EXHIBIT 10.4

EXECUTION VERSION

AMBAC ASSURANCE CORPORATION,

as Note Insurer

CAPITAL ONE AUTO FINANCE, INC.,

individually and as Servicer

CAPITAL ONE AUTO RECEIVABLES, LLC,

as Seller

CAPITAL ONE AUTO FINANCE TRUST 2007-A,

as Issuer

and

THE BANK OF NEW YORK

as Indenture Trustee

INSURANCE AGREEMENT

$1,500,000,000

Capital One Auto Finance Trust 2007-A

Asset Backed Notes, Series 2007-A

Class A-1 Notes, Class A-2 Notes,

Class A-3-A Notes, Class A-3-B Notes and Class A-4 Notes

Dated as of February 15, 2007

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ARTICLE I

   DEFINITIONS    1

ARTICLE II

  

REPRESENTATIONS, WARRANTIES AND COVENANTS

   11

Section 2.01.

     

Representations and Warranties.

   11

Section 2.02.

     

Affirmative Covenants of the COAF Companies

   16

Section 2.03.

     

Negative Covenants of the COAF Companies

   20

Section 2.04.

     

Representations, Warranties and Covenants of Indenture Trustee.

   20

Section 2.05.

     

Representations, Warranties and Covenants of the Issuer

   21

Section 2.06.

     

Representations and Warranties of Ambac.

   21

Section 2.07.

     

Covenants of Note Insurer

   24

ARTICLE III

  

THE POLICIES; REIMBURSEMENT

   25

Section 3.01.

     

Issuance of the Policies

   25

Section 3.02.

     

Payment of Fees and Premium.

   28

Section 3.03.

     

Reimbursement and Additional Payment Obligation.

   29

Section 3.04.

     

Indemnification; Limitation of Liability.

   30

Section 3.05.

     

Payment Procedure

   33

Section 3.06.

     

Subrogation

   34

Section 3.07.

     

Reimbursement

   34

ARTICLE IV

  

FURTHER AGREEMENTS

   34

Section 4.01.

     

Effective Date; Term of the Insurance Agreement

   34

Section 4.02.

     

Further Assurances and Corrective Instruments.

   35

Section 4.03.

     

Obligations Absolute.

   35

Section 4.04.

     

Assignments; Reinsurance; Third-party Rights.

   36

Section 4.05.

     

Liability of the Note Insurer

   37

Section 4.06.

     

Nonpetition Covenant

   37

Section 4.07.

     

Parties To Join in Enforcement Action.

   38

ARTICLE V

  

DEFAULTS; REMEDIES

   40

Section 5.01.

     

Defaults

   40

Section 5.02.

     

Remedies; No Remedy Exclusive.

   41

Section 5.03.

     

Waivers.

   42

ARTICLE VI

  

MISCELLANEOUS

   42

Section 6.01.

     

Amendments, Etc

   42

Section 6.02.

     

Notices

   42

Section 6.03.

     

Severability

   45

Section 6.04.

     

Governing Law

   45

Section 6.05.

     

Consent to Jurisdiction.

   45

Section 6.06.

     

Consent of the Note Insurer

   46

Section 6.07.

     

Counterparts

   46

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Section 6.08.

     

Headings

   46

Section 6.09.

     

Trial by Jury Waived

   46

Section 6.10.

     

Limited Liability

   46

Section 6.11.

     

Entire Agreement

   46

Section 6.12.

     

Limitation of Liability

   46

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INSURANCE AGREEMENT

This INSURANCE AGREEMENT (this “Insurance Agreement”) is dated as of
February 15, 2007 by and among AMBAC ASSURANCE CORPORATION (the “Note Insurer”),
CAPITAL ONE AUTO FINANCE, INC., in its individual capacity (“COAF”) and as the
Servicer (the “Servicer”), CAPITAL ONE AUTO RECEIVABLES, LLC, as Seller (the
“Seller”), CAPITAL ONE AUTO FINANCE TRUST 2007-A, as Issuer (the “Issuer”) and
THE BANK OF NEW YORK, not in its individual capacity but solely as indenture
trustee (the “Indenture Trustee”).

WHEREAS, the Indenture Trustee is authenticating $1,500,000,000 principal amount
of the Capital One Auto Finance Trust 2007-A, Asset Backed Notes, Series 2007-A,
Class A-1 Notes, Class A-2 Notes, Class A-3-A Notes, Class A-3-B Notes and
Class A-4 Notes, pursuant to an Indenture as more specifically defined below.
The Notes will be secured by the Trust Estate as defined in the Indenture;

WHEREAS, the Issuer, Seller, COAF and Servicer have requested that the Note
Insurer issue its Note Guaranty Insurance Policy (the “Note Policy”) to
guarantee payment of Insured Payments (as defined in Note Policy) with respect
to the Class A Notes, upon such terms and conditions as were mutually agreed
upon by the parties and subject to the terms and conditions of the Note Policy
and has asked the Note Insurer to issue an Interest Rate Swap Policy (the “Swap
Policy”) and together with the Note Policy, the “Policies”) and the Note Insurer
has agreed to insure certain amounts which may be due from the Owner Trustee on
behalf of the Issuer to the Swap Counterparty under the Swap Agreement;

WHEREAS, the parties hereto desire to specify the conditions precedent to the
issuance of the Policies by the Note Insurer, the indemnity and reimbursement to
be provided by COAF and the Servicer in respect of amounts paid by the Note
Insurer under the Policies and to provide for certain other matters;

WHEREAS, the Note Insurer shall be paid an insurance premium pursuant to the
Transaction Documents, and the details of such premium are set forth herein; and

WHEREAS, each COAF Company (as defined below) has undertaken certain obligations
in consideration for the Note Insurer’s issuance of the Policies;

NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

The terms defined in this Article I shall have the meanings provided herein for
all purposes of this Insurance Agreement, unless the context clearly requires
otherwise, in both singular and plural form, as appropriate. Unless the context
clearly requires otherwise, all capitalized terms used herein and not otherwise
defined in this Article I shall have the meanings assigned to them in the

 

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Transaction Documents (as defined below). All words used herein shall be
construed to be of such gender or number as the circumstances require. This
“Insurance Agreement” shall mean this Insurance Agreement as a whole and as the
same may, from time to time hereafter, be amended, supplemented or modified. The
words “herein,” “hereby,” “hereof,” “hereto,” “hereinabove” and “hereinbelow,”
and words of similar import, refer to this Insurance Agreement as a whole and
not to any particular paragraph, clause or other subdivision hereof, unless
otherwise specifically noted.

