receivables, LLC (the “Depositor”), who sold them to the Issuer.

 

WHEREAS, the Issuer has granted a security
interest in the pool of Receivables to the Indenture Trustee, for the benefit of the Holders of Notes, as security for the Notes
issued by the Issuer under the Indenture.

 

WHEREAS, the Issuer desires to engage the
Asset Representations Reviewer to perform reviews of certain Receivables for compliance with the representations and warranties
made by AHFC about the Receivables in the pool.

 

NOW, THEREFORE, in consideration of the
foregoing, other good and valuable consideration, and the mutual terms and conditions contained herein, the parties hereto agree
as follows.

 

ARTICLE
I

USAGE
AND DEFINITIONS

 

Section 1.1.         Usage
and Definitions. (a) Except as otherwise specified herein or if the context may otherwise require, capitalized terms not defined
in this Agreement shall have the respective meanings assigned such terms set forth in Appendix A to the Sale and Servicing Agreement,
dated as of the date hereof (the “Sale and Servicing Agreement”), by and among the Depositor, as seller, AHFC,
as servicer, RPA seller and sponsor, and Honda Auto Receivables 2017-3 Owner Trust, as issuer.

 

(b)          With
respect to all terms in this Agreement, the singular includes the plural and the plural the singular; words importing any gender
include the other genders; references to “writing” include printing, typing, lithography and other means of reproducing
words in a visible form; references to agreements and other contractual instruments include all subsequent amendments, amendments
and restatements, and supplements thereto or changes therein entered into in accordance with their respective terms and not prohibited
by this Agreement; references to Persons include their permitted successors and assigns; references to laws include their amendments
and supplements, the rules and regulations thereunder and any successors thereto; the term “including” means “including
without limitation;” and the term “or” is not exclusive.

 

    	 	 	 

     

    

  

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

 

“Asset Review” means
the performance by the Asset Representations Reviewer of the testing procedures for each Test and each Subject Receivable according
to Section 3.4.

 

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

 

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

 

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

 

“Personally Identifiable Information”
or “PII” has the meaning stated in Section 4.10(a).

 

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

 

“Review Materials” means,
for an Asset Review and a Subject Receivable, the documents and other materials for each Test listed under “Review Materials”
in Schedule A.

 

“Review Report” means,
for an Asset Review, the report of the Asset Representations Reviewer prepared according to Section 3.5.

 

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

 

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

 

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

 

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

 

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

 

ARTICLE
II

ENGAGEMENT
OF ASSET REPRESENTATIONS REVIEWER

 

Section 2.1.         Engagement;
Acceptance. The Issuer engages Clayton Fixed Income Services LLC to act as the Asset Representations Reviewer for the Issuer.
Clayton Fixed Income Services LLC accepts the engagement and agrees to perform the obligations of the Asset Representations Reviewer
on the terms in this Agreement.

 

Section 2.2.         Confirmation
of Scope. The parties confirm that the Asset Representations Reviewer is not responsible for determining whether noncompliance
with the representations or warranties constitutes a breach of the Basic Documents.

 

ARTICLE
III

ASSET
REPRESENTATIONS REVIEW PROCESS

 

Section 3.1.         Review
Notices. On receipt of a review notice from the Indenture Trustee in accordance with Section 7.05 of the Indenture, the Asset
Representations Reviewer will start an Asset Review. The Asset Representations Reviewer will have no obligation to start an Asset
Review until a review notice is received.

 

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Section 3.2.         Identification
of Subject Receivables. Within ten (10) Business Days after receipt of a review notice, the Servicer will deliver to the Asset
Representations Reviewer a list of the Subject Receivables.

 

Section 3.3.         Review
Materials.

 

(a)          Access
to Review Materials. The Servicer will give the Asset Representations Reviewer access to the Review Materials for all of the
Subject Receivables within sixty (60) calendar days after receipt of the review notice in one or more of the following ways in
the Servicer’s reasonable discretion: (i) by electronic posting of Review Materials to a password-protected website to which
the Asset Representations Reviewer has access, (ii) by providing originals or photocopies of documents relating to the Subject
Receivables at one of the properties of the Servicer or (iii) in another manner agreed by the Servicer and the Asset Representations
Reviewer. The Servicer may redact or remove PII from the Review Materials so long as all information in the Review Materials necessary
for the Asset Representations Reviewer to complete the Asset Review remains intact and unchanged.

 

(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 reasonably determines that any of the Review Materials are missing or insufficient for the Asset Representations Reviewer
to perform any Test, the Asset Representations Reviewer will notify the Servicer promptly, and in any event no less than twenty
(20) calendar days before completing the Review, and the Servicer will use reasonable efforts to provide the Asset Representations
Reviewer access to such missing Review Materials or other documents or information to correct the insufficiency within fifteen
(15) calendar days. If the missing or insufficient Review Materials have not been provided by the Servicer within sixty (60) calendar
days, the parties agree that the Subject Receivable will have a Test Incomplete for the related Test(s) and the Review Report will
indicate the reason for the Test Incomplete.

 

Section 3.4.         Performance
of Reviews.

 

(a)          Test
Procedures. For an Asset Review, the Asset Representations Reviewer will perform for each Subject Receivable the procedures
listed under “Tests” in Schedule A for each representation and warranty (each, a “Test”),
using the Review Materials listed for each such Test in Schedule A. For each Test and Subject Receivable, the Asset Representations
Reviewer will determine in its reasonable judgment if the Test has been satisfied (a “Test Pass”), or if the
Test has not been satisfied (a “Test Fail”), or if the Test could not be concluded as a result of missing or
incomplete Review Materials (a “Test Incomplete”). The Asset Representations Reviewer will use such determination
for all Subject Receivables that are subject to the same Test.

 

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(b)          Review
Period. The Asset Representations Reviewer will complete the Review of all of the Subject Receivables within sixty (60) calendar
days after receiving access to the Review Materials under Section 3.3(a). However, if missing or additional Review Materials
are provided to the Asset Representations Reviewer under Section 3.3(b), the review period will be extended for an additional
thirty (30) calendar days.

 

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

 

(d)          Previously
Reviewed Receivable: Duplicative Tests. If any Subject Receivable was included in a prior Asset Review, the Asset Representations
Reviewer will not perform the same Tests on it, but will include the results of the previous Tests in the Review Report for the
current Asset Review.

 

(e)          Duplicative
Tests. If the same Test is required for more than one representation or warranty listed on Schedule A, 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 or warranty on the Review Report.

 

(f)           Termination
of Review. If an Asset Review is in process and the Notes will be paid in full on the next Distribution Date, the Servicer
will notify the Asset Representations Reviewer and the Indenture Trustee no less than ten (10) calendar days before that Distribution
Date. On receipt of notice, the Asset Representations Reviewer will terminate the Asset Review immediately and will have no obligation
to deliver a Review Report.

 

Section 3.5.         Review
Reports. (a) Within ten (10) calendar days after the end of the Asset Review period under Section 3.4(b), the Asset
Representations Reviewer will deliver to the Issuer, the Sponsor, the Servicer and the Indenture Trustee a Review Report indicating
for each Subject Receivable whether there was a Test Pass or a Test Fail for each Test, or whether the Subject Receivable was a
Test Complete and the related reason. The Review Report will contain a summary of the findings and conclusions of the Asset Representations
Reviewer with respect to the Asset Review 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 Issuer
PII. On the reasonable request of the Servicer or the Indenture Trustee, acting solely on behalf of the Noteholders, the Asset
Representations Reviewer will provide additional details on the Test results.

 

(b)          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 Servicer or the Indenture Trustee, acting solely on behalf
of the Noteholders, until the earlier of (i) payment in full of the Notes and (ii) one year after the delivery of the Review Report.
The Asset Representations Reviewer will have no obligation to respond to questions or requests for clarification from Noteholders
or any Person other than the Servicer or the Indenture Trustee, acting solely on behalf of the Noteholders, and will direct such
Persons to submit written requests to the Servicer.

 

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Section 3.6.         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 an Asset
Review under the Indenture, and may rely on the information in any review notice delivered by the Indenture Trustee;

 

(ii)         to
determine which Receivables are subject to an Asset Review, and may rely on the lists of Subject Receivables provided by the Servicer;

 

(iii)        to
obtain or confirm the validity of the Review Materials and no liability for any errors in the Review Materials and may rely on
the accuracy and completeness of the Review Materials;

 

(iv)        to
obtain missing or insufficient Review Materials from any party or any other source; or

 

(v)         to
take any action or cause any other party to take any action under any of the Basic Documents or otherwise to enforce any remedies
against any Person for breaches of representations or warranties about the Subject Receivables.

