Document:

Exhibit 10.1

 

CONSENT, STANDSTILL, REGISTRATION RIGHTS

AND LOCK-UP AGREEMENT

 

THIS CONSENT, STANDSTILL, REGISTRATION RIGHTS AND LOCK-UP AGREEMENT, dated as of October 2, 2016 (as amended, supplemented or restated from time to time, this “Agreement”), by and among Five Star Quality Care, Inc., a Maryland corporation (the “Company”), ABP Trust, a Maryland statutory trust (“ABP”), ABP Acquisition LLC, a Maryland limited liability company and a wholly owned subsidiary of ABP Trust (“Purchaser”), Barry M. Portnoy and Adam D. Portnoy.

 

W I T N E S S E T H:

 

WHEREAS, the Requesting Parties have requested that the FVE Board: (i) approve the Proposed Acquisition under Section 3-601(j)(3) of the MGCL and Section 9.3 of Article IX of the Company’s Bylaws and (ii) grant to the Requesting Parties and certain other Persons an exception to the Ownership Limit in respect of the Proposed Acquisition;

 

WHEREAS, the Company’s Bylaws contain a provision opting out of the control share acquisition statute of the MGCL, and accordingly, the control share acquisition statute of the MGCL does not apply to the Proposed Acquisition; and

 

WHEREAS, in order to induce the FVE Board to grant such approvals and exception, the Requesting Parties have agreed to enter into this Agreement and to perform their obligations hereunder.

 

NOW, THEREFORE, in consideration of the aforesaid and the mutual promises hereinafter made and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

ARTICLE I

DEFINITIONS

 

SECTION 1.1  Definitions.  As used in this Agreement, the following terms shall have the following meanings:

 

“13D Group” means a “partnership, limited partnership, syndicate, or other group” within the meaning of Section 13(d)(3) or Section 14(d)(2) of the 1934 Act.

 

“1933 Act” means the Securities Act of 1933, as amended, together with the rules and regulations promulgated thereunder.

 

“1934 Act” means the Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder.

 

“ABP” is defined in the preamble to this Agreement.

 

“Affiliate” of a Person means and includes another Person that directly, or indirectly through one or more intermediaries, Controls, or is Controlled by, or is under common Control with, such Person.

 

“Agreement” is defined in the preamble to this Agreement.

 

“Beneficially Own” (or any correlative form thereof) has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the 1934 Act, except that a Person shall be deemed to have “Beneficial Ownership” of all the securities that such Person has a right to acquire, whether such right is exercisable immediately or only after the passage of time.

 

“Business Day” means a day, other than Saturday, Sunday or other day on which banks located in Boston, Massachusetts or Baltimore, Maryland are authorized or required by Law to close.

 

“Chosen Courts” is defined in Section 10.4(b).

 

“Code” means the United States Internal Revenue Code of 1986, as amended.

 

 

“Collateral Person” means RMR LLC, each Family Member of a Requesting Party and each other Person (other than SNH and the Requesting Parties, and, upon the death of any Requesting Party who is an individual, their estates and spouses) who Constructively Owns Common Shares on account of attribution under the Code from one or more of the Requesting Parties (or their estates or spouses), SNH or RMR LLC.

 

“Common Shares” means shares of common stock, par value $.01 per share, of the Company.

 

“Company” is defined in the preamble to this Agreement.

 

“Company Change of Control” shall be deemed to have occurred upon any of the following events:

 

(a)         any Person or 13D Group becomes the Beneficial Owner of more than fifty percent (50%) of the then outstanding voting power of the voting securities of the Company; or

 

(b)         the consummation of any direct or indirect sale, lease, transfer, conveyance or other disposition, in one or a series of related transactions, of all or substantially all of the assets of the Company and its subsidiaries on a consolidated basis.

 

“Company’s Bylaws” means the Amended and Restated Bylaws of the Company.

 

“Company’s Charter” means the Articles of Amendment and Restatement of the Company, as amended and supplemented.

 

“Company Consents” means the approvals and exceptions described in Article II.

 

“Constructively Own” (or any correlative form thereof) has the meaning set forth in the Company’s Charter.

 

“Control” (or any correlative form thereof) in respect of an Entity means (i) Beneficial Ownership of securities representing twenty percent (20%) or more of the voting power entitled to vote for the election of the board of directors, board of trustees, board of managers or other governing body of such Entity or, in the case of an Entity that is a partnership, limited partnership or limited liability company, of the general partner, managing member or manager of such Entity or (ii) if the Entity is a charitable Entity, having the sole or shared power to vote or direct the voting or to dispose or direct the disposition of securities owned by such Entity. For the avoidance of doubt, a partner of a general partnership shall be deemed to Control the partnership, a general partner of a limited partnership shall be deemed to Control the limited partnership and a managing member of a limited liability company shall be deemed to Control the limited liability company. A managing director or trustee of a board of directors or trustees shall not be deemed to control the applicable board or Entity unless a majority of the board is comprised of managing directors or trustees.

 

“Controlled Affiliate” of a Person shall mean any Affiliate of such Person that directly, or indirectly through one or more intermediaries, is Controlled by, or is under common Control with, such Person.

 

“Covered Liabilities” is defined in Section 9.1.

 

“Credit Agreement” means that certain Credit Agreement, dated as of April 13, 2012, among the Company, the guarantors party thereto, Citibank, N.A. and the other parties thereto.

 

“Demand Registration” is defined in Section 7.1(a).

 

“Demanding Shareholders” is defined in Section 7.1(a).

 

“Entity” means any general partnership, limited partnership, corporation, limited liability company, joint venture, real estate investment trust, business trust or other trust, cooperative, unincorporated association or other form of organization, whether or not a legal entity.

 

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“Equity Grant Shares” means Common Shares issued to any Requesting Party pursuant to any equity compensation plan of the Company if such issuance was approved by the FVE Board or a duly authorized committee thereof.

 

“Excepted Holder” has the meaning set forth in the Company’s Charter.

 

“Excepted Holder Limit” has the meaning set forth in the Company’s Charter.

 

“Family Member” means, as to any Requesting Party who is an individual, such Requesting Party’s spouse, child, stepchild, grandchild, son-in-law, or daughter-in-law, but excluding any of such Persons who is a Requesting Party.

 

“FVE Board” means the Board of Directors of the Company.

 

“Governmental Entity” means (a) the United States of America, (b) any other sovereign nation, (c) any state, province, district, territory or other political subdivision of (a) or (b) of this definition, including any county, municipal or other local subdivision of the foregoing, or (d) any entity exercising executive, legislative, judicial, regulatory or administrative functions of government on behalf of (a), (b) or (c) of this definition.

 

“Immediate Family Member” as used to indicate a relationship with any individual, means (a) any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, and any other individual (other than a tenant or employee) sharing the household of that individual or (b) a trust, the beneficiaries of which are the individual and/or any Immediate Family Member of that individual.

 

“Indemnified Company Person” is defined in Section 9.2.

 

“Indemnified Requesting Person” is defined in Section 9.1.

 

“Law” means any law, statute, ordinance, rule, regulation, directive, code or order enacted, issued, promulgated, enforced or entered by any Governmental Entity.

 

“Lender Consent” is defined in Section 3.2.

 

“Lock-Up Period” means the period beginning on the date hereof and ending on the earliest to occur of: (i) the date that is the tenth (10th) year anniversary of the date hereof or (ii) January 1st of the fourth calendar year after the first taxable year of the Company to which no then existing Tax Benefits may be carried forward, but in any event, no earlier than the January 1st following the date that is at least five (5) years after the date hereof. Notwithstanding the foregoing, the Lock-Up Period shall end on the date on which there is any announcement by the Company of a proposed transaction or series of proposed transactions pursuant to which (i) the Common Shares will cease to be traded on any Stock Exchange, (ii) the registration of the Common Shares under the 1934 Act will be terminated or (iii) the Company will become eligible to terminate or suspend its reporting obligations under the 1934 Act with respect to the Common Shares.

 

“Lock-Up Shares” means any Common Shares which any Requesting Party acquires after the date hereof and prior to the expiration of the Standstill Term, including any which have been Transferred to a Permitted Transferee in accordance with Section 6.1 (and shall include any shares of capital stock of the Company issued in respect thereof as a result of any stock split, stock dividend, share exchange, merger, consolidation or similar recapitalization), but not including any Equity Grant Shares issued to any Requesting Party; provided, however, that Common Shares shall cease to be Lock-Up Shares hereunder as of the end of the Lock-Up Period.

 

“Maximum Shares” means Common Shares representing, in aggregate, thirty-eight percent (38%) of the issued and outstanding Common Shares (but in any event not in excess of the lesser of (x) the maximum number of Common Shares which the Requesting Parties may acquire and own without 

 

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having obtained the Lender Consent until the Lender Consent has been obtained, and, thereafter, the maximum number of Common Shares which the Requesting Parties may acquire and own under the Lender Consent and (y) one hundred and four percent (104%) of the issued and outstanding Common Shares Constructively Owned by the Requesting Parties on March 31, 2017).

 

“MGCL” means the Maryland General Corporation Law.

 

“Ownership Limit” has the meaning set forth in the Company’s Charter.

 

“Parties” means the Company and the Requesting Parties.

 

“Permitted Transfer” means any of the following:

 

(a)         the Transfer of any Lock-Up Shares to one or more Permitted Transferees;

 

(b)         a pledge of any Lock-Up Shares that creates a security interest in the pledged Lock-Up Shares pursuant to a bona fide loan or indebtedness transaction, in each case, with a third party lender that makes the loan in the ordinary course of its business, so long as a Requesting Party or one or more Permitted Transferees, as the case may be, continue(s) to exercise exclusive voting control over the pledged Lock-Up Shares; provided, however, that a foreclosure on the pledged Lock-Up Shares or other action that would result in a Transfer of the pledged Lock-Up Shares to the pledgee shall not be a “Permitted Transfer” within the meaning of this paragraph (b) of this definition unless the pledgee is a Permitted Transferee;

 

(c)          the existence or creation of a testamentary power of appointment that may be exercised with respect to any Lock-Up Shares held by a trust; provided, however, that the Transfer of any Lock-Up Shares upon the exercise of a testamentary power of appointment to someone other than a Permitted Transferee shall not be a “Permitted Transfer” within the meaning of this paragraph (c) of this definition;

 

(d)         any Transfer by will or pursuant to the Laws of descent and distribution by any individual described in paragraph (a) or (b) of the definition of Permitted Transferee; or

 

(e)          any Transfer to the Company or approved by the FVE Board in its sole discretion.

 

“Permitted Transferee” means any of the following:

 

(a)         any Requesting Party;

 

(b)         any Immediate Family Member of Barry M. Portnoy or Adam D. Portnoy or any lineal descendant of any such Immediate Family Member; and

 

(c)          any Entity that is majority Controlled by any Person or Persons referenced in paragraphs (a) or (b) of this definition; provided, however, such Entity shall be a Permitted Transferee only for so long as it is majority Controlled by such Person(s).

 

For purposes of this definition, “lineal descendants” shall not include individuals adopted after attaining the age of eighteen (18) years and the adopted individual’s descendants.

 

“Person” means and includes any natural person (whether acting on his or her own behalf or in a representative or fiduciary capacity) or Entity.

 

“Piggy-Back Registration” is defined in Section 7.2(a).

 

“Proposed Acquisition” means the purchase of up to an aggregate of eighteen million (18,000,000) Common Shares by Purchaser (or one or more Requesting Parties) after the date hereof and prior to March 31, 2017 pursuant to the Tender Offer or one or more other tender offers, open market purchases or privately negotiated purchases, provided that the purchase price per Common Share in the Tender Offer or any other tender offers, open market purchases or privately negotiated purchases is 

 

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not less than the closing price of the Common Shares on the Stock Exchange on the last trading day immediately preceding the announcement of the Tender Offer or other tender offer, open market purchase or privately negotiated purchase.

 

“Prospectus” means a prospectus relating to a Registration Statement, as amended or supplemented, including all materials incorporated by reference in such Prospectus.

 

“Public Company” means an Entity, the equity securities of which are registered under the 1934 Act, and shall include its subsidiaries.

 

“Purchaser” is defined in the preamble to this Agreement.

 

“register,” “registered” and “registration” refer to a registration effected by preparing and filing a registration statement or similar document under the 1933 Act and such registration statement becoming effective.

 

“Registered Offering Cap” is defined in Section 7.1(c).

 

“Registrable Securities” means any Common Shares acquired by Purchaser pursuant to the Proposed Acquisition (including any shares of capital stock of the Company issued in respect thereof as a result of any stock split, stock dividend, share exchange, merger, consolidation or similar recapitalization) and owned by any Requesting Party or Permitted Transferee; provided; however, that such Common Shares shall cease to be Registrable Securities hereunder, as of any date, when: (a) a Registration Statement with respect to the sale of such Common Shares shall have become effective under the 1933 Act and such Common Shares shall have been sold, transferred, disposed of or exchanged in accordance with such Registration Statement; (b) such Common Shares shall have been otherwise transferred pursuant to Rule 144 under the 1933 Act or pursuant to any other exemption from registration under the 1933 Act and new share certificates or share statements for such Common Shares not bearing or containing any restrictive legend or notation with respect to transferability under the 1933 Act shall have been delivered by the Company or its transfer agent, and subsequent public distribution of such Common Shares shall not require registration under the 1933 Act or exemption from registration under the 1933 Act; (c) such Common Shares are saleable immediately in their entirety without condition or limitation pursuant to Rule 144 under the 1933 Act; or (d) such Common Shares shall cease to be outstanding.

 

“Registration Period” means the period beginning on the day after the end of the Lock-Up Period and ending at such date and time at which no Requesting Party or Permitted Transferee owns any Registrable Securities.

 

“Registration Statement” means any registration statement filed by the Company with the SEC in compliance with the 1933 Act for a public offering and sale of Common Shares (other than a registration statement on Form S-4 or Form S-8, or their successors, or any registration statement covering only securities proposed to be issued in exchange for securities or assets of another entity), as amended or supplemented, including all materials incorporated by reference in such registration statement.

 

“Related Person” means any “affiliate” or “associate” (as those terms are defined in Subtitle 6 of Title 3 of the MGCL) of a Requesting Party.

 

“Representative” of a Person means and includes any director, trustee, officer, employee or agent of such Person or any Controlled Affiliate of such Person and any financial advisor, attorney, accountant, consultant, banker or other advisor acting on behalf of or in concert with such Person or such Person’s Controlled Affiliates.

 

“Requesting Parties” means ABP, Purchaser, Barry M. Portnoy and Adam D. Portnoy.

 

“RMR LLC” means The RMR Group LLC, a Maryland limited liability company.

 

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“SEC” means the U.S. Securities and Exchange Commission.

 

“Shelf Offering” is defined in Section 8.2.

 

“Shelf Registration” is defined in Section 7.1(a).

 

“SNH” means Senior Housing Properties Trust, a Maryland real estate investment trust.

 

“SNH’s Charter” means the Articles of Amendment and Restatement of SNH, as amended and supplemented.

 

“SNH Consent” is defined in Section 3.1.

 

“Standstill Term” is defined in Section 5.1.

 

“Stock Exchange” means any national securities exchange, as defined under the 1934 Act, on which the Common Shares trade.

 

“Subject Party” is defined in Section 10.4(b).

 

“Tax Benefits” means the net operating loss carryforwards, capital loss carryforwards, general business credit carryforwards, alternative minimum tax credit carryforwards and foreign tax credit carryforwards, as well as any loss or deduction attributable to a “net unrealized built-in loss” of the Company or any direct or indirect subsidiary thereof, within the meaning of Section 382 of the Code (or any successor statute).

 

“Tender Offer” means the tender offer by Purchaser for up to an aggregate of eighteen million (18,000,000) Common Shares.

 

“Transfer” means, with respect to Lock-Up Shares, any sale, assignment, bequest, conveyance, devise, gift (outright or in trust), pledge, encumbrance, hypothecation, mortgage, exchange, transfer or other disposition of (whether directly or indirectly, whether with or without consideration and whether voluntarily or involuntarily or by operation of Law) any interest (legal or beneficial) in (a) any Lock-Up Shares or (b) any equity or other interest (legal or beneficial) in the Person holding the Lock-Up Shares; provided, however, that the term “Transfer” does not include any revocable proxy granted by a Person or any exercise of rights by an executor, administrator, trustee, committee, guardian, conservator or receiver of a Requesting Party or a Permitted Transferee, including the sale of Lock-Up Shares to pay any applicable estate taxes.

 

“Underwriter” means a securities dealer who purchases any Registrable Securities as principal in an underwritten offering.

 

SECTION 1.2  Construction.

 

(a)         Unless the context otherwise requires, as used in this Agreement: (i) “or” is not exclusive; (ii) “including” and its variants mean “including, without limitation” and its variants; (iii) words defined in the singular have the parallel meaning in the plural and vice versa; (iv) references to “written,” “in writing” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form; (v) words of one gender shall be construed to apply to each gender; (vi) all pronouns and any variations thereof refer to the masculine, feminine or neuter as the context may require; (vii) “Articles” and “Sections,” refer to Articles and Sections of this Agreement unless otherwise specified; (viii) “hereof”, “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement; (ix) “dollars” and “$” mean United States Dollars; and (x) the word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends and such phrase shall not mean simply “if.”

 

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(b)         Descriptive headings herein are for convenience of reference only and shall not control or affect the meaning or construction of any provision of this Agreement.

 

ARTICLE II

COMPANY CONSENTS

 

SECTION 2.1  Company Consents.  Subject to the terms and conditions of this Agreement, the FVE Board:

 

(a)         has approved the Proposed Acquisition and any future transfer of ownership of Common Shares upon the death of a Requesting Party who is an individual to his estate or spouse under Sections 3-601(j)(3) and 3-603(c)(1)(ii) of the MGCL so that: (i) no Requesting Party, Related Person or, upon the death of a Requesting Party who is an individual, the estate or spouse of such Requesting Party, will be an “interested stockholder” (as defined in and for the purposes of Section 3-601 of the MGCL) as a result of the Proposed Acquisition or any such future transfer and their beneficial ownership of Common Shares up to their applicable Excepted Holder Limit; (ii) the restrictions on business combinations contained in Subtitle 6 of Title 3 of the MGCL do not apply to (x) the Proposed Acquisition, (y) any future transfer of ownership of Common Shares upon the death of a Requesting Party who is an individual to his estate or spouse or (z) any Requesting Party or Related Person as a result of the Proposed Acquisition; and (iii) any future business combination with (x) any Requesting Party or Related Person or (y) upon the death of any such Requesting Party who is an individual, such Requesting Party’s estate or spouse, are exempted from the provisions of Section 3-602 of the MGCL;

 

(b)         has approved the Proposed Acquisition under Section 9.3 of Article IX of the Company’s Bylaws and any other “Transfers” (as that term is defined in the Company’s Bylaws) to a Requesting Party (or from an individual Requesting Party, upon his death, to his estate or spouse) which would otherwise constitute a “5-percent Transaction” (as that term is defined in the Company’s Bylaws) to the extent that after such Transfer, the Requesting Parties’ (inclusive of his estate’s or spouse’s, as so described) Constructive Ownership of Common Shares does not exceed the Maximum Shares;

 

(c)          has approved the grant to the Requesting Parties (inclusive of the estate and/or spouse of any Requesting Party who is an individual to the extent Common Shares Constructively Owned by such Requesting Party are transferred to such estate or spouse upon the death of such Requesting Party) of an exception to the Ownership Limit so that the Requesting Parties (inclusive of such estates and spouses, as so described) may Constructively Own, in the aggregate, up to the Maximum Shares and the Requesting Parties (inclusive of such estates and spouses, as so described) collectively are deemed to be an Excepted Holder with an Excepted Holder Limit equal to the Maximum Shares; provided, however, that the Requesting Parties (inclusive of such estates and spouses, as so described) shall not be in breach of the Excepted Holder Limit to the extent that their aggregate Constructive Ownership of Common Shares exceeds their Excepted Holder Limit as a result of (i) a reduction in the number of issued and outstanding Common Shares (whether due to a redemption, forfeiture, share buyback, reverse stock split or similar transaction effected by the Company or any of its subsidiaries), or (ii) a distribution that is made generally to holders of Common Shares (or other equity securities of the Company) as a result of their ownership of Common Shares (or other equity securities of the Company) including, without limitation, pursuant to a shareholder rights plan or similar plan or agreement; and

 

(d)         has approved the grant to each Collateral Person of an exception to the Ownership Limit so that such Collateral Person may Constructively Own Common Shares solely as a result of attribution under the Code from one or more of the Requesting Parties (inclusive of estates and spouses, upon the death of a Requesting Party who is an individual), SNH and RMR LLC, and 

 

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such Collateral Person is deemed to be an Excepted Holder with an Excepted Holder Limit that equals the percentage of Common Shares so attributed to it, except that the Excepted Holder Limit for RMR LLC shall be an additional one percent (1.0%) higher to permit it to directly own Common Shares issued solely as a result of the issuance of Equity Grant Shares, and that the Excepted Holder Limit for a Family Member of a Requesting Party who is an individual shall be an additional two-tenths of one percent (0.2%) higher to permit such individual to actually own Common Shares or Constructively Own Common Shares from other sources.

 

ARTICLE III

CONDITIONS TO CONSENTS

 

The effectiveness of Article II and the Company Consents is subject to the satisfaction of the following terms and conditions:

 

SECTION 3.1  Consent and Waiver of SNH.  The Requesting Parties shall have obtained (i) the written consent of SNH to the granting of the exceptions to the Ownership Limit to the Requesting Parties and the Collateral Persons by the FVE Board described in Sections 2.1(c) and 2.1(d) and (ii) a written waiver from SNH, on behalf of itself and its subsidiaries, of any default or event of default under any lease, management or other agreement between or among the Company and SNH, or any of their subsidiaries, arising or resulting from the consummation of the Proposed Acquisition or the granting of such exceptions. Such written consent and waiver shall be for the benefit of the Company, the Requesting Parties and the Collateral Persons and otherwise in such form as is satisfactory to the FVE Board in its sole discretion (the “SNH Consent”) and all conditions to the effectiveness of the SNH Consent set forth therein shall have been satisfied.

 

SECTION 3.2  Consent and Waiver of Lenders.  The Requesting Parties shall have obtained, prior to the earlier of: (i) either the announcement of the commencement of, or any increase in the number of, Common Shares subject to, the Tender Offer, such that the number of Common Shares that could be acquired by Purchaser under the Tender Offer represents thirty-five percent (35%) or more of the combined voting power of all Voting Interests (as defined in the Credit Agreement) of the Company and (ii) the date the Requesting Parties, in the aggregate, have beneficial ownership (within the meaning of Rule 13d-3 under the 1934 Act), directly or indirectly, of Voting Interests of the Company (or other securities convertible into Voting Interests) representing thirty-five percent (35%) or more of the combined voting power of all Voting Interests of the Company, the written consent of the Required Lenders (as defined in the Credit Agreement) to such acquisition and a written waiver from the Required Lenders of any default or event of default under the Credit Agreement arising or resulting from such acquisition (such consent and waiver, the “Lender Consent”). The Lender Consent shall be for the benefit of the Company and the Requesting Parties and otherwise in such form as is satisfactory to the FVE Board in its sole discretion.

 

SECTION 3.3  Execution of Agreement.  The Requesting Parties shall have executed and delivered this Agreement.

 

SECTION 3.4  Representations and Warranties.  The representations and warranties of the Requesting Parties set forth in this Agreement shall be true and correct as of the date of this Agreement in all material respects.

 

SECTION 3.5  Commencement of Tender Offer.  The Tender Offer shall have commenced with respect to at least five million (5,000,000) Common Shares on or before December 31, 2016.

 

SECTION 3.6  Regulatory Approvals.  Any approval, permit, authorization, license or consent of any Governmental Entity required to be obtained by the Company, SNH or any of their respective subsidiaries as a result of any acquisition of Common Shares by any one or more of the Requesting 

 

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Parties pursuant to the Proposed Acquisition shall have been obtained or, in the judgment of the FVE Board, is expected to be timely obtained, on terms satisfactory to the FVE Board.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

 

SECTION 4.1  Representations and Warranties of the Company.  The Company hereby represents and warrants to the Requesting Parties as follows:

 

(a)         The Company has full legal right, power and authority to enter into, deliver and perform this Agreement. The execution, delivery and performance of this Agreement by the Company have been duly and validly authorized by the FVE Board and the Independent Directors of the Company, acting separately, and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or the performance of this Agreement by the Company. This Agreement has been duly and validly executed and delivered by the Company and constitutes a valid, legal and binding agreement of the Company, enforceable against the Company in accordance with its terms.