“Business Day” means any day other than a Saturday or a Sunday or a day on which
banking institutions in the states of Delaware, California, Texas, Virginia or
New York, or in the state in which the Corporate Trust Office of the Indenture
Trustee is located, are authorized or obligated by law, executive order or
government decree to be closed.

“Capital One Information” means the information included in the Prospectus, but
excluding the Note Insurer Information and the Underwriter Information.

“Class A Notes” means the Capital One Auto Finance Trust 2007-A, Asset Backed
Notes, Series 2007-A, designated as Class A-1 Notes, Class A-2 Notes,
Class A-3-A Notes, Class A-3-B Notes and Class A-4 Notes issued in accordance
with the provisions of the Indenture.

“COAF” means Capital One Auto Finance, Inc., a Texas corporation, and its
successors and assigns.

“COAF Company” means each of the Servicer, COAF and the Seller.

“Commission” means the Securities and Exchange Commission.

“Cumulative Net Charge-Off Ratio” means, as of any Determination Date, the ratio
of (i) the aggregate Principal Balance of Receivables that became Defaulted
Receivables plus all the Cram Down Losses which occurred during the period from
the Initial Cutoff Date through the end of the related Collection Period reduced
by the amount of Liquidation Proceeds with respect to Defaulted Receivables
received during such period which are applied to principal of the Defaulted
Receivables to (ii) the sum of (A) the initial aggregate Principal Balance of
the Initial Receivables plus (B) the initial aggregate Principal Balance of the
Subsequent Receivables as of their respective Subsequent Cutoff Dates.

“Date of Issuance” means the date on which each Policy is issued as specified
therein.

“Default” means any event which results, or which with the giving of notice or
the lapse of time or both would result, in an Event of Default.

“Delinquency Ratio” means, as of a Determination Date, the ratio of (i) the
aggregate Principal Balance of Receivables that were Delinquent Receivables at
the end of the related Collection Period to (ii) the aggregate Principal Balance
of all Receivables as of the first day of such related Collection Period.

 

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“Delinquent Receivable” means any Receivable as to which the Obligor fails to
pay for more than 60 days past the due date the portion of a scheduled payment
necessary for such Receivable to be considered contractually current under the
Servicer’s Customary Servicing Practices (excluding (i) any Receivable that has
become a Defaulted Receivable and (ii) any Receivable as to which the Servicer
has repossessed the related Financed Vehicle, from the date on which it is due
and payable.

“EDGAR” means the Commission’s Electronic Data Gathering, Analysis and Retrieval
system.

“Event of Default” means any event of default specified in Section 5.01 of this
Insurance Agreement.

“Exchange Act Reports” means all Distribution Reports on Form 10-D, Current
Reports on Form 8-K and Annual Reports on Form 10-K that are required to be
filed by the Seller or the Issuer with respect to the Notes pursuant to the
Exchange Act.

“Fee Letter” means the fee letter dated as of February 15, 2007, from the Note
Insurer to the Owner Trustee, the Servicer, and the Indenture Trustee.

“Financial Statements” means, with respect to COFC, the balance sheets and the
statements of income, retained earnings and cash flows for the 12-month period
then ended and the notes thereto which have been provided to the Note Insurer.

“Fitch” means Fitch Ratings, and any successor thereto, and, if such corporation
shall for any reason no longer perform the functions of a securities rating
agency, “Fitch” shall be deemed to refer to any other nationally recognized
rating agency designated by the Note Insurer.

“Indemnification Agreement” means that certain Indemnification Agreement dated
as of February 6, 2007, by and among the Note Insurer, and J.P. Morgan
Securities Inc. and Barclays Capital Inc. as Representatives of the several
Underwriters (as defined therein).

“Indenture” means that certain Indenture dated as of February 15, 2007, between
the Issuer and the Indenture Trustee.

“Insurance Agreement Event of Default” means any of the following:

(a) any failure (i) to observe or perform any covenant or obligation of the
Owner Trustee, COAF, the Seller, the Issuer or the Servicer set forth herein, or
in the Indenture, the Sale and Servicing Agreement or the Purchase Agreement
which has not been cured within sixty (60) days (or such longer period not in
excess of ninety (90) as may be reasonably necessary to remedy such failure;
provided that (i) such failure is capable of remedy within ninety (90) days or
less and (ii) the Note Insurer consents in its

 

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sole discretion to that longer period) from the date of receipt by the Owner
Trustee, COAF, the Seller, the Issuer or the Servicer, as the case may be, of
written notice from the Indenture Trustee or the Note Insurer of such breach or
default and such breach or default could reasonably have a material adverse
effect on the interests of the Note Insurer or the Noteholders (as determined in
the Note Insurer’s sole discretion), or (ii) of any Person to deposit into the
Collection Account or the Reserve Account all amounts required to be deposited
therein by the required deposit date and such failure could reasonably have a
material adverse effect on the interests of the Note Insurer or the Noteholders
(as determined in the Note Insurer’s sole discretion) and such failure has
continued for a period of at least five (5) Business Days (A) after notice is
received by such Person from the Indenture Trustee or the Note Insurer or
(B) after discovery of such failure by a responsible officer of such Person;
provided, however, that no Insurance Agreement Event of Default will result from
the breach by the Servicer of any covenant for which the repurchase of the
affected Receivables is specified as the sole remedy pursuant to Section 3.6 of
the Sale and Servicing Agreement and such repurchase takes place within the time
frame required by Section 2.3 and Section 3.6 of the Sale and Servicing
Agreement;

(b) any representation, warranty or statement of the Indenture Trustee, the
Servicer, the Owner Trustee, COAF, the Issuer or the Seller (other than
representations and warranties under Schedule I of the Sale and Servicing
Agreement and Section 3.2 of the Purchase Agreement) contained herein or in the
Indenture or in the Sale and Servicing Agreement, the Purchase Agreement or in
any report, document or certificate delivered pursuant to the foregoing
agreements shall prove to be incorrect in any material respect as of the time
when the same shall have been made and, within sixty (60) days (or such longer
period not in excess of ninety (90) as may be reasonably necessary to remedy
such failure; provided that (i) such failure is capable of remedy within ninety
(90) days or less and (ii) the Note Insurer consents in its sole discretion to
that longer period) after written notice thereof shall have been given to the
Indenture Trustee and the defaulting party (if not the Indenture Trustee) by the
Servicer, the Note Insurer, the Indenture Trustee or by Noteholders constituting
Noteholder Approval, the circumstances or condition in respect of which such
representation, warranty or statement was incorrect shall not have been
eliminated or otherwise cured or waived by the Note Insurer and could reasonably
have a material adverse affect on the interests of the Note Insurer or the
Noteholders (as determined in the Note Insurer’s sole discretion);