 

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 limited liability company
in good standing under the laws of the State of Delaware. The Asset Representations Reviewer is qualified as a foreign limited
liability company 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.

 

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(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 (A) conflict with, or be a breach or default under,
any indenture, loan agreement, guarantee or other agreement or instrument under which the Asset Representations Reviewer is a debtor
or guarantor, (B) result in the creation or imposition of any Lien on any of the properties or assets of the Asset Representations
Reviewer under the terms of any indenture, loan agreement, guarantee or other agreement or instrument, (C) violate the organizational
documents of the Asset Representations Reviewer or (D) violate any law or any 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. There are no proceedings or investigations pending or, to the knowledge of the Asset Representations Reviewer,
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 (A) asserting the invalidity of this Agreement, (B)
seeking to prevent the completion of the transactions contemplated by this Agreement or (C) 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.

 

(e)          Eligibility.
The Asset Representations Reviewer meets the eligibility requirements in Section 5.1 and will notify the Issuer and the
Servicer promptly if it no longer meets, or reasonably expects that it will no longer meet, 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 and the Servicer promptly if it no longer meets 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 Subject Receivable and the related Review Materials to be individually tracked and stored
as contemplated by this Agreement. The Asset Representations Reviewer will maintain adequate staff that is properly trained to
conduct Asset Reviews as required by this Agreement.

 

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(c)          Maintenance
of Review Materials. It will maintain copies of any Review Materials, Review Reports and other documents relating to an Asset
Review, including internal correspondence and work papers, for a period of two years after the termination of this Agreement or
repayment of the Notes in full, whichever comes first.

 

Section 4.3.         Fees,
Expenses and Indemnities.

 

(a)          Annual
Fee. The Sponsor will pay the Asset Representations Reviewer, as compensation for agreeing to act as the Asset Representations
Reviewer under this Agreement, an annual fee equal to $5,000. The annual fee will be paid as agreed in Section 4.3(d) by
the Sponsor until this Agreement is terminated.

 

(b)          Review
Fee. Following the completion of an Asset Review and the delivery to the Indenture Trustee, the Sponsor and the Servicer of
the Review Report, or the termination of an Asset Review according to Section 3.4(e), and the delivery to the Sponsor of
a detailed invoice, the Asset Representations Reviewer will be entitled to a fee of up to $250 for each Account containing a Subject
Receivable (the “Review Fee”). However, no Review Fee will be charged for any Tests that were performed in a
prior Asset Representations Review or for any Asset Representations Review in which no Tests were completed prior to the Asset
Representations Reviewer being notified of a termination of the Asset Representations Review in accordance with Section 3.4(e).
The Sponsor will pay the Review Fee to the Asset Representations Reviewer in accordance with the terms of Section 4.3(d)
of this Agreement. If an Asset Review is terminated according to Section 3.4(e), the Asset Representations Reviewer must
submit its invoice for the Review Fee for the terminated Asset Review no later than five Business Days before the final Payment
Date to be reimbursed no later than the final Payment Date.

 

(c)          Reimbursement
of Travel Expenses. If the Servicer provides access to the Review Materials at one of its properties, the Sponsor will reimburse
the Asset Representations Reviewer for its reasonable travel expenses incurred in connection with the Asset Review upon receipt
of a detailed invoice.

 

(d)          Payment
of Fees and Indemnities. The Asset Representations Reviewer shall submit reasonably detailed invoices to the Sponsor for any
amounts owed to it under this Agreement. To the extent not paid by the Sponsor within sixty (60) calendar days following the receipt
of a detailed invoice, the fees provided for in this Section 4.3 and the indemnities provided for in Section 4.6(a)
shall be paid by the Issuer pursuant to Section 4.06(c) of the Sale and Servicing Agreement; provided, that prior to any
such payment pursuant to the Sale and Servicing Agreement, the Asset Representations Reviewer shall notify the Sponsor in writing
that such payments have been outstanding for at least sixty (60) calendar days. For the avoidance of doubt, to the extent that
such owed amounts are not paid in full by the Sponsor or any other party, upon receipt of a detailed invoice, the Asset Representations
Reviewer shall be entitled to payment by the Sponsor of incurred but otherwise unpaid amounts.

 

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, breach of this Agreement 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.

 

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Section 4.5.         Indemnification
by Asset Representations Reviewer. The Asset Representations Reviewer will indemnify each of the Issuer, the Depositor, the
Servicer, the Sponsor, the Owner Trustee and the Indenture Trustee (each, an “Indemnified Party”) and their
respective directors, officers, employees and agents for all costs, expenses, losses, damages and liabilities (including any reasonable
legal fees and expenses incurred by an Indemnified Party in connection with the enforcement of any indemnification or other obligation
of the Asset Representations Reviewer) resulting from (a) the willful misconduct, bad faith or negligence of the Asset Representations
Reviewer in performing its obligations under this Agreement, (b) the Asset Representations Reviewer’s failure to comply with
the requirements of applicable federal, state or local laws and regulations in the performance of its duties hereunder or (c) the
Asset Representations Reviewer’s breach of any of its representations, warranties, covenants or other obligations 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 permitted resignation or removal of the Asset Representations Reviewer.

 

Section 4.6.         Indemnification
of Asset Representations Reviewer.

 

(a)          Indemnification.
The Sponsor will indemnify the Asset Representations Reviewer and its officers, directors, employees and agents (each, an “Indemnified
Person”), for all costs, expenses, losses, damages and liabilities resulting from the performance of the Asset Representations
Reviewer’s obligations under this Agreement (including the costs and expenses of defending itself against any loss, damage
or liability), but excluding any cost, expense, loss, damage or liability resulting from (i) the Asset Representations Reviewer’s
willful misconduct, bad faith or negligence, (ii) the Asset Representations Reviewer’s failure to comply with the requirements
of applicable federal, state and local laws and regulations in the performance of its duties hereunder or (iii) the Asset Representations
Reviewer’s breach of any of its representations, warranties, covenants or other obligations 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 Sponsor of the Proceeding. The Sponsor may participate in and assume the defense
and settlement of a Proceeding at its expense. If the Sponsor notifies the Indemnified Person of its intention to assume the defense
of the Proceeding with counsel reasonably satisfactory to the Indemnified Person, and the Sponsor will not be liable for legal
expenses of counsel to the Indemnified Person unless there is a conflict between the interests of the Sponsor, and an Indemnified
Person. If there is a conflict, the Sponsor 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 Sponsor and the Indemnified Person, which approval
will not be unreasonably withheld.

 

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

 

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(d)          Repayment.
If the Sponsor 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 Sponsor.

 

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 or the Sponsor, 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 or the Sponsor’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 Sponsor will, and will cause its authorized representatives to, hold in confidence any proprietary confidential information
of the Asset Representations Reviewer except if disclosure may be required by law or if the Issuer, the Servicer or the Sponsor
reasonably determines that it is required to make the disclosure under this Agreement or the other Basic Documents. Except as described
in Section 4.2(c), 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 parties to this Agreement.

 

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 Sponsor and the Servicer, 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 Asset Reviews of Subject 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 AHFC or its Affiliates or special purpose entities 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.

 

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(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 Subject 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 Sponsor or the Servicer, which contain information
supplied by or on behalf of the Sponsor or the Servicer or their 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 Sponsor or the Servicer 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 Sponsor or the Servicer 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 Sponsor or the Servicer provides permission to the applicable Information Recipients
to release.

 

(c)          Protection.
The Asset Representations Reviewer will use 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 Personally Identifiable Information is
also subject to the additional requirements in Section 4.9.

 

(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 Sponsor and the Servicer with notice of the requirement and will cooperate,
at the Sponsor’s expense, in the Issuer’s and the Sponsor’s pursuit of a proper protective order or other relief
for the disclosure of the Confidential Information. If the Issuer or the Sponsor 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.