 

(b)         The FVE Board, at a duly called and held meeting, has taken all action necessary to approve and grant the Company Consents subject to satisfaction of the conditions set forth in Article III, and such actions remain in full force and effect.

 

(c)          No material consent, approval, authorization, license, clearance, filing or registration of or with any third Person, excluding any Governmental Entity, is required in order to permit the Company to execute, deliver or perform this Agreement, except for the SNH Consent and, if required, the Lender Consent, and those that have been obtained, made, or waived.

 

SECTION 4.2  Representations and Warranties of the Requesting Parties.  The Requesting Parties hereby jointly and severally represent and warrant to the Company as follows:

 

(a)         Each Requesting Party that is not an individual is a trust or limited liability company, duly formed or organized, validly existing and in good standing under the laws of its jurisdiction of formation or organization, as applicable.

 

(b)         Each Requesting Party that is not an individual has all trust, or limited liability company, as applicable, power and authority, and each Requesting Party who is an individual has the capacity, to enter into, deliver and perform this Agreement. The execution, delivery and performance of this Agreement by each Requesting Party that is not an individual have been duly and validly authorized by its board of directors, trustees, manager or other governing body, as applicable, and no other trust, or limited liability company, as applicable, proceedings on the part of such Requesting Party is necessary to authorize this Agreement or the performance of this Agreement by such Requesting Party. This Agreement has been duly and validly executed and delivered by each Requesting Party and constitutes a valid, legal and binding agreement of such Requesting Party, enforceable against such party in accordance with its terms.

 

(c)          No consent, approval, authorization, license, clearance, filing or registration of or with any Governmental Entity or third Person is required in order to permit any Requesting Party to execute, deliver or perform this Agreement or consummate the Proposed Acquisition, except for the SNH Consent and, if required, the Lender Consent, and those that have been obtained, made, or waived, or, in the case of the consummation of the Proposed Acquisition, will be obtained prior to such consummation.

 

(d)         The Requesting Parties do not actually own or Constructively Own (as defined in SNH’s Charter) five percent (5%) or more of any class of shares of beneficial interest of SNH. RMR LLC does not actually own more than one percent (1%) of any class of shares of capital 

 

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stock of the Company. To the knowledge of the Requesting Parties, no Person to whom Common Shares are attributed from a Requesting Party under the Code (other than another Requesting Party or RMR LLC or SNH) actually owns any shares of capital stock of the Company, except that a Family Member of a Requesting Party may Constructively Own Common Shares of up to two-tenths of one percent (0.2%) by virtue of Constructive Ownership other than on account of attribution under the Code from a Requesting Party.

 

(e)          The Requesting Parties have all necessary funding to consummate the Proposed Acquisition and the availability of such funds is not in any way conditioned upon or qualified by any Requesting Party’s ability to obtain financing of any type or nature whatsoever, including, without limitation, debt financings or equity investments.

 

ARTICLE V

STANDSTILL PROVISIONS AND OTHER COVENANTS

 

SECTION 5.1  Standstill Agreement.  Each Requesting Party agrees that, except as may be approved by the FVE Board in its sole discretion, for a period commencing on the date hereof and ending on the date that is ten (10) years after the date hereof (such period, the “Standstill Term”), such Requesting Party will not, and will cause its Controlled Affiliates, Permitted Transferees and Representatives to not, in any manner, directly or indirectly, either alone or in concert with one or more other Person(s):

 

(a)         effect or seek, offer or propose (whether publicly or otherwise) to effect, cause, participate in or in any way advise, assist or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect, cause or participate in, (A) any tender or exchange offer, merger or other business combination or extraordinary transaction involving, or any sale of all or a substantial portion of the assets of, the Company or any of its subsidiaries, other than the Proposed Acquisition; (B) any recapitalization, restructuring, liquidation or dissolution with respect to the Company or any of its subsidiaries; or (C) any “solicitation” of “proxies” (as such terms are defined in Rule 14a-1 of Regulation 14A under the 1934 Act) or consents to vote any Common Shares or other voting securities of the Company;

 

(b)         deposit any Common Shares or other voting securities of the Company in a voting trust or subject Common Shares or other voting securities of the Company to a voting agreement or other agreement or arrangement with respect to the voting of such shares or securities, other than with other Requesting Parties of this Agreement;

 

(c)          publicly request that the Company amend or waive any provision of this Agreement;

 

(d)         take any action (including any public announcement or communication with or to the Company) which would reasonably be expected to result in the Company making a public announcement regarding any of the types of matters set forth in this Section 5.1; or

 

(e)          encourage, assist or enter into any discussions or arrangements with any third party with respect to any of the foregoing.

 

Nothing in Section 5.1 of this Agreement shall be deemed to (1) restrict or limit the Requesting Parties’ ability to discuss any matter confidentially with the Chief Executive Officer or Chief Financial Officer of the Company or with the FVE Board or any member of the FVE Board or to communicate, on a confidential basis, with their own Representatives; (2) restrict any director, officer, or manager of any Requesting Party or any of its Controlled Affiliates (including any Requesting Party acting in such capacity) from acting in his, her or its capacity as a director, trustee, officer or manager of any Public Company (including the Company) in accordance with his or her fiduciary, statutory, contractual or similar duties to such Entity or the stockholders thereof; or (3) restrict any Public Company that is not Controlled by a Requesting Party. For the avoidance of doubt, nothing in this Agreement shall be

 

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construed to prevent any Person who is a director, officer, manager or employee of the Company from performing any duties in such capacity, including, without limitation, discussing, considering or voting on any matter, interacting with the Board and/or management of the Company or from participating in any activity of the Board and/or the Company.

 

SECTION 5.2  Approval under Section 3-601(j)(3) of the MGCL and Section 9.3 of Article IX of the Company’s Bylaws and Exception to the Ownership Limit.  It is expressly agreed by the Requesting Parties that the Company Consents are predicated upon the compliance by the Requesting Parties and their Controlled Affiliates with the terms and conditions of this Agreement, and the material breach of any of the terms of this Agreement by any Requesting Party will have the effect, if not cured by such Requesting Party on or before the date that is five (5) calendar days after delivery of written notice thereof by the FVE Board to such Requesting Party, of nullifying the approval of the FVE Board of the Proposed Acquisition under Section 3-601(j)(3) of the MGCL. Each Requesting Party agrees that from and after such nullification (a) it will be subject to (i) the provisions of Section 3-601(j)(3) of the MGCL as an “interested stockholder,” (ii) the restrictions in Article IX of the Company’s Bylaws and (iii) the Ownership Limit and the restrictions and other provisions of Article VI of the Company’s Charter, and (b) the FVE Board shall be deemed not to have approved the Proposed Acquisition for purposes of Section 3-601(j)(3) of the MGCL or the restrictions in Article IX of the Company’s Bylaws and to not have granted to the Requesting Parties any exception to the Ownership Limit or other restrictions and provisions of Article VI of the Company’s Charter. This Section 5.2 shall be in addition to and not in limitation of any other remedies for breach of this Agreement.

 

SECTION 5.3  Termination.  The restrictions contained in Section 5.1 of this Agreement shall terminate and be of no further force and effect upon the earliest of:

 

(a)         the expiration of the Standstill Term;

 

(b)         the date on which the Company enters into a definitive binding agreement for a transaction that, if consummated, would result in a Company Change of Control;

 

(c)          the date on which the FVE Board otherwise approves and recommends that the Company’s stockholders accept a transaction (including, without limitation, a tender offer) that, if consummated, would result in a Company Change of Control; and

 

(d)         the consummation of a Company Change of Control.

 

Nothing in this Section 5.3 shall relieve a Requesting Party from liability or responsibility for any material breach of an obligation of this Agreement which breach arose prior to termination pursuant to this Section 5.3, and any such termination shall be without prejudice to the rights and remedies of the Company with respect to such breach.

 

SECTION 5.4  SNH Ownership.  In order to assist SNH and the Company with compliance under Section 856(d)(3) of the Code (specifically with respect to an “independent contractor” being sufficiently unrelated from any real estate investment trust that engages it), the Requesting Parties agree to notify SNH and the Company of acquisition(s) of shares of beneficial interest of SNH that they or any of their Affiliates might make (or of any other event) that could reasonably be expected to cause the Requesting Parties to actually own or Constructively Own (as defined in SNH’s Charter) five percent (5%) or more of any class of shares of beneficial interest of SNH. The Requesting Parties agree to coordinate with SNH and the Company in respect of their compliance with Section 856(d)(3) of the Code to the extent reasonably requested by SNH or the Company, including the Requested Parties refraining, and causing their Affiliates to refrain, from an acquisition of shares of beneficial interest of SNH if such acquisition would cause the Requesting Parties to actually own or Constructively Own (as defined in SNH’s Charter) five percent (5%) or more of any class of shares of beneficial interest of SNH. For the avoidance of doubt, the Requesting Parties shall not be required pursuant to this Section 5.4 to divest any of the Common Shares that they may own as of the date hereof or acquire pursuant to the Proposed Acquisition.

 

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SECTION 5.5  Estate Planning.  Upon the request of a Requesting Party who is an individual and in connection with a proposed transfer of Common Shares actually owned or Constructively Owned by such Requesting Party to a Family Member for estate planning purposes, the FVE Board will consider in good faith a request by such Requesting Party to grant such exceptions to the Ownership Limit and to the restrictions on Transfers constituting “5-percent Transactions” (as that term is defined in the Company’s Bylaws) as may be necessary to permit such transfers, it being understood that the decision to grant any such exceptions will be in the sole discretion of the FVE Board.

 

ARTICLE VI

LOCK-UP

 

SECTION 6.1  Restrictions on Transfer of Common Shares.  Each Requesting Party agrees that, during the Lock-Up Period, it will not Transfer any Lock-Up Shares or publicly announce an intention to effect any Transfer of Lock-Up Shares other than a Permitted Transfer; provided, however, that upon any Permitted Transfer each Permitted Transferee in such Transfer shall agree in writing to be bound by the restrictions set forth in this Agreement, including this Section 6.1.

 

SECTION 6.2  Legend.  At the request of the Company, all share certificates or share statements evidencing Lock-Up Shares shall bear or contain a legend or notation substantially in the following form (or in such other form as the FVE Board may determine):

 

THE SECURITIES REPRESENTED BY THIS [CERTIFICATE / STATEMENT] ARE SUBJECT TO RESTRICTIONS ON TRANSFER SPECIFIED IN A CONSENT, STANDSTILL, REGISTRATION RIGHTS AND LOCK-UP AGREEMENT WITH THE CORPORATION, AS THE SAME MAY BE AMENDED AND MODIFIED FROM TIME TO TIME, AND THE CORPORATION RESERVES THE RIGHT TO REFUSE THE TRANSFER OF SUCH SECURITIES UNTIL SPECIFIED CONDITIONS HAVE BEEN FULFILLED. A COPY OF SUCH CONDITIONS SHALL BE FURNISHED BY THE CORPORATION TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE.

 

The term “Corporation” shall mean the Company for purposes of the above legend.

 

SECTION 6.3  Stop Transfer.  The Company and its transfer agent are hereby authorized to decline to make any Transfer of Lock-Up Shares if such Transfer would constitute a violation or breach of Section 6.1 and each Requesting Party agrees and consents to the entry of stop transfer instructions with the Company’s transfer agent and registrar against any Transfer of the Lock-Up Shares not made in compliance with Section 6.1.

 

ARTICLE VII

REGISTRATION RIGHTS

 

SECTION 7.1  Demand Registration.

 

(a)   General Request for Registration.  At any time during the Registration Period, any Requesting Party may make a written demand for registration under the 1933 Act of twenty-five percent (25%) or more of the Registrable Securities owned by the Requesting Parties, in aggregate. Any such written demand for a registration shall specify the number of Registrable Securities proposed to be sold and the intended method(s) of distribution thereof. The Company shall provide a copy of any such written demand to each other Requesting Party and each such other Requesting Party shall have the option to join in such demand for registration by making its own written demand for a Demand Registration to the Company within five (5) Business Days thereafter. The registration so demanded by one or more Requesting Parties is referred to herein as a “Demand Registration” and the Requesting Parties making such requests as “Demanding Shareholders.” If the Company is eligible to utilize a Registration Statement on Form S-3 to sell 

 

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securities in a secondary offering on a delayed or continuous basis in accordance with Rule 415 under the 1933 Act (a “Shelf Registration”), any Demand Registration made pursuant to this Section 7.1(a) shall, at the option of Demanding Shareholder(s) holding a majority of the Registrable Securities subject to the Demand Registration, be a demand for a Shelf Registration. For the avoidance of doubt, if a Shelf Registration is so requested pursuant to this Section 7.1(a), any reference to a Demand Registration in this Agreement also refers to a Shelf Registration.

 

(b)   Underwritten Offering.  If Demanding Shareholder(s) holding a majority of the Registrable Securities subject to the Demand Registration so advise the Company as part of their written demand(s) for a Demand Registration, the offering of such Registrable Securities pursuant to such Demand Registration shall be in the form of an underwritten offering. In such case, each Demanding Shareholder shall enter into an underwriting agreement in customary form with the Underwriter(s) selected for such underwriting by the Requesting Parties holding a majority of the Registrable Securities subject to the Demand Registration (which Underwriter(s) shall be reasonably acceptable to the Company), complete and execute any questionnaires, powers of attorney, indemnities, lock-up agreements, securities escrow agreements and other documents reasonably required or which are otherwise customary under the terms of such underwriting agreement and furnish to the Company such information as the Company may reasonably request in writing for inclusion in the Registration Statement.

 

(c)   Reduction of Offering.  If the managing Underwriter(s) for a Demand Registration that is to be an underwritten offering advise(s) the Company and each Demanding Shareholder that the dollar amount or number of Registrable Securities which Demanding Shareholder(s) desire(s) to sell, taken together with all other Common Shares or other securities which Demanding Shareholder(s) have agreed may be included in the offering, exceeds the maximum dollar amount or maximum number of Common Shares or other securities that can be sold in such offering without adversely affecting the proposed offering price, the timing, the distribution method or the probability of success of such offering (such maximum dollar amount or maximum number of Common Shares or other securities, as applicable, the “Registered Offering Cap”), then the Company shall include in such registration: (i) first, the Registrable Securities which Demanding Shareholder(s) have demanded be included in the Demand Registration; provided, however, if the aggregate number of Registrable Securities as to which Demand Registration has been requested exceeds the Registered Offering Cap, then the number of Registrable Securities that may be included shall be reduced to the Registered Offering Cap and the participation in the Demand Registration shall be allocated to Demanding Shareholders pro rata (in accordance with the number of Registrable Securities which each Demanding Shareholder has requested be included in the Demand Registration); (ii) second, to the extent that the Registered Offering Cap has not been reached under the foregoing clause (i), the Common Shares or other securities that the Company desires to sell that can be sold without exceeding the Registered Offering Cap; and (iii) third, to the extent that the Registered Offering Cap has not been reached under the foregoing clauses (i) and (ii), the Common Shares or other securities for the account of other security holders of the Company that can be sold without exceeding the Registered Offering Cap.

 

(d)   Withdrawal.  In the case of a Demand Registration, if a Demanding Shareholder disapproves of the terms of any underwriting or is not entitled to include all of its Registrable Securities in any offering, such Demanding Shareholder may elect to withdraw from such offering no later than the time at which the public offering price and underwriters’ discount are determined with the Underwriter(s) by giving written notice to the Company and the Underwriter(s) of its request to withdraw. In such event, if there are no other Requesting Parties included in the Demand Registration, the Company need not proceed with the offering. If such Demanding Shareholder’s withdrawal is based on (i) a material adverse change in circumstances with respect to the Company and not known to such Demanding Shareholder at the time such Demanding 

 

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Shareholder makes its written demand for such Demand Registration, (ii) the Company’s failure to comply with its obligations under this Agreement or (iii) a reduction pursuant to Section 7.1(c) of ten percent (10%) or more of the number of Registrable Securities which Demanding Shareholder has requested be included in the Demand Registration, such registration shall not count as a Demand Registration for purposes of Section 8.1(a)(3) or Section 8.1(a)(5). If such Demanding Shareholder’s withdrawal is based on the circumstances described in clause (i) or (ii) of the preceding sentence, the Company shall pay or reimburse all expenses otherwise payable or reimbursable by the Demanding Shareholder in connection with such Demand Registration pursuant to Section 8.3 and such registration shall not count as a Demand Registration for purposes of Section 8.1(a)(3) or Section 8.1(a)(5).

 

SECTION 7.2  Piggy-Back Registration.

 

(a)   Piggy-Back Rights.  If, at any time during the Registration Period, the Company proposes to file a Registration Statement under the 1933 Act with respect to an offering of Common Shares, or securities or other obligations exercisable or exchangeable for, or convertible into, Common Shares, by the Company for its own account or for any other shareholder of the Company for such shareholder’s account, other than a Registration Statement (i) filed in connection with any employee benefit plan, (ii) for an exchange offer or offering of securities solely to the Company’s existing shareholders, (iii) for an offering of debt securities convertible into equity securities of the Company, (iv) for a dividend reinvestment plan or (v) filed on Form S-4 (or successor form), then the Company shall (x) give written notice of such proposed filing to each Requesting Party as soon as practicable but in no event less than ten (10) Business Days before the anticipated filing date, which notice shall describe the amount and type of securities to be included in such offering, the intended method(s) of distribution, and the name of the proposed managing Underwriter(s), if any, of the offering and (y) offer to each Requesting Party in such notice the opportunity to register the sale of such number of its Registrable Securities as such Requesting Party may request in writing within five (5) Business Days following receipt of such notice (a “Piggy-Back Registration”). If a Requesting Party so requests to register the sale of some of its Registrable Securities, the Company shall cause such Registrable Securities to be included in the Registration Statement and shall use commercially reasonable efforts to cause the managing Underwriter(s) of the proposed underwritten offering to permit the Registrable Securities requested to be included in the Piggy-Back Registration to be included on the same terms and conditions as any similar securities of the Company and other shareholders of the Company and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof. If the Piggy-Back Registration involves one or more Underwriters, each Requesting Party shall enter into an underwriting agreement in customary form with the Underwriter(s) selected for such Piggy-Back Registration by the Company, complete and execute any questionnaires, powers of attorney, indemnities, lock-up agreements, securities escrow agreements and other documents reasonably required or which are otherwise customary under the terms of such underwriting agreement and furnish to the Company such information as the Company may reasonably request in writing for inclusion in the Registration Statement or such information that is otherwise customary.

 

(b)   Reduction of Offering.  If the managing Underwriter(s) for a Piggy-Back Registration that is to be an underwritten offering advises the Company and the holders of Registrable Securities that the dollar amount or number of Common Shares or other securities which the Company desires to sell, taken together with Common Shares or other securities, if any, as to which registration has been requested pursuant to written contractual arrangements with Requesting Parties and other Persons, the Registrable Securities as to which registration has been requested under this Section 7.2, and the Common Shares or other securities, if any, as to which registration has been requested pursuant to the written contractual demand or piggy-back 

 

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registration rights of other shareholders of the Company, exceeds the Registered Offering Cap, then the Company shall include in any such registration:

 

(1)         If the registration is undertaken for the Company’s account: (x) first, the shares or other securities that the Company desires to sell that can be sold without exceeding the Registered Offering Cap; and (y) second, to the extent that the Registered Offering Cap has not been reached under the foregoing clause (x), the shares or other securities, if any, including the Registrable Securities, as to which registration has been requested pursuant to written contractual piggy-back registration rights of security holders (pro rata in accordance with the number of Common Shares or other securities which each such person has actually requested to be included in such registration, regardless of the number of shares or other securities with respect to which such persons have the right to request such inclusion) that can be sold without exceeding the Registered Offering Cap; and

 

(2)         If the registration is a “demand” registration undertaken at the demand of Persons, other than a Requesting Party or Permitted Transferee, pursuant to written contractual arrangements with such Persons, (x) first, the Common Shares or other securities for the account of the demanding Persons that can be sold without exceeding the Registered Offering Cap; (y) second, to the extent that the Registered Offering Cap has not been reached under the foregoing clause (x), the Common Shares or other securities that the Company desires to sell that can be sold without exceeding the Registered Offering Cap; and (z) third, to the extent that the Registered Offering Cap has not been reached under the foregoing clauses (x) and (y), the shares or other securities, if any, including the Registrable Securities, as to which registration has been requested pursuant to written contractual piggy-back registration rights, which other shareholders desire to sell (pro rata in accordance with the number of Common Shares or other securities which each such Person has actually requested to be included in such registration, regardless of the number of Common Shares or other securities with respect to which such persons have the right to request such inclusion) that can be sold without exceeding the Registered Offering Cap.

 

(c)   Withdrawal.  Any Requesting Party may elect to withdraw its request for inclusion of its Registrable Securities in any Piggy-Back Registration by giving written notice to the Company of such request to withdraw no later than the time at which the public offering price and underwriters’ discount are determined with the Underwriter(s). The Company may also elect to withdraw from a registration at any time no later than the time at which the public offering price and underwriters’ discount are determined with the Underwriter(s). If a Requesting Party’s withdrawal is based on the Company’s failure to comply with its obligations under this Agreement, the Company shall pay or reimburse all expenses otherwise payable or reimbursable by such Requesting Party in connection with such Piggy-Back Registration pursuant to Section 8.3.

 

ARTICLE VIII

REGISTRATION PROCEDURES

 

SECTION 8.1  Filings; Information.  Whenever the Company is required to effect the registration of any Registrable Securities pursuant to Article VII, the Company shall use its commercially reasonable efforts to effect the registration and sale of such Registrable Securities in accordance with the intended method(s) of distribution thereof as expeditiously as practicable, and in connection with any such request:

 

(a)   Filing Registration Statement.  The Company shall, as expeditiously as possible and in any event within sixty (60) days after receipt of a request for a Demand Registration pursuant to Section 7.1, prepare and file with the SEC a Registration Statement on any form for which the Company then qualifies or which counsel for the Company shall deem appropriate and which form 

 

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shall be available for the sale of all Registrable Securities to be registered thereunder and the intended method(s) of distribution thereof, and shall use commercially reasonable efforts to cause such Registration Statement to become and remain effective for the period required by Section 8.1(c); provided, however, that:

 

(1)         In the case of demand under Section 7.1 for a Shelf Registration, the Registration Statement shall be on Form S-3;

 

(2)         the Company shall have the right to defer any Demand Registration and any Piggy-Back Registration for a reasonable period of time if, in the good faith judgment of the Board of Directors or the officers of the Company (and the Company shall furnish to the holders a confirmatory certificate signed by a principal executive officer or principal financial officer of the Company), it would (A) materially interfere with a significant acquisition, disposition, financing or other transaction involving the Company, (B) result in the disclosure of material information that the Company has a bona fide business purpose for preserving as confidential that is not then otherwise required to be disclosed or (C) render the Company unable to comply with requirements under the 1933 Act or the 1934 Act; in such event, (i) if the applicable Registration Statement has become effective, each Requesting Party will forthwith discontinue (or cause the discontinuance of) disposition of Registrable Securities until it is advised by the Company that the use of such Registration Statement may be resumed or (ii) each Requesting Party shall be entitled to withdraw its request for the filing of the applicable Registration Statement and, if such request is withdrawn, such request shall not count as one of the permitted requests for registration hereunder and the Company shall pay all customary costs and expenses in connection with such withdrawn registration; provided, further, however, that the Company may not exercise the right set forth in this subsection (2) in respect of a request by a Requesting Party, for more than one hundred eighty (180) days in any 365-day period in respect of a Demand Registration (including in such one hundred eighty (180) days, any deferral under subsection (4) of this Section 8.1(a) if the Registration Statement was not timely filed thereunder);

 

(3)         the Company shall not be obligated to effect any registration of Registrable Securities upon receipt of a written demand for a Demand Registration if the Company has already completed two (2) Demand Registrations requested by a Requesting Party within the past twelve (12) month period;

 

(4)         the Company shall not then be obligated to effect any registration of Registrable Securities upon receipt of a written demand for a Demand Registration if the Company shall furnish to the demanding Requesting Parties a certificate signed by a principal executive officer or principal financial officer of the Company stating that the Company expects to file, within ninety (90) days of receipt of the written demand for a Demand Registration, a Registration Statement and offer to each Requesting Party the opportunity to register its Registrable Securities thereunder in accordance with Section 7.2;

 

(5)         the Company shall not be obligated to effect any registration of Registrable Securities upon receipt of a written demand for a Demand Registration from a Requesting Party if the Company has, within the ninety (90) day period preceding the date of the written demand for a Demand Registration, already effected a Demand Registration;

 

(6)         the Company shall not be obligated to effect any registration of Registrable Securities upon receipt of a written demand for a Demand Registration if all Registrable Securities could be sold within ninety (90) days pursuant to Rule 144 under the 1933 Act; and

 

(7)         the Company shall not be obligated to effect any registration of Registrable Securities upon receipt of a written demand for a Demand Registration if all Registrable 

 

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Securities are proposed to be offered at an expected aggregate offering price of less than $50.0 million (net of registration expenses set forth in Section 8.3), provided, that this clause (7) shall not apply to a Shelf Registration.