(c) the cessation of a valid perfected first priority security interest in the
Receivables or the Trust Accounts in favor of the Indenture Trustee which is not
cured within seven (7) Business Days of receipt of notice thereof;

(d) [Reserved];

 

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(e) as of the Determination Date with respect to each Collection Period, the
three month average of the Delinquency Ratios for such Collection Period and the
two Collection Periods immediately preceding such Collection Period is greater
than the level specified for such month in such table:

 

Collection Period

   Delinquency
Ratio  

February 2007

   8.00 %

March 2007 to September 2007

   6.50 %

October 2007

   8.00 %

November 2007 to February 2008

   9.00 %

March 2008 to September 2008

   7.50 %

October 2008

   9.00 %

November 2008 to February 2009

   10.00 %

March 2009 to September 2009

   8.50 %

October 2009

   10.00 %

November 2009 to February 2010

   11.00 %

March 2010 to September 2010

   10.50 %

October 2010

   12.00 %

November 2010 to February 2011

   13.00 %

March 2011 to September 2011

   11.50 %

October 2011

   13.00 %

November 2011 to January 2012

   14.00 %

provided, that an Insurance Agreement Event of Default occurring under this
clause (e) shall be deemed to have been cured if, as of the Determination Date
with respect to each of any three (3) consecutive Collection Periods following
the occurrence of an Insurance Agreement Event of Default pursuant to this
clause (e), the average of the Delinquency Ratios for such Collection Periods is
less than the percentage above for the applicable Collection Period;

 

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(f) a draw is made on the Note Policy;

(g) as of the Determination Date in any month prior to and including the
applicable month set forth in the table below, the Cumulative Net Charge-Off
Ratio exceeds the level specified for such month in such table:

 

Months

   Cumulative Net
Charge-Off Ratio  

February 2007 to July 2007

   Not Applicable  

August 2007 to October 2007

   7.00 %

November 2007 to January 2008

   9.30 %

February 2008 to April 2008

   12.00 %

May 2008 to July 2008

   14.30 %

August 2008 to October 2008

   16.00 %

November 2008 to January 2009

   17.30 %

February 2009 to April 2009

   19.00 %

May 2009 to July 2009

   20.00 %

August 2009 and thereafter

   21.00 %

(h) except as permitted by the Sale and Servicing Agreement, any assignment by
the Servicer of its rights and obligations under the Sale and Servicing
Agreement or any attempt to make such an assignment;

(i) failure to make any payment with respect to the Class A Notes pursuant to
the Indenture according to the priorities set forth in Section 4.4(a) of the
Sale and Servicing Agreement, which continues unpaid for a period of five
(5) Business Days;

(j) [Reserved];

(k) the occurrence of a Servicer Termination Event or Event of Default under the
Indenture; or

(l) any Event of Default or Termination Event (as defined in the Swap Agreement)
occurs under the Swap Agreement.

 

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“Investment Company Act” means the Investment Company Act of 1940, including,
unless the context otherwise requires, the rules and regulations thereunder, as
amended.

“Issuer” means Capital One Auto Finance Trust 2007-A.

“Late Payment Rate” means the rate of interest as it is publicly announced by
Citibank, N.A. at its principal office in New York, New York as its prime rate
(any change in such prime rate of interest to be effective on the date such
change is announced by Citibank, N.A.) plus 3%. The Late Payment Rate shall be
computed on the basis of a year of 365 days calculating the actual number of
days elapsed. In no event shall the Late Payment Rate exceed the maximum rate
permissible under any applicable law limiting interest rates.

“Managed Assets” means, with respect to any Person, receivables owned,
receivables sold to securitization trusts and serviced by such Person, and all
other serviced or owned assets.

“Material Adverse Change” means, with respect to any event or circumstance, a
material adverse effect on (a) the business, financial condition, operations or
assets of the Issuer (considered separately) or the Issuer, the Seller, the
Servicer and COAF (taken as a whole), (b) the ability of any COAF Company to
perform its obligations under any Transaction Document to which it is a party,
(c) the validity, enforceability of, or collectibility of, amounts payable by
any COAF Company when due under any Transaction Document to which it is a party
or (d) the status, existence, perfection or priority of the interest of the
Issuer or of the Indenture Trustee in the Trust Estate.

“Moody’s” means Moody’s Investors Service, Inc., a Delaware corporation, and any
successor thereto, and, if such corporation shall for any reason no longer
perform the functions of a securities rating agency, “Moody’s” shall be deemed
to refer to any other nationally recognized rating agency designated by the Note
Insurer.

“Note Insurer Financial Information” means the financial information of the Note
Insurer incorporated by reference into the Prospectus or any Exchange Act
Report.

“Note Insurer Information” means the information relating to the Note Insurer in
the Prospectus Supplement as of the date thereof under the heading “The Note
Guaranty Insurance Policy and the Note Insurer” and the information relating to
the Note Insurer incorporated by reference into the Prospectus Supplement.

“Notes” means the $1,500,000,000 Capital One Auto Finance Trust 2007-A, Asset
Backed Notes, Series 2007-A, Class A-1 Notes, Class A-2 Notes, Class A-3-A Notes
and Class A-3-B Notes and Class A-4 Notes.

“Owners” means registered holders of Class A Notes.

 

7

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“Person” means an individual, joint stock company, trust, unincorporated
association, joint venture, corporation, limited liability company, business or
owner trust, partnership or other organization or entity (whether governmental
or private).

“Premium” means the premium payable in accordance with Section 3.02 of this
Insurance Agreement.

“Pricing Date” means February 6, 2007.

“Prospectus” means, collectively, (i) the Preliminary Prospectus Supplement
dated February 5, 2007 to the Prospectus dated October 3, 2006 and (ii) the
Final Prospectus Supplement dated February 6, 2007 to the Prospectus dated
October 3, 2006, each relating to the sale of the Class A Notes on the Closing
Date.