 

    	 	10	 

     

    

  

(f)           Violation.
The Asset Representations Reviewer agrees that a violation of this Agreement may cause irreparable injury to the Issuer, the Sponsor
and the Servicer and the Issuer, the Sponsor and the Servicer may seek injunctive relief in addition to legal remedies. If an action
is initiated by the Issuer or the Servicer 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.
“Personally Identifiable Information” or “PII” means information in any format about an identifiable
individual, including, name, address, phone number, e-mail address, account number(s), identification number(s), vehicle identification
number(s) or “VIN(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 or their 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. None of the Issuer, the
Sponsor or the Servicer intend to share, provide or supply any Issuer PII to the Asset Representations Reviewer. However, if the
Asset Representations Reviewer receives any Issuer PII, the Asset Representations Reviewer will promptly (i) notify the Servicer
and (ii) delete and destroy such Issuer PII in accordance with Section 4.10(c). Notwithstanding the foregoing, 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 implement and maintain reasonable and appropriate practices, procedures and systems, including
administrative, technical and physical safeguards designed to (i) protect the security, confidentiality and integrity of Issuer
PII, (ii) ensure against anticipated threats or hazards to the security or integrity 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 an Asset 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.

 

    	 	11	 

     

    

  

(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.

 

(d)          Notice
of Breach. The Asset Representations Reviewer will notify the Issuer 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 Asset 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.

 

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

 

(g)          Affiliates
and Third Parties. If the Asset Representations Reviewer processes the PII of the Issuer’s Affiliates or a third party
when performing an Asset 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 will be entitled to enforce the PII related terms of this Section
4.10 against the Asset Representations Reviewer as if each were a signatory to this Agreement.

 

(h)          Audit
of Asset Representations Reviewer. The Asset Representations Reviewer will permit the Issuer and its authorized representatives
to audit the Asset Representations Reviewer’s compliance with this Agreement 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 agrees 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 and its authorized representatives during normal business hours on reasonable advance written notice to audit
any service providers used by the Asset Representations Reviewer with the Sponsor’s prior written consent to fulfill the
Asset Representations Reviewer’s obligations under this Agreement.

 

    	 	12	 

     

    

  

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 Affiliated
with the Sponsor, the Depositor, the Servicer, the Indenture Trustee, the Owner Trustee or any of their Affiliates and (b) was
not, and is not Affiliated with a Person that was, engaged by the Sponsor or any Underwriter to perform any due diligence on the
Receivables prior to the Closing Date.

 

Section 5.2.         Resignation
and Removal of Asset Representations Reviewer.

 

(a)          No
Resignation of Asset Representations Reviewer. The Asset Representations Reviewer will not resign as Asset Representations
Reviewer unless (a) the Asset Representations Reviewer no longer meets the eligibility requirements in Section 5.1 or (b)
upon determination that the performance of its duties under this Agreement is no longer permissible under applicable law. The Asset
Representations Reviewer will notify the Issuer and the Servicer of its resignation as soon as practicable after it determines
it is required to resign and stating the resignation date and including an Opinion of Counsel supporting its determination.

 

(b)          Removal
of Asset Representations Reviewer. If any of the following events occur, the Sponsor, 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 Sponsor will notify the Issuer, 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
Sponsor will appoint a successor Asset Representations Reviewer who meets the eligibility requirements of Section 5.1.

 

    	 	13	 

     

    

  

(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 and the Servicer an agreement accepting its engagement
and agreeing to perform the obligations of the Asset Representations Reviewer under this Agreement or entered into a new agreement
with the Issuer 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 and take all actions reasonably requested to assist the Issuer in making an orderly transition of the Asset Representations
Reviewer’s rights and obligations under this Agreement to the successor Asset Representations Reviewer. The Asset Representations
Reviewer will pay the reasonable expenses (including the fees and expenses of counsel) of transitioning the Asset Representations
Reviewer’s obligations under this Agreement and preparing the successor Asset Representations Reviewer to take on such obligations
on receipt of an invoice with reasonable detail of the expenses from the Issuer or the successor Asset Representations Reviewer.

 

Section 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 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 and the Servicer
an agreement to assume the Asset Representations Reviewer’s obligations under this Agreement (unless the assumption happens
by operation of law).

 

ARTICLE
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, the Owner Trustee or the Indenture Trustee for the manner in which it accomplishes the performance
of its obligations under this Agreement. Unless authorized by the Issuer, the Owner Trustee, or the Indenture Trustee, respectively,
the Asset Representations Reviewer will have no authority to act for or represent the Issuer, the Owner Trustee or the Indenture
Trustee and will not be considered an agent of the Issuer, the Owner Trustee or the Indenture Trustee. None of the Issuer, the
Owner Trustee or the Indenture Trustee will be responsible for monitoring the performance of the Asset Representations Reviewer
or liable to any Person for the failure of the Asset Representations Reviewer to perform its obligations hereunder. Nothing in
this Agreement will make the Asset Representations Reviewer and any of the Issuer, the Owner Trustee or the Indenture Trustee members
of any partnership, joint venture or other separate entity or impose any liability as such on any of them.

 

    	 	14	 

     

    

  

Section 6.2.         No
Petition. Each of the parties, by entering into this Agreement, agrees that, before the date that is one year and one day (or,
if longer, any applicable preference period) after payment in full of (a) all securities issued by the Depositor or by a trust
for which the Depositor was a depositor (including, without limitation, the Issuer) or (b) the Notes, it will not start or pursue
against, or join any other Person in starting or pursuing against (i) the Depositor or (ii) the Issuer, respectively, 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 The Bank of New York Mellon not in
its individual capacity but solely in its capacity as Owner Trustee of the Issuer. In no event will The Bank of New York Mellon
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 4.5 or as otherwise stated in
this Agreement, 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.

 

(a)          This
Agreement can be modified in a written document executed by the parties hereto without the consent of the Noteholders or any other
Person; provided, that, except with respect to amendments (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 or (ii) to convert or supplement any provision
in a manner consistent with the intent of this Agreement, either (a) such amendment shall not, as evidenced by an opinion of counsel
or officer’s certificate, materially and adversely affect the interests of the holders of any outstanding Note or (b) the
Rating Agency Condition is satisfied with respect to such amendment. With respect to any amendment for which clauses (a) or (b)
of the immediately preceding sentence cannot be satisfied, this Agreement can be amended with the consent of the Noteholders of
a majority of the Outstanding Principal Balance of the Notes of each adversely affected Series.

 

(b)          Notice
of Amendments. The Servicer will notify the Rating Agencies in advance of any amendment. Promptly after the execution of an
amendment, the Servicer will deliver a copy of the amendment to the Rating Agencies and the Indenture Trustee.

 

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 parties to this Agreement.

 

    	 	15	 

     

    

  

(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 entitled to enforce this Agreement against the Asset Representations Reviewer. No other Person
will have any right or obligation under this Agreement.

 

Section 7.3.         Notices.

 

(a)          Delivery
of Notices. 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 a letter mailed by registered first class mail, postage prepaid, three 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 (without the requirement of
confirmation of receipt) of an email to that recipient stating that the electronic posting has occurred.

 

(b)          Notice
Addresses. Any notice, request, demand, consent, waiver or other communication will be delivered or addressed to: (i) (a) in
the case of the Sponsor and the Servicer, to American Honda Finance Corporation, 20800 Madrona Avenue, Torrance, CA 90503, Attention:
Program Services & Investor Relations, (b) in the case of the Issuer or the Owner Trustee, to Honda Auto Receivables 2017-3
Owner Trust, c/o The Bank of New York Mellon, 101 Barclay Street, Floor 7 West, New York, NY 10286, Attention: Asset Backed Securities
Unit – Honda Auto Receivables 2017-3, (c) in the case of the Indenture Trustee, to U.S. Bank National Association, 190 South
LaSalle Street, 7th Floor, Chicago, Illinois 60603, Attention: Corporate Trust Services - Honda Auto Receivables 2017-3, and (d)
in the case of the Asset Representations Reviewer, to Clayton Fixed Income Services LLC, 1700 Lincoln Street, Denver, CO 80203,
Attention: SVP, Surveillance; with a copy to Clayton Fixed Income Services LLC, 100 Beard Sawmill Road, Ste. 200, Shelton, CT 06484,
Attention: General Counsel or, (ii) as to each party, at such other address or email as shall be designated by such party in a
written notice to each other party.

 

Section 7.4.         Governing
Law; Submission to Jurisdiction; Waiver of Jury Trial. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

 

    	 	16	 

     

    

  

Each
of the parties hereto hereby submits to the exclusive jurisdiction of the United States District Court for the Southern District
of New York and of any New York State court sitting in New York City for purposes of all legal proceedings arising out of or relating
to this Agreement or the transactions contemplated hereby. Each of the parties hereto hereby further irrevocably waives any claim
that any such courts lack jurisdiction over such party, and agrees not to plead or claim, in any legal action or proceeding with
respect to this Agreement in any of the aforesaid courts, that any such court lacks jurisdiction over such party. Each of the parties
hereto irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying
of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum.