 

(b)   Copies.  If a Requesting Party has included Registrable Securities in a registration, the Company shall, prior to filing a Registration Statement or Prospectus, or any amendment or supplement thereto, furnish to such Requesting Party and its counsel, copies of such Registration Statement as proposed to be filed, each amendment and supplement to such Registration Statement (in each case including all exhibits thereto and documents incorporated by reference therein), the Prospectus included in such Registration Statement (including each preliminary Prospectus), and such other documents as such Requesting Party or counsel for such Requesting Party may reasonably request in order to facilitate the disposition of the Registrable Securities included in such registration.

 

(c)   Amendments and Supplements.  If a Requesting Party has included Registrable Securities in a registration, the Company shall prepare and file with the SEC such amendments, including post-effective amendments, and supplements to such Registration Statement and the Prospectus used in connection therewith as may be necessary to keep such Registration Statement effective and in compliance with the provisions of the 1933 Act until all Registrable Securities covered by such Registration Statement have been disposed of in accordance with the intended method(s) of distribution set forth in such Registration Statement (which period shall not exceed the sum of one hundred eighty (180) days, plus any period during which any such disposition is interfered with by any stop order or injunction of the SEC or any Governmental Entity) or such securities have been withdrawn.

 

(d)   Notification.  If a Requesting Party has included Registrable Securities in a registration, after the filing of the Registration Statement, the Company shall promptly, and in no event more than two (2) Business Days after such filing, notify such Requesting Party of such filing, and shall further notify such Requesting Party promptly and confirm such notification in writing in all events within two (2) Business Days of the occurrence of any of the following: (i) when such Registration Statement becomes effective; (ii) when any post-effective amendment to such Registration Statement becomes effective; (iii) the issuance or threatened issuance by the SEC of any stop order (and the Company shall use reasonable best efforts to prevent the entry of such stop order or to remove it if entered); and (iv) any request by the SEC for any amendment or supplement to such Registration Statement or any Prospectus relating thereto or for additional information or of the occurrence of an event requiring the preparation of a supplement or amendment to such Prospectus so that, as thereafter delivered to the purchasers of the securities covered by such Registration Statement, such Prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and promptly make available to such Requesting Party any such supplement or amendment; except that before filing with the SEC a Registration Statement or Prospectus or any amendment or supplement thereto, including documents incorporated by reference, the Company shall furnish to such Requesting Party and to its counsel, copies of all such documents proposed to be filed sufficiently in advance of filing to provide such Requesting Party and its counsel with a reasonable opportunity to review such documents and comment thereon, and the Company shall not file any Registration Statement or Prospectus or amendment or supplement thereto, including documents incorporated by reference, to which such Requesting Party or its counsel shall reasonably object.

 

(e)   State Securities Laws Compliance.  If a Requesting Party has included Registrable Securities in a registration, the Company shall use commercially reasonable efforts to (i) register or qualify the Registrable Securities covered by the Registration Statement under such securities or “blue sky” laws of such jurisdictions in the United States as such Requesting Party (in light of the 

 

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intended plan of distribution) may request and (ii) take such action necessary to cause such Registrable Securities covered by the Registration Statement to be registered with or approved by such other federal or state authorities as may be necessary by virtue of the business and operations of the Company and do any and all other acts and things that may be necessary or advisable to enable such Requesting Party to consummate the disposition of such Registrable Securities in such jurisdictions; provided, however, that the Company shall not be required to qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 8.1(e) or subject itself to taxation in any such jurisdiction.

 

(f)    Agreements for Disposition.  If a Requesting Party has included Registrable Securities in a registration, (i) the Company shall enter into customary agreements (including, if applicable, an underwriting agreement in customary form) and use commercially reasonable efforts to take such other actions as are required in order to expedite or facilitate the disposition of such Registrable Securities and (ii) the representations, warranties and covenants of the Company in any underwriting agreement which are made to or for the benefit of any Underwriters, to the extent applicable, shall also be made to and for the benefit of the applicable Requesting Parties. For the avoidance of doubt, no Requesting Party may require the Company to accept terms, conditions or provisions in any such agreement which the Company determines are not reasonably acceptable to the Company, notwithstanding any agreement to the contrary herein. No Requesting Party including Registrable Shares in a registration shall be required to make any representations or warranties in the underwriting agreement except as reasonably requested by the Underwriters or the Company and, if applicable, with respect to such Requesting Party’s organization, good standing, authority, title to Registrable Securities, lack of conflict of such sale with such Requesting Party’s material agreements and organizational documents, and with respect to written information relating to such Requesting Party that such Requesting Party has furnished in writing expressly for inclusion in such Registration Statement, in each case, as applicable to such Requesting Party. Each Requesting Party which has included Registrable Securities in a registration shall, however, agree to such covenants and indemnification and contribution obligations for selling stockholders as are reasonable and customarily contained in agreements of that type.

 

(g)   Cooperation.  The Company shall cooperate in any offering of Registrable Securities under this Agreement, which cooperation shall include, without limitation, the preparation of the Registration Statement with respect to such offering and all other offering materials and related documents, and participation in meetings with Underwriters, attorneys, accountants and potential investors. Each Requesting Party shall cooperate in the preparation of the Registration Statement and other documents relating to any offering in which it includes securities pursuant to this Agreement. If a Requesting Party has included Registrable Securities in a registration, such Requesting Party shall also furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method(s) of disposition of such securities as the Company and/or its counsel shall reasonably request in order to assure full compliance with applicable provisions of the 1933 Act and the 1934 Act in connection with the registration of the Registrable Securities.

 

(h)   Records.  If a Requesting Party has included Registrable Securities in a registration, upon reasonable notice and during normal business hours, subject to the Company receiving any customary confidentiality undertakings or agreements, the Company shall make available for inspection by Requesting Parties, any Underwriter participating in any disposition pursuant to such Registration Statement and any attorney, accountant or other professional retained by a Requesting Party or any Underwriter, all relevant financial and other records, pertinent corporate documents and properties of the Company as shall be necessary to enable them to exercise their due diligence responsibility, and shall cause the Company’s officers, directors and employees to 

 

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supply all information reasonably requested by such Requesting Party in connection with such Registration Statement.

 

(i)    Opinions and Comfort Letters.  If a Requesting Party has included Registrable Securities in a registration, the Company shall use commercially reasonable efforts to furnish to each Requesting Party signed counterparts, addressed to such Requesting Party, of (i) any opinion of counsel to the Company delivered to any Underwriter and (ii) any comfort letter from the Company’s independent public accountants delivered to any Underwriter; provided, however, that counsel to the Underwriter shall have exclusive authority to negotiate the terms thereof. In the event no legal opinion is delivered to any Underwriter, the Company shall furnish to each Requesting Party, at any time that such Requesting Party elects to use a Prospectus in connection with an offering of such Requesting Party’s Registrable Securities, an opinion of counsel to the Company to the effect that the Registration Statement containing such Prospectus has been declared effective, that no stop order is in effect, and such other matters as Persons holding a majority of the Registrable Securities subject to the registration may reasonably request as would customarily have been addressed in an opinion of counsel to the Company delivered to an Underwriter.

 

(j)    Earning Statement.  The Company shall comply with all applicable rules and regulations of the SEC and the 1933 Act, and make generally available to its shareholders, as soon as practicable, an earning statement satisfying the provisions of Section 11(a) of the 1933 Act, provided that the Company will be deemed to have complied with this Section 8.1(j) if the earning statement satisfies the provisions of Rule 158 under the 1933 Act.

 

(k)   Listing.  The Company shall use commercially reasonable efforts to cause all Registrable Securities included in any registration to be listed on such exchanges or otherwise designated for trading in the same manner as similar shares of the Company are then listed or designated or, if no such similar securities are then listed or designated, in a manner satisfactory to each Requesting Party whose Registrable Securities are included in the registration.

 

SECTION 8.2  Shelf Offering.  In the event that a Registration Statement with respect to a Shelf Registration is effective, each Requesting Party may make a written request to sell pursuant to an offering (including an underwritten offering) Registrable Securities available for sale pursuant to such Registration Statement (a “Shelf Offering”) so long as such Registration Statement remains in effect and to the extent permitted under the 1933 Act. Any written request for a Shelf Offering shall specify the number of Registrable Securities proposed to be sold and the intended method(s) of distribution thereof. Upon receipt of a written request for a Shelf Offering, the Company shall, as expeditiously as possible, use its commercially reasonable efforts to facilitate such Shelf Offering.

 

SECTION 8.3  Registration Expenses.  Except to the extent expressly provided by Section 7.1(d) or Section 7.2(c) or in connection with a Piggy-Back Registration relating to a registration by the Company on its own initiative (and not as a result of any other person’s or entity’s right to cause the Company to file, cause and effect a registration of the Company securities) and for the Company’s own account (in which case the Company will pay all customary costs and expenses of registration), each Requesting Party whose Registrable Securities are included in the registration shall pay, or promptly reimburse the Company for, its pro rata share of all customary costs and expenses incurred in connection with any Demand Registration effected pursuant to Section 7.1 or Piggy-Back Registration pursuant to Section 7.2, such pro rata share to be in proportion to the number of shares such Requesting Party is selling, after giving effect to any reduction pursuant to Section 7.1(c) or Section 7.2(b), in such Demand or Piggy-Back Registration relative to the total number of shares being sold in the registration, of all customary costs and expenses incurred in connection with such registration, in each case whether or not the Registration Statement becomes effective, including, without limitation: (i) all registration and filing fees; (ii) fees and expenses of compliance with 

 

19

 

securities or “blue sky” laws (including fees and disbursements of counsel in connection with blue sky qualifications of the Registrable Securities); (iii) printing expenses; (iv) fees imposed by the Financial Industry Regulatory Authority, Inc.; and (v) fees and disbursements of counsel for the Company and fees and expenses for independent registered public accountants retained by the Company (including the expenses or costs associated with the delivery of any opinions or comfort letters requested pursuant to Section 8.1(i)). The Company shall have no obligation to pay for the fees and expenses of counsel representing any Requesting Party in any Demand Registration or Piggy-Back Registration. The Company shall have no obligation to pay any underwriting discounts or selling commissions attributable to the Registrable Securities being sold by any Requesting Party, which underwriting discounts or selling commissions shall be borne solely by such Requesting Party. For the avoidance of doubt, no Requesting Party shall have any obligation to pay any underwriting discounts or selling commissions attributable to the shares being sold by any other Person. Additionally, in an underwritten offering, the Company, the Requesting Parties and any other Person whose Common Shares or other securities are included in the offering shall bear the expenses of the Underwriter(s) pro rata in proportion to the respective amount of shares each is selling in such offering. For the avoidance of doubt, no Requesting Party shall have any obligation to pay, and the Company shall bear, all internal expenses of the Company (including, without limitation, all fees, salaries and expenses of its officers, employees and management) incurred in connection with performing or complying with the Company’s obligations under this Agreement.

 

SECTION 8.4  Information.  Each Requesting Party shall provide such information as may reasonably be requested by the Company, or the managing Underwriter, if any, in connection with the preparation of any Registration Statement, including amendments and supplements thereto, in order to effect the registration of any of its Registrable Securities under the 1933 Act pursuant to this Agreement and in connection with the Company’s obligation to comply with federal and applicable state securities laws.

 

SECTION 8.5  Requesting Party Obligations.  No Requesting Party may participate in any underwritten offering pursuant to this Agreement unless such Requesting Party (i) agrees to only sell Registrable Securities on the basis reasonably provided in any underwriting agreement and (ii) completes, executes and delivers any and all questionnaires, lock-up agreements, powers of attorney, custody agreements, indemnities, underwriting agreements and other documents reasonably or customarily required by or under the terms of any underwriting agreement or as reasonably requested by the Company.

 

SECTION 8.6  Lock-Up in an Underwritten Public Offering.  If requested by the Underwriter(s) of a registered underwritten public offering of securities of the Company, a Requesting Party will enter into a lock-up agreement in customary form pursuant to which it shall agree not to offer, pledge, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise transfer, dispose of or hedge, directly or indirectly, or enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of any Common Shares or other securities of the Company or any securities convertible into or exercisable or exchangeable for Common Shares or other securities of the Company (except as part of such registered underwritten public offering or as otherwise permitted by the terms of such lock-up agreement) for a lock-up period that is customary for such an offering.

 

ARTICLE IX

INDEMNIFICATION

 

SECTION 9.1  Indemnification by the Company.  The Company shall, to the extent permitted by applicable Law, indemnify and hold harmless each Requesting Party, its subsidiaries, each of their respective directors, trustees, officers, employees, Representatives and agents in their capacity as such

 

20

 

and each Person, if any, who controls a Requesting Party within the meaning of the 1933 Act or the 1934 Act, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “Indemnified Requesting Persons”) from and against any and all damages, claims, losses, expenses, costs, obligations and liabilities, including liabilities for all reasonable attorneys’, accountants’, and experts’ fees and expenses (collectively, “Covered Liabilities”), suffered, directly or indirectly, by any Indemnified Requesting Person by reason of or arising out of any untrue statement or alleged untrue statement of any material fact contained or incorporated by reference in the Registration Statement under which the sale of Registrable Securities was registered under the 1933 Act (or any amendment thereto), or any Prospectus, preliminary Prospectus, or free writing prospectus (as defined in Rule 405 promulgated under the 1933 Act) relating to such Registration Statement, or any amendment thereof or supplement thereto, or by reason of or arising out of the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or any amendment or supplement thereto, in the light of the circumstances under which they were made), not misleading; provided, however, that (i) the Company will not be liable in any such case to the extent that any such Covered Liability arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made or incorporated by reference in such Registration Statement, Prospectus, preliminary Prospectus, free writing prospectus, amendment or supplement in reliance upon and in conformity with information furnished to the Company by or on behalf of such Requesting Party expressly for use in such document or documents and (ii) the indemnity agreement contained in this Section 9.1 shall not apply to amounts paid in settlement of any such Covered Liability if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld). The indemnity in this Section 9.1 shall remain in full force and effect regardless of any investigation made by or on behalf of any Indemnified Requesting Person. For the avoidance of doubt, the Company and its subsidiaries are not “Indemnified Requesting Persons.”

 

SECTION 9.2  Indemnification by Requesting Parties.  Each Requesting Party shall, severally and not jointly, to the extent permitted by applicable Law, indemnify and hold harmless the Company, its subsidiaries each of their respective trustees, directors, officers, employees, Representatives and agents, in their capacity as such and each Person, if any, who controls the Company within the meaning of the 1933 Act or the 1934 Act, and the heirs, executors, successors and assigns of any of the foregoing (collectively, the “Indemnified Company Persons”) from and against any and all Covered Liabilities suffered, directly or indirectly, by any Indemnified Company Person by reason of or arising out of any untrue statement or alleged untrue statement or omission or alleged omission contained or incorporated by reference in the Registration Statement under which the sale of Registrable Securities was registered under the 1933 Act (or any amendment thereto), or any Prospectus, preliminary Prospectus, or free writing prospectus (as defined in Rule 405 promulgated under the 1933 Act) related to such Registration Statement or any amendment thereof or supplement thereto, in reliance upon and in conformity with information furnished to the Company by such Requesting Party expressly for use therein; provided, however, that (i) the indemnity agreement contained in this Section 9.2 shall not apply to amounts paid in settlement of any such Covered Liability if such settlement is effected without the consent of such Requesting Party (which consent shall not be unreasonably withheld), and (ii) in no event shall the total amounts payable in indemnity by a Requesting Party under this Section 9.2 exceed the net proceeds received by such Requesting Party in the registered offering out of which such Covered Liability arises. The indemnity in this Section 9.2 shall remain in full force and effect regardless of any investigation made by or on behalf of any Indemnified Company Person. For the avoidance of doubt, a Requesting Party is not an “Indemnified Company Person.”

 

21

 

SECTION 9.3  Contribution.  If the indemnification provided for in Section 9.1 or Section 9.2 is unavailable, because it is prohibited or restricted by applicable Law, to an indemnified party under either such Section in respect of any Covered Liabilities referred to therein, then in order to provide for just and equitable contribution in such circumstances, each party that would have been an indemnifying party thereunder shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such Covered Liabilities in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and such indemnified party on the other in connection with the untrue statement or omission, or alleged untrue statement or omission, which resulted in such Covered Liabilities, as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue statement or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or such indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Requesting Parties agree that it would not be just and equitable if contribution pursuant to this Section 9.3 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 9.3. For the avoidance of doubt, the amount paid or payable by an indemnified party as a result of the Covered Liabilities referred to in this Section 9.3 shall include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating, preparing or defending, settling or satisfying any such Covered Liability. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

 

SECTION 9.4  Certain Limitations, Etc.  The amount of any Covered Liabilities for which indemnification is provided under this Agreement shall be net of (i) any amounts actually recovered or recoverable by the indemnified parties under insurance policies and (ii) other amounts actually recovered by the indemnified party from third parties, in the case of (i) and (ii), with respect to such Covered Liabilities. Any indemnifying party hereunder shall be subrogated to the rights of the indemnified party upon payment in full of the amount of the relevant indemnifiable loss. An insurer who would otherwise be obligated to pay any claim shall not be relieved of the responsibility with respect thereto or, solely by virtue of the indemnification provision hereof, have any subrogation rights with respect thereto. If any indemnified party recovers an amount from a third party in respect of an indemnifiable loss for which indemnification is provided in this Agreement after the full amount of such indemnifiable loss has been paid by an indemnifying party or after an indemnifying party has made a partial payment of such indemnifiable loss and the amount received from the third party exceeds the remaining unpaid balance of such indemnifiable loss, then the indemnified party shall promptly remit to the indemnifying party the excess of (i) the sum of the amount theretofore paid by such indemnifying party in respect of such indemnifiable loss plus the amount received from the third party in respect thereof, less (ii) the full amount of such Covered Liabilities.

 

ARTICLE X

MISCELLANEOUS

 

SECTION 10.1  Notices.  All notices and other communications in connection with this Agreement shall be in writing and shall be considered given if given in the manner, and be deemed given at times, as follows: (i) on the date delivered, if personally delivered; (ii) on the day of transmission if sent via facsimile transmission to the facsimile number given below, and telephonic confirmation of receipt is obtained promptly after completion of transmission; or (iii) on the next 

 

22

 

Business Day after being sent by recognized overnight mail service specifying next Business Day delivery, in each case with delivery charges pre-paid and addressed to the following addresses:

 

(a)                                 If to any Requesting Party, to:

 

c/o ABP Trust

Two Newton Place

255 Washington Street

Suite 300

Newton, MA 02458

Attn: Jennifer B. Clark

Facsimile: (617) 928-1305

 

with copies (which shall not constitute notice) to:

 

Skadden, Arps, Slate, Meagher & Flom LLP

500 Boylston Street

Boston, MA 02116

Attn: Margaret R. Cohen

Facsimile: (617) 305-4859

 

(b)                                 If to the Company, to:

 

Five Star Quality Care, Inc.

400 Centre Street

Newton, MA 02458

Attn: Katherine E. Potter

Facsimile: (617) 796-8385

 

with copies (which shall not constitute notice) to:

 

Sullivan & Worcester LLP

One Post Office Square

Boston, MA 02109

Attn: Nicole L. Rives

Facsimile: (617) 338-2880

 

SECTION 10.2  Assignment; Successors; Third Party Beneficiaries.

 

(a)   Assignment.  Except as set forth in this Section 10.2, this Agreement and the rights, interests and obligations of any Person hereunder may not be assigned, transferred or delegated and any assignment or attempted assignment in violation of this Section 10.2 shall be void ab initio. This Agreement and the rights, interests and obligations of the Company hereunder may be assigned, transferred or delegated by the Company to a successor of the Company by operation of law or to a Person who succeeds to all or substantially all the assets of the Company, which successor or Person agrees in a writing delivered to each Requesting Party to be subject to and bound by all interests and obligations set forth in this Agreement. The rights, interests and obligations of each Requesting Party under Article VII, Article VIII and Article IX may be assigned, transferred or delegated by such Requesting Party, in whole or in part, only in conjunction with and only to the extent of any Transfer of Registrable Securities to a Person that is a Permitted Transferee of such Requesting Party, which Permitted Transferee agrees in a writing delivered to the Company to be subject to and bound by Article VII, Article VIII, Article IX and Article X, whereupon any such Permitted Transferee will have all rights, interests and obligations under such Articles as a Requesting Party (in addition to such Requesting Party to the extent that such Requesting Party continues to own Common Shares).

 

23

 

(b)   Successors.  This Agreement shall bind and inure to the benefit of, and be enforceable by, the Parties and the express third party beneficiaries of this Agreement and their respective successors and permitted assigns.

 

(c)   No Third Party Beneficiaries.  Except as expressly provided in this Agreement with respect to the Indemnified Requesting Persons, the Indemnified Company Persons, the Collateral Persons, the Related Persons and estates and spouses of Requesting Parties who are individuals, this Agreement is not intended to and does not confer any rights or remedies upon any Person, other than the Parties. Each of the Indemnified Requesting Persons, the Indemnified Company Persons, the Collateral Persons and the Related Persons, by their acceptance of the benefits of this Agreement, agrees to be bound by the terms of this Agreement.

 

SECTION 10.3  Prior Negotiations; Entire Agreement.  This Agreement (including the documents and instruments referred to in this Agreement or entered into in connection therewith) constitute the entire agreement of the Parties and supersede all prior agreements, arrangements or understandings, whether written or oral, between the Parties with respect to the subject matter of this Agreement.

 

SECTION 10.4  Governing Law; Venue; Arbitration.

 

(a)   Governing Law.  This Agreement and all proceedings or counterclaims (whether based in contract, tort or otherwise) arising out of or relating to this Agreement or the transactions contemplated hereby, or any action of any Party in the negotiation, administration, performance and enforcement hereof, shall be governed by, and construed in accordance with, the Laws of the State of Maryland, without giving effect to any choice or conflict of laws provision or rule (whether of the State of Maryland or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of Maryland.

 

(b)   Venue.  All claims, actions, suits, dispute resolution, judicial and other legal proceedings arising out of or relating to this Agreement or the transactions contemplated hereby or any action of any Party, Collateral Person or Related Person (each a “Subject Party”) in the negotiation, administration, performance and enforcement hereof shall be heard and determined exclusively in the Business and Technology Case Management Program of the Circuit Court for Baltimore City, Maryland or the U.S. District Court for Maryland (collectively, the “Chosen Courts”). Each Subject Party hereby expressly and irrevocably (i) submits to the exclusive personal jurisdiction of the Chosen Courts in the event any claim or dispute arising out of or relating to this Agreement or the transactions contemplated hereby, or any action of any Subject Party in the negotiation, administration, performance and enforcement hereof, (ii) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from the Chosen Courts, (iii) agrees that it will not bring any proceeding arising out of or relating to this Agreement or the transactions contemplated hereby, or any action of any Subject Party in the negotiation, administration, performance and enforcement hereof, in any court other than the Chosen Courts, (iv) waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any such proceeding in the Chosen Courts, (v) agrees that a final judgment in any such proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law and (vi) agrees that service of process upon such Subject Party in any such proceeding shall be effective if notice is given in accordance with Section 10.1. Nothing in this Agreement will affect the right of any Subject Party to serve process in any other manner permitted by Law. EACH SUBJECT PARTY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

 

24

 

SECTION 10.5  Severability.  This Agreement shall be interpreted in such manner as to be effective and valid under applicable Law. If at any time subsequent to the date hereof, any provision of this Agreement is determined by any court or arbitrator of competent jurisdiction to be invalid, illegal or incapable of being enforced by any rule of Law or public policy in any respect, such provision will be enforced to the maximum extent possible given the intent of the Parties and the remaining provisions hereof shall remain in full force and effect.

