Complaint Filed by Hogans Over Inverters, Retaliation

1
LOUIS R. MILLER (State Bar No. 54141)

smifler@millerbarondess.com
2 AMNON Z. SIEGEL (State Bar No. 234981)
asiegel~mil1erbarondess.corn
3 CASEY B. SYPEK (State Bar No. 291214)
csypek~rnillerbarondess.com
4 MILLER BARONDESS, LLP
1999 Avenue of the Stars, Suite 1000
5 Los Angeles, California 90067
Telephone: (310) 552-4400
6 Facsimile: (310) 552-8400
7 Attorneys for Plaintiffs ROGER HOGAN, HOGAN

SRK, INC. (d/b/a CAPISTRANO TOYOTA/SCION)
8 and R&C MOTOR CORPORATION (d/b/a
CLAREMONT TOYOTA)
9
SUPERIOR COURT OF THE STATE OF CALIFORNIA
10
COUNTY OF ORANGE
ROGER HOGAN, an individual, HOGAN CASE NO. 30-2017-00933647-CU-FR-CJC

1~ 13 SRK, INC., (d/b/a CAPISTRANO
TOYOTA/SCION), a California corporation, FIRST AMENDED COMPLAINT FOR:
14 and R&C MOTOR CORPORATION (d/b/a
3 CLAREMONT TOYOTA), a California (1) FRAUD BY CONCEALMENT; AND
15 corporation,
(2) BREACH OF THE IMPLIED
16 Plaintiffs, COVENANT OF GOOD FAITH AND
FAIR DEALING.
~ 17 v.
18 TOYOTA MOTOR SALES, U.S.A., INC., a DEMAND FOR JURY
California corporation,
19 Assigned for All Purposes to:
Defendant. Hon. Peter J. Wilson. Dept. C15
20 ________________________________________
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356993.9
FIRST AMENDED COMPLAINT
1 TABLE OF CONTENTS
2 PAGE
3 INTRODUCTION 4
4 A. The Defendant 4
5 B. The Plaintiff 6
6 PARTIES/JURISDICTION/VENUE 8
7 FACTS COMMON TO ALL CAUSES OF ACTION 9
8 A. Roger Hogan 9
9 B. Toyota’s Safety Recall Crisis 10
10 C. Autovation 11
11 D. Toyota Defrauds Customers And The Government By Concealing Safety

S Defects 15
12
E. Toyota Continues To Conceal and Manipulate Safety Defects 16
-J u? 13
(a) Toyota Misclassifies Safety Defects As “Technical Service Bulletins”—
~! ! 14 Smart Key 17
15 (b) Toyota Misclassifies Safety Defects As “Limited Service Campaigns” or
“Special Service Campaigns”— Engine Control Module; Driveshafls; Radar
16 Sensors; Front Passenger Airbags S.
j ~!
17 (c) Toyota Makes Inadequate Safety Repairs — Inverters and Inverter
Components 9.
18
(d) Toyota Manipulates Service History Reports — The Rav4 Suspension
19 Arms 22
20 (e) Toyota Certifies Unsafe Vehicles As “Toyota Certified Used Vehicles” 24
21 F. Toyota Plots Against Hogan 25
22 G. Toyota Retaliates Against Hogan 26
23 (a) Toyota Destroys Autovation 26
24 (b) Toyota Delays Capistrano Vehicles 28
25 (c) Toyota Reffises To Allocate Cars To Claremont Toyota 28

26 (d) Toyota Rejects Hogan’s Sons For Leadership Positions 29
27 (e) Toyota Plays Favorites With Allocation of Vehicles 29
28 (f) Toyota Diverts Hogan’s Customers To Other Dealers 30
356993.9 2
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(g) Toyota Blocks Hogan’s Succession Plan; And Tells Him To Sell
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FIRST CAUSE OF ACTION (Fraud By Concealment — Plaintiffs against Toyota)
3
SECOND CAUSE OF ACTION (Breach of the Implied Covenant of Good Faith And Fair
4 Dealing Capistrano Toyota and Claremont Toyota Against Toyota)
— 35
5 PRAYER FOR RELIEF 38
6 JURY DEMAND 38
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356993.9 3
1 Plaintiffs ROGER HOGAN (“Hogan”), HOGAN SRK, INC. (d/b/a CAPISTRANO
2 TOYOTA/SCION) and R&C MOTOR CORPORATION (d/b/a CLAREMONT TOYOTA)
3 (collectively, “Plaintiffs”) allege in their Complaint against TOYOTA MOTOR SALES, U.S.A.
4 INC. (“Toyota”), as follows:
5 INTRODUCTION
6 A. The Defendant
7 1. The original Complaint in this action was based on retaliatory actions by Toyota in
8 furtherance of its nefarious scheme to oust one of its most loyal and successfhl dealers for illegal
9 and improper reasons. Since the filing of the original Complaint, Hogan has uncovered other
10 egregious misconduct by Toyota that jeopardizes public safety and diminishes the value of the
11 Hogan dealerships.
12 2. Toyota is the largest car manufacturer in the world. It has been concealing safety
13 related defects on its vehicles that pose unreasonable risks of accidents and bodily injury. In order
14 to save money and avoid governmental scrutiny, Toyota has been misleading dealers, like Hogan,
15 the public and governmental regulators about safety defects in its vehicles. Toyota’s misconduct
16 has harmed Plaintiffs and continues to endanger Toyota drivers, passengers and others on the road.
~~ 17 3. Toyota has a history of covering up defects that affect the safe operations of its
18 vehicles. In 2009-2014, Toyota was forced to recall millions of vehicles for safety issues. The
19 defects that led to some of these recalls (e.g., unintended acceleration caused by “sticky pedals”
20 and/or “floor mat entrapment”) were linked to dozens of injuries and deaths, were the subject of
21 Congressional hearings and regulatory enforcement actions against Toyota, and led to a criminal
22 charge of wire fraud against Toyota and a $1.2 billion fine by the U.S. Department of Justice.
23 4. Toyota concealed its unintended acceleration issues, and other issues, from the
24 public and from the government. For a long time, many Toyota customers did not even know
25 their cars had serious safety defects because To9ota hid them. The recalls severely tarnished
26 Toyota’s reputation and cost it billions of dollars.
27 5. Toyota claims to have cleaned up its act since the unintended acceleration crisis,
28 but that is not at all the case. Toyota continues to conceal dangerous defects that affect the safe
356993.9 4
1 operation of its vehicles. Toyota’s cover-up is more sophisticated than simply lying to regulators
2 and the public, as it did for unintended acceleration problems.
3 6. For example, instead of issuing recalls for defects that pose a risk to safety, as
4 required by law, Toyota instead issues “technical service bulletins” (TSB5), “limited service
5 campaigns” (“LSC5”), or “special service campaigns” (“SSC5”), which are not monitored by the
6 National Highway Traffic Safety Administration (“NHTSA”) at all — or at the same level as safety
7 recalls. By doing so, Toyota circumvents governmental scrutiny (disclosure and reporting
8 obligations) and avoids the much greater expense associated with safety recalls.
9 7. NHTSA requires that manufacturers recall vehicles with safety-related defects. A

10 defect is “safety-related” if it relates to the performance of a vehicle in a way that protects against
11 unreasonable risk of accidents and against risk of death or injury in an accident. Campaigns such
12 as TSBs, LSCs and SSCs, on the other hand, are designed for defects that do not affect the safe
13 operation of a vehicle—malfunctioning air conditioners or radios, cosmetic blemishes, excessive

14 oil consumption, etc. The response rates for these campaigns are lower than the completion rates
15 for safety recalls. Toyota is misclassifying safety-related defects as lesser things to avoid further
oD.T
16 governmental intrusion and save money; TSBs, LSCs and SSCs are supposed to address defects
~ ~ 17 that do not affect safety.

18 8. Worse, while safety recalls generally do not expire, LSCs do expire; many drivers
19 never obtain these fixes; and unsafe vehicles continue to be driven on the roads. Even when
20 Toyota issues a safety recall, it knowingly chooses cheaper, inadequate fixes to save itself money,
21 only for customers to later face life-threatening situations on the road when the inadequate fix
22 fails. Toyota has duped not only the public and the regulators but also its own dealer body,
23 including the Plaintiffs herein.
24 9. Since the filing of this Complaint, Hogan has discovered Toyota’s reprehensible
25 cover-up of numerous safety defects. Toyota leads dealers and customers to believe that a safety
26 defect has been fixed when, in fact, it has not; and the unreasonable risk of accidents still exists.
27 10. Even when Toyota did issue safety recalls (such as with unintended acceleration),
28 many customers did not know their cars had open safety recalls that jeopardized their safety. In
356993.9 5
FIRST AMENDED COMPLKNT
I most instances, Toyota sent only one recall notice, and the antiquated system Toyota put in place
2 for its dealers made it difficult, if not impossible, for dealers to identify open recalls. To save
3 money and preserve its bottom line, Toyota has avoided repairing thousands of recalled vehicles
4 with serious safety issues.
5 B. The Plaintiff
6 11. Plaintiff Roger Hogan, a self-made businessman with 40 years of auto industry
7 experience, came up with a solution. He created a technology that enabled Toyota dealers to
8 identify customers with open and unrepaired safety recalls and send them letters directly offering a
9 fix. Hogan implemented the technology at his two dealerships, Claremont Toyota and Capistrano
10 Toyota (the “Dealerships”), and he sold it to other Toyota dealers.
N 11 12. The program, known as Autovation, was very successfi.il. The Dealerships and
12 other Toyota dealers using Autovation were able to identify and notify thousands of customers
13 with open and unrepaired recalls that otherwise would have gone unrepaired. This generated
14 significant recall repair revenue for Toyota dealerships and made Toyota vehicles safer to drive.
15 The dealerships were able to fix customers’ cars and turn customers into additional sales, trade
~9~7
16 ins, and service and parts; and thereby generate additional revenue.
~; 17 13. As Hogan was developing and implementing Autovation, Toyota was trying to
18 keep its unintended acceleration issues under wraps. Toyota did not want Autovation to succeed
19 because it would cost Toyota more money.
20 14. Toyota was required to pay for the safety recall work that Hogan’s program was
21 generating. Even though Autovation was helping to identify and fix defective vehicles, Toyota
22 wanted to end Hogan’s program and thereby avoid having to spend millions fixing recalls.
23 15. Toyota eventually succeeded. It destroyed Hogan’s recall program, leaving Toyota
24 customers in jeopardy and making it difficult for Hogan and other Toyota dealers to identify open
25 recalls and service them accordingly.

26 16. So while Hogan was trying to protect Toyota customers and ensure their safety,
27 Toyota was creating a plan to kill Autovation and push out Hogan as a dealer. To Toyota, Hogan
28 was a problem and a threat to Toyota’s multi-billion dollar profit machine.
356993.9 6
17. After Hogan notified Toyota about Autovation’s ability to identify open and
2 unrepaired recalls, Toyota decided upon, and commenced, retaliatory acts against Hogan to harm
3 his Dealerships and make them more difficult to operate and less profitable—all to coerce Hogan
4 and squeeze him out:
5 • Toyota sabotaged the recall program (Autovation), preventing Hogan from making
6 recall fixes and shutting off the Dealerships from the stream of new and repeat
7 customers that the program was generating.
8 • Toyota instructed Hogan to purchase additional land for his Capistrano Toyota
9 facility (which he did for $2.5 million), only to later deny him the additional
10 vehicles the new space entitled him to.
11 • Toyota claimed Claremont Toyota was not “sales efficient,” but Toyota refused to
12 allocate the cars Claremont Toyota needed to reach Toyota’s view of sales
~ ti ~ 13 efficiency.
14 • Toyota discriminated against the Dealerships by failing to allocate vehicles fairly
15 and in good faith by, among other things, favoring Hogan’s competitors in vehicle
~O~7
16 allocation through Toyota’s secretive “General Manager’s Pool.”

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17 • Toyota unreasonably refused to approve Hogan’s son, Roger Hogan, Jr., as General
18 Manager of Capistrano Toyota. Toyota also unreasonably refused to approve
19 Hogan’s son, Stephen Hogan, as an AAO—a manager for multiple Toyota
20 locations.
21 • Toyota directed its financing arm to change the structure of its loan to Capistrano
22 Toyota from “interest only” to “principal plus interest,” tripling Capistrano
23 Toyota’s monthly payments and diminishing its value.
24 • Toyota extended the Capistrano Toyota franchise agreement often only for months
25 at a time, contrary to its customary practice, to pressure Hogan.
26 • Toyota unfairly distributed its best inventory to favored dealers in the region, and
27 not to Hogan’s Dealerships.
28 • Toyota diverted Hogan’s customers to competing dealerships.
356993.9 7
I • Toyota forced Hogan to use its oil company and then failed to maintain the
2 Dealerships’ oil supplies, preventing the Dealerships from servicing customers.
3 • Toyota told Hogan to create a succession plan, but then Toyota rejected Hogan’s
4 sons for ownership and management positions, even though his sons are his
5 succession plan and have been managing the Dealerships for years.
6 • Eventually, Toyota told Hogan to sell.

7 18. Hogan did not know that his attempts to improve safety would lead to his forced
8 ouster. This is not the brand that Hogan has known and been dedicated to for 40 years. Hogan
9 had no way of knowing about, and did not know about, Toyota’s scheme to squeeze him out until
10 2016 when Toyota denied his succession plan and told him to sell.
11 19. Toyota did not want to pay the millions required to remedy the safety defects that
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2: Hogan’s recall program was identifying. Toyota put corporate profits over customer safety.
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13 20. Toyota’s misconduct not only threatens the safety of drivers, it violates its dealer
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~ 14 agreements with Hogan and is contrary to Toyota’s repeated representations and own policies
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15 relating to its supposed commitment to customer safety. Toyota’s function is to manufacture and
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distribute safe, reliable vehicles to its dealerships for sale to the public.
21. Toyota is failing the Dealerships and its customers. By refusing to properly
address safety defects, Toyota is frustrating the most basic, important purpose of its agreements
with Hogan.
22. As a result of Toyota’s actions, millions of vehicles still have unrepaired safety
defects. Hogan and his Dealerships have lost millions in revenue and value due to Toyota’s
improper actions. Toyota continues to conceal safety defects and is destroying the value of the
Dealerships that Hogan spent decades building.
PARTIES/JURISDICTION/VENUE
23. Plaintiff Roger Hogan (“Hogan”) is a resident of Orange County, California. He
owns and operates two Toyota dealerships pursuant to franchise agreements entered with Toyota.
24. Hogan SRK, Inc. is a California corporation that owns Hogan’s Toyota dealership
in San Juan Capistrano, California (“Capistrano Toyota”), in Orange County.
356993.9 8
1 25. R&C Motor Corporation is a California corporation that owns Hogan’s Toyota
2 dealership in Claremont, California (“Claremont Toyota”), in Los Angeles County.
3 26. Defendant Toyota Motor Sales, U.S.A., Inc. (“Toyota”) is a California corporation
4 with its principal place of business in Los Angeles County. It engages in sales, marketing and
5 distribution of Toyota and Lexus brand vehicles in the United States.
6 27. Venue is proper in this Court because the wrongdoing alleged herein occurred, in
7 part, in Orange County and because plaintiff Roger Hogan resides in Orange County. Subject
8 matter jurisdiction is proper in this Court because the amount in controversy exceeds the
9 jurisdictional requirement. Personal jurisdiction is also proper because the defendant, Toyota
10 Motor Sales, U.S.A., Inc., is incorporated in and is located in California.
N 11 FACTS COMMON TO ALL CAUSES OF ACTION

12 A. Roger Hogan
13 28. After starting as a salesman at Toyota of Orange in 1977, Hogan worked his way
14 up in the automotive industry. He became general sales manager of Toyota of Orange. Then in
15 1985, Hogan became a minority partner at Elmore Toyota, built a new facility and turned around
16 the underperforming dealership.
~ ~ 17 29. Hogan acquired Toyota of Pomona in 1994 and built it into a flourishing business.
18 In 1997, he bought land by the freeway in Claremont and relocated the Pomona store to the
19 Claremont Auto Center. In 2005, Claremont Toyota was ranked as the Number 3 Toyota
20 dealership in the United States, and Toyota honored Hogan with its “President’s Cabinet” award, a
21 recognition achieved by only a handful of Toyota dealers nationwide.
22 30. Hogan also acquired a Ford dealership in Claremont. In 2006, Hogan sold his Ford
23 dealership so that he could focus on Toyota. Hogan used the 5.25-acre lot the Ford dealership was
24 located on to expand Claremont Toyota. The new facility totals over 12 acres.
25 31. In 2008, after more than three decades as a Toyota dealer, Toyota, through its then
26 Vice President Jeff Bracken, asked Hogan to acquire a Toyota dealership in San Juan Capistrano.
27 Hogan bought Capistrano Toyota for approximately $30 million and immediately improved its
28 performance. Claremont Toyota and Capistrano Toyota are hereafter referred to as the
356993.9 9
1 “Dealerships.”
2 32. Over his 40-plus year career with Toyota, Hogan has been very active in Toyota
3 associations and committees. Hogan was on the Toyota Dealers Advertising Association (“TDA”)
4 Board of Directors for 17 years and served as the Board’s President several times. From 2005 to
5 2007, he was selected as one of twelve dealers and general managers in the country to serve on the
6 Toyota Tundra Steering Committee. Toyota also invited Hogan on an all-expenses-paid trip to
7 Japan and gave him the honor of delivering the farewell address to the Japanese host and staff
8 33. Hogan grew the Dealerships into a family business, with his three sons working
9 alongside him. Roger Hogan, Jr. is the General Sales Manager at Capistrano Toyota. Stephen
10 Hogan is the General Manager of Claremont Toyota. Kyle Hogan is a manager at Capistrano
11 Toyota. All three of Hogan’s sons graduated from the National Automobile Dealers Association
12 (NADA) Academy, an intensive year-long management program.
13 34. Hogan has earned a reputation for honesty, integrity and leadership in the industry.
14 He and his family and the Dealerships are committed to customer service and safety.
o 0
15 B. Toyota’s Safety Recall Crisis
~ ~. 16 35. As the economy fell into a recession in 2008, the auto industry was hit hard.
~ ~ 17 Toyota saw its sales in the United States plummet; laid off thousands of workers; and drastically
18 cut back vehicle production. In 2009, Toyota reported a loss of $4.8 billion for fiscal year 2008.
19 36. As the economic crisis (and car sales, in particular) worsened, Toyota was faced
20 with another impending financial disaster—the 2009-20 14 safety recall crisis. Despite becoming
21 aware of dangerous defects that caused its vehicles to accelerate unexpectedly, Toyota knowingly
22 concealed the problems, hoping not to be discovered.

23 37. Former Toyota executive, liv Miller, finally told other Toyota executives that “the
24 time to hide on this one is over”; and “we are not protecting our customers by keeping this quiet.”
25 The defects and accidents relating thereto were widespread and horrific—people were badly
26 injured and lives were lost. Toyota’s cover-up was later discovered, and it was charged by the
27 U.S. Department of Justice with the crime of wire fraud under 18 U.S. Code § 1343.
28 38. The damage to Toyota’s brand was severe. Toyota recalled millions of vehicles for
356993.9 10
1 serious, life-threatening safety issues. Toyota issued a “stop-sale” on millions of cars globally,
2 mainly over problems with sticking accelerator pedals, floor mat entrapment and braking flaws.
3 39. By 2011, Toyota’s worldwide recalls had reached approximately 11 million cars.
4 Over 6 million of these recalled vehicles were in the United States. Regulators linlced dozens of
5 deaths to crashes caused by unintended acceleration. Toyota recalls were the subject of
6 Congressional hearings.
7 40. The recalls tamished Toyota’s image, costing it billions of dollars in lost sales and
8 repair bills, a reduction in Toyota’s credit rating, and leading to a multitude of lawsuits. By mid-
9 2011, more than 90 class-action lawsuits had been filed against Toyota, exposing the company to
10 billions of dollars of liability. Toyota was fined over a billion dollars by the U.S. Department of
11 Justice and additional multi-millions by federal regulators for knowingly hiding dangerous
12 defects, lying to the public and government officials about defects and failing to timely notify
13 regulators as required under federal law.

14 41. During this time, Hogan was on the Board of the TDA. Amidst the negative
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15 publicity, lawsuits and Congressional hearings, a majority of the TDA supported a public relations
16 campaign that would splinter off the dealers from Toyota (the manufacturer). But Hogan refused
17 to do so. He remained loyal to Toyota and convinced the dealer association to not pursue their
18 anti-manufacturer public relations campaign. His loyalty to Toyota was unwavering. He believed
19 Toyota when it said that it would commit itself to vehicle safety. Unbeknownst to Hogan, Toyota
20 never intended to handle safety issues appropriately and continued to hide dangerous safety issues
21 from dealers, the government and the public.
22 42. In March 2011, Japan was hit by a powerful earthquake followed by a tsunami.
23 Significant damage from the earthquake and tsunami affected Toyota’s vehicle production.
24 Toyota was reeling and was desperate to preserve its bottom line.
25 C. Autovation
26 43. Hogan had a great relationship with Toyota for many years until he became critical
27 of Toyota’s failure to address and fix open safety recalls.
28 44. When a manufacturer recalls a vehicle, that is just the first step. The problem is not
356993.9 11
1 solved until the safety defect is actually remedied. Before the creation of Hogan’s Autovation, it
2 was often impossible for Toyota owners to know their cars had open and uncompleted safety
3 recalls, because recall notices were based on DMV registrations. Toyota often could not reach
4 owners of cars whose DMV records were out of date, who had transferred ownership one or more
5 times, and owners who moved out of state or lent their vehicles to relatives or others.
6 45. Making matters worse, the operating system Toyota used at its dealerships was
7 antiquated and required a manual search to identify open recalls, causing dealerships to miss
8 hundreds of open recall issues each month.
9 46. Many owners of Toyota vehicles with open safety recall issues were not being
10 notified of dangerous defects with their cars. These recall issues were bound to cause accidents
II and injuries; lives were at stake. Toyota knew many safety recalls were being missed.
12 47. When a customer leaves a Toyota dealership with a recalled vehicle that has not
13 been fixed, the dealership also could be exposed to legal liability. Hogan saw the significant
14 problems with the system Toyota used to address open and unrepaired safety recalls. Hogan
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15 worried that Toyota customers were driving unsafe vehicles and that dealers, like him, would be
~ 16 exposed to liability because of Toyota’s antiquated system.
~ ~: 17 48. In the interest of keeping customers safe, and to protect dealers and the Toyota
18 brand, Hogan developed Autovation, a software technology. Once installed in a dealer’s
19 operating system, Autovation automatically cross-referenced a Toyota vehicle’s V~ number
20 against the Toyota recall database while it was in the dealership’s possession. This process, called
21 the technology’s “passive system,” easily and immediately identified all open and unrepaired
22 recall issues on a vehicle.
23 49. The software also had an “active system,” which allowed dealers to mail a “safety
24 recall information” letter directly to any customer in their area who owns a Toyota car with an
25 outstanding safety recall. The letter often informed customers of multiple open recalls on their
26 cars. It explained the safety risk to the customer in layman’s terms and offered repair at no charge.
27 50. Hogan implemented the Autovation technology at his Dealerships. The technology
28 revealed an alarming number of missed recalls for cars that came to the Dealerships’ service
356993.9 12
1 department. For example, the results over the first three months at Capistrano Toyota are below:
2 • In November 2010, the old operating system identified 222 outstanding safety
3 recalls that needed repair. Hogan’s Autovation technology identified an additional

4 165 vehicles—35 of which involved unintended acceleration issues.
5 • Tn December 2010, the old operating system identified 240 outstanding safety

7 135 vehicles—3 1 of which involved unintended acceleration issues.
8 • By mid-January 2011, the old operating system identified 271 outstanding safety

10 82 vehicles—14 of which involved unintended acceleration issues.
11 51. The results of Autovation at other Toyota dealerships also demonstrated that many
12 open recalls were being missed. In January 2011, Toyota still faced millions of outstanding
13 recalls. Hogan knew that, without implementation of his technology, the safety of millions of
14 Toyota customers was at risk. Thus, Hogan met with Toyota executives to discuss
ZF. t~
15 implementation of his technology across the country.
16 52. He emailed Bob Daly, Toyota’s national customer service manager, regarding the
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17 impending safety issues and the breakthrough technology he created to resolve them. Hogan
18 explained that his recall mailer program would not only improve service but would also eliminate
19 or greatly reduce Toyota’s and its dealerships’ liability exposure. Moreover, it would put
20 Toyota’s reputation for its commitment to customer safety back to the position it once
21 enjoyed. Hogan stressed to Daly that lives were at stake and that Toyota has an obligation to do
22 the right thing and take care of its customers.
23 53. Hogan thereafter presented his Autovation technology to Ellen Farrell, a Toyota
24 attorney, and David VandeLinde, Toyota’s Customer Services Operations Manager for the Los
25 Angeles region. Hogan explained that dealerships were missing many open and unrepaired
26 recalls, including for dangerous unintended acceleration, and that Toyota customers who rely on
27 Toyota and its dealers to ensure safety are being let down.
28 54. Hogan told the Toyota people that he had used Autovation at his Dealerships and
356993.9 13
1 compiled data from other Toyota dealers using Autovation to determine the high number of
2 missed recalls. Hogan described how the implementation of Autovation at his Dealerships had
3 successfully resolved hundreds of recalls that would have been missed under the current Toyota
4 system. Hogan told Toyota that the failure of Toyota to address these open recalls was a ticking
5 time bomb.
6 55. If a dealership serviced a car but missed an open recall due to Toyota’s antiquated
7 system, and that customer was subsequently in a car accident due to a vehicle defect that should
8 have been fixed, the dealership and Toyota would be exposed to substantial liability, and Toyota’s
9 credibility would be further tarnished. Toyota’s and Hogan’s reputation (and Hogan’s livelihood)
10 were in issue.
11 56. Hogan followed up with Farrell, VandeLinde and other Toyota executives to
12 address these safety issues. Toyota responded that it already had the same technology, which
13 would be released in the first quarter of 2012. This was a lie. To this day, Toyota has not released
14 an “active system” for recall mailers, which would allow dealers to affirmatively notify customers
15 of open and unrepaired safety recalls in a timely and comprehensive manner.

16 57. Instead of welcoming Hogan’s innovative program, Toyota rejected it and refused
j ~
~~ 17 to notify customers about unfixed safety recalls. Toyota buried its head in the sand. As a result,
18 nothing changed—recalls continued to be missed, and Toyota drivers and their families continued
19 tobeindanger.
20 58. In 2011, at a District Council meeting attended by Toyota dealers from Orange
21 County and the Inland Empire, VandeLinde told the dealers in attendance that there was no system
22 available to automatically identify Toyota vehicles with uncompleted recall campaigns while such
23 vehicles are in the dealership for other service. This statement was false. Hogan had presented
24 him with his Autovation technology earlier.
25 59. Hogan later learned that Toyota already had such “passive system” technology for
26 its higher-priced Lexus brand but was not using it for its lower-priced Toyota branded vehicles.
27 60. The Dealerships used Autovation from 2010 through 2015. By explaining to car
28 owners the risks associated with their vehicles and offering to fix the safety issues without charge,
356993.9 14
I the Dealerships not only remedied serious vehicle defects, they were also able to bring in new
2 customers as well as “orphaned” Toyota customers who had been servicing their cars at non-
3 dealership locations. These customers were much more likely to buy or lease their next car from
4 the Dealerships, and also to service their vehicles at the Dealerships in the future.
5 61. The Dealerships’ best years were when they were using the Autovation technology.
6 The Dealerships’ growth in the recall field fueled a corresponding growth in sales, service and
7 parts. The Dealerships’ customers were extremely appreciative of the recall mailer and expressed
8 this to Hogan; without it, many of them would not have known their cars were unsafe to drive.
9 Hogan’s customer retention for service during this period was one of the best in the region.
10 D. Toyota Defrauds Customers And The Government By Concealing Safety Defects
11 62. Around the same time Hogan implemented his Autovation technology, and against
12 the backdrop of intense public scrutiny over the safety of its vehicles, Toyota made misleading
13 statements to consumers and gave inaccurate facts to governmental regulators about defects that
14 caused unintended sudden-acceleration—sticking gas pedals and floor mats trapping the pedals.
0 15 63. Toyota made public statements assuring customers that it had “addressed the root
05.t
16 cause of unintended acceleration” in its vehicles through a limited recall of eight models for floor
17 mat entrapment. At the time Toyota made these statements, Toyota knew it had not recalled other
18 models that were equally susceptible to floor mat entrapment.
19 64. A few weeks before Toyota made these statements, Toyota had also taken steps to
20 hide another type of unintended acceleration from the National Highway Traffic Safety
21 Administration (“NHTSA”)—a problem with accelerators getting stuck, known as “sticky pedal.”
22 Toyota did not inform regulators of the sticky pedal problem or conduct a recall and, instead,
23 quietly directed the pedal manufacturer to change the pedals in new production of affected models.
24 65. Tn furtherance of its cover-up and efforts to save money, Toyota suspended the
25 pedal design changes and instructed its employees to alert the pedal manufacturer orally—and not
26 in writing—to prevent NHTSA from learning about the sticky pedal problem.
27 66. Tn 2014, Toyota was charged criminally for its misleading statements to the public,
28 regulators and Congress. In conjunction with the criminal charge, the Department of Justice
356993.9 15
1 (“DOJ”) and Toyota entered into a deferred prosecution agreement (“DPA”) under which Toyota
2 conceded that it misled regulators and consumers and that it avoided recalling vehicles to fix the
3 problems.
4 67. The DPA required that Toyota pay a $1.2 billion penalty—the largest fine that had
5 ever been imposed on an automaker in the United States. The DOJ’s March 19, 2014 press release
6 announcing the criminal charge and DPA is attached hereto as Exhibit A. The DPA is attached
7 hereto as Exhibit B. The Statement of Facts filed along with and incorporated into the DPA is
8 attached hereto as Exhibit C.
9 68. On October 5, 2017, upon a motion by the government, the United States District
10 Court in the Southern District of New York dismissed the criminal charge against Toyota. The
it Court (Honorable William H. Pauley III presiding), stated that Toyota’s misleading statements
12 “represented a reprehensible picture of corporate misconduct.” “Regrettably,” Judge Pauley
13 continued, “the payment of a $1.2 billion fine and the appointment of a monitor concluded the
J 14 government’s investigation into this tragic episode.”
15 69. Judge Pauley also expressed concern that Toyota and its executives were not
~fl 16 adequately held accountable for misleading the public and regulators.
~ ~ 17 E. Toyota Continues To Conceal and Manipulate Safety Defects

18 70. After the millions of recalls and the significant damage to the Toyota brand, in
19 2010, Toyota made numerous statements about its commitment to safety. Toyota assured its
20 dealers (and the public) that something like this would never happen again and that Toyota had
21 cleaned up its act.
22 71. In September 2010, Toyota announced to its dealers that it would have a renewed
23 focus on safety to reassure customers after the negative publicity surrounding the unintended
24 acceleration crisis. In one of Toyota’s emails to dealers, which was sent to Hogan, Toyota stated it
25 “has taken major steps to become a more responsive, safety-focused organization — listening more
26 closely to our customers, responding more quickly to their concerns and those of our regulators,
27 and taking concrete actions to ensure we are among the industry’s leaders in safety.” These
28 actions supposedly included “[m]aking extraordinary efforts to fix our recalled vehicles” and
356993.9 16
I “[a]cting swiftly on safety issues when they are reported to us.” Toyota stated: “We’re confident
2 our vehicles are among the safest on the road.”
3 72. In 2014, after Toyota agreed to pay $1.2 billion to the government to settle the
4 criminal charges, Toyota’s chief legal officer, Christopher Reynolds, assured dealers and the
5 public: “We [Toyota] have made fimdamental changes across our global operations to become a
6 more responsive company — listening better to our customers’ needs and proactively taking action
7 to serve them.” He also stated that Toyota would enhance quality control, respond more quickly
8 to customer concerns and improve the safety of Toyota products. He stated that Toyota customers
9 “can be confident that we [Toyota] continue to take our responsibilities to them seriously.
10 73. Despite the DPA, $1.2 billion fine and Judge Pauley’ s concerns, Toyota has
11 continued to deliberately hide safety issues and has refused to issue recalls for life-threatening
12 defects.
13 (‘a,) Toyota Misciassifles Safety Deftcts As “Technical Service Bulletins” Smart Key
—
~ 1!: 14 74. In 2011, while Hogan was driving his Prius, the dashboard suddenly flashed with
15 an alanning message: “KEY NOT DETECTED;” at the same time, warning lights were flashing
16 and warning beeps were sounding. It was a major distraction creating a dangerous situation. Per
~ ,~ ~ 17 NHTSA, 41% of accidents are caused by driver distraction or inattention.
C
18 75. Thereafter, Hogan’s wife, Cathie Hogan, was driving the same Prius at 60 miles per
19 hour on a major road when the engine suddenly shut off. She lost power to the power steering and
20 the power assist on her brakes. Hogan immediately reported these incidents to Toyota. Toyota
21 explained that it was aware of these safety issues, and led Hogan to believe the fault was due to a
22 defective smart key.
23 76. But instead of issuing a safety recall to notify customers of this dangerous defect
24 and fix it, as should have been done, Toyota only sent a “technical service bulletin” (or “TSB”) to
25 Toyota dealers. Customers are not notified about TSBs; only dealers are notified. In fact, Toyota
26 instructs dealers not to notify customers about TSBs unless a customer comes into the dealership
27 and complains about that condition after it has occurred; and even if a customer brings the car into
28 a Toyota dealership for unrelated service, Toyota prohibits dealers from notifying customers about
356993.9 17
1 a TSB defect unless the customer brings it up first.
2 77. Toyota knew about this defect. Toyota knew that cars were capable of losing
3 power, leading to driver distraction and accidents. To this day, Toyota has not issued a safety
4 recall for this dangerous defect.
5 78. Toyota misclassified this and other safety hazards as TSBs to avoid fixing them as
6 recalls and incurring much greater expense. This is the exactly the same type of misleading
7 conduct that Toyota engaged in with the unintended accelerator defects and is another example of
8 Toyota prioritizing its bottom line over the safety of its customers.
9 (b) Toyota Misclassjfles Safety Deftcts As “Limited Service Campaigns” or “Special

10 Service Campaigns” Engine Control Module; Driveshafis; Radar Sensors; Front
—
11 Passenger A irbags
12 79. Drivers of 2012-2014 Toyota Tundra and Sequoia vehicles were experiencing
13 issues with their Engine Control Module (ECM) calibration, causing the Air Injection Pump, an
14 emissions control component, to fail and causing the vehicle to enter what Toyota calls “limp
15 home” mode while driving. When a vehicle enters “limp-home” mode, the vehicle cannot travel
16 at more than 30 or 35 miles per hour. This is all in order to avoid ifirther strain on the engine and
~ ~ 17 “limp” you home.

18 80. This is a dangerous safety defect. If a car is traveling on the highway at 65 miles
19 per hour and is surrounded by other cars traveling at similar speeds, a sudden switch into “limp-
20 home” mode could disrupt traffic and cause an accident.
21 81. Nonetheless, Toyota claims that “limp-home” mode is not a safety issue. Instead of
22 issuing a safety recall on cars with this dangerous defect, as should have been done, Toyota only
23 issued a “limited service campaign” (“LSC”). LSCs are not supposed to address safety-related
24 defects that affect the performance of the vehicle; only safety recalls are. Unlike safety recalls,
25 LSCs have an expiration date; when an LSC expires, Toyota no longer pays to fix the issue.
26 Unlike safety recalls, LSCs also do not show up on NHTSA’s website (safercar.gov) when
27 checking a car by VIN number for open and unrepaired safety defects.
28 82. Indeed, when a car shows up in a dealership’s service drive, expired LSCs do not
356993.9 18
1 show up in the dealership management system (“DMS”), so Hogan’s Dealerships would not be
2 notified of these serious defects. The DM5 is where Toyota trains service advisors to look for
3 such defects.
4 83. In January 2015, Toyota turned this LSC into a special service campaign (“SSC”)
5 with no expiration date. But SSCs—like LSCs—are not supposed to address safety-related
6 defects that affect the performance of the vehicle. And SSCs—like LSCs—do not show up on
7 NHTSA’s website when checking a car by VI7N number for open safety defects.
8 84. Instead of issuing safety recalls, as it should have, Toyota has also issued LSCs for
9 dangerous defects on other vehicles, including the following:

10 • In October 2013, Toyota issued an LSC on 2011-2012 Highlander Hybrid vehicles.
11 Due to an assembly error in these vehicles, the driveshafi can disengage from the
12 inboard joint assembly. This can affect the vehicle’s ability to start from a stop,
13 reverse, decelerate and brake—increasing the likelihood of a crash. This LSC expired
14 in October 2016, yet there are still many of these vehicles on the road that have not
15 received the necessary repair.

ODt
16 • In June 2014, Toyota issued an LSC on 2011-2014 Sienna vehicles with defective
~ ~ 17 radar sensors in the Pre-Collision System. If the radar sensor is inactive for more than
18 10 seconds, it may not re-activate—increasing the likelihood of a frontal collision.
19 This LSC expired in June 2017, yet many of these vehicles have not received the
20 necessary repair.
21 • In July 2014, Toyota issues an LSC on 2007-2011 Camry Hybrid vehicles. In these
22 cars, the brake reservoir filter can become clogged, causing a temporary loss in front
23 brake assist. This increases the amount of time it takes to come to a stop and increases
24 the likelihood of a crash. This LSC expired in June 2017, yet there are still many of
25 these vehicles on the road that have not received the necessary repair.
26 In December 2014, Toyota issued an LSC on 2012-2013 Avalon, Avalon Hybrid,
27 Camry, Camry Hybrid, Prius C and Yaris vehicles. In these cars, front passenger
28 airbags may not work in a collision due to defective seat sensors. Without a properly
356993.9 19
1 operating airbag, a major accident would cause serious bodily injury or perhaps death
2 to the passenger. For that reason, Nissan and GM have recalled over 3 million cars
3 with a similar defective sensor condition. In fact, Toyota itself issued a safety recall
4 for a condition leading to front passenger airbag malflinction on 2014-2015 Prius V
5 vehicles in January 2015. Yet here, Toyota only issued an LSC that expires in
6 December 2017. Thus, many vehicles with this defect will not obtain the necessary fix
7 when the LSC expires.
8 • In June 2015, Toyota issued an LSC on 2014 Corolla Eco vehicles with faulty engine
9 software programming for “continuous variable valve lift control” that can cause a
10 reduction in power. This LSC expires in June 2018.
11 85. Toyota misclassified these safety hazards as “limited service campaigns” to avoid
12 the expense of fixing safety recalls and to avoid the reporting and monitoring obligations NHTSA
~ 1 ~ 13 requires for safety recalls, and to significantly reduce the cost of repairs by putting a deadline on
to
~ 14 them.
O~3
fl 15 86. Instead of issuing safety recalls, as it should have, Toyota has also issued SSCs for
16 dangerous defects on other vehicles. For example, in November 2015, Toyota issued an SSC on
~ ~ 17 2010-2014 Toyota Tacoma 2TR-FE vehicles. In these vehicles, the front catalytic converter
18 internal components can deteriorate, restricting the exhaust flow and causing a reduction in power.
19 Toyota misclassified this safety hazard as a “special service campaign” to avoid the expense of
20 fixing safety recalls and to avoid the reporting and monitoring obligations for safety recalls under
21 NHTSA.
22 (c) Toyota Makes Inadequate Safety Repairs—In verters and Inverter C’otnponents
23 87. Drivers of 2010-2014 Toyota Prius models were experiencing problems with their
24 inverters. Inverters and their components are critical parts of the electrical power system in Prius
25 hybrids. The inverters were failing, causing the car to either shut down while driving or to enter
26 “limp-home” mode.
27 88. Despite knowing about this safety concern since at least 2010 (if not earlier),
28 Toyota took no action until 2014. In February 2014, Toyota finally issued Safety Recall EOE to
356993.9 20
1 address this issue in over 700,000 Prius vehicles in the U.S., including many that had already been
2 on the road for years. Safety Recall EOE requires a “software re-flash,” i.e., a reboot of the
3 software, costing Toyota approximately $80 per vehicle. Once a car is given the “software re
4 flash,” the recall is deemed completed.
5 89. But this dilatory “remedy” did not fix the safety defect. Many customers who
6 received the “software re-flash” still experienced failing inverters. Thus, they were still at risk of
7 experiencing a shut-down or loss of power while driving, which is a serious safety defect.
8 90. Toyota knew a software reboot would not fix the problem. Less than a year before
9 issuing the FOE recall, Toyota issued a safety recall on Toyota Highlander Hybrid vehicles that
10 were experiencing a similar inverter problem. For vehicles falling under that recall, Toyota
11 replaced a critical part of the inverter at a cost of approximately $3,000 per vehicle. And recently,
12 on October 18, 2017, Toyota issued another safety recall on 2016 Toyota Prius vehicles that were
6 ~ 13 experiencing a similar inverter problem. For those vehicles, Toyota also replaced the inverter
~
ojs
14 system.
15 91. Under Safety Recall EOE — the software reboot — Toyota did not correct the root
Dz.r .
16 cause of the inverter failure. Instead, Toyota chose to perform an ineffective fix that cost a
17 fraction of what the appropriate fix would have cost. Prius drivers who believed they had
18 completed the necessary recall repair work were thus put back on the road with defective inverters
19 still in their vehicles. And dealers, like Hogan, were misled to believe that they had fixed these
20 serious safety defects on their customers’ vehicles.