“Purchase Agreement” means that certain Purchase Agreement, dated as of
February 15, 2007, by and between COAF and Seller.

“Representatives” means J.P. Morgan Securities Inc., Barclays Capital Inc., as
representatives for the several Underwriters.

“Reserve Account Increase Condition” means:

(i) the occurrence of one or both of the following events:

(a) as of the Determination Date with respect to any Collection Period, the
average of the Delinquency Ratios for such Collection Period and the two
Collection Periods immediately preceding such Collection Period is greater than
the level specified for such month in the following table:

 

Collection Period

   Delinquency Ratio  

February 2007

   7.00 %

March 2007 to September 2007

   5.50 %

October 2007

   7.00 %

November 2007 to February 2008

   8.00 %

March 2008 to September 2008

   6.50 %

October 2008

   8.00 %

November 2008 to February 2009

   9.00 %

March 2009 to September 2009

   7.50 %

October 2009

   9.00 %

November 2009 to February 2010

   10.00 %

March 2010 to September 2010

   9.50 %

October 2010

   11.00 %

November 2010 to February 2011

   12.00 %

March 2011 to September 2011

   10.50 %

October 2011

   12.00 %

November 2011 to January 2012

   13.00 %

 

8

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provided, that a Reserve Account Increase Condition occurring under this clause
(a) shall be deemed to have been cured if, as of the Determination Date with
respect to each of any three (3) consecutive Collection Periods following the
occurrence of a Reserve Account Increase Condition pursuant to this clause, the
average of the Delinquency Ratios for such Collection Periods is less than the
percentage specified above for the applicable Collection Period; or

(b) as of the Determination Date in any month prior to and including the
applicable month set forth in the table below, the Cumulative Net Charge-Off
Ratio exceeds the level specified for such month in such table:

 

Month After Closing

   Cumulative Net
Charge-Off Ratio  

February 2007 to April 2007

   Not Applicable  

May 2007 to July 2007

   4.00 %

August 2007 to October 2007

   6.00 %

November 2007 to January 2008

   8.30 %

February 2008 to April 2008

   10.30 %

May 2008 to July 2008

   12.30 %

August 2008 to October 2008

   14.00 %

November 2008 to January 2009

   15.30 %

February 2009 to April 2009

   16.00 %

May 2009 to July 2009

   17.00 %

August 2009 and thereafter

   18.00 %

 

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(ii) the occurrence or continuation of an Event of Default which has not been
waived or cured.

“Sale and Servicing Agreement” means that certain Sale and Servicing Agreement,
dated as of February 15, 2007, between the Seller, the Issuer, the Servicer and
the Indenture Trustee.

“Securities Act” means the Securities Act of 1933, including, unless the context
otherwise requires, the rules and regulations thereunder, as amended from time
to time.

“Securities Exchange Act” means the Securities Exchange Act of 1934, including,
unless the context otherwise requires, the rules and regulations thereunder, as
amended from time to time.

“Seller” means Capital One Auto Receivables, LLC, a Delaware limited liability
company.

“S&P” means Standard & Poor’s Ratings Services, and any successor thereto, and,
if such corporation shall for any reason no longer perform the functions of a
securities rating agency, “S&P” shall be deemed to refer to any other nationally
recognized rating agency designated by the Note Insurer.

“Swap Agreement” means the ISDA Master Agreement dated as of February 15, 2007
between the Issuer, and the Swap Counterparty, the Schedule thereto and the
Confirmation bearing Reference Nos. 1598273B and 1598281B dated February 15,
2007.

“Swap Counterparty” means Barclays Bank PLC, and its permitted successors and
assigns.

“Swap Policy” means the Interest Rate Swap Insurance Policy No. SW0350BE issued
by Ambac, which guarantees certain payments due under the Swap Agreement.

“Tangible Net Worth” means, with respect to any Person, the net worth of such
Person calculated in accordance with GAAP, after subtracting therefrom the
aggregate amount of such Person’s intangible assets, including, without
limitation, goodwill, franchises, licenses, patents, trademarks, copyrights and
service marks.

 

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“Target Cumulative Net Charge-Off Ratio” means, with respect to the Payment
Dates occurring in August 2008, February 2009 and August 2009, the Cumulative
Net Charge-Off Ratio set forth below opposite such Payment Date:

 

Payment Date

   Target Cumulative Net Charge-Off Ratio  

August 2008

   4.50 %

February 2009

   6.25 %

August 2009

   7.50 %

“Term of the Insurance Agreement” shall be determined as provided in
Section 4.01 of this Insurance Agreement.

“Transaction” means the transactions contemplated by the Transaction Documents
including the transactions described in the Prospectus.

“Transaction Documents” means this Insurance Agreement, the Indemnification
Agreement, the Prospectus, the Indenture, the Swap Agreement, the Purchase
Agreement, the Sale and Servicing Agreement, the Limited Guaranty, the
Underwriting Agreement, the Trust Agreement, and the Notes.

“Underwriter Information” means the information furnished by the Underwriters in
writing expressly for use in the Prospectus and included in the second paragraph
(regarding concessions and discounts) and the second sentence of the ninth
paragraph (regarding market making) under the caption “Underwriting” in the
Prospectus Supplement.

“Underwriting Agreement” has the meaning assigned thereto in Appendix A to the
Sale and Servicing Agreement.

ARTICLE II

REPRESENTATIONS, WARRANTIES AND COVENANTS

Section 2.01. Representations and Warranties.

(a) Representations and Warranties of the Seller. The Seller makes the following
representations and warranties as of the date hereof and the Date of Issuance:

(i) Existence and Power. The Seller is a Delaware limited liability company
validly existing and in good standing under the laws of its state of
organization and has, in all material respects, full power and authority to own
its assets and operate its

 

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business as presently owned or operated, and to execute, deliver and perform its
obligations under the Transaction Documents to which it is a party. The Seller
has obtained all necessary licenses and approvals in each jurisdiction where the
failure to do so could reasonably result in a Material Adverse Change.

(ii) Authorization and No Contravention. The execution, delivery and performance
by the Seller of the Transaction Documents to which it is a party have been duly
authorized by all necessary action on the part of the Seller and do not
contravene or constitute a default under (A) any applicable law, rule or
regulation, (B) its organizational documents or (C) any material indenture or
material agreement or material instrument to which the Seller is a party or by
which its properties are bound (other than violations of such laws, rules,
regulations, indentures or agreements which do not affect the legality, validity
or enforceability of any of such agreements and which, individually or in the
aggregate, could reasonably result in a Material Adverse Change).