 

SECTION 10.6  Fees and Expenses.  The Requesting Parties shall pay all out-of-pocket fees and expenses (including attorneys’ fees) reasonably incurred and paid by the Company in connection with: (i) the negotiation, preparation and execution of this Agreement, the SNH Consent and the Lender Consent; (ii) the preparation of a Solicitation/ Recommendation Statement on Schedule 14D-9 and any other required filing with the SEC related to the Tender Offer, this Agreement, the SNH Consent or the Lender Consent; and (iii) the obtaining of (or the failure to obtain) any of the consents described in Section 3.6, in each case, whether or not the Proposed Acquisition is consummated. Except as provided in the preceding sentence, all expenses incurred by the Parties shall be borne solely and entirely by the Party that has incurred the same.

 

SECTION 10.7  Counterparts.  This Agreement may be executed in any number of counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the Parties and delivered to the other Party (including via facsimile or other electronic transmission), it being understood that each Party need not sign the same counterpart.

 

SECTION 10.8  Effectiveness of this Agreement.  The Requesting Parties may elect, by written notice to the Company, to terminate this Agreement (other than Section 5.1, Section 5.3 and this Article X) at any time after the expiration or termination of the Tender Offer if, at such time, the Requesting Parties and their Controlled Affiliates Beneficially Own less than ten percent (10%) of the then issued and outstanding Common Shares. Upon the termination of this Agreement by the Requesting Parties pursuant to this Section 10.8, (a) the approval previously granted under Section 3-601(j)(3) of the MGCL and Section 9.3 of Article IX of the Company’s Bylaws and the exception to the Ownership Limit previously granted by the Board of Directors of the Company pursuant to this Agreement shall continue to apply in respect of acquisitions of Common Shares made, and Common Shares Beneficially Owned, prior to such termination but, without further approval of the Board of Directors of the Company, shall not apply in respect of any acquisition of Common Shares made after such termination, (b) Section 5.1, Section 5.3 and this Article X shall remain in full force and effect, and (c) except as provided in this Section 10.8, this Agreement (other than Section 5.1, Section 5.3 and this Article X) shall become void and have no effect, without any further liability or obligation on the part of any Party; provided, however, that each Party shall remain liable for its willful breach of this Agreement prior to such termination and such termination shall be without prejudice to the rights and remedies of any other Party with respect to such willful breach.

 

SECTION 10.9  Waivers and Amendments.  This Agreement may be amended, modified, superseded, cancelled, renewed or extended, and the terms and conditions of this Agreement may be waived, only by a written instrument signed by the Parties or, in the case of a waiver, by the Party waiving compliance. No delay on the part of any Party in exercising any right, power or privilege pursuant to this Agreement shall operate as a waiver thereof, nor shall any waiver of the part of any Party of any right, power or privilege pursuant to this Agreement, nor shall any single or partial exercise of any right, power or privilege pursuant to this Agreement, preclude any other or further exercise thereof or the exercise of any other right, power or privilege pursuant to this Agreement. The rights and remedies provided pursuant to this Agreement are cumulative and are not exclusive of any rights or remedies which any Party otherwise may have at Law or in equity.

 

25

 

SECTION 10.10  Specific Performance.  The Parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that, in addition to any other applicable remedies at Law or equity, the Parties shall be entitled to an injunction or injunctions, without proof of damages, to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement.

 

SECTION 10.11  Further Assurances.  At any time or from time to time after the date hereof, the Parties agree to cooperate with each other, and at the request of any other Party, to execute and deliver any further instruments or documents and to take all such further action as the other Party may reasonably request in order to evidence or effectuate the transactions contemplated hereby and to otherwise carry out the intent of the Parties hereunder.

 

[Signature Page Follows]

 

26

 

IN WITNESS WHEREOF, the Requesting Parties and the Company have executed this Consent, Standstill, Registration Rights and Lock-Up Agreement as of the date first above written, effective as of the date first above written.

 

	
 
    	
FIVE STAR QUALITY   CARE, INC.
    
	
 
    	
 
    
	
 
    	
/s/ Bruce J. Mackey Jr.
    
	
 
    	
By:
    	
Bruce J. Mackey Jr.
    
	
 
    	
Its:
    	
President and Chief   Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
ABP TRUST
    
	
 
    	
 
    	
 
    
	
 
    	
/s/ Adam D. Portnoy
    
	
 
    	
By:
    	
Adam D. Portnoy
    
	
 
    	
Its:
    	
President
    
	
 
    	
 
    	
 
    
	
 
    	
ABP   ACQUISITION LLC
    
	
 
    	
 
    	
 
    
	
 
    	
/s/ Adam D. Portnoy
    
	
 
    	
By:
    	
Adam D. Portnoy
    
	
 
    	
Its:
    	
President
    
	
 
    	
 
    	
 
    
	
 
    	
Barry M. Portnoy
    
	
 
    	
 
    	
 
    
	
 
    	
/s/ Barry M. Portnoy
    
	
 
    	
 
    	
 
    
	
 
    	
Adam D. Portnoy
    
	
 
    	
 
    	
 
    
	
 
    	
/s/ Adam D. Portnoy
    

 

[Signature Page to Consent, Standstill, Registration Rights and Lock-Up Agreement]Exhibit 4.1

TOYOTA AUTO RECEIVABLES 2016-D OWNER TRUST

(a Delaware Statutory Trust)

______________________________________

FORM OF AMENDED AND RESTATED TRUST AGREEMENT

between

TOYOTA AUTO FINANCE RECEIVABLES LLC,

as Depositor,

and

WELLS FARGO DELAWARE TRUST COMPANY, NATIONAL ASSOCIATION,

as Owner Trustee

______________________________________________

Dated as of October 12, 2016

 

TABLE OF CONTENTS

Page

 

	
ARTICLE I

	
DEFINITIONS

	
1

	
Section 1.01.

	
Definitions

	
1

	
Section 1.02.

	
Usage of Terms

	
4

	
ARTICLE II

	
CREATION OF TRUST

	
4

	
Section 2.01.

	
Creation of Trust

	
4

	
Section 2.02.

	
Office

	
5

	
Section 2.03.

	
Purposes and Powers

	
5

	
Section 2.04.

	
Power of Attorney

	
6

	
Section 2.05.

	
Declaration of Trust

	
6

	
Section 2.06.

	
Liability of the Certificateholders

	
6

	
Section 2.07.

	
Title to Trust Property

	
6

	
Section 2.08.

	
Situs of Trust

	
6

	
Section 2.09.

	
Representations and Warranties of the Depositor

	
6

	
Section 2.10.

	
Federal Income Tax Allocations

	
8

	
Section 2.11.

	
Covenants of the Trust

	
8

	
ARTICLE III

	
CERTIFICATES AND TRANSFER OF INTERESTS

	
9

	
Section 3.01.

	
The Certificates

	
9

	
Section 3.02.

	
Authentication of Certificates

	
9

	
Section 3.03.

	
Registration of Transfer and Exchange of Certificates

	
9

	
Section 3.04.

	
Mutilated, Destroyed, Lost or Stolen Certificate

	
11

	
Section 3.05.

	
Maintenance of Office or Agency

	
11

	
Section 3.06.

	
Appointment of Paying Agent

	
11

	
Section 3.07.

	
Persons Deemed Certificateholders

	
12

	
Section 3.08.

	
Access to List of Certificateholders’ Names and Addresses

	
13

	
Section 3.09.

	
Regarding the Certificate(s)

	
13

	
ARTICLE IV

	
ACTIONS BY OWNER TRUSTEE OR THE CERTIFICATEHOLDERS

	
13

	
Section 4.01.

	
Prior Notice to the Certificateholders with Respect to Certain Matters

	
13

	
Section 4.02.

	
Action by the Certificateholders with Respect to Certain Matters

	
14

	
Section 4.03.

	
Action with Respect to Bankruptcy

	
14

	
Section 4.04.

	
Restrictions on the Certificateholders’ Power

	
15

	
Section 4.05.

	
Majority of the Certificates Control

	
15

	
ARTICLE V

	
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES

	
15

	
Section 5.01.

	
[Reserved]

	
15

	
Section 5.02.

	
Application of Amounts in Trust Accounts

	
15

	
Section 5.03.

	
Method of Payment

	
16

	
Section 5.04.

	
Accounting and Reports to the Noteholders, the Certificateholders, the Internal Revenue Service and Others

	
16

	
Section 5.05.

	
Signature on Returns; Tax Matters Partner

	
17

	
ARTICLE VI

	
AUTHORITY AND DUTIES OF OWNER TRUSTEE

	
17

 

 

ii

TABLE OF CONTENTS

(continued)

Page

 

	
Section 6.01.

	
General Authority

	
17

	
Section 6.02.

	
General Duties

	
17

	
Section 6.03.

	
Duties of Owner Trustee

	
18

	
Section 6.04.

	
No Duties Except as Specified in this Agreement or in Instructions

	
20

	
Section 6.05.

	
No Action Except Under Specified Documents or Instructions

	
21

	
Section 6.06.

	
Restrictions

	
21

	
ARTICLE VII

	
CONCERNING THE OWNER TRUSTEE

	
21

	
Section 7.01.

	
Rights of the Owner Trustee

	
21

	
Section 7.02.

	
Furnishing of Documents

	
23

	
Section 7.03.

	
Representations and Warranties

	
23

	
Section 7.04.

	
Reliance; Advice of Counsel

	
24

	
Section 7.05.

	
Not Acting in Individual Capacity

	
25

	
Section 7.06.

	
Owner Trustee Not Liable for the Certificates or Receivables

	
25

	
Section 7.07.

	
Owner Trustee May Own Certificates and Notes

	
26

	
Section 7.08.

	
Trust Licenses

	
26

	
ARTICLE VIII

	
COMPENSATION OF OWNER TRUSTEE

	
26

	
Section 8.01.

	
Owner Trustee’s Fees and Expenses

	
26

	
Section 8.02.

	
Indemnification

	
26

	
Section 8.03.

	
Payments to the Owner Trustee

	
27

	
ARTICLE IX

	
TERMINATION OF TRUST AGREEMENT

	
27

	
Section 9.01.

	
Termination of Trust Agreement

	
27

	
ARTICLE X

	
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES

	
28

	
Section 10.01.

	
Eligibility Requirements for Owner Trustee

	
28

	
Section 10.02.

	
Resignation or Removal of Owner Trustee

	
29

	
Section 10.03.

	
Successor Owner Trustee

	
29

	
Section 10.04.

	
Merger or Consolidation of Owner Trustee

	
30

	
Section 10.05.

	
Appointment of Co-Trustee or Separate Trustee

	
30

	
Section 10.06.

	
Power of Attorney for Co-Trustee or Separate Trustee

	
31

	
ARTICLE XI

	
MISCELLANEOUS

	
31

	
Section 11.01.

	
Supplements and Amendments

	
31

	
Section 11.02.

	
No Legal Title to Trust Estate in the Certificateholders

	
33

	
Section 11.03.

	
Limitations on Rights of Others

	
33

	
Section 11.04.

	
Notices

	
33

	
Section 11.05.

	
Severability

	
34

	
Section 11.06.

	
Counterparts

	
34

	
Section 11.07.

	
Successors and Assigns

	
34

	
Section 11.08.

	
No Petition

	
34

	
Section 11.09.

	
No Recourse

	
34

	
Section 11.10.

	
Headings

	
34

	
Section 11.11.

	
Governing Law

	
35

 

 

iii

TABLE OF CONTENTS

(continued)

Page

 

	
Section 11.12.

	
Exclusive Jurisdiction

	
35

	
Section 11.13.

	
WAIVER OF JURY TRIAL

	
35

	
Section 11.14.

	
USA PATRIOT Act Compliance

	
35

	
ARTICLE XII

	
COMPLIANCE WITH REGULATION AB

	
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Section 12.01.

	
Intent of the Parties; Reasonableness

	
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EXHIBITS

	 	 
	
EXHIBIT A

	
Form of Certificate

	
A‐1

	
EXHIBIT B

	
Form of Transferee Representation Letter

	
B‐1

	
EXHIBIT C

	
Form of Transferor Representation Letter

	
C‐1

 

 

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AMENDED AND RESTATED TRUST AGREEMENT, dated as of October 12, 2016, by and between TOYOTA AUTO FINANCE RECEIVABLES LLC, a Delaware limited liability company, as depositor, and WELLS FARGO DELAWARE TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association, not in its individual capacity but solely as Owner Trustee, amending and restating in its entirety the Trust Agreement dated as of June 28, 2016 (the “Original Trust Agreement”), by and between TOYOTA AUTO FINANCE RECEIVABLES LLC, a Delaware limited liability company, as depositor and WELLS FARGO DELAWARE TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association, as owner trustee, and herein referred to as the “Trust Agreement” or this “Agreement.”

IN CONSIDERATION of the mutual agreements herein contained, and of other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01.      Definitions.  Except as otherwise specified herein or if the context may otherwise require, capitalized terms used but not otherwise defined herein have the meanings ascribed thereto in the Sale and Servicing Agreement and the Indenture for all purposes of this Trust Agreement.  Except as otherwise provided in this Agreement, whenever used herein the following words and phrases, unless the context otherwise requires, shall have the following meanings:

“Administration Agreement” means the Administration Agreement dated as of October 12, 2016, by and among the Trust, as issuer, the Administrator, and the Indenture Trustee, pursuant to which the Administrator undertakes to perform certain of the duties and obligations of the Trust and the Owner Trustee hereunder, under the Sale and Servicing Agreement, the Asset Representations Review Agreement and under the Indenture.

“Administrator” means TMCC acting in its capacity as Administrator under the Administration Agreement.

“Agreement” means this Amended and Restated Trust Agreement, as the same may be amended and supplemented from time to time.

“Asset Representations Review Agreement” means the Asset Representations Review Agreement dated as of October 12, 2016, by and among the Asset Representations Reviewer, the Trust, the Servicer and the Administrator.

“Asset Representations Reviewer” means Clayton Fixed Income Services LLC, as asset representations reviewer under the Asset Representations Review Agreement, and any successor thereto.

“Basic Documents” means the Receivables Purchase Agreement, this Agreement, the Certificate of Trust, the Sale and Servicing Agreement, the Indenture, the Administration

 

Agreement, the Securities Account Control Agreement, the Note Depository Agreement, the Asset Representations Review Agreement and the other documents and certificates delivered in connection herewith and therewith.

“Benefit Plan” means an “employee benefit plan” as defined in Section 3(3) of ERISA, which is subject to the provisions of Title I of ERISA, a “plan” described in and subject to Section 4975 of the Code, an entity whose underlying assets include “plan assets” by reason of an employee benefit plan’s or plan’s investment in the entity, or any other employee benefit plan that is subject to any law that is substantially similar to the fiduciary responsibility or prohibited transaction provisions of ERISA or Section 4975 of the Code.

“Certificate” means any of the Certificates executed by the Trust and authenticated by the Owner Trustee, evidencing a beneficial interest in the Trust, substantially in the form attached hereto as Exhibit A.

“Certificate of Trust” means the Certificate of Trust filed with respect to the formation of the Trust pursuant to Section 3810(a) of the Statutory Trust Act, as amended, corrected or restated from time to time.

“Certificate Register” means the register maintained pursuant to Section 3.03.

“Certificate Registrar” means Wells Fargo Delaware Trust Company, National Association, unless and until a successor thereto is appointed pursuant to Section 3.03. The Certificate Registrar initially designates its offices at 919 North Market Street, Suite 1600, Wilmington, Delaware 19801, Attention: Corporate Trust Services, as its offices for purposes of Section 3.03.

“Certificateholder” or “Holder” means a Person in whose name a Certificate is registered in the Certificate Register.

“Code” means the Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated thereunder.

“Corporate Trust Office” means, with respect to the Owner Trustee, the principal corporate trust office of the Owner Trustee located at 919 North Market Street, Suite 1600, Wilmington, Delaware 19801, Attention: Corporate Trust Services; or at such other address as the Owner Trustee may designate by notice to the Certificateholder, or the principal corporate trust office of any successor Owner Trustee (the address of which the successor Owner Trustee will notify the Certificateholder).

“Depositor” means TAFR LLC in its capacity as depositor hereunder.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“Expenses” shall have the meaning assigned to such term in Section 8.02.

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“Indenture” means the Indenture, dated as of October 12, 2016, entered into between the Trust and U.S. Bank National Association, a national banking association, as Indenture Trustee, pursuant to which a series of Notes are issued.

“Non-U.S. Person” means any Person who is not (i) a citizen or resident of the United States who is a natural person, (ii) a corporation or partnership (or an entity treated as a corporation or partnership) created or organized in or under the laws of the United States or any state thereof, including the District of Columbia (unless, in the case of a partnership, Treasury Regulations are adopted that provide otherwise), (iii) an estate, the income of which is subject to United States federal income taxation, regardless of its source or (iv) a trust, if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons (as such term is defined in the Code and Treasury Regulations) have the authority to control all substantial decisions of the trust; except that, to the extent provided in Treasury Regulations, certain trusts in existence prior to August 20, 1996 which elected to be treated as United States Persons prior to such date also shall be U.S. Persons.

“Notes” means the notes issued by the Trust pursuant to the Indenture, having the payment and other terms set forth in the Indenture.

“Original Trust Agreement” shall have the meaning assigned to such term in the introductory paragraph to this Agreement.

“Owner Trustee” means Wells Fargo Delaware Trust Company, National Association, a national banking association, not in its individual capacity but solely as Owner Trustee under this Agreement, and any successor Owner Trustee hereunder.

“Paying Agent” means any paying agent or co-paying agent appointed pursuant to Section 3.06, and shall initially be the Owner Trustee.

“Percentage Interest” shall mean, with respect to each Certificate, the percentage interest in the Trust represented by such Certificate.

“Receivables Purchase Agreement” means that certain Receivables Purchase Agreement, dated as of October 12, 2016, between TMCC, as Seller, and TAFR LLC, as Purchaser of the Receivables.

“Record Date” means, with respect to the Notes of any Class and each Payment Date, the calendar day immediately preceding such Payment Date or, if Definitive Notes representing any Class of Notes have been issued, the last day of the month immediately preceding the month in which such Payment Date occurs.  Any amount stated “as of a Record Date” or “on a Record Date” shall give effect to (i) all applications of collections, and (ii) all payments and distributions to any party under this Agreement, the Indenture and the Trust Agreement or to the related Obligor, as the case may be, in each case as determined as of the opening of business on the related Record Date.

“Responsible Officer” means, with respect to the Owner Trustee, any vice president, assistant vice president, secretary, assistant secretary working in its corporate trust department

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and having direct responsibility for the administration of this Trust Agreement and with respect to a particular matter to whom such matter is referred because of such officer’s knowledge and familiarity with the particular subject.

“Sale and Servicing Agreement” means the Sale and Servicing Agreement, dated as of October 12, 2016, among the Trust, TAFR LLC, as seller, and TMCC, as servicer.

“Secretary of State” means the Secretary of State of the State of Delaware.

“Securities Account Control Agreement” shall have the meaning ascribed thereto in the Sale and Servicing Agreement.

“Statutory Trust Act” means Chapter 38 of Title 12 of the Delaware Code, 12 Del. Code § 3801 et seq., as the same may be amended from time to time.

“TAFR LLC” means Toyota Auto Finance Receivables LLC, a Delaware limited liability company, its successors and assigns.

“TMCC” means Toyota Motor Credit Corporation, a California corporation, its successors and assigns.

“Treasury Regulations” means regulations, including proposed or temporary regulations, promulgated under the Code.  References herein to specific provisions of proposed or temporary regulations shall include analogous provisions of final Treasury Regulations or other successor Treasury Regulations.

“Trust” means the Toyota Auto Receivables 2016-D Owner Trust, a Delaware statutory trust existing pursuant to this Agreement and the filing of the Certificate of Trust.

“Trust Estate” shall have the meaning ascribed thereto in the Indenture.

Section 1.02.      Usage of Terms.  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; and the term “including” means “including without limitation.”

ARTICLE II

CREATION OF TRUST

Section 2.01.      Creation of Trust.  A Delaware statutory trust known as “Toyota Auto Receivables 2016-D Owner Trust” was formed in accordance with the provisions of the Statutory Trust Act pursuant to the Original Trust Agreement.  The Owner Trustee is hereby authorized and vested with the power and authority to make and execute contracts, instruments,

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certificates, agreements and other writings on behalf of the Trust as set forth herein and to sue and be sued on behalf of the Trust.

The Owner Trustee accepted under the Original Trust Agreement, and does hereby confirm its acceptance and agreement to hold in trust, for the benefit of the Certificateholders and such other Persons as may become beneficiaries hereunder from time to time, all of the Trust Estate conveyed or to be conveyed to the Trust and all monies and proceeds that may be received with respect thereto, subject to the terms of this Agreement.

Section 2.02.      Office.  The principal place of business of the Trust for purposes of Delaware law shall be in care of the Owner Trustee at 919 North Market Street, Suite 1600, Wilmington, Delaware 19801, Attention: Corporate Trust Services, or at such other address in Delaware as the Owner Trustee may designate by written notice to the Certificateholders and the Servicer. The Trust may establish additional offices located at such place or places inside or outside of the State of Delaware as the Owner Trustee may designate from time to time by written notice to the Certificateholders and the Servicer.

Section 2.03.      Purposes and Powers.

(a)            The purpose of the Trust is, and the Trust shall have the power and authority and is authorized, to engage in the following activities:

(i)            to issue Notes pursuant to the Indenture and Certificates pursuant to this Agreement;

(ii)            to acquire, hold and manage the Trust Estate (including the Receivables and related property) from the Depositor in exchange for the Notes and Certificates pursuant to the Sale and Servicing Agreement;

(iii)            to assign, grant, transfer, pledge, mortgage and convey the Trust Estate pursuant to, and on the terms and conditions set forth in, the Indenture and to hold, manage and distribute to Certificateholders pursuant to the terms of the Sale and Servicing Agreement any portion of the Trust Estate released from the Lien of, and remitted to the Trust pursuant to, the Indenture as set forth therein and in the Sale and Servicing Agreement;

(iv)            to engage in those activities, including entering into and performing such agreements (including, without limitation, the Basic Documents) that are necessary, suitable or convenient to accomplish the foregoing or are incidental thereto or connected therewith; and

(v)            subject to compliance with the Basic Documents, to engage in such other activities as may be required in connection with conservation of the Trust Estate and the making of distributions to the Certificateholders and the Noteholders and in respect of amounts to be released to the Depositor, the Servicer, the Administrator and third parties, if any.

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(b)            The Trust shall not engage in any activity other than in connection with the foregoing and as required or authorized by the terms of the Basic Documents.

Section 2.04.      Power of Attorney.  Pursuant to the Administration Agreement, the Trust has authorized the Administrator to perform certain of its administrative duties hereunder, including duties with respect to the management of the Trust Estate, and in connection therewith hereby grants the Administrator its revocable power of attorney.