21 92. Many Toyota customers have experienced inverter failure after completing Safety
22 Recall EOE. In October 2017, an elderiy Toyota driver experienced inverter failure while driving
23 on a major road. The dashboard flashed with lights telling the customer to turn off the engine and
24 park the car immediately. She lost power and was lucky to avoid a major crash. The driver had
25 her Prius towed to Capistrano Toyota.
26 93. Her vehicle had completed Safety Recall FOE (the software “reflash”) in 2014 at
27 another dealership. Despite this, the inverter in her Prius failed and she suddenly had to maneuver
28 the car to the shoulder with limited power. Toyota knows about this risk of failure but continues
356993.9 21
I to put driver safety at risk to save money.
2 94. Toyota issued the $80 software reboot, knowing it would not fix the inverter, to
3 save repair costs ($3,000 for full replacement versus the $80 reboot), at the expense of Toyota
4 drivers and their safety.
5 95. To cover its tracks, Toyota issued a “warranty enhancement,” which extended
6 warranty coverage on inverters to 15 years in cars that had the inverter software reboot. Under
7 this warranty, Toyota will replace the inverters only after they fail. This is insufficient and does
8 not protect driver safety. A customer should not have to face a life-threatening loss or reduction of
9 power while driving in order to obtain the necessary inverter replacement.

10 96. The Toyota Prius V is the wagon version of the Toyota Prius. These two models
11 have essentially the same inverter. But Toyota did not issue a safety recall for the Prius V until 18
12 months after issuance of the Safety Recall EOE for the Prius. Thus, Toyota knew about the danger
~ O! 13 of driving Prius V vehicles with defective inverters for 18 months and did nothing about it during
H: 14 that period of time.

15 (d~) Toyota Manipulates Service History Reports—The Rav4 Suspension Arms
16 97. By 2012, drivers of Toyota Rav4 vehicles were experiencing problems with the
~; 17 suspension. The nuts on the rear suspension arms were coming loose, causing the arm to separate
18 and creating a dangerous risk of a crash.
19 98. In November 2012, Toyota issued Safety Recall COJ to address this suspension
20 defect in 760,000 vehicles in the U.S. As a remedy, Toyota instructed dealers to inspect the nuts,
21 apply suspension arm clips, provide an owner’s manual supplement for future wheel alignments,
22 and apply a warning label about the recall.
23 99. But the suspension arm clip fix, at a cost of $65, did not work. When it became
24 clear that the suspension clips did not cure the problem, in September 2013, Toyota issued a
25 second recall for the same condition—Safety Recall CSJ. This second recall provided for removal
26 of the suspension arm clips installed in the first, COJ, recall. Then, it called for either the
27 application of epoxy glue to the existing suspension arm or replacement of one or both rear
28 suspension arms and sealing with epoxy. Toyota called the foregoing a “re-inspection.”
356993.9 22
1 100. But this is incorrect because it involves the removal of the parts utilized in the first
2 recall and the implementation of a new procedure with new parts. In effect, this is a recall of the
3 first COJ Safety Recall—which didn’t work—by way of the second CSJ Safety Recall.
4 101. Nine months lajer, in June 2014, drivers of Rav4s were still experiencing problems
5 with their suspension. But this time, instead of issuing another safety recall, Toyota issued a TSB.
6 Toyota stated in this TSB that “any vehicle which has had Safety Recall CSJ completed will no
7 longer have a rear wheel toe adjustment.” This means a full alignment can no longer be done on
8 the vehicle. The epoxy remedy in (second) Recall CSJ created a new problem—it sealed the
9 suspension arm so that the car can no longer have a full alignment done (this results in the vehicle
10 having a harsher ride, diminished handling and faster tire wear).
11 102. As TSBs are sent only to dealers, and dealers are not allowed to notify customers of
1< 12 information contained within TSBs unless a customer brings that exact condition to their attention.
13 Toyota thus effectively concealed from its customers this new condition that it created.
14 103. The suspension ann issues continued, and in September 2016, Toyota issued
15 another (third) safety recall—Safety Recall GOV. As a remedy for the suspension arms separating
16 and causing loss of vehicle control, Safety Recall GOV required that Toyota replace both
~
17 suspension arms and apply an epoxy.
18 104. Under California law, a vehicle is presumed to be a “lemon”—and triggers
19 Toyota’s obligation to buy back or replace the vehicle—if there have been at least two
20 unsuccessful attempts to repair a defect “that is likely to cause death or serious bodily injury.” If a
21 manufacturer completes two safety recalls on a vehicle for the same condition, and the car still
22 suffers from the problem, then that vehicle is subject to a “Lemon Law” buyback. With respect to
23 the Rav4 vehicle, there have been three recalls, and a TSB, because of the suspension arm defect.
24 105. To avoid the massive financial impact of the “Lemon Law,” Toyota manipulated
25 the service history for Rav4s with the suspension arm defects in its databases. Toyota deleted
26 entries showing the first recall—Safety Recall COJ—from the section of Toyota’s databases where
27 dealers and repair shops go to determine necessary repairs. Instead of listing this safety recall with
28 all the other campaigns, Toyota buried the only record of this safety recall in a different section of
356993.9 23
1 the databases. Toyota did this so that the databases would not show three unsuccessfhl attempts
2 to repair the same condition and to thereby avoid costly “Lemon Law” buybacks.
3 (e) Toyota Certifies Unsafe Vehicles As “Toyota Certified Used Vehicles”

4 106. Many 2010-2014 Toyota Priuses, 2012-2014 Prius Vs, and 2006-2011 Toyota
5 Rav4s have been certified as Toyota Certified Used Vehicles, or “TCUVs.” Many vehicles with
6 expired and uncompleted LSCs or SSCs—such as the 2012-2014 Tundras and Sequoias, 2011-
7 2014 Siennas, 2012-2013 Avalons, Avalon Hybrids, Camrys, Camry Hybrids, Prius Cs and
8 Yarises, 2014 Corolla Ecos and 2010-2014 Tacoma 2TR-FEs—are also certified as “TCUVs.”
9 Toyota identifies vehicles as TCUVs only afier they successflully complete a “160-point Quality
10 Assurance Inspection” and reconditioning. Toyota charges dealers $450 for each certification.
11 107. Toyota has stated that its TCUV program is “vital to keeping [its] residual values
12 strong.” By advertising a Toyota vehicle as a TCUV, Toyota is ensuring that vehicle is the best of
13 the best. But many cars being advertised as TCUVs—like the Prius and Prius Vs with faulty
~1 14 inverters/components, the Rav4s with defective rear suspension anns, and other cars with expired
15 and uncompleted LSCs or SSCs—have serious safety issues creating the substantial risk of
16 accidents and injunes.
~ ~ 17 108. Accordingly, on September 29, 2017, Hogan put a “stop-sale” on all 2010-2014
18 Prius and Prius V cars and all 2006-2011 Rav4 cars at Claremont Toyota and Capistrano Toyota.
19 Hogan’s employees removed these vehicles from the Dealerships’ lots and locked them up. They
20 stopped wholesaling them and pulled all advertisements relating to them, in order to keep them off
21 the market. Hogan seeks reimbursement from Toyota for the misleading $450/car TCUV
22 certifications, and for Toyota to repurchase these unsafe vehicles.
23 109. On October 16, 2017, Hogan notified Toyota that he issued a “stop-sale” on these
24 cars at the Dealerships. He asked Toyota what it was doing to address the safety issues with the
25 faulty inverters/components in the Prius and Prius V cars, and the defective rear suspension arms
26 in the Rav4 vehicles. Hogan asked Toyota for guidance on how he and the Dealerships should
27 handle these critical safety issues. Toyota admitted that its prior recalls did not rectify the safety
28 concerns and refhsed to address them firther.
356993.9 24
110. Hogan has also asked Toyota for guidance on how he and the Dealerships should
2 handle several safety hazards that Toyota misclassified as LSCs, and not as safety recalls—the
3 “limp-home” mode, radar sensor, front brake assist, front passenger airbag, and power reduction
4 problems. These unsafe conditions continue to exist on Toyotas on the road.
5 111. In addition, Toyota makes Hogan’s Dealerships (and all other Toyota dealers in the
6 Los Angeles region) contribute 2% of the dealer invoice cost of vehicles to the TDA. This equates
7 to an average $650 per car. Toyota claims this money is being used for regional advertising in
8 which Toyota misleadingly tells the public that its vehicles are safe and reliable when in fact they
9 are not. Hogan should not have to contribute to this false advertising campaign and seeks
10 reimbursement from Toyota for the monies that his Dealerships have contributed over the years to
11 the TDA. For Claremont Toyota alone, this would be more than $1.5 million per year.
12 112. Toyota has been working to keep the lid on these safety issues. Hogan was and is
13 getting in Toyota’s way.

14 F. Toyota Plots Against Hogan
15 113. Through the use of Autovation between 2010 and 2015, the Dealerships completed
2 16 tens of thousands of recall repairs for Toyota vehicles. These repairs cost Toyota millions of
~ ~ 17 dollars for Hogan’s Dealerships alone. In addition, Hogan licensed the Autovation “passive
18 system” technology to other Toyota dealers, which cost Toyota millions more to fix safety recalls.
19 114. Following the recession, the recall crisis and the tsunami in Japan, Toyota’s
20 objective was to preserve and enhance its bottom line—even at the expense of customer safety.
21 Hogan’s innovative recall solution—Autovation—had become a thorn in Toyota’s side, costing
22 Toyota millions and reducing its profits accordingly.

23 115. As Hogan confronted Toyota executives about their seeming lack of concern for
24 customer safety, unbeknownst to Hogan, Toyota’s senior management initiated a plan to oust
25 Hogan as a franchised dealer. Toyota commenced a series of acts to punish Hogan, harm his
26 business and drive him out; and Toyota continues on with its campaign to this day.
27 116. After the unintended acceleration recall debacle, Toyota claimed that it was setting
28 a new standard of responsiveness to customers and was going to prioritize customer safety. That
356993.9 25
1 was public relations lip service. Hogan presented a technology that was making his customers
2 safer and would have made millions more safer, and Toyota rejected it and then went after Hogan.
3 G. Toyota Retaliates Against Hogan

4 (a) Toyota Destroys A utovation
5 117. Toyota took action to block Hogan’s recall program. Toyota initially removed the
6 codes from its internal website that made it possible for Autovation to run yIN numbers against
7 open and unrepaired recalls.
8 118. Toyota also pressured dealers not to use Hogan’s program. Hogan met with other
9 Toyota dealers to demonstrate and sell them his Autovation software. Toyota knew about these
10 meetings and did not want the software to be disseminated. When one Toyota dealership called
11 Toyota about the recall mailing program, he was told by Toyota not to use it.
12 119. As for dealers who were already using Autovation, Toyota sent threatening cease
13 and-desist letters, stating (falsely) that they were violating their franchise agreements and NHTSA
14 requirements. Toyota directed these dealerships to stop using Autovation.
15 120. Toyota’s threatening letters were a lie. Dealers using Hogan’s mailer program
16 were not violating any Toyota policies or NHTSA requirements. In fact, NHTSA does not
17 regulate dealers, only manufacturers like Toyota. Toyota was trying to strong-arm dealers to save
18 money on fixing recalls; and it worked. Dealers refUsed to use the Autovation program.
19 121. When Hogan was able to reprogram the software to identify open and unrepaired
20 recalls without the codes listed on Toyota’s system, Toyota found another way to block the recall
21 program. In 2014, around the same time Toyota was charged with criminal wire fraud in
22 connection with its falsification and concealment of unintended acceleration, Toyota shut down
23 the Dealerships’ user profile on “Dealer Daily,” Toyota’s website that the Dealerships used to run
24 VIN numbers against open recalls.

25 122. Toyota claimed the Dealerships had exceeded the number of VIN numbers that
26 could be run on the user profile. Of course, the Dealerships were running a high volume of VIN
27 numbers because they were identifying open and unrepaired safety recalls. Many of these open
28 and unrepaired safety recalls involved unintended acceleration resulting from sticky pedals and
356993.9 26
1 floor mat entrapment.
2 123. Despite knowing that the Dealerships were trying to enhance customer safety,
3 Toyota put an end to it. Toyota actively and purposefluly shut down Hogan’s ability to run the
4 recall information mailers at his Dealerships. Toyota blocked a program intended to make
5 customers safe.
6 124. After Toyota’s interference with his recall program, Hogan was forced to succumb
7 to Toyota’s pressure. This not only left Toyota drivers in jeopardy; it also cost the Dealerships
8 thousands of new customers and tens of millions in revenue.
9 125. As a result, the Dealerships lost thousands of new customers each year. According
10 to Toyota’s own figures, a new customer is worth more than $15,000 per year to a Toyota
11 dealership. Therefore, Toyota’s blocking of the recall mailing program has cost the Dealerships
12 over $30 million of revenue per year and has caused millions in losses in the Dealerships’ value.
13 126. Today, there are millions of Toyota cars on the road with open and unrepaired
14 safety recalls that the Dealerships can no longer identify and notify customers about. Toyota’s
O~3 t
15 inefficient, ineffective manual system makes it virtually impossible to notify customers about all
16 open and unrepaired recalls for each VIN number.
j ~: 1 17 127. To this day, Toyota continues to block technology intended to keep its customers
18 safe. Reynolds and Reynolds (“Reynolds”), a company that provides operational software to auto
19 dealers and car manufacturers, including Toyota, recently developed a technology that is similar to
20 Autovation. Reynolds’ program allows dealers to identify vehicles in their area with open recalls
21 and send letters to owners of those vehicles. Other manufacturers—Honda, Chevrolet, Cadillac,
22 Buick and others—allow Reynolds to access their master database of yIN numbers and recall
23 repair codes so that their dealers can notify customers in their area about outstanding safety
24 recalls. Honda even gives awards to its dealers with the most completed safety recalls.
25 128. Toyota, on the other hand, has denied Reynolds access to its master database of
26 VIN numbers and recall repair codes, making it impossible for Toyota dealers to notify customers
27 about safety issues. Unlike other manufacturers, Toyota is actively preventing its dealers from
28 fixing open safety recalls.
356993.9 27
1 (rb) Toyota Delays Capistrano Vehicles
2 129. Toyota’s Vehicle Supplemental Support (“VSS”) policy provides that, when a
3 dealer adds land to his or her facility, that addition entitles the dealership to a special allocation of
4 additional VSS cars. Once Toyota decided to oust Hogan from the Toyota franchise, Toyota
5 violated its own policy to punish Hogan.
6 130. Pursuant to the Dealer Agreement, Toyota required that Hogan purchase additional
7 land at Capistrano Toyota. Beginning in 2011, in compliance with Toyota’s instructions and in
8 reliance on the promise of additional vehicles under the VSS policy, Hogan spent $2.5 million to
9 add land and make improvements to Capistrano Toyota. The site approval was received in July
10 2013, which triggered Hogan’s right to approximately 300 additional cars.
11 131. Despite continuous requests from Hogan, Toyota did not provide Capistrano
12 Toyota the additional cars until June 2015—almost two years later; and the cars eventually
13 provided, in large part, were not suited for sale in Capistrano Toyota’s particular market.
14 (ç) Toyota Refuses To Allocate Cars To Claremont Toyota
O.~3
15 132. Claremont Toyota was a top dealer in light truck sales. Claremont Toyota was
Ozt
16 ranked Number lOin total sales of Tacomas. Despite this success, Toyota claimed Claremont
~ ~ 17 Toyota did not meet Toyota’s standard for what it calls “sales efficiency.”
18 133. Tn 2014, Toyota pushed Hogan to perform a refurbishment—what Toyota calls an
19 “Image II”—at Claremont Toyota. Hogan complied, spending $3.5 million on a state of the art
20 remodel of the facility.
21 134. Stephen Hogan, General Manager at Claremont Toyota, asked Douglas Eroh,
22 Toyota’s former Assistant General Manager for the Los Angeles region, for more trucks since
23 sales were brisk and since Toyota was allocating more trucks to other operators in the area.
24 Toyota refused. For years, Stephen Hogan pleaded for Toyota’s support and for additional
25 allocation of trucks to increase Claremont Toyota’s “sales efficiency” and enhance revenues.
26 Toyota denied his requests.

27 135. While hamstringing sales at Claremont Toyota, Toyota criticized Claremont Toyota
28 for its lack of “sales efficiency.” When Hogan tried to get additional vehicles—the only way to
356993.9 28
1 increase sales efficiency—Toyota refused to allocate them. Toyota itself thus caused the sales
2 inefficiency; and also caused Claremont Toyota to lose other streams of revenue, including service
3 and parts.
4 136. Hogan asked Toyota for information regarding allocation to other dealers in his
5 region. Toyota refused. Toyota is providing preferred and best-selling cars and light trucks to its
6 favored dealers in close proximity to Hogan’s Dealerships (such as John Biway’s Crown Toyota,
7 Longo Toyota and Tustin Toyota), to punish Hogan and force him out as a franchisee.
8 (‘d) Toyota Rejects Hogan ~s Sons For Leadership Positions
9 137. Like their father, Hogan’s sons have devoted their careers to the Toyota brand and
10 to the Dealerships; and they have performed successfully as managers of the business. As General
11 Sales Manager and General Manager Evaluation (“GME”) Candidate at Capistrano Toyota, Roger
12 Hogan, Jr. boosted the dealership’s profits and Customer Satisfaction Index (“CSI”) and increased
13 sales efficiency by over 35%. And Toyota has praised Stephen Hogan’s performance as General
14 Manager of Claremont Toyota.

ojs
15 138. But to punish Hogan for developing the recall program, Toyota unreasonably
16 refused to approve Roger Hogan, Jr. as General Manager of Capistrano Toyota. Toyota also
17 refused to approve Stephen Hogan as an AAO—a manager for multiple Toyota locations—
18 because of Claremont Toyota’s supposed “sales inefficiency” which was caused by Toyota itself.
19 139. By rejecting Roger Hogan, Jr. and Stephen Hogan for these positions, Toyota, as
20 part of its efforts to force out Hogan, blocked Hogan’s ability for a succession plan at his
21 dealerships.
22 (e) Toyota Plays Favorites With Allocation of Vehicles

23 140. Toyota’s General Manager’s Pool (“GMP”) is a pool of vehicles that Toyota’s
24 regional manager skims off the total vehicle allocation for the region and assigns to whomever he
25 or she deems appropriate. Toyota operates the GMP program in its discretion to reward favored
26 dealers and punish those not in favor—like Hogan.
27 141. To retaliate against Hogan, Toyota systematically gave other dealers in the
28 region—Hogan’s competitors—more and better inventory through the GMP. Toyota gave its best
356993.9 29
I products to its favorite dealers, handing them a competitive advantage. Dealers who receive
2 additional GMP inventory have an advantage to maintain higher profit margins and are able to
3 spend less money on advertising to move inventory.

4 142. Toyota’s refusal to fairly distribute vehicles to Hogan and his Dealerships under the
5 GMP has, in turn, affected the Dealerships’ sales efficiency figures that Toyota criticizes.
6 (9 Toyota Diverts Hogan’s Customers To Other Dealers
7 143. Many Toyota customers use Toyota’s website (toyota.com) to determine which
8 Toyota dealership has the vehicle they desire. Because Toyota does not allocate vehicles fairly to
9 Hogan’s Dealerships, prospective Toyota buyers are diverted to Hogan’s competitors to find the
10 desirable cars they want.
11 144. Even worse, when a customer enters his or her zip code into Toyota’s website to
12 find the nearest Toyota dealership, many customers who reside only a few miles away from
13 Hogan’s Dealerships are diverted to Toyota dealerships farther away. Hogan has asked Toyota to
14 fix this issue, but Toyota has refused. Because of this, Hogan’s competitors sell a significant
15 amount of vehicles in his Dealerships’ primary market area.

16 145. Moreover, even where Hogan’s Dealerships appear in searches on Toyota.com,
~ ~ 17 Toyota has manipulated the results such that when a consumer clicks on Capistrano Toyota, the
18 consumer gets redirected to a different Toyota dealership not owned by Hogan. Toyota is
19 diverting customers away from Hogan’s Dealerships and its websites to undermine its business.
20 Web traffic generated from Toyota.com is critical to all Toyota dealerships, including Hogan’s
21 Dealerships.
22 146. Tn addition, Toyota released a hydrogen model called the Mirai in 2015. Toyota
23 made the Mirai available only to a handful of dealers across the country, several of which were in
24 Southern California near Hogan’s Dealerships. Toyota did not make the Mirai available at either
25 of Hogan’s Dealerships.
26 147. To solicit sales for the Mirai and to retaliate against Hogan for developing the recall
27 program, Toyota went into Hogan’s customer databases and seized his customer lists. Toyota
28 used these lists to target Hogan’s customers (especially plug-in Prius drivers who would be
356993.9 30
1 receptive to an environmentally-friendly hydrogen vehicle) and divert them to competing
2 dealerships in the region (Longo Toyota, Tustin Toyota and Toyota of Orange). Toyota
3 knowingly solicited Hogan’s customers in order to send them to other nearby dealers to buy a
4 highly desired new vehicle.
5 (g) Toyota Blocks Hogan ‘s Succession Plan; And Tells Hbn To Sell
6 148. In 2015, Toyota Regional Executive Eroh was replaced by Alec Hagey. In
7 September 2016, Hagey requested a face-to-face meeting with Hogan. During that meeting,
8 Hogan first learned about Toyota’s plan to oust him from the franchise system. Hagey requested
9 that Hogan come to the meeting alone.

10 149. At the meeting, Hagey told Hogan that he should sell and offered Toyota’s services
11 to help identify qualified buyers. Hogan replied that he did not want to sell.
12 150. Hagey told Hogan at this meeting that, contrary to Toyota’s prior representations of
13 creating a stair-step approval program for Roger Hogan Jr., Toyota would not approve him as
14 general manager at Capistrano Toyota and was terminating him completely from Toyota’s GM
15 program. Toyota further stated that Stephen Hogan would not be approved as a general manager
16 of both stores, even though Claremont Toyota is one of the most successfUl stores in the region,
17 and Toyota does this for other dealers.
18 151. Toyota knows that Hogan is planning to pass on his Dealerships to his sons. But
19 Toyota is blocking Hogan’s succession plan because Toyota wants Hogan out.
20 152. Hogan was shocked by this meeting. He had been trying to work with Toyota for
21 years and spent millions at Toyota’s behest and encouragement, all the while believing that Toyota
22 had his best intentions in mind. But unbeknownst to Hogan, Toyota was already planning the
23 future of the Dealerships without him and his family. The 2016 meeting with Hagey was when
24 Hogan realized Toyota’s plan to oust him as a Toyota dealer.
25 FIRST CAUSE OF ACTION

26 (Fraud By Concealment — Plaintiffs against Toyota)
27 153. Plaintiffs repeat and reallege each and every foregoing and subsequent allegation
28 contained in the First Amended Complaint, and further allege as follows:
356993.9 31
154. Beginning in 2010 and continuing through the present, Toyota concealed material
2 information and made numerous, repeated material misrepresentations to Hogan. Specifically,

3 Toyota concealed from Hogan:
4 a. Its scheme to oust him from the Toyota franchise system; and
5 b. Dangerous safety issues affecting numerous Toyota cars.
6 155. Toyota had a duty to disclose these facts to Hogan. Hogan had a long-standing
7 relationship of trust and confidence with Toyota. Hogan was a long time member of the Toyota
8 family who devoted his career to the coffipany. Hogan was one of Toyota’s top dealers and was a
9 go-to dealer to turn around troubled dealerships. Hogan was buying vehicles from Toyota and
10 selling them to the public. His Dealerships were also fixing vehicles pursuant to Toyota’s
11 standards and requirements. Toyota had a duty to disclose to Hogan—and Hogan had a right to
12 know—that Toyota was covering up safety defects and putting driver safety in jeopardy. While
13 Hogan was telling customers that the vehicles they were buying were certified safe by Toyota,
14 many of those cars were unsafe and improperly repaired due to Toyota’s misconduct.
ojs
15 156. Hogan trusted and relied on Toyota’s concealment. Hogan sold his Ford dealership
16 so that he could focus on Toyota. Hogan used the 5.25-acre lot the Ford dealership was located on
~ ~ 17 to expand Claremont Toyota. Toyota also encouraged Hogan to expand and improve his
18 Dealerships, and Hogan did so.
19 157. As Toyota requested, Hogan made improvements to Capistrano Toyota’s property
20 and invested $2.5 million in additional land for the facility; he also spent $3.5 million to conduct
21 an “Image II” upgrade to Claremont Toyota. Hogan took these steps in trust and confidence of
22 Toyota. He would not have done this had he known about the dangerous safety defects Toyota
23 was concealing or Toyota’s plan to oust him as a dealer.

24 158. Toyota was required to disclose the true facts to Hogan because Toyota had been
25 telling Hogan to spend money to grow and expand his Dealerships, and Hogan spent millions in
26 reliance. Toyota falsely communicated support for Hogan’s business. Unbeknownst to Hogan,
27 Toyota had initiated a plan to eliminate him as a franchisee and was knowingly covering up safety
28 defects. Toyota concealed these facts from Hogan, which were in Toyota’s exclusive possession.
356993.9 32
1 Toyota concealed these facts form Hogan and prevented him from discovering them.
2 159. Toyota concealed its plan to force Hogan out as a franchisee so that Hogan would
3 complete the improvements on the Dealerships, invest in upgraded facilities and land, and keep the
4 Dealerships in business.
5 160. Until in or about September 2016—when Toyota told Hogan to sell—Hogan was
6 unaware of Toyota’s scheme to get rid of him. If he had known of Toyota’s plan to force him out
7 of the franchise, he would not have acted as he did. Also, had Hogan known about Toyota’s
8 continuing cover-up of safety defects, Hogan would not have invested millions of dollars into the
9 Dealerships, would not have added land to the facilities, and would have sold the Dealerships at a
10 time when their value was higher than it is today.
11 161. After the unintended acceleration crisis, Toyota represented to Hogan and other
12 dealers that Toyota was improving safety responsiveness, ensuring its vehicles are safe to drive,
13 and taking actions to ensure customer safety. But Toyota never intended to handle safety issues
~ ~ 14 appropriately. Toyota continued to hide dangerous safety issues from dealers, the government and
1°! 15 thepublic.
16 162. After Hogan became aware of Toyota’s retaliatory scheme against him, Plaintiffs
17 began to review Toyota’s conduct with respect to safety. Since the filing of the original
18 Complaint in this action, Plaintiffs’ investigation has discovered that Toyota has not become a
19 responsive, safety-focused organization, as it claimed. Toyota is not addressing continuing safety
20 defects properly and is not acting “swiftly” on safety issues that are reported to it. Instead, Toyota
21 continues to prioritize its profit margin over customer safety.
22 163. Toyota misled dealers, like Hogan, to believe that it was properly addressing safety
23 issues. In fact, Toyota has been concealing material facts about defects in many of Toyota’s most
24 popular makes from Hogan and all of its dealer body (as well as the public and the government).
25 For example:
26 • Toyota issued a software “re-flash” recall remedy for faulty inverters in 2010-2014
27 Toyota Prius and Prius V cars that it knew would not fix the root cause of the
28 problem. Prius inverters continue to fail after obtaining Toyota’s cheap recall.
356993.9 33
1 Toyota is knowingly jeopardizing customer safety by continuing to put drivers back
2 on the road with defective inverters that can cause the car to shut down while
3 driving or enter “limp-home” mode.

4 • Toyota misclassified defective Smart Keys that were capable of creating a
5 distraction as a TSB—instead of a safety recall—to avoid fixing them as recalls and
6 incurring greater expense.
7 • Toyota misclassified other safety hazards as LSCs or SSCs instead of safety recalls
8 in order to circumvent NHTSA regulations, reporting and disclosure requirements.
9 LSCs and SSCs were issued for dangerous conditions including “limp-home”
10 mode, deactivated radar sensors and disabled front passenger airbags.
11 • Toyota manipulated the service history in its databases to cover up multiple recall
12 remedy failures for defective rear suspension arms, and to avoid the massive
13 financial impact of “Lemon Law.”

14 • Despite knowing many of these vehicles are defective and unsafe, Toyota certified
o 15 them as TCUVs and charged dealers like Hogan for this phony certification.
16 164. Toyota’s concealment of a multitude of safety defects has significantly diminished
~- ~ 17 the value of Hogan’s Dealerships and the Toyota brand.

18 165. If Hogan had known Toyota was hiding dangerous safety issues from its dealers, he
19 would not have acted as he did. Hogan would not have invested millions of dollars into the
20 Dealerships, would not have added land to the facilities, and would have sold the Dealerships at a
21 time when their value was higher than it is today. In addition, by refusing to issue safety recalls
22 when necessary (and instead calling them TSBs, LSCs or SSCs), Toyota deprived the Dealerships
23 of millions in additional recall repair work that it would have received had Toyota properly
24 classified these defects.

25 166. Toyota concealed facts about numerous safety defects so that Hogan would
26 continue to, in addition to investing heavily in the Dealerships, buy TCUV certifications for
27 Toyota Prius and Prius V cars with defective inverters/components, and so that they would
28 continue to sell these carsthat Toyota knew had serious safety issues creating a dangerous risk of
356993.9 34
1 a crash. Also, based on Toyota’s non-disclosures, Hogan continued to contribute 2% of each car
2 invoice to the TDA for Toyota’s false advertising claims about safety. Hogan would not have paid
3 these millions of dollars had he known the true facts about the safety defects that Toyota was
4 concealing. Hogan seeks that Toyota repay those fraudulently induced funds to the Dealerships.
5 167. Plaintiffs changed their position and relied to their detriment on Toyota’s
6 concealment and non-disclosures described herein, and as a proximate result of such conduct,
7 Plaintiffs have suffered damages in excess of $100 million, with the exact amount to be proven at
8 trial.
9 Furthermore, Toyota’s conduct was committed with the intent of depriving Plaintiffs of
10 rights and causing Plaintiffs other injury. Toyota’s conduct was despicable and subjected
11 Plaintiffs to unjust hardship. Toyota’s conduct was malicious, fraudulent and oppressive,
12 and was committed with a conscious disregard of Plaintiffs’ rights. Accordingly, Plaintiffs
13 are entitled to an award of punitive or exemplary damages, based on Toyota’s net worth, in
14 an amount sufficient to punish Toyota’s and make an example of it, and disgorgement of
Qis
15 all profits Toyota obtained through its unlawful and intentional conduct.
17 SECOND CAUSE OF ACTION
18 (Breach of the Implied Covenant of Good Faith And Fair Dealing — Capistrano Toyota and
19 Claremont Toyota against Toyota)
20 168. Plaintiffs repeat and reallege each and every foregoing and subsequent allegation
21 contained in the First Amended Complaint, and further allege as follows:
22 169. Between each of the Dealerships and Toyota there existed valid and enforceable
23 contracts, the Dealer Agreements. A true and correct copy of Hogan’s Dealerships’ agreements
24 with Toyota are attached hereto as Exhibits D and E. The essence of the Dealer Agreements is to
25 ensure customer confidence and satisfaction and to make sure Toyota vehicles are safe and
26 reliable. The agreements describe their “purposes and objectives” as, among other things, to
27 ensure that “Toyota Products are sold and serviced in a manner which promotes consumer
28 confidence and satisfaction” and to “refrain from conduct which may be detrimental or adversely
356993.9 35
1 reflect upon the reputation of [Toyota] or [Toyota Products] in general.”
2 170. Toyota breached the implied covenant of good faith and fair dealing in two ways:
3 First, it frustrated the fundamental purpose of the Dealer Agreements by failing to provide safe,
4 viable products for sale and concealing safety-related defects from Hogan. Second, it failed to
5 exercise good faith in carrying out various provisions of the Dealer Agreements relating to its
6 treatment of the Dealerships.
7 171. Under the Dealer Agreements, Toyota’s flindamental obligation is to manufacture
8 and distribute (to dealers) Toyota vehicles that are safe, reliable and that operate properly. Hogan
9 buys those vehicles from Toyota and sells them to the public. Toyota violated this obligation by
10 concealing dangerous safety issues in its vehicles; misclassifying dangerous defects as “technical
11 service bulletins” and “limited service campaigns”; refusing to issue safety recalls for safety
12 related defects; knowingly issuing inadequate recall remedies; and hiding critical service history
13 information in its databases. Toyota gave the Dealerships unsafe cars to sell to their customers—
14 contrary to the most basic, and important, purpose of the Dealer Agreements.
053
15 172. In addition, each of the Dealer Agreements include Standard Provision XIII.B
16 regarding availability and allocation of Toyota products. Under that provision, Toyota agreed to
~
17 allocate its products among dealers in a fair and equitable manner. Implied in this provision, and
18 the rest of the Dealer Agreement, is the covenant of good faith and fair dealing. The implied
19 covenant requires that Toyota exercise its discretion to allocate cars in good faith. Toyota failed to
20 do so, discriminating unfairly against Hogan.
21 173. Each of these agreements also included Standard Provision XV.A regarding
22 customer service standards imposed on the Dealerships. Under that provision, the Dealerships are
23 obligated to ensure that customers are advised of any necessary repairs; to ensure that repairs are
24 promptly and professionally performed; and to ensure that the customer is treated fairly at all
25 times. Implied in this provision, and the rest of the Dealer Agreements, is the covenant of good
26 faith and fair dealing. Toyota violated the implied covenant, and hampered the Dealerships’
27 ability to comply with this provision, by refhsing to issue safety recalls for dangerous defects;
28 covering up dangerous safety issues on its vehicles; and burying critical service history
356993.9 36
1 information in its databases.
2 174. Each of these agreements also included Standard Provision XXIII.B regarding
3 termination of the Dealerships. Implied in this provision, and the rest of the Dealer Agreements, is
4 the covenant of good faith and fair dealing.
5 175. Each of these agreements also included Provision VI regarding change in
6 management or ownership of the Dealerships. Under that provision, any change in management
7 or ownership requires Toyota’s written consent, and Toyota cannot withhold such consent
8 unreasonably. Implied in this provision, and the rest of the Dealer Agreement, is the covenant of
9 good faith and fair dealing.

10 176. Critically, each of these agreements included a provision whereby the parties
11 agreed to refrain from conduct which may be detrimental to or adversely affect the reputation of
12 Toyota or the Dealerships. Implied in this provision, and the rest of the Dealer Agreement, is the
13 covenant of good faith and fair dealing.
~1 14 177. Toyota breached the implied covenant of good faith and fair dealing by:
15 • Refusing to provide the Dealerships with safe, reliable vehicles to sell to customers;
16 • Actively and purposefully shutting down the recall mailer program intended to
17 protect customers, make vehicles safer, ensure customers are advised of necessary
18 repairs, and ensure that repairs are performed effectively;
19 • Refusing to allocate vehicles to the Dealerships fairly and in good faith;

20 • Refusing to allocate the cars Claremont Toyota needed to reach sales efficiency;
21 • Refusing to issue safety recalls—instead sending only technical service bulletins,

22 limited service campaigns or special service campaigns—for serious safety defects;
23 • Covering up serious defects that jeopardize the safety of its vehicles;
24 • Scrubbing Safety Recall COJ from the “Owner Notification Programs” page of
25 NSH and the “Campaign” section of TIS to avoid “Lemon Law”;

26 • Causing the Dealerships to issue “stop-sales” on unsafe vehicles;
27 • Diverting the Dealerships’ actual and prospective customers to competing
28 dealerships;
356993.9 37
• Unreasonably rejecting Hogan’s sons for leadership positions and blocking
2 Hogan’s succession plan;
3 • Refusing to timely provide the additional 300 VSS vehicles to Hogan at Capistrano
4 Toyota;
5 • Taking a series of other retaliatory actions against Hogan to make it more difficult
6 for him to operate the Dealerships; and
7 • Squeezing Hogan out of the franchises contrary to the Dealer Agreements.
8 178. As a proximate result of Toyota’s conduct, the Dealerships have suffered damages
9 in excess of$100 million, with the exact amount to be proven at trial.