 

Each
party hereto hereby waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect
of any litigation directly or indirectly arising out of, under or in connection with this agreement.

 

Section 7.5.         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 7.6.         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 7.7.         Headings.
The headings in this Agreement are included for convenience and will not affect the meaning or interpretation of this Agreement.

 

Section 7.8.         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]

 

    	 	17	 

     

    

 

EXECUTED BY:

 

	 	HONDA AUTO RECEIVABLES 2017-3 OWNER TRUST,
	 	 	as Issuer
	 	 	 	 
	 	By:	The Bank of New York Mellon, not in its
	 	 	individual capacity, but solely as Owner Trustee
	 	 	 	 
	 	By:	 	 
	 	 	Name:	 
	 	 	Title:	 
	 	 	 	 
	 	AMERICAN HONDA FINANCE CORPORATION,
	 	 	as Sponsor and Servicer
	 	 	 	 
	 	By:	 	 
	 	 	Name:  	Paul C. Honda
	 	 	Title:	Vice President and Assistant Secretary
	 	 	 	 
	 	CLAYTON FIXED INCOME SERVICES LLC,
	 	 	as Asset Representations Reviewer
	 	 	 	 
	 	By:	 	 
	 	 	Name:	 
	 	 	Title:	 

 

    	 	S-1	HAROT 2017-3
ARR Agreement

     

    

 

Schedule A

 

Representations and Warranties, Review Materials
and Tests

 

	Representations and Warranty	 	Review Materials and Tests
	
        (i)           Characteristics
        of Receivables. Each Receivable

        (a)   was originated
        by a Dealer located in the United States for the sale of the related Financed Vehicle, fully executed by the Obligor thereto, purchased
        by AHFC from such Dealer under an existing agreement with AHFC, assigned by such Dealer to the RPA Seller and subsequently sold
        by the RPA Seller to the Purchaser pursuant to the Receivables Purchase Agreement,

        (b)   has created
        or shall create a first priority security interest in favor of the RPA Seller in the related Financed Vehicle, which security interest
        has been assigned by the RPA Seller to the Purchaser and shall be assignable, and shall be so assigned, by the Purchaser to the
        Issuer,

        (c)   contains
        provisions that permit the repossession and sale of the Financed Vehicle upon a default under the Receivable by the Obligor,

        (d)   except
        as otherwise provided in this Agreement, provides, at the time of origination, for level Monthly Payments (provided that the first
        and last payments in the life of the Receivable may be different from but in no event more than two times the level payment) that
        fully amortize the Amount Financed over its original term,

        (e)   allows
        for prepayment,

        (f)   is not
        listed on the Servicer’s records as a federal, state or local governmental entity and

        (g)   is a retail
        installment sales contract.
	 	
        Review Materials:

        (a)   Title
        documents

        (b)   Installment
        sales contract

        (c)   Receivable
        Files

        (d)   Servicer’s
        Records/Data file

        Tests:

        (a)   Origination

        i.     Review
        the contract and confirm that the Dealer address is a United States address.

        ii.    Review
        the contract and confirm that it was signed by the Obligor.

        iii.   Review
        the contract and confirm that AHFC (or an acceptable variation of the name) is listed as an assignee within the assignment section.

        iv.   Review
        the contract and confirm the Vehicle Identification Number (VIN) on the contract matches the VIN on the Certificate of Title or
        Application for Title.

        v.    Confirm
        the Dealer signed the assignment section of the contract.

        (b)   Security
        Interest Enforcement

        i.     Review
        the Receivable File and confirm that the security interest has not been subordinated and the Receivable maintains an enforceable
        security interest in favor of AHFC for the Financed Vehicle.

        (c)   Repossession

        i.     Review
        the contract and confirm that it contains language permitting the repossession and sale of the Financed Vehicle upon default by
        the Obligor.

        (d)   Fully
        Amortizing Payment Schedule

        i.     Review
        the contract and confirm that all payments are equivalent with the possible exception of the first and last payments, which may
        be two times the level payment.

        ii.    Review
        the Truth-in-Lending section of the contract and calculate the product of the Amount of Payments with the Number of Payments and
        confirm that this amount is equal to the Total of Payments.

        (e)   Prepayments

        i.     Review
        the contract and confirm that the terms conform to the representation.

        (f)   No governmental
        obligors

        i.     Review
        the contract and confirm that the Obligor does not appear to be a governmental entity and that the Servicer’s records do
        not otherwise indicate that the Obligor is a governmental entity.

 

    	 	 	 

     

    

  

	 	 	
        (g)   Retail
        installment sale contract

        i.     Review
        the contract and confirm that the contract terms conform to the representation.

        (h)   If (a) through (g) are confirmed, then
        Test Pass.

	(ii)          Compliance with Law.  At the time it was originated, the Receivable complied in all material respects with all requirements of law in effect at the time and applicable to such Receivable.	 	
        Review Materials:

        (a)   Installment
        sales contract

        (b)   AHFC’s
        list of approved contract forms.

        Tests:

        (a)   Review
        the contract form number and revision date and confirm that they are both on AHFC’s list of approved contract forms.

        (b)   If (a)
        is confirmed, then Test Pass.

	(iii)         Binding Obligation.  Each Receivable is on a form contract that includes the legal and binding payment obligation in writing of the related Obligor, enforceable by the holder thereof, except as enforceability may be subject to or limited by bankruptcy, insolvency, reorganization, moratorium, liquidation or other laws affecting the enforcement of creditors’ rights and by general principles of equity, consumer protection laws and the Servicemembers Civil Relief Act.	 	
        Review Materials:

        (a)   Installment
        sales contract

        (b)   AHFC’s
        list of approved contract forms.

        Tests:

        (a)   Review
        the contract form number and revision date and confirm that they are both on AHFC’s list of approved contract forms.

        (b)   Confirm
        the Obligor signed the contract.

        (c)   If (a)
        and (b) are confirmed, then Test Pass.

	(iv)         Receivables in Force.  According to the Servicer’s Receivables system, the Receivable shall not have been satisfied, subordinated or rescinded, nor shall the Financed Vehicle have been released in whole or in part from the lien granted by the related Receivable on the Cutoff Date.	 	
        Review Materials:

        (a)   Receivable
        Files

        (b)   Title
        documents

        (c)   Servicer’s
        Records/Data file

        Tests:

        (a)   Confirm
        that there is no indication in the Servicer’s Records or Receivable Files that the Receivable was subordinated or rescinded.

        (b)   Confirm
        that there is no indication in the Servicer’s Records or Receivable Files that the Receivable was satisfied prior to the
        Cut-off Date.

        (c)   Confirm
        that there is no indication in the Servicer’s Records or Receivable Files that the Financed Vehicle has been released from
        the lien in whole or in part.

        (d)   If (a)
        through (c) are confirmed, then Test Pass.

	(v)          No Defenses.  To the RPA Seller’s knowledge, no right of rescission, setoff, counterclaim or defense has been asserted or threatened in writing by any Obligor against the Receivable.	 	
        Review Materials:

        (a)   Receivable
        Files

        (b)   Receivable
        system

        Tests:

        (a)   Review
        the Receivable Files and confirm that there is no indication the Receivable is subject to rescission, setoff, counterclaim or defense
        that would cause the Receivable to become invalid, or, if so, confirm such indications were not present as of the Cut-off Date.

        (b)   If (a)
        is confirmed, then Test Pass.

	(vi)         No Defaults.  Except for payment delinquencies that, as of the Cutoff Date, were not more than thirty (30) days, according to the accounting records of the RPA Seller, no payment default existed under the terms of any Receivable as of the Cutoff Date.	 	
        Review Materials:

        (a)   Servicer’s
        Records/Data file

        Tests:

        (a)   Confirm
        that there is no indication of a payment default, other than payment delinquencies of not more than thirty (30) days, or if so,
        confirm such defaults were not present as of the Cut-off Date.

        (b)   If (a)
        is confirmed, then Test Pass.

 

    	 	 	 

     

    

  

	(vii)        Insurance.  Each Obligor of a Receivable has been required to obtain physical damage insurance covering the related Financed Vehicle and is required under the terms of the related Receivable to maintain such insurance.	 	
        Review Materials:

        (a)   Installment
        sale contract

        Tests:

        (a)   Confirm
        that the contract contains language that requires the Obligor to obtain and maintain insurance against physical damage to the Financed
        Vehicle.