Section 2.05.      Declaration of Trust.  The Owner Trustee hereby declares that it shall hold the Trust Estate in trust upon and subject to the conditions set forth herein for the use and benefit of the Certificateholders, subject to the obligations of the Trust under the Basic Documents.  It is the intention of the parties hereto that the Trust constitute a statutory trust under the Statutory Trust Act and that this Agreement constitute the governing instrument of such statutory trust.  It is the intention of the parties hereto that, solely for income and franchise tax purposes, the Trust shall be treated as a division or branch of the Person holding the beneficial interests in the Trust for any period during which the beneficial interests in the Trust are held by one Person, and that it shall be treated as a partnership for any period during which the beneficial interests in the Trust are held by more than one Person, with the assets of the partnership being the Receivables and other assets held by the Trust, and the Notes being debt of the partnership. The parties agree that for any such period, unless otherwise required by appropriate tax authorities, the Trust will file or cause to be filed annual or other necessary returns, reports and other forms consistent with such characterization of the Trust for income and franchise tax purposes.  Effective as of the date hereof, the Owner Trustee and, solely to the extent set forth in the Administration Agreement, the Administrator shall have all rights, powers and duties set forth herein and in the Statutory Trust Act with respect to accomplishing the purposes of the Trust.  At the direction of the Depositor, the Owner Trustee caused to be filed a certificate of trust for the Trust pursuant to the Statutory Trust Act, and the Owner Trustee shall file or cause to be filed such amendments thereto as shall be necessary or appropriate to satisfy the purposes of this Agreement and as shall be consistent with the provisions hereof.

Section 2.06.      Liability of the Certificateholders.  No Certificateholder shall have any personal liability for any liability or obligation of the Trust, solely by reason of it being a Certificateholder.

Section 2.07.      Title to Trust Property.  Legal title to the Trust Estate shall be vested at all times in the Trust as a separate legal entity.

Section 2.08.      Situs of Trust.  The Trust will be located in Delaware and administered in Delaware and California.  All bank accounts maintained by the Owner Trustee on behalf of the Trust shall be located in the State of Delaware or the State of New York.  The Trust shall not have any employees in any state other than Delaware; provided, however, that nothing herein shall restrict or prohibit the Owner Trustee from having employees within or without the State of Delaware.  Payments will be received by the Trust only in Delaware or New York, and payments will be made by the Trust only from Delaware or New York.

Section 2.09.      Representations and Warranties of the Depositor.  The Depositor hereby represents and warrants to the Owner Trustee that as of the Closing Date:

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(a)            The Depositor is duly organized and validly existing as a limited liability company in good standing under the laws of the State of Delaware, with power and authority to own its properties and to conduct its business as such properties are currently owned and such business is presently conducted, and had at all relevant times and has power, authority and legal right to acquire, own and sell the Receivables.

(b)            The Depositor is duly qualified to do business 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 property or the conduct of its business shall require such qualifications and where the failure to so qualify will have a material adverse effect on the ability of the Depositor to conduct its business or perform its obligations under this Agreement.

(c)            The Depositor has the power and authority to execute and deliver this Agreement and to carry out its terms; the Depositor has full power and authority to sell and assign the property to be sold and assigned to the Trust under the Sale and Servicing Agreement and deposited with the Owner Trustee, on behalf of the Trust, as part of the Trust Estate, and the Depositor has duly authorized such sale and assignment and deposit to the Trust by all necessary corporate action; and the execution, delivery and performance of this Agreement has been duly authorized by the Depositor by all necessary action.

(d)            This Agreement shall constitute a legal, valid and binding obligation of the Depositor enforceable in accordance with its terms, except as such enforceability may be subject to or limited by bankruptcy, insolvency, reorganization, moratorium, liquidation, fraudulent conveyance or other similar laws affecting the enforcement of creditors’ rights in general and by general principles of equity, regardless of whether such enforceability shall be considered in a proceeding in equity or in law.

(e)            The consummation of the transactions contemplated by this Agreement and the fulfillment of the terms hereof do not conflict with, result in any breach of any of the terms and provisions of, nor constitute (with or without notice or lapse of time) a default under, the limited liability company agreement of the Depositor or conflict with or breach any of the terms or provisions or constitute (with or without notice or lapse of time) a default under any indenture, agreement or other instrument to which the Depositor is a party or by which it is bound, nor result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such indenture, agreement or other instrument (other than pursuant to the Basic Documents); nor violate any law or, to the best of the Depositor’s knowledge, any order, rule or regulation applicable to the Depositor of any court or of any federal or state regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Depositor or its properties which breach, default, conflict, Lien or violation would have a material adverse effect on the earnings, business affairs or business prospects of the Depositor.

(f)            There is no action, suit or proceeding before or by any court or governmental agency or body, domestic or foreign, now pending, or to the best of the Depositor’s knowledge, threatened, against or affecting the Depositor: (i) asserting the invalidity of this Agreement, (ii) seeking to prevent the consummation of any of the transactions contemplated by this Agreement, (iii) seeking any determination or ruling that might materially and adversely affect

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the performance by the Depositor of its obligations under, or the validity or enforceability of, this Agreement or (iv) relating to the Depositor and which might adversely affect the federal income tax attributes of the Trust or the Certificate or the Notes.

Section 2.10.      Federal Income Tax Allocations.  To the extent required for federal income tax purposes, net income or net losses of the Trust for any month as determined for federal income tax purposes (and each item of income, gain, loss and deduction entering into the computation thereof) shall be allocated to the Certificateholders in proportion to their interests (to the extent not previously allocated pursuant to this clause).  The Depositor is authorized to modify the allocations in this paragraph if necessary or appropriate, in its sole discretion for the allocations to fairly reflect the economic income, gain or loss to the Certificateholders, as otherwise required by the Code.

Section 2.11.      Covenants of the Trust.  The Trust covenants and agrees to the following:

(a)            to maintain books and records separate from any other person or entity;

(b)            to maintain its accounts separate from those of any other person or entity, except as permitted by the Trust Agreement or any other Basic Document;

(c)            not to commingle assets with those of any other entity, except as permitted by the Trust Agreement or any other Basic Document;

(d)            to conduct its own functions in its own name;

(e)            to maintain separate financial statements or records;

(f)            to pay its own liabilities out of its own funds, except as permitted by the Trust Agreement or any other Basic Document;

(g)            to maintain an arm's-length relationship with its Affiliates;

(h)            to pay the salaries of its own employees and maintain a sufficient number of employees or adequate service providers in light of its contemplated business operations;

(i)            to allocate fairly and reasonably any overhead for shared office space;

(j)            to hold itself out as a separate entity;

(k)            to correct any known misunderstanding regarding its separate identity;

(l)            not to guarantee or become obligated for the debts of any other affiliated or unaffiliated third party or hold out its credit as being available to satisfy the obligations of others (except as otherwise specified in the Basic Documents); and

(m)            to take such actions as are necessary to ensure that any financial statements of TMCC or any Affiliate thereof that are consolidated to include the Trust will contain detailed

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notes clearly stating that (i) all of the Trust’s assets are owned by the Trust, and (ii) the Trust is a separate entity with its own separate creditors that will be entitled to be satisfied out of the Trust’s assets prior to any value in the Trust becoming available to the Trust’s equity holders; and the accounting records and the published financial statements of TMCC will clearly show that, for accounting purposes, the Receivables and the other Collateral have been sold or contributed to the Trust.

ARTICLE III

CERTIFICATES AND TRANSFER OF INTERESTS

Section 3.01.      The Certificates.  The Certificates, evidencing a beneficial interest in the Trust, shall be executed on behalf of the Trust by manual or facsimile signature of an Authorized Officer of the Owner Trustee and authenticated on behalf of the Owner Trustee by the manual or facsimile signature of an Authorized Officer of the Owner Trustee.  Certificates bearing the manual or facsimile signatures of individuals who were, at the time when such signatures shall have been affixed, authorized to sign on behalf of the Trust, shall be valid and binding obligations of the Trust, notwithstanding that such individuals or any of them shall have ceased to be so authorized prior to the authentication and delivery of such Certificates or did not hold such offices at the date of authentication and delivery of such Certificates.

The Certificates may be printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination in the form of Exhibit A hereto.  The Certificates shall be issued in minimum denominations of a Percentage Interest of 5.00% and integral multiples of 5.00% in excess thereof.

A transferee of a Certificate shall become a Certificateholder, and shall be entitled to the rights and subject to the obligations of a Certificateholder hereunder, upon such transferee’s acceptance of a Certificate duly registered in such transferee’s name pursuant to Section 3.03.

Section 3.02.      Authentication of Certificates.  Concurrently with the initial transfer of the Receivables to the Trust pursuant to the Sale and Servicing Agreement, the Owner Trustee shall cause to be executed, authenticated and delivered on behalf of the Trust to or upon the written order of the Depositor, Certificates evidencing the entire beneficial interest in the Trust.  No Certificate shall entitle its holder to any benefit under this Agreement or be valid for any purpose, unless there shall appear on such Certificate a certificate of authentication substantially in the form set forth in Exhibit A, executed by the Owner Trustee or the Owner Trustee’s authenticating agent, by manual or facsimile signature of an Authorized Officer, and such authentication shall constitute conclusive evidence, and the only evidence, that such Certificate shall have been duly authenticated and delivered hereunder.  All Certificates shall be dated the date of their authentication.  The Owner Trustee shall be the initial authenticating agent of the Trust hereunder.

Section 3.03.      Registration of Transfer and Exchange of Certificates.

(a)            The Certificate Registrar shall keep or cause to be kept, at the office or agency maintained pursuant to Section 3.05, a Certificate Register in which, subject to such reasonable

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regulations as it may prescribe, the Certificate Registrar shall provide for the registration of Certificates and of transfers and exchanges of Certificates as herein provided.  Wells Fargo Delaware Trust Company, National Association, shall be the initial Certificate Registrar.  In the event that the Certificate Registrar shall for any reason become unable to act as Certificate Registrar, the Certificate Registrar shall promptly give written notice to such effect to the Depositor, the Owner Trustee and the Servicer.  Upon receipt of such notice, the Depositor or its designee shall appoint another bank or trust company to act as successor Certificate Registrar under this Agreement, which entity will agree to act in accordance with the provisions of this Agreement applicable to it as successor Certificate Registrar, and otherwise acceptable to the Owner Trustee.

(b)            Upon surrender for registration of transfer of any Certificate at the office or agency maintained pursuant to Section 3.05, the Owner Trustee shall execute, authenticate and deliver (or shall cause its authenticating agent to authenticate and deliver), in the name of the designated transferee or transferees, one or more new Certificates dated the date of authentication by the Owner Trustee or any authenticating agent. At the option of a Holder, Certificates may be exchanged for other Certificates upon surrender of the Certificates to be exchanged at the office or agency maintained pursuant to Section 3.05.  The preceding provisions of this Section notwithstanding, (i) the Owner Trustee shall not make, and the Certificate Registrar shall not register, transfer or exchanges of Certificates for a period of 15 days preceding the due date for any payment with respect to the Certificates and (ii) the Owner Trustee shall permit the registration, transfer and exchange of Certificates only in minimum denominations of a Percentage Interest of 5.00% and integral multiples of 5.00% in excess thereof.

(c)            Every Certificate presented or surrendered for registration of transfer or exchange shall be accompanied by a written instrument of transfer in form satisfactory to the Owner Trustee and the Certificate Registrar duly executed by the Holder or his attorney duly authorized in writing. Each Certificate surrendered for registration of transfer or exchange shall be cancelled and disposed of by the Owner Trustee in accordance with its customary practice.

No transfer of a Certificate shall be made unless the Owner Trustee shall have received:

(1)             a representation from the transferee of such Certificate substantially in the form of Exhibit B to the effect that:

(i)             such transferee is not a Non-U.S. Person; and

(ii)             such transferee is not a Benefit Plan;

(2)             a representation from the transferor of such Certificate substantially in the form of Exhibit C; and

(3)             an opinion of counsel to the Owner Trustee that the transfer of such Certificate is being made pursuant to an effective registration under the Securities Act or is exempt from the registration requirements of the Securities Act.

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Notwithstanding anything else to the contrary herein, any purported transfer of a Certificate to a Non-U.S. Person or to or on behalf of a Benefit Plan or utilizing the assets of a Benefit Plan shall be void and of no effect.

To the extent permitted under applicable law (including, but not limited to, ERISA), the Owner Trustee shall be under no liability to any Person for any registration of transfer of any Certificate that is in fact not permitted by this Section 3.03(c) or for making any payments due on such Certificate to the Certificateholder thereof or taking any other action with respect to such Holder under the provisions of this Trust Agreement or the Sale and Servicing Agreement so long as the transfer was registered by the Certificate Registrar or the Owner Trustee in accordance with the foregoing requirements.

(d)            No service charge shall be made for any registration of transfer or exchange of Certificates, but the Owner Trustee or the Certificate Registrar may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer or exchange of Certificates.

(e)            No transfer of a Certificate or any interest therein shall be made unless (i) the holder of such Certificate shall have first surrendered such Certificate to the Certificate Registrar for registration of transfer, or (ii) in the case of any such Certificate which shall have been mutilated, destroyed, lost or stolen, the holder of such Certificate shall have first complied with the applicable provisions of Section 3.04.

Section 3.04.      Mutilated, Destroyed, Lost or Stolen Certificate.  If (a) any mutilated Certificate shall be surrendered to the Certificate Registrar, or if the Certificate Registrar shall receive evidence to its satisfaction of the destruction, loss or theft of any Certificate and (b) there shall be delivered to the Certificate Registrar and the Owner Trustee such security or indemnity as may be required by them to save each of them harmless, then in the absence of notice that such Certificate shall have been acquired by a bona fide purchaser, the Owner Trustee on behalf of the Trust shall execute and the Owner Trustee, or the Owner Trustee’s authenticating agent, shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of like tenor and denomination.  In connection with the issuance of any new Certificate under this Section, the Owner Trustee or the Certificate Registrar may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith.  Any duplicate Certificate issued pursuant to this Section shall constitute conclusive evidence of ownership in the Trust, as if originally issued, whether or not the lost, stolen or destroyed Certificate shall be found at any time.

Section 3.05.      Maintenance of Office or Agency.  The Owner Trustee shall maintain an office or offices or agency or agencies where notices and demands to or upon the Owner Trustee in respect of the Certificate and the Basic Documents may be served.  The Owner Trustee initially designates the Corporate Trust Office, as its principal corporate trust office for such purposes.  The Owner Trustee shall give prompt written notice to the Depositor and to the Certificateholders of any change in the location of any such office or agency.

Section 3.06.      Appointment of Paying Agent.  Except during any period when the Indenture Trustee is authorized and directed to do so under the Indenture (i.e. prior to the

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termination of the Indenture), the Paying Agent shall make distributions to the Certificateholders from the amounts distributable thereto under Section 5.06 of the Sale and Servicing Agreement pursuant to Section 5.02 and shall report the amounts of such distributions to the Owner Trustee.  Any Paying Agent shall have the revocable power to withdraw funds from the Collection Account for the purpose of making the distributions referred to above.  The Owner Trustee may revoke such power and remove the Paying Agent if the Owner Trustee determines in its sole discretion that the Paying Agent shall have failed to perform its obligations under this Agreement in any material respect.  The Paying Agent shall initially be Owner Trustee and any co-paying agent chosen by the Owner Trustee and acceptable to the Owner Trustee.  The Paying Agent shall be permitted to resign as Paying Agent upon 30 days’ written notice to the Owner Trustee or, if the Paying Agent is also the Owner Trustee, to the Indenture Trustee.  In the event that the Owner Trustee shall no longer be the Paying Agent, the Owner Trustee shall appoint a successor to act as Paying Agent (which shall be a bank or trust company).  By executing this Agreement, the Owner Trustee hereby agrees in its capacity as Paying Agent to hold all sums, if any, held by it for payment to the Certificateholders in trust for the benefit of the Certificateholders until such sums are paid to the Certificateholders.  The Owner Trustee shall cause such successor Paying Agent or any additional Paying Agent appointed by the Owner Trustee to execute and deliver to the Owner Trustee an instrument in which such successor Paying Agent or additional Paying Agent shall agree with the Owner Trustee that, as Paying Agent, such successor Paying Agent or additional Paying Agent will hold all sums, if any, held by it for payment to the Certificateholders in trust for the benefit of the Certificateholders until such sums shall be paid to such Certificateholder.  The Paying Agent shall return all unclaimed funds to the Owner Trustee (subject to applicable escheatment laws)   and upon removal of a Paying Agent such Paying Agent shall also return all funds in its possession to the Owner Trustee.  The provisions of Sections 6.04, 7.01, 7.03, 7.04, 7.05, 7.06, 8.01 and 8.02 shall apply to the Owner Trustee also in its role as Paying Agent and Certificate Registrar, for so long as the Owner Trustee shall act as Paying Agent and Certificate Registrar and, to the extent applicable, to any other paying agent or certificate registrar appointed hereunder.  Any reference in this Agreement to the Paying Agent shall include any co-paying agent unless the context requires otherwise.

To the extent of any ambiguity in the interpretation of any definition, provision or term contained in this Agreement or to the extent more than one methodology can be used to make any of the determinations or calculations set forth herein or in the Sale and Servicing Agreement, the Paying Agent may request direction from the Depositor as to the interpretation and/or methodology to be used, and the Paying Agent shall follow such direction and shall be entitled to conclusively rely thereon without any responsibility therefor.  Upon receiving such request from the Paying Agent, the Depositor shall, prior to the date of distribution occurring immediately following such a request, deliver a written direction to the Paying Agent setting forth the interpretation and/or methodology to be used.

Section 3.07.      Persons Deemed Certificateholders.  Prior to due presentation of a Certificate for registration of transfer, the Owner Trustee or the Certificate Registrar may treat the Person in whose name any Certificate shall be registered in the Certificate Register as the owner of such Certificate for the purpose of receiving distributions pursuant to Section 5.02 and for all other purposes whatsoever, and neither the Owner Trustee nor the Certificate Registrar shall be bound by any notice to the contrary.

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Section 3.08.      Access to List of Certificateholders’ Names and Addresses.  The Certificate Registrar shall furnish or cause to be furnished to the Owner Trustee, the Servicer or the Depositor, as the case may be, within 15 days after its receipt of a request therefor from the Owner Trustee, the Servicer or the Depositor in writing, a list, in such form as the Owner Trustee, the Servicer or the Depositor may reasonably require, of the names and addresses of the Certificateholders as of the most recent Record Date. If three or more Certificateholders or one or more Holders of Certificates evidencing, in the aggregate, not less than 25% of the Percentage Interest apply in writing to the Owner Trustee, and such application states that the applicants desire to communicate with other Certificateholders with respect to their rights under this Agreement or under the Certificates and such application is accompanied by a copy of the communication that such applicants propose to transmit, then the Owner Trustee shall, within five (5) Business Days after the receipt of such application, afford such applicants access during normal business hours to the current list of Certificateholders. Each Holder, by receiving and holding a Certificate, shall be deemed to have agreed not to hold any of the Depositor, the Servicer, the Certificate Registrar or the Owner Trustee accountable by reason of the disclosure of its name and address, regardless of the source from which such information was derived.

Section 3.09.      Regarding the Certificate(s).  Each Certificateholder, by its acceptance of a Certificate issued hereunder, represents that it has, independently and without reliance on the Owner Trustee or any other person, and based on such documents and information as it has deemed appropriate, made its own investment decision in respect of the Certificate.  Each Certificateholder also represents that it will, independently and without reliance on the Owner Trustee or any other person, and based on such documents and information as it shall deem appropriate at the time, continue to make its own decisions in taking or not taking action under this Trust Agreement and in connection with the Certificate.  Except for notices, reports and other documents expressly required to be furnished to the Certificateholders by the Owner Trustee hereunder, the Owner Trustee shall not have any duty or responsibility to provide any Certificateholder with any other information concerning the transactions contemplated hereby, the Trust, the Depositor or any other parties hereto or to any related documents which may come into possession of the Owner Trustee or any of its officers, directors, employees, agents, representatives or attorneys-in-fact.

ARTICLE IV

ACTIONS BY OWNER TRUSTEE OR THE CERTIFICATEHOLDERS

Section 4.01.      Prior Notice to the Certificateholders with Respect to Certain Matters.  With respect to the following matters, the Owner Trustee shall not take action unless at least 30 days before the taking of such action (or such shorter period as shall be agreed to in writing by all Certificateholders), the Owner Trustee shall have notified the Certificateholders in writing of the proposed action and none of the Certificateholders shall have notified the Owner Trustee in writing prior to the 30th day (or such agreed upon shorter period) after such notice is given that such Certificateholders have withheld consent or provided alternative direction:

(a)            the initiation of any claim or lawsuit by the Trust (except claims or lawsuits brought in connection with the collection of the Receivables) and the compromise of any action,

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claim or lawsuit brought by or against the Trust (except with respect to the aforementioned claims or lawsuits for collection of the Receivables);

(b)            the election by the Trust to file an amendment to the Certificate of Trust (unless such amendment is required to be filed under the Statutory Trust Act);

(c)            the amendment of the Indenture, whether or not by a Supplemental Indenture, in circumstances where the consent of any Noteholder is required;

(d)            the amendment of the Indenture, whether or not by a Supplemental Indenture, in circumstances where the consent of any Noteholder is not required but such amendment materially adversely affects the interest of the Certificateholders;

(e)            the amendment, change or modification of the Administration Agreement, other than to cure any ambiguity or to amend or supplement any provision in a manner or add any provision that would not materially adversely affect the interests of the Certificateholders;

(f)            (i) the appointment pursuant to the Indenture of a successor Note Registrar or Paying Agent, (ii) the appointment pursuant to this Agreement of a successor Certificate Registrar or (iii) any consent by the Note Registrar, Paying Agent, Indenture Trustee or Certificate Registrar to the assignment of its respective obligations under the Indenture or this Agreement, as applicable; or

(g)            the amendment of the Sale and Servicing Agreement in circumstances where the consent of any Noteholder is required.

Section 4.02.      Action by the Certificateholders with Respect to Certain Matters.  The Owner Trustee shall not have the power, except upon the direction of the Certificateholders, to (a) remove the Administrator pursuant to Section 8 of the Administration Agreement, (b) appoint a successor Administrator pursuant to Section 8 of the Administration Agreement, (c) remove the Servicer pursuant to Section 8.01 of the Sale and Servicing Agreement or (d) except as expressly provided in the Basic Documents, sell the Receivables after the termination of the Indenture.  The Owner Trustee shall take the actions referred to in the preceding sentence only upon written instructions signed by the authorized representative of 100% of the Certificateholders.

Section 4.03.      Action with Respect to Bankruptcy.  The Trust shall not, without the prior written consent of the Owner Trustee and 100% of the Certificateholders, (i) institute any proceedings to adjudicate the Trust as bankrupt or insolvent, (ii) consent to the institution of bankruptcy or insolvency proceedings against the Trust, (iii) file a petition seeking or consenting to reorganization or relief under any applicable federal or state law relating to bankruptcy with respect to the Trust, (iv) consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Trust or a substantial part of its property (v) make any assignment for the benefit of the Trust's creditors; (vi) cause the Trust to admit in writing its inability to pay its debts generally as they become due; or (vii) take any action in furtherance of any of the foregoing (any of the above foregoing actions, a "Bankruptcy Action").  In considering whether to give or withhold written consent to the Bankruptcy Action by the Trust, the Owner Trustee, with the consent of the Certificateholder, shall consider the interests of the

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Noteholders in addition to the interests of the Trust and whether the Trust is insolvent.  The Owner Trustee shall have no duty to give such written consent to Bankruptcy Action by the Trust if the Owner Trustee shall not have been furnished (at the expense of the Person that requested such letter be furnished to the Owner Trustee) a letter from an independent accounting firm of national reputation stating that in the opinion of such firm the Trust is then insolvent.  The Owner Trustee shall not be personally liable to any Noteholder or Certificateholder on account of the Owner Trustee's good faith reliance on the provisions of this Section and no Noteholder or Certificateholder shall have any claim for breach of fiduciary duty or otherwise against the Owner Trustee for withholding or granting its consent to any such Bankruptcy Action.

Section 4.04.      Restrictions on the Certificateholders’ Power.  The Certificateholders shall not direct the Owner Trustee to take or refrain from taking any action if such action or inaction would be contrary to any obligations of the Trust or of the Owner Trustee under any of the Basic Documents or would be contrary to Section 2.03 nor shall the Owner Trustee be obligated to follow any such direction, if given.