10 PRAYER FOR RELIEF
11 WHEREFORE, Plaintiffs pray for the following relief:

12 1. For compensatory and consequential damages in excess of $100 million, to be
~ 13 provenattrial;
~ 1!: 14 2. For pre- and post-judgment interest;
15 3. For attorneys’ fees and costs of suit;

16 4. For punitive and exemplary damages;
‘LI
17 5. For disgorgement of profits; and
18 6. For such other and further as the Court deems just and proper.
19 DATED: November~2017 MILLER BARONDESS, LLP

20 /
21
By:
0
22 L~ IS R. MILLER
Attorneys for Plaintiffs
23
24 JURY DEMAND
25 Plaintiffs hereby demand a jury trial on the claims to which they are entitled to trial by
26 jury.
27
28
356993.9 38
I DATED: November 8, 2017 MILLER BAflONDESS, LLP
By:___
4 LO ISR. MILLER
Attorneys for Plaintiffs
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356993.9 39
EXHIBIT A
40
Home >> Office of Public Affairs >> News
JUSTICE NEWS
Department of Justice
Office of Public Affairs
FOR IMMEDIATE RELEASE Wednesday, March 19, 2014
Justice Department Announces Criminal Charge Against Toyota Motor Corporation

and Deferred Prosecution Agreement with $1.2 Billion Financial Penalty
Toyota Motor Corporation Admits to Misleading Consumers and U.S. Regulator About Safety Issues Related to
Unintended Acceleration in Its Cars Independent Monitor to Be Appointed to Oversee Toyota’s Public Statements
and Reporting of Safety Issues
U.S. Attorney General Eric Holder, U.S. Secretary of Transportation Anthony Foxx, U.S. Attorney for the Southern District of New
York Preet Bharara, Inspector General of the U.S. Department of Transportation (DOT) Calvin L. Scovel III, National Highway
Traffic Safety Administration (NHTSA) Acting Administrator David Friedman and Federal Bureau of Investigation (FBI) Deputy
Assistant Director Joe Campbell announced a criminal wire fraud charge against Toyota Motor Corporation (“TOYOTA” or “the
company”), an automotive company headquartered in Toyota City, Japan, that designs, manufactures, assembles, and sells Toyota
and Lexus brand vehicles. The charge is that TOYOTA defrauded consumers in the fall of 2009 and early 2010 by issuing
misleading statements about safety issues in Toyota and Lexus vehicles.
Also today, the Department of Justice announced a deferred prosecution agreement with TOYOTA (“the agreement”) under which
the company admits that it misled U.S. consumers by concealing and making deceptive statements about two safety issues affecting
its vehicles, each of which caused a type of unintended acceleration. The admissions are contained in a detailed statement of facts
attached to the agreement. The agreement, which is subject to judicial review, requires TOYOTA to pay a 51.2 billion financial
penalty the largest penalty of its kind ever imposed on an automotive company, and imposes on TOYOTA an independent
—
monitor to review and assess policies, practices and procedures relating to TOYOTA’s safety-related public statements and reporting
obligations. TOYOTA agrees to pay the penalty under a Final Order of Forfeiture in a parallel civil action also filed today in the
Southern District of New York.
The criminal charge is contained in an Information (‘the information”) alleging one count of wire fraud. If TOYOTA abides by all
of the terms of the agreement, the Government will defer prosecution on the information for three years and then seek to dismiss
the charge.
41
“Rather than promptly disclosing and correcting safety issues about which they were aware, Toyota made misleading public
statements to consumers and gave inaccurate facts to Members of Congress,” said Attorney General Eric Holder. “When car owners
get behind the wheel, they have a right to expect that their vehicle is safe. If any part of the automobile turns out to have safety
issues, the car company has a duty to be upfront about them, to fix them quickly, and to immediately tell the truth about the
problem and its scope. Toyota violated that basic compact. Other car companies should not repeat Toyota’s mistake: a recall may
damage a company’s reputation, but deceiving your customers makes that damage far more lasting.”
“Safety is our top priority,” said Transportation Secretary Anthony Foxx. “Throughout this recall process, NHTSA investigators
worked tirelessly to make sure that Toyota recalled vehicles with defects causing unintended acceleration, and to determine when
they learned of it, and as we learned today, they succeeded in this effort in spite of extraordinary challenges. Today’s penalties
follow NHTSA’s own record civil penalties of more than $66 million together, they send a powerful message to all manufacturers
—
to follow our recall requirements or they will face serious consequences.”
“Toyota stands charged with a criminal offense because it cared more about savings than safety and more about its own brand and
bottom line than the truth,” said U.S. Attorney Preet Bharara for the Southern District of New York. “In its zeal to stanch bad
publicity in 2009 and 2010, Toyota misled regulators, misled customers, and even misstated the facts to Congress. The tens of
millions of drivers in America have an absolute right to expect that the companies manufacturing their cars are not lying about
serious safety issues; are not slow-walking safety fixes; and are not playing games with their lives. Companies that make inherently
dangerous products must be maximally transparent, not two-faced. That is why we have undertaken this landmark enforcement
action. And the entire auto industry should take notice.”
“To the families and friends of those who died or were injured as a result of these incidents, I offer my deepest sympathies for your
loss and my highest admiration for the strength you demonstrate every day,” said DOT Inspector General Calvin L. Scovel III. “As is
true for Secretary Foxx and DOT, safety is and will remain the highest priority of my office. The OJG is committed to working with
our law enforcement and prosecutorial partners in pursuing those who commit criminal violations of the Department of
Transportation’s or related laws. The efforts of this dedicated multi-agency team and the agreement reached with Toyota must serve
as a clarion call to all auto manufacturers of the need to always be as vigilant and forthcoming as possible to keep the public safe.”
According to the allegations in the information, as well as other documents filed today in Manhattan federal court, including the
Statement of Facts:
In the fall of 2009, TOYOTA deceived consumers and its U.S. regulator, the National Highway Traffic Safety Administration
(“NHTSA”), by claiming that it had “addressed” the “root cause” of unintended acceleration in its vehicles through a limited safety
recall of eight models for floor-mat entrapment, a dangerous condition in which an improperly secured or incompatible all-weather
floor mat can “trap” a depressed gas pedal causing the car to accelerate to a high speed. Such public assurances deceived customers
and NHTSA in two ways: First, at the time the statements were made, TOYOTA knew that it had not recalled some cars with
design features that made them just as susceptible to floor-mat entrapment as some of the recalled cars. Second, only weeks before
these statements were made, TOYOTA had taken steps to hide from NHTSA another type of unintended acceleration in its vehicles,
separate and apart from floor-mat entrapment: a problem with accelerators getting stuck at partially depressed levels, known as
“sticky pedal.”
Floor-Mat Entrapment: A Fatal Problem
42
TOYOTA issued its misleading statements, and undertook its acts of concealment, against the backdrop of intense public concern
and scrutiny over the safety of its vehicles following a widely publicized Aug. 28, 2009 accident in San Diego, Calif., that killed a
family of four. A Lexus dealer had improperly installed an incompatible all-weather floor mat into the Lexus ES350 in which the
family was traveling, and that mat entrapped the accelerator at full throttle. A 911 emergency call made from the out-of-control
vehicle, which was speeding at over 100 miles per hour, reported, “We’re in a Lexus... and we’re going north on 125 and our
accelerator is stuck. there’s no brakes
. . . . . we’re approaching the intersection. Hold on. hold on and pray. pray.” The call
. . . . . .
ended with the sound of the crash that killed everyone in the vehicle.
The San Diego accident was not the first time that TOYOTA had faced a problem with floor-mat entrapment. In 2007, following a
series of reports alleging unintended acceleration in Toyota and Lexus vehicles, NHTSA opened a defect investigation into the Lexus
E535o model (the vehicle involved in the 2009 San Diego accident), and identified several other Toyota and Lexus models it
believed might likewise be defective. TOYOTA, while denying to NI-ITSA the need to recall any of its vehicles, conducted an internal
investigation in 2007 which revealed that certain Toyota and Lexus models, including most of the ones that NHTSA had identified
as potentially problematic, had design features rendering entrapment of the gas pedal by an all-weather floor mat more likely.
TOYOTA did not share these results with NEITSA. In the end, the Company negotiated a limited recall of 55,000 mats (no vehicles)
— a result that TOYOTA employees touted internally as a major victory: “had the agency pushed for recall of the throttle pedal
...
assembly (for instance), we would be looking at upwards of Sioo million + in unnecessary costs.”
Shortly after TOYOTA announced its 2007 mat recall, company engineers revised internal design guidelines to provide for, among
other things, a minimum clearance of 10 millimeters between a fully depressed gas pedal and the floor. But TOYOTA decided those
revised guidelines would only apply where a model was receiving a “full model redesign” something each Toyota and Lexus model
—
underwent only about once every three to five years. As a result, even after the revised guidelines had been adopted internally,
many new vehicles produced and sold by TOYOTA including the Lexus ES350 involved in the 2009 San Diego accident did not
— —
comply with TOYOTA’s 2007 guidelines.
After the fatal and highly publicized San Diego accident, TOYOTA agreed to recall eight of its models, including the £5350, for
floor-mat entrapment susceptibility. Thereafter, as part of an effort to defend its brand image, TOYOTA began issuing public
statements assuring customers that this limited recall had “addressed the root cause of unintended acceleration” in its U.S. -sold
vehicles.
As TOYOTA knew from internal testing it had completed by the time these statements were made, the eight-model recall had not in
fact “addressed the root cause” of even the floor-mat entrapment problem. Models not recalled and therefore still on the road
— —
bore design features rendering them just as susceptible to floor-mat entrapment as those within the recall populadon. One engineer
working at a TOYOTA facility in California had concluded that the Corolla, a top-selling car that had not been recalled, was among
the three “worse” vehicles for floor-mat entrapment. In October 2009, TOYOTA engineers in Japan circulated a chart showing that
the Corolla had the lowest rating for floor-mat entrapment under their analysis. None of these findings or this data were shared
with NHTSA at the time.
The Sticky Pedal Problem
What is more misleading, at the same time it was assuring the public that the “root cause” of unintended acceleration had been
“addressed” by the 2009 eight-model floor-mat entrapment recall, TOYOTA was hiding from NHTSA a second cause of unintended
acceleration in its vehicles: the sticky pedal. Sticky pedal, a phenomenon affecting pedals manufactured by a U.S. company (“A-
43
Pedal Company”) and installed in many Toyota brand vehicles In North America as well as Europe, resulted from the use of a
plastic material inside the pedals that could cause the accelerator pedal to become mechanically stuck in a partially depressed
position. The pedals incorporating this plastic were installed in, among other models, the Camry, the Matrix, the Corolla, and the
Avalon sold in the United States.
The sticky pedal problem surfaced in Europe in 2008. There, reports reflected instances of “uncontrolled acceleration” and
unintended acceleration to “maximum RPM,” and customer concern that the condition was “extremely dangerous.”
In early 2009, TOYOTA circulated to European Toyota distributors information about the sticky pedal problem and instructions for
addressing the problem if it presented itself in a customer’s vehicle. These instructions identified the issue as “Sudden RPM
increase/vehicle acceleration due to accelerator pedal sticking,” and stated that should a customer complain of pedal sticking, the
pedal should be replaced with pedals manufactured by a company other than A-Pedal Company. Contemporaneous internal
TOYOTA documents described the sticky pedal problem as a “defect” that was “[i]mportant in terms of safety because of the
possibility of accidents.”
TOYOTA did not then inform its U.S. regulators of the sticky pedal problem or conduct a recall. Instead, beginning in the spring of
2009, TOYOTA quietly directed A-Pedal Company to change the pedals in new productions of affected models in Europe, and to
plan for the same design changes to be rolled out in the United States (where the same problematic pedals were being used)
beginning in the fall of 2009. The design change was to substitute the plastic used in the affected pedal models with another
material and to change the length of the friction lever in the pedal.
Meanwhile, the sticky pedal problem was manifesting itself in U.S. vehicles. On or about the same day the San Diego floor-mat
entrapment accident occurred, staff at a U.S. TOYOTA subsidiary in California sent a memorandum to staff at TOYOTA in Japan
identifying as “critical” an “unintended acceleration” issue separate and apart from floor-mat entrapment that had been identified
in an accelerator pedal of a Toyota Matrix vehicle in Arizona. The problem identified, and then reproduced during testing of the
pedal on Sept. 17, 2009, was the sticky pedal problem. Also in August, the sticky pedal problem cropped up in a U.S. Camry.
On Sept. 9, 2009, an employee of a U.S. TOYOTA subsidiary who was concerned about the sticky pedal problem in the United
States and believed that TOYOTA should address the problem prepared a “Market Impact Summary” listing (in addition to the
August 2009 Matrix and Camry) 39 warranty cases that he believed involved potential manifestations of the sticky pedal problem.
This document, which was circulated to TOYOTA engineers and, later, to staff in charge of recall decisions in Japan, designated the
sticky pedal problem as priority level “A,” the highest level.
By no later than September 2009, TOYOTA recognized internally that the sticky pedal problem posed a risk of a type of unintended
acceleration or “overrun,” as Toyota sometimes called it in many of its U.S. vehicles. A September 2009 presentation made by
— —
a manager at a U.S. TOYOTA subsidiary to TOYOTA executives gave a “current summary of O/R [overrun] types in NA [North
American] market” that listed the three confirmed types as: “mat interference” (i.e., floor-mat entrapment), “material issue”
(described as “pedal stuck and... pedal slow return/deformed”) and “simultaneous pedal press” by the consumer. The
presentation further listed the models affected by the “material issue” as including “Camry, Corolla, Matrix, Avalon.”
Hiding Sticky Pedaifrorn NHTSA and the Pit bile
44
As noted, TOYOTA had by this time developed internal plans to implement design changes for all A-Pedal-Company-manufactured
pedals in U.S. Toyota models to address, on a going-forward basis, the still-undisclosed sticky pedal problem that had already been
resolved for new vehicles in Europe. On Oct. 5, 2009, TOYOTA engineers issued to A-Pedal Company the first of the design change
instructions intended to prevent sticky pedal in the U.S. market. This was described internally as an “urgent” measure to be
implemented on an “express” basis, as a “major” change meaning that the part number of the subject pedal was to change, and
—
that all inventory units with the old pedal number should be scrapped.
On Oct. 21, 2009, however, in the wake of the San Diego floor-mat entrapment accident, and in the midst of TOYOTA’s discussions
with NHTSA about its eight-model entrapment recall, engineers at TOYOTA and the leadership of TOYOTA’s recall decision group
decided to cancel the design change instruction that had already been issued and to suspend all remaining design changes planned
for A-Pedal Company pedals in U.S. models. U.S. TOYOTA subsidiary employees who had been preparing for implementation of
the changes were instructed, orally, to alert the manufacturing plants of the cancellation. They were also instructed not to put
anything about the cancellation in writing. A-Pedal Company itself would receive no written cancellation at this time; instead,
contrary to TOYOTA’s own standard procedures, the cancellation was to be effected without a paper trail.
TOYOTA decided to suspend the pedal design changes in the United States, and to avoid memorializing that suspension, in order to
prevent NHTSA from learning about the sticky pedal problem.
In early November 2009, TOYOTA and the leadership of a U.S. TOYOTA subsidiary became aware of three instances of sticky pedal
in U.S. Corollas. Shortly thereafter, the leadership of the recall decision group within TOYOTA discussed a plan to finally disclose
the sticky pedal problem to NHTSA. The recall decision group was aware at this time not only of the problems in the three Corollas
in the United States but also of the problems that had surfaced in a Matrix and a Camry in August 2009 and been reproduced
through testing in September 2009. The group was also familiar with the sticky pedal problem in Europe, the design changes that
had been implemented there, and the cancellation and suspension of similar planned design changes in the United States. Knowing
all of this, the group’s leadership decided that (a) it would not disclose the September 2009 Market Impact Summary to NHTSA;
(b) if any disclosure were to be made to NHTSA, it would be limited to a disclosure that there were some reports of unintended
acceleration apparently unrelated to floor-mat entrapment; and (c) NHTSA should be told that TOYOTA had made no findings with
respect to the sticky pedal problem reflected in the reports concerning the three U.S. Corollas, and that the investigation of the
problem had just begun.
On Nov. 17, 2009, before TOYOTA had negotiated with NHTSA a final set of remedies for the eight models encompassed by the
floor-mat entrapment recall, TOYOTA informed NHTSA of the three Corolla reports and several other reports of unintended
acceleration in Toyota model vehicles equipped with pedals manufactured by A Pedal Company. Jn TOYOTA’s disclosure to
NHTSA, TOYOTA did not reveal its understanding of the sticky pedal problem as a type of unintended acceleration, nor did it
reveal the problem’s manifestation and the subsequent design changes in Europe, the planned, cancelled, and suspended design
changes in the United States, the August 2009 Camry and Matrix vehicles that had suffered sticky pedal, or the September 2009
Market Impact Summary.
TOYOTA’S Misleading Statements
Alter the August 2009 fatal floor-mat entrapment accident in San Diego, several articles critical of TOYOTA appeared in U.S.
newspapers. The articles reported instances of TOYOTA customers allegedly experiencing unintended acceleration and the authors
accused TOYOTA of, among other things, hiding defects related to unintended acceleration.
45
On Nov. 25, 2009, TOYOTA, through a U.S. subsidiary, announced its floor- mat entrapment resolution with NHTSA, In a press
release that had been approved by TOYOTA, the U.S. subsidiary assured customers: “The safety of our owners and the public is our
utmost concern and Toyota has and will continue to thoroughly investigate and take appropriate measures to address any defect
trends that are identified.” A spokesperson for the subsidiary stated during a press conference the same day, “We’re very, very
confident that we have addressed this issue.”
In truth, the issue of unintended acceleration had not been “addressed” by the remedies announced. A-Pedal Company pedals
which could experience stickiness were still on the road and still, in fact, being installed in newly-produced vehicles. And the best
selling Corolla, the Highlander, and the Venza which had design features similar to models that had been included in the earlier
—
floor-mat entrapment recall were not being “addressed” at all.

—
Again, on Dec. 23, 2009, TOYOTA responded to media accusations that it was continuing to hide defects in its vehicles by
authorizing a U.S. TOYOTA subsidiary to publish the following misleading statements on the subsidiary’s website: “Toyota has
absolutely not minimized public awareness of any defect or issue with respect to its vehicles. Any suggestion to the contrary is
wrong and borders on irresponsibility. We are confident that the measures we are taking address the root cause and will reduce the
risk of pedal entrapment.” In fact, TOYOTA had “minimized public awareness of’ both sticky pedal and floor-mat entrapment.
Further, the measures TOYOTA had taken did not “address the root cause” of unintended acceleration, because TOYOTA had not
yet issued a sticky pedal recall and had not yet recalled the Corolla, the Venza, or the Highlander for floor-mat entrapment.
TOYOTA’á False Tirneline
When, in early 2010, TOYOTA finally conducted safety recalls to address the unintended acceleration issues it had concealed
throughout the fall of 2009, TOYOTA provided to the American public, NHTSA and the United States Congress an inaccurate
timeline of events that made it appear as if TOYOTA had learned of the sticky pedal in the United States in “October 2009,” and
then acted promptly to remedy the problem within 90 days of discovering it. Jn fact, TOYOTA had begun its investigation of sticky
pedal in the United States no later than August 2009, had already reproduced the problem in a U.S. pedal by no later than
September 2009, and had taken active steps in the months following that testing to hide the problem from NHTSA and the public.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney Bonnie Jonas,
Deputy Chief of the Criminal Division and Assistant U.S. Attorney Sarah E. McCallum are in charge of the prosecution, and
Assistant U.S. Attorney Sharon Cohen Levin, Chief of the Money Laundering and Asset Forfeiture Unit is responsible for the
forfeiture aspects of the case.
Related Materials:
Deferred Prosecution Agreement

Toyota Information
Toyota Statement of Facts
Component(s):
Office of the Attorney General
46
Press Release Number:
14-286
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UNITFU STATES ATTORNEYS
47
48
EXHIBIT B
49
U.S. Department of Justice
United States Attorney
Southern District ofNew York
The Silvia .1. Motto Building

One saint4ndrews Plaza
New YorkNew York 10007
March 19, 2014
James F. Johnson, Esq.

Matthew Fishbein, Esq.
Helen Cantwell, Esq.
Debevoise & Plimpton LLP
919 Third Avenue
New York, NY 10022
Re: Toyota Motor Corporation — Deferred Prosecution Agreement
Dear Messrs. Johnson and Fishbein and Ms. Cantwell:
Pursuant to our discussions and written exchanges, the Office of the United States
Attorney for the Southern District of New York (the “Office”) and the defendant Toyota Motor
Corporation (“Toyota”), under authority granted by its Board of Directors in the form of the
written authorization attached as Exhibit A, hereby enter into this Deferred Prosecution
Agreement (the “Agreement”).
The Criminal Information
1. Toyota consents to the filing of a one-count Information (the

“Information”) in the United States District Court for the Southern District of New York (the
“Court”), charging Toyota with committing wire fraud, in violation of Title 18, United States
Code, Section 1343. A copy of the Information is attached as Exhibit B. This Agreement shall
take effect upon its execution by both parties.
Acceptance of Responsibility
2. Toyota admits and stipulates that the facts set forth in the Statement of
Facts, attached as Exhibit C and incorporated herein, are true and accurate. In sum, Toyota
admits that it misled U.S. consumers by concealing and making deceptive statements about two
safety related issues affecting its vehicles, each of which caused a type of unintended acceleration.
Financial Penalty
3. As a result of the conduct described in the Information and the Statement

of Facts, Toyota agrees to pay to the United States $1.2 billion (the “Stipulated Financial
Penalty”) representing the financial penalty resulting from the offense described in the
Information and Statement of Facts. Toyota agrees that the facts contained in the Information and
Statement of Facts are sufficient to establish that the Stipulated Financial Penalty is subject to
civil forfeiture to the United States and that this Agreement, Information, and Statement of Facts
50
James E. Johnson, Esq.
March 19, 2014
may be attached to and incorporated into the Civil Forfeiture Complaint to be filed against the
Stipulated Financial Penalty, a copy of which is attached as Exhibit D hereto. By this Agreement,
Toyota specifically waives service of said Civil Forfeiture Complaint and agrees that a Final
Order of Forfeiture may be entered against the Stipulated Financial Penalty. Upon payment of the
Stipulated Financial Penalty, Toyota shall release any and all claims it may have to such funds
and execute such documents as necessary to accomplish the forfeiture of the funds. Toyota agrees
that it will not file a claim with the Court or otherwise contest the civil forfeiture of the Stipulated
Financial Penalty and will not assist a third party in asserting any claim to the Stipulated Financial
Penalty. Toyota agrees that the Stipulated Financial Penalty shall be treated as a penalty paid to
the United States government for all purposes, including all tax purposes. Toyota agrees that it
will not claim, assert, or apply for a tax deduction or tax credit with regard to any federal, state,
local, or foreign tax for any fine or forfeiture paid pursuant to this Agreement.
4. Toyota shall transfer $1.2 billion to the United States by no later than
March 25, 2014 (or as otherwise directed by the Office following such date). Such payment shall
be made by wire transfer to the United States Marshals Service, pursuant to wire instructions
provided by the Office. If Toyota fails to timely make the payment required under this paragraph,
interest (at the rate specified in Title 28, United States Code, Section 1961) shall accrue on the
unpaid balance through the date of payment, unless the Office, in its sole discretion, chooses to
reinstate prosecution pursuant to paragraphs 10 and 11 below.
Obligation to Cooperate
5. Toyota has cooperated with this Office’s criminal investigation and agrees
to cooperate fully and actively with the Office, the Federal Bureau of Investigation (“FBI”), the
Department of Transportation C’DOT”), the National Highway Traffic Safety Administration
(“NHTSA”), and any other agency of the government designated by the Office regarding any
matter relating to the Office’s investigation about which Toyota has knowledge or infomrntion.
6. It is understood that Toyota shall (a) truthfully and completely disclose all
infonnation with respect to the activities of itself and its subsidiaries Toyota Motor Sales, U.S.A.,
Inc. (“TMS”), Toyota Motor North America, Inc. (“TMA), and Toyota Motor Engineering &
Manufacturing North America, Inc. C’TEMA”), as well as with respect to the activities of officers,
agents, and employees of Toyota, TMS, TMA, and TEMA, concerning all matters about which
the Office inquires of it, which infonnation can be used for any purpose; (b) cooperate fully with
the Office, FBI, DOT, NHTSA. and any other law enforcement agency designated by the Office;
(c) attend all meetings at which the Office requests its presence and use its best efforts to secure
the attendance and truthful statements or testimony of any past or current officers, agents, or
employees of Toyota, TMS, TMA, and TEMA at any meeting or interview or before the grand
jury or at trial or at any other court proceeding; (d) provide to the Office upon request any
document, record, or other tangible evidence relating to matters about which the Office or any
designated law enforcement agency inquires of it; (e) assemble, organize, and provide in a
responsive and prompt fashion, and upon request, on an expedited schedule, all documents,
records, infonnation and other evidence in Toyota’s possession, custody or control as may be
2
51
March 19, 2014
requested by the Office, FBI, DOT, NHTSA, or designated law enforcement agency; (f) volunteer
and provide to the Office any information and documents that come to Toyota’s attention that
may be relevant to the Office’s investigation of this matter, any issue related to the Statement of
Facts, and any issue that would fall within the scope of the duties of the independent monitor (the
“Monitor”) as set forth in paragraph 15; (g) provide testimony or information necessary to
identii~’ or establish the original location, authenticity, or other basis for admission into evidence
of documents or physical evidence in any criminal or other proceeding as requested by the Office,
FBI, DOT, NHTSA, or designated law enforcement agency, including but not limited to
information and testimony concerning the conduct set forth in the Information and Statement of
Facts; (h) bring to the Office’s attention all criminal conduct by or criminal investigations of
Toyota or any of its agents or employees acting within the scope of their employment related to
vio]ations of the federal laws of theUnited States, as to which Toyota’s Board of Directors, senior
management, or United States legal and compliance personnel are aware; (i) bring to the Office’s
attention any administrative or regulatory proceeding or civil action or investigation by any U.S.
governmental authority that alleges fraud by Toyota; and (j) commit no crimes whatsoever under
the federal laws of the United States subsequent to the execution of this Agreement. To the extent
the provisions of this paragraph relate to information or attendance of personnel located in Japan,
the parties to this Agreement acknowledge that the request, provision, or use of such information,
or attendance of personnel, is subject to applicable laws and legal principles in Japan. In the
event the Office determines that information it receives from Toyota pursuant to this provision
should be shared with DOT and/or NHTSA, the Office may request that Toyota provide such
infonnation to DOT and/or NHTSA directly. Toyota will submit such information to DOT and/or
NHTSA consistent with the regulatory provisions related to the protection of confidential
business information contained in 49 C.F.R. Part 512 and 49 C.F.R. Part 7. Nothing in this
Agreement shall be construed to require Toyota to provide any information, documents or
testimony protected by the attorney-client privilege, work product doctrine, or any other
applicable privilege.
7. Toyota agrees that its obligations pursuant to this Agreement, which shall
commence upon the signing of this Agreement, will continue for three years from the date of the
Court’s acceptance of this Agreement, unless otherwise extended pursuant to paragraph 12 below.
Toyota’s obligation to cooperate is not intended to apply in the event that a prosecution against
Toyota by this Office is pursued and not deferred.
Deferral of Prosecution
8. In consideration of Toyota’s entry into this Agreement and its

commitment to: (a) accept and acknowledge responsibility for its conduct; (b) cooperate with the
Office, FBI, DOT, NHTSA, and any other law enforcement agency designated by this Office;
(c) make the payments specified in this Agreement; (d) comply with Federal criminal laws; and
(e) otherwise comply with all of the terms of this Agreement, the Office shall recommend to the
Court that prosecution of Toyota on the Information be deferred for three years from the date of
the signing of this Agreement. Toyota shall expressly waive indictment and all rights to a speedy
trial pursuant to the Sixth Amendment of the United States Constitution, Title 18, United States
3
52
James B. Johnson, Esq.
March 19, 2014
Code, Section 3161, Federal Rule of Criminal Procedure 48(b), and any applicable Local Rules of
the United States District Court for the Southern District of New York for the period during
which this Agreement is in effect.
9. It is understood that this Office cannot, and does not, agree not to
prosecute Toyota for criminal tax violations. However, if Toyota fully complies with the tents of
this Agreement, no testimony given or other information provided by Toyota (or any other
information directly or indirectly derived therefrom) will be used against Toyota in any criminal
tax prosecution. In addition, the Office agrees that, if Toyota is in compliance with all of its
obligations under this Agreement, the Office will, within thirty (30) days after the expiration of
the period of deferral (including any extensions thereof), seek dismissal with prejudice as to
Toyota of the Infontation filed against Toyota pursuant to this Agreement. Except in the event of
a violation by Toyota of any tent of this Agreement, the Office will bring no additional charges
against Toyota, except for criminal tax violations, relating to its conduct as described in the
admitted Statement of Facts. This Agreement does not provide any protection against prosecution
for any crimes except as set forth above and does not apply to any individual or entity other than
Toyota and its subsidiaries TMS, TMA, and TEMA. Toyota and the Office understand that the
Agreement to defer prosecution of Toyota must be approved by the Court, in accordance with 18
U.S.C. § 3 161(h)(2). Should the Court decline to approve the Agreement to defer prosecution for
any reason, both the Office and Toyota are released from any obligation imposed upon them by
this Agreement, and this Agreement shall be null and void, except for the tolling provision set
forth in paragraph 10.
10. It is further understood that should the Office in its sole discretion
determine based on facts learned subsequent to the execution of this Agreement that Toyota has:
(a) knowingly given false, incomplete or misleading information to the Office, FBI, DOT, or
NHTSA, either during the term of this Agreement or in connection with the Office’s investigation
of the conduct described in the Information and Statement of Facts, (b) committed any crime
under the federal laws of the United States subsequent to the execution of this Agreement, or (c)
otherwise violated any provision of this Agreement, Toyota shall, in the Office’s sole discretion,
thereafter be subject to prosecution for any federal criminal violation of which the Office has
knowledge, including but not limited to a prosecution based on the Information, the Statement of
Facts, or the conduct described therein. Any such prosecution may be premised on any
information provided by or on behalf of Toyota to the Office and/or FBI, DOT, or NHTSA at any
time. In any such prosecution, no charge would be time-barred provided that such prosecution is
brought within the applicable statute of limitations period, excluding (a) any period subject to any
prior or existing tolling agreement between the Office and Toyota and (b) the period from the
execution of this Agreement until its termination. Toyota agrees to toll, and exclude from any
calculation of time, the running of the applicable criminal statute of limitations for the length of
this Agreement starting from the date of the execution of this Agreement and including any
extension of the period of deferral of prosecution pursuant to paragraph 12 below. By this
Agreement, Toyota expressly intends to and hereby does waive its rights in the foregoing
respects, including any right to make a claim premised on the statute of limitations, as well as any
53
March 19, 2014
constitutional, statutory, or other claim concerning pre-indictment delay. Such waivers are
knowing, voluntary, and in express reliance on the advice of Toyota’s counsel.
11. It is further agreed that in the event that the Office, in its sole discretion,
determines that Toyota has violated any provision of this Agreement, including by failure to meet
its obligations under this Agreement: (a) all statements made by or on behalf of Toyota to the
Office, FBI, DOT, and/or NHTSA, including but not limited to the Statement of Facts, or any
testimony given by Toyota or by any agent of Toyota before a grand jury, or elsewhere, whether
before or after the date of this Agreement, or any leads from such statements or testimony, shall
be admissible in evidence in any and all criminal proceedings hereinafter brought by the Office
against Toyota; and (b) Toyota shall not assert any claim under the United States Constitution,
Rule 11(f) of the Federal Rules of Criminal Procedure, Rule 410 of the Federal Rules of
Evidence, or any other federal rule, that statements made by or on behalf of Toyota before or after
the date of this Agreement, or any leads derived therefrom, should be suppressed or otherwise
excluded from evidence. It is the intent of this Agreement to waive any and all rights in the
foregoing respects.
12. Toyota agrees that, in the event that the Office determines during the
period of deferral of prosecution described in paragraph 8 above (or any extensions thereof) that
Toyota has violated any provision of this Agreement, an extension of the period of deferral of
prosecution may be imposed in the sole discretion of the Office, up to an additional one year, but
in no event shall the total term of the deferral-of-prosecution period of this Agreement exceed
four (4) years.
13. Toyota, having truthfully admitted to the facts in the Statement of Facts,
agrees that it shall not, through its attorneys, agents, or employees, make any statement, in
litigation or otherwise, contradicting the Statement of Facts or its representations in this
Agreement. Consistent with this provision, Toyota may raise defenses and/or assert affirmative
claims in any civil proceedings brought by private parties as long as doing so does not contradict
the Statement of Facts or such representations. Any such contradictory statement by Toyota, its
present or future attorneys, agents, or employees shall constitute a violation of this Agreement
and Toyota thereafter shall be subject to prosecution as specified in paragraphs 8 through 11,
above, or the deferral-of-prosecution period shall be extended pursuant to paragraph 12, above.
The decision as to whether any such contradictory statement will be imputed to Toyota for the
purpose of determining whether Toyota has violated this Agreement shall be within the sole
discretion of the Office. Upon the Office’s notifying Toyota of any such contradictory statement,
Toyota may avoid a finding of violation of this Agreement by repudiating such statement both to
the recipient of such statement and to the Office within forty-eight (48) hours after having been
provided notice by the Office. Toyota consents to the public release by the Office, in its sole
discretion, of any such repudiation. Nothing in this Agreement is meant to affect the obligation of
Toyota or its officers, directors, agents or employees to testi& truthfully to the best of their
personal knowledge and belief in any proceeding.
54
James B. Johnson, Bsq.
Helen Cantwell, Bsq.
March 19, 2014
14. Toyota agrees that it is within the Office’s sole discretion to choose, in the
event of a violation, the remedies contained in paragraphs 10 and 11 above, or instead to choose
to extend the period of deferral of prosecution pursuant to paragraph 12. Toyota understands and
agrees that the exercise of the Office’s discretion under this Agreement is unreviewable by any
court. Should the Office determine that Toyota has violated this Agreement, the Office shall
provide notice to Toyota of that determination and provide Toyota with an opportunity to make a
presentation to the Office to demonstrate that no violation occurred, or, to the extent applicable,
that the violation should not result in the exercise of those remedies or in an extension of the
period of deferral of prosecution, including because the violation has been cured by Toyota.
Independent Monitor
15. Toyota agrees to retain a Monitor upon selection by the Office and
approval by the Office of the Deputy Attorney General, whose powers, rights and responsibilities
shall be as set forth below.
(a). Jurisdiction. Powers. and Oversight Authority. To address issues

related to the Statement of Facts and Information, the Monitor shall have the authorities and
duties defined below. The scope of the Monitor’s authority is to review and assess Toyota’s
policies, practices or procedures as set forth below, and is not intended to include substantive
review of the correctness of any of Toyota’s decisions relating to compliance with NHTSA’s
regulatory regime, including the National Traffic and Motor Vehicle Safety Act, its
implementing regulations, and related policies. Nor is it intended to supplant NHTSA’s
authority over decisions related to motor vehicle safety.
(I). Review and assess whether Toyota’s policies, practices, or

procedures ensure that Toyota’s public statements in the United States related to motor vehicle
safety are true and accurate;
(2). Review and assess the effectiveness of Toyota’s policies, practices,

or procedures for making information relating to accidents that take place in the United States
available to Toyota’s engineers, Toyota’s chief quality officer for North America, and Toyota’s
regional product safety executive for North America; and
(3). Review and assess whether Toyota’s policies, practices, or

procedures regarding the generation of field technical reports as opposed to other internal
—
reporting mechanisms, including, but not limited to, the “intra-company communication” in the —
United States ensure compliance with 49 C.F.R. Part 579.
It is the intent of this Agreement that the provisions regarding the Monitor’sjurisdiction, powers,
and oversight authority and duties be broadly construed, subject to the following limitation: the
Monitor’s responsibilities shall be limited to Toyota’s activities in the United States, and to the
extent the Monitor seeks information outside the United States, compliance with such requests
shall be consistent with the applicable legal principles in that jurisdiction. Toyota shall adopt all
55
March 19, 2014
recommendations submitted by the Monitor unless Toyota objects to any recommendation and
the Office agrees that adoption of such recommendation should not be required.
(b). Access to Information. The Monitor shall have the authority to take
such reasonable steps, in the Monitor’s view, as necessary to be fully informed about those
operations of Toyota within or relating to his or her jurisdiction. To that end, the Monitor shall
have:
(1). Access to, and the right to make copies of, any and all non-
privileged books, records, accounts, correspondence, files, and any and all other documents or
electronic records, including e-mails, of Toyota and its subsidiaries TMS, TMA, and TEMA, and
of officers, agents, and employees of Toyota, TMS, TMA, and TEMA, within or relating to his
or her jurisdiction that are located in the United States. To the extent the Monitor believes such
information from Japan is reasonably necessary, Toyota will make its best efforts to request the
information and make it available to the Monitor in the United States consistent with applicable
laws and legal principles in Japan; and
(2). The right to interview any officer, employee, agent, or consultant

of Toyota, TMS, TMA, and TEMA conducting business in or present in the United States and to
participate in any meeting in the United States concerning any matter within or relating to the
Monitor’s jurisdiction.
To the extent that the Monitor seeks access to information contained within privileged
documents or materials, Toyota shall use its best efforts to provide the Monitor with the
information without compromising the asserted privilege.
(c). Confidentiality.
(I). The Monitor shall maintain the confidentiality of any non-public

information entrusted or made available to the Monitor. The Monitor shall share such
information only with the Office and FBI. The Monitor may also determine that such
information should be shared with DOT and/or NHTSA. In the event of such a detennination,
the Monitor may request that Toyota provide the subject information directly to DOT and/or
NHTSA. Toyota will submit such information to DOT or NHTSA consistent with the regulatory
provisions related to the protection of confidential business information contained in 49 C.F.R.
Part 512 and 49 C.F.R. Part?.
(2). The Monitor shall sign a non-disclosure agreement with Toyota

prohibiting disclosure of infonnation received from Toyota to anyone other than to the Office,
FBI, DOT, or NHTSA, and anyone hired by the Monitor. Within thirty days after the end of the
Monitor’s term, the Monitor shall either return anything obtained from Toyota, or certify that
such information has been destroyed. Anyone hired by the Monitor shall also sign a non
disclosure agreement with similar return or destruction requirements as set forth in this sub
paragraph.
56
March 19, 2014
(d). Hiring Authority. The Monitor shall have the authority to employ
legal counsel, consultants, investigators, experts, and any other personnel necessary to assist in
the proper discharge of the Monitor’s duties.
(e). Implementing Authority. The Monitor shall have the authority to take
any other actions in the United States that are necessary to effectuate the Monitor’s oversight and
monitoring responsibilities.
(f). Miscellaneous Provisions.
(1). Term. The Monitor’s authority set forth herein shall extend for a
period of three years from the commencement of the Monitor’s duties, except that (a) in the
event the Office detennines during the period of the Monitorship (or any extensions thereof) that
Toyota has violated any provision of this Agreement, an extension of the period of the
Monitorship may be imposed in the sole discretion of the Office, up to an additional one-year
extension, but in no event shall the total term of the Monitorship exceed the term of the
Agreement; and (b) in the event the Office, in its sole discretion, determines during the period of
the Monitorship that the employment of a Monitor is no longer necessary to carry out the
purposes of this Agreement, the Office may shorten the period of the Monitorship.
(2). Selection of the Monitor. The Office shall consult with Toyota,
including soliciting nominations from Toyota, using its best efforts to select and appoint a
mutually acceptable Monitor (and any replacement Monitors, if required) as promptly as
possible. In the event that the Office is unable to select a Monitor acceptable to Toyota, the
Office shall have the sole right to select a monitor (and any replacement Monitors, if required.
To ensure the integrity of the Monitorship, the Monitor must be independent and objective and
the following persons shall not be eligible as either a Monitor or an agent, consultant or
employee of the Monitor: (a) any person previously employed by Toyota; or (b) any person who
has been directly adverse to Toyota in any proceeding. The selection of the Monitor must be
approved by the Deputy Attorney General.
(3). Notice regarding the Monitor: Monitor’s Authority to Act on

Information received from Employees: No Penalty for Reporting. Toyota shall establish an
independent, toll-free answering service to facilitate communication anonymously or otherwise
with the Monitor. Within 10 days of the commencement of the Monitor’s duties, Toyota shall
advise employees of its subsidiaries TMS, TMA, and TEMA in writing of the appointment of the
Monitor, the Monitor’s powers and duties as set forth in this Agreement, the toll-free number
established for contacting the Monitor, and email and mail addresses designated by the Monitor.
Such notice shall inform employees that they may communicate with the Monitor anonymously
or otherwise, and that no agent, consultant, or employee of Toyota shall be penalized in any way
for providing information to the Monitor. In addition, such notice shall direct that, if an
employee is aware of any violation of any law or any unethical conduct that has not been
reported to an appropriate federal, state or municipal agency, the employee is obligated to report
such violation or conduct to Toyota’s compliance office in the United States or the Monitor. The
8
57
James B. Johnson, Esq.
March 19, 2014
Monitor shall have access to all communications made using this toll-free number. The Monitor
has the sole discretion to determine whether the toll-free number is sufficient to permit
confidential and/or anonymous communications or whether the establishment of an additional
toll-free number is required.
(4). Reports to the Office. The Monitor shall keep records of his or h~r
activities, including copies of all correspondence and telephone logs, as well as records relating
to actions taken in response to correspondence or telephone calls. If potentially illegal or
unethical conduct is reported to the Monitor, the Monitor may, at his or her option, conduct an
investigation, and/or refer the matter to the Office. The Monitor should, at his or her option, refer
any potentially illegal or unethical conduct to Toyota’s compliance office. The Monitor may
report to the Office whenever the Monitor deems fit but, in any event, shall file a written report
not less often than every four months regarding: the Monitor’s activities; whether Toyota is
complying with the terms of this Agreement; and aiiy changes that are necessary to foster
Toyota’s compliance with any applicable laws, regulations and standards related to the Monitor’s
jurisdiction as set forth in paragraph 15(a). Such periodic written reports are to be provided to
Toyota and the Office. The Office may, in its sole discretion, provide to FBI all or part of any
such periodic written report, or other information provided to the Office by the Monitor. The
Office may also determine that all or part of any such periodic report, or other information
provided to the Office by the Monitor, be provided to DOT and/or NHTSA. lii the event of such
a determination, the Office may request that Toyota transmit such report, part of a report, and/or
non-public information to DOT andlor NHTSA directly. Toyota will submit such report, part of
a report, and/or non-public information to DOT and/or NHTSA consistent with the regulatory
provisions related to the protection of confidential business information contained in 49 C.F.R.
Part 512 and 49 C.F.R. Part 7. Toyota may provide all or part of any periodic written reports to
NHTSA or other federal agencies or governmental entities. Should the Monitor determine that it
appears that Toyota has violated any law, has violated any provision of this Agreement, or has
engaged in any conduct that could warrant the modification of his or her jurisdiction, the Monitor
shall promptly notify the Office, and when appropriate, Toyota.
(5). Cooperation with the Monitor. Toyota and all of its officers,
directors, employees, agents, and consultants, and all of the officers, directors, employees,
agents, and consultants of Toyota’s subsidiaries TMS, TMA, and TEMA shall have an
affirmative duty to cooperate with and assist the Monitor in the execution of his or her duties
provided in this Agreement and shall inform the Monitor of any non-privileged information that
may relate to the Monitor’s duties or lead to information that relates to his or her duties. Failure
of any Toyota, TMS, TMA, or TEMA officer, director, employee, or agent to cooperate with the
Monitor may, in the sole discretion of the Monitor, serve as a basis for the Monitor to
recommend dismissal or other disciplinary action.
(6). Compensation and Expenses. Although the Monitor shall operate

under the supervision of the Office, the compensation and expenses of the Monitor, and of the
persons hired under his or her authority, shall be paid by Toyota. The Monitor, and any persons
hired by the Monitor, shall be compensated in accordance with their respective typical hourly
9
58
March 19, 2014
rates. Toyota shall pay bills for compensation and expenses promptly, and in any event within
30 days. In addition, within one week after the selection of the Monitor, Toyota shall make
available, at either TMS, TMA or TEMA, office space, telephone service and clerical assistance
sufficient for the Monitor to carry out his or her duties.
(7). Indemnification. Toyota shall provide an appropriate

indemnification agreement to the Monitor with respect to any claims arising out of the
performance of the Monitor’s duties.
(8). No Affiliation. The Monitor is not, and shall not be treated for any
purpose, as an officer, employee, agent, or affiliate of Toyota.
Limits of this Agreement
16. It is understood that this Agreement is binding on the Office but does not
bind any other Federal agencies, any state or local law enforcement agencies, any licensing
authorities, or any regulatory authorities. However, if requested by Toyota or its attorneys, the
Office will bring to the attention of any such agencies, including but not limited to any regulators,
as applicable, this Agreement, the cooperation of Toyota, and Toyota’s compliance with its
obligations under this Agreement.
Public Filing
17. Toyota and the Office agree that, upon the submission of this Agreement
(including the Statement of Facts and other attachments) to the Court, this Agreement and its
attachments shall be filed publicly in the proceedings in the United States District Court for the
Southern District of New York.
18. The parties understand that this Agreement reflects the unique facts of this
case and is not intended as precedent for other cases.
Execution in Counterparts
19. This Agreement may be executed in one or more counterparts, each of

which shall be considered effective as an original signature.
10
59
James?. Johnson, Esq.
Matth~w Flshbein, Fsq.
March 19,2014
lnte~ra1ion Clause
20. This Agreement sets forth all the terms of the Deferred Prosecution
Agreement between Toyota and the Office. No modifications or additions to this Agreembnt shHlI
he valic~ unless they are in writing and signed by the Office. Toyota’s attorneys, and a duly
authoritd representative of Toy.ta.
PREET 2HARARA
United States Attorney
Southern District of New York
By~
SARAh E. MCCAL
Assistant United States Attorneys
~±d /t W/~
RICHARD B. ZABF~)
Deputy United State~itorney
:hristoQntcr iceynolds
GeneraiCounsel and Chief I egal Officer,
Toyota fr’otor North America, Inc.
Group ~~‘ice President,
Toyota otor Sales USA., Inc
James S Johnson, Esq.