        (b)   If (a)
        is confirmed, then Test Pass.

         

	(viii)       Lawful Assignment.  The terms of the Receivable do not limit the right of the owner of the Receivable to sell the Receivable.	 	
        Review Materials:

        (a)   Installment
        sale contract

        Tests:

        (a)   Review
        the contract and confirm that there is no language present that limits the rights of the owner of the Receivable to sell the Receivable.

        (b)   If (a)
        is confirmed, then Test Pass.

	(ix)          Chattel Paper.  The Receivable is either “tangible chattel paper” or “electronic chattel paper” within the meaning of the applicable UCC and there is only one original authenticated copy of the Receivable.	 	
        Review Materials:

        (a)   Installment
        sale contract

        (b)   AHFC’s
        list of approved contract forms

        (c)   Title
        documents

        Tests:

        (a)   Review
        the contract form number and revision date and confirm that it is on AHFC’s list of approved contract forms.

        (b)   Confirm
        there is a signature under the each of the Obligor’s and seller’s name within the contract.

        (c)   Confirm
        there is no indication the contract was voided or is otherwise not the original authenticated copy.

        (d)   If (a)
        through (c) are confirmed, then Test Pass.

	(x)          Security Interest.  The RPA Seller has, or the Servicer has, started procedures that will result in the RPA Seller having a perfected, first priority security interest in the Financed Vehicle within then (10) days of the Closing Date, which security interest was validly created and is assignable by the RPA Seller to the Purchaser.	 	
        Review Materials:

        (a)   Installment
        sales contract

        (b)   Title
        documents

        Tests:

        (a)   Confirm
        the Title documents report AHFC (or an acceptable variation of the name) as the first lien holder.

        (b)   Confirm
        that the Obligor name on the contract matches the name on the title documents.

        (c)   Confirm
        that the Vehicle Identification Number (VIN) on the contract matches the vehicle identification number as reported on the title
        documents.

        (d)   If (a)
        through (c) are confirmed, then Test Pass.

	
        (xi)          Individual
        Characteristics. Each Receivable has the following individual characteristics as of the Cutoff Date:

        (a)   is not
        listed on the Servicer’s records as the subject of a pending bankruptcy proceeding;

        (b)   had an
        original maturity of not greater than 72 payments;

        (c)   provides
        for the payment of a finance charge or shall yield interest calculated on the basis of a Contract Rate of at least 0.50%;

        (d)   has a
        Scheduled Payment that is not more than thirty (30) days past due;

        (e)   the Financed
        Vehicle to which the Receivable relates is a new or used Honda or Acura automobile or light-duty truck; 

         
	 	
        Review Materials:

        (a)   Installment
        sales contract

        (b)   Servicer’s
        Records/Data file

        (c)   Receivable
        Files

        Tests:

        (a)   Bankruptcy

        i.     Review
        the Servicer’s records and confirm that the Obligor was not the subject of a bankruptcy proceeding as of the Cutoff Date.

        (b)   Original
        Maturity

        i.     Confirm
        that the number of payments as stated within the contract does not exceed 72 payments.

        (c)   Contract
        Rate

        i.     Confirm
        that the Contract Rate stated within the contract is greater than or equal to 0.50% as of the Cutoff Date.

 

    	 	 	 

     

    

  

	        and

                                                                       (f)   the Obligor under each Receivable had a billing address in the United States or its territories or possessions, according to the records of the Servicer.
	 	
        (d)   Past Due

        i.     Review
        the Servicer’s records and confirm that the Receivable was not more than thirty (30) days past due as of the Cutoff Date.

        (e)   New or
        Used Honda or Acura

        i.     Confirm
        the Financed Vehicle is a new or used automobile or light-duty truck as stated within the New/Used section of the contract.

        (f)   Billing
        Address

        i.     Confirm
        the Receivable Files indicate that the Obligor’s address is located within the United States or its territories or possessions
        as of the Cutoff Date.

        (g)   If (a) through (f) are confirmed, then
        Test Pass.ras-ex101_131.htm

Exhibit 10.1

 

SETTLEMENT AGREEMENT AND GENERAL RELEASE

 

This Settlement Agreement and General Release (this “Agreement”) is made and entered into by and between Paul W. Kopsky, Jr. (“Mr. Kopsky”) and RAIT Financial Trust, a Maryland real estate investment trust (“RAIT”).

 

WHEREAS, Mr. Kopsky was previously employed by RAIT pursuant to the Employment Agreement between RAIT and Mr. Kopsky executed on February 17, 2017 (the “Employment Agreement”); and said employment terminated on August 20, 2017; and 

WHEREAS, RAIT and Mr. Kopsky now desire to reach a complete and final settlement of all existing and potential disputes between the parties, including, but not limited to, all disputes related to Mr. Kopsky’s previous employment by RAIT and the termination of such employment;

NOW, THEREFORE, in consideration of all of the above and of the mutual promises, covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Mr. Kopsky and RAIT, intending to be legally bound hereby agree as follows:

	
1.
	
As used in this Agreement, these words shall have the following meanings:

	
 
	
a.
	
“RELEASEES” means RAIT and all of RAIT’s former owners, current owners, and future owners and parents, shareholders, partners, sponsors, members, predecessors, officials, officers, representatives, insurers, reinsurers, agents, directors, employees, subsidiaries, affiliates, trustees, attorneys, and divisions and all other related entities and their respective heirs, successors, and assigns and all other persons and entities acting by, through, under, or in concert with any of them. 

	
 
	
b.
	
CLAIM(S) means any and all charges, complaints, claims, liabilities, obligations, promises, agreements, grievances, controversies, damages, actions, causes of action, suits, rights, demands, costs, losses, debts, and expenses, including, but not limited to any CLAIM arising out of or related to the Employment Agreement and any and all related documents, instruments, or agreements, including without limitation, for any amount owed or allegedly owed thereunder. 

2.After this Agreement becomes effective pursuant to Paragraph 4 hereof, and after receiving: (a) a completed and executed IRS Form W-9 from Mr. Kopsky’s attorney; and (b) a fully executed original of this Agreement from Mr. Kopsky, RAIT agrees to the following which shall constitute valuable consideration: 

 

	
 
	
a.
	
RAIT shall, within ten (10) days thereafter, pay Mr. Kopsky a total payment in the amount of Five Hundred and Seventy Five Thousand Dollars and Zero Cents ($575,000.00), The payment will come in the form of two checks. The first check will be made payable to Mr. Kopsky in the amount of Five Hundred Forty-Two Thousand Five Hundred Dollars and Zero Cents ($542,500.00), less legally required deductions, for which an IRS Form W-2 shall be issued. A second check will be made payable to Mr. Kopsky and Wechsler & Cohen, LLP for Thirty-Two 

1

 Mr. Kopsky’s initials _PWK___

 

	
 
		
Thousand Five Hundred Dollars and Zero Cents ($32,500.00), representing attorneys’ fees incurred by Mr. Kopsky in connection with this dispute for which an IRS Form 1099 will be issued.

 

	
 
	
b.
	
RAIT shall and hereby does Release Mr. Kopsky from his obligations under Section 4.1(a) of the Employment Agreement to the extent they may otherwise be enforceable, provided, however, that the other terms of Section 4 of the Employment Agreement, as well as the terms of Section 19 of the Employment Agreement, are incorporated herein by reference and shall be binding on Mr. Kopsky and constitute separate consideration for entering into this Agreement. 

 

3.Mr. Kopsky acknowledges that the payment and other consideration described in Paragraph 2 above are something of value to which he would not be entitled except for RAIT’s agreement herein. Mr. Kopsky further agrees that the payment and other consideration constitutes full, final, and complete satisfaction of any and all CLAIMS by Mr. Kopsky against any or all of the RELEASEES, including any CLAIM against any RELEASEES under and/or related to the Employment Agreement and/or Mr. Kopsky’s employment with RAIT for breach of contract, wrongful discharge, CLAIMS for additional compensation, CLAIMS for severance pay, CLAIMS of defamation or any other tort, CLAIMS for unpaid wages or commissions or bonuses or vacation days and CLAIMS arising under federal, state or local laws or otherwise. 

4.In exchange for his receipt of the above-referenced consideration, and as a material inducement for RAIT to enter into this Agreement, Mr. Kopsky agrees to the following:

	
 
	
a.
	