Section 4.05.      Majority of the Certificates Control.  Except as otherwise expressly provided herein, any action that may be taken by the Certificateholders under this Agreement may be taken by the Holders of the Certificates evidencing not less than a majority of the Percentage Interest.  Except as expressly provided herein, any written notice of the Certificateholders delivered pursuant to this Agreement shall be effective if signed by Holders of the Certificates evidencing not less than a majority of the Percentage Interest at the time of the delivery of such notice.

ARTICLE V

APPLICATION OF TRUST FUNDS; CERTAIN DUTIES

Section 5.01.      [Reserved].

Section 5.02.      Application of Amounts in Trust Accounts.

(a)            For so long as any Notes are outstanding, on each Payment Date, the Indenture Trustee will distribute to the Certificateholders, on a pro rata basis, based on the Percentage Interests thereof, the amounts distributable thereto pursuant to Section 5.06 of the Sale and Servicing Agreement and Section 3.01 of the Indenture.  From and after the date on which the Notes of all Classes have been paid in full, the Paying Agent shall distribute to the Certificateholders (i) amounts released to the Issuer pursuant to Sections 4.02 and 8.05(b) of the Indenture and Section 5.01(d) of the Sale and Servicing Agreement and (ii) amounts that are distributable to the Certificateholders in accordance with the instructions of the Servicer pursuant to Section 5.06 of the Sale and Servicing Agreement.

(b)            On each Payment Date, the Owner Trustee shall send to the Certificateholders the statement provided to the Owner Trustee by the Servicer pursuant to Section 5.09 of the Sale and Servicing Agreement with respect to such Payment Date.

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(c)            In the event that any withholding tax is imposed on the Trust’s distributions (or allocations of income) to a Certificateholder, such tax shall reduce the amount otherwise distributable to the Certificateholders in accordance with this Section.  The Owner Trustee and Paying Agent (and the Indenture Trustee, to the extent the Indenture Trustee is then making distributions to Certificateholders) are hereby authorized and directed to retain from amounts otherwise distributable to the Certificateholders sufficient funds for the payment of any tax that is legally owed by the Trust (but such authorization shall not prevent the Owner Trustee from contesting any such tax in appropriate proceedings, and withholding payment of such tax, if permitted by law, pending the outcome of such proceedings). The amount of any withholding tax imposed with respect to a Certificateholder shall be treated as cash distributed to such Certificateholder at the time it is withheld by the Trust and remitted to the appropriate taxing authority.  If there is a possibility that withholding tax is payable with respect to any distribution (such as any distribution to a Non-U.S. Person), in order to comply with applicable law, the Owner Trustee may, in its sole discretion and without liability, withhold such amounts in accordance with this paragraph (c).  In the event that a Certificateholder wishes to apply for a refund of any such withholding tax, the Owner Trustee shall reasonably cooperate with such Certificateholder in making such claim so long as such Certificateholder agrees to reimburse the Owner Trustee for any out-of-pocket expenses incurred in connection therewith.

Section 5.03.      Method of Payment.  Subject to Section 9.01(c), distributions required to be made to Certificateholders on any Payment Date shall be made to each Certificateholder of record on the related Record Date either by check mailed to such Certificateholder at the address of such holder appearing in the Certificate Register or by wire transfer, in immediately available funds, to the account of any Certificateholder at a bank or other entity having appropriate facilities therefor, if such Certificateholder shall have provided to the Certificate Registrar appropriate written instructions at least five (5) Business Days prior to such Payment Date.

Section 5.04.      Accounting and Reports to the Noteholders, the Certificateholders, the Internal Revenue Service and Others.  The Administrator will (a) maintain (or cause to be maintained) the books of the Trust on a fiscal year basis or a calendar year basis on the accrual method of accounting, (b) deliver to each Certificateholder, as may be required by the Code and applicable Treasury Regulations, such information as may be required (including Schedule K-1s to an IRS Tax Form 1065, if the Trust is treated as a partnership) to enable each Certificateholder to prepare its federal and state income tax returns, including a copy of any applicable Servicer’s Certificates (as defined in the Sale and Servicing Agreement), (c) prepare (or cause to be prepared) and file any tax and information returns, and fulfill any other reporting requirements, relating to the Trust, as may be required by the Code and applicable Treasury Regulations (including Treasury Regulation Section 1.6049-7), including causing such tax and information returns to be signed in the manner required by law, (d) for any period during which the beneficial interests in the Trust are held by more than one person, make such elections as may from time to time be required or appropriate under any applicable state or federal statute or rule or regulation thereunder so as to maintain the Trust’s characterization as a partnership for federal income tax purposes, and (e) collect or cause to be collected any withholding tax as described in and in accordance with Section 5.02(c) with respect to income or distributions to the Certificateholders.  The Administrator will make any elections as so directed by a majority of the Certificateholders; provided, however, that neither the Administrator nor any Certificateholder shall make any

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election to have the Trust treated as a corporation for federal, state or local income or franchise tax purposes.

Section 5.05.      Signature on Returns; Tax Matters Partner.

(a)            The Certificateholder shall sign the tax returns of the Trust on behalf of the Trust; provided, that if there is more than one Certificateholder, the tax returns of the Trust shall be signed by the Certificateholder that is the “tax matters partner” of the Trust under Section 5.05(b).

(b)            For any period during which the beneficial interests of the Trust are held by more than one Person and the Trust is treated as a partnership for purposes of U.S. federal, state and local income or franchise tax, or any other tax measured in whole or in part by income, the Certificateholder holding Certificates evidencing the largest portion of the Certificates shall be designated the “tax matters partner” of the Trust pursuant to Section 6231(a)(7)(A) of the Code and applicable Treasury Regulations.  If the Trust is treated as a partnership for tax purposes, (i) for any taxable period beginning before December 31, 2017, the “tax matters partner” of the Trust shall represent the Trust (at the Trust’s expense) in connection with all examinations of the Trust’s affairs by tax authorities, including resulting judicial and administrative proceedings, and shall expend the Trust funds for professional services and costs associated therewith and (ii) for any taxable period beginning after December 31, 2017, the “tax matters partner” shall be designated as the “partnership representative” within the meaning of Section 6223 of the Code (as amended by P.L. 114-74, the Bipartisan Budget Act of 2015) and the Trust will, to the extent practicable, make the election described in Section 6226 of the Code (as amended by P.L. 114-74, the Bipartisan Budget Act of 2015).  Finally, the Trust will not elect to apply Sections 6221-6241 of the Code (as amended by P.L. 114-74, the Bipartisan Budget Act of 2015) to any taxable period of the Trust beginning before December 31, 2017.

ARTICLE VI

AUTHORITY AND DUTIES OF OWNER TRUSTEE

Section 6.01.      General Authority.  The Owner Trustee is authorized and directed to execute and deliver, on behalf of the Trust, the Basic Documents to which the Trust is to be a party and each certificate or other document attached as an exhibit to or contemplated by the Basic Documents to which the Trust is to be a party and any amendment thereto, and, on behalf of the Trust, to direct the Indenture Trustee to authenticate and deliver Class A‐1 Notes in the aggregate principal amount of $341,000,000, Class A‐2a Notes in the aggregate principal amount of $320,800,000, Class A-2b Notes in the aggregate principal amount of $111,200,000, Class A‐3 Notes in the aggregate principal amount of $334,000,000, Class A‐4 Notes in the aggregate principal amount of $111,750,000 and Class B Notes in the aggregate principal amount of $31,250,000.  In addition to the foregoing, the Owner Trustee is authorized, but shall not be obligated, to take all actions required of the Trust, pursuant to the Basic Documents.

Section 6.02.      General Duties.  It shall be the duty of the Owner Trustee to discharge (or cause to be discharged) all of its responsibilities pursuant to the terms of this Agreement and the Basic Documents to which the Trust is a party and to administer the Trust in accordance with the

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provisions hereof and of the Basic Documents and in the interest of the Certificateholders.  Notwithstanding the foregoing, the Owner Trustee shall be deemed to have discharged its duties and responsibilities hereunder and under the Basic Documents to the extent the Administrator has agreed in the Administration Agreement to perform any act or to discharge any duty of the Owner Trustee hereunder or under any Basic Document, and the Owner Trustee shall not be held liable for the default or failure of the Administrator to carry out such obligations or fulfill such duties under the Administration Agreement.

Section 6.03.      Duties of Owner Trustee.

(a)            Subject to Article IV and in accordance with the terms of the Basic Documents, the Certificateholders may by written instruction direct the Owner Trustee in the management of the Trust.  Such direction may be exercised at any time by written instruction of the Certificateholders pursuant to Article IV.

(b)            The Owner Trustee shall take such action or refrain from taking such action under this Agreement as it may be directed in writing by the Certificateholders from time to time; provided, however, that the Owner Trustee shall not be required to take or refrain from taking any such action if it shall have determined, or shall have been advised by counsel, that such performance is likely to involve the Owner Trustee in personal liability or is contrary to the terms of this Agreement or of any document contemplated hereby to which the Trust is a party or is otherwise contrary to law.  If at any time the Owner Trustee determines that it requires or desires guidance regarding the application of any provision of this Agreement or any other document, then the Owner Trustee may deliver a notice to the Certificateholders requesting written instructions as to the course of action desired by the Certificateholders and such instructions shall constitute full and complete authorization and protection for actions taken by the Owner Trustee in reliance thereon.  If the Owner Trustee does not receive such instructions within five (5) Business Days after it has delivered to the Certificateholders such notice requesting instructions, or such shorter period of time as may be set forth in such notice, it shall refrain from taking any action with respect to the matters described in such notice. Each instruction delivered by the Certificateholders to the Owner Trustee shall certify to the Owner Trustee that any actions to be taken pursuant to such instruction comply with the terms of this Agreement and the Owner Trustee may rely on such certification and instruction without inquiry except to the extent it has actual knowledge to the contrary.

(c)            The Owner Trustee accepts the trusts hereby created and agrees to perform its duties hereunder with respect to such trusts but only upon the terms of this Agreement.

(d)            The Owner Trustee, upon receipt of all resolutions, certificates, statements, opinions, reports, documents, orders or other instruments furnished to the Owner Trustee that shall be specifically required to be furnished pursuant to any provision of this Agreement, shall examine them to determine whether they conform on their face to the requirements of this Agreement.

(e)            No provision of this Agreement shall be construed to relieve the Owner Trustee from liability for its own grossly negligent action, its own grossly negligent failure to act, its own bad faith or its own willful misfeasance; provided, however, that:

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(i)            the duties and obligations of the Owner Trustee shall be determined solely by the express provisions of this Agreement, the Owner Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Agreement, no implied covenants or obligations shall be read into this Agreement against the Owner Trustee, the permissive right of the Owner Trustee to do things enumerated in this Agreement and the Basic Documents shall not be construed as a duty and, in the absence of bad faith on the part of the Owner Trustee, the Owner Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Owner Trustee and conforming on their face to the requirements of this Agreement and the Basic Documents;

(ii)            the Owner Trustee shall not be personally liable for an error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Owner Trustee was grossly negligent in performing its duties in accordance with the terms of this Agreement and the Basic Documents;

(iii)            the Owner Trustee shall not be personally liable with respect to any action taken, suffered or omitted to be taken in good faith in accordance with the direction of the Holders of the Certificates representing at least a majority of the Percentage Interest (or such larger or smaller percentage of the Percentage Interest as may be required by any other provision of this Agreement or the other Basic Documents); and

(iv)            in no event shall the Owner Trustee be personally liable for (x) special consequential, indirect or punitive damages, however styled, including, without limitation, lost profits, (y) the acts or omissions of any nominee, correspondent, clearing agency or securities depository through which it holds the Trust’s securities or assets or (z) any losses due to forces beyond the reasonable control of the Owner Trustee, including without limitation, strikes, work stoppages, acts of war or terrorism, insurrection, revolution, nuclear or natural catastrophes or acts of God and interruptions, loss or malfunctions of utilities, communications or computer (software or hardware) services.

(f)            The Owner Trustee shall not be required to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties under this Agreement, or in the exercise of any of its rights or powers.

(g)            All information obtained by the Owner Trustee regarding the Obligors and the Receivables contained in the Trust, whether upon the exercise of its rights under this Agreement or otherwise, shall be maintained by the Owner Trustee in confidence and shall not be disclosed to any other Person, unless such disclosure is required by any applicable law or regulation or pursuant to subpoena.

(h)            The Owner Trustee shall provide prompt notice to Toyota Motor Credit Corporation and Toyota Auto Finance Receivables LLC (each, a “TMCC Party,” and together, the “TMCC Parties”) of all demands received by an officer in the Corporate Trust Services

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Department of the Owner Trustee for the repurchase or replacement of any Receivable for breach of the representations and warranties concerning such Receivable (each, a “Demand”).  If any such Demand is made in non-written form, the Owner Trustee shall request that such Demand be put into writing and delivered to it; provided, however, that the Owner Trustee shall notify the TMCC Parties regardless of whether any such Demand is made in writing.  The obligations of the Owner Trustee under the first two sentences of this Section 6.03(h) to notify the TMCC Parties of any such Demand made in non-written form shall not be applicable during such time as the interpretations of the requirements of the Repurchase Rules and Regulations (as defined below) explicitly require reporting by TMCC Parties solely with respect to Demands in written form.  The Owner Trustee shall, upon written request of either TMCC Party, provide notification to the TMCC Parties with respect to any actions taken by the Owner Trustee with respect to any such Demand received by the Owner Trustee in respect of any Receivables, such notifications to be provided by the Owner Trustee promptly after receipt by the Owner Trustee of such request but not more than once each calendar month or such other time frame as may be mutually agreed to by the Owner Trustee and the applicable TMCC Party.  The Owner Trustee and the Depositor acknowledge and agree that the purpose of this Section 6.03(h) is to facilitate compliance by the TMCC Parties with Rule 15Ga-1 under the Securities Exchange Act of 1934, as amended, and Items 1104(e) and 1121(c) of Regulation AB (the “Repurchase Rules and Regulations”).  The Owner Trustee shall cooperate with reasonable written requests received by it from the TMCC Parties to deliver any and all records and any other information in the possession of the Owner Trustee that is necessary in the good faith determination of the TMCC Parties to permit the TMCC Parties to comply with the provisions of Repurchase Rules and Regulations.  Subject to its duties explicitly set forth herein, the Owner Trustee shall not have any responsibility or liability in connection with the compliance of either TMCC Party or a securitizer with the Securities Exchange Act of 1934, as amended, or Regulation AB or any filing required to be made by a TMCC Party or a securitizer under the Securities Exchange Act of 1934, as amended, or Regulation AB.

(i)            The Owner Trustee hereby agrees to cooperate with the Administrator in connection with any regulatory, administrative, governmental, investigative or other proceeding or inquiry relating in any way to the Trust, its assets or the conduct of its business.  In connection therewith, the Owner Trustee further agrees to comply with any reasonable request made by the Administrator for the delivery of information or documents in the Owner Trustee’s actual possession.

Section 6.04.      No Duties Except as Specified in this Agreement or in Instructions.  The Owner Trustee shall not have any duty or obligation to manage, make any payment with respect to, register, record, sell, dispose of, or otherwise deal with the Trust Estate, or to otherwise take or refrain from taking any action under, or in connection with, any Basic Document to which the Owner Trustee is a party, except as expressly provided by the terms of this Agreement.  No implied duties or obligations shall be read into this Agreement or any Basic Document against the Owner Trustee, it being understood that, to the fullest extent permitted by law, any implied duties (including fiduciary duties) or liabilities otherwise existing at law or in equity with respect to the Trust are hereby eliminated and replaced with the express duties and obligations set forth in this Agreement.  The Owner Trustee shall have no responsibility or liability for the preparation, correctness, accuracy or filing of any financing or continuation

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statement in any public office at any time or for the existence, validity or perfection or maintenance of perfection of any security interest or lien granted to it hereunder or to prepare or file any Securities and Exchange Commission filing for the Trust or to record this Agreement or any Basic Document.  Notwithstanding anything to the contrary herein or in any Basic Document, the Owner Trustee shall not be required to execute, deliver or certify on behalf of the Trust or any other Person any filings, certificates, affidavits or other instruments required under the Sarbanes-Oxley Act of 2002, to the extent permitted by applicable law.  The Owner Trustee nevertheless agrees that it will, at its own cost and expense, promptly take all action as may be necessary to discharge any liens on any part of the Trust Estate that result from actions by, or claims against, the Owner Trustee that are not related to the ownership or the administration of the Trust Estate.

Section 6.05.      No Action Except Under Specified Documents or Instructions.  The Owner Trustee shall not manage, control, use, sell, dispose of or otherwise deal with any part of the Trust Estate except (i) in accordance with the powers granted to and the authority conferred upon the Owner Trustee pursuant to this Agreement, (ii) in accordance with the Basic Documents and (iii) in accordance with any document or written instruction delivered to the Owner Trustee pursuant to Section 6.03.

Section 6.06.      Restrictions.  The Owner Trustee shall not take any action (a) that is inconsistent with the purposes of the Trust set forth in Section 2.03, (b) that, to the actual knowledge of a Responsible Officer of the Owner Trustee, (x) would result in the Trust’s becoming taxable as a corporation for federal income tax purposes or (y) affect the treatment of the Notes as indebtedness for federal or state income tax purposes or (c) is not in accordance with applicable law.  The Certificateholders shall not have the authority to and, by acceptance of a beneficial interest in any Certificate shall thereby be deemed to have covenanted not to, direct the Owner Trustee to take any action that would violate the provisions of this Section.

ARTICLE VII

CONCERNING THE OWNER TRUSTEE

Section 7.01.      Rights of the Owner Trustee.  Except as otherwise provided in Article VI:

(a)            in accordance with Section 7.04, the Owner Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, Officer's Certificate, certificate of an authorized signatory, certificate of auditors or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, appraisal, bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;

(b)            the Owner Trustee shall not be liable with respect to any action taken or omitted to be taken by it in accordance with the direction or instructions of the Administrator, as provided in the Administration Agreement or the Certificateholders, as provided herein;

(c)            the Owner Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement or the other Basic Documents, or to institute, conduct or

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defend any litigation under this Agreement, or in relation to this Agreement or the other Basic Documents, at the request, order or direction of any of the Securityholders or any other Person, unless such Person shall have offered to the Owner Trustee reasonable security or indemnity against the costs, expenses and liabilities that may be incurred therein or thereby. The right of the Owner Trustee to perform any discretionary act enumerated in this Agreement or in any Basic Document shall not be construed as a duty, and the Owner Trustee shall not be answerable for such act other than its gross negligence or willful misconduct in the performance of any such act;

(d)            under no circumstances shall the Owner Trustee be liable for any representation, warranty, covenant or obligation of the Trust, or for any indebtedness evidenced by or arising under any of the Basic Documents, including the principal of and interest on the Notes;

(e)            the recitals contained herein and in the Certificates (other than the signature of the Owner Trustee and the certificate of authentication on the Certificates) shall be taken as statements of the Depositor, and the Owner Trustee shall have no responsibility for the correctness thereof;

(f)            the Owner Trustee shall not be bound to recalculate, reverify, or make any investigation into the facts, content or accuracy of matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond or other paper or document, unless requested in writing to do so by Holders of Certificates representing not less than 25% of the Percentage Interest; provided, however, that if the payment within a reasonable time to the Owner Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Owner Trustee, not reasonably assured to the Owner Trustee by the security afforded to it by the terms of this Agreement, the Owner Trustee may require reasonable indemnity against such cost, expense or liability as a condition to so proceeding; the reasonable expense of every such examination shall be paid by the Administrator or, if paid by the Owner Trustee shall be reimbursed by the Administrator upon demand; and nothing in this clause shall derogate from the obligation of the Servicer to observe any applicable law prohibiting disclosure of information regarding the Obligors;

(g)            the Owner Trustee shall not be liable for, and shall have no duty to supervise or monitor, the action or inaction,  default, misconduct or negligence of the Administrator, the Servicer, the Depositor or the Indenture Trustee or any agent appointed by it under any of the Basic Documents or otherwise, and the Owner Trustee may assume performance by each of such parties absent written notice or actual knowledge by a Responsible Officer to the contrary, and the Owner Trustee shall have no obligation or liability to supervise or perform the obligations of the Trust under the Basic Documents that are required to be performed by the Administrator under the Administration Agreement, the Indenture Trustee under the Indenture or the Servicer under the Sale and Servicing Agreement;

(h)            the Owner Trustee shall not be required to investigate any claims for the breach by any Person of a representation or warranty under any of the Basic Documents;

(i)            the Owner Trustee shall not be deemed to have knowledge or notice of any event or information, including any Event of Default, or be required to act upon any event or information (including the sending of any notice), unless written notice of such event or

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information is received by a Responsible Officer and such notice references the event or information. Absent written notice in accordance with this Section, the Owner Trustee may conclusively assume that no such event has occurred. The Owner Trustee shall have no obligation to inquire into, or investigate as to, the occurrence of any such event (including any Event of Default). For purposes of determining the Owner Trustee’s responsibility and liability hereunder, whenever reference is made in this Trust Agreement to any event (including, but not limited to, an Event of Default), such reference shall be construed to refer only to such event of which the Owner Trustee has received written notice as described in this Section. Knowledge of the Owner Trustee shall not be attributed or imputed to Wells Fargo’s other roles in the transaction; and

(j)            the Owner Trustee’s receipt of delivery of any reports, information or other documents hereunder and any publically available information is for informational purposes only and shall not constitute actual or constructive knowledge of any information contained therein or determinable from information contained therein, including the Depositor’s, the Indenture Trustee’s, Administrator’s, Servicer’s or the Paying Agent’s compliance with any of their covenants and obligations hereunder; the Owner Trustee shall be entitled to rely exclusively on Officers’ Certificates provided by the Depositor, the Indenture Trustee, Administrator, Servicer or the Paying Agent, as the case may be, to confirm compliance with such covenants and obligations, but shall have no duty to request or otherwise monitor the delivery of such Officers’ Certificates.

Section 7.02.      Furnishing of Documents.  The Owner Trustee shall furnish (a) to the Certificateholders promptly upon receipt of a written request therefor, duplicates or copies of all reports, notices, requests, demands, certificates, financial statements and any other instruments furnished to the Owner Trustee under the Basic Documents and (b) to Noteholders promptly upon written request therefor, copies of the Sale and Servicing Agreement, the Administration Agreement and the Trust Agreement.

Section 7.03.      Representations and Warranties.  The Owner Trustee hereby represents and warrants to the Depositor and for the benefit of the Certificateholders, that:

		i.	It is a national banking association duly organized and validly existing and in good standing under the laws of the United States.  It has full power, authority and right to execute, deliver and perform its obligations under this Agreement and each other Basic Document.

		ii.	It has taken all corporate action necessary to authorize the execution and delivery of this Agreement and each other Basic Document, and this Agreement and each other Basic Document has been executed and delivered by one of its officers duly authorized to execute and deliver this Agreement and each other Basic Document on its behalf.

		iii.	This Agreement constitutes the legal, valid and binding obligation of the Owner Trustee, enforceable against it in accordance with its terms except as the enforceability thereof may be limited by bankruptcy, insolvency, moratorium,

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reorganization or other similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity.

		iv.	It is authorized to exercise trust powers in the State of Delaware as and to the extent contemplated herein and it has a principal place of business in the State of Delaware.

		v.	Neither the execution nor the delivery by it of this Agreement nor the consummation by the Owner Trustee of the transactions contemplated hereby or thereby nor compliance by it with any of the terms or provisions hereof or thereof will contravene any federal or Delaware law, governmental rule or regulation governing the banking or trust powers of the Owner Trustee or any judgment or order binding on it, or constitute any default under its charter documents or by-laws or any indenture, mortgage, contract, agreement or instrument to which it is a party or by which any of its properties may be bound.

		vi.	There are no proceedings or investigations pending or, to the Owner Trustee's actual knowledge, threatened, before any court, regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Owner Trustee or its properties: (a) asserting the invalidity of this Agreement or (b) seeking any determination or ruling that might materially and adversely affect the performance by the Owner Trustee of its obligations under, or the validity or enforceability of, this Agreement and each other Basic Document to which it is a party.

Section 7.04.      Reliance; Advice of Counsel.