Matthe4’ Fishbein, Esq.
Helen qantwell. Esq.
Attorne s for TOYOTA
60
EXHIBIT C
61
Statement of Facts
1. TOYOTA MOTOR CORPORATION (“TOYOTA”) is an automotive company

headquartered in Toyota City, Japan. Assisted by its subsidiaries and affiliates worldwide,
TOYOTA designs, manufactures, assembles, and sells Toyota and Lexus brand vehicles. For the
fiscal year ending March 31, 2010, s revenues from its automotive business were
17.2 trillion Japanese yen (approximately $184 billion), and its second largest market, with
approximately 29% of its worldwide sales, was North America.
2. As set forth in more detail below, TOYOTA is responsible for unlawful activities
committed by certain employees that resulted in circumstances in which information was hidden
from the public. As evidenced in part by internal company documents, individual employees
not only made misleading public statements to TOYOTA’s consumers, but also concealed from
TOYOTA’s regulator one safety-related issue (a problem with accelerators getting stuck at
partially depressed levels, referred to as “sticky pedal”) and minimized the scope of another
(accelerators becoming entrapped at fully or near-fully depressed levels by improperly secured or
incompatible floor mats, refened to as “floor mat entrapment”).
3. Contrary to public statements that TOYOTA made in late 2009 saying it had
“addressed” the “root cause” of unintended acceleration through a limited safety recall
addressing floor mat entrapment, TOYOTA had actually conducted internal tests revealing that
certain of its unrecalled vehicles bore design features rendering them just as susceptible to floor
mat entrapment as some of the recalled vehicles. And only weeks before these statements were
made, individuals within TOYOTA had taken steps to hide from its regulator another type of
unintended acceleration in its vehicles, separate and apart from floor mat entrapment: the sticlcy
pedal problem.
4. According to a January 2010 report of a discussion following a meeting between

TOYOTA and its regulator, one Toyota employee was said to exclaim, “Idiot& Someone will go
to jail if lies are repeatedly told. I can’t support this.”
TOYOTA and Related Entities
5. At least through February 2010, decisions about whether and when to conduct
recalls of Toyota and Lexus vehicles were made by the leadership of a group within TOYOTA
called “Customer Quality Engineering,” which was centered in Japan and sometimes referred to
as “CQE-J.” Customer Quality Engineering had regional arms responsible for monitoring vehicle
quality issues in the “field” (that is, for vehicles already on the road) in their respective regions.
These regional aims regularly reported field issues and results of vehicle inspections and testing
to CQE-J. The U.S. regional arm, located in Torrance, California, was called “CQE-LA.”
Technically, CQE-LA was part of Toyota Motor Engineering & Manufacturing North America,
Inc. (“TEMA”), an entity that is a wholly-owned subsidiary of TOYOTA headquartered in
Kentucky and principally responsible for North American manufacturing of Toyota and Lexus
vehicles. In practice, CQE-LA staff reported to CQE-J’s leadership.
6. Toyota Motor Sales, U.S.A., Inc. (“TMS”) is an entity that is a wholly-owned

subsidiary of TOYOTA and headquartered in Torrance, California. It is responsible for sales and
marketing of Toyota and Lexus brand vehicles in the United States.
62
7. Toyota Motor North America, Inc. (“TMA”) is an entity that is a wholly-owned
subsidiary of TOYOTA with offices in New York, New York, and Washington, D.C. The
Washington office was responsible for reporting to and interacting with TOYOTA’s U.S.
regulator, the National Highway Traffic Safety Administration (“NHTSA”).
Overview of the Unlawthl Conduct
8. From the fall of 2009 through March 2010, TOYOTA misled U.S. consumers by
concealing and making deceptive statements about two safety-related issues affecting its
vehicles, each of which caused a type of unintended acceleration.
9. In the fall of 2009, TOYOTA faced intense public concern and scrutiny over the
safety of its vehicles after a widely-publicized August 28, 2009 accident in San Diego, California
that killed a family of four. A Lexus dealer had improperly installed an unsecured, incompatible
rubber floor mat (an “all weather floor mat” or “AWFM”) into the Lexus ES350 in which the
family was traveling, and that AWFM entrapped the accelerator at full throttle. A 911 emergency
call made from the out-of-control vehicle, which was speeding at over 100 miles per hour,
reported, “We’re in a Lexus... and we’re going north on 125 and our accelerator is stuck.
there’s no brakes. we’re approaching the intersection. Hold on. hold on and pray.
. . . . . .
pray.” The call ended with the sound of the crash that killed everyone in the vehicle.
10. Against the backdrop of the San Diego accident, press reports of other unintended
acceleration incidents in Toyota and Lexus vehicles, and intensified scrutiny from NHTSA,
TOYOTA agreed to NHTSA’s request in or about September 2009 to recall eight of its U.S.
models for floor mat entrapment susceptibility. Meanwhile and thereafter, from the fall of 2009
through January 2010, TOYOTA misleadingly assured customers that it had “addressed the root
cause” of unintended acceleration in its U.S.-sold vehicles by conducting this recall. In truth, the
recall TOYOTA had conducted (a) left unaddressed the Corolla, the Highlander, and the Venza,
which shared design features similar to the models that were recalled for floor mat entrapment,
and (b) left unaddressed a second type of unintended acceleration: the sticky pedal problem.
11. TOYOTA made these misleading statements and undertook these acts of
conceahnent as part of efforts to defend its brand image in the walce of the fatal San Diego accident
and the ensuing onslaught of critical press.
12. When, in early 2010, TOYOTA finally conducted safety recalls to address the
unintended acceleration issues it had concealed, TOYOTA provided to the American public,
NHTSA, and Congress an inaccurate tirneline of events that made it appear as if TOYOTA had acted
to remedy the sticky pedal problem within approximately 90 days of discovering it.
Background to the Unlawful Conduct
13. TOYOTA is required to disclose to NHTSA if it “learns [a] vehicle or equipment

contains a defect and decides in good faith that the defect is related to motor vehicle safety.”
“Motor vehicle safety” is defined as “perfonnance of a motor vehicle in a way that protects
...
the public against unreasonable risk of accidents . and against unreasonable risk of death or
. .
injury in an accident.” 49 U.S.C. §~ 301 l8(c)(l); 30l02(a)(8). Such disclosure must be

“submitted not more than 5 working days after a defect in a vehicle or item of equipment has
2
63
been determined to be safety related” (the “Defect Disclosure Regulation”). See 49 U.s.c.
§ 30118(c) and 49 c.F.R.~ 573.6.
14. The required disclosure is to be made by filing a “Defect Information Report,” or
“DIR.”
15. Although TOYOTA is not required to notiQv NHTSA of any engineering and design
changes it made to Toyota and Lexus models sold in the United States, it is required to file a
DIR for any safety-related defect addressed by such an engineering and/or design change.
Events Prior to 2009: Floor Mat Entrapment
16. In or about the fall of 2007, TOYOTA successfully avoided a potential vehicle recall
to address floor mat entrapment in certain Toyota and Lexus brand vehicles.
17. In 2007, following a series of reports alleging unintended acceleration in Toyota and
Lexus vehicles, NHTSA opened a defect investigation into the Lexus E5350 model (the vehicle
that was subsequently involved in the tragic 2009 San Diego accident), and identified several other
Toyota and Lexus models it believed might likewise be defective. Floor mat entrapment can pose
a high risk to human life and safety because, when unsecured or incompatible, the AWFM can
entrap the accelerator pedal and it can result in high speed, uncontrolled acceleration.
18. Throughout the summer and fall of 2007, TOYOTA denied the need for any
vehicle-based recall related to floor mat entrapment. TOYOTA resisted a recall even though an
internal investigation being conducted at the time revealed that certain Toyota and Lexus models,
including most of the ones that NHTSA had identified as potentially problematic, had some
design features, including an absence of clearance between a fUlly depressed accelerator pedal
and the vehicle floor, that rendered entrapment of the pedal by an unsecured or incompatible
AWFM more likely. TOYOTA did not share these results with NHTSA.
19. In or about September 2007, having kept to itself the results of some of its initial
internal investigation related to floor mat entrapment, TOYOTA negotiated with NHTSA a
limited recall of 55,000 AWFMs that had been designed for the ES350 and caimy. There was no
recall of or fix to the vehicles themselves, just the limited recall of AWFMs. Inside TOYOTA,
the limited recall was touted as a major victory in a contemporaneous email: “had the agency..
pushed for recall of the throttle pedal assembly (for instance), we would be looking at upwards
of $100 million + in unnecessary costs.”
20. Shortly after TOYOTA announced its AWFM recall, TOYOTA engineers
studying floor mat entrapment revised TOYOTA’s internal design guidelines to provide for,
among other things, a minimum clearance of 10 millimeters between a fully depressed
accelerator pedal and the floor. Engineers also detennined that newly designed models would
have to undergo vehicle-based tests using unsecured genuine AWFMs to determine whether they
had appropriate resistance to floor mat entrapment.
21. The determination was made, however, that these revised guidelines and
procedures would apply only in circumstances where a model was receiving a “full model
redesign” a redesign to which each Toyota and Lexus model was subjected approximately once
—
64
every three to five years. As a result, even after the revised guidelines had been adopted
internally, many new vehicles produced and sold by TOYOTA were not subject to TOYOTA’s
2007 guidelines.
Events Immediately Preceding the

2009 Floor Mat Entrapment Recall
22. As described above, on August 28, 2009, the driver and three passengers of an
ES350 sedan fitted with an AWFM intended for another, larger Lexus spoil utility vehicle model
were killed in an accident resulting from floor mat entrapment in San Diego, California. The
accelerator pedal in this vehicle, the tip of which was designed to reach the floor when frilly
depressed, got trapped under the ill-fitting, incompatible AWFM and could not be freed. The
ES350 vehicle did not have a brake override system, which, under certain circumstances, may
provide an additional safety benefit by closing the throttle upon firm and steady application of
the brake pedal.
23. On or about the same day the San Diego accident occurred, staff at CQE-LA in
Torrance, California, sent a memorandum to CQE-J identil3iing as “critical” an “unintended
acceleration” issue separate and apart from floor mat entrapment that had manifested itself in an
accelerator pedal of a Toyota Matrix vehicle in Arizona. The condition, called “sticky pedal,”
had already arisen in the European market, and entailed the accelerator pedal “sticking” in a
partially depressed position.
24. Sticky pedal, a phenomenon affecting pedals manufactured by a U.S. company (“A
Pedal Company”) and installed in some Toyota brand vehicles in North America as well as Europe,
resulted from the use of a plastic material inside the pedals that could under certain circumstances
result in the accelerator pedal becoming mechanically stuck in a partially depressed position.
The pedals incorporating this plastic were installed in, among other models, the Canny, the
Matrix, the Corolla, and the Avalon sold in the United States.
25. The August 2009 report about the “critical” sticky pedal issue in the Arizona
Matrix was not the only report of the condition that TOYOTA received from U.S. technicians in
the field in the summer of 2009. On or about August 4, 2009, a dealer technician made a similar
report about a pedal in a Camry vehicle.
26. Reports of the same sticky pedal problem in Europe in or about 2008 and early 2009,
where the problem had become apparent earlier, reflected, among other things, instances of
“uncontrolled acceleration” and unintended acceleration to “maxinium RPM,” and customer concem
that the condition was “extremely dangerous.”
27. In or about early 2009, TOYOTA circulated to European Toyota distributors

information about the sticky pedal problem and instructions for addressing the problem if it
presented itself in a customer’s vehicle. These instructions identified the issue as “Sudden RPM
increase/vehicle acceleration due to accelerator pedal sticking,” and stated that should a customer
complain of pedal sticking, the pedal should be replaced with pedals manufactured by a company
other than A-Pedal Company.
65
28. Contemporaneous documents internal to TOYOTA reflect at least a preliminary
assessment by CQE engineers that the sticky pedal problem, as manifested in the above-
described European reports, was a “defect” that was “[i]mportant in terms of safety because of
the possibility of accidents.” TOYOTA did not then infomi its U.S. regulators or conduct a
recall. Beginning in or about the spring of 2009, TOYOTA quietly directed A-Pedal Company to
change the pedals in new productions of affected models in Europe, and to plan for the same
design changes to be rolled out in the United States beginning in the fall of 2009. The design
change was to substitute the plastic used in the affected pedal models with another material and
to change the length of the friction lever in the pedal.
29. By no later than September 2009, TOYOTA recognized internally that the sticky
pedal problem posed a risk of a type of unintended acceleration or “overrun,” as Toyota
—
sometimes called it in many of its U.S. vehicles. A September 2009 presentation made by a
—
CQE-LA manager to TOYOTA executives gave a “current summary of O/R [overrun) types in
NA market” that listed the three confirmed types as: “mat interference” (i.e., floor mat
entrapment), “material issue” (described as “pedal stuck and. pedal slow return/defonned”),
. .
and “simultaneous pedal press” by the consumer. The presentation further listed the models
affected by the “material issue” as including “Camry, Corolla, Matrix, Avalon.”
30. On or about September 9, 2009, a TMS employee who was concerned about the sticky
pedal problem in the United States and believed that TOYOTA should address the problem,
prepared a “Market Impact Summary” listing (in addition to the August 2009 Matrix and Camry)
39 warranty cases that he believed involved potential manifestations of the sticky pedal problem.
This document was circulated to TOYOTA engineers and was later sent to members of CQE-J,
and designated the sticky pedal problem as prionty level “A,” the highest level.
31. On or about September 17, 2009, TOYOTA reproduced sticky pedal in a pedal
recovered from a U.S. vehicle.
32. After the August 2009 fatal floor mat entrapment accident in San Diego, several articles
critical of TOYOTA appeared in U.S. newspapers. The articles reported instances of TOYOTA
customers allegedly experiencing unintended acceleration and the authors accused TOYOTA of,
among other things, hiding defects related to unintended acceleration.
33. Meanwhile, following the San Diego floor mat entrapment accident, NHTSA
identified customer complaints that it believed were potentially related to floor mat entrapment.
Based principally on complaint data that the agency had itself collected, NHTSA identified eight
vehicle models it believed posed an unreasonable risk of floor mat entrapment and should be
recalled.
TOYOTA’s Negotiations with NHTSA About Floor Mat Entrapment
34. As it had in 2007, TOYOTA initially resisted NHTSA’s recall suggestions.

CQE-I prescribed and followed a negotiating position with NHTSA with respect to floor mat
entrapment consisting of: (a) a refusal to declare a vehicle defect of any kind, and (b) an effort to
narrow the class of vehicles that would be subject to the recall.
66
35. During a meeting on September 25, 2009 NHTSA requested that TOYOTA
immediately file a DIR with respect to AWFM entrapment risk in eight specific models, with the
understanding that remedial action for each affected model would be negotiated in the ensuing
months. NHTSA stated that it would open an investigation if TOYOTA declined the request. On
or about September 28, 2009, TOYOTA notified NHTSA that it agreed to file the DIR. That
document, filed on or about October 5, 2009, identified as the “affected” models just the eight
that NHTSA had specified.
36. Shortly before TOYOTA filed its DIR, NHTSA asked TOYOTA to disclose to the
agency “any production changes” that had “been made to pedal geometry.” NHTSA had
expressed to TOYOTA its view that design features related to pedal geometry including
—
clearance between the filly depressed pedal and the floor were important factors in evaluating
—
floor mat entrapment. NHTSA also asked TOYOTA whether it had “a metric for detenriining
which vehicles” to include in the floor mat entrapment recall. TOYOTA did not, at this time,
respond to these requests.
Cancellation and Suspension of Sticky Pedal Design Change
37. As noted, TOYOTA had developed internal plans to implement design changes
for all A-Pedal-Company-manufactured pedals in U.S. Toyota models to address, on a going-
forward basis, the still-undisclosed sticky pedal problem that had already been resolved for new
vehicles in Europe. As of the date of NHTSA’s request for infornntion about “pedal
geometry” in connection with the floor mat entrapment recall, implementation of these pedal
design changes had not yet begun in the United States. On or about October 5, 2009, TOYOTA
engineers issued to A-Pedal Company the first of the design change instructions intended to
prevent sticky pedal in the U.S. market. This was described internally as an “urgent” measure
to be implemented on an “express” basis, as a “major” change meaning that the part number
—
of the subject pedal was to change, and that all inventory units with the old pedal number should
be scrapped.
38. On or about October 21, 2009, however, engineers at TOYOTA and the
leadership of CQE-J decided to cancel the design change instruction that had already been
issued and to suspend all remaining design changes planned for A-Pedal Company pedals in
U.S. models. TEMA employees who had been preparing for implementation of the changes
were instructed, orally, to alert the manufacturing plants of the cancellation. They were also
instructed not to put anything about the cancellation in writing. A-Pedal Company itself would
receive no written cancellation at this time; instead, contrary to TOYOTA’s own standard
procedures, the cancellation was to be effected without a paper frail.
39. TOYOTA decided to suspend the pedal design changes in the United States, and to
avoid memorializing that suspension, in order to prevent NHTSA from learning about the sticky
pedal problem.
TOYOTA’s Internal Entrapment Investigation
40. Meanwhile, in the fall of 2009, as had occurred in 2007, TOYOTA undertook an
internal investigation of floor mat entrapment. That investigation revealed, among other
things, the following, some of which echoed the findings from two years prior:
6
67
a. All but one of the eight models that NHTSA had identified were designed
with 10 millimeters or less of clearance between a ifilly depressed accelerator pedal and a
vehicle floor. Two unrecalled models, the Corolla, one of the best-selling Toyota vehicles in the
United States, and the Venza, had 0 millimeters’ clearance. One contemporaneous document
summarizing measurement and testing data and evaluating the relationship of certain design
features to floor mat entrapment contained the following notation related to these clearance
measurements: “10 [millimeters] or less is high risk.”
b. When CQE-LA engineers subjected Toyota and Lexus models to testing in

which an AWFM was unhooked from its secured position and moved forward by hand in small
increments, all but one of the eight models that NHTSA had identified experienced entrapment
with the AWFM intended for that model. In the eighth model, the Prius, a compatible AWFM
did not trap the pedal. The AWFM used in that particular testing was a recent model that had
benefited from a 2006 design change to address floor mat entrapment susceptibility.
c. A notation contained on a CQE-LA document summarizing the testing

results (the “Score Chart”) for three Toyota models (the Corolla, the Carnry, and the Avalon) and
two Lexus models (one of which was the E5350) read as follows for each of these models: “The
shape of floor underneath A pedal is concave shape and a mat may become bent and easily
retained.” CQE-LA presented its Score Chart to a senior Toyota executive in mid-October 2009.
d. A CQE-LA engineer involved in the floor mat entrapment testing reported

to CQE-J that among the three “worse” vehicles was the Corolla, a model not among those that
NHTSA had identified as the potential subjects of a recall.
e. On or about October 27, 2009, TOYOTA engineers in Japan circulated to

CQE-J a chart showing that the Corolla had the lowest rating for floor mat entrapment under that
analysis.
£ An internal memorandum prepared by a CQE-J leader on or about

November 12, 2009 stated: “In the competitor benchmarkings conducted at TMS and CQE-LA,
Toyota vehicles tended to have more models that use pedal tips as stoppers [and therefore tend
to have zero clearance from the floor], and from the viewpoint of robustness for improper mat
use, we would have to say that it is inferior compared to other companies.”
41. TOYOTA did not inform NHTSA of its intemal analyses concerning models not
among those identified by NHTSA, which showed that the top-selling Corolla, the Highlander,
and the Venza shared design features similar to several of the eight models for which NHTSA
had requested a recall.
Misleading Disclosures to NHTSA About Sticky Pedal
42. Throughout the fall of 2009, following reports in August of sticky pedals in a Matrix
and a Carnry, and following reproduction of the problem by TOYOTA in a pedal from a U.S.
vehicle on or about September 17, 2009, as referenced above, TOYOTA became await of other
manifestations of the problem in the United States.
68
43. In or about late September 2009, TMS employees received a report of sticky pedal
in a Corolla. TMS urged CQE-LA to do something about the issue. Then, in or about October
2009, TMS received three more such reports in U.S. Corolla vehicles, and dispatched technicians to
prepare “field technical reports” (or “FIRs”) documenting the incidents. In or about November
2009, senior executives at TMS learned of these three reports.
44. On or about November 12, 2009, the leadership of CQE-J discussed a plan to
disclose the sticky pedal problem to NHTSA. CQE-J’s leadership was aware at this time not only
of the three Corolla FTRs but also of a problem with the Matrix in August 2009. It was also
familiar with the sticky pedal problem in Europe, the design changes that had been implemented
there, and the cancellation and suspension of similar planned design changes in the United
States. Knowing all of this, CQE-J’s leadership decided that (a) it would not disclose the
September 2009 Market Impact Summary to NHTSA; (b) if any disclosure were to be made to
NHTSA, it would be limited to a disclosure that there were some reports of unintended
acceleration apparently unrelated to floor mat entrapment; and (c) NHTSA should be told that
TOYOTA had made no findings with respect to the sticky pedal problem reflected in the Corolla
FTRs, and that the investigation of the problem had just begun.
45. On or about November 17, 2009, before TOYOTA had negotiated with NHTSA a
final set of remedies for the eight models encompassed by the floor mat entrapment recall,
TOYOTA informed NHTSA of the three Corolla FTRs and several other FTRs reporting
unintended acceleration in Toyota model vehicles equipped with pedals manufactured by
A-Pedal Company. In TOYOTA’s disclosure to NHTSA, TOYOTA did not reveal its
understanding of the sticky pedal problem as a type of unintended acceleration, nor did it reveal
the problem’s manifestation and the subsequent design changes in Europe, the planned,
cancelled, and suspended design changes in the United States, the August 2009 Camry and
Matrix vehicles that had suffered sticky pedal, the September 2009 Corolla with a similar
problem, or the September 2009 Market Impact Summary.
46. In truth, the cause of the issue reflected in the three Corolla FTRs from October 2009
was the same sticky pedal problem that had arisen and been addressed on a going-forward basis in
Europe, about which NHTSA remained unaware.
47. In contrast to its public comments in early November 2009 that there was “no
evidence to support” theories concerning “other causes of unintended acceleration” in its
vehicles beyond floor mat entrapment, on or about November 17, 2009, a CQE-J employee
wrote an email to a leader of CQE-J stating: “We have been trying to approach the floor mat
issue by treating it as a problem caused by the all weather floor mat interfering with the pedal;
however, our understanding is that we can no longer separate this problem from the [A-Pedal
Company] problem that just began to surface.” He went on: “[lit has become increasingly
difficult to take the position that ‘the only problems in the return of the gas pedal we have
confirmed are related to interference with the floor mat.’ Therefore, we are in a subtle situation
as to how much we can emphasize the ‘floor mat problems’ as the top leaders meet with NHTSA
and whether we can get NHTSA to agree with our position.”
48. Despite this November 17, 2009 email, TOYOTA took no further steps to
disclose to NHTSA what it knew about sticky pedal. In fact, at a meeting on November 24, 2009
69
between NHTSA and TOYOTA executives about the floor mat entrapment recall, the sticky
pedal problem went unmentioned.
TOYOTA’s Misleading Statements and Acts of Concealment Following

Announcement of the Floor Mat Entrapment Remedies
49. On or about November 25, 2009, TOYOTA, through TMS, announced its floor mat
entrapment resolution with NHTSA. In a press release that had been approved by TOYOTA, TMS
assured customers: “The safety of our owners and the public is our utmost concern and Toyota
has and will continue to thoroughly investigate and take appropriate measures to address any
defect trends that are identified.” A TMS spokesperson stated during a press conference the same
day, “We’re very, very confident that we have addressed this issue.”
50. In truth, the issue of unintended acceleration had not been “addressed” by the
remedies announced. A-Pedal Company pedals which could experience stickiness were still on
the road and still, in fact, being installed in newly-produced vehicles. And the best-selling
Corolla, the Highlander, and the Venza—which had some design features similar to models that
had been included in the earlier floor mat entrapment recall—were not being “addressed” at all.
One of the vehicle-based remedies that TOYOTA agreed to implement in the eight models
subject to the floor mat entrapment recall was a “cut” of the accelerator pedal to improve
clearance from the floor. TOYOTA had been concerned throughout much of the fall of 2009 that
NHTSA would require TOYOTA to offer replacement pedals to owners of the subject vehicles
as pail of the recall, and further require that such replacement pedals be made available as early
as January 2010.
51. On or about November 26, 2009, CQE-J issued a directive to engineers at

TOYOTA not to implement any design improvements for the North American market related to
floor mat entrapment in models other than the eight subject to the recall unless the subject model
was already undergoing a frill model redesign. The justification offered for the directive was that
design changes would “most likely mislead the concerned authorities and consumers and such to
believe that we have admitted havin2 defective vehicles.” (Emphasis in original).
52. On or about December 10, 2009, only after the floor mat entrapment recall
remedy had been fliliy negotiated with NHTSA and announced to the public, TOYOTA finally
issued to A-Pedal Company renewed pedal design change instructions to address sticky pedal in
newly produced vehicles in the United States. Whereas the single design change instruction that
had issued for the U.S. market on or about October 5, 2009 (and then been cancelled on or about
October 21, 2009) had called for a “major” change that would have entailed scrapping of old
parts, the new design change instructions were issued as “minor” changes a designation that
—
entailed no part number change and allowed for use of old, defective parts until inventory was
exhausted. TOYOTA engineers decided to characterize the changes as minor to prevent their
detection by NHTSA. The newly issued design change instructions were to go into effect in or
about mid-January 2010, around the same time that TOYOTA would be implementing pedal
design changes for models encompassed by the floor mat entrapment recall.
53. At or about the same time that TOYOTA was issuing renewed design change
instructions to remedy sticky pedal in newly produced U.S. vehicles, CQE-J instructed TMS that
issuance of a “technical service bulletin” to Toyota dealers alerting them to the sticky pedal
9
70
problem and explaining how it should be remedied for vehicles in the field was “not permitted.”
Under NHTSA regulations, any such communication would have to have been disclosed to
NHTSA.
54. On or about December 10, 2009, the date upon which TOYOTA issued renewed
design change instructions for sticky pedal in the United States, a statement appeared on TMS’s
website, in response to a Los Angeles Times editorial dated December 5, 2009. Toyota asserted
misleadingly, that “[biased on the comprehensive investigation and testing, we are highly
confident that we have addressed the root cause of unwanted acceleration the entrapment of the
—
accelerator pedal.”
55. In truth, TOYOTA had not “addressed the root cause ofunwanted acceleration.”
TOYOTA had not recalled the Corolla, the Highlander and the Venza, which shared design
features similar to the models that had been the subject of the recall.
56. Again, on or about December 23, 2009, TOYOTA responded to media

accusations that it was continuing to hide defects in its vehicles by authorizing TMS to publish the
following misleading statements on TMS’s website: “Toyota has absolutely not minimized public
awareness of any defect or issue with respect to its vehicles. Any suggestion to the contrary is
wrong and borders on ilTesponsibility. We are confident that the measures we are taking address
the root cause and will reduce the risk of pedal entrapment.”
57. These statements were misleading because TOYOTA had “minimized public
awareness of’ both sticky pedal and floor mat entrapment. Further, the measures TOYOTA had
taken did not “address the root cause” of unintended acceleration, because TOYOTA had not yet
issued a sticky pedal recall and had not yet recalled the Corolla, the Venza, or the Highlander for
floor mat entrapment.
TOYOTA Is Forced to Disclose Sticky Pedal
58. By in or about early January 2010, TOYOTA had received additional reports of sticky
pedal in the United States. The news media, meanwhile, was reporting two incidents of unintended
acceleration in Toyota vehicles apparently unrelated to floor mat entrapment. One news outlet in
particular was preparing to run a feature about an Avalon vehicle in New Jersey that had
experienced what appeared to be sticky pedal three times but had not been involved in an accident.
59. On or about January 16, 2010, TOYOTA finally disclosed to NHTSA that
TOYOTA had recently begun implementing design changes to prevent sticky pedal in the United
States, and that, in fact, TOYOTA had implemented the same changes to European pedals many
months before in response to reports of “uncontrolled acceleration” and unintended acceleration
to “maximum RPM.”
TOYOTA’s Misleading Statements to NHTSA in January 2010
60. On or about January 19, 2010, representatives of TOYOTA, including executives

from TMS and TMA, delivered to NHTSA representatives in Washington, D.C. a presentation
that had been developed in large part by the leadership and staff of CQE-J. One of the
chronologies used for this presentation purported to present a history of sticky pedal reports in
10
71
the United States. It omitted any reference to the August 2009 sticky pedals in the Camry and the
Matrix, the September 2009 Corolla, and the September 2009 Market Impact Summary. It also
stated that TOYOTA began arrangements to implement design changes for sticky pedal in the
U.S market in January 2010 after sticky pedal was reproduced in December 2009. In fact,
TOYOTA began considering design changes to address sticky pedal in or about spring 2009,
which ultimately were to be implemented in the United States; TOYOTA had also reproduced
sticky pedal in a pedal recovered from a U.S. vehicle no later than September 17, 2009.
61. The presentation that TOYOTA gave to NHTSA on January 19, 2010
downplayed the seriousness of reports of sticky pedal in Europe. When, after the presentation, a
TOYOTA employee who attended the presentation reviewed the actual reports from Europe, and
saw that they included such phrases as “out of control” and “safety issue,” he was said to
exclaim “Idiots! Someone will go to jail if lies are repeatedly told. I can’t support this.”
62. On or about January 21, 2010, TOYOTA filed a DIR in which it recalled all
vehicles in the United States fitted with the accelerator pedals from A-Pedal Company that could
experience a sticky pedal. In that filing, TOYOTA stated that it had begun receiving “field
technical information” from the U.S. market about sticky pedal in “October 2009.” In truth,
TOYOTA had received information no later than in or about August 2009 and, in October 2009,
had cancelled the U.S. fix for the sticky pedal problem so as to avoid its disclosure to NHTSA.
TOYOTA Recalls the Corolla, the Highlander, and the

Venza For Floor Mat Entrapment
63. Also on or about January 21, 2010, NHTSA informed TOYOTA that it had
received additional complaints suggesting possible floor mat entrapment in vehicles that had not
been recalled in 2009, including the Corolla. Rather than have NHTSA open an investigation,
TOYOTA immediately agreed to “amend” its 2009 DIR to add the Corolla, the Highlander, and
the Venza to the recall. As one leader of CQE-J explained internally in justifying his decision to
so readily agree to this amendment: “Is it really in our best interest to report, ‘We found a
problem’ after conducting an inspection? Or maybe we won’t say, ‘We found a problem’ but if
we say, ‘Everything is the same as Camry, etc.’, they may come after us by saying ‘Why didn’t
you report when we agreed last time? Considering the background that we have been cornered
with regard to the [A-Pedal Company] issue [i.e., sticky pedal], I think they might assert we have
been hiding something. Don’t you think so?”
TOYOTA’s Statements to the Public and Congress

About Its Knowledge Timeline
64. In or about late January and early February 2010, TOYOTA, based on talking
points approved by TOYOTA executives and distributed to TOYOTA’s U.S. personnel, made
several public statements that asserted, misleadingly, that the “fall of 2009” or “October 2009”
was the first time TOYOTA learned of sticky pedal in the United States when in fact TOYOTA
had received reports of sticky pedal in August 2009. For example, TOYOTA told a reporter on or
about January 25, 2010 that “[i]solated reports of sticky accelerator pedals have only recently
come to light, in the fall of 2009 to be a little more precise.” Later, TOYOTA told the public it
first discovered sticky pedal in the United States after the floor mat recall and that it had started
investigating the problem in October 2009. TOYOTA flirther claimed that it had moved quickly
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72
to investigate and fix the sticky pedal problem within 90 days of TOYOTA’s discovery of the
problem. During this time period, TOYOTA also acknowledged that sticky pedal, though
“rare,” was “a grave safety concern.”
65. TOYOTA made inaccurate statements during the course of an investigation

initiated by the United States Congress in or about late January 2010. Consistent with the talking
points described above, but contrary to certain internal documents that TOYOTA had itself
produced to Congress among thousands of other documents, TOYOTA repeated to Congress that it
became aware of sticky pedal in the United States in October 2009, when in fact it had been
investigating sticky pedal in the United States since no later than August 2009.
TOYOTA Admits Earlier Knowledge
66. On or about February 16, 2010, NHTSA opened inquiries into the timeliness of the
recalls that TOYOTA had conducted to address floor mat entrapment and sticky pedal in 2007,
2009, and 2010.
67. On or about March 25, 2010, in response to NHTSA’s inquiries, TOYOTA

submitted a tirneline of events that listed, among other sticky pedal incidents in the United States, the
August 2009 Caniry and Matrix incidents.
12
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EXHIBIT B
74
TOYOTA DEALER AGREEMENT
This is an Agreement between —- — Toyota Motor Sales, U.S.A., Inc.
(DISTRIBUTOR), and R & C Motor Corporation
(DEALER), a(n) Corporation If a corporation, DEALER is duly
incorporated in the state of _________________— California and doing
business as Claremont Toyota and Claremont Scion
PURPOSES AND OBJECTIVES OJ? THIS AGREEMENT
DISTRIBUTOR sells Toyota Products, which are manufactured or approved by Toyota Motor Corporation
(FACTORY) and imported and/or sold to DISTRIBUTOR by Toyota Motor Sales, U.S.A., Inc.
(IMPORTER). It is of vital importance to DISTRIBUTOR that Toyota Products are sold and serviced in a
maimer which promotes consumer confidence and satisfaction and leads to increased product acceptance.
Accordingly, DISTRIBUTOR has established a network of authorized Toyota dealers, operating at
approved locations and pursuant to certain standards, to sell and service Toyota Products. DEALER
desires to become one of DISTRIBUTOR’s authorized dealers, Based upon the representations and
promises of DEALER, set forth herein, DISTRIBUTOR agrees to appoint DEALER as an authorized
Toyota dealer and welcomes DEALER to DISTRIBUTOR’s network of authorized dealers of Toyota
Products.
This Agreement sets forth the rights and responsibilities of DISTRIBUTOR as seller and DEALER as
buyer of Toyota Products, DISTRIBUTOR enters into this Agreement in reliance upon DEALER’s
integrity, ability, assurance of personal services, expressed intention to deal fairly with the consuming
public and with DISTRIBUTOR, and proinis~ tcs adhere to the terms and conditions herein. Likewise,
DEALER enters into this Agreement in reliance upon DISTRIBUTOR’s promise to adhere to the terms and
conditions herein. DISTRIBUTOR and DEALER shall refrain from conduct which may be detrimental to
or adversely reflect upon the reputation of the FACTORY, IMPORTER, DISTRIBUTOR, DEALER or
Toyota Products in general. The parties acknowledge that the success of the relationship between
DISTRIBUTOR and DEALER depends upon the mutual understanding and cooperation of both
DISTRIBUTOR and DEALER.
Dealer Code: 04018
75
RIGHTS GRANTED TO THE DEALER
Subject to the terms of this Agreement, DISTRIBUTOR hereby grants DEALER the non-
exclusive right:
A. To buy and resell the Toyota Products identified in the Toyota Product addendum hereto
which may be periodically revised by IMPORTER;
B. To identit~, itself as an authorized Toyota dealer utilizing approved siguage at the location(s)
approved herein;
C. To use the name Toyota and the Toyota Marks in the advertising, promotion, sale and
servicing of Toyota Products in the manner herein provided.
DISTRIBUTOR reserves the unrestricted right to sell Toyota Products and to grant the privilege
of using the name Toyota or the Toyota Marks to other dealers or entities, wherever they may be
located.
II. RESPONSIBILITIES ACCEPTED BY THE DEALER
DEALER accepts its appointment as an authorized Toyota dealer and agrees to:
A. Sell and promote Toyota Products subject to the terms and conditions of this Agreement;
B. Service Toyota Products subject to the terms and conditions of this Agreement;
C. Establish and maintain satisfactory dealership facilities at the location(s) set forth
herein; and
D. Make all payments to DISTRIBUTOR when due.
IlL TERM OF AGREEMENT
ThirAgreemenriwEffe&iwthis IUUjL da3’ aT tT&vember 2012 , and

shall continue for a period of 6 Years , and shall expire on November 29, 2018,
unless ended earlier by mutual agreement or terminated as provided herein. This Agreement
may not be continued beyond its expiration date except by written consent of DISTRIBUTOR
and IMPORTER.
76
IV. OWNERSHIP OF DEALERSHIP
This Agreement is a persona) service Agreement and has been entered into by DISTRIBUTOR
in reliance upon and in consideration of DEALER’s representation that only the following
named persons are the Owners of DEALER, that such persons will serve in the capacities
indicated, and that such persons are committed to achieving the purposes, goals and
commitments of this Agreement:
OWNERS’ PERCENT OF
NAMES TITLE OWNERSHIP
The Hogan Family 100%

Revocable Living Trust,
Roger T. and Cathie L,
Hogan as Trustees
V. MANAGEMENT OF DEALERSHIP
DISTRIBUTOR and DEALER agree that the retention of qualified management is of critical
importance to satisfy the commitments made by DEALER in this Agreement.
DISTRIBUTOR, therefore, enters into this Agreement in reliance upon DEALER’s
representation that Stephen Hogan , and no other
person, will exercise the lbnction of General Manager, be in complete charge of DEALER’s
operations, and will have authority to make all decisions on behalf of DEALER with respect to
D.EA.LER-!s~operations._DRA~LER_further_agrees~that-the-General..Manager--shalI-devote-his-or———
her MI efforts to DEALER’s operations.
VI. CHANGE IN MANAGEMENT OR OWNERSHIP
This is a personal service contract. DISTRIBUTOR has entered into this Agreement because
DEALER has represented to DISTRIBUTOR that the Owners and General Manager of
DEALER identified herein possess the personal qualifications, skill and commitment necessary
to ensure that DEALER will promote, sell and service Toyota Products in the most effective
manner, enhance the Toyota image and increase market acceptance of Toyota Products.
Because DISTRIBUTOR has entered into this Agreement in reliance upon these representations
and DEALER’s assurances of the active involvement of such persons in DEALER operations,
any change in ownership, no matter what the share or relationship between parties, or any
changes in General Manager from the person specified herein, requires the prior written consent
of DISTRIBUTOR, which DISTRIBUTOR shall not unreasonably withhold.
77
DEALER agrees that factors which would make DISTRIBUTOR’s withholding of consent
reasonable would include, without limitation, the failure of a new Owner or General Manager to
meet DISTRIBUTOR’s standards with regard to financial capability, experience and success in
the automobile dealership business.
VII. APPROVED DEALER LOCATIONS
In order that DISTRIBUTOR may establish and maintain an effective network of authorized
Toyota dealers, DEALER agrees that it shall conduct its Toyota operation only and exclusively
in facilities and at locations herein designated and approved by DISTRIBUTOR.
DISTRIBUTOR hereby designates and approves the following facilities as the exclusive
location(s) for the sale and servicing of Toyota Products and the display of Toyota Marks:
New Vehicle Sales and Showroom Used Vehicle Display and Sales
Toyota: 508 and 601 Auto Center Drive
508 and 601 Auto Center Drive Claremont, CA 91711
Claremont, CA 91711
Scion:
508 Auto Center Drive
Claremont, CA 91711
Sales and General Office Body and Paint