Mr. Kopsky fully, irrevocably and unconditionally releases and forever discharges the RELEASEES from each and every CLAIM of any nature whatsoever, known or unknown, including, but not limited to those arising out of or relating to his employment with RAIT or his separation therefrom, under any federal, state or local law, the common law, or any CLAIM arising under the Employment Agreement, provided, however, that Mr. Kopsky does not release: (i) any rights of indemnification and advancement he may have, any rights under any Director and Officer, and/or other, insurance policies he may have, (ii) any rights to any vested benefits in his 401(k) contributions made prior to August 20, 2017 and the RAIT match applicable thereto; and (iii) his rights under COBRA. Mr. Kopsky also represents, warrants and agrees that he has not assigned or transferred or purported to assign or transfer, to any person, firm, or other entity any CLAIMS, demands, obligations, losses, causes of action, damages, penalties, costs, expenses, attorneys’ fees, liabilities or indemnities herein released.

Mr. Kopsky agrees not to assert, sue and/or be a party to any proceeding of any kind or nature against RELEASEES for any CLAIMS or take any steps to further, any CLAIM, action or proceeding against the RELEASEES from and in respect of any and all CLAIMS, demands, rights, actions, potential actions, causes of action, liabilities, damages, losses, obligations, judgments, duties, suits, agreements, costs, expenses, debts, interest, penalties, sanctions, fees, attorneys’ fees, judgments, decrees, matters, issues, and controversies of any kind, nature or description whatsoever, whether known or unknown, contingent or absolute, 

2Mr. Kopsky’s initials _PWK____

 

 

suspected or unsuspected, foreseen or unforeseen, disclosed or undisclosed, liquidated or unliquidated, matured or unmatured, fixed or contingent, accrued or unaccrued, apparent or unapparent, including unknown CLAIMS that are, have been, could have been, or could now be, asserted in any court, tribunal or proceeding, whether legal, equitable, or any other type, direct, indirect or representative in nature, foreseen or unforeseen, matured or unmatured, known or unknown, which Mr. Kopksy has, had or may have against the RELEASEES, of any kind, nature or type whatsoever.

	
 
	

	
Mr. Kopsky agrees to waive any and all rights (to the extent permitted by state law, federal law, principles of common law or any other law) which may have the effect of limiting the releases as set forth in this Paragraph 4. Without limiting the generality of the foregoing, Mr. Kopsky acknowledges that there is a risk that the damages which he believes he has suffered or will suffer may turn out to be other than or greater than those now known, suspected, or believed to be true. In addition, the cost and damages he has incurred or has suffered may be greater than or other than those now known. Facts on which he has been relying in entering into this Agreement may later turn out to be other than or different from those now known, suspected or believed to be true. He acknowledges that in entering into this Agreement, he has expressed that he agrees to accept the risk of any such possible unknown CLAIMS, damages, facts, demands, actions, and causes of action. Accordingly, the releases contemplated by this Agreement shall be deemed to extend to CLAIMS that Mr. Kopsky does not know or suspect exist in his favor at the time of the release of the released CLAIMS, which if known might have affected the decision to enter into this Agreement.

	
 
	

	
Mr. Kopsky hereby acknowledges and agrees that the releases and covenants provided for in this Paragraph 4 are binding, unconditional and final as of the date hereof.

	
 
	
b.
	
Exclusively as this Agreement pertains to Mr. Kopsky’s release of claims under the Age Discrimination in Employment Act (ADEA), Mr. Kopsky, pursuant to and in compliance with rights afforded Mr. Kopsky under the Older Workers Benefit Protection Act: (i) is advised to consult with his attorney prior to executing this Agreement; (ii) is afforded twenty-one (21) days within which to consider this Agreement; and (iii) is afforded seven (7) days following execution of the Agreement to revoke the Agreement as to any claim under the ADEA. Mr. Kopsky’s knowing and voluntary execution of this Agreement is an express acknowledgment and agreement that he had the opportunity to review this Agreement with an attorney; that Mr. Kopsky was afforded twenty-one (21) days to consider it before executing it; that Mr. Kopsky agrees this Agreement is written in a manner that enables him to fully understand its content and meaning; and that Mr. Kopsky is being given seven (7) days to revoke the Agreement. This Agreement as it pertains to a release of claims under the ADEA shall become effective and enforceable seven (7) calendar days after its execution. All other provisions of this Agreement or parts thereof shall become effective and enforceable upon execution; provided, however, that if Mr. Kopsky exercises his 

3Mr. Kopsky’s initials _PWK____

 

 

	
 
		
right to revoke pursuant to this Paragraph, RAIT may revoke the Agreement in its entirety during the seven (7) calendar day period following Mr. Kopsky’s revocation.

	
 
	
c.
	
Mr. Kopsky acknowledges and agrees that any bonus and/or equity compensation or similar compensation for which he may have been eligible to receive had his employment with RAIT not been terminated on August 20, 2017 is terminated and he has no right to receive any such compensation.  

In exchange for its receipt of the consideration set forth herein, and as a material inducement for Mr. Kopsky to enter into this Agreement, except for (i) the agreements contained herein, (ii) any intentional acts of fraud, dishonesty or misappropriation by Mr. Kopsky of RAIT funds or property which RAIT may discover after this Agreement is executed, (iii) any violation by Mr. Kopsky of Section 16 of the Securities Exchange Act of 1934, as amended (and any rules and regulations enacted thereunder), (iv) any violation by Mr. Kopsky of the Sarbanes-Oxley Act of 2002, as amended (and any rules and regulations enacted thereunder), including, but not limited to, Sections 304 and 306 thereof, or (v) any violation by Mr. Kopsky of the Dodd–Frank Wall Street Reform and Consumer Protection Act, as amended (and any rules and regulations enacted thereunder), RAIT hereby releases and forever discharges Mr. Kopsky from any and all Claims, accruing, occurring, or arising at any time prior to the execution of this Agreement but only if and to the extent that such Claims are actually known, as of the date of this Agreement, by any of the individuals currently serving on the date hereof as the following officers of RAIT (the President and Chief Executive Officer,  the General Counsel, the Chief Financial Officer, the Senior Managing Director – Chief Credit Risk Officer, the Senior Managing Director - Origination, the Senior Managing Director - Asset Management, and/or the Senior Managing Director - Human Resources (collectively, the “RAIT Named Officers”).  As of the date hereof, the RAIT Named Officers do not have any actual knowledge of any facts or circumstances that would give rise to a Claim by RAIT against Mr. Kopsky with respect to the matters described in (i) – (v) above and, as a result of such lack of actual knowledge of such facts and circumstances, as of the date hereof, RAIT has no intention of asserting such a Claim against Mr. Kopsky. For the avoidance of doubt, no knowledge of Mr. Kopsky shall be imputed to any of the officers of RAIT.

5.        Additionally, in exchange for his receipt of the above-referenced consideration, and as material inducement for RAIT to enter into this Agreement, Mr. Kopsky agrees that all information disclosed or discovered by him during his employment that was not otherwise known to Mr. Kopsky on a non-confidential basis prior to commencing work with RAIT Financial Trust, otherwise in the public domain, or otherwise ascertainable from other non-confidential sources, including, without limitation: sales and marketing strategies; prior, current, or potential customer lists or customer information; compensation policies; operations; environmental matters; computer systems information; personnel matters; trade secrets; long-term planning goals and management action plans and/or financial information are collectively considered “confidential information” and are valuable and unique assets of RAIT, unless such information generally is known or could be readily ascertainable by the general public. Therefore, Mr. Kopsky shall not directly or indirectly, intentionally or unintentionally, use, in any manner, disseminate, or disclose any “confidential information” to any other person or entity. Mr. Kopsky agrees that the remedy at law for any breach of this Paragraph could be inadequate and, therefore RELEASEES may seek temporary and permanent injunctive relief in any proceeding brought by the RELEASEES to enforce this Paragraph and, in connection with any such proceeding, Mr. Kopsky agrees to waive any bonding requirement.  Mr. Kopsky acknowledges and agrees that, as of August 20, 2017, 

4Mr. Kopsky’s initials _PWK____

 

 

Mr. Kopsky is no longer and ceases to be a director, officer, or manager of RAIT or its subsidiaries and/or affiliates, and from after such date, Mr. Kopsky has no authority to bind RAIT or its subsidiaries and/or affiliates.  