(iii) No Consent Required. No approval or authorization by, or filing with, any
Governmental Authority is required in connection with the execution, delivery
and performance by the Seller of any Transaction Document other than (A) UCC
filings, (B) approvals and authorizations that have previously been obtained and
filings that have previously been made or approvals, authorizations or filings
which will be made on a timely fashion and (C) authorizations or filings which,
if not obtained or made, would not reasonably result in a Material Adverse
Change.

(iv) Binding Effect. Each Transaction Document to which the Seller is a party
constitutes the legal, valid and binding obligation of the Seller enforceable
against the Seller in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
receivership, conservatorship or other similar laws affecting creditors’ rights
generally and, if applicable, the rights of creditors of limited liability
companies from time to time in effect or by general principles of equity.

(v) No Proceedings. There are no actions, suits or proceedings pending or, to
the knowledge of the Seller, threatened against the Seller before or by any
Governmental Authority that (A) assert the invalidity or unenforceability of
this Agreement or any of the other Transaction Documents, (B) seeking to prevent
the issuance of the Notes or the consummation of any of the transactions
contemplated by this Agreement or any of the other Transaction Documents,
(C) seeking any determination or ruling that could reasonably result in a
Material Adverse Change, or (D) relating to the Seller that would materially and
adversely affect the federal or Applicable Tax State income, excise, franchise
or similar tax attributes of the Notes.

 

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(vi) Compliance With Securities Laws. The initial offer and sale of the Notes
comply in all material respects with all requirements of law, including all
registration requirements of applicable securities laws. Without limitation of
the foregoing, the Prospectus does not contain any untrue statement of a
material fact and does not omit to state a material fact necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading; provided, however, that no representation is made with
respect to the information in the Prospectus set forth under the heading “THE
NOTE GUARANTY INSURANCE POLICY AND THE NOTE INSURER,” the consolidated financial
statements of the Note Insurer incorporated by reference in the Prospectus or
the Underwriter Information. Neither the offer nor the sale of the Notes has
been or will be in violation of the Securities Act or any other federal or state
securities laws. Neither the Issuer nor the Seller is required to be registered
as an “investment company” under the Investment Company Act.

(vii) Transaction Documents. Each of the representations and warranties of the
Seller contained in the Transaction Documents is true and correct in all
material respects, and the Seller hereby makes each such representation and
warranty to, and for the benefit of, the Note Insurer as if the same were set
forth in full herein, provided that the remedy for any breach of this paragraph
shall be limited to the remedies specified in the related Transaction Document.

(viii) Solvency. The Seller is solvent and will not be rendered insolvent by the
Transaction and, after giving effect to the Transaction, the Seller will not be
left with an unreasonably small amount of capital with which to engage in its
business, nor does the Seller intend to incur, or believe that it has incurred,
debts beyond its ability to pay as they mature. The Seller does not contemplate
the commencement of insolvency, bankruptcy, liquidation or consolidation
proceedings or the appointment of a receiver, liquidator, conservator, trustee
or similar official in respect of any COAF Company or any of their assets.

(b) Representations and Warranties of Servicer. Each of the Servicer and COAF
makes the following representations and warranties as of the date hereof and the
Date of Issuance:

(i) Existence and Power. Each of the Servicer and COAF is a Texas corporation
validly existing and in good standing under the laws of its state of
organization and has, in all material respects, full power and authority to own
its assets and operate its business as presently owned or operated, and to
execute, deliver and perform its obligations under the Transaction Documents to
which it is a party. Each of the Servicer and COAF has obtained all necessary
licenses and approvals in each jurisdiction where the failure to do so could
reasonably result in a Material Adverse Change.

 

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(ii) Authorization and No Contravention. The execution, delivery and performance
by each of the Servicer and COAF of the Transaction Documents to which it is a
party have been duly authorized by all necessary action on the part of the
Servicer and COAF and do not contravene or constitute a default under (A) any
applicable law, rule or regulation, (B) its organizational documents or (C) any
material indenture or material agreement or instrument to which the Servicer or
COAF is a party or by which its properties are bound (other than violations of
such laws, rules, regulations, indentures or agreements which do not affect the
legality, validity or enforceability of any of such agreements and which,
individually or if the aggregate, and would not reasonably result in a Material
Adverse Change.

(iii) No Consent Required. No approval or authorization by, or filing with, any
Governmental Authority is required in connection with the execution, delivery
and performance by the Servicer or COAF of any Transaction Document other than
(A) UCC filings, (B) approvals and authorizations that have previously been
obtained and filings that have previously been made or approvals, authorizations
or filings which will be made on a timely fashion and (C) approval,
authorizations or filings which, if not obtained or made, would not reasonably
result in a Material Adverse Change.

(iv) Binding Effect. Each Transaction Document to which the Servicer or COAF is
a party constitutes the legal, valid and binding obligation of the Servicer
enforceable against it in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, receivership, conservatorship or other similar laws
affecting creditors’ rights generally and, if applicable, the rights of
creditors of limited liability companies from time to time in effect or by
general principles of equity.

(v) No Proceedings. There are no actions, suits or proceedings pending or, to
the knowledge of the Servicer or COAF, threatened against the Servicer or COAF
before or by any Governmental Authority that (A) assert the invalidity or
unenforceability of this Agreement or any of the other Transaction Documents,
(B) seeking to prevent the issuance of the Notes or the consummation of any of
the transactions contemplated by this Agreement or any of the other Transaction
Documents, (C) seeking any determination or ruling that would materially and
adversely affect the performance by the Servicer of its obligations under this
Agreement or any of the other Transaction Documents, or (D) relating to the
Servicer or COAF that would materially and adversely affect the federal or
Applicable Tax State income, excise, franchise or similar tax attributes of the
Notes.

 

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(vi) Financial Statements. The Financial Statements of Capital One Financial
Corporation (A) are, as of the dates and for the periods referred to therein,
complete and correct in all material respects, (B) present fairly the financial
condition and results of operations of COAF as of the dates and for the periods
indicated and (C) have been prepared in accordance with generally accepted
accounting principles consistently applied, except as noted therein (subject as
to interim statements to normal year-end adjustments); since the date of the
most recent Financial Statements, there has been no Material Adverse Change in
respect of COAF; and except as disclosed in the Financial Statements, COAF is
not subject to any contingent liabilities or commitments that, individually or
in the aggregate, have a material possibility of causing a Material Adverse
Change in respect of COAF.