508 and 601 Auto Center Drive
Claremont, CA 91711
Parts Service
508 and 601 Auto Center Drive 508 and 601 Auto Center Drive
Claremont, CA 91711 Claremont, CA 91711
Other Facilities
602 and 608 Auto Center Drive
Claremont, CA 91711
DEALER may not, either directly or indirectly, display Toyota Marks or establish or
conduct any dealership operations contemplated by this Agreement, including the display, sale
and servicing of Toyota Products, at any location or facility other than those approved herein
without the prior written consent of DISTRIBUTOR. DEALER may not modify or change the
usage or firnction of any location or facility approved herein or otherwise utilize such locations
or facilities for any functions other than the approved Thnction(s) without the prior written
consent of DISTRIBUTOR.
VIII. PRIMARY MARKET AREA
DISTRIBUTOR will assign DEALER a geographic area called a Primary Market Area
(“PMA”). The PMA is used by DISTRIBUTOR to evaluate DEALER’s performance of its
obligations,
78
among other things. DEALER agrees that it has no exclusive right to any such PMA.
DISTRIBUTOR may add new dealers, relocate dealers, or adjust DEALER’s PMA as it
reasonably determines is necessary. DEALER’s PMA is set forth on the PMA Addendum
hereto.
Nothing contained in this Agreement, with the exception of Section XIVQ3), shall limit or be
construed to limit the geographical area in which, or the persons to whom, DEALER may sell or
promote the sale of Toyota products.
IX. STANDARD PROVISIONS
The “Toyota Dealer Agreement Standard Provisions” arc incorporated herein and made part of
this Agreement as if hilly set forth herein.
X. ADDITIONAL PROVISIONS
In consideration of DISTRIBUTOR’s agreement to appoint DEALER as an authorized Toyota

dealer, DEALER further agrees:
1. DISTRIBUTOR has entered into this Agreement in reliance upon the terms of the Second
Amendment of and Complete Restatement of the Hogan Family Revocable Living Trust,
dated January 12, 2012 (the “Trust”), including the desigi~ation of Roger T. Hogan and
Cathie L. Hogan as the trustees of the Trust. Notwithstanding any provision of the Trust,
DEALER expressly agrees that (i) the Trust may not be amended, modified or terminated
without the prior written consent of DISTRIBUTOR; and (ii) no additional, replacement or
successor trustee(s) may be named without the prior written consent of DISTRIBUTOR.
DEALER further understands and expressly agrees that DISTRIBUTOR at this time is not
approving any successor trustee, co-trustee or beneficiary, whether or not named in and/or
appointed pursuant to the Trust, as owner, operator or individual in direct or indirect control
of DEALER and that any potential future approval of any successor trustee, co-trustee or
beneficiary as owner operator or individual in control of DEALER will be conditioned on
such person’s hill compliance with DISTRIBUTOR’s then-applicable policies.
~ has entered into this Agreement in ~éli ip6ñThe terms ofih~

Consent(s) of Co-Trustee, dated March II, 2009, executed by Cathie L. Hogan whereby
Roger T. Hogan has been granted the authority to manage the Trust’s direct or indirect
interest in DEALER.
Any changes in ownership or trustees (including desigziation of voting trustee pursuant

to Consent of Co-Trustee), whether or not pursuant to the Trust, without the prior
written approval of DISTRIBUTOR will void this Agreement.
79
ADDITIONAL PROVISIONS (Continued):
2. DEALER acknowledges that Cathie L. Hogan (“Investor”) does not have a proven, relevant,
successflul retail automotive management background and thus is not qualified at this time to
be approved as the individual with majority control and final decision-making authority for
the DEALER. DEALER lbrther agrees that Investor is likewise not qualified at this time to
be the approved General Manager of DEALER. DEALER acknowledges that should
Investor acquire the required proven, relevant suecessflil retail automotive management
background, she may submit a completed Toyota Dealer Application for DISTRIBUTOR’s
consideration.
3. DEALER acknowledges that its current facility is substantially deficient in that it does not
meet DISTRIBUTOR’s appearance requirements in the following respects:
Actual Standard Variance

Image USA II Non-Compliant Compliant
DEALER acknowledges that DISTRIBUTOR has approved DEALER’s Site Request for a
relocation of all dealership operations to 601, 602 and 608 Auto Center Drive, Claremont,
CA. DEALER acknowledges the facilities located at 601, 602 and 608 Auto Center Drive
are substantially deficient in that together they do not meet DISTRIBUTOR’s minimum
space and appearance requirements in the following respects:

Service Department (stalls) 36 56 -20
Total Building (sq. ft.) 55,829 73,549 -17,720
Total Land (sq. Ft.) 383,870 409,270 -25,400
Image USA II Non-Compliant Compliant
DEALER therefore agrees upon DISTRIBUTOR’s approval of DEALER’s request to

relocate all dealership operations to 601, 602 and 608 Auto Ccnter Drive, DEALER will
utilize a minimum of 14 additional service stalls located at 508 Auto Center Drive (the
“Offsitc Service Stalls”), so that a total of 50 service stalls will be dedicated to DEALER’s
Toyota operations throughout the duration of this Agreement, DEALER agrees that the
Offsite Service Stalls will be non-customer facing and no Dealership or Toyota signage will
be~dispIayed at 508 Auto Center Drive.
DEALER agrees to remedy the appearance deficiency by renovating the 601 602 and
6O8Auto Center Drive facility to meet Toyota IMAGE USA II requirements within the
following timetable:
o Commence constmction by April 30, 2013

o Complete construction by September 30, 2013
DEALER and DISTRIBUTOR acknowledge that, upon completion of the approved Image
USA 11 facility action and subsequent relocation to 601,602 and 608 Auto Center Drive,
DEALER’s facilities will not meet DISTRIBUTOR’s current minimum requirements for
land, building and service stalls. DEALER understands that DISTRIBUTOR is not requiring
DEALER to remedy these deficiencies at this time, based upon current compliance with
Dealer Initials ______________
5a
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ADDITIONAL PROVISIONS (Continued):
DISTRIBUTOR’s performance standards and DEALER’S representation that DEALER will
remain in compliance with DISTRIBUTOR’s service stall requirement either by using the
Offsite Service Stalls for non-customer facing service or by constructing additional service
stalls, as set forth below in this Additional Provision.
DEALER further agrees if DEALER decides to discontinue use of the Offsite Service Stalls,
DEALER will give DISTRIBUTOR a minimum of thirty (30) days advance written notice
and provide, no later than thirty (30) days before discontinuing use of the Offsite Service
Stalls, a detailed, written facility action plan that provides for the completion of sufficient
service stalls to meet the lesser of either:
o A total of fifty (50) service stalls, or

• The then-existing minimum service stall requirement for DEALER
within twelve (12) months of discontinuing use of the Offsite Service Stalls.
DEALER understands and agrees that, to the extent DISTRIBUTOR has permitted or will
permit DEALER to continue Toyota operations without full compliance with Toyota facility
space standards or DISTRIBUTOR directives or both, such conduct by the DISTRIBUTOR
shall not constitute a waiver of any such standards or directives. Further, DISTRIBUTOR
may, at any time, amend this Agreement to establish a timetable for DEALER to filly
comply with DISTRIBUTOR’s then-current facility requirements in the event DEALER’s
performance falls below DISTRIBUTOR’s then-current performance standards.
Time is of the essence for all matters set forth herein.
5b
81
XL EXECUTION OF AGREEMENT
Notwithstanding any other provision herein, the parties to this Agreement, DISTRIBUTOR and
DEALER, agree that this Agreement shall be valid and binding only if it is signed;
A. On behalf of the DEALER by a duly authorized person;
B, On behalf of DISTRIBUTOR by the President and/or an authorized General Manager, if any, of

DISTRIBUTOR; and
C. On behalf of IMPORTER, solely in connection with its limited undertaking herein, by President
of IMPORTER.
XII. CERTIFICATION
By their signatures hereto, the parties agree that they have read and understand this Agreement,
including the Standard Provisions incorporated herein, are committed to its purposes and objectives
and agree to abide by all of its terms and conditions.
R DEALER
Date: By: President

tile
Date: By:
~ignawroj I ale
Date: By:
(Signature) title
Toyota Motor Sales, U.S.A., Inc. — DiSTRIBUTOR

(Uistnb anie)
Date: /f/2542_— By: _______ General Manager
Date: By:
(Signature) I Lit
82
Undertaking by IMPORTER: In the event of termination af this Agreement by virtue of termination
or expiration of DISTRIBUTOR’s contract with IMPORTER, iMPORTER, through its designee,
will offer DEALER a new agreement of no less than one year’s duration and containing the terms of
the Toyota Dealer Agreement then prescribed by IMPORTER.
TOYOTA.MOTOR SALES U.S.A., INC.
Date: NOV 3 02012 By: ______________________________
Wign~turc) 0’
president
Lie
83
STANDARD PROVISIONS
The following Standard Provisions are expressly incorporated in and made a part of the Toyota
Dealer Agreement.
XIII. ACQUISITION, DELIVERY AND INVENTORY OF TOYOTA PRODUCTS
A. ACQUISITION OF TOYOTA PRODUCTS
DEALER shall have the right to purchase Toyota Products from DISTRIBUTOR in
accordance with the provisions set forth herein and such other requirements as may be
established from time to time by DISTRIBUTOR
B. AVAILABILITY AND ALLOCATION OF PRODUCT
DISTRIBUTOR agrees to use its best efforts to provide Toyota Products to DEALER in
such quantities and types as may be required by DEALER to fulfill its obligations with
respect to the sale and servicing of Toyota Products under this Agreement, subject to
available supply from IMPORTER, DISTRIBUTORs requirements, and any change or
discontinuance with respect to any Toyota Product. DISTRIBUTOR will endeavor to
allocate Toyota Products among its dealers in a fair and equitable manner, which it shall
deteimine in its sole discretion. DISTRIBUTOR agrees to provide DEALER with an
explanation of the method used to distribute such products and, upon written request, will
advise DEALER of DISTRIBUTORs total wholesale sales of new motor vehicles, by
series, in DISTRIBUTORs area and to DEALER individually, for a reasonable time frame.
C. PRICES AND TERMS OF SALE
DISTRIBUTOR shall have the right to establish and revise prices and other terms for the
sate of Toyota Products to DEALER. Ownership and title of Toyota Products sold by
DISTRIBUTOR to DEALER shall pass upon payment therefor by DEALER to
DISTRIBUTOR and DEALER shall have no ownership interest in such Products until such
payment is received. Risk of loss for Toyota Products sold by DISTRIBUTOR to DEALER
shall pass upon delivery of such Products to DEALER. Revised prices and terms shall
apply to any Toyota Products not invoiced to DEALER by DISTRIBUTOR at the time the
notice of such change is given to DEALER (in the case of Toyota Motor Vehicles), or upon
issuance of a new or modified Parts Price List or through change notices, letters, bulletins,
or revision sheets (in the case of parts, options and accessories), or at such other times as
may be designated in writing by DISTRIBUTOR.
Payment for all Toyota Products shall be made when billed, unless other terms are
established by DISTRIBUTOR in writing.
0. MODE, PLACE AND CHARGES FOR DELIVERY OF PRODUCTS
DISTRIBUTOR shall designate the distribution points and the mode of transportation and
shall select carrier(s) for the transportation of Toyota Products to DEALER. DEALER
shall pay DISTRIBUTOR such charges as DISTRIBUTOR in its sole discretion establishes
S
84
for such transportation services.
E. INVENTORY DAMAGE CLAIMS AND LIABIUTY
DEALER shall promptly notify DISTRIBUTOR of any damage occurring during transit
and shall, if so directed by DISTRIBUTOR, file claims on DISTRIBUTOR’s behalf against
transportation carrier for damage. DEALER agrees to assist DISTRIBUTOR in obtaining
recovery against any transportation carrier or insurer for loss or damage to Toyota Products
shipped hereunder,
To the extent required by law, DEALER shall notify the purchaser of a vehicle of any
damage sustained by such vehicle prior to sale. DEALER shall indemnify and hold
DISTRIBUTOR harmless from any liability resulting from DEALER’S failure to so notify
such purchasers.
F. DELAY OR FAILURE OF DELIVERY

DISTRIBUTOR shall not be liable for delay or failure to deliver Toyota Products which it
has previously agreed to deliver, where such delay or failure to deliver is the result of any
event beyond the control of DISTRIBUTOR, IMPORTER or FACTORY, including but not
limited to fire, floods, storms or other acts of God, any law or regulation of any
governmental entity, foreign or civil wars, riots, interruptions of navigation, shipwrecks,
strikes, lockouts or other labor troubles, embargoes, blockades, or delay or failure of
FACTORY to deliver Toyota Products.
G. DIVERSION CHARGES
If after delivery DEALER fails or refuses to accept Toyota Products that it has agreed to
purchase, DEALER shall pay all charges incurred by DISTRIBUTOR as a result of such
refusal. Such charges shall not exceed the charge of returning any such product to the point
of original shipment by DISTRIBUTOR plus all charges for demurrage, storage or other
charges related to such reftisal,
DEALER also agrees to assume responsibility for, and shall pay any and all reasonable
—— charges for, deniurrage, storage or other charges accruing after arrival of shipment at the
point of original shipment.
H. CHANGES OF DESIGN, OPTIONS OR SPECIFICATIONS

DISTRIBUTOR, IMPORTER or FACTORY may change the design or specifications of
any Toyota Product or the options in any Toyota Product and shall be under no obligation
to provide notice of same or to make any similar change upon any product previously
purchased by or shipped to DEALER. No change shall be considered a model year change
unless so specified by DISTRIBUTOR.
I. DISCONTINUANCE OF MANUFACTURE OR IMPORTATION

FACTORY, IMPORTER and/or DISTRIBUTOR may discontinue the manufacture,
importation or distribution of all or part of any Toyota Product whether motor vehicle,
parts, options, or accessories, including any model, series, or body style of any Toyota
9
85
Motor Vehicle at any time without any obligation or liability to DEALER by reason
tIiereof~
S. MINIMUM VEHICLE INVENTORIES
Subject to the ability of DISTRIBUTOR to supply Toyota Motor Vehicles to DEALER,

DEALER agrees that it shall, at all times, maintain at least the minimum inventory of
Toyota Motor Vehicles as may be established by DISTRIBUTOR from time to time.
DEALER also agrees that it shall have available at all times, for purposes of display and
demonstration, the number of Toyota Motor Vehicles of the most current models as may be
established by DISTRIBUTOR from time to time, and shall, at all times, maintain such
Motor Vehicles in showroom ready condition.
K. PRODUCT MODIFICATIONS
DEALER agrees that it will not make any modifications to Toyota Products that may
impair or adversely affect a vehicle’s safety, emissions or structural integrity,
XIV. DEALER MARKETING OF TOYOTA PRODUCTS
A. DEALER’S SALES RESPONSIBILITIES
DEALER recognizes that customer satisfaction and the successful promotion and sale of
Toyota Products are significantly dependent on DEALER’s advertising and sales promotion
activities. DEALER shall actively and effectively promote, through DEALER’s own
advertising and sales promotion activities, the purchase of Toyota Products by customers.
Therefore, DEALER at all times shall:
1. Actively and effectively advertise, merchandise, promote and sell Toyota Products;
2. Maintain an adequate, stable and trained sales organization, and, to that end, make all
reasonable efforts to ensure that its sales personnel attend all sales training courses
prescribed by DISTRIBUTOR at DEALER’s expense;
3. Maintain high standards of ethics in advertising~i~moting and selling Toyota Products

and avoid engaging in any misrepresentation or unfair or deceptive practices; and
4. Accurately represent to customers the total selling price of Toyota Products. DEALER
agrees to explain to customers of Toyota Product the items that make up the total selling
price and to give the customers itemized statements and all other information required
by law, DEALER understands and hereby acknowledges that it may sell Toyota
Products at whatever price DEALER desires.
B. EXPORT PROHIBITION
DEALER is authorized to sell Toyota Motor Vehicles only to customers located in the
continental United States. DEALER agrees that it will not sell Toyota Motor Vehicles for
resale or use outside the continental United States. DEALER agrees to abide by any export
policy established by DISTRIBUTOR.
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C. USED VEHICLES
DEALER agrees to display, promote and sell used vehicles at the Approved Location.
DEALER shall maintain for resale an inventory of used vehicles.
0. ASSISTANCE PROVIDED BY DISTRIBUTOR
1. Sales Training Assistance
To assist DEALER in the fulfillment of its sales responsibilities under this Agreement,
DISTRIBUTOR agrees to offer general and specialized sales management and sales
training programs for the benefit and use of DEALERs sales organization, When
requested by DISTRIBUTOR, DEALER’S personnel shall participate in such programs
at DEALER’s expense.
2. Sales Promotion Assistance
In order that authorized Toyota dealers may be assured of the benefits of comprehensive
advertising and promotion of Toyota Products, DISTRIBUTOR agrees to establish and
maintain general advertising and promotion programs and will from time to time make
sales promotion and campaign materials available to DEALER to promote the sales of
such Toyota Products at a reasonable charge where applicable.
3. Field Sales Personnel Assistance
To assist DEALER in handling its sales responsibilities under this Agreement,

DISTRIBUTOR agrees to provide trained field sales personnel to advise and counsel
DEALER on sales-related subjects, including merchandising, training and sales
management.
XV. DEALER SERVICE OBLIGATIONS
A. CUSTOMER SERVICE STANDARDS
DEALER and DISTRIBUTOR agree that the ass and future growth of DISTRIBUTOR
and DEALER are substantially dependent upon the customer’s ability to obtain high-quality
vehicle servicing. Therefore, DEALER agrees to:
1. Take all reasonable steps to provide service of the highest quality for all Toyota Motor
Vehicles, regardless of where purchased and whether or not under warranty;
2. Ensure that the customer is advised of the necessary repairs and that his or her consent
is obtained prior to the initiation of any repairs;
3. Ensure that problems on Toyota Motor Vehicles are accurately diagnosed and repairs
are promptly and professionally performed; and
4. Ensure that the customer is treated courteously and fairly at all times.
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B. NEW MOTOR VEI-IICLE PRE-DELI VERY SERVICE
DEALER agrees that prior to delivery of a new Toyota Motor Vehicle to a customer it shall
perform, as directed by DISTRIBUTOR, pre-delivery service on each Toyota Motor
Vehicle in accordance with Toyota standards. DISTRIBUTOR shall pay DEALER for such
pre-delivery service according to such directives and the applicable provisions of the
Toyota Warranty Policy and Procedures Manual.
C. WARRANTY AND POLICY SERVICE
DEALER acknowledges that the only warranties of DISTRIBUTOR or FACTORY

applicable to Toyota Products shall be the New Vehicle Limited Warranty or such other
written warranties that may be expressly fUrnished or sold by DISTRIBUTOR or
FACTORY, Except for its limited liability under such written warranty or warranties,
DISTRIBUTOR and FACTORY do not assume any other warranty obligation or liability.
DEALER is not authorized to assume any additional warranty obligations or liabilities on
behalf of DISTRIBUTOR, IMPORTER or FACTORY. Any such additional obligations
assumed by DEALER shall be the sole responsibility of DEALER, Any extended service
contract sold by IMPORTER, DISTRIBUTOR or Toyota-affiliated entity shall be governed
by its own terms.
DEALER shall perform warranty service specified by DISTRIBUTOR in accordance with

the Toyota Warranty Policy and Procedures Manual. DISTRIBUTOR agrees to
compensate DEALER for all warranty work, including labor, diagnosis and Genuine
Toyota Parts and Accessories, in accordance with procedures and at rates to be announced
from time to time by DISTRIBUTOR, Unless otherwise approved in writing in advance by
DISTRIBUTOR, DEALER shall use only Genuine Toyota Parts and Accessories when
performing Toyota warranty repairs. Warranty service is provided for the benefit of
customers and DEALER agrees that the customer shall not be obligated to pay any charges
for warranty work or any other services for which DEALER is reimbursed or paid by
DISTRIBUTOR.
I). USE 01? PARTS AND ACCESSORIES IN NON-WARRANTY SERVICING
Subject to the provisions let forth belowcb~ALER has the iljht to sell, install or use, for
making non-warranty repairs, products that are not Genuine Toyota Pails or Accessories.
DEALER acknowledges, however, that its customers expect that any parts or accessories
that DEALER sells, installs or uses in the sale, repair or servicing of Toyota Motor
Vehicles are, or meet the high quality standards of, Genuine Toyota Parts or Accessories.
DEALER agrees that in sales, repairs or servicing where DEALER does not use Genuine
Toyota Parts or Accessories, DEALER will only utilize such other parts or accessories that
will not adversely affect the mechanical operation of the Toyota Motor Vehicle being sold,
repaired or serviced, and that are equivalent in quality and design to Genuine Toyota Parts
or Accessories.
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E. WARRANTY DISCLOSURES AS TO NON-GENUINE PARTS AND
ACCESSORIES
In order to avoid confusion and to minimize potential customer dissatisfaction, in any

instance where DEALER sells, installs or uses other than Genuine Toyota Parts or
Accessories, DEALER shall disclose such fact to the customer and shall advise the
customer that these items are not included in warranties furnished by DISTRIBUTOR,
Such disclosure shall be written, conspicuous and stated on the customer’s copy of the
service or repair order or sale document. In addition, DEALER will clearly explain to the
customer the extent of any warranty covering the parts or accessories involved and will
deliver a copy of the warranty to the customer.
E SERVICE CAMPAIGN INSPECTIONS AND CORRECTIONS
DEALER agrees to perform service campaign inspections and/or corrections for owners or
users of all Toyota Products that qualify for such inspections and/or corrections. DEALER
further agrees to comply with all DISTRIBUTOR’s directives and with the applicable
procedures in the Toyota Warranty Policy and Procedures Manual relating to those
inspections and/or corrections. DISTRIBUTOR agrees to reimburse DEALER for all
replacement parts and/ or other materials required and used in connection with such work
and for labor according to such directives and the applicable provisions of the Toyota
Warranty Policy and Procedures Manual.
G. COMPLIANCE WITH SAFETY AND EMISSION CONTROL REQUIREMENTS

DEALER agrees to comply and operate consistently with all applicable provisions of the
National Traffic and Motor Vehicle Safety Act of 1966 and the Federal Clean Air Act, as
amended, including applicable rules and regulations issued from time to time thereunder,
and all other applicable federal, state and local motor vehicle safety and emission control
statutes, rules and regulations.
In the event that the laws of the state in which DEALER is located require motor vehicle
dealers or distributors to install in new or used motor vehicles, prior to their retail sale any
—
safety devicesthenor DEALER,
FACTORY, other equipment
prior to not installed
the sale of anyorToyota
supplied as standard
Motor Vehicle onequipment
which suchby
installations are required, shall properly install such devices or equipment on such Toyota
Motor Vehicles. DISTRIBUTOR agrees to reimburse DEALER for all parts and/or other
materials required and used in connection with such work and for labor according to the
applicable provisions of the Toyota Warranty Policy and Procedures ManuaL DEALER
shall comply with state and local laws pertaining to the installation and reporting of such
equipment.
In the interest of motor vehicle safety and emission control, DISTRIBUTOR and DEALER
agree to provide to each other such information and assistance as may reasonably be
requested by the other in connection with the performance of obligations imposed on either
party by the National Traffic and Motor Vehicle Safety Act of 1966, and the Federal Clean
Air Act, as amended, and their rules and regulations, and all other applicable federal, state
and local motor vehicle safety and emissions control statutes, rules and regulations.
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H. COMPLIANCE WITH CONSUMER PROTECTION STATUTES, RULES AND
REGULATIONS
Because certain customer complaints may impose liability upon DISTRIBUTOR under
various repair or replace laws or other consumer protection laws and regulations, DEALER
agrees to provide prompt notice to DISTRIBUTOR of such complaints and take such other
steps as DISTRIBUTOR may reasonably require. DEALER will do nothing to affect
adversely DISTRIBUTOR’s rights under such laws and regulations. Subject to any law or
any regulation to the contrary, DEALER shall be liable to DISTRIBUTOR for any refunds
or vehicle replacements provided to customer where DISTRIBUTOR reasonably
establishes that DEALER failed to carry out vehicle repairs in accordance with
DISTRIBUTOR’s written published policies and procedures or its express oral instructions
subsequently confirmed in writing. DEALER also agrees to provide applicable required
customer notifications and disclosures as prescribed by repair or replacement laws or other
consumer laws or regulations.
XVI. SERVICE AND PARTS OPERATIONS
A. ORGANIZATION AND STANDARDS
DEALER agrees to organize and maintain an adequate, stable and trained service and parts
organization of the highest quality, including a qualified Service Manager and a qualified
Parts Manager, and a number of competent customer relations, service and pails personnel
sufficient to meet the needs of the marketplace in the reasonable opinion of
DISTRIBUTOR. DEALER’s personnel will meet the educational, management and
technical training standards established by DISTRIBUTOR.
B. SERVICE EQUIPMENT AND SPECIAL TOOLS
DEALER agrees to acquire and properly maintain adequate service equipment and such
special service tools and instruments as are specified by DISTRIBUTOR.
C. PARTS INVENTORY
DEALER and DISTRIBUTOR recognize tifat the owners and users of Toyota Motor
Vehicles may reasonably expect that DEALER will have Genuine Toyota Parts or
Accessories immediately available for purchase or installation. DEALER, therefore, agrees
to carry in stock at all times during the term of this Agreement an adequate inventory of
Genuine Toyota Parts or Accessories, as listed in DISTRIBUTOR’s current inventory
guide, to enable DEALER to meet its customers needs and to ftilfihl its service
responsibilities under this Agreement.
D. ASSISTANCE PROVIDED BY DISTRIBUTOR
I. Service Training Assistance

To assist DEALER in fliliilling its service and parts responsibilities under this
Agreement, DISTRIBUTOR agrees to offer general and specialized service and parts
training programs for the benefit and use of DEALER’s service and parts organizations.
When requested by DISTRIBUTOR, DEALER’s personnel shall participate in such
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programs at DEALER’s expense.
2. Manuals and Materials
DISTRIBUTOR agrees to make available to DEALER, at DEALER’s expense, copies of

such dealer manuals, catalogs, bulletins, publications and technical data as
DISTRIBUTOR shall deem to be necessary for the needs of DEALER’s service and parts
organization. DEALER shall be responsible for keeping such manuals, publications and
data current and available for consultation by its employees.
3. Field Personnel Assistance
To assist DEALER in handling its parts and service responsibilities under this
Agreement, DISTRIBUTOR agrees to make available qualified field parts and service
personnel who will, from time to time, advise and counsel DEALER on parts and
service-related subjects, including parts and service policies, product quality, technical
adjustments, repair and replacement of product components, customer relations,
warranty administration, service and parts merchandising, and personnel/management
training.
XVII. CUSTOMER SATISFACTION RESPONSIBILITIES
A goal of DISTRIBUTOR and DEALER is to be recognized as marketing the finest products

and providing the best service in the automobile industry. The Toyota name should be
synonymous with the highest level of customer satisfaction, DEALER will take all reasonable
steps to ensure that each customer is completely satisfied with his or her Toyota Products and
the services and practices of DEALER
Whenever requested by DISTRIBUTOR, DEALER shall:
A. Designate an employee responsible for customer satisfaction commensurate with the need of
the marketplace; and
B. Provide a detailed written plan of DEALER’s customer satisfaction program to

DISTRIBUTOR and implement such program on a continuous basis. This plan shall include
an ongoing system for:
I. Emphasizing customer satisfaction to all DEALER’s employees;
2. Training DEALER’s employees, including participation in DISTRIBUTOR’s customer

satisfaction training at DEALER’s expense; and
3. Responding immediately to, and resolving promptly, requests for customer assistance
and conveying to customers that DEALER is committed to the highest possible level of
customer satisfaction.
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XVIII. DEALERSHIP FACILITIES AND IDENTIFICATION
A. FACILITIES
1. In order for DISTRIBUTOR to establish an effective network of authorized Toyota

dealers, DEALER shall provide, and at all times maintain, attractive dealership facilities
at the Approved Location(s) that satis~’ the image, size, layout, interior design, color,
equipment, identification and other factors established by DISTRIBUTOR. DEALER
shall meet the minimum facility standards and policies established by DISTRIBUTOR
which can be amended from time to time.
2. To assist DEALER in planning, building, or remodeling dealership facilities,

DISTRIBUTOR will provide DEALER, upon request, a Toyota Dealer Facility Planner
and will assist in identif3’ing sources from which DEALER may purchase architectural
materials and furnishings that meet Toyota standards and guidelines. In addition,
representatives of DISTRIBUTOR will be available to DEALER from time to time to
counsel and advise DEALER in connection with DEALER’s planning and equipping the
dealership premises.
B. DEALER’S OPERATING HOURS
DEALER agrees to keep all of its dealership operations open for business during all days
and hours that are customary and lawful for such operations in the community or locality in
which DEALER is located and in accordance with industry standards. The dealership shall
not be considered open unless all sales, service and parts operations are open to the public
and dealership personnel are present to assist customers.
C. SIGNS
Subject to applicable governmental ordinances, regulations, and statutes, DEALER agrees

to comply with IMPORTER’s signage program and to display only standard authorized
signage which conforms to the approved corporate identification program.
D. USE OF TOYOTA MARKS ________________
1. Use by DEALER
DISTRIBUTOR grants to DEALER the non-exclusive privilege of displaying or

otherwise using authorized Toyota Marks as specified in the Toyota Brand Graphic
Standards Manual at the Approved Location(s) in connection with the selling or
servicing of Toyota Products.
DEALER further agrees that it promptly shall discontinue the display and use of any
Toyota Marks, or shall change the manner in which any Toyota Marks are displayed and
used, when for any reason it is requested to do so by DISTRIBUTOR. DEALER may
use the Toyota Marks as specified in the Toyota Brand Graphic Standards Manual only
at Approved Location(s) and for such purposes as are specified in this Agreement.
DEALER agrees that such Toyota Marks may be used as part of the name under which
DEALER’s business is conducted only with the prior written approval of
DISTRIBUTOR.
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DEALER shall discontinue any advertising that DISTRIBUTOR may find to be
injurious to DISTRIBUTOIVs business or reputation or the Toyota Marks.
2. Discontinuance of Use
Upon termination, non-renewal, or expiration of this Agreement, DEALER agrees that it

shall immediately:
a. Discontinue the use of Toyota Marks, or any semblance of same, including without
limitation, the use of all stationery, telephone directory listing, and other printed
material referring in any way to Toyota or bearing any Toyota Mark;
b. Discontinue the use of the Toyota Marks, or any semblance of same, as part of its
business or corporate name, and file a change or discontinuance of such name with
appropriate authorities;
c. Remove all product signs bearing Toyota Marks. Product signs owned by DEALER
shall be removed and disposed of at DEALER’s sole cost and expense. Product signs
leased to DEALER by or through IMPORTER or its representative shall be removed
from DEALERS premises at IMPORTER’s sole cost and expense. DEALER hereby
grants permission for DISTRIBUTOR to enter upon DEALER’s premises to remove
signs leased to DEALER by IMPORTER;
d. Cease representing itself as an authorized Toyota Dealer; and
e. Refrain from any action, including without limitation, any advertisement, statement
or implication that it is authorized to sell or distribute Toyota Products.
In the event DEALER fails to comply promptly with the tents and conditions of this
Section, DISTRIBUTOR shall have the right to enter upon DEALER’s premises and
remove, without notice or liability, all such product signs and identification bearing the
Toyota Marks. DEALER agrees that it shall reimburse DISTRIBUTOR for any costs and
expenses incurred in the removal of signs owned by DEALER bearing the Toyota
Marks, including reasonable attorney fees.
XIX, EVALUATION OF DEALER’S PERFORMANCE
DEALER acknowledges the importance of its overall performance in relation to the purposes
and objectives of this Agreement. DISTRIBUTOR will periodically evaluate DEALER’s
performance of its responsibilities in the areas of sales, service and parts, facilities and
customer satisfaction, based upon such reasonable criteria as DISTRIBUTOR may establish
from time to time. DISTRIBUTOR agrees to review all such evaluations with DEALER and
will provide DEALER a copy thereof, Where performance is below acceptable standards of
DISTRIBUTOR, DEALER agrees to take prompt action to improve its performance and, if
requested by DISTRIBUTOR, to noti~’ DISTRIBUTOR in writing of its detailed plans and
timetables for accomplishing those improvements.
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A. SALES PERFORMANCE EVALUATION
Pursuant to Section XIV herein, DISTRIBUTOR ~vill evaluate DEALER’S sales

performance under criteria established by DISTRIBUTOR, which may include, but is not
limited to, the achievement of reasonable sales objectives as DISTRIBUTOR may establish;
comparisons of DEALER’s sales and/or registrations to those of comparable Toyota dealers
and other line makes within DEALER’s Primary Market Area or such area(s) which
DISTRIBUTOR believes is a reasonable basis for comparison; sales performance trends
over a reasonable period of time; and the manner in which DEALER has conducted its sales
and marketing operations.
B. SERVICE PERFORMANCE EVALUATION
Pursuant to Sections XV and XVI herein, DISTRIBUTOR will evaluate DEALER’S service
performance in such areas as, without limitation, warranty management, compliance with the
Toyota Warrarny Policy and Procedures Manual, service management, service operating
procedures, service staffing and training, administration, service facilities and equipment,
new vehicle pre-delivery service, customer handling and customer retention.
C. PARTS PERFORMANCE EVALUATION
Pursuant to Section XVI herein, DISTRIBUTOR will evaluate DEALER’s parts

performance in such areas as, without limitation, general parts management, parts operating
procedures, parts staffing and training, parts facilities, parts inventory management, parts
sales, accessory sales, parts merchandising and parts availability to customers.
D. CUSTOMER SATISFACTION PERFORMANCE EVALUATION
Pursuant to Section XVII, herein, DISTRIBUTOR will evaluate DEALER’s performance of

its responsibilities in the area of customer satisfaction based on the following
considerations:
I. DISTRIBUTOR will provide DEALER with customer satisfaction reports or such other
—. equivalent data as wiHyermit DEALER to assess its performance and maintain the
highest level of customer satisfaction. DEALER agrees to review with its employees on
a regular basis the results of the customer satisfaction reports or other data it receives.
2. DEALER agrees to develop, implement and review with DISTRIBUTOR specific action
plans for improving results in the event that DEALER is below the average customer
satisfaction levels for other Toyota dealers in such areas that DISTRIBUTOR believes
are a reasonable basis for comparison. DEALER shall respond on a timely basis to
requests from DISTRIBUTOR to take action on unsatisfactory customer satisfaction
matters and to commit necessary resources to remedy deficiencies reasonably specified
by DISTRIBUTOR, and DEALER shall remedy those deficiencies. DISTRIBUTOR
reserves the right to establish reasonable, uniform criteria to be used to evaluate
DEALER
E. DEALERSHIP FACILITIES EVALUATION
Pursuant to Section XVIII, herein, DISTRIBUTOR will evaluate DEALER’s performance of

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its responsibilities in the area of dealership facilities.
XX. CAPITAL, CREDIT, RECORDS AND UNIFORM SYSTEMS
A. NET WORKING CAPITAL
The amount and structure of the net working capital required to properly conduct the
business of DEALER depends upon many factors, including the nature, size and volume of
DEALERs vehicle sales, service and parts operations. Therefore, DEALER agrees to
establish and maintain actual net working capital in an amount not less than the minimum
net working capital specified in a separate Minimum Net Working Capital Agreement
executed by DEALER and DISTRIBUTOR concurrently with this Agreement. If, either
because of changed conditions or because DISTRIBUTOR adopts a new net working capital
formula, DISTRIBUTOR shall have the right to revise DEALERS minimum net working
capital requirement to be used in DEALER’S operation. If so revised, DEALER agrees to
enter into the revised Minimum Net Working Capital Agreement and to meet the new
standard within a reasonable period of time as established by DISTRIBUTOR
B. FLOORING LINE
DEALER recognizes that its ability to fulfill its obligations under this Agreement is
dependent upon its maintenance of flooring which is sufficient to sustain its ongoing
operations. DEALER agrees to obtain and maintain at all times a confirmed and adequate
flooring line with a bank or financial institution or other method of financing acceptable to
DISTRIBUTOR to enable DEALER to perform its obligations pursuant to this Agreement.
Subject to the foregoing obligations, DEALER is free to do its financing business,
wholesale, retail or both, with whomever it chooses and to the extent it desires.
C. PAYMENT TERMS AND SETTLEMENT OF ACCOUNTS
All monies or accounts due DEALER from DISTRIBUTOR will be considered net of
DEALER’s obligations to DISTRIBUTOR on DEALER’s parts/open account.
DISTRIBUTOR may deduct or offset any amounts due or to become due from DEALER to
-- — -. DISTRIBUTOR, or any amounts held by DISTRIBUTOR, from or against any sums or
• accounts due or to become due from DISTRIBUTOR to DEALER. Payments by DEALER
to DISTRIBUTOR shall be made by electronic bank draft or in any other manner prescribed
by DISTRIBUTOR and shall be applied against DEALER’s indebtedness in accordance with
DISTRIBUTOR’s policies and practices. DISTRIBUTOR shall have the right to apply
payments received from DEALER to any amount owed to DISTRIBUTOR, in
DISTRIBUTOR’S sole discretion. All obligations owed by DEALER to DISTRIBUTOR
shall be due and payable when billed, unless other terms are established by DISTRIBUTOR
in writing.
Under no circumstances will DISTRIBUTOR enter into a new Agreement with a proposed
transferee unless DEALER first makes arrangements acceptable to DISTRIBUTOR to
satisfy any outstanding obligations to DISTRIBUTOR on DEALER’s partsIopen account.
U. UNIFORM ACCOUNTING SYSTEM

DEALER agrees to maintain its financial books and records in accordance with the Toyota
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Dealer Accounting Manual, as amended from time to time by DISTRIBUTOR. In addition,
DEALER shall furnish to DISTRIBUTOR, who may also furnish it to IMPORTER and
FACTORY, complete and accurate financial and operating information by the tenth (10th) of
each month in a format prescribed by DISTRIBUTOR, This information shall include,
without limitation, a complete and accurate financial and operating statement covering the
preceding month and calendar year-to-date operations, including any adjusted year-end
statements, showing the true condition of DEALER’S business. All such information be
furnished by DEALER to DISTRIBUTOR via DISTIUBUTOR!s electronic communications
network andlor in hard copy and/or in any other manner designated by DISTRIBUTOR.
E. RECORDS MAINTENANCE
DEALER agrees to keep complete, accurate and current records regarding its sale, lease and
servicing of Toyota Products for a minimum of five (5) years, regardless of any retention
period required by any governmental entity. DEALER shall prepare, keep current and retain
records in support of requests for reimbursement for warranty and policy work performed by
DEALER in accordance with the IMPORTER’s Toyota Warranty Policy and Procedures
Manual.
F. EXAMINATION OF DEALERSHIP ACCOUNTS AND RECORDS
DJSTRIBUTOR, in its sole discretion, without notice and for any reason whatsoever, shall
have the right during regular business hours to inspect DEALER’s facilities and examine,
audit and to reproduce all records, accounts and supporting data relating to the operations of
DEALER, including without limitation, sales, sales reporting, service and repair of Toyota
Products by DEALER. If requested by DEALER, DISTRIBUTOR agrees to review any
report with DEALER and to provide a copy of any report of the examination or audit of
DEALER.
C. TAXES
DEALER shall be responsible for and duly pay all taxes of any kind, including, but not
limi ted to, sales taxes, use taxes, excise taxes and other governmental municipal charges
imposed, levied or based upon the sale of Toyota Products by DEALER, and shall maintain
accurate records of the same.
H. CONFIDENTIALITY
Except as provided in Sections XX(D) above and XXI(A), below, DISTRIBUTOR agrees
that it shall not provide any financial information, documents or other information submitted
to it by DEALER to any third party, other than subsidiary and parent corporations of
DISTRJBUTOR, unless authorized by DEALER, required by law, required to effectuate the
terms and conditions of this Agreement, or required to generate composite or comparative
data for analytical purposes.
DEALER agrees to keep confidential and not to disclose, directly or indirectly, any
information that DISTRIBUTOR designates as confidential,
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I. INFORMATION COMMUNICATION SYSTEMS
To facilitate the accurate and prompt reporting of such relevant dealership operational
financial information as DISTRIBUTOR may require, DEALER agrees to install and
maintain electronic communication processing facilities which are compatible with and
which will facilitate the transmission and reception of such information on the eLectronic
communications network utilized by DISTRIBUTOR.
J. SALES REPORTING
DEALER agrees to report accurately to DISTRIBUTOR, together with such information as