(a)            The Owner Trustee shall incur no liability to anyone in acting upon any signature, instrument, direction, notice, resolution, request, consent, order, certificate, report, opinion, bond, or other document or paper believed by it to be genuine and believed by it to be signed by the proper party or parties. The Owner Trustee may request and conclusively rely (and shall be fully protected in relying) upon an opinion of counsel.  The Owner Trustee may accept a certified copy of a resolution of the board of directors or other governing body of any corporate party as conclusive evidence that such resolution has been duly adopted by such body and that the same is in full force and effect.  As to any fact or matter the method of the determination of which is not specifically prescribed herein, the Owner Trustee may for all purposes hereof request and rely on a certificate, signed by the president or any vice president or by the treasurer or other authorized officers or agents of the relevant party, as to such fact or matter and such certificate shall constitute full protection to the Owner Trustee for any action taken or omitted to be taken by it in good faith in reliance thereon.  The Owner Trustee need not investigate or re-calculate, evaluate, verify or independently determine the accuracy of any report, certificate, information, statement, representation or warranty or any fact of matter stated in any such document and may conclusively rely as to the truth of the statements and the correctness of the opinions expressed therein.  The costs of any opinion of counsel or certificate requested by the Owner Trustee under this Section shall be paid by the party requesting the Owner Trustee to act or refrain from acting.

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(b)            In the exercise or administration of the trusts hereunder and in the performance of its duties and obligations under the Basic Documents, the Owner Trustee (i) may act directly or through its agents or attorneys pursuant to agreements entered into with any of them, and the Owner Trustee shall not be liable for the action, inaction, conduct, misconduct or negligence of such agents or attorneys if such agents or attorneys shall have been selected by the Owner Trustee in good faith, and (ii) may consult with counsel, accountants and other skilled persons to be selected in good faith and employed by it.  The Owner Trustee shall not be liable for anything done, suffered or omitted in good faith by it in accordance with the opinion or advice of any such counsel, accountants or other such persons and not contrary to this Agreement or any Basic Document.

Section 7.05.      Not Acting in Individual Capacity.  In accepting the trusts hereby created, Wells Fargo Delaware Trust Company, National Association, acts solely as Owner Trustee hereunder and not in its individual capacity.  Except with respect to a claim based on the failure of the Owner Trustee to perform its duties under this Agreement or based on the Owner Trustee's willful misconduct, bad faith or gross negligence, no recourse shall be had for any claim based on any provision of this Agreement, the Notes or the Certificates, or based on rights obtained through the assignment of any of the foregoing, against the institution serving as the Owner Trustee in its individual capacity.  The Owner Trustee shall not have any personal obligation, liability or duty whatsoever to any Securityholder or any other Person with respect to any such claim, and any such claim shall be asserted solely against the Trust or any indemnitor who shall furnish indemnity as provided in this Indenture.

Section 7.06.      Owner Trustee Not Liable for the Certificates or Receivables.  The Owner Trustee makes no representations as to the validity or sufficiency of this Agreement or of the Certificates or of the Notes (other than the execution by the Owner Trustee on behalf of the Trust of, and the certificate of authentication on, the Certificates).  The Owner Trustee shall have no obligation to perform any of the duties of or to monitor the performance by the Trust, the Servicer, the Indenture Trustee, the Administrator or any other Person.

The Owner Trustee shall at no time have any responsibility or liability for or with respect to the legality, validity and enforceability of the Certificates, the Notes, or any Receivable, any ownership interest in any Financed Vehicle, or the maintenance of any such ownership interest, or for or with respect to the efficacy of the Trust or its ability to generate the payments to be distributed to Securityholders under this Agreement and the Indenture, including without limitation the validity of the assignment of the Receivables to the Trust or of any intervening assignment; the existence, condition, location and ownership of any Receivable or Financed Vehicle; the existence and enforceability of any Insurance Policy; the existence and contents of any retail installment sales contract or any computer or other record thereof; the completeness of any retail installment sales contract; the performance or enforcement of any retail installment sales contract; the compliance by the Trust with any covenant or the breach by the Trust of any warranty or representation made under this Agreement or in any related document and the accuracy of any such warranty or representation prior to the Owner Trustee's receipt of notice or other discovery of any noncompliance therewith or any breach thereof; the acts or omissions of the Trust or the Servicer; or any action or inaction by the Owner Trustee taken at the instruction

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of the Certificateholders; provided, however, that the foregoing shall not relieve the Owner Trustee of its obligation to perform its duties under this Agreement.

The Owner Trustee shall not be accountable for:  (i) the use or application by the Depositor of the proceeds of the sale of the Notes; (ii) the use or application by the Certificateholders of the Certificates or the proceeds of the Certificates; (iii) the use or application by the holder of any Notes of any of the Notes or of the proceeds of such Notes; or (iv) the use or application of any funds paid to the Servicer in accordance with the Sale and Servicing Agreement.

Section 7.07.      Owner Trustee May Own Certificates and Notes.  The Owner Trustee in its individual or any other capacity (but not in its fiduciary capacity), may become the owner or pledgee of Certificates or Notes and may deal with the Depositor, the Company, the Administrator, the Indenture Trustee and the Servicer in banking or other transactions with the same rights as it would have if it were not Owner Trustee.

Section 7.08.      Trust Licenses.  Pursuant to Section 1(b) of the Administration Agreement, the Administrator will cause the Trust to use its best efforts to maintain the effectiveness of all licenses, if any, required to be held by the Trust under the laws of any jurisdiction in connection with ownership of the Receivables or the terms set forth in this Agreement and the Basic Documents and the transactions contemplated hereby and thereby until such time as the Trust shall terminate in accordance with the terms hereof.

ARTICLE VIII

COMPENSATION OF OWNER TRUSTEE

Section 8.01.      Owner Trustee’s Fees and Expenses.  The Trust shall pay or shall cause the Servicer to pay to the Owner Trustee from time to time compensation for its services as have been separately agreed upon before the date hereof, and the Owner Trustee shall be entitled to be reimbursed by the Servicer or the Administrator, as the case may be, for its other reasonable expenses hereunder, including the reasonable compensation, expenses and disbursements of such agents, representatives, experts and counsel as the Owner Trustee may employ in connection with the exercise and performance of its rights and its duties hereunder.

Section 8.02.      Indemnification.  The Trust shall reimburse the Owner Trustee and its agents (including the Certificate Registrar and the Paying Agent), counsel, accountants and experts directly related to its services hereunder (the “Indemnified Parties”) for, and the Trust will indemnify such Indemnified Parties against, any and all costs, damages, loss, liability or expense (including but not limited to, all reasonable out-of-pocket expenses incurred or made by it, including costs of collection, in addition to the compensation for its services, including the Indemnified Parties’ reasonable compensation and expenses, disbursements and advances), any and all costs related to amendments, supplements and petitioning any court, and any reasonable attorneys’ fees and expenses (including, but not limited to, reasonable legal fees, costs and expenses, and including any such reasonable fees, costs and expenses incurred in connection with (i) any enforcement (including any action, claim, or suit brought by such indemnified parties) of any indemnification or other obligation of the Trust) or (ii) a successful defense of any

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claim that the Owner Trustee breached its standard of care) of any kind or nature whatsoever (collectively, “Expenses”), which may at any time be imposed on, incurred by or asserted against the Owner Trustee or any other Indemnified Party in connection with the administration of the Trust and the performance of its duties hereunder.  An Indemnified Party shall notify the Administrator and the Trust promptly of any claim for which it may seek indemnity.  Failure by  an Indemnified Party to so notify the Administrator and the Trust shall not relieve the Trust of its obligations hereunder, except to the extent such failure shall adversely affect the Trust’s defenses in respect thereof.  In case any action is brought against an Indemnified Party under this Section 8.02 and it notifies the Administrator of the commencement thereof, the Administrator will assume the defense thereof, with counsel reasonably satisfactory to the Indemnified Party (who may, unless there is, as evidenced by an opinion of counsel to the Indemnified Party stating that there is an unwaivable conflict of interest, be counsel to the Administrator), and the Administrator will not be liable to the Indemnified Party under this Section for any legal or other Expenses subsequently incurred by the Indemnified Party in connection with the defense thereof, other than reasonable costs of investigation.  The Trust need not reimburse any Expense or indemnify against any costs, damages, loss, liability or expense incurred by the Owner Trustee through the Owner Trustee’s own willful misconduct, gross negligence or bad faith to the extent such matters have been determined definitively by a court of competent jurisdiction pursuant to a final order or verdict not subject to appeal, and until such determination, an Indemnified Party shall be entitled to indemnification hereunder.  The provisions of this Section 8.02 shall survive the termination or assignment of this Agreement and the resignation or removal of the Owner Trustee.  The Depositor shall cause the Administrator to make prompt payment of any unpaid amounts due to the Owner Trustee in respect of fees, expenses and indemnification amounts not otherwise paid by the Trust on a Payment Date in accordance with the terms of Section 1(a)(ii) of the Administration Agreement.

Section 8.03.      Payments to the Owner Trustee.  Any amounts paid to the Owner Trustee pursuant to this Article VIII from assets in the Trust Estate shall be deemed not to be a part of the Trust Estate immediately after such payment.

ARTICLE IX

TERMINATION OF TRUST AGREEMENT

Section 9.01.      Termination of Trust Agreement.

(a)            The Trust shall dissolve and be wound up in accordance with Section 3808 of the Statutory Trust Act, upon the earliest of (i) the maturity or other liquidation of the last Receivable (or other asset) in the Trust Estate and the final distribution by the Paying Agent of all moneys or other property or proceeds of the Trust Estate held by it in accordance with the terms of this Agreement, the Indenture and the Sale and Servicing Agreement (including, but not limited to, any property and proceeds to be deposited in the Collection Account pursuant to the terms of the Sale and Servicing Agreement or to be released by the Indenture Trustee from the Lien of the Indenture pursuant to the terms of the Indenture) or (ii) the payment or distribution to all Securityholders of all amounts required to be paid to them under the Sale and Servicing Agreement and the Indenture.  The bankruptcy, liquidation, dissolution, death or incapacity of any Certificateholder shall not (x) operate to terminate this Agreement or the Trust, nor

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(y) entitle such Certificateholder’s legal representatives or heirs to claim an accounting or to take any action or proceeding in any court for a partition or winding up of all or any part of the Trust Estate, nor (z) otherwise affect the rights, obligations and liabilities of the parties hereto.

(b)            Except as provided in Section 9.01(a), the Certificateholder shall not be entitled to revoke or terminate the Trust.

(c)            Notice of any dissolution of the Trust, specifying the Payment Date upon which the Certificateholders shall surrender their Certificates to the Paying Agent for payment of the final distributions and cancellation, shall be given by the Owner Trustee to the Certificateholders mailed within five (5) Business Days of receipt of notice of such termination from the Servicer given pursuant to Section 10.03 of the Sale and Servicing Agreement, stating (i) the Payment Date upon or with respect to which final payment of the Certificates shall be made upon presentation and surrender of the Certificates at the office of the Paying Agent therein designated, (ii) the amount of any such final payment and (iii) that payment to be made on such Payment Date will be made only upon presentation and surrender of the Certificates at the office of the Paying Agent therein specified.  The Owner Trustee shall give such notice to the Certificate Registrar (if other than the Owner Trustee) and the Paying Agent (if other than the Owner Trustee) at the time such notice is given to the Certificateholders.  Upon presentation and surrender of the Certificates, the Paying Agent shall cause to be distributed to the Certificateholders amounts distributable on such Payment Date pursuant to Section 5.02.

In the event that one or more of the Certificateholders shall not surrender their Certificates for cancellation within six months after the date specified in the above mentioned written notice, the Owner Trustee shall give a second written notice to the remaining Certificateholders to surrender their Certificates for cancellation and receive the final distribution with respect thereto.  If within one year after the second notice all the Certificates shall not have been surrendered for cancellation, the Owner Trustee may take appropriate steps, or may appoint an agent to take appropriate steps, to contact the remaining Certificateholders concerning surrender of their Certificates, and the cost thereof shall be paid out of the funds and other assets that shall remain subject to this Agreement.  Any funds remaining in the Trust after exhaustion of such remedies shall be distributed by the Owner Trustee to the Depositor (subject to applicable escheatment laws).

(d)            Upon the completion of the winding up of the Trust, including the payment or reasonable provision for payment of all claims and obligations in accordance with Section 3808 of the Statutory Trust Act by the Administrator, the Owner Trustee shall, at the direction and expense of the Administrator, file a certificate of cancellation with the Secretary of State in accordance with the provisions of Section 3810 of the Statutory Trust Act.

ARTICLE X

SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES

Section 10.01.      Eligibility Requirements for Owner Trustee.  The Owner Trustee shall at all times be an entity having a combined capital and surplus of at least $50,000,000, be subject to supervision or examination by federal or state authorities and be authorized to exercise trust

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powers in the State of Delaware.  If such entity shall publish reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purpose of this Section 10.01, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.  In case at any time the Owner Trustee shall cease to be eligible in accordance with the provisions of this Section, the Owner Trustee shall resign immediately in the manner and with the effect specified in Section 10.02.

Section 10.02.      Resignation or Removal of Owner Trustee.  The Owner Trustee may at any time resign and be discharged from the trusts hereby created by giving written notice thereof to the Depositor, the Servicer and the Indenture Trustee.  Upon receiving such notice of resignation, the Servicer will promptly appoint a successor Owner Trustee by written instrument, in duplicate, one copy of which shall be delivered to each of the resigning Owner Trustee and the successor Owner Trustee.  If no successor Owner Trustee shall have been so appointed or shall not have accepted such appointment within 30 days after the giving of such notice of resignation, the resigning Owner Trustee may petition any court of competent jurisdiction for the appointment of a successor Owner Trustee at the Administrator’s expense, which shall include payment of all reasonable fees, costs and expenses (including reasonable attorneys’ fees and expenses) incurred by the Owner Trustee in connection therewith.

If at any time the Owner Trustee shall cease to be eligible in accordance with the provisions of Section 10.01 and shall fail to resign promptly, or if at any time the Owner Trustee shall be legally unable to act, or shall be adjudged bankrupt or insolvent, or a receiver of the Owner Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Owner Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then the Administrator may remove the Owner Trustee by written instrument to such effect delivered to the Owner Trustee, the Depositor and the Indenture Trustee. If the Administrator removes the Owner Trustee under the authority of the immediately preceding sentence, the Servicer will promptly appoint a successor Owner Trustee by written instrument in duplicate, one copy of which instrument shall be delivered to each of the outgoing Owner Trustee so removed and the successor Owner Trustee and shall pay or cause to be paid all fees, expenses and other compensation then owed to the outgoing Owner Trustee.

Any resignation or removal of the Owner Trustee and appointment of a successor Owner Trustee pursuant to any of the provisions of this Section shall not become effective until acceptance of appointment by the successor Owner Trustee pursuant to Section 10.03 and payment of all fees and expenses owed to the outgoing Owner Trustee.  The Administrator will provide notice of such resignation or removal of the Owner Trustee to each of the Rating Agencies.

Section 10.03.      Successor Owner Trustee.  Any successor Owner Trustee appointed pursuant to Section 10.02 shall execute, acknowledge and deliver to the Administrator and to its predecessor Owner Trustee an instrument accepting such appointment under this Agreement, and thereupon the resignation or removal of the predecessor Owner Trustee shall become effective and such successor Owner Trustee without any further act, deed or conveyance, shall become fully vested with all the rights, powers, duties, and obligations of its predecessor under this Agreement, with like effect as if originally named as Owner Trustee.  The predecessor Owner

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Trustee shall upon payment of its fees and expenses deliver to the successor Owner Trustee all documents and statements and monies held by it under this Agreement; and the Administrator and the predecessor Owner Trustee shall execute and deliver such instruments and do such other things as may reasonably be required for fully and certainly vesting and confirming in the successor Owner Trustee all such rights, powers, duties, and obligations.

No successor Owner Trustee shall accept appointment as provided in this Section unless at the time of such acceptance such successor Owner Trustee shall meet the criteria for eligibility set forth in Section 10.01.

Upon acceptance of appointment by a successor Owner Trustee pursuant to this Section, the Administrator will mail notice of the successor of such Owner Trustee to the Certificateholders, the Indenture Trustee, the Noteholders and the Rating Agencies.  If the Administrator fails to mail such notice within 10 days after acceptance of appointment by the successor Owner Trustee, the successor Owner Trustee shall cause such notice to be mailed at the expense of the Administrator.

Section 10.04.      Merger or Consolidation of Owner Trustee.  Any corporation into which the Owner Trustee may be merged or converted or with which it may be consolidated or any corporation resulting from any merger, conversion or consolidation to which the Owner Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Owner Trustee shall be the successor of the Owner Trustee hereunder, provided such corporation shall be eligible pursuant to Section 10.01, without the execution or filing of any instrument or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding; provided, further, that the Owner Trustee shall mail notice of such merger or consolidation to the Depositor and the Administrator.  The Administrator will provide notice of such merger or consolidation to the Rating Agencies.

Section 10.05.      Appointment of Co-Trustee or Separate Trustee.  Notwithstanding any other provisions of this Agreement, at any time, for the purpose of meeting any legal requirements of any jurisdiction in which any part of the Trust Estate or any Financed Vehicle may at the time be located, or for enforcement actions or conflict of interest matters, the Administrator and the Owner Trustee acting jointly shall have the power and shall execute and deliver all instruments to appoint one or more Persons approved by the Owner Trustee to act as co-trustee, jointly with the Owner Trustee, or separate trustee or separate trustees, of all or any part of the Trust Estate, and to vest in such Person, in such capacity, such title to the Trust, or any part thereof, and, subject to the other provisions of this Section, such powers, duties, obligations, rights and trusts as the Administrator and the Owner Trustee may consider necessary or desirable.  If the Administrator shall not have joined in such appointment within 25 days after the receipt by it of a request so to do, the Owner Trustee alone shall have the power to make such appointment.  No co-trustee or separate trustee under this Agreement shall be required to meet the terms of eligibility as a trustee pursuant to Section 10.01 and no notice of the appointment of any co-trustee or separate trustee shall be required pursuant to Section 10.03.  A co-trustee or separate trustee appointed hereunder is not an agent of the Owner Trustee.

Each separate trustee and co-trustee shall, to the extent permitted by law, be appointed and act subject to the following provision and conditions:

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(i)            all rights, powers, duties and obligations conferred or imposed upon the Owner Trustee shall be conferred upon and exercised or performed by the Owner Trustee and such separate trustee or co-trustee jointly (it being understood that such separate trustee or co-trustee is not authorized to act separately without the Owner Trustee joining in such act), except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed, the Owner Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties, and obligations (including the holding of title to the Trust or any portion thereof in any such jurisdiction) shall be exercised and performed singly by such separate trustee or co-trustee, but solely at the written direction of the Owner Trustee;

(ii)            no trustee under this Agreement shall be personally liable by reason of the appointment or any act or omission of any other trustee under this Agreement; and

(iii)            the Administrator and the Owner Trustee acting jointly may at any time accept the resignation of or remove any separate trustee or co-trustee.

Any notice, request or other writing given to the Owner Trustee shall be deemed to have been given to each of the then separate trustees and co-trustees, as if given to each of them.  Each separate trustee and co-trustee, upon its acceptance of the powers and duties conferred thereto under this Agreement, shall (i) be vested with the estates or property specified in its instrument of appointment, either jointly with the Owner Trustee or separately, as may be provided therein, subject to all the provisions of this Agreement, specifically including every provision of this Agreement relating to the conduct of, affecting the liability of, or affording protection to, the Owner Trustee, and (ii) agree to indemnify the Owner Trustee for its acts or omissions pursuant to its appointment hereto.  Each such instrument shall be filed with the Owner Trustee and a copy thereof given to the Administrator.

Section 10.06.      Power of Attorney for Co-Trustee or Separate Trustee.  Any separate trustee or co-trustee may at any time appoint the Owner Trustee as its agent or attorney-in-fact with full power and authority, to the extent not prohibited by law, to do any lawful act under or in respect of this Agreement on its behalf and in its name.  If any separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, all of its estates, properties, rights, remedies and trusts shall vest in and be exercised by the Owner Trustee, to the extent permitted by law, without the appointment of a new or successor trustee.

ARTICLE XI

MISCELLANEOUS

Section 11.01.      Supplements and Amendments.  This Agreement may be amended by the Depositor and the Owner Trustee, with prior written notice to the Rating Agencies, and without the consent of any of the Noteholders or the Certificateholders, to cure any ambiguity, to correct or supplement any provisions in this Agreement or for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions in this Agreement

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or of modifying in any manner the rights of the Noteholders or the Certificateholders; provided, that either (i) an Officer’s Certificate shall have been delivered by the Servicer to the Owner Trustee and the Indenture Trustee certifying that such officer reasonably believes that such proposed amendment will not materially and adversely affect the interest of any Noteholder or (ii) the Rating Agency Condition has been satisfied in respect of such proposed amendment.

This Agreement may also be amended from time to time by the Depositor and the Owner Trustee, with prior written notice to the Rating Agencies, and with the consent of the Indenture Trustee and, if the interests of the Noteholders are materially and adversely affected, with the consent of the Holders of the Notes evidencing at least a majority of the outstanding principal amount of the Controlling Class of Notes, acting together as a single Class, for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement or of modifying in any manner the rights of the Noteholders or Certificateholders under this Agreement.

No amendment otherwise permitted under this Section 11.01 (except as described in the last sentence of this paragraph) may (x) increase or reduce in any manner the amount of, or accelerate or delay the timing of, collections of payments on the Receivables or distributions required to be made for the benefit of any Noteholders or Certificateholders without the consent of all Noteholders and Certificateholders adversely affected thereby, or (y) reduce the percentage of the Notes or Certificates which are required to consent to any such amendment without the consent of the Noteholders and Certificateholders adversely affected thereby; provided, that any amendment referred to in clause (x) or (y) above shall be deemed to not adversely affect any Noteholder if the Rating Agency Condition has been satisfied in respect of such proposed amendment.  No amendment referred to in clause (x) in the immediately preceding sentence shall be permitted unless an Officer’s Certificate shall have been delivered by the Servicer to the Owner Trustee and the Indenture Trustee certifying that such officer reasonably believes that such proposed amendment will not materially and adversely affect the interest of any Noteholder or Certificateholder whose consent was not obtained.  Notwithstanding the immediately preceding two sentences, this Agreement may also be amended by the parties hereto, without the consent of the Noteholders or the Certificateholders, for the purpose of conforming the provisions in this Agreement to the descriptions thereof contained in the prospectus, dated October 4, 2016, related to the offering of the Notes.

Promptly after the execution of any such amendment or consent, the Owner Trustee shall furnish written notification of the substance of such amendment or consent to the Certificateholder, the Indenture Trustee and the Administrator and the Administrator shall provide such notification to each of the Rating Agencies.

It shall not be necessary for the consent of the Certificateholders, the Noteholders or the Indenture Trustee pursuant to this Section to approve the particular form of any proposed amendment or consent, but it shall be sufficient if such consent shall approve the substance thereof.  The manner of obtaining such consents (and any other consents of Certificateholders provided for in this Agreement or in any other Basic Document) and of evidencing the authorization of the execution thereof by the Certificateholders shall be subject to such reasonable requirements as the Owner Trustee may prescribe.

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Promptly after the execution of any amendment to the Certificate of Trust, the Owner Trustee shall cause the filing of such amendment with the Secretary of State.

Prior to the execution of any amendment to this Agreement or any amendment to the Certificate of Trust, the Owner Trustee shall be entitled to receive and rely upon an Officer’s Certificate of the Administrator and an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this Agreement.  The Owner Trustee shall not be obligated to enter into any such amendment which affects the Owner Trustee’s own rights, duties or immunities under this Agreement or otherwise.  The fees and expenses of the Owner Trustee in connection with any amendment or supplement hereto shall be paid by the Depositor.

Section 11.02.      No Legal Title to Trust Estate in the Certificateholders.  The Certificateholders shall not have legal title to any part of the Trust Estate.  The Certificateholders shall be entitled to receive distributions with respect to their fractional undivided beneficial interest therein only in accordance with Articles V and IX.  No transfer, by operation of law or otherwise, of any right, title, or interest of the Certificateholders to and in their ownership interest in the Trust Estate shall operate to terminate this Agreement or the trusts hereunder or entitle any transferee to an accounting or to the transfer to it of legal title to any part of the Trust Estate.