(vii) Compliance With Securities Laws. The offer and sale of the Notes comply in
all material respects with all requirements of law, including all registration
requirements of applicable securities laws. Without limitation of the foregoing,
the Prospectus does not contain any untrue statement of a material fact and does
not omit to state a material fact necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading;
provided, however, that no representation is made with respect to the
information in the Prospectus set forth under the heading “THE NOTE GUARANTY
INSURANCE POLICY AND THE NOTE INSURER,” the consolidated financial statements of
the Note Insurer incorporated by reference in the Prospectus or the Underwriter
Information. Neither the offer nor the sale of the Notes has been or will be in
violation of the Securities Act or any other federal or state securities laws.
Neither the Issuer nor the Seller is required to be registered as an “investment
company” under the Investment Company Act.

(viii) Transaction Documents. Each of the representations and warranties of the
Servicer and COAF contained in the Transaction Documents is true and correct in
all material respects, and the Servicer and COAF hereby make each such
representation and warranty to, and for the benefit of, the Note Insurer as if
the same were set forth in full herein, provided that the remedy for any breach
of this paragraph shall be limited to the remedies specified in the related
Transaction Document.

(ix) Solvency. Each of the Servicer and COAF is solvent and will not be rendered
insolvent by the Transaction and, after giving effect to the Transaction,
neither the Servicer nor COAF will be left with an unreasonably small amount of
capital with which to engage in its business, nor does the Servicer or COAF
intend to incur, or believe that it has incurred, debts beyond its ability to
pay as they mature. Neither the Servicer nor COAF contemplates the commencement
of insolvency, bankruptcy, liquidation or consolidation proceedings or the
appointment of a receiver, liquidator, conservator, trustee or similar official
in respect of any COAF Company or any of their assets.

 

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Section 2.02. Affirmative Covenants of the COAF Companies. The COAF Companies
hereby agree that during the Term of the Insurance Agreement, unless the Note
Insurer shall otherwise expressly consent in writing:

(a) Compliance With Agreements and Applicable Laws. The COAF Companies shall not
be in default under the Transaction Documents and shall comply with all material
requirements of any law, rule or regulation applicable to each such party in all
circumstances where non compliance could reasonably result in a Material Adverse
Change. Except in accordance with any provision of the Transaction Documents
that expressly states Note Insurer consent is not required, no COAF Company
shall agree to any amendment to or modification of the terms of any Transaction
Documents or its respective organizational documents (including without
limitation and as applicable its articles of incorporation, partnership
agreement, bylaws, certificate of formation and limited liability company
agreement) unless the Note Insurer shall have otherwise consented.

(b) Corporate Existence. Each COAF Company, its successors and assigns, shall
maintain its corporate or other existence and shall at all times continue to be
duly organized under the laws of its respective jurisdiction of incorporation or
formation and duly qualified and duly authorized and shall conduct its business
in accordance with the terms of its certificate of incorporation and bylaws or
other formation documents in all circumstances where failure could reasonably
result in a Material Adverse Change.

(c) The Servicer To Provide Compliance Certificates; Accountants’ Reports; Other
Information. The Servicer shall keep or cause to be kept in reasonable detail
books and records of account of COAF’s, and its consolidated subsidiaries’,
assets and business, including, but not limited to, books and records relating
to the Transaction. The Servicer shall furnish or cause to be furnished to the
Note Insurer:

(i) Servicer Reports and Compliance Certificates. All reports, certificates and
reviews required to be furnished under Sections 3.8 and 3.9 of the Sale and
Servicing Agreement.

(ii) Initial and Continuing Reports. On or before the Closing Date, the Servicer
will provide the Note Insurer a copy of the electronic file or other such medium
as may be acceptable to the Note Insurer to be delivered to the Indenture
Trustee setting forth, as to each Receivable, the information required on the
Schedule of Receivables.

(iii) Other Information. Promptly upon receipt thereof, copies of all schedules,
financial statements or other similar reports delivered to or by the Servicer
pursuant to the terms of the Sale and Servicing Agreement and, promptly upon
request, such other data or reports relating to the Transaction as the Note
Insurer may reasonably request.

 

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The Note Insurer agrees that it and its agents, accountants and attorneys shall
keep confidential all financial statements, reports and other information
delivered by the Servicer pursuant to this subsection 2.02(c) to the extent
provided in subsection 2.07 hereof.

(d) Access to Records; Discussions With Officers and Accountants. On an annual
basis, or as often as the Note Insurer deems appropriate upon the occurrence of
an Insurance Agreement Event of Default, each COAF Company shall, upon the
reasonable request of the Note Insurer, permit the Note Insurer or its
authorized agents:

(i) to inspect its books and records as they may relate to the Class A Notes,
the obligations of such party under the Transaction Documents, and the
Transaction;

(ii) to discuss the affairs, finances and accounts of each COAF Company with the
chief operating officer and the chief financial officer of such COAF Company, as
the case may be; and

(iii) with any COAF Company’s consent, which consent shall not be unreasonably
withheld, to discuss the affairs, finances and accounts of such COAF Company
with such company’s independent accountants, provided that an officer of such
COAF Company shall have the right to be present during such discussions;
provided, however that upon the occurrence of an Insurance Agreement Event of
Default, no such consent of the COAF Companies will be required but the Note
Insurer will provide reasonable notice to such COAF Company prior to such
discussions and such discussions may not create an undue burden on such COAF
Company’s or the accountants’ business.

Such inspections and discussions shall be conducted during normal business hours
at the Note Insurer’s cost and expense and shall not unreasonably disrupt the
business of such COAF Company. The books and records of each COAF Company will
be maintained at the address of such COAF Company designated herein for receipt
of notices, unless the Servicer shall otherwise advise the parties hereto in
writing.