DISTRIBUTOR may reasonably require, the delivery of each new motor vehicle to a
purchaser by the end of the day in which the vehicle is delivered to the purchaser tliereo F;
and to furnish DISTRIBUTOR with such other reports in such form as DISTRIBUTOR may
reasonably require from time to time.
XXI. RIGHT OF FIRST REFUSAL OR OPTION TO PURCHASE
A. RIGHTS GRANTED
If a proposal to sell the dealership’s assets or transfer its ownership is submitted by DEALER
to DISTRIBUTOR, or in the event of the death of the majority Owner of DEALER,
DISTRIBUTOR has a right of first refUsal or option to purchase the dealership assets or
stock, including any leasehold interests or realty. DISTRIBUTOR’s exercise of its right or
option under this Section supersedes any right or attempt by DEALER to transfer its interest
in, or ownership of, the dealership. DISTRIBUTOR’s right or option may be assigned by it
to any third party and DISTRIBUTOR hereby guarantees the full payment to DEALER of
the purchase price by such assignee, DISTRIBUTOR may disclose the terms of any pending
buy/sell agreement and any other relevant dealership performance information to any
potential assignee. DISTRiBUTOR’s rights under this Section will be binding on and
enforceable against any successor in interest of DEALER or purchaser of DEALER’s assets
or stock.
B. EXERCISE OF DISTRIBUTOR’S RIGHTS________________________
DISTRIBUTOR shalt have thirty (30) days from the following events within which to
exercise its right of first refusal or option to purchase: (i) DISTRIBUTORs receipt of all
data and documentation customarily required by it to evaluate a proposed transfer of
ownership; (ii) DISTRIBUTOR’s receipt of written notice from DEALER of the death of the
majority Owner of DEALER; or (iii) DISTRIBUTOR’s disapprovaL of any application
submitted by an Owner’s heirs pursuant to Section XXII. DISTRIBUTOR’s exercise of its
right of first refusal under this Section shall neither be dependent upon nor require its prior
consideration of or refusal to approve the proposed buyer or transferee.
C. RIGHT OF FIRST REFUSAL
If DEALER has entered into a bona fide written agreement to sell its dealership stock or
assets, DISTRIBUTOR’s right under this Section is a right of first refusal, enabling
DISTRIBUTOR to assume the buyer’s rights and obligations under such agreement, and to
terminate this Agreement and all rights granted DEALER. Upon DISTRIBUTOR’s request,
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or charge of any kind, DEALER agrees to procure the discharge and satisfaction thereof
DEALER agrees to provide other documents relating to the proposed transfer and any other
information which DISTRIBUTOR deems appropriate, including, but limited to, those
reflecting other agreements or understandings between the parties to the buy/sell agreement.
Refusal to provide such documentation or to state in writing that no such documents exist
shall create the presumption that the buy/sell agreement is not a bona tide agreement.
D. OPTION TO PURCHASE
In the event of the death of the majority Owner of DEALER or if DEALER submits a
proposal which DISTRIBUTOR reasonably believes is not bona fide, DISTRIBUTOR has
the option to purchase the principal assets of DEALER utilized in the dealership business,
including real estate and leasehold interests, and to cancel this Agreement and the rights
granted DEALER. The terms and conditions of the purchase of the dealership assets will be
determined by good faith negotiations between the parties. If an agreement cannot be
reached, those terms will be exclusively determined by arbitration in accordance with the
commercial arbitration rules of the American Arbitration Association. The site of the
arbitration shall be the office of the American Arbitration Association in the locality of
DISTRII3UTOR’s principal place of business.
t. DEALER’S OBLIGATIONS
Upon DISTRIBUTOR’s exercise of its right or option and tender of performance hereunder,
DEALER shall forthwith transfer the affected real property by warranty deed or its
equivalent, conveying marketable title free and clear of all liens, claims, mortgages,
encumbrances, interests and occupancies. The warranty deed or its equivalent shall be in
proper form for recording, and DEALER shall deliver complete possession of the property
and deed at the time of closing. DEALER shall also furnish to DISTRIBUTOR all copies of
any easements, licenses or other documents affecting the property or dealership operations
and shall assign any permits or licenses that are necessary or desirable for the use of or
appurtenant to the property or the conduct of such dealership operations. DEALER shalt also
forthwith execute and deliver to DISTRIBUTOR instruments satisfactory to
DISTRIBUTOR conveying title to all affected personal property and leasehold interests
involved in the transfer or sale to DISTRIBUTOR. If any personal property is subject to lien
prior to the closing of sale of such property to DISTRIBUTOR,
F. NO APPLICABILITY TO NOMINATED SUCCESSOR
Section XXI shall not apply to any DEALER whose proposed transfer of assets or ownership
is to a candidate who is currently approved by DISTRIBUTOR to be DEALER’s nominated
successor pursuant to Section XXII(C).
XXII. SUCCESSION RIGHTS UPON DEATH OR INCAPACITY
A. SUCCESSION TO OWNERSHIP AFTER DEATH OF OWNER
In the event that Owner dies and his or her interest in Dealership passes directly to any
person or persons (“Heirs’) who wish to succeed to Owner’s interest, then Owner’s legal
representative must noti& DISTRIBUTOR within sixty (60) days of the death of Owner of
such Heir’s or Heirs’ intent to succeed Owner. The legal representative also must then
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98
designate a proposed General Manager for DISTRIBUTOR approval. The effect of such
notice from Owners legal representative will be to suspend any notice of termination
provided for in Section XXJII(B)(4) issued hereunder.
Upon delivery of such notice, Owner’s legal representative shall immediately request any
person(s) identified by it as intending to succeed Owner and the designated candidate for
General Manager to submit an application and to provide all personal and financial
information that DISTRIBUTOR may reasonably and customarily require in connection
with its review of such applications. All requested information, must be provided promptly
to DISTRIBUTOR and in no case later than thirty (30) days after receipt of such request
from Owners legal representative. Upon the submission of all requested information
DISTRIBUTOR agrees to review such application(s) pursuant to the then current criteria
generally applied by DISTRIBUTOR in quali~’ing dealer Owners and/or General Managers.
DISTRIBUTOR shall either approve or disapprove the application(s) within ninety (90) days
of full compliance with all DISTRIBUTOR’s requests for information, If DISTRIBUTOR
approves the application(s), it shall offer to enter into a new Toyota Dealer Agreement with
Owner’s Melt(s) in the form then currently in use, subject to such additional conditions and
for such a term as DISTRIBUTOR deems appropriate.
In the event that DISTRIBUTOR does not approve the designated Heir(s) or designated
candidate for General Manager, or if the Owner’s legal representative withdraws his or her
notice of the Heir(s) intent to succeed as Owner(s), or if the legal representative or any
proposed owners or General Manager fails to timely provide the required information,
DISTRIBUTOR may reinslate or issue a notice of termination. Nothing in this Section shall
constitute a waiver of DISTRIBUTOR’s right under Section XXI to exercise its right of first
refusal or option to purchase.
B. INCAPACITY OF OWNER
The parties agree that, as used herein, incapacity shall refer to any physical or mental
ailment that, in DISTRIBUTOR’s opinion, adversely affects Owners ability to meet his or
her obligations under this Agreement DISTRIBUTOR may terminate this Agreement when
an incapacitated Owner also is the General Manager identified herein.
Prior to the effective date of any notice of termination, an incapacitated Owner who is also
the General Manager, or his or her legal representative, may propose a new candidate for the
position of General Manager. Such proposal shall be in writing and shall suspend any
pending notice of termination until DISTRIBUTOR advises DEALER of its approval or
disapproval of the new candidate, Upon receipt of such notice, DISTRIBUTOR and
DEALER shall follow the qualification procedures set forth subsection (A) above.
C. NOMINATION OF SUCCESSOR PRiOR TO DEATH OR INCAPACITY OF

OWNER
An Owner owning a majority of DEALER’s stock may nominate a candidate to assume

ownership and/or the position of General Manager of the dealership upon his or her death or
incapacity.
As soon as practicable after such nomination, DISTRIBUTOR will request such personal
and financial information from the nominated Owner and/or General Manager candidate as it
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99
reasonably and customarily may require in evaluating such candidates. DISTRIBUTOR
shall apply criteria then currently used by DISTRIBUTOR in qua1i1~’ing Owners and/or
General Managers of authorized dealers. Upon receipt of all requested information,
DISTRIBUTOR shall either approve or disapprove such candidate. Approval by
DISTRIBUTOR will not be unreasonably withheld. In the event of death or incapacity of the
nominating Owner, DISTRIBUTOR will enter into a new Toyota Dealer Agreement with
the approved nominee of a length to be determined by DISTRIBUTOR. DISTRIBUTOR
agrees that DEALER may renominate the candidate after the expiration of this Agreement,
and DISTRIBUTOR will approve such nomination provided: (1) DISTRIBUTOR and
DEALER have entered into a new Toyota Dealer Agreement; and (2) the proposed candidate
continues to comply with the then current criteria used by DISTRIBUTOR in qualifying
such candidates. If DISTRIBUTOR does not initially qualify the candidate, DISTRIBUTOR
agrees to review the reason(s) for its decision with Owner. Owner is free at any time to
renew its nomination. However, in such instances, the candidate must again quali~ pursuant
to the then current criteria. Owner may, by written notice, withdraw a nomination at any
time, even if DISTRIBUTOR has previously qualified said candidate.
XXIII. TERMINATION
A. VOLUNTARY TERMINATION BY DEALER
DEALER may voluntarily terminate this Agreement at any time by written notice
DISTRIBUTOR. Termination shall be effective thirty (30) days after receipt of the notice by
DISTRIBUTOR, unless otherwise mutually agreed in writing.
B. TERMINATION FOR CAUSE
1. Immediate Termination
DEALER and DISTRIBUTOR agree that the following conduct is within DEALER’s
control and is so contrary to the goals, purposes and objectives of this Agreement as to
warrant its immediate termination. Accordingly, DEALER agrees that if it engages in
any of the following types of conduct, DISTRIBUTOR shall have the right to terminate
this Agreement immediately: _________________________________
a, If DEALER fails to conduct any customary dealership operations for seven

consecutive business days during DEALER’s customary business hours, except in
the event such closure of cessation of operation is caused by some physical even
beyond the control of DEALER, such as fires, floods, earthquakes, or other acts of
God;
b. If DEALER becomes insolvent, or files any petition under bankruptcy law, or

executes an assignment for the benefit of creditors, or appoints a receiver or trustee
or another officer having similar powers is appointed for DEALER and is not
removed within thirty (30) days from his appointment thereto or there is any levy
under attachment or execution or similar process which is not vacated or removed
by payment or bonding within ten (10) days;
c. If DEALER, or any Owner or officer or parent company of DEALER, is convicted

of any felony;
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d. If DEALER, or any Owner, officer or General Manager of DEALER makes any
material misrepresentation to DISTRIBUTOR, including, but not limited to, any
misrepresentations made by DEALER to DISTRIBUTOR in applying for this
Agreement or for approval as Owner or General Manager of DEALER;
e. If DEALER fails to obtain or maintain any license, permit or authorization

necessary for the conduct by DEALER of his or her business pursuant to this
Agreement, or such license, permit or authorization is suspended or revoked; or
f. If DEALER makes any attempted or actual sale, transfer or assignment by

DEALER of this Agreement or any of the rights granted DEALER hereunder, or
upon any attempted or actual transfer, assignment or delegation by DEALER of
any of the responsibilitLes assumed by it under this Agreement without the prior
written approval of DISTRIBUTOR.
2. Termination Upon Sixty Days Notice
The following conduct violates the terms and conditions of this Agreement and, if
DEALER engages in such conduct, DISTRIBUTOR shall have the right to terminate
this Agreement upon sixty (60) days notice:
a. Appointment of a new General Manager without the prior written approval of

DISTRIBUTOR;
b. Conducting, directly or indirectly, any Toyota dealership operation at any location

other than at the Approved Location(s);
c. Failure of DEALER to make any payments to DISTRIBUTOR when due;
d. Failure of DEALER to establish or maintain during the existence of this Agreement

the required net working capital or adequate flooring line;
e. Any dispute, disagreement or controversy among Owners, partners, managers,

officers—or-stoclcholders of -DEALER that~ in -the—reasonablr—opinionuf
DISTRIBUTOR, adversely affects the ownership, operation, management,
business, reputation or interests of DEALER or DISTRIBUTOR;
f. Impairment of the reputation or financial standing of DEALER, Owner, officer or

parent company subsequent to the execution of this Agreement;
g. Refusal to permit DISTRIBUTOR to examine or audit DEALER’s accounting

records as provided herein upon receipt by DEALER from DISTRIBUTOR of
written notice requesting such permission or information;
h. Failure of DEALER to flirnish all required sales or financial information and

related supporting information in a timely manner;
i. Any civil, criminal or administrative liability found against DEALER or any

Owner, officer or parent company of DEALER for any automotive-related matter
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101
which adversely affects the ownership, operation, management, reputation,
business or interests of DEALER, or impairs the goodwill associated with the
Toyota Marks; or
j. Breach or violation by DEALER of any other term or provision of this Agreement.
3. Termination for Failure of Performance
If, upon evaluation of DEALER’s performance pursuant to Section XIX, herein,

DISTRIBUTOR concludes that DEALER has failed to perform adequately its sales,
service, parts or customer satisfaction responsibilities or to provide adequate dealership
facilities, DISTRIBUTOR shall notify DEALER in writing of such failure(s) and will
endeavor to review promptly with DEALER the nature and extent of such failure(s),
and will grant DEALER 180 days or such other period as may be required by law to
correct such failure(s). If DEALER fails or reibses to correct such failure(s) or has not
made substantial progress towards remedying such failure(s) at the expiration of such
period, DISTRIBUTOR may terminate this Agreement upon sixty (60) days notice or
such other notice as may be required by law. Section XXIII(B)(3) shall not be
applicable where DEALER has relocated without DISTRIBUTOR’s approval.
4. Termination Upon Death or Incapacity
DISTRIBUTOR may terminate this Agreement in the event of the death of an Owner or
upon the incapacity of any Owner who is also the General Manager identified herein,
upon written notice to DEALER and/or such Owner’s legal representative. Termination
upon either of these events shall be effective ninety (90) days from the date of such
notice.
C. NOTICE 01? TERMINATION
Any notice of termination under this Agreement shall be in writing and shall be mailed to
DEALER or its General Manager at DEALER’s Approved Location by certified mail, return
receipt requested, or shall be delivered in person to the dealership. Such notice shall be
Thfl~ctive upon the diieThfi~eei~it[D1STRrnUTORme~d 116t state all grounds on which it
relies in its termination of DEALER, and shalt have the right to amend such notice as
appropriate. DISTRIBUTOR’s failure to refer to any additional grounds for termination shall
not constitute a waiver of its right later to rely upon such grounds.
Ii CONTINUANE OF BUSINESS RELATIONS
Upon receipt of any notice of tetmination or non-renewal, DEALER agrees to conduct itself
and its operation until the effective date of termination or non-renewal in a manner that will
not injure the reputation or goodwill of the Toyota Marks or DISTRIBUTOR.
E. REPURCHASE PROVISIONS
1. DISTRIBUTOR’s Obligations
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Upon the expiration or termination of this Agreement (other than pursuant to an
approved agreement to sell the dealership business or assets or to otherwise transfer the
ownership of DEALER), DISTRIBUTOR shall repurchase from DEALER the
following:
a. New, unused, never titled, unmodified, undamaged, current model year Toyota
Motor Vehicles with less than 100 miles, then unsold in DEALER’s inventory. The
prices of such Motor Vehicles shall be the same as those at which they were
originally purchased by DEALER, less all prior refunds or other allowances made
by DISTRIBUTOR to DEALER with respect thereto.
b. New, unused and undamaged Toyota parts and accessories, contained in the
original packaging, then unsold in DEALER’s inventory that are in good and
saleable condition. The prices for such parts and accessories shall be the prices last
established by DISTRIBUTOR for the sale of identical parts or accessories to
dealers in the area in which DEALER is located.
c. Special service tools recommended by DISTRIBUTOR and then owned by

DEALER and that are especially designed for servicing Toyota Motor Vehicles.
The prices for such special service tools will be the price paid by DEALER less
appropriate depreciation, or such other price as the parties may negotiate.
d. Signs that DISTRIBUTOR has recommended for identification of DEALER and

are owned by DEALER. The price of such signs shall be the price paid by
DEALER less appropriate depreciation or such other price as the parties may
negotiate.
2. Responsibilities of DEALER
DISTRIBUTOR’s obligations to repurchase the items set forth in this Section are
contingent upon DEALER fulfilling the following obligations:
a. Within thirty (30) days after the date of expiration of the effective date of
t~mhin~ti~wUf1his AgIe6fneiit; DEALER alialP~deliVer or maiI1ÔDISTRIBUTOR a
detailed inventory of all items referred to in this Section which it requests
DISTRIBUTOR to repurchase and shall certify that such list is true and accurate.
b. DEALER shall be entitled to request repurchase of only those items which it

purchased from DISTRIBUTOR, unless DISTRIBUTOR agrees otherwise.
c. Products and special service tools to be repurchased by DISTRIBUTOR from

DEALER shall be delivered by DEALER to DISTRIBUTOR’s place of business at
DEALERS expense.
d. DEALER will execute and deliver to DISTRIBUTOR instruments satisfactory to

DISTRIBUTOR conveying good and marketable title to the aforesaid items to
DISTRIBUTOR. If such items are subject to any lien or charge of any kind,
DEALER will procure the discharge in satisfaction thereof prior to their repurchase
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by DISTRIBUTOR
e. DEALER will remove, at its own expense, all signage bearing Toyota marks which
it owns from DEALER’s Approved Location(s) before it is eligible for payment for
any repurchased items pursuant to Section XXIII(E).
3. Payment by DISTRIBUTOR
DISTIUBUTOR will pay DEALER for such items as DEALER may request be
repurchased and that qualif~’ hereunder as soon as practicable upon DEALER’s
compliance with the obligations set forth herein upon computation of any outstanding
indebtedness of DEALER to DISTRIBUTOR. DISTRIBUTOR shall have the right to
offset from any amounts due to DEALER hereunder the total sum of DEALERS
outstanding indebtedness to DISTRIBUTOR.
If DEALER disagrees with DISTRIBUTOR’s valuation of any item herein, and

DEALER and DISTRIBUTOR have not resolved their disagreement within sixty (60)
days of the effective date of termination or expiration of this Agreement,
DISTRIBUTOR shall pay to DEALER the amount to which it reasonably believes
DEALER is entitled, DEALER’s exclusive remedy to recover any additional sums that
it believes is due under this Section shall be by resort to any existing Alternative
Dispute Resolution program established by DISTRIBUTOR that is binding on
DISTRIBUTOR, If no Alternative Dispute Resolution program is then existing,
DEALER’s exclusive remedy shall be by resort to arbitration in accordance with the
commercial arbitration rules of the American Arbitration Association (AkA). The site
of the arbitration shall be the office of the AAA in the locality of DISTRIBUTOR’s
principal place of business.
XXIV. MANAGEMENT OF DISPUTES
A. ALTERNATIVE DISPUTE RESOLUTION PROGRAMS
DISTRIBUTOR and DEALER acknowledge that disputes involving the performance of this
‘Agreement may ftmwtim~ to tithe ari~t th~tcam~dt be Th~dltEdiflhTDISTRIBUTOWlEVël.
In order to minimize the effects of such disputes on their business relationship, the parties
agree to participate in such Alternative Dispute Resolution programs, including mediation,
as may be established by DISTRIBUTOR in its sole discretion.
It is expressly understood that, unless otherwise specified in this Agreement, the results of
any Alternative Dispute Resolution program will not be binding upon DEALER, but shall be
binding upon DISTRIBUTOR. The parties commitment to support and participate in
Alternative Dispute Resolution programs specifically is not a waiver of DEALER’s right to
later resort to litigation before any judicial or administrative forum.
B. APPLICABLE LAW
This Agreement shall be governed by and construed according to the laws of the stale in
which DEALER is located.
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C. MUTUAL RELEASE
Each party hereby releases the other from any and alt claims and causes of action that it may
have against the other for money damages arising from any event occurring prior to the date
of execution of this Agreement, except for any accounts payable by one party to the other as
a result of the purchase of any Toyota Products, audit adjustments or reimbursement for any
services. This release does not extend to claims which either part does not know or
reasonably suspect to exist in its favor at the time of the execution of this Agreement.
XXV, DEFENSE AND INDEMNIFICATION
A. DEFENSE AND INDEMNIFICATION BY DISTRIBUTOR
DISTRIBUTOR agrees to assume the defense of DEALER and to indemnify and hold
harmless DEALER, expressly conditioned and subject to all provisions of Section XXV(C),
against loss in any lawsuit or claim naming DEALER for bodily injury, property damage or
breach of warranty caused solely by an alleged defect in design, manufacture or assembly of
a Toyota Product (except for tires not manufactured by FACTORY) sold by DISTRIBUTOR
to DEALER for resale that has not been altered, converted or modified by or for DEALER,
provided that the alleged defect could not reasonably have becn discovered by DEALER
during pre-delivery inspection or service or installation of Toyota Products, less any offset.
DISTRIBUTOR agrees to defend, to indemnif~’ and hold harmless DEALER for alleged
misrepresentations, misleading statements, unfair or deceptive trade practices of
DISTRIBUTOR, IMPORTER or FACTORY or any substantial damage to a Toyota Product
purchased by DEALER from DISTRiBUTOR which was improperly repaired by
DISTRIBUTOR unless DEALER has been notified of such damage in writing prior to retail
delivery of the affected Toyota Product. Notwithstanding any provision of this Agreement,
DISTRIBUTOR shall not be required to defend, to indemnil~’ or hold harmless DEALER
against loss resulting from any claim, complaint, or action alleging DEALER misconduct,
including but not limited to, improper or unsatisfactory service or repair, or
misrepresentations, or any claim of DEALER’s unfair or deceptive trade practices or any
claim of improper environmental or work place practices or conditions.
B. DEFENSE AND INDEMNIFICATION BY DEALER
DEALER agrees to assume the defense of DISTRIBUTOR, IMPORTER or FACTORY and

to indemnify and hold them harmless, expressly conditioned and subject to all provisions of
Section XXV(C), against loss in any lawsuit or claim naming DISTRIBUTOR, IMPORTER
or FACTORY, or their subsidiaries or affiliates, when the claim or lawsuit directly or
indirectly involves any allegations of: (I) DEALER’s alleged failure to comply, in whole or
in part, with any obligation assumed by DEALER pursuant to this Agreement; or (2)
DEALER’s alleged negligent or improper repairing or servicing or installation of a new or
used Toyota Motor Vehicle or Toyota Product, or any loss related to other motor vehicles or
equipment, other than Toyota Motor Vehicles or Products, as may be sold, serviced, repaired
or installed by DEALER; or (3) DEALER’s alleged breach of any contract or warrant other
than that provided by DISTRIBUTOR, IMPORTER or FACTORY; or (4) DEALER’s
alleged misleading statements, misrepresentations, or deceptive or unfair trade practices; or
(5) any modification, conversion or alteration made by or for DEALER to a Toyota Product,
except those made pursuant to the express written approval and instruction of
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DISTRIBUTOR, IMPORTER or FACTORY; or (6) any and all claims arising out of or in
any way connected to the hiring, retention or termination of any person by DEALER,
including but not limited to, claims of employment discrimination, age, race or sex
discrimination or harassment, wrongful discharge or termination, breach of the covenant of
good faith and fair dealing, breach of contract, interference with contractual relations,
intentional and/or negligent infliction of emotional distress, defamation, negligent hiring,
violations of or non-compliance with: the Occupational Safety and Health Act, the Fair
Labor Standards Act, or the Employment Retirement Income and Security Act (“ERISA”)
or any similar state or local laws.
C. CONDITIONAL DEFENSE AND/OR INDEMNIFiCATION
The obligations of the DEALER, DISTRIBUTOR, IMPORTER or FACTORY to defend,

to indemnify and hold harmless are expressly conditioned and subject to all of the following
terms:
I. The party initially requesting defense and/or indemnification shall make such request in
writing and deliver to the other party within twenty (20) days of service of any legal
process or within twenty (20) days of discovery of facts giving rise to indemnification,
whichever is sooner.
2. The party requesting defense and/or indemnification covenants, represents and warrants
that it, its agents or employees have not permitted a default judgment to be entered and
have not made any direct or indirect admissions of liability, and are not aware of any
credible evidence to support any independent claim of liability or lack of unity of
interest. Said party farther agrees to cooperate fully in the defense of such action as may
be reasonably required.
3. The party requested to defend and/or indemnify shall have sixty (60) days from receipt
of a request in writing to conduct an investigation or otherwise determine whether or
not, or under what conditions, it will agree to defend and/or indemnify.
4. During the pendency of a request for defense and/or indemnification, and thereafter, the
requesting party shall have a continuing duty to avoid undue prejudice to the other party
and to mitigate damages. The party requesting indemnification shall protect its own
interests until a decision has been made to assume the defense and/or provide
indemnification.
5. The party accepting the request for defense and/or indemnification shall have the right
to engage and direct counsel of its own choosing and shall have the obligation to
reimburse the requesting party for all reasonable costs and expenses, including
reasonable attorney’s fees, incurred prior to such assumption except where the request is
made under the circumstances described in XXV(C)(6), and subject to the provisions of
XXV(C)(9).
6. If subsequent developments in a case, supported by credible evidence, cause a party to

reasonably conclude that the allegations which initially preclude a request or acceptance
of a request for defense and/or indemnification are meritless or no longer at issue, then
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the request may be retendered,
7. No party shall be required to agree to such a subsequent request or retender of defense

and/or indemnification where that party would be unduly prejudiced by such delay.
Initial acceptance by any party of defense and/or indemnification is not a waiver of the
right to retender timely.
8. A party agreeing to defend and/or indemnify may make its written agreement
conditioned upon the continued existence of the state of facts as then known as well as
such other reasonable conditions as may be dictated by the particular allegations or
claims.
9. Any party withdrawing from its agreement to defend and/or indemnify, shall give
timely, written notice which shall be effective upon receipt, The withdrawing party
shall be responsible for all costs and expenses of defense prior to receipt of notice of
withdrawal, except for those reasonable costs and expenses, including reasonable
attorneys’ fees, incurred solely for the benefit of the other party.
10. The defense, indemnification and hold harmless obligations of this Agreement shall
survive the termination of this Agreement.
XXVI. GENERAL PROVISIONS
A. NOTICES
Except as otherwise specifically provided herein, any notice required to be given by either
party to the other shall be in writing and delivered personally to the dealership or by
certified mail, return receipt requested, and shall be effective on the date of receipt. Notices
to DEALER shall be directed to DEALER or its General Manager at DEALERs Approved
Location. Notices to DISTRIBUTOR shall be directed to the General Manager of
DISTRIBUTOR,
B. NO IMPLIED WAIVERS
The failure of either party at any time to require performance by the other party of any
provision herein shall in no way affect the right of such party to require such performance
at any time thereafter, nor shall any waiver by any party of a breach of any provision herein
constitute a waiver of any succeeding breach of the same or any other provision, nor
constitute a waiver of the provision itself.
Any continuation of business relations between the parties following expiration of this
Agreement shall not be deemed a waiver of the expiration nor shall it imply that either party
has committed to continue to do business with the other at any Lime in the future. Should
this Agreement be renewed or any other form of agreement be offered to DEALER,
DISTRIBUTOR reserves the right to offer an agreement of a length and upon such
additional terms and conditions as it deems reasonable.
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C. SOLE AGREEMENT OF THE PARTIES
There are no prior agreements or understandings, either oral or written, between the parties
affecting this Agreement or relating to the sale or service of Toyota Products, except as
otherwise specifically provided for or referred to in this Agreement. DEALER
acknowledges that no representations or statements other than those expressly set forth
herein were made by DISTRIBUTOR or any officer, employee, agent or representative
thereof, or were relied upon by DEALER in entering into this Agreement, This Agreement
cancels and supersedes all previous agreements between the parties relating to the subject
matters covered herein, No change or addition to, or deletion of, any portion of this
Agreement (except as provided in Section III) shall be valid or binding upon the parties
hereto unless the same is approved in writing by an officer of each of the parties hereto.
P. DEALER NOT AN AGENT OR REPRESENTATIVE
DEALER is an independent business. This Agreement is not a property right and does not
constitute DEALER, Owners or employees of DEALER as the agent or legal
representatives of DISTRIBUTOR for any purpose whatsoever, DEALER, Owners and
employees of DEALER or any other persons acting on behalf of DEALER are not granted
any express or implied right or authority to assume or create any obligation on behalf of or
in the name of DISTRIBUTOR or to bind DISTRIBUTOR in any manner whatsoever.
E. ASSIGNMENT OF RIGHTS OR DELEGATION OF DUTIES
This is a personal service agreement and may not be assigned or sold in whole or in part,
directly or indirectly, voluntarily or by operation of law, without the prior written approval
of DISTRIBUTOR. Any attempted transfer, assignment or sale without DISTRIBUTORs
prior written approval will be void and not binding upon DISTRIBUTOR
F. NO FRANCHISE FEE
DEALER warrants that it has paid no fee, nor has it provided any goods or services in lieu
of same, to DISTKIaUTOR or any other party in consideration of entering, into, this -
Agreement. The sole consideration for DISTRIBUTOR’s entering into this Agreement is
DEALER’s ability, integrity, assurance of personal services and expressed intention to deal
fairly and equitably with DISTRIBUTOR and the public.
G. SEVERABILITY
If any provision of this Agreement should be held invalid or unenforceable for any reason
whatsoever, or conflicts with any applicable law, this Agreement will be considered
divisible as to such provisions, and such provisions will be deemed amended to comply
with such law, or if it cannot be so amended without materially affecting the tenor of the
Agreement, then it will be deemed deleted from this Agreement in such jurisdiction, and in
either case, the remainder of the Agreement will be valid and binding.
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H. NEW AND SUPERSEDING DEALER AGREEMENTS
In the event any new and superseding form of deaier Agreement is offered by
DISTIUBUTOR to authorized Toyota dealers generally at any time prior to the expiration
of the term of this Agreement, DISTRIBUTOR may, by written notice to DEALER, replace
this Agreement with a new agreement in a new and superseding form for a term not less
than the then unexpired term of this Agreement.
I. BENEFIT
This Agreement is entered into by and between DISTRIBUTOR and DEALER for their
sole and mutual benefit, Neither this Agreement nor any specific provision contained in it is
intended or shall be construed to be for the benefit of any third party.
J. NO FIDUCIARY RELATIONSHIP
This Agreement shall not be construed to create a fiduciary relationship between DEALER
and DISTRIBUTOR.
K, NO JOINT EMPLOYMENT
DEALER acknowledges that it has assumed obligations under this Agreement to use its
best efforts to sell and service Toyota Products, to increase the future growth in Toyota
Product sales through increased customer satisfaction and other obligations related to the
operation of the dealership and recognizes the necessity to employ and train qualified
personnel to satisfy these commitments. To this end, DEALER agrees to employ only
qualified persons who will fulfill the commitments made by DEALER to DISTRIBUTOR
in this Agreement. Notwithstanding the foregoing, DEALER retains the sole and exclusive
right to determine whom to hire and their qualifications, to direct, control and supervise
DEALERs employees, and to establish all terms and conditions of employment of
DEALER’s employees. All supervision, control and direction of DEALER’s employees
shall be the sole and exclusive responsibility of DEALER. DEALER shall at all times
remain the sole employer of persons employed by DEALER and, to this end, DEALER and
DISTRIBUTOR agree that no act or omission of DEALER or DISTRIBUTOR shall be
construed to make or render them joint employer, co-employer or alter ego of each other.
L. CONSENT OF DISTRIBUTOR
Any time that this Agreement provides that DEALER must obtain DISTRIBUTOR’s
consent to any proposed conduct or change, DEALER must provide all information
requested by DISTRIBUTOR concerning the proposal, and DISTRIBUTOR shall have a
reasonable amount of time in which to evaluate the proposal.
M. DISTRIBUTOR’S POLICIES I
This Agreement, from time to time, refers to certain policies and standards. DEALER
acknowledges that these policies and standards are prepared by DISTRIBUTOR in its sole
discretion based upon DISTRIBUTOR’s evaluation of the marketplace. DISTRIBUTOR
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may reasonably amend its policies and standards as the marketplace changes from time to
time.
XXVII. DEFINITIONS
As used in this Agreement, the parties agree that the following terms shall be defined as
exclusively set forth below.
A. OWNER: The persons identified in Section IV hereof.
B. GENERAL MANAGER: The person identified in Section V hereof.
C. DEALER FACKLITJES: The buildings, improvements, fixtures, and equipment situated at

the Approved Location(s).
U. APPROVED LOCATION(S): The location(s) and any facilities thereon, designated in

Section VII that DISTRIBUTOR has approved for dealership operation(s) specified therein.
E. TOYOTA MARKS: The various Toyota trademarks, service marks, names, logos and
designs that DEALER is authorized by DISTRIBUTOR to use in the sale and servicing of
Toyota Products as specified in the current Toyota Brand Graphic Standards Manual.
F. TOYOTA PRODUCTS: All Toyota Motor Vehicles, parts, accessories and equipment
which IMPORTER, in its sole discretion, sells to DISTRIBUTOR for resale to authorized
Toyota dealers.
G. TOYOTA MOTOR VEHICLES: All motor vehicles identified in the current Toyota
Product Addendum that DISTRIBUTOR sells to DEALER for resale.
H. GENUINE TOYOTA PARTS AND ACCESSORIES: All Toyota brand Parts and
Accessories manufactured by or on behalf of DISTRIBUTOR or FACTORY, or other parts
and accessories specifically approved by FACTORY for use in servicing Toyota Motor
Vehicles and sold by DISTRIBUTOR to DEALER for resale.
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TOYOTA PRODUCT ADDENDUM TO
Pursuant to Paragraph 1(A) of the Toyota Dealer Agreement, DISTRIBUTOR hereby

grants DEALER the non-exclusive right to buy and resell the Toyota Products as defined
in the Toyota Dealer Agreement and identified below:
Avalon Scion xB*

Camry Scion tC~
Corolla Scion xD~
N Cruiser Scion iQt
1-lighlander Scion FR~S*
Landcruiser Sequoia
Matri,c Sienna
Prius Tacoma Truck
Prius C Tundra Truck
Prius V Venza
RAV4 Yriris
4Runner
and all parts, accessories and equipment for such vehicles.

* Subject to DISTRIBUTOR’s currently applicable policies, DEALER may elect to sell,
or not to sell, this model througftj~jçpgrate Participation Agr~m~ntJ~iyaihthieJI~oni.
DISTRIBUTOR). DEALER’s election applies only to the sale of such model and does
not affect any of DEALER’s other obligations under the Toyota Dealer Agreement.
This Toyota Product Addendum shall remain in effect unless and until superseded by a
new Toyota Product Addendum furnished DEALER by DISTRIBUTOR.
111
Toyota Motor Sales USA Inc. San Gabriel
ZIPITRACT MAP
•P~tkS DEFINED BY TRRGTS NOT ~PS
3 Clarcmonl Teyolaclarcrnont
1’
Eo~
UflAN
112
Toyota Motor Sales USA Inc. San Gabriel
rr
N
/ 0*
Miles GEOG REF POO4VCovReZo
113
~(2) TOYOTA Toyota Motor Sales USA Inc. San Gabriel
Zip Code Approximation Report

PMA: 0003 Claremont DEALER: 04018 Claremont Toyota
ZIP ZIP NAME PERCENT SPLIT

91701 Rancho Cucamonga 50.00 Y
91708 China 6.00 Y
91710 China 73.00 V
91711 Claremont 99.00 V
91730 Rancho Cucamonga 6.00 V
91737 Rancho Cucamonga 4,00 V
91750 La Verne 18.00 Y
91762 Ontario 56.00 V
91763 Montclair 100.00 N
91764 Ontario 8.00 V
91765 Diamond Bar 6.00 V
91766 Pomona 99.00 V
91767 Pomona 99.00 V
91768 Pomona 73.00 V
91784 Upland 87.00 V
91786 Upland 99.00 V
91789 Walnut 1.00 V
Approdmate zip~de contained within the PMA defined by census tracts Data Ret: December 2011 ‘(i’D
GeogRetPoomCovR&o URBAN SCIENCE~
114
Toyota Motor Sales USA Inc. San Gabriel Structure List RC~O~t
Toyota
Geog Ref:P00/WCov Bela Date printed:
Apr 13, 2012
PMA 0003-claremont
oealer:clareaont Toyota State/county code:06037
Dealer Code:04018 Tract/ZIP codelOZO.01
County;06037 - LOS ANGeLeS CALIFORNIA

4002.05 4002.06 4016.02 4017.01 4011.03 4017.04 4018.00 4019.01 4019.02
4020.01 4020.02 4021.01 4021.02 4022.00 4023.01 4023.03 4023.04 4024.02
4024.05 4024,05 4025.01 4025.02 4026.00 4027.02 4027.03 4027.05 4021.05
4028.01 4028.03 4028.04 4029.02 4029.03 4029,04 4030.00 4032.00 4033.16
4033.17 4033.18 4088.00
91711 :Claroront 91766 :Poaona 91767 :Pomona 91768 Pomona
county:06071 - SAN BERNARDINO CALIFORNIA
2.01 2.03 2.05 2.01 2.08 3.01 3.03 3.04 4,01
4,03 4.04 5.01 5.03 5,04 6.03 6.04 6.05 6.06
8.04 8.08 8.12 8.13 8,14 8.15 8.16 8.17 8.18
8.19 8.20 8.21 8.23 8.24 6.25 8.26 9.01 9,03
9.04 10,01 10.02 11.01 11,03 11.04 12,00 14.00 17.02
17.03 17.04 17.06 17.07 20,11 20.13 20.14 122.00
91701 :Rancho Cucamong 91710 :chino 91762 :ontario 91763 :Montclair
91784 :Upland 91786 :Upland
Total Market Definitions for this PMA: 102
Source: R.L. polk & co. URBAN SCIENCE 0 2012 Urban Science. All rights reserved.
Page: L SerIal: 3594579
115
EXHIBIT E
116
~O~OT~%~ DEALERI~AGRE~M~NE
This is an Agreement between Toyota Motor Sales, U.S.A., Inc.
(DISTRIBUTOR), and Hogan SRK, Inc. —
(DEALER), a(n) Corporation .If a corporation, DEALER is duly

incorporated in the state of California and doing
business as Capistrano Toyota and Capistrano Scion
PURPOSES AND OBJECTIVES OF THIS AGREEMENT
DISTRIBUTOR sells Toyota Products, which are manufactured or approved by Toyota Motor Corporation
(FACTORY) and imported and/or sold to DISTRIBUTOR by Toyota Motor Sales, U.S.A., Inc.
(IMPORTER). It is of vital importance to DISTRIBUTOR that Toyota Products are sold and serviced in a
manner which promotes consumer confidence and satisfaction and leads to increased product acceptance.
Accordingly, DISTRIBUTOR has established a network of authorized Toyota dealers, operating at
approved locations and pursuant to certain standards, to sell and service Toyota Products, DEALER
desires to become one of DISTRIBUTOR’s authorized dealers. Based upon the representations and
promises of DEALER, set forth herein, DISTRIBUTOR agrees to appoint DEALER as an authorized
Toyota dealer and welcomes DEALER to DISTRIBUTOR’s network of authorized dealers of Toyota
Products.
This Agreement sets forth the rights and responsibilities of DISTRIBUTOR as seller and DEALER as
buyer of Toyota Products. DISTRIBUTOR enters into this Agreement in reliance upon DEALER’s
integrity, ability, a~surance of personal services, expressed intention to deal fairly with the consuming
public and with DISTRIBUTOR, and promise to adhere to the terms and conditions herein. Likewise,
DEALER enters into this Agreement in reliance upon DISTRIBUTOR’s promise to adhere to the terms and
conditions herein. DISTRIBUTOR and DEALER shall refrain from conduct which may be detrimental to
or adversely reflect upon the reputation of the FACTORY, IMPORTER, DISTRIBUTOR, DEALER or
Toyota Products in general. The parties acknowledge that the success of the relationship between
DISTRIBUTOR and DEALER depends upon the mutual understanding and cooperation of both
DISTRIBUTOR and DEALER.
Dealer Code: 04306
117
This Agreement is effective this 2nd day of September 2015-_ and
RIGHTS GRANTED TO THE DEALER
Subject to the terms of this Agreement, DISTRIBUTOR hereby giants DEALER the non-
exclusive right:
A. To buy and resell the Toyota Products identified in the Toyota Product addendum hereto
which may be periodically revised by IMPORTER;
B. To identi~’ itself as an authorized Toyota dealer utilizing approved signage at the location(s)
approved herein;
C. To use the name Toyota and the Toyota Marks in the advertising, promotion, sale and
servicing of Toyota Products in the manner herein provided.
DISTRIBUTOR reserves the unrestricted right to seLl Toyota Products and to grant the privilege
of using the name Toyota or the Toyota Marks to other dealers or entities, wherever they may be
located.
II. RESPONSIBILITIES ACCEPTED BY THE DEALER
DEALER accepts its appointment as an authorized Toyota dealer and agrees to:
A. Sell and promote Toyota Products subject to the terms and conditions of this Agreement;
13. Service Toyota Products subject to the tenns and conditions of this Agreement;
C. Establish and maintain satisfactory dealership facilities at the location(s) set forth
herein; and
D. Make all payments to DISTRIBUTOR when due.
IlL TERM OF AGREEMENT
shall continue for a period of 24 Months , and shall expire on September 1, 2017,
unless ended earlier by mutual agreement or terminated as provided herein. This Agreement
may not be continued beyond its expiration date except by written consent of DISTRIBUTOR
and IMPORTER.
118
IV. OWNERSHIP OF DEALERSHIP
This Agreement is a personal service Agreement and has been entered into by DISTRIBUTOR
in reliance upon and in consideration of DEALER’s representation that only the following
named persons are the Owners of DEALER, that such persons will serve in the capacities
indicated, and that such persons are committed to achieving the purposes, goals and
commitments of this Agreement:
OWNERS’ PERCENT OF
NAMES TITLE OWNERSHIP
The Hogan Family 100%