Section 11.03.      Limitations on Rights of Others.  Except for Section 2.06, the provisions of this Agreement are solely for the benefit of the Owner Trustee, the Depositor, TMCC (as Servicer), the Certificateholders, the Administrator and, to the extent expressly provided herein the Indenture Trustee and the Noteholders, and nothing in this Agreement, (other than Section 2.06), whether express or implied, shall be construed to give to any other Person any legal or equitable right, remedy or claim in the Trust Estate or under or in respect of this Agreement or any covenants, conditions or provisions contained herein.

Section 11.04.      Notices.

(a)            Unless otherwise expressly specified or permitted by the terms hereof, all notices shall be in writing and shall be deemed given upon receipt by the intended recipient or three Business Days after mailing if mailed by certified mail, postage prepaid (except that notice to the Owner Trustee shall be deemed given only upon actual receipt by the Owner Trustee), if to the Owner Trustee, addressed to the Corporate Trust Office; if to the Depositor, addressed to Toyota Auto Finance Receivables LLC, 19851 South Western Avenue NF10, Torrance, California 90501, Attention: President; if, to the Trust, addressed to Toyota Auto Receivables 2016-D Owner Trust, c/o Wells Fargo Delaware Trust Company, National Association, 919 North Market Street, Suite 1600, Wilmington, Delaware 19801, Attention: Corporate Trust Services, with a copy to Toyota Motor Credit Corporation, 19001 South Western Avenue EF12, Torrance, California 90501, Attention: General Counsel; or, as to each party, at such other address as shall be designated by such party in a written notice to each other party.

(b)            Any notice required or permitted to be given a Certificateholder shall be given by first-class mail, postage prepaid, at the address of such Holder as shown in the Certificate Register.  Any notice so mailed within the time prescribed in this Agreement shall be

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conclusively presumed to have been duly given, whether or not the Certificateholder receives such notice.

Section 11.05.      Severability.  If any one or more of the covenants, agreements, provisions or terms of this Agreement shall be for any reason whatsoever held invalid or unenforceable in any jurisdiction, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement or of the Certificates or the rights of the Holders thereof.

Section 11.06.      Counterparts.  This Agreement may be executed simultaneously in any number of counterparts, each of which shall be deemed to be an original, and all of which shall constitute but one and the same instrument.

Section 11.07.      Successors and Assigns.  All covenants and agreements contained herein shall be binding upon, and inure to the benefit of, the Depositor, the Owner Trustee, and its successors and each Certificateholder and its successors and permitted assigns, all as herein provided.  Any request, notice, direction, consent, waiver or other instrument or action by a Certificateholder shall bind the successors and assigns of such Certificateholder.

Section 11.08.      No Petition.  To the fullest extent permitted  by law, each of the parties hereto, by entering into this Agreement hereby covenants and agrees, and the Indenture Trustee and each Certificateholder and Noteholder by accepting a Certificate or accepting the benefits of this Agreement, as the case may be, are each deemed to covenant and agree, that it shall not at any time acquiesce, petition or otherwise invoke or cause the Issuer or the Depositor to invoke the process of any court or government authority for the purpose of commencing or sustaining a case against the Trust or the Depositor under any federal or state bankruptcy, insolvency or similar law, or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Trust or the Depositor, as the case may be, or any substantial part of its property, or, except as expressly set forth herein, ordering the winding up or liquidation of the affairs of the Trust or the Depositor, in connection with any obligations relating to the Notes, the Certificates, this Agreement or any of the Basic Documents prior to the date that is one year and one day after the date on which the Indenture is terminated.  This Section 11.08 shall survive the termination of this Agreement.

Section 11.09.      No Recourse.  Each Certificateholder by accepting an interest in a Certificate acknowledges that such Certificates represent beneficial interests in the Trust only and do not represent interests in or obligations of the Depositor, TMCC (in any capacity), the Administrator, the Owner Trustee, the Indenture Trustee or any Affiliate thereof and no recourse may be had against such parties or their assets, except as may be expressly set forth or contemplated in the Certificates or the Basic Documents.

Section 11.10.      Headings.  The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof.

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Section 11.11.      Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, 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.

Section 11.12.      Exclusive Jurisdiction.  Each party to this Agreement and each person beneficially owning a beneficial interest in the Trust, to the fullest extent permitted by law, including Section 3804(e) of the Statutory Trust Act, (i) irrevocably agrees that any claims, suits, actions or proceedings arising out of or relating in any way to the Trust or its business and affairs, the Statutory Trust Act or this Agreement, including, without limitation, any claims, suits, actions or proceedings to interpret, apply or enforce the provisions of this Agreement, will be exclusively brought in the courts of the State of Delaware or the State of New York and (ii) irrevocably submits to the exclusive jurisdiction of such courts in connection with any such claim, suit, action or proceeding.

Section 11.13.      WAIVER OF JURY TRIAL.  EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 11.14.      USA PATRIOT Act Compliance.  The parties hereto and each Certificateholder acknowledge that in accordance with the Customer Identification Program (CIP) requirements under the USA PATRIOT Act and its implementing regulations, the Owner Trustee and the Paying Agent, in order to help fight the funding of terrorism and money laundering, are required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Owner Trustee or the Paying Agent.  Each party hereto and each Certificateholder by its acceptance of a Certificate agrees that it shall provide the Owner Trustee and the Paying Agent with such information as the Owner Trustee or the Paying Agent may reasonably request that will help the Owner Trustee and the Paying Agent to identify and verify each party’s identity, including without limitation each party’s name, physical address, tax identification number, organizational documents, certificates of good standing, licenses to do business or other pertinent identifying information.

ARTICLE XII

COMPLIANCE WITH REGULATION AB

Section 12.01.      Intent of the Parties; Reasonableness.  The Depositor and the Owner Trustee acknowledge and agree that the purpose of Article XII of this Agreement is to facilitate compliance by the Depositor with the provisions of Regulation AB and related rules and regulations of the Commission.

Neither the Depositor nor the Owner Trustee shall exercise its right to request delivery of information or other performance under these provisions other than in good faith, or for purposes other than compliance with the Securities Act, the Exchange Act and the rules and regulations of

35

the Commission thereunder (or the provision in a private offering of disclosure comparable to that required under the Securities Act).  The Owner Trustee acknowledges that interpretations of the requirements of Regulation AB may change over time, whether due to interpretive guidance provided by the Commission or its staff, consensus among participants in the asset-backed securities markets, advice of counsel, or otherwise, and agrees to comply with requests made by the Depositor in good faith for delivery of information under these provisions on the basis of evolving interpretations of Regulation AB.  In connection therewith, the Owner Trustee shall cooperate fully with the Depositor to deliver to the Depositor (including any of its assignees or designees), any and all statements, reports, certifications, records, attestations, and any other information necessary in the good faith determination of the Depositor, to permit the Depositor to comply with the provisions of Regulation AB, together with such disclosures relating to the Owner Trustee or the servicing of the Receivables, reasonably believed by the Depositor to be necessary in order to effect such compliance.

 

 

 

 

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IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to be duly executed by their respective officers hereunto duly authorized, as of the day and year first above written.

TOYOTA AUTO FINANCE RECEIVABLES LLC, as Depositor

By:      ____________________________________

Name:

Title:

WELLS FARGO DELAWARE TRUST COMPANY, NATIONAL ASSOCIATION, as Owner Trustee

By:      ____________________________________

Name:

Title:

S-1

Acknowledged by:

TOYOTA MOTOR CREDIT CORPORATION,

as Servicer and Administrator

By:      ____________________________________

Name:

Title:

S-2

EXHIBIT A

FORM OF ASSET-BACKED CERTIFICATE

THIS CERTIFICATE DOES NOT CONSTITUTE AN OBLIGATION OF OR AN INTEREST IN THE DEPOSITOR, THE OWNER TRUSTEE, THE SERVICER, THE ADMINISTRATOR, TOYOTA MOTOR CREDIT CORPORATION, TOYOTA AUTO FINANCE RECEIVABLES LLC OR ANY OF THEIR RESPECTIVE AFFILIATES, AND WILL NOT BE INSURED OR GUARANTEED BY ANY SUCH ENTITY OR BY ANY GOVERNMENTAL AGENCY.

THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES.  THIS CERTIFICATE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF THE TRUST AGREEMENT.

EACH PURCHASER AND TRANSFEREE OF THIS CERTIFICATE WILL BE DEEMED TO REPRESENT, WARRANT AND COVENANT THAT IT IS NOT ACQUIRING THE CERTIFICATE WITH THE ASSETS OF AN “EMPLOYEE BENEFIT PLAN” AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), WHICH IS SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, A “PLAN” DESCRIBED IN AND SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY REASON OF AN EMPLOYEE BENEFIT PLAN’S OR PLAN’S INVESTMENT IN THE ENTITY OR ANY OTHER EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO ANY LAW THAT IS SUBSTANTIALLY SIMILAR TO THE FIDUCIARY RESPONSIBILITY OR PROHIBITED TRANSACTION PROVISIONS OF ERISA OR SECTION 4975 OF THE CODE.

NUMBER R‐1

TOYOTA AUTO RECEIVABLES 2016-D OWNER TRUST

ASSET-BACKED CERTIFICATE

THIS CERTIFIES THAT TOYOTA AUTO FINANCE RECEIVABLES LLC is the registered owner of 100% of the nonassessable, fully-paid, fractional undivided beneficial interest in Toyota Auto Receivables 2016-D Owner Trust (the “Trust”) formed by Toyota Auto Finance Receivables LLC.

The Trust was created pursuant to a Trust Agreement, dated as of June 28, 2016 (as amended and restated by the Amended and Restated Trust Agreement dated as of October 12, 2016, the “Trust Agreement”), between Toyota Auto Finance Receivables LLC, as depositor (the “Depositor”), and Wells Fargo Delaware Trust Company, National Association, a national banking association, as Owner Trustee (the “Owner Trustee”), a summary of certain of the pertinent provisions of which is set forth below.  Capitalized terms used herein and not otherwise defined have the meanings ascribed thereto in the Trust Agreement, the Sale and Servicing

A-1

Agreement, dated as of October 12, 2016 (the “Sale and Servicing Agreement”), among the Trust, the Depositor and Toyota Motor Credit Corporation, as servicer (the “Servicer”), or the Indenture, dated as of October 12, 2016 (the “Indenture”), among the Trust and U.S. Bank National Association, as indenture trustee (the “Indenture Trustee”), as the case may be.

This Certificate is one of the duly authorized Certificates designated as “Asset Backed Certificates” (the “Certificates”) issued pursuant to the Trust Agreement.  Certain debt instruments evidencing obligations of the Trust have been issued under the Indenture, consisting of Notes designated as “0.63000% Asset Backed Notes, Class A‐1,” “1.06% Asset Backed Notes, Class A‐2a,” “LIBOR plus 0.13% Asset Backed Notes, Class A-2b,”  “1.23% Asset Backed Notes, Class A‐3,” “1.42% Asset Backed Notes, Class A‐4” and “0.00% Asset Backed Notes, Class B” (collectively, the “Notes”).  This Certificate is issued under and is subject to the terms, provisions and conditions of the Trust Agreement.  The holder of this Certificate, by virtue of its acceptance hereof, assents to and is bound by all of the provisions of the Trust Agreement.

The property of the Trust includes a pool of retail installment sales contracts secured by new and used cars, minivans, light-duty trucks and sport utility vehicles (the "Receivables"), all monies due thereunder and received after the Cutoff Date, security interests in the vehicles financed thereby, certain bank accounts and the proceeds thereof, proceeds from claims on certain insurance policies and certain other rights under the Trust Agreement and the Sale and Servicing Agreement and all proceeds of the foregoing.

It is the intent of the Depositor, Toyota Motor Credit Corporation and the Certificateholders that, for purposes of federal income tax, state and local income tax, any state single business tax and any other income taxes, the Trust will be treated as a division or branch of the Person holding the beneficial interests in the Trust for any period during which the beneficial interests in the Trust are held by one person, and will be treated as a partnership, and the Certificateholders will be treated as partners in that partnership, for any period during which the beneficial interests in the Trust are held by more than one person.  For any such period during which the beneficial interests in the Trust are held by more than one person, each Certificateholder, by acceptance of a Certificate or any beneficial interest on a Certificate, agrees to treat, and to take no action inconsistent with the treatment of, the Certificates as partnership interests in the Trust for such tax purposes.

Under the Trust Agreement, there will be distributed to the Holder hereof on the 15th day of each month or, if such 15th day is not a Business Day, the next Business Day, (each, a “Payment Date”), commencing in November 2016, the amounts to be distributed to Certificateholder on such Payment Date in respect of amounts distributable to the Certificateholder pursuant to Section 5.06 of the Sale and Servicing Agreement.

The holder of this Certificate acknowledges and agrees that its rights to receive distributions in respect of this Certificate are subordinated to the rights of the Noteholders, as described in the Sale and Servicing Agreement and the Indenture.

Distributions on this Certificate will be made as provided in the Trust Agreement by the Paying Agent by wire transfer or check mailed to the Certificateholder without the presentation or surrender of this Certificate or the making of any notation hereon.  Except as otherwise

A-2

provided in the Trust Agreement and notwithstanding the above, the final distribution on this Certificate will be made after due notice by the Owner Trustee of the pendency of such distribution and only upon presentation and surrender of this Certificate at the office or agency of the Paying Agent designated in such notice.

Each Certificateholder, by its acceptance of a Certificate or any beneficial interest in a Certificate, covenants and agrees that such Certificateholder will not at any time institute against the Depositor or the Trust, or join in any institution against the Depositor or the Trust of, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings under any United States, federal or state bankruptcy or similar law in connection with any obligations relating to the Certificates, the Notes, the Trust Agreement or any of the Basic Documents.

Reference is hereby made to the further provisions of this Certificate set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

Unless the certificate of authentication hereon shall have been executed by an authorized officer of the Owner Trustee or an authenticating agent, by manual signature, this Certificate shall not entitle the holder hereof to any benefit under the Trust Agreement or the Sale and Servicing Agreement or be valid for any purpose.

THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, 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.

A-3

IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not in its individual capacity, has caused this Certificate to be duly executed.

TOYOTA AUTO RECEIVABLES 2016-D

OWNER TRUST

		By:	WELLS FARGO DELAWARE TRUST COMPANY, NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee

By:            _________________________________

Authorized Signatory

Dated:  October 12, 2016

A-4

OWNER TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is the Certificate referred to in the within-mentioned Trust Agreement.

WELLS FARGO DELAWARE TRUST COMPANY, NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee

By:            _________________________________

Authorized Signatory

A-5

(REVERSE OF CERTIFICATE)

The holder of this Certificate, by accepting an interest in this Certificate, acknowledges that this Certificate represents a beneficial interest in the Trust only and does not represent any interest in or obligation of the Depositor, Toyota Motor Credit Corporation (in any capacity), the Administrator, the Owner Trustee, the Indenture Trustee or any Affiliate thereof and no recourse may be had against such parties or their assets, except as may be expressly set forth or contemplated in this Certificate or the Basic Documents.  In addition, this Certificate is not guaranteed by any governmental agency or instrumentality and is limited in right of payment to certain collections with respect to the Receivables (and certain other amounts), all as more specifically set forth herein and in the Sale and Servicing Agreement.  A copy of each of the Sale and Servicing Agreement and the Trust Agreement may be examined during normal business hours at the principal office of the Depositor, and at such other places, if any, designated by the Depositor, by the Certificateholder upon written request.

As provided in the Trust Agreement, and subject to certain limitations therein set forth, the transfer of this Certificate is registerable in the Certificate Register upon surrender of this Certificate for registration of transfer at the offices or agencies of the Certificate Registrar maintained by the Owner Trustee, accompanied by a written instrument of transfer in form satisfactory to the Owner Trustee and the Certificate Registrar duly executed by the holder hereof or such holder’s attorney duly authorized in writing, and thereupon one or more new Certificates of authorized denominations evidencing the same aggregate interest in the Trust will be issued to the designated transferee or transferees. The initial Certificate Registrar appointed under the Trust Agreement is Wells Fargo Delaware Trust Company, National Association.

The Owner Trustee, the Certificate Registrar and any agent of the Owner Trustee or the Certificate Registrar may treat the person in whose name this Certificate is registered as the owner hereof for all purposes and none of the Owner Trustee, the Certificate Registrar or any such agent shall be affected by any notice to the contrary.

The Trust Agreement permits, with certain exceptions therein provided, the amendment thereof by the Depositor and the Owner Trustee, with prior written notice to the Rating Agencies, without the consent of any of the Noteholders or the Certificateholders, to cure any ambiguity, to correct or supplement any provisions in the Trust Agreement or for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions in the Trust Agreement or of modifying in any manner the rights of the Noteholders or the Certificateholder; provided, that either (i) an Officer’s Certificate has been delivered by the Servicer to the Owner Trustee and the Indenture Trustee certifying that such officer reasonably believes that any such amendment will not materially and adversely affect the interest of any Noteholder or Certificateholder or (ii) the Rating Agency Condition has been satisfied in respect of any such amendment.

The Trust Agreement may also be amended from time to time by the Depositor and the Owner Trustee, with prior written notice to the Rating Agencies and with the consent of the Indenture Trustee and with the consent of:

A-6

(i)            if the interests of the Noteholders are materially and adversely affected, the Holders of Notes evidencing at least a majority of the outstanding principal amount of the Controlling Class of Notes, acting together as a single; and

(ii)            if the interests of the Certificateholders are materially and adversely affected, the Holders of the Certificates evidencing not less than a majority of the Percentage Interest;

for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Trust Agreement or of modifying in any manner the rights of the Noteholders or Certificateholders under the Trust Agreement.

No amendment otherwise permitted under Section 11.01 of the Trust Agreement may (x) increase or reduce in any manner the amount of, or accelerate or delay the timing of, collections of payments on the Receivables or distributions required to be made for the benefit of any Noteholders or Certificateholders without the consent of all Noteholders and Certificateholders adversely affected thereby, or (y) reduce the percentage of the Notes or Certificates which are required to consent to any such amendment without the consent of the Noteholders and Certificateholders adversely affected thereby; provided, that any amendment referred to in clause (x) or (y) above will be deemed to not adversely affect any Noteholder if the Rating Agency Condition has been satisfied in respect of such proposed amendment.  No amendment referred to in clause (x) in the immediately preceding sentence will be permitted unless an Officer’s Certificate has been delivered by the Servicer to the Owner Trustee and the Indenture Trustee certifying that such officer reasonably believes that such amendment will not materially and adversely affect the interest of any Noteholder or Certificateholder whose consent was not obtained.

The obligations and responsibilities created by the Trust Agreement and the Trust created thereby shall terminate upon the payment to the Certificateholder of all amounts required to be paid to it pursuant to the Trust Agreement and the Sale and Servicing Agreement and the disposition of all property held as part of the Trust Estate.  Toyota Motor Credit Corporation, as servicer of the Receivables under the Sale and Servicing Agreement, or any successor servicer, may at its option purchase the Trust Estate at a price specified in the Sale and Servicing Agreement, and any such purchase of the Receivables and other property of the Trust will effect early retirement of the Certificate; however, such right of purchase is exercisable only after the last day of the Collection Period as of which the Pool Balance is less than or equal to 5% of the Original Pool Balance.

A-7

ASSIGNMENT

Social Security or taxpayer I.D.  or other identifying number of assignee:__________________

FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto:

____________________________________________________________________________

 (name and address of assignee)

the within Certificate, and all rights thereunder, hereby irrevocably constituting and appointing

______________________, attorney, to transfer said Certificate on the books of the Certificate Registrar, with full power of substitution in the premises.

Dated:                                        */

Signature Guaranteed:

 __________________*/

*/NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Certificate in every particular, without alteration, enlargement or any change whatever. Such signature must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company.

A-8

EXHIBIT B

FORM OF TRANSFEREE REPRESENTATION LETTER

Toyota Auto Receivables 2016-D Owner Trust

c/o Wells Fargo Delaware Trust Company, N.A.,

not in its individual capacity but solely as Owner Trustee

919 North Market Street, Suite 1600

Wilmington, Delaware 19801

Attention: Corporate Trust Services

Wells Fargo Delaware Trust Company, National Association,

as Certificate Registrar

919 North Market Street, Suite 1600

Wilmington, Delaware 19801

Attention: Corporate Trust Services

Re:  Transfer of Toyota Auto Receivables 2016-D Owner Trust Certificates, (the “Certificates”)

Ladies and Gentlemen:

This letter is delivered pursuant to Section 3.03 of the Amended and Restated Trust Agreement, dated as of October 12, 2016 (the “Trust Agreement”), between Toyota Auto Finance Receivables LLC, as Depositor, and Wells Fargo Delaware Trust Company, National Association, as Owner Trustee (the “Owner Trustee”), in connection with the transfer by ________________ (the “Seller”) to the undersigned (the “Purchaser”) of the Certificates, a copy of which are attached hereto. Capitalized terms used and not otherwise defined herein have the meanings assigned to such terms in the Trust Agreement.

In connection with such transfer, the undersigned hereby represents and warrants to you and the addressees hereof as follows:

1.    I am not a Non-U.S. Person as defined in the Trust Agreement; and

2.    I am not (i) an “employee benefit plan” as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), which is subject to the provisions of Title I of ERISA, (ii) a “plan” described in and subject to Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”), (iii) an entity whose underlying assets include “plan assets” by reason of an employee benefit plan’s or plan’s investment in the entity, or (iv) any other employee benefit plan that is subject to any law that is substantially similar to the fiduciary responsibility or prohibited transaction provisions of ERISA or Section 4975 of the Code.

Signature appears on next page.

B-1

IN WITNESS WHEREOF, the Purchaser hereby executes this Transferee Representation Letter on the ___ day of  ___________.

Very truly yours,

The Purchaser

B-2

EXHIBIT C

FORM OF TRANSFEROR REPRESENTATION LETTER

Toyota Auto Receivables 2016-D Owner Trust

c/o Wells Fargo Delaware Trust Company, National Association,

not in its individual capacity but solely as Owner Trustee

919 North Market Street, Suite 1600

Wilmington, Delaware 19801

Attention: Corporate Trust Services

Wells Fargo Delaware Trust Company, National Association,

as Certificate Registrar

919 North Market Street, Suite 1600

Wilmington, Delaware 19801

Attention: Corporate Trust Services

Re:  Transfer of Toyota Auto Receivables 2016-D Owner Trust Certificates, (the “Certificates”)

Ladies and Gentlemen:

This letter is delivered pursuant to Section 3.03 of the Amended and Restated Trust Agreement, dated as of October 12, 2016 (the “Trust Agreement”), between Toyota Auto Finance Receivables LLC, as Depositor, and Wells Fargo Delaware Trust Company, National Association, as Owner Trustee (the “Owner Trustee”), in connection with the transfer by ______________________ (the “Purchaser”) to the undersigned (the “Seller”) of the Certificates, a copy of which are attached hereto. Capitalized terms used and not otherwise defined herein have the meanings ascribed thereto in the Trust Agreement. The Transferor hereby certifies, represents and warrants to you, as Certificate Registrar, that:

1. The Transferor is the lawful owner of the Transferred Certificates with the full right to transfer such Certificates free from any and all claims and encumbrances whatsoever.

2. Neither the Transferor nor anyone acting on its behalf has (a) offered, transferred, pledged, sold or otherwise disposed of any Transferred Certificate, any interest in any Transferred Certificate or any other similar security to any person in any manner, (b) solicited any offer to buy or accept a transfer, pledge or other disposition of any Transferred Certificate, any interest in any Transferred Certificate or any other similar security from any person in any manner, (c) otherwise approached or negotiated with respect to any Transferred Certificate, any interest in any Transferred Certificate or any other similar security with any person in any manner, (d) made any general solicitation by means of general advertising or in any other manner, or (e) taken any other action, which (in the case of any of the acts described in clauses (a) through (e) hereof) would constitute a distribution of any Transferred Certificate under the Securities Act of 1933, as amended (the “Securities Act”), or would render the disposition of any Transferred Certificate a violation of Section 5 of the Securities Act or any state securities laws,

C-1

or would require registration or qualification of any Transferred Certificate pursuant to the Securities Act or any state securities laws.

Very truly yours,

(Transferor)

By:

C-2

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