(e) [Reserved]

(f) Notice of Material Events. Each COAF Company shall be obligated (which
obligation shall be satisfied as to each if performed by any of them) promptly
to inform the Note Insurer in writing of the occurrence of any of the following
to the extent any of the following relate to it:

(i) the submission of any claim or the initiation of any legal process,
litigation or administrative or judicial investigation, or rule-making or
disciplinary proceeding by or against any COAF Company that (A) could be
required to be disclosed to the Commission or to any COAF Company’s shareholders
or (B) is deemed reasonably likely to result in a Material Adverse Change with
respect to any COAF Company, or to the knowledge of such COAF Company, or the
promulgation of any proceeding or any proposed or final rule which would result
in a Material Adverse Change with respect to any COAF Company;

 

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(ii) any change in the location of any COAF Company’s principal offices,
jurisdiction of organization, legal name as indicated on the public records of
any COAF Company’s jurisdiction of organization which shows any COAF Company to
be organized, or any change in the location of any COAF Company’s books and
records;

(iii) the occurrence of any Default, Insurance Agreement Event of Default, Event
of Default under the Indenture; Servicer Termination Event or of any Material
Adverse Change;

(iv) the commencement of any proceedings by or against any COAF Company under
any applicable bankruptcy, reorganization, liquidation, rehabilitation,
insolvency or other similar law now or hereafter in effect or of any proceeding
in which a receiver, liquidator, conservator, trustee or similar official shall
have been, or may be, appointed or requested for any COAF Company or any of its
assets; or

(v) the receipt of notice that (A) any COAF Company is being placed under
regulatory supervision, (B) any license, permit, charter, registration or
approval necessary for the conduct of any COAF Company’s business is to be, or
may be suspended or revoked, or (C) any COAF Company is to cease and desist any
practice, procedure or policy employed by any COAF Company in the conduct of its
business, and such suspension, revocation or cessation may reasonably be
expected to result in a Material Adverse Change with respect to any COAF
Company.

(g) Financing Statements and Further Assurances. The Servicer will cause to be
filed all necessary financing statements or other instruments, and any
amendments or continuation statements relating thereto, necessary to be kept and
filed in such manner and in such places as may be required by law to preserve
and protect fully the interest of the Indenture Trustee in the Trust Estate.
Each COAF Company shall, upon the request of the Note Insurer, from time to
time, execute, acknowledge and deliver, or cause to be executed, acknowledged
and delivered, within 10 days of such request, such amendments hereto and such
further instruments and take such further action as may be reasonably necessary
to effectuate the intention, performance and provisions of the Transaction
Documents. In addition, each of the COAF Companies agrees to cooperate with S&P,
Fitch, and Moody’s in connection with any review of the Transaction that may be
undertaken by S&P, Fitch, and Moody’s after the date hereof.

 

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(h) Maintenance of Licenses. Each COAF Company or any successors thereof shall
maintain all licenses, permits, charters and registrations which are material to
the conduct of its business in all circumstances where failure could reasonably
result in a Material Adverse Change.

(i) Redemption of Class A Notes. The Servicer shall instruct the Indenture
Trustee, upon redemption of the Class A Notes pursuant to the Transaction
Documents, to furnish to the Note Insurer a notice of such redemption and, upon
a redemption or other payment of all of the Class A Notes to surrender the Note
Policy to the Note Insurer for cancellation.

(j) Disclosure Document. Each Prospectus delivered with respect to the Notes
shall clearly disclose that the Note Policy is not covered by the
property/casualty insurance security fund specified in Article 76 of the New
York Insurance Law.

(k) Third-party Beneficiary. Subject to the provisions of the Transaction
Documents, each COAF Company agrees that the Note Insurer shall have all rights
provided to the Note Insurer in the Transaction Documents and that the Note
Insurer shall constitute a third-party beneficiary of the Transaction Documents;
provided, however, it is expressly acknowledged by the Note Insurer that the
sole remedy for any breach of representation and warranty of COAF and the Seller
under Section 3.2 of the Purchase Agreement and Section 2.2, 3.2, 3.3, 3.4 or
3.5 of the Sale and Servicing Agreement, shall be limited to the repurchase
remedy specified in the Purchase Agreement unless COAF or the Seller, as
applicable, fails to repurchase the related Receivables as described in the
Purchase Agreement or Sale and Servicing Agreement, as applicable.

(l) Amendments. The Servicer will provide the Note Insurer with written notice
of any change or amendment to any Transaction Document as currently in effect.

(m) Closing Documents. The Servicer shall provide or cause to be provided to the
Note Insurer an executed original copy of each document executed in connection
with the Transaction within 90 days after the date of closing.

(n) Corporate Formalities. The Seller and any successor to the Seller described
in Section 5.3 of the Sale and Servicing Agreement shall (i) observe all
corporate or other formalities necessary to preserve its status as a separate
legal entity and (ii) at all times operate its business in accordance with the
provisions of its organizational documents and operating agreement relating to
bankruptcy remoteness and otherwise in material compliance with its
organizational documents and operating agreement.

 

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(o) Suspension of Filing. The Seller and the Issuer shall suspend filing
periodic Exchange Act Reports by filing Form 15 as soon as reasonably
practicable after they are permitted to do so under the Securities Exchange Act
and the rules and regulations promulgated thereunder.

Section 2.03. Negative Covenants of the COAF Companies. Each COAF Company hereby
agrees that during the Term of the Insurance Agreement, unless the Note Insurer
shall otherwise expressly consent in writing:

(a) Impairment of Rights. No COAF Company shall take any action, or fail to take
any action, if such action or failure to take action is reasonably likely to
result in a Material Adverse Change with respect to any COAF Company, or may
interfere in any material respect with the enforcement of any rights of the Note
Insurer under or with respect to the Transaction Documents. Each COAF Company
shall give the Note Insurer written notice of any such action or, to the best of
the knowledge of any COAF Company, failure to act on the earlier of (i) the date
upon which any publicly available filing or release is made with respect to such
action or failure to act or (ii) promptly prior to the date of consummation of
such action or failure to act. Each COAF Company shall furnish to the Note
Insurer all information reasonably requested by it that is necessary to
determine compliance with this paragraph.

(b) Waiver, Amendments, Etc. Except in accordance with the Transaction
Documents, no COAF Company shall waive, modify or amend, or consent to any
waiver, modification or amendment of, any of the terms, provisions or conditions
of the Transaction Documents without the consent of the Note Insurer.

(c) Customary Servicing Practices. So long as no Note Insurer Default has
occurred and is continuing, the Servicer shall not change its Customary
Servicing Practices without the consent of the Note Insurer if the Servicer
determines that such a change will have a material adverse effect on the
interests of the Note Insurer.