Revocable Living Trust,
Roger T. and Cathie L.
Hogan as Trustees
Roger T. Hogan Dealer Principal —
V. MANAGEMENT OF DEALERSHIP
DISTRIBUTOR and DEALER agree that the retention of qualified management is of critical
importance to satisfy the commitments made by DEALER in this Agreement.
DISTRIBUTOR, therefore, enters into this Agreement in reliance upon DEALER’S
representation that Roger T. Hogan and no other
,
person, will exercise the function of General Manager, be in complete charge of DEALER’s
operations, and will have authority to make all decisions on behalf of DEALER with respect to
DEALER!s.operations. DEALER further agrees that the Generali n~g~rshaJ[d~yQ~ his or
her full efforts to DEALER’s operations.
VI. CHANGE IN MANAGEMENT OR OWNERSHIP
This is a personal service contract. DISTRIBUTOR has entered into this Agreement because
DEALER has represented to DISTRIBUTOR that the Owners and General Manager of
DEALER identified herein possess the personal qualifications, skill and commitment necessary
to ensure that DEALER will promote, sell and service Toyota Products in the most effective
manner, enhance the Toyota image and increase market acceptance of Toyota Products.
Because DISTRIBUTOR has entered into this Agreement in reliance upon these representations
and DEALER’s assurances of the active involvement of such persons in DEALER operations,
any change in ownership, no matter what the share or relationship between parties, or any
changes in General Manager from the person specified herein, requires the prior written consent
of DISTRIBUTOR, which DISTRIBUTOR shall not unreasonably withhold.
119
DEALER agrees that factors which would make DISTRIBUTOR’S withholding of consent
reasonable would include, without limitation, the failure of a new Owner or General Manager to
meet DISTRIBUTOR’S standards with regard to financial capability, experience and success in
the automobile dealership business.
VII. APPROVED DEALER LOCATIONS
In order that DISTRIBUTOR may establish and maintain an effective network of authorized
Toyota dealers, DEALER agrees that it shall conduct its Toyota operation only and exclusively
in facilities and at locations herein designated and approved by DISTRIBUTOR.
DISTRIBUTOR hereby designates and approves the following facilities as the exclusive
location(s) for the sale and servicing of Toyota Products and the display of’ Toyota Marks;
Ncw Vehicle Sales and Showroom Used Vehicle Display and Sales
Toyota; 33395 Camino Capistrano
33395 Camino Capistrano San Juan Capistrano, CA 92675
San Juan Capistrano, CA 92675
Scion:
33395 Camino Capistrano
Sales and General Office Body and Paint

33395 Camino Capistrano N/A
Service
33395 Camino Capistrano 33395/33375 Camino Capistrano
San Juan Capistrano, CA 92675 San Juan Capistrano, CA 92675
Other Facilities-DisDlay/Stora~e
33375 Camino Real
DEALER may not, either directly or indirectly, display Toyota Marks or establish or
conduct any dealeiship operations contemplated by this Agreement, including the display, sale
and servicing of Toyota Products, at any location or facility other than those approved herein
without the prior written consent of DISTRIBUTOR. DEALER may not modify or change the
usage or function of any location or facility approved herein or otherwise utilize such locations
or facilities for arty functions other than the approved function(s) without the prior written
consent of DISTRIBUTOR,
VIII. PRIMARY MARKET AREA
DISTRIBUTOR will assign DEALER a geographic area called a Primary Market Area
(“PMA”). The PMA is used by DISTRIBUTOR to evaluate DEALER’s performance of its
obligations, among other things. DEALER agrees that it has no exclusive right to any such
120
PMA. DISTRIBUTOR may add new dealers, relocate dealers, or adjust DEALER’s PMA as it
reasonably determines is necessary. DEALER’s PMA is set forth on the PMA Addendum
hereto.
Nothing contained in this Agreement, with the exception of Section XIV(B), shall limit or he
construed to limit the geographical area in which, or the persons to whom, DEALER may sell or
promote the sale of Toyota products.
IX. STANDARD PROVISIONS
The “Toyota Dealer Agreement Standard Provisions” are incorporated herein and made part of
this Agreement as if fUlly set forth herein.
X. ADDITIONAL PROVISIONS
In consideration of DISTRIBUTOR’s agreement to appoint DEALER as an authorized Toyota

dealer, DEALER further agrees:
I. DISTRIBUTOR has entered into this Agreement in reliance upon the terms of the Second
Amendment to and Complete Restatement of the Hogan Family Revocable Living Trust,
dated January 12, 2012 (the “Trust”), including the designation of Roger T. Hogan and
Cathie L. Hogan as the trustees of the Trust. Notwithstanding any provision of the Trust,
DEALER expressly agrees that (i) the Trust may not be amended, modified or terminated
without the prior written consent of DISTRIBUTOR; and (ii) no additional, replacement or
successor trustee(s) may be named without the prior written consent of DISTRIBUTOR,
DEALER further understands and expressly agrees that DISTRIBUTOR at this time is not
approving any successor trustee, co-trustee or beneficiary, whether or not named in and/or
appointed pursuant to the Trust, as owner, operator or individual in direct or indirect control
of DEALER and that any potential future approval of any successor trustee, co-trustee or
beneficiary as owner, operator or individual in control of DEALER will be conditioned on
such person’s full compliance with DISTRIBUTOR’s then-applicable policies.
DISTRIBUTOR has entered into this Agreement in reliance upon the terms of the Consent(s) of
Co-Trustee, dated November 4, 2008, executed by Cathie L. Hogan whereby Roger T, Hogan
has been granted the authority to manage the Trust’s direct or indirect interest in DEALER.
Any changes in ownership or trustees (including designation of voting trustee pursuant to

Consent(s) of Co-Trustee), whether or not pursuant to the Trust, without the prior written
approval of DISTRIBUTOR will void this Agreement
2. DEALER acknowledges that Cathie L. Hogan C’lnvestor”) does not have a proven, relevant,
successful retail automotive management background and thus is not qualified at this time to he
approved as the individual with majority control and final decision-making authority for the
DEALER. DEALER further agrees that Investor is likewise not qualified at this time to be the
approved General Manager of DEALER, DEALER acknowledges that should Investor acquirc
the required proven, relevant successful retail automotive management background, she may
submit a completed Toyota Dealer Application for DISTRIBUTOR’s consideration.
5 Dealer
121
ADDJTIONAL PROVISIONS (Continued):
3. DEALER agrees to achieve not less than 90% Sales Efficiency within twenty-four (24)
months from the effective date of this Agreement and to thereafter maintain not less than
90% sales efficiency throughout the duration of this Agreement.
.4, DEALER acknowledges that its current facility is substantiaLly deficient in that it does not meet
DISTRIBUTORs minimum space and appearance requirements in the following iespects~

Total Building (sq. ft.) 43,348 48,197 -4,849
Image USA 11 Non-Compliant Compliant
DEALER agrees to correct these deficiencies within the following timetable;
• Secure permits by August 31, 2016;

• Commence construction by December31, 2016; and
• Complete construction by April 30, 2018
DEALER acknowledges, however, that its facility requirements are subject to change and
therefore expressly agrees to consult with DISTRIBUTOR before finalizing any land acquisition
and/or construction plans to ensure that DEALER’s proposal is compliant with then-current
facility standards.
Time is of the essence for all matters set forth herein.
5. DEALER understands and agrees that any provisions set forth in paragraph no. 4 of these
Additional Provisions contemplate action to be taken by DEALER after the expiration of this
Agreement are advisory only and that DISTRIBUTOR shall have no obligation to extend this
Agreement or to offer DEALER a subsequent Agreement.
DISTRIBUTOR does intend, however, to recommend a subsequent Agreement for DEALER

provided that DEALER is in full compliance with all of the terms and conditions of this
Agreement, including, bitt not limited to, these Additional Provisions, as well as any other
reasonable requirements imposed by DISTRIBUTOR from time to time.
Dealer
5a
122
XL EXECUTION OF AGREEMENT
Notwithstanding any other provision herein, the parties to this Agreement, DISTRIBUTOR and
DEALER, agree that this Agreement shall be valid and binding only if it is signed:
A. On behalf of the DEALER by a ditty authorized person;
B, On behalf of DISTRIBUTOR by the President and/or an authorized General Manager, if any, of

DISTRIBUTOR; and
C, On behalf of IMPORTER, solely in connection with its limited undertaking herein, by President
of IMPORTER.
XII. CERTIFICATION
By their signatures hereto, the parties agree that they have read and understand this Agreement,
including the Standard Provisions incorporated herein, are committed to its purposes and objectives
and agree to abide by all of its terms and conditions,
DEALER
Date: — 1$jic President

Title
Date:
(signature) -I ale
Date: ___________ By:

(SignutuFe) ‘ride
Toyota Motor Sales, U.S.A., Inc. DISTRIBUTOR

(Distributor Name)
Date: 9/i/fr By: z4’l \—, / Vice President and
General Manager
(Signatuie) A. Hag~~ ‘rifle —
Date: By:
(Signature) Title
123
Undertaking by IMPORTER: In the event of termination of this Agreement by virtue of tennination
or expiration of DISTRIBUTOR’s contract with IMPORTER, IMPORTER, through its designee,
will offer DEALER a new agreement of no less than one year’s duration and containing the terms of
the Toyota Dealer Agreement then prescribed by IMPORTER.
TOYOTA MOTOR SALES, U.S.A., INC.
Date; SEP 02 2015 By: ______________________________ President

(Signnture) Pile
124
STANDARD PROVISIONS
The following Standard Provisions are expressly incorporated in and made a part of the Toyota
Dealer Agreement.
XIII. ACQUISITION, DELIVERY AND INVENTORY OF TOYOTA PRODUCTS
A, ACQUISITION OF TOYOTA PRODUCTS
DEALER shall have the tight to purchase Toyota Products from DISTRIBUTOR in
accordance with the provisions set forth herein and such other requirements as may be
established from time to time by DISTRIBUTOR
B. AVAILABILITY AND ALLOCATION OF PRODUCT
DISTRIBUTOR agrees to use its best efforts to provide Toyota Products to DEALER in
such quantities and types as may be required by DEALER to fiñfill its obligations with
respect to the sale and servicing of Toyota Products under this Agreement, subject to
available supply from IMPORTER, DISTRIBUTORS requirements, and any change or
discontinuance with respect to any Toyota Product DISTRIBUTOR will endeavor to
allocate Toyota Products among its dealers in a fair and equitable manner, which it shall
determine in its sole discretion. DISTRIBUTOR agrees to provide DEALER with an
explanation of the method used to distribute such products and, upon written request, will
advise DEALER of DISTRIBUTOR’S total wholesale sales of new motor vehicles, by
series, in DISTRiBUTOR’s area and to DEALER individaally, for a reasonable time frame.
C. PRICES AND TEEMS OF SALE
DISTRIBUTOR shall have the right to establish and revise prices and other terms for the
sale of Toyota Products to DEALER. Ownership and title of’ Toyota Products sold by
DISTRIBUTOR to DEALER shall pass upon payment therefor by DEALER to
DISTRIBUTOR and DEALER shall have no ownership interest in such Products until such
—— payment is received. Risk of loss for Toyota Products sold by DISTRIBUTOR to DEALER
shall pass upon delivëiy of such Products to DEALER. Revised prices and terms shall
apply to any Toyota ?roducts not invoiced to DEALER by DISTRIBUTOR at the time the
notice of such change is given to DEALER (in the cas~ of Toyota Motor Vehicles), or upon
issuance of a new or modified Parts Price List or through change notices, letters, bulletins,
or revision sheets (in the case of parts, options and accessories), or at such other times as
may be designated in writing by DISTRIBUTOR.
Payment for all Toyota Products shall be made when billed, unless other terms are
established by DISTRIBUTOR in writing.
0. MODE, PLACE AND CHARGES FOR DELIVERY OF PRODUCTS
DISTRIBUTOR shall designate the distribution points and the mode of transportation and
shall select carrier(s) for the transportation of Toyota Products to DEALER, DEALER
shall pay DISTRIBUTOR such charges as DISTRIBUTOR in its sole discretion establishes
S
125
for such transportation services,
E. INVENTORY DAMAGE CLAIMS AND LIABILITY
DEALER shall promptly notify DISTRIBUTOR of any damage occurring during transit
and shall, if so dhected by DISTRIBUTOR, file claims on DISTRIBUTOR’s behalf against
transportation carrier for damage. DEALER agrees to assist DISTRIBUTOR in obtaining
recovery against any transportation carrier or insurer for toss or damage to Toyota Products
shipped hereunder,
To the extent required by law, DEALER shall notify the purchaser of a vehicle of any
damage sustained by such vehicle prior to sale, DEALER shall indemnify and hold
DISTRIBUTOR harmless from any liability resulting from DEALER’s failure to so notify
such purchasers.
F. DELAY OR FAILURE OF DELIVERY

DISTRIBUTOR shaLl not be liable for delay or failure to deliver Toyota Products which it
has previously agreed to deliver, where such delay or failure to deliver is the result of any
event beyond the control of DISTRIBUTOR, IMPORTER or FACTORY, including but not
limited to fire, floods, storms or other acts of God, any law or regulation of any
governmental entity, foreign or civil wars, rIots, interruptions of navigation, shipwrecks,
strikes, lockouts or other labor troubles, embargoes, blockades, or delay or failure of
FACTORY to deliver Toyota Products.
G. DIVERSION CHARGES
If after delivery DEALER fails or refuses to accept Toyota Products that it has agreed to
purchase, DEALER shall pay all charges incurred by DISTRIBUTOR as a result of such
refusal. Such charges shall not exceed the charge of returning any such product to the point
of original shipment by DISTRIBUTOR plus all charges for demurrage, storage or other
charges related to such refusal.
DEALER also agrees to assume responsibility for, and shall pay any and all reasonable
charges for, demurrage, storage or other charges accruing after arrival of shipment at the
point of original shipment.
H. CHANGES OF DESIGN, OPTIONS OR SPECIFICATIONS
DISTRIBUTOR, IMPORTER or FACTORY may change the design or specifications of

any Toyota Product or the options in any Toyota Product and shall be under no obligation
to provide notice of same or to make any similar change upon any product previously
purchased by or shipped to DEALER. No change shall be considered a model year change
unless so specified by DISTRIBUTOR.
I. DISCONTINUANCE OF MANUFACTURE OR IMPORTATION
FACTORY, IMPORTER and/or DISTRIBUTOR may discontinue the manufacture,

importation or distribution of all or part of any Toyota Product whether motor vehicle,
parts, options, or accessories, including any model, series, or body style of any Toyota
9
126
Motor Vehicle at any time without any obligation or liability to DEALER by reason
thereof,
S. MINIMUM VEHICLE INVENTORIES

Subject to the ability of DISTRIBUTOR to supply Toyota Motor Vehicles to DEALER,
DEALER agrees that it shall, at all times, maintain at least the minimum inventory of
Toyota Motor Vehicles as may be established by DISTRIBUTOR from time to time.
DEALER also agrees that it shall have available at all times, for purposes of display and
demonstration, the number of Toyota Motor Vehicles of the most current models as may be
established by DISTRIBUTOR from time to time, and shall, at all times, maintain such
Motor Vehicles in showroom ready condition.
K. PRODUCT MODIFICATIONS
DEALER agrees that it will not make any modifications to Toyota Products that may
impair or adversely affect a vehicle’s safety, emissions or structural integrity,
xiv; DEALER MARKIJ~TING OF TOYOTA PRODUCTS
A. DEALER’S SALES RESPONSIBILITIES
DEALER recognizes that customer satisfaction and the successful promotion and sale of
Toyota Products are significantly dependent on DEALER’s advertising and sales promotion
activities. DEALER shall actively and effectively promote, through DEALER’s own
advertising and sales promotion activities, the purchase of Toyota Products by customers.
Therefore, DEALER at all times shall:
I, Actively and effectively advertise, merchandise, promote and sell Toyota Products;
2. Maintain an adequate, stable and trained sales organization, and, to that end, make all
reasonable efforts to ensure that its sales personnel attend all sates training courses
prescribed by DISTRIBUTOR at DEALER’s expense;
3, Maintain high ‘standards of ethics in advertisingjiomoting and selling Toyota Products

and avoid engaging in any misrepresentation or unfair or deceptive practices; and
4. Accurately represent to customers the total selling price of Toyota Products, DEALER
agrees to explain to customers of Toyota Product the items that make up the total selling
price and to give the customers itemized statements and all other information required
by law, DEALER understands and hereby acknowledges that it may sell Toyota
Products at whatever price DEALER desires.
B. EXPORT PROI-HBITION
DEALER is authorized to sell Toyota Motor Vehicles only to customers located in the
continental United States. DEALER agrees that it will not sell Toyota Motor Vehicles for
resale or use outside the continental United States. DEALER agrees to abide by any export
policy established by DISTRIBUTOR.
10
127
C, USED VEHICLES
DEALER agrees to display, promote and sell used vehicles at the Approved Location.
DEALER shall maintain for resale an inventory ofused vehicles.
I. Sales Training Assistance
To assist DEALER in the fulfillment of its sales responsibilities under this Agreement,
DISTRIBUTOR agrees to offer general and specialized sales management and sales
training programs for the benefit and use of DEALER’s sales organization. When
requested by DISTRIBUTOR, DEALER’s personnel shall participate in such programs
at DEALER’s expense.
2. Sales Promotion Assistance

In order that authorized Toyota dealers may be assured of the benefits of comprehensive
advertising and promotion of Toyota Products, DISTRIBUTOR agrees to establish and
maintain general advertising and promotion programs and will from time to time make
sales promotion and campaign materials available to DEALER to promote the sales of
such Toyota Products at a reasonable charge where applicable.
3. Field Sales Personnel Assistance
To assist DEALER in handling its sales responsibilities under this Agreement,

DISTRIBUTOR agrees to provide trained field sales personnel to advise and counsel
DEALER on sales-related subjects, including merchandising, training and sales
management.
XV. DEALER SERVICE OBLIGATIONS
A. CUSTOMER SERVICE STANDARDS
DEALER and DISTRIBUTOR agree that the success and future graMh of DISTRIBUTOR
and DEALER are substantially dependent upon the customer’s ability to obtain high-quality
vehicle servicing. Therefore, DEALER agrees to:
1. Take all reasonabie steps to provide service of the highest quality for all Toyota Motor
Vehicles, regardless of where purchased and whether or not under warranty;
2. Ensure that the customer is advised of the necessary repairs and that his or her consent
is obtained prior to the initiation of any repairs;
3. Ensure that problems on Toyota Motor Vehicles are accurately diagnosed and repairs
are promptly and professionally performed; and
4. Ensure that the customer is treated courteously and fairly at all times.
11
128
B. NEW MOTOR VEBICLE PRE-DELI VERY SERVICE
DEALER agrees that prior to delivery of a new Toyota Motor Vehicle to a customer it shalt
perform, as directed by DISTRIBUTOR, pie-delivery service on each Toyota Motor
Vehicle in accordance with Toyota standards, DISTRIBUTOR shall pay DEALER for such
pre-delivery service according to such directives and the applicable provisions of the
Toyola Warranty Policy and Procedures ManuaL
C. WARRANTY AND POLICY SERVICE
DEALER acknowledges that the only warranties of DISTRIBUTOR or FACTORY

applicable to Toyota Products shall be the New Vehicle Limited Warranty or such other
written warranties that may be expressly furnished or sold by DISTRIBUTOR or
FACTORY. Except for its limited liability under such written warranty or warranties,
DISTRIBUTOR and FACTORY do not assume any other warranty obligation or liability.
DEALER is not authorized to assume any additional warranty obligations or liabilities on
behalf of DISTRIBUTOR, IMPORTER or FACTORY. Any such additional obligations
assumed by DEALER shall be the sole responsibility of DEALER. Any extended service
contact sold by IMPORTER, DISTRIBUTOR or Toyota-affiliated entity shall be governed
by its own terms,
DEALER shall perform warranty service specified by DISTRIBUTOR in accordance with

the Toyota Warranty Policy and Procedures Manual. DISTRIBUTOR agrees to
compensate DEALER for all warranty work, including labor, diagnosis and Genuine
Toyota Paris and Accessories, in accordance with procedures and at rates tO be announced
from time to time by DISTRIBUTOR. Unless otherwise approved in writing in advance by
DISTRIBUTOR, DEALER shall use only Genuine Toyota Parts and Accessories when
performing Toyota warranty repairs. Warranty service is provided for the benefit of
customers and DEALER agrees that the customer shall not be obligated to pay any charges
for warranty work or any other services for which DEALER is reimbursed or paid by
DISTRIBUTOR.
D. USE OF PARTS AND ACCESSORIES IN NON-WARRANTY SERVICING
Subject to the provisions set forth below, DEALER has the iljht to sell, install or use, for
making non-warranty repairs, products that are not Genuine Toyota Parts or Accessories.
DEALER acknowledges, however, that its customers expect that any parts or accessories
that DEALER sells, installs or uses in the sale, repair or servicing of Toyota Motor
Vehicles are, or meet the high quality standards o~ Genuine Toyota Parts or Accessories,
DEALER agrees that in sales, repairs or servicing where DEALER does not use Genuine
Toyota Parts or Accessories, DEALER will only utilize such other parts or accessories that
will not adversely affect the mechanical operation of the Toyota Motor Vehicle being sold,
repaired or serviced, and that are equivalent in quality and design to Genuine Toyota Parts
or Accessories.
12
129
E. WARRANTY DISCLOSURES AS TO NON-GENUINE PARTS AND
ACCESSORIES
In order to avoid confusion and to minimize potential customer dissatisfaction, in any

instance where DEALER sells, installs or uses other than Genuine Toyota Parts or
Accessories, DEALER shall disclose such fact to the customer and shall advise the
customer that these items are not included in warranties furnished by DISTRIBUTOR,
Such disclosure shall be written, conspicuous and stated on the customer’s copy of the
service or repair order or sale document. In addition, DEALER will clearly explain to the
customer the extent of any warranty covering the parts or accessories involved and will
deliver a copy of the warranty to the customer.
F. SERVICE CAMPAIGN INSPECTIONS AND CORRECTIONS
DEALER agrees to perform service campaign inspections and/or corrections for owners or
users of alt Toyota Products that qualify for such inspections and/or corrections, DEALER
further agrees to comply with all DISTRIBUTOR’s directives and with the applicable
procedures in the Toyota Warranty Policy and Procedures Manual relating to those
inspections and/or corrections, DISTRIBUTOR agrees to reimburse DEALER for all
replacement parts and! or other materials required and used in connection with such work
and for labor according to such directives and the applicable provisions of the Toyota
Warranty Policy andProcedures Manual
G. COMPLIANCE WITH SAFETY AND EMISSION CONTROL REQUIREMENTS

DEALER agrees to comply and operate consistently with all applicable provisions of the
National Traffic and Motor Vehicle Safety Act of 1966 and the Federal Clean Air Act, as
amended, including applicable rules and regulations issued from time to time thereunder,
and all other applicable federal, state and local motor vehicle safety and emission control
statutes, rules and regulations.
In the event that the laws of the state in which DEALER is located require motor vehicle
dealers or distributors to install in new or used motor vehicles, prior to their retail sale, any
safety devices or other equipment not installed or supplied as standard equipment by
FACTORY, then DEALER, prior to the sale of any Toyota Motor Vehicle on which such
installations are required, shall properly install such devices or equipment on such Toyota
Motor Vehicles. DISTRIBUTOR agrees to reimburse DEALER for all parts and/or other
materiais required and used in connection with such work and for labor according to the
applicable provisions of the Toyota Warranty Policy and Procedures Manual DEALER
shall comply with state and local laws pertaining to the installation and reporting of such
equiprnent.
In the interest of motor vehicle safety and emission control, DISTRIBUTOR and DEALER
~gree to provide to each other such information and assistance as may reasonably be
requested by the other in connection with the performance of obligations imposed on either
party by the National Traffic and Motor Vehicle Safety Act of 1966, and the Federal Clean
Air Act, as amended, and their rules and regulations, and all other applicable federal, state
and local motor vehicle safety and emissions control statutes, rules and regulations.
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H. COMPLIANCE WIlE CONSUMER PROTECTION STATUTES, RULES AND
REGULATIONS
Because certain customer complaints may impose liability upon DISTRIBUTOR under
various repair or replace laws or other consumer protection laws and regulations, DEALER
agrees to provide prompt notice to DISTRIBUTOR of such complaints and take such other
steps as DISTRIBUTOR may reasonably require, DEALER will do nothing to affect
adversely DISTRIBUTOR’s rights under such laws and regulations. Subject to any law or
any regulation to the contrary, DEALER shall be liable to DISTRIBUTOR for any refunds
or vehicle replacements provided to customer where DISTRIBUTOR reasonably
establishes that DEALER failed to carry out vehicle repairs in accordance with
DISTRiBUTOR’s written published policies and procedures or its express oral instructions
subsequently confirmed in writing. DEALER also agrees to provide applicable required
customer notifications and disclosures as prescribed by repair or replacement laws or other
consumer laws or regulations.
XVI. SERVICE AND PARTS OPERATIONS
A. ORGANIZATION AM) STANDARDS

DEALER agrees to organize and maintain an adequate, stable and trained service and parts
organization of the highest quality, including a qualified Service Manager and a qualified
Parts Manager, and a number of competent customer relations, service and parts personnel
sufficient to meet the needs of the marketplace in the reasonable opinion of
DISTRIBUTOR. DEALER’s personnel will meet the educational, management and
technical training standards established by DISTRIBUTOR.
B. SERVICE EQUIPMENT AND SPECIAL TOOLS
DEALER agrees to acquire and properly maintain adequate service equipment and such
special service tools and instruments as are specified by DISTRIBUTOR.
C. PARTS INVENTORY
DEALER and DISTRIBUTOR recognize th~flhe owners and users of Toyota Motor
Vehicles may reasonably expect that DEALER will have Genuine Toyota Pads or
Accessories immediately available for purchase or installation. DEALER, therefore, agrees
to carry in stock at all times during the term of this Agreement an adequate inventory of
Genuine Toyota Parts or Accessories, as listed in DISTRIBUTOR’s current inventory
guide, to enable DEALER to meet its customers’ needs and to fulfill its service
responsibilities under this Agreement.
1. Service Training Assistance

To assist DEALER in fulfilling its service and parts responsibilities under this
Agreement, DISTRIBUTOR agrees to offer general and specialized service and parts
training programs for the benefit and use of DEALER’s service and parts organizations.
When requested by DISTRIBUTOR, DEALER’s personnel shall participate in such
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programs at DEALER’s expense.
2. Manuals and Materials
DISTRIBUTOR agrees to make available to DEALER, at DEALER’S expense, copies of

such dealer manuals, catalogs, bulletins, publications and technical data as
DISTRIBUTOR shall deem to be necessary for the needs of DEALER’S service and parts
organization. DEALER shall be responsible for keeping such manuals, publications and
data current and available for consultation by its employees.
3 Field Personnel Assistance

To assist DEALER in handling its parts and service responsibilities under this
Agreement, DISTRIBUTOR agrees to make available qualified field parts and service
personnel who will, from time to time, advise and counsel DEALER on parts and
service-related subjects, including parts and service policies, product quality, technical
adjustments, repair and replacement ot’ product components, customer relations,
warranty administration, service and parts merchandising, and personnel/management
training.
XVII. CUSTOMER SATISFACTION RESPONSIBIUTIES
A goal of DISTRIBUTOR and DEALER is to be recognized as marketing the finest products

and providing the best service in the automobile industry. The Toyota name should be
synonymous with the highest level of customer satisfaction, DEALER will take all reasonable
steps to ensure that each customer is completely satisfied with his or her Toyota Products and
the services and practices of DEALER
Whenever requested by DISTRIBUTOR, DEALER shall:
A. Designate an employee responsible for customer satisfaction commensurate with the need of
the marketplace; and
B. Provide a detailed written plan of DEALER’s customer satisfaction program to

DISTRIBUTOR and implement such program on a continuous basis. This plan shall include
an ongoing system for:
1. Emphasizing customer satisfaction to all DEALER’s employees;
2. Training DEALER’s employees, including participation in DISTRIBUTOR’s customer

satisfaction training at DEALER’s expense; and
3. Responding immediately to, and resolving promptly, requests for customer assistance
and conveying to customers that DEALER is committed to the highest possible level of
customer satisfaction,
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XVIII. DEALERSHIP FACILITIES AND IDENTIFICATION
A. FACILITIES
1. In order for DISTRIBUTOR to establish an effective network of authorized Toyota

dealers, DEALER shall provide, and at all times maintain, attractive dealership facilities
at the Approved Location(s) that satis~, the image, size, layout, interior design, color,
equipment identification and other factors established by DISTRIBUTOR. DEALER
shall meet the minimum facility standards and policies established by DISTRIBUTOR
which can be amended from time to time.
2. To assist DEALER. in planning, building, or remodeling dealership facilities,

DISTRIBUTOR will provide DEALER, upon request, a Toyota Dealer Facility Planner
and will assist in identiiging sources from which DEALER may purchase architectural
materials and furnishings that meet Toyota standards and guidelines. In addition,
representatives of DISTRIBUTOR will be available to DEALER from time to time to
counsel and advise DEALER in connection with DEALER’S planning and equipping the
dealership premises.
B. DEALER’S OPERATING HOURS
DEALER agrees to keep all of its dealership operations open for business during all days
and hours that are customary and lawfUl for such operations in the community or locality in
which DEALER is located and in accordance with industry standards. The dealership shall
not be considered open unless all sales, service and parts operations are open to the public
and dealership personnel are present to assist customers.
C. SIGNS
Subject to applicable governmental ordinances, regulations, and statutes, DEALER agrees

to comply with IMPORTER’s signage program and to display only standard authorized
signage which conforms to the approved corporate identification program.
D. USE OF TOYOTA MARKS _________________
1. Use by DEALER
DISTRIBUTOR grants to DEALER the non-exclusive privilege of displaying or

otherwise using authorized Toyota Marks as specified in the Toyota Brand Graphic
Standards Mcmual at the Approved Location(s) in connection with the selling or
servicing of Toyota Products.
DEALER fUrther agrees that it promptly shall discontinue the display and use of any
Toyota Marks, or shall change the manner in which any Toyota Marks are displayed and
used, when for any reason it is requested to do so by DISTRIBUTOR. DEALER may
use the Toyota Marks as specified in the Toyota Brand Graphic Standards Manual only
at Approved Location(s) and for such purposes as are specified in this Agreement.
DEALER agrees that such Toyota Marks may be used as part of the name under which
DEALER’s business is conducted only with the prior written approval of
DISTRIBUTOR.
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DEALER shall discontinue any advertising that DISTRIBUTOR may find to be
injurious to DISTRIBUTOR’s business or reputation or the Toyota Marks.
2. Discontinuance of Use
Upon termination, non-renewal, or expiration of this Agreement, DEALER agrees that it

shall immediately:
a, Discontinue the use of Toyota Marks, or any semblance of same, including without
limitation, the use of all stationery, telephone directory listing, and other printed
material refening in any way to Toyota or bearing any Toyota Mark;
b. Discontinue the use of the Toyota Marks, or any semblance of same, as part of its
business or corporate name, and file a change or discontinuance of such name with
appropriate authorities;
c. Remove all product signs bearing Toyota Marks. Product signs owbed by DEALER
shall be removed and disposed of at DEALER’s sole cost and expense. Product signs
leased to DEALER by or through IMPORTER or its representative shall be removed
from DEALER’S premises at IMPORTER’S sole cost and expense. DEALER hereby
grants permission for DISTRIBUTOR to enter upon DEALER’s premises to remove
signs leased to DEALER by IMPORTER;
d. Cease representing itself as an authorized Toyota Dealer; and
e. Refrain from any action, including without limitation, any advertisement, statement
or implication that it is authorized to sell or distribute Toyota Products.
In the event DEALER fails to comply promptly with the terms and conditions of this
Section, DISTRIBUTOR shall have the right to enter upon DEALER’s premises and
remove, without notice or liability, all such product signs and identification bearing the
Toyota Marks, DEALER agrees that it shall reimburse DISTRIBUTOR for any costs and
—. ‘~
expensesincluding
Marks, incurredreasonable
in the removal
attorneyoffees.
signs owned by DEALER bearing the Toyota
XIX. EVALUATION OF DEALER’S PERFORMANCE
DEALER acknowledges the importance of its overall performance in relation to the purposes
and objectives of this Agreement, DISTRIBUTOR will periodically evaluate DEALER’s
performance of its responsibilities in the areas of sales, service and parts, facilities and
customer satisfaction, based upon such reasonable criteria as DISTRIBUTOR may establish
from time to time. DISTRIBUTOR agrees to review all such evaluations with DEALER and
will provide DEALER a copy thereof. ‘Where performance is below acceptable standards of
DISTRIBUTOR, DEALER agrees to take prompt action to improve its performance and, if
requested by DISTRIBUTOR, to noti~’ DISTRIBUTOR in writing of its detailed plans and
timetables for accomplishing those improvements.
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A. SALES PEEFORMAI’JCE EVALUATION
Pursuant to Section XIV herein, DISTRIBUTOR ~vil1 evaluate DEALERs sales

performance under criteria established by DISTRIBUTOR, which may include, but is not
limited to, the achievement of reasonable sales objectives as DISTRIBUTOR may establish;
comparisons of DEALER’s sales and/or registrations to th6se of comparable Toyota dealers
and other line makes within DEALER’s Primary Market Area or such area(s) which
DISTRIBUTOR believes is a reasonable basis for compariáon; sales performance trends
over a reasonable period of time; and the manner in which DEALER has conducted its sales
and marketing operations.
B. SERVICE PERFORMANCE EVALUATION
Pursuant to Sections XV and XVI herein, DISTRIBUTOR will evaluate DEALER’s service
performance in such areas as, without limitation, warranty management, compliance with the
Toyota Warranty Policy and Procedures Manual, service management, service operating
procedures, service staffing and training, administration, service facilities and equipment,
new vehicle pre-delivery service, customer handling and customer retention,
C, PARTS PERFORMANCE EVALUATION
Pursuant to Section XVI herein, DISTRIBUTOR will evaluate DEALER’s parts

performance in such areas as, without limitation, general parts management parts operating
procedures, parts staffing and training, parts facilities, parts inventory management, parts
sales, accessory sales, parts merchandising and parts availability to customers.
D. CUSTOMER SATISFACTION PERFORMANCE EVALUATION
Pursuant to Section XVII, herein, DiSTRIBUTOR will evaluate DEALER’s performance of

its responsibilities in the area of customer satisfaction based on the following
considerations:
1. DISTRIBUTOR will provide DEALER with customer satisfaction reports or such other•
equivalent data as will permit DEALER to assess its performance and maintain the
highest level of customer satisfaction. DEALER agrees to review with its employees on
a regular basis the results of the customer satisfaction reports or other data it receives.
2. DEALER agrees to develop, implement and review with DISTRIBUTOR specific action
plans for improving resuLts in the event that DEALER is below the average customer
satisfaction levels for other Toyota dealers in such areas that DISTRIBUTOR believes
are a reasonable basis for comparison. DEALER shall respond on a timely basis to
requests from DISTRIBUTOR to take action on unsatisfactory customer satisfaction
matters and to commit necessary resources to remedy deficiencies reasonably specified
by DISTRIBUTOR, and DEALER shall remedy those deficiencies, DISTRIBUTOR
reserves the right to establish reasonable, uniform criteria to be used to evaluate
DEALER
E. DEALERSHIP FACILITIES EVALUATION
Pursuant to Section XVIII, herein, DISTRIBUTOR will evaluate DEALER’S performance of

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its responsibilities in the area of dealership facilities.
XX. CAPITAL, CREDIT, RECORDS AND UNIFORM SYSTEMS
A. NET WORKING CAPITAL
The amount and structure of the net working capital required to properly conduct the
business of DEALER depends upon many factors, including the nature, size and volume of
DEALER’s vehicle saies, service and parts operations. Therefore, DEALER agrees to
establish and maintain actual net working capital in an amount not less than the minimum
net workipg capitaL specified in a s6parate Minimum Net Working Capital Agreement
executed by DEALER and DISTRIBUTOR concurrently with this Agreement. If, either
because of changed conditions or because DISTRIBUTOR adopts a new net working capital
formula, DISTRIBUTOR shall have the right to revise DEALER’S minimum net working
capital requirement to be used in DEALER’S operation. If so revised, DEALER agrees to
enter into the revised Minimum Net Working Capital Agreement and to meet the new
standard within a reasonable period of time as established by DISTRIBUTOR
B. FLOORING LINE
DEALER recognizes that its ability to fblfihl its obligations under this Agreement is
dependent upon its maintenance of flooring which is sufficient to sustain its ongoing
operations. DEALER agrees to obtain and maintain at all times a confinned and adequate
flooring line with a bank or financial institution or other method of financing acceptable to
DISTRIBUTOR to enable DEALER to perform its obligations pursuant to this Agreement.
Subject to the foregoing obligations, DEALER is free to do its financing business,
wholesale, retail or both, with whomever it chooses and to the extent it desires.
C PAYMENT TERMS AND SETTLEMENT OF ACCOUNTS
All monies or accounts due DEALER from DISTRIBUTOR will be considered net of
DEALER’s obligations to DISTRIBUTOR on DEALER’s parts/open account.
DISTRIBUTOR may deduct or offäet any amounts due or to become due from DEALER to
DISTRItUTOR, or any amounts held by DISTRIBUTOR, from or against any sums or
accounts due or to become due from DISTRIBUTOR to DEALER. Payments by DEALER
to DISTRIBUTOR shall be made by electronic bank draft or in any other manner prescribed
by DISTRIBUTOR and shall be applied against DEALER’S indebtedness in accordance with
DISTRIBUTOR’s policies and practices. DISTRIBUTOR shall have the right to apply
payments received from DEALER to any amount owed to DISTRIBUTOR, in
DISTRIBUTOR’S sole discretion, All obligations owed by DEALER to DISTRIBUTOR
shall be due and payable when billed, unless other terms are established by DISTRIBUTOR
in writing.
• Under no circumstances will DISTRIBUTOR enter into a new Agreement with a proposed
transferee unless DEALER first makes arrangements acceptable to DISTRIBUTOR to
satisfy any outstanding obligations to DISTRIBUTOR on DEALER’s parts/open account.
IX UNIFORM ACCOIJNTING SYSTEM

DEALER agrees to maintain its financial books and records in accordance with the Toyota
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Dealer Accounting Mqnua4 as amended from time to time by DISTRIBUTOR. In addition,
DEALER shall furnish to DISTRIBUTOR, who may also furnish it to IMPORThR and
FACTORY, complete and accurate financial and operating information by the tenth (loth) of
each month in a fornmt prescribed by DISTRIBUTOR. This information shall include,
without limitation, a complete and accurate financial and operating statement covering the
preceding month and calendar year-to-date operations, including any adjusted year-end
statements, showing the true condition of DEALER’s business. All such information be
furnished by DEALER to DISTRIBUTOR via DISTRIBUTOR’s electronic communications
network and/or in hard copy and/or in any other manner designated by DISTRIBUTOR.
E. RECORDS MAINTENANCE
DEALER agrees to keep complete, accurate and current records regarding its sale, lease and
servicing of Toyota Products for a minimum of five (5) years, regardless of any retention
period required by any governmental entity. DEALER shall prepare, keep current and retain
records in support of requests for reimbursement for warranty and policy work performed by
DEALER in accordance with the IMPORTER’s Toyota Warranty Policy and Procedures
Mamthl.
F. EXAMINATION OF DEALERSHIP ACCOUNTS AND RECORDS