6.          Mr. Kopsky represents and warrants that he has returned all materials of any kind that contain or embody any proprietary or confidential information of RAIT, including, without limitation, files, notes, notebooks, memoranda, agreements, computer-recorded information, drawings, records, business plans, forecasts, financial information and specifications (and returned or destroyed all reproductions thereof in whole or in part) (collectively, “RAIT Documents”) and other RAIT property that Mr. Kopsky has had in his possession at any time, including, without limitation, credit cards, entry cards, parking permits, cellular telephone, identification badges and keys.

7.    Mr. Kopsky further agrees in exchange for his receipt of the above-referenced consideration, and as a material inducement for RELEASEES to enter into this Agreement,  not to, directly or indirectly, make, express, transmit, speak, write, verbalize or otherwise  communicate in any way (or cause, further, assist, solicit, encourage, support or participate in any of the foregoing), any remark, comment, message, information, declaration, communication or other statement of any kind, whether verbal or in writing, that might reasonably be construed to be derogatory or critical of, or negative toward, the RELEASEES, or that reveals, discloses, incorporates, is based upon, discusses, includes or otherwise involves any confidential or proprietary information of the RELEASEES, or to malign, harm, disparage, defame or damage the reputation or good name of the RELEASEES, provided, however, that the foregoing does not apply to any communication compelled by applicable law.  

RAIT further agrees in exchange for its receipt of the consideration set forth herein, and as a material inducement for Mr. Kopsky to enter into this Agreement, that the RAIT Named Officers and the trustees on RAIT’s Board of Trustees as of August 20, 2017 (collectively, the “Trustees”) shall not, directly or indirectly, make, express, transmit, speak, write, verbalize or otherwise  communicate in any way (or cause, further, assist, solicit, encourage, support or participate in any of the foregoing), any remark, comment, message, information, declaration, communication or other statement of any kind, whether verbal or in writing, that might reasonably be construed to be derogatory or critical of, or negative toward, Mr. Kopsky or to malign, harm, disparage, defame or damage the reputation of Mr. Kopsky; provided, however, that the foregoing does not and will not (A) apply to any communication compelled by (i) applicable law, rule, regulation or court order, (ii) the rules, policies and/or procedures with respect to any applicable legal or administrative proceedings or (iii) the rules or regulations of any self-regulatory (or similar) organization with jurisdiction over RAIT; and/or (B) prohibit RAIT, any of the Trustees, any of the RAIT Named Officers or any representatives thereof from providing disclosures or information in response to: (i) any action, suit, hearing, mediation, arbitration, other alternative dispute mechanism, inquiry, review and/or investigation (including, but not limited to, any internal investigation or any inquiry by RAIT’s independent registered public accounting firm) or any other proceeding, whether civil, criminal, administrative, regulatory, arbitrative, legislative, investigative or otherwise and whether formal or informal, or any appeal of any kind therefrom, including, but not limited to, any action initiated by Mr. Kopsky or his legal representatives against RAIT, any of the Trustees or any of the RAIT Named Officers that may be threatened or brought against, or otherwise involve, whether as a named party, a witness or otherwise, any of RAIT, any of RAIT’s subsidiaries or affiliates, any of the Trustees and/or any of RAIT’s officers, trustees and/or employees (including, without limitation, the RAIT Named Officers), (ii) any counterparty or party, or its representatives, providing a written indication of interest or otherwise participating in RAIT’s publicly-disclosed review of strategic alternatives, conducting due 

5Mr. Kopsky’s initials _PWK____

 

 

diligence on or with respect to RAIT and/or any of its affiliates and/or subsidiaries, so long as the disclosure is being provided pursuant to a written confidentiality arrangement, and/or (iii) any investment banker, lender, insurer or similar party conducting underwriting of RAIT and/or any of its affiliates and/or subsidiaries, so long as the disclosure is being provided pursuant to a confidentiality arrangement.  For the avoidance of doubt, the non-disparagement obligations of a party contained in this Section 7 shall be immediately suspended in the event that the other party breaches in any respect any of the covenants contained in this Agreement, including, but not limited to, Mr. Kopsky’s agreement not to provide assistance to third parties who may seek to wage an activist campaign against RAIT.  Notwithstanding anything to the contrary set forth herein, a party may make truthful statements to refute a disparaging statement by the other.  

     RAIT, upon request for information regarding Mr. Kopsky from any prospective employer, will state that, consistent with company policy, RAIT only discloses for former employees their respective dates of employment and positions held with RAIT, and will then provide that information for Mr. Kopsky, provided that Mr. Kopsky has all such inquiries directed to, and all such inquiries are actually directed to, the Director of Human Resources.

	
8. 
	
Mr. Kopsky represents he does not claim an interest in, has not made any CLAIMS, or has not filed any complaints or charges against any or all of the RELEASEES with any local, state, or federal department, agency or court. Mr. Kopsky understands this Agreement does not prevent him from filing a Charge with the Equal Employment Opportunity Commission or any similar state or local agency. Nevertheless, Mr. Kopsky waives the right to recover any damages or other relief in any CLAIM or suit brought by or through any local, state, or federal department, agency, or court.

	
9.
	
Mr. Kopsky also acknowledges and agrees that neither this Agreement nor any actions or statements taken hereunder constitute nor are they to be construed as an acknowledgment, evidence, or admission of any liability or violation of any law or statute, the common law, or any agreement which exists or which allegedly may exist by and among Mr. Kopsky and any or all of the RELEASEES. The RELEASEES specifically deny any such violation and disclaim any liability.

	
10.
	
Mr. Kopsky further agrees that the existence and terms of this Agreement are confidential until such time as RAIT files a Current Report on Form 8-K with the U.S. Securities and Exchange Commission (the “SEC”) reporting its entry into this Agreement. Accordingly, until then, Mr. Kopsky shall not disclose this Agreement’s existence or the terms thereof to any person or entity, except that Mr. Kopsky may disclose the terms of the Agreement to his spouse, attorney, tax advisor or accountant, and as otherwise required and compelled by law. In so doing, Mr. Kopsky shall instruct his spouse, attorney, or tax advisor or accountant that the information is confidential and shall not be disclosed to any other person or entity. Mr. Kopsky represents that he has not, to date, disclosed to any person, other than to his spouse and/or attorney, the contents of any and all terms in this Agreement.

	
11.
	
This Agreement is being entered into for the purpose of avoiding litigation, uncertainty, controversy and legal expense, constitutes a compromise and settlement entered into by each party hereto, and shall not in any event constitute, be construed or deemed a concession or admission of any liability or wrongdoing of any of the parties. 

	
12.
	
RAIT and Mr. Kopsky acknowledge that they are aware that, no later than four (4) business days following the execution of this Agreement, RAIT shall file a Current Report on Form 8-K 

6Mr. Kopsky’s initials _PWK____

 

 

		
(the “8-K”) with the SEC reporting its entry into this Agreement.  The terms of the 8-K, with respect to the Agreement, will include the identity of the parties to this Agreement and the date on which this Agreement was entered and, unless required by applicable law, including any requirement of the SEC pursuant to Item 1.01, Item 5.02 or Item 9.01 of Form 8-K, will only further: (a) state that RAIT entered into a settlement agreement with Mr. Kopsky, (b) describe the terms and conditions of this Agreement, and (c) append or incorporate by reference a copy of this Agreement as an exhibit thereto. For the avoidance of doubt, the 8-K shall not provide any additional disclosures relating to the discussions between the parties leading up to the execution of this Agreement that is not readily apparent from the express text of this Agreement, including the recitals thereto. Mr. Kopsky also acknowledges and agrees that neither he nor his counsel shall be provided with any opportunity at any time to review or comment upon the disclosures contained in the 8-K.  Further, the 8-K may include other information entirely unrelated to Mr. Kopsky or the Agreement, in RAIT’s sole discretion.

	
13.
	
This Agreement is binding upon Mr. Kopsky and upon his respective heirs, administrators, representatives, executors and assigns and shall inure to the benefit of the RELEASEES and their respective heirs, administrators, representatives, executors, successors and assigns.  

	
14.
	
Mr. Kopsky agrees not to apply for and renounces and forever waives any and all reinstatement or employment, whether temporary or permanent, part-time or full time, in any capacity whatsoever, with RAIT at any of its current or future facilities. Mr. Kopsky agrees that he shall not be rehired by RAIT and if he is rehired, may be terminated immediately based on this Agreement.   RAIT agrees that it shall not object to any application by Mr. Kopsky for unemployment insurance benefits.  