DISTRIBUTOR, in its sole discretion, without notice and for any reason whatsoever, shall
have the right during regular business hours to inspect DEALER’S facilities and examine,
audit and to reproduce all records, accounts and supporting data relating to the operations of
DEALER, including without limitation, sales, sales reporting, service and repair of Toyota
Products by DEALER. If requested by DEALER, DISTRIBUTOR agrees to review any
report with DEALER and to provide a copy of any report of the examination or audit of
DEALER.
C. TAXES
DEALER shall be responsible for and duly pay all taxes of any kind, including, but not
limited to, sales taxes, use taxes, excise taxes and other governmental municipal charges
imposed, levied or based upon the sale of Toyota Products by DEALER, and shall maintain
accurate records of the same.
H. CONFIDENTIALITY
Except as provided in Sections XX(D) above and 30(1(A), below, DISTRIBUTOR agrees
that it shall not provide any financial information, documents or other information submitted
to it by DEALER to any third party, other than subsidiaiy and parent corporations of
DISTRIBUTOR, unless authorized by DEALER, required by law, required to effectuate the
terms and conditions of this Agreement, or required to generate composite or comparative
data for analytical purposes,
DEALER agrees to keep confidential and not to disclose, directly or indirectly, any
information that DISTRIBUTOR designates as confidential.
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L INFORMATION COMt~’1UNICATION SYSTEMS
To facilitate the accurate and prompt reporting of such relevant dealership operational
financial information as DISTRIBUTOR may require, DEALER agrees to install and
maintain electronic communication processing facilities which are compatible with and
which will facilitate the transmission and reception of such information on the electronic
communications network utilized by DISTRIBUTOR.
S. SALES REPORTING
DEALER agrees to report accurately to DISTRIBUTOR, together with such information as

DISTRIBUTOR may reasonably require, the delivery of each new motor vehicle to a
purchaser by the end of the day in which the vehicle is delivered to the purchaser thereof;
and to furnish DISTRIBUTOR with such other reports in such form as DISTRIBUTOR may
reasonably require from time to time.
XXI. RIGHT OF FIRST REFUSAL OR OPTION TO PURCHASE
A. RIGHTS GRANTED
Ifa proposal to sell the dealership’s assets or transfer its ownership is submitted by DEALER
to DISTRiBUTOR, or in the event of the death of the majority Owner of DEALER,
DISTRIBUTOR has a right of first refusal or option to purchase the dealership assets or
stock, including any leasehold interests or realty. DISTRIBUTOR’S exercise of its right or
option under this Section supersedes any right or attempt by DEALER to transfer its interest
in, or ownership of, the dealership, DISTRIBUTOR’s right or option may be assigned by it
to any third party and DISTRIBUTOR hereby guarantees the full payment to DEALER of
the purchase price by such assignee. DISTRIBUTOR may disclose the terms of any pending
buy/sell agreement and any other relevant dealership performance information to any
potential assignee. DISTRIBUTOR’s rights under this Section will be binding on and
enforceable against any successor in interest of DEALER or purchaser of DEALER’s assets
or stock.
B. EXERCISE OF DISTBIBUTOR1S RIGHTS ________________________
DISTRIBUTOR shall have thirty (30) days from the following events within which to
exercise its right of first refusal or option to purchase: (i) DISTRIBUTOR’s receipt of all
data and documentation customarily required by it to evaluate a proposed transfer of
ownership; (ii) DISTRiBUTOR’s receipt of written notice from DEALER of the death of the
majority Owner of DEALER; or (iii) DISTRIBUTOR’s disapproval of any application
submitted by an Owner’s heirs pursuant to Section XXII. DISTRIBUTOR’s exercise of its
right of first refusal under this Section shall neither be dependent upon nor require its prior
consideration of or refusal to approve the proposed buyer or transfrree,
C. RIGHT OF FIRST REFUSAL
If DEALER has entered into a bona fide written agreement to sell its dealership stock or
assets, DISTRIBUTOR’s right under this Section is a right of first refusal, enabling
DISTRIBUTOR to assume the buyer’s rights and obligations under such agreemen~ and to
terminate this Agreement and all rights granted DEALER. Upon DISTRIBUTOR’s request
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DEALER agrees to provide other documents relating to the proposed transfer and any other
information which DISTRIBUTOR deems appropriate, including, but limited to, those
reflecting other agreements ot understandings between the parties to the buy/sell agreement
Refusal to provide such documentation or to state in writing that no such documents exist
shall create the presumption that the buy/sell agreement is not a bona fide agreement.
D. OPTION TO PURCHASE
In the event of the death of the majority Owner of DEALER or if DEALER submits a
proposal which DISTRIBUTOR reasonably believes is not bona tide, DISTRIBUTOR has
the option to purchase the principal assets of DEALER utilized in the dealership business,
including real estate and leasehold interests, and to cancel this Agreement and the rights
granted DEALER. The terms and conditions of the purchase of the dealership assets will be
determined by good faith negotiations between the parties. If an agreement cannot be
reached, those terms will be exclusively determined by arbitration in accordance with the
commercial arbitration tides of the American Arbitration Association. The site of the
arbitration shall be the office of the American Arbitration Association in the tocality of
DISTRiBUTOR’s principal place of business.
E. DEALER’S OBLIGATIONS
Upon DISTRIBUTOR’s exercise of its right or option and tender of performance hereunder,
DEALER shall forthwith transfer the affected real property by warranty deed or its
equivalent, conveying marketable title free and clear of all liens, claims, mortgages,
encumbrances, interests and occupancies. The warranty deed or its equivalent shall be in
proper form for recording, and DEALER shall deliyer complete possession of the property
and deed at the time of closing. DEALER shall also furnish to DISTRIBUTOR all copies of
any easements, licenses or other documents affecting the property or dealership operations
and shall assign any permits or licenses that are necessary or desirable fpr the use of or
appurtenant to the property or the conduct of such dealership operations. DEALER shall also
forthwith execute and deliver to DISTRIBUTOR instruments satisfactory to
DISTRIBUTOR conveying title to all affected personal property and leasehold interests
involved in the transfer or sale to DISTRIBUTOR. If any personal property is subject to lien
- - or charge of any kind, DEALER agrees to procure the discharge and satisfaction thereof
prior to the closing of sale of such property to DISTRIBUTOR.
F. NO APPLICABILITY TO NOMINATED SUCCESSOR

Section XXI shall not apply to any DEALER whose proposed transfer of assets or ownership
is to a candidate who is currently approved by DISTRIBUTOR to be DEALER’s nominated
successor pursuant to Section XXII(C).
XXII. SUCCESSION RIGHTS UPON DEATH OK INCAPACITY
A. SUCCESSION TO OWNERSHIP AFTER DEATH OF OWNER

In the event that Owner dies and his or her interest in Dealership passes directly to any
person or persons (?IHefrslI) who wish to succeed to Owner’s interest, then Owner’s legal
representative must notif~’ DISTRIBUTOR within sixty (60) days of the death of Owner of
such Heir’s or Heirs’ intent to succeed Owner. The legal representative also must then
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designate a proposed General Manager for DISTRIBUTOR approval. The effect of such
notice from Owner’s legal representative will be to suspend any notice of termination
prov,ided for in Section XXIII(B)(4) issued hereunder.
Upon delivery of such notice, Owner’s legal representative shall immediately request any
person(s) identified by it as intending to succeed Owner and the designated candidate for
General Manager to submit an application and to provide all personal and financial
information that DISTRIBUTOR may reasonably and customarily require in connection
with its review of such appilcations. All requested information, must be provided promptly
to DISTRIBUTOR and in no case later than tbirty (30) days after receipt of such request
from Owner’s legal representative. Upon the submission of all requested information
DISTRIBUTOR agrees to review such application(s) pursuant to the then current criteria
generally applied by DISTRIBUTOR in quali~’ing dealer Owners and/or General Managers.
DISTRIBUTOR shall either approve or disapprove the application(s) within ninety (90) days
of fill compliance with all DISTRiBUTOR’s requests for information. If DISTRIBUTOR
approves the application(s), it shall offer to enter into a new Toyota Dealer Agreement with
Owner’s Heir(s) in the form then currently in use, subject to such additional conditions and
for such a term as DiSTRIBUTOR deems appiopriate.
In the eveht that DISTRIBUTOR does not approve the designated Heir(s) or designated
candidate for General Manager, or if the Owner’s legal representative withdraws his or her
notice of the Heir(s) intent to succeed as Owner(s), or if the legal representative or any
proposed owners or General Manager fails to timely provide the required information,
DISTRIBUTOR may reinstate or issue a notice of termination. Nothing in this Section shall
constitute a waiver of DISTRIBUTOR’s right under Section XXI to exercise its right of first
reibsal or option to purchase.
B, INCAPACITY OF OWNER
The parties agree that, as used herein, incapacity bhall refer to any physical or mental
ailment that, in DISTRIBUTOR’s opinion, adversely affects Owner’s ability to meet his or
her obligations under this Agreement. DISTRIBUTOR may terminate this Agreement when
an incapacitated Owner also is the General Manager identified herein,
Prior to the effective date of any notice of termination, an incapacitated Owner who is also
the General Manager, or his or her legal representative, may propose a new candidate for the
position of General Manager. Such proposal shall be in writing and shall suspend any
pending notice of termination until DISTRIBUTOR advises DEALER of its approval or
disapproval of the new candidate. Upon receipt of such notice, DISTRIBUTOR and
DEALER shall follow the qualification procedures set forth subsection (A) above,
C. NOMENATION OF SUCCESSOR PRiOR TO DEATH OR INCAPACITY OF

OWNER
An Owner owning a majority of DEALER’s stock may nominate a candidate to assume

ownership and/or the position of General Manager of the dealership upon his or her death or
incapacity
As soon as practicable after such nomination, DISTRIBUTOR will request such personal
and financial information from the nominated Owner and/or General Manager candidate as it
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140
reasonably and customarily may require in evaluating such candidates. DISTRIBUTOR
shall apply criteria then currently used by DISTRIBUTOR in qualifying Owners and/or
General Managers of authorized dealers. Upon receipt of all requested information,
DISTRIBUTOR shall either approve or disapprove such candidate. Approval by
DISTRIBUTOR will not be unreasonably withheld, In the event of death or incapacity of the
nominating Owner, DISTRIBUTOR wilt enter into a new Toyota Dealer Agreement with
the approved nominee of a length to be determined by DISTRIBUTOR. DISTRIBUTOR
agrees that DEALER may renominate the candidate after the expiration of this Agreement,
and DISTRIBUTOR will approve such nomination provided: (1) DISTRIBUTOR and
DEALER have entered into a new Toyota Dealer Agreement; and (2) the proposed candidate
continues to comply with the then current criteria used by DISTRIBUTOR in qualifying
such candidates. If DISTRIBUTOR does not initially qualify the candidate, DISTRIBUTOR
agrees to review the reason(s) for its decision with Owner. Owner is free at any time to
renew its nomination. However, in such instances, the candidate must again qualify pursuant
to the then current criteria. Owner may, by written notice, withdraw a nomination at any
time, even if DISTRIBUTOR has previously qualified said candidate.
XXIII. TERMINATION
A. VOLUNTARY TERMINATION BY DEALER
DEALER may voluntarily terminate this Agreement at any time by written notice
DISTRIBUTOR. Termination shall be effective thirty (30) days after receipt of the notice by
DISTRIBUTOR, unless otherwise mutually agreed in writing.
B. TERMINATION FOR CAUSE
1. Immediate Termination
DEALER and DISTRIBUTOR agree that the following conduct is within DEALER’s
control and is so contrary to the goals, purposes and objectives of this Agreement as to
warrant its immediate termination. Accordingly, DEALER agrees that if it engages in
any of the following types of conduct, DISTRIBUTOR shall have the right to terminate
this Agreement immediately: — —— - _______________________________
a. If DEALER fails to conduct any customary dealership operations for seven

consecutive business days during DEALER’s customary business hours, except in
the event such closure of cessation of operation is caused by some physical even
beyond the control of DEALER, such as fires, floods, earthquakes, or other acts of
God;
b, If DEALER becomes insolvent, or files any petition under bankwptcy law, or

executes an assignment for the benefit of creditors, or appoints a receiver or trustee
or another officer having similar powers is appointed for DEALER and is not
removed within thirty (30) days from his appointment thereto or there is any levy
under attachment or execution or similar process which is not vacated or removed
by payment or bonding within ten (10) days;
c, If DEALER, or any Owner or officer or parent company of DEALER, is convicted

of any felony;
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d. If DEALER, or any Owner, officer or General Manager of DEALER makes any
material misrepresentation to DISTRIBUTOR, including, but not limited to, any
misrepresentations made by DEALER to DISTRIBUTOR in applying for this
Agreement or for approval as Owner or General Manager of DEALER;
e. If DEALER fails to obtain or maintain any license, permit or authorization

necessary for the conduct by DEALER of his or her business pursuant to this
Agreement, or such license, permit or authorization is suspended or revoked; or
f. If DEALER makes any attempted or actual sale, transfer or assignment by

DEALER of this Agreement or any of the rights granted DEALER hereunder, or
upon any attempted or actual transfer, assignment or delegation by DEALER of
any of the responsibilities assumed by it under this Agreement without the prior
written approval of DISTRIBUTOR.
2. Termination Upon Sixty Days Notice
The following conduct violates the terms and conditions of this Agreement and, if
DEALER engages in such conduct DISTRIBUTOR shall have the right to terminate
this Agreement upon sixty (60) days notic&
a. Appointment of a new General Manager without the prior written approval of

DISTRIBUTOR;
b. Conducting, directly or indirectly, any Toyota dealership operation at any location

other than at the Approved Location(s);
c. Failure of DEALER to make any payments to DISTRIBUTOR when due;
d. Failure of DEALER to establish or maintain during the existence of this Agreement

the required net working capital or adequate flooring line;
e. Any dispute, disagreement or controversy among Owners, partners, managers,

officers—or----stoclcholders of -DEALER that, in -the—reasonablrtplnErtf
•-
DISTRIBUTOR, adversely affects the ownership, operation, management

business, reputation or interests of DEALER or DISTRIBUTOR;
f. Impairment of the reputation or financial standing of DEALER, Owner, officer or

parent company subsequent to the execution of this Agreement;
g. Refusal to permit DISTRIBUTOR to examine or audit DEALER’s accounting

records as provided herein upon receipt by DEALER from DISTRIBUTOR of
written notice requesting such permission or information;
h. Failure of DEALER to furnish all required sales or financial information and

related supporting information in a timely manner;
1. Any civil, criminal or administrative liability found against DEALER or any

Owner, officer or parent company of DEALER for any automotive-related matter
25
142
which adversely affects the ownership, operation, management, reputation,
business or interests of DEATJER, or impairs the goodwill associated with the
Toyota Marks; or
j, Breach or violation by DEALER of any other term or provision of this Agreement.
3. Termination for Failure of Performance
If, upon evaluation of DEALER’s performance pursuant to Section XIX, herein,

DISTRIBUTOR concludes that DEALER has failed to perform adequately its sales,
service, parts or customer satisfaction responsibilities or to provide adequate dealership
facilities, DISTRJBUTOR shall notify DEALER in writing of such failure(s) and will
endeavor to review promptly with DEALER the nature and extent of such failure(s),
and will grant DEALER 180 days or such other period as may be required by law to
correct such failure(s). If DEALER fails or refUses to correct such failure(s) or has not
made substantial progress towards remedying such failure(s) at the expiration of such
period, DISTRIBUTOR may terminate this Agreement upon sixty (60) days notice or
such other notice as may be required by law. Section XXIII(B)(3) shall not be
applicable where DEALER has relocated without DISTRIBUTORs approval.
4. TermInation Upon Death or Incapacity
DISTRIBUTOR may terminate this Agreement in the event of the death of an Owner or
upon the incapacity of any Owner who is also the General Manager identified herein,
upon written notice to DEALER and/or such Owners legal representative. Termination
upon either of these events shall be effective ninety (90) days from the date of such
notice.
C. NOTICE OF TERMINATION
Any notice of termination under this Agreement shall be in writing and shall be mailed to
DEALER or its General Manager at DEALERs Approved Location by certified mail, return
receipt requested, or shall be delivered in perion to the dealership. Such notice shall be
ifi~ctive upon the d~fSThfi eij~iD1STRIBUTORiiè~d ñ5t state all grounds on which it
relies in its termination of DEALER, and shall have the right to amend such notice as
appropriate. DISTRIBUTOR’s failure to refer to any additional grounds for termination shall
not constitute a waiver of its right later to rely upon such grounds.
D. CONTINUANE OF BUSINESS RELATIONS
Upon receipt of any notice of termination or non-renewal, DEALER agrees to conduct itself
and its operation until the effective date of termination or non-renewal in a manner that will
not injure the reputation or goodwill of the Toyota Marks or DISTRIBUTOR.
E. REPURCHASE PROVISIONS
I. DISTRIBUTOR’S Obligations
26
143
Upon the expiration or termination of this Agreement (other than pursuant to an
approved agreement to sell the dealership business or assets or to otherwise transfer the
ownership of DEALER), DISTRIBUTOR shall repurchase from DEALER the
following:
a. New, unused, never titled, unmodified, undamaged, current model year Toyota
Motor Vehicles with less than 100 miles, then unsold in DEALER’s inventory. The
prices of such Motor Vehicles shall be the same as those at which they were
originally purchased by DEALER, less all prior refimds or other allowances made
by DISTRIBUTOR to DEALER with respect thereto.
b. New, unused and undamaged Toyota parts and accessories, contained in the
original packaging, then unsold in DEALER’s inventory that are in good and
saleable condition. The prices for such parts and accessories shall be the prices last
established by DISTRIBUTOR for the sale of identical parts or accessories to
dealers in the area in which DEALER is located.
c, Special service tools recommended by DISTRIBUTOR and then owned by

DEALER and that are especially designed for servicing Toyota Motor Vehicles.
The prices for such special service tools will be the price paid by DEALER less
appropriate depreciation, or such other price as the parties may negotiate.
d. Signs that DISTRIBUTOR has recommended for identification of DEALER and

are owned by DEALER The price of such signs shall be the price paid by
DEALER less appropriate depreciation or such other price as the parties may
negotiate.
2. Responsibilities of DEALER
DISTRIBUTOR’s obligations to repurchase the items set forth in this Section are
contingent upon DEALER Thlfilling the following obligations:
a, Within thirty (30) days after the date of expiration_of the effective date of
t~ThiifiãtfflTötthis Agftemeht; DEALER ~lraltd&liver or maiHWDISTIUBUTOR a
detailed inventory of all items referred to in this Section which it requests
DISTRIBUTOR to repurchase and shall certify that such list is true and accurate.
b. DEALER shall be entitled to request repurchase of only those items which it

purchased from DISTRIBUTOR; unless DISTRIBUTOR agrees otherwise.
c. Products and special service tools to be repurchased by DISTRIBUTOR from

DEALER shall be delivered by DEALER to DISTRIBUTOR’s place of business at
• DEALERs expense.
d. DEALER will execute and deliver to DISTRIBUTOR instruments satisfactory to

DISTRIBUTOR conveying good and marketable title to the aforesaid items to
DISTRIBUTOR. If such items are subject to any lien or charge of any kind,
DEALER will procure the discharge in satisfaction thereof pribr to their repurchase
27
144
by DISTRIBUTOR
e, DEALER will remove, at its own expense, all signage beanng Toyota marks which
it owns from DEALER’s Approved Location(s) before it is eligible for payment for
any repurchased items pursuant to Section XXIII(E).
3. Payment by DISTRIBUTOR
DISTIUBUTOR will pay DEALER for such items as DEALER may request be
repurchased and that qualify hereunder as soon as practicable upon DEALER’s
compliance with the obligations set forth herein upon computation of any outstanding
indebtedness of DEALER to DISTRIBUTOR. DISTRIBUTOR shall have the right to
offset from any amounts due to DEALER hereunder the total sum of DEALER’s
outstanding indebtedness to DISTRIBUTOR.
If DEALER disagrees with DISTRIBUTOR’s valuation of any item herein, and

DEALER and DISTRIBUTOR have not resolved their disagreement within sixty (60)
days of the effective date of termination or expiration of this Agreement
DISTRIBUTOR shall pay to DEALER the amount to which it reasonably believes
DEALER is entitled, DEALERS exclusive remedy to recover any additional sums that
it believes is due under this Section shall be by resort to any existing Alternative
Dispute Resolution program established by DISTRIBUTOR that is binding on
DISTRIBUTOR. If no Alternative Dispute Resolution program is then existing,
DEALER’s exclusive remedy shall be by resort to arbitration in accordance with the
commercial arbiiration rules of the American Arbitration Association (AAA). The site
of the arbitration shall be the office of the AAA in the locality of DISTRIBUTOR’s
principal place of business.
XXIV. MANAGEMENT OF DISPUTES
A. ALTERNATIVE DISPUTE RESOLUTION PROGRAMS
DISTRIBUTOR and DEALER acknowledge that disputes involving the performance of this
AgreemenflyftiiThe1btiiii~ ámis~ thãfcäftitit b~ FeiöfQëdä11hTDISTRJBUTOR]ëVël,
In order to minimize the effects of such disputes on their business relationship, the parties
agree to participate in such Alternative Dispute Resolution programs, including mediation,
as maybe established by DISTRIBUTOR in its sole discretion.
It is expressly understood that, unless otherwise specified in this Agreement, the results of
any Alternative Dispute Resolution program will not be binding upon DEALER, but shall be
binding upon DISTRIBUTOR. The parties commitment to support and participate in
Alternative Dispute Resolution programs specifically is not a waiver of DEALER’S right to
later resort to litigation before any judicial or administrative forum.
B. APPLICABLE LAW
This Agreement shall be governed by and construed according to the laws of the state in
which DEALER is located.
28
145
C MUTUAL RflEASE
Each party hereby releases the other from any and alt claims and causes of action that it may
have against the other for money damages arising from any event occurring prior to the date
of execution of this Agreement, except for any accounts payable by one party to the other as
a result of the purchase of any Toyota Products, audit adjustments or reimbursement for any
services. This release does not extend to claims which either part does not know or
reasonably suspect to exist in its favor at the time of the execution of this Agreement.
XXV. DEFENSE AND INDEMNIFICATION
A. DEFENSE AND INDEMNIFICATION BY DISTRIBUTOR
DISTRIBUTOR agrees to assume the defense of DEALER and to indemnify and hold
harmless DEALER, expressly conditioned and subject to all provisions of Section XXV(C),
against loss in any lawsuit or claim naming DEALER for bodily injury, properly damage or
breach of warranty caused solely by an alleged defect in design, manufacture or assembly of’
a Toyota Product (excppt for tires not manufactured by FACTORY) sold by DISTRIBUTOR
to DEALER for resale that has not been altered, converted or modified by or for DEALER,
provided that the alleged defect could not reasonably have been discovered by DEALER
during pre-delivery inspection or service or installation of Toyota Products, less any offset.
DISTRIBUTOR agrees to defend, to indemnify and hold harmless DEALER for alleged
misrepresentations, misleading statements, unfair or deceptive trade practices of
DISTRIBUTOR, IMPORTER or FACTORY or any substantial damage to a Toyota Product
purchased by DEALER from DISTRIBUTOR which was improperly repaired by
DISTRIBUTOR unless DEALER has been notified of such damage in writing prior to retail
delivery of the affected Toyota Product. Notwithstanding any provision of this Agreement,
DISTRIBUTOR shall not be required to defend, to indemnify or hold harmless DEALER
against loss resulting from any claim, complaint or action alleging DEALER misconduct,
including but not limited to, improper or unsatisfactory service or repair, or
misrepresentations, or any claim of DEALER’s unfair or deceptive trade practices or any
claim of improper environmental or workplace practices or conditions.
B. DEFENSE AND INDEMNIFICATION BY DEALER
DEALER agrees to assume the defense of DISTRIBUTOR, IMPORTER or FACTORY and

to indemnify and hold them harmless, expres’sly conditioned and subject to all provisions of
Section XXV(C), against loss in any lawsuit or claith naming DISTRIBUTOR, IMPORTER
or FACTORY, or their subsidiaries or affiliates, when the claim or lawsuit directly or
indirectly involves any allegations of: i)) DEALER’s alleged failure to comply, in whole or
in part, with any obligation assumed by DEALER pursuant to this Agreement; or (2)
DEALER’S alleged negligent or improper repairing or servicing or installation of a new or
used Toyota Motor Vehicle or Toyota Product, or any toss related to other motor vehicles or
equipment, other than Toyota Motor Vehicles or Products, as may be sold, serviced, repaired
or installed by DEALER or (3) DEALER’s alleged breach of any contract or warrant other
than that~ provided by DISTRIBUTOR, IMPORTER or FACTORY; or (4) DEALER’s
alleged misleading statements, misrepresentations, or deceptive or unfair trade practices; or
(5) any modification, conversion or alteration made by or for DEALER to a Toyota Product,
except those made pursuant to the express written approval and instruction of
29
146
DISTRIBUTOR, IMPORTER or FACTORY; or (6) any and all claims arising out of or in
any way connected to the hiring, retention or termination of any person by DEALER,
including but not limited to, claims of employment discrimination, age, race or sex
discrimination or harassment, wrongful discharge or termination, breach of the covenant of
good faith and fair dealing, breach of contract, interference with contractual relations,
intentional and/or negligent infliction of emotional distress, defamation, negligent hiring,
violations of or non-compliance with: the Occupational Safety and Health Act, the Fair
Labor Standards Act, or the Employment Retirement Income and Security Act (“ERISA “)
or any similar state or local laws.
C. CONDITIONAL DEFENSE AND/OR INDEMNIFICATION
The obligations of the DEALER, DISTRIBUTOR, IMPORTER or FACTORY to defend,

to indemnify and hold harmless are expressly conditioned and subject to all of the following
terms:
I. The party initially requesting defense and/or indemnification shall make such request in
writing and deliver to the other party within twenty (20) days of service of any legal
process or within twenty (20) days of discovery of facts giving rise to indemnification,
whichever is sooner.
2. The party requesting defense and/or indemnification covenants, represents and warrants
that it, its agents or employees have not permitted a default judgment to be entered and
have not made any direct or indirect admissions of liability, and are not aware of any
credible evidence to support amy independent claim of liability or lack of unity of
interest. Said party thither agrees to cooperate fUlly in the defense of such action as may
be reasonably required.
3. The party requested to defend and/or indemnify shall have sixty (60) days from receipt
of a request in writing to conduct an investigation or otherwise determine whether br
not, or under what conditions, it will agree to defend and/or indemnify. -
4. During the pendeney of a request for defense and/or indemnification, and thereafter, the
r~quêsting party shall have a continuing duty to avoid undue prejuilice to the other party
and to mitigate damages. The party requesting indemnification shall protect its own
interests until a decision has been made to assume the defense and!or provide
indemnification,
5. The party accepting the request for defense and/or indemnification shall have the right
to engage and direct counsel of its own choosing and shall have the obligation to
reimburse the requesting party for all reasonable costs and expenses, including
reasonable attorney’s fees, incurred prior to such assumption except where the request is
made under the circumstances described in XXV(C)(6), and subject to the provisions of
XXV(C)(9).
6. If subsequent developments in a case, supported by credible evidence, cause a party to

reasonably conclude that the allegations which initially preclude a request or acceptance
of a request for defense and/ or indemnification are meritless or no longer at issue, then
30
147
the request may be retendered,
7. No party shall be required to agree to such a subsequent request or retender of defense

and/or indemnification where that irnrty would be unduly prejudiced by such delay.
Initial acceptance by any party of defönse and/or indemnification is not a waiver of the
right to retender timely.
S. A party agreeing to defend and/or indemnify may make its written agreement
.
conditioned upon the continued existence of the state of facts as then known as well as
such other reasonable conditions as may be dictated by the particular allegations or
claims,
9. Any party withdrawing from its agreement to defend and/or indemnify, shall give
timely, written notice which shall be effective upon receipt. The withdrawing party
shall be responsible for all costs and expenses of defense prior to receipt of notice of
withdrawal, except for those reasonable costs and expenses, including reasonable
attorneys’ fees, incurred solely for the benefit of the other party.
10. The defense, indemnification and hold harmless obligations of this Agreement shall
survive the termination of this Agreement.
XXVI. GENERAL PROVThIONS
A. NOTICES
Except as otherwise specifically provided herein, any notice required to be given by either
party to the other shall be in writing and delivered personally to the dealership or by
certified mail, return receipt requested, and shall be effective on the date of receipt Notices
to DEALER shall be directed to DEALER or its General Manager at DEALER’s Approved
Location. Notices to DISTRIBUTOR shall be directed to the General Manager of
DISThIBUTOR.
B, .NO IMPLIED. WAIVERS
The failure of either party at any time to require performance by the other party of any
provision herein shall in no way affect the right of such party to require such performance
at any time thereafter, nor shall any waiver by any party of a breach of any provision herein
constitute a waiver of any succeeding breach of the same or any other provision, nor
constitute a waiver of the provision itself.
Any continuation of business relations between the parties following expiration of this
Agreement shall not be deemed a waiver of the expiration nor shall it imply that either party
has committed to continue to do business with the other at any time in the future. Should
this Agreement be renewed or any other form of agreement be offered to DEALER,
DISTRIBUTOR reserves the right to of~r an agreement of a length and upon such
additional terms and conditions as it deems reasonable.
31
148
C. SOLE AGREEMENT OF THE PARTIES
There are no prior agreements or understandings, either oral or written, between the parties
affecting this Agreement or relating to the sale or service of Toyota Products, except as
otherwise specifically provided for or referred to in this Agreement. DEALER
acknowledges. that no representations or statements other tht those expressly set forth
herein were made by DISTRIBUTOR or any officer, employee, agent or representative
thereof, or were relied upon by DEALER in entering into this Agreement. This Agreement
cancels and supersedes all previous agreements between the parties relating to the subject
matters covered herein. No change or addition to, or deletion of, any portion of this
Agreement (except as provided in Section III) shall be valid or binding upon the parties
hereto unless the same is approved in writing by an offrer of each of the parties hereto.
D. DEALER NOT AN AGENT OR REPRESENTATIVE
DEALER is an independent business. This Agreement is not a property right and does not
constitute DEALER, Owners or employees of DEALER as the agent or legal
representatives of DISTRIBUTOR for any purpose whatsoever. DEALER, Owners and
employees of DEALER or any other persons acting on behalf of DEALER are not granted
any express or implied right or authority to assume or create any obligation on behalf of or
in the name of DISTRIBUTOR or to bind DISTRIBUTOR in any manner whatsoever.
E. ASSIGNMENT OF RIGHTS OR DELEGATION OF DUTIES
This is a personal service agreement and may not be assigned or sold in whole or in part,
directly or indirectly, voluntarily or by operation of law, without the prior written approval
of DISTRIBUTOR. Any attempted transfer, assignment or sale without DISTIUBUTOR!s
prior written approval -will be void and not binding upon DISTRIBUTOR
F. NO FRANCHISE FEE
DEALER warrants that it has paid no fee, nor has it provided any goods or services in lieu
c4’ s~nw, to PJST~JSIJTOR or any other party in consideration, of entering .intQ.. this
Agreement. The sole consideration for DISTRIBUTOR’s entering into this Agreement is
DEALER’s ability, integrity, assurance of personal services and expressed intention to deal
fairly and equitably with DISTRIBUTOR and the public.
G. SEVERABILITY
If any provision of this Agreement should be held invalid or unenforceable for any reason
whatsoever, or conflicts with any applicable law, this Agreement will be considered
divisible as to such provisions, and such provisions will be deemed amended to comply
with such law, or if’ it cannot be so amended without materially affecting the tenor of the
Agreement, then it will be deemed deleted from this Agreement in such jurisdiction, and in
either case, the remainder of the Agreement will be valid and binding.
32
149
H, NEW AND SVPERSEDING DEALER AGREEMENTS
In the event any new and superseding form of dealer Agreement is offered by
DISTIU.BUTOR to authorized Toyota dealers generally at any time prior to the expiration
of the term of this Agreement, DISTRIBUTOR may, by written notice to DEALER, replace
this Agreement with a new agreement in a new and superseding form for a term not less
than the then unexpired term of this Agreement
I. BENEFIT
This Agreement is entered into by and between DISTRIBUTOR and DEALER for their
sole and mutual benefit, Neither this Agreement nor any specific provision contained in it is
intended or shall be constmed to be for the benefit of any third party.
I NO FIDUCIARY RELATIONSHIP
This Agreement shall not be construed to create a fiduciary relationship between DEALER
and DISTRIBUTOR,
K. NO JOINT EMPLOYMENT
DEALER acknowledges that it has assumed obligations under this Agreement to use its
best efforts to sell and service Toyota Products, to increase the future growth in Toyota
Product sales through increased customer satisfaction and other obligations related ‘to the
operation of the dealership and recognizes the necessity to employ and train qualified
persoilnel to satisfy these commitments. To this end, DEALER agrees to employ only
qualified persons who will fidfill the commitments made by DEALER to DISTRIBUTOR
in this Agreement. Notwithstanding the foregoing, DEALER retains the sole and exclusive
right to determine whom to hire and their qualifications, to direct, control and supervise
DEALER’s employees, and to establish all terms and conditions of employment of
DEALER’s employees. All supervision, control and direction of DEALER’s employees
shall be the sole and exclusive responsibility of DEALER. DEALER shall at alt times
remain the sole employer of persons employed by DEALER and, to this end, DEALER and
DISTRIBUTOR agree that no act or omission of DEALER or DISTRIBUTOR shall be
construed to make or render them joint employer, co-employer or alter ego of each other,
L. CONSENT OF DISTRIBUTOR
Any time that thi~ Agreement provides that DEALER must obtain DISTRIBUTOR’s
consent to any proposed conduct or change, DEALER must provide all information
requested by DISTRIBUTOR concerning the proposal, and DISTRIBUTOR shall have a
reasonable amount of time in which to evaluate the proposal.
M. DISTRIBUTOR’S POLICIES
This Agreement from time to time, refers to certain policies and standards. DEALER
acknowledges that these policies and standards are prepared by DISTRIBUTOR in its sole
discretion based upon DISTRIBUTOR’s evaluation of the marketplace. DISTRIBUTOR
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150
may reasonably amend its policies and standards as the marketplace changes from time to
time.
XXVII. DEFINITIONS
As used in this Agreement, the parties agree that the following terms shall be defIned as
exclusively set forth below.
A. OWNER: The persons identified in Section IV hereof.
B. GENERAL MANAGER: The person identifIed in Section V hereof.
C. DEALER FACILITIES: The buildings, improvements, fixtures, and equiprnetit situated at

the Approved Location(s).
D. APPROVED LOCATION(S): The location(s) and any facilities thereon, designated in

Section VII that DISTRiBUTOR has approved for dealership operation(s) specified therein.
E. TOYOTA MARKS: The various Toyota trademarks, service marks, names, logos and
designs that DEALER is authorized by DISTRIBUTOR to use in the sale and servicing of
Toyota Products as specified in the current Toyota Brand Graphic Standards Manual
F. TOYOTA PRODUCTS: All Toyota Motor Vehicles, $rts, accessories and equipment
which IMPORTER, in its sole discretion, sells to DISTRIBUTOR for resale to authorized
Toyota dealers,
G. TOYOTA MOTOR VEHICLES: All motor vehicles identified in the current Toyota
Product Addendum that DISTRIBUTOR sells to DEALER for resale.
H. GENUINE TOYOTA PARTS AND ACCESSORIES: All Toyota brand Parts and
Accessories manufactured by or on behalf of DISTRIBUTOR or FACTORY, or qther pads
and accessories specifically approved by FACTORY for use in servicing Toyota Motor
Vehicles and sold by DISTRIBUTOR to DEALER for resale.
34
151
TOYOTA PRODUCT ADDENDUM TO
Pursuant to Paragraph 1(A) of the Toyota Dealer Agreement, DISTRIBUTOR hereby

grants DEALER the non~exeIusive right to buy and resell the Toyota Products as defined
in the Toyota Dealer Agreement and identified below~
Avalon Solon XB*

Camry Scion tC*
Corolla Scion xD*
F) Cruiser Scion jQ*
Highlander Solon FR~S*
Landeruiser Sequoia
Matrix Sienna
Prius Tacoma Truck
Prius C Tundra Truck
Prius V Venza
RAV4 Yaris
4Runner
and all parts, accessories and equipment for such vehicles.

* Subject to DISTRIBUTOR’s currently applicable policies, DEALER may elect to sell,
or not to sell, this model throug~fi separate Participation Agreement (available from
DISTRIBUTOR), DEALER’s election applies only to the sale of such model and does
not affect any of DEALER’s other obligation~ tinder the Toyota Dealer Agreement.
This Toyota Product Addendum shall remain in effect unless and until superseded by a
new Toyota Product Addendum furnished DEALER by DISTRIBUTOR.
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153
PROOF OF SERVICE
2 STATE OF CALIFORNIA, COUNTY OF LOS ANGELES
3 At the time of service, I was over 18 years of age and not a party to this action. I am
employed in the County of Los Angeles, State of California. My business address is 1999 Avenue
4 of the Stars, Suite 1000, Los Angeles, CA 90067.
5 On November 8,2017, I served true copies of the following document(s) described as:
6 FIRST AMENDED COMPLAINT

7 on the interested parties in this action as follows:
8 David L. Schrader Attorneys for Defendant

Morgan Lewis & Bockius LLP TOYOTA MOTOR SALES. US.A., INC.
9 300 S. Grand Avenue, 22nd Floor
Los Angeles, CA 90071-3132 Tel.: (213) 612-7370
10 Fax: (213)612-2501
Email: david.schrader~morganlewis.com
‘5 ~ 13 BY ELECTRONIC SERVICE: I served the document(s) on the person listed in the

Service List by submitting an electronic version of the document(s) to One Legal, LLC, through
14 the user interface at www.onelegal.com.
15 I declare
foregoing is true under penalty of perjury under the laws of the State of California that the
and correct.
I
16 Executed on November 8, 2017, at Los Angeles, Californi.
17
19 Aexalidrir ango
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22
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24
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356993.9 154
FJRST AMENDED COMPLAINT

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1

LOUIS R. MILLER (State Bar No. 54141)

7 Attorneys for Plaintiffs ROGER HOGAN, HOGAN

ROGER HOGAN, an individual, HOGAN CASE NO. 30-2017-00933647-CU-FR-CJC

7 FACTS COMMON TO ALL CAUSES OF ACTION 9

9 B. Toyota’s Safety Recall Crisis 10

11 D. Toyota Defrauds Customers And The Government By Concealing Safety

21 F. Toyota Plots Against Hogan 25

22 G. Toyota Retaliates Against Hogan 26

23 (a) Toyota Destroys Autovation 26

24 (b) Toyota Delays Capistrano Vehicles 28

25 (c) Toyota Reffises To Allocate Cars To Claremont Toyota 28

27 (e) Toyota Plays Favorites With Allocation of Vehicles 29

28 (f) Toyota Diverts Hogan’s Customers To Other Dealers 30

5 PRAYER FOR RELIEF 38

9 7. NHTSA requires that manufacturers recall vehicles with safety-related defects. A

13 operation of a vehicle—malfunctioning air conditioners or radios, cosmetic blemishes, excessive

~ ~ 17 that do not affect safety.

23 including the Plaintiffs herein.

4 with serious safety issues.

25 recalls and service them accordingly.

28 was a problem and a threat to Toyota’s multi-billion dollar profit machine.

4 and squeeze him out:

7 customers that the program was generating.

14 • Toyota discriminated against the Dealerships by failing to allocate vehicles fairly

16 allocation through Toyota’s secretive “General Manager’s Pool.”

23 Toyota’s monthly payments and diminishing its value.

27 not to Hogan’s Dealerships.

28 • Toyota diverted Hogan’s customers to competing dealerships.

6 • Eventually, Toyota told Hogan to sell.

Dealerships that Hogan spent decades building.

in San Juan Capistrano, California (“Capistrano Toyota”), in Orange County.

5 distribution of Toyota and Lexus brand vehicles in the United States.

N 11 FACTS COMMON TO ALL CAUSES OF ACTION

21 recognition achieved by only a handful of Toyota dealers nationwide.

12 (NADA) Academy, an intensive year-long management program.

22 concealed the problems, hoping not to be discovered.

13 regulators as required under federal law.

8 hundreds of open recall issues each month.

22 recall issues on a vehicle.

3 recalls that needed repair. Hogan’s Autovation technology identified an additional

6 recalls that needed repair. Hogan’s Autovation technology identified an additional

9 recalls that needed repair. Hogan’s Autovation technology identified an additional

22 the right thing and take care of its customers.

15 of open and unrepaired safety recalls in a timely and comprehensive manner.

18 models that were equally susceptible to floor mat entrapment.

8 attached hereto as Exhibit C.

12 “represented a reprehensible picture of corporate misconduct.” “Regrettably,” Judge Pauley

~ ~ 17 E. Toyota Continues To Conceal and Manipulate Safety Defects

21 cleaned up its act.

22 defective smart key.

9 (b) Toyota Misclassjfles Safety Deftcts As “Limited Service Campaigns” or “Special

~ ~ 17 “limp” you home.

9 dangerous defects on other vehicles, including the following:

15 received the necessary repair.

4 for a condition leading to front passenger airbag malflinction on 2014-2015 Prius V

7 when the LSC expires.

20 serious safety defects on their customers’ vehicles.

4 drivers and their safety.

9 power while driving in order to obtain the necessary inverter replacement.

H: 14 that period of time.

22 and apply a warning label about the recall.

3 (e) Toyota Certifies Unsafe Vehicles As “Toyota Certified Used Vehicles”

28 concerns and refhsed to address them firther.