	
15.
	
RAIT and Mr. Kopsky hereby agree that all previous correspondence relating to Mr. Kopsky’s termination of employment by RAIT are hereby retracted and this Agreement shall be the sole and exclusive document providing for Mr. Kopsky’s termination of employment.  Pursuant to this Agreement, the parties have agreed to provide for the termination of Mr. Kopsky’s employment from RAIT retroactive to August 20, 2017. 

16.False Claims Representations and Promises: Mr. Kopsky affirms that he has no information concerning any conduct involving RELEASEES that he has any reason to believe may be unlawful or that involves any false claims to the United States. Mr. Kopsky understands that nothing in this Agreement prevents him from cooperating with any U.S. government investigation. However, Mr. Kopsky agrees he cannot receive any monetary or personal gain for such participation. Accordingly, Mr. Kopsky shall be barred from seeking and expressly waives any and all rights to any monetary, injunctive, or other personal relief for released claims, including but not limited to reinstatement, damages, remedies, or other such relief, any and all rights to which he hereby waives.

17.Mr. Kopsky agrees that he will not voluntarily provide assistance, information, or advice of any kind, directly or indirectly (including through agents, attorneys or other representatives), to any person or entity in connection with such person or entity’s assertion of any claim or cause of action of any kind, in any court, arbitration or mediation proceeding or otherwise, or any proxy contest, special meeting demand, consent solicitation, or other shareholder activism initiative, against RAIT, any of the other RELEASEES, its parents, subsidiaries and affiliates, and each of their past, present and future officers, directors, employees, shareholders, contractors and attorneys, and he shall not suggest, induce or encourage any person or entity to do so. The foregoing restrictions shall not prohibit Mr. Kopsky from testifying truthfully under subpoena or providing other assistance under compulsion of applicable law. 

7Mr. Kopsky’s initials _PWK____

 

 

18.    Other Representations: In addition to other representations in this Agreement, Mr. Kopsky has made the following representations to RAIT, on which he acknowledges RAIT also has relied in entering into this Agreement with him: (a) Mr. Kopsky has not suffered any discrimination on account of his age, sex, disability, national origin, marital status, or any other protected status and none of these ever has been an adverse factor used against Mr. Kopsky by RELEASEES; and (b) Mr. Kopsky has not suffered any job-related wrongs or injuries for which he might receive a workers' compensation award in the future.

	
19.
	
Mr. Kopsky agrees he is fully able and competent to enter into this Agreement, that he has read this Agreement in its entirety, that he had an opportunity to review it with an attorney or freely and knowingly waives his rights to do so, and that his agreement to all of its provisions is made freely, voluntarily, and with full knowledge and understanding of its contents. Further, Mr. Kopsky represents and acknowledges that in executing this Agreement, he does not rely and has not relied upon any representation or statement made by any or all of the RELEASEES with regard to the subject matter, basis, or effect of this Agreement or otherwise, other than the obligations of the parties set forth in this Agreement.

	
20.
	
This Agreement sets forth the entire agreement between the parties hereto and fully supersedes any and all prior agreements or understandings, whether oral or written, between them. 

21.     This Agreement shall be interpreted, enforced, and governed in all respects, including validity, interpretation, and effect, by, and construed in accordance with, the laws of the Commonwealth of Pennsylvania executed and to be performed wholly within the Commonwealth of Pennsylvania, without giving effect to the choice of law or conflict of law principles thereof or of any other jurisdiction to the extent that such principles would require or permit the application of the laws of another jurisdiction.

	
22.
	
If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement shall remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree shall remain in full force and effect to the extent not held invalid or unenforceable. The parties further agree to replace such invalid or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the purposes of such invalid or unenforceable provision.

	
 23.
	
Each of the parties hereto (a) consents to submit itself to the personal jurisdiction of the federal or state courts of the Commonwealth of Pennsylvania in the event any dispute arises out of this Agreement or the transactions contemplated by this Agreement, (b) agrees that it shall not bring any action relating to this Agreement or the transactions contemplated by this Agreement in any court other than the federal or state courts of the Commonwealth of Pennsylvania, unless such courts hold they do not have jurisdiction, and each of the parties irrevocably waives the right to trial by jury, (c) agrees to waive any bonding requirement under any applicable law, in the case any other party seeks to enforce the terms by way of equitable relief, and (d) irrevocably consents to service of process by first class certified mail, return receipt requested, postage prepaid, to the address of such party’s principal place of business or as otherwise provided by applicable law. Each of the parties hereto irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any action, suit or other legal proceeding with respect to this Agreement, (a) any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason, (b) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through 

8Mr. Kopsky’s initials _PWK____

 

 

		
service of notice, attachment before judgment, attachment in aid of execution of judgment, execution of judgment or otherwise), and (c) to the fullest extent permitted by applicable law, that (i) such action, suit or other legal proceeding in any such court is brought in an inconvenient forum, (ii) the venue of such action, suit or other legal proceeding is improper or (iii) this agreement, or the subject matter hereof, may not be enforced in or by such court.

	
 24.
	
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS PARAGRAPH 24.

	
25.
	
This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall be deemed to be one and the same instrument.  This Agreement shall become effective when each party hereto shall have received a counterpart hereof signed by the other parties hereto.  The exchange of copies of this Agreement and signature pages by facsimile or electronic mail shall constitute effective delivery.  

	
26.
	
Should enforcement of this Agreement by either party become necessary by legal means, the prevailing party shall be entitled to collect its reasonable attorneys’ fees and costs. Each of the parties shall bear their own fees and expenses incurred in connection with the negotiation and execution of this Agreement.

	
27. 
	
No failure on the part of any party to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such party preclude any other or further exercise thereof or the exercise of any other right, power or remedy.

	
28. 
	
All remedies hereunder are cumulative and are not exclusive of any other remedies provided by law or equity.

	
29. 
	
Each party acknowledges that it has received adequate information to enter into this Agreement, that it has had adequate opportunity to make whatever investigation or inquiry it may deem necessary or desirable in connection with the subject matter of this Agreement prior to the execution hereof, and that it has not relied on any promise, representation or warranty, express or implied not contained in this Agreement. Each of the parties hereto acknowledges that it has been represented by counsel of its choice throughout all negotiations that have preceded the execution of this Agreement, and that it has executed the same with the advice of said independent counsel. Each party cooperated and participated in the drafting and preparation of this Agreement and the documents referred to herein, and 

9Mr. Kopsky’s initials _PWK____

 

 

		
any and all drafts relating thereto exchanged among the parties shall be deemed the work product of all of the parties and may not be construed against any party by reason of its drafting or preparation. Accordingly, any rule of law or any legal decision that would require interpretation of any ambiguities in this Agreement against any party that drafted or prepared it is of no application and is hereby expressly waived by each of the parties hereto, and any controversy over interpretations of this Agreement shall be decided without regards to events of drafting or preparation. Further, any rule of law or any legal decision that would provide any party with a defense to the enforcement of the terms of this Agreement against such party shall have no application and is expressly waived. The provisions of this Agreement shall be interpreted in a reasonable manner to effect the intent of the parties.

	
30.
	
When a reference is made in this Agreement to a Paragraph, such reference shall be to a Paragraph of this Agreement, unless otherwise indicated. Any headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include,” “includes” and “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” The words “hereof, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The word “will” shall be construed to have the same meaning as the word “shall.” The words “dates hereof” will refer to the date of this Agreement. The word “or” is not exclusive. The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms. Any agreement, instrument, law, rule or statute defined or referred to herein means, unless otherwise indicated, such agreement, instrument, law, rule or statute as from time to time amended, modified or supplemented.

	
31.
	
This Agreement may be modified, amended or otherwise changed only in a writing signed by all of the parties hereto or their respective successors or assigns.

	
32.
	
The representations, warranties and agreements of the parties contained herein are intended solely for the benefit of the party to whom such representations, warranties or agreements are made, and shall confer no rights, benefits, remedies, obligations, or liabilities hereunder, whether legal or equitable, in any other person or entity, and no other person or entity shall be entitled to rely thereon.

_/s/ Paul W. Kopsky, Jr.________________

Paul W. Kopsky, Jr. 

 

Date: _9/26/17________________________

 

____________________________________
On Behalf of RAIT Financial Trust 

By: _/s/ Scott L. N. Davidson_____________ 

Title: _CEO and President_______________

Date: _9/27/17_________________________

10Mr. Kopsky’s initials _PWK____

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