(d) Transaction Documents. No COAF Company will at any time in the future deny
that the Transaction Documents constitute the legal, valid and binding
obligations of each COAF Company, as applicable.

Section 2.04. Representations, Warranties and Covenants of Indenture Trustee.

(a) Representations and Warranties. As of the Date of Issuance, each of the
representations and warranties of the Indenture Trustee set forth in the
Transaction Documents are true and correct in all material respects, and the
Indenture Trustee makes each such representation and warranty to, and for the
benefit of, the Note Insurer as if the same were set forth in full herein.

 

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(b) Compliance and Amendments. The Indenture Trustee shall comply in all
material respects with the terms and conditions of the Transaction Documents to
which it is a party, and the Indenture Trustee shall not agree to any amendment
to or modification of the terms of any of the Transaction Documents to which
both the Indenture Trustee and the Note Insurer are parties unless the Note
Insurer shall otherwise consent, provided that such consent shall not be
required if a Note Insurer Default has occurred and is continuing.

Section 2.05. Representations, Warranties and Covenants of the Issuer. The
Issuer hereby represents and warrants as follows:

(a) Representations and Warranties. As of the Date of Issuance, each of the
representations and warranties of the Issuer set forth in the Transaction
Documents is true and correct in all material respects and the Issuer makes each
such representation and warranty to, and for the benefit of, the Note Insurer as
if the same were set forth in full herein.

(b) Compliance and Amendments. The Issuer shall comply in all material respects
with the terms and conditions of the Transaction Documents it is a party and,
except in accordance with the Transaction Documents, the Issuer shall not agree
to any amendment to or modification of the terms of any of the Transaction
Documents to which it is a party unless the Note Insurer shall otherwise give
its prior written consent.

(c) Principal Place of Business. The principal place of business of the Issuer
is located in Wilmington, Delaware.

Section 2.06. Representations and Warranties of Ambac.

The Note Insurer represents, warrants and agrees as follows as of the Closing
Date or such other date as specified below:

(a) Organization and Licensing. Ambac is a stock insurance corporation duly
organized, validly existing and in good standing under the laws of the State of
Wisconsin and in any other jurisdiction where qualification may be necessary to
accomplish the Transaction.

(b) Corporate Power. The Note Insurer has the corporate power and authority to
issue the Note Policy and execute and deliver this Insurance Agreement and to
perform all of its obligations thereunder and hereunder.

(c) Authorization; Approvals. All proceedings legally required for the
execution, issuance (with respect to the Note Policy only) delivery and
performance of the Note Policy and this Insurance Agreement have been taken and
all licenses, orders, consents or other authorizations or approvals of the Note
Insurer’s Board of Directors or stockholders or any governmental boards or
bodies legally required for the enforceability of the Note Policy and this
Insurance Agreement have been obtained or are not material to the enforceability
of the Note Policy and this Insurance Agreement.

 

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(d) Enforceability. The Note Policy, when issued, will constitute, and this
Insurance Agreement constitutes, legal, valid and binding obligations of the
Note Insurer, enforceable in accordance with their respective terms, subject to
insolvency, reorganization, moratorium, receivership and other similar laws
affecting creditors’ rights generally and by general principles of equity and
subject to principles of public policy limiting the right to enforce the
indemnification provisions contained therein and herein, insofar as such
provisions relate to indemnification for liabilities arising under federal
securities laws.

(e) No Conflict. The execution by the Note Insurer of the Note Policy and this
Insurance Agreement will not, and the performance of the provisions thereof and
hereof will not, conflict with or result in a breach of any of the terms,
conditions or provisions of the Restated Articles of Incorporation or By Laws of
the Note Insurer, or any restriction contained in any contract, agreement or
instrument to which the Note Insurer is a party or by which it is bound;
constitute a default under any of the foregoing which would materially and
adversely affect its ability to perform its obligations under the Note Policy or
this Insurance Agreement.

(f) Exempt from Registration. The Note Policy, when issued, will be exempt from
registration under the Securities Act.

(g) Ambac Information. The Note Insurer Information is true and correct in all
material respects and does not contain any untrue statement of a material fact.

(h) No Litigation. There are no actions, suits, proceedings or investigations
pending or, to the best of the Note Insurer’s knowledge, threatened against it
at law or in equity or before or by any court, governmental agency, board or
commission or any arbitrator which, if decided adversely, would materially and
adversely affect its ability to perform its obligations under the Note Policy or
this Insurance Agreement.

(i) Compliance With Law, Etc. No practice, procedure or policy employed, or
proposed to be employed, by the Note Insurer in the conduct of its business
violates any law, regulation, judgment, agreement, order or decree applicable to
the Insurer that, if enforced, could result in a Material Adverse Change with
respect to the Note Insurer.

(j) No Affiliations. There are no affiliations relating to the Note Insurer and
any of the following parties or their affiliates: The Bank of New York (the
Indenture Trustee), Wilmington Trust Company (the Owner Trustee) or Barclays
Bank PLC (the Swap Counterparty).

 

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(k) As of the Closing Date and as of each date that Note Insurer Financial
Information is incorporated into the Prospectus or any Exchange Act Report, the
Note Insurer or the entity that consolidates the Note Insurer is required to
file reports with the Commission pursuant to Section 13(a) or 15(d) of the
Exchange Act.

(l) As of the Closing Date and as of each date that Note Insurer Financial
Information is incorporated into the Prospectus or any Exchange Act Report, the
Note Insurer or the entity that consolidates the Note Insurer has filed all
reports and other materials required to be filed by such requirements during the
preceding 12 months (or such shorter period that such party was required to file
such reports and materials).

(m) As of the Closing Date and as of each date that Note Insurer Financial
Information is incorporated into the Prospectus or any Exchange Act Report, the
reports filed by the Note Insurer, or entity that consolidates the Note Insurer,
include (or properly incorporate by reference) the financial statements of the
Note Insurer. The Note Insurer agrees to respond promptly to a written request
from the Seller, which request shall be made no more frequently than once a
calendar quarter, as to whether it or the entity that consolidates it is
required to make and has made the filings required by Section 13(a) or
Section 15(d) of the Securities Exchange Act.

(n) As of the Closing Date and as of each date that Note Insurer Financial
Information is incorporated into the Prospectus or any Exchange Act Report, to
the best of the Note Insurer’s knowledge, the accountants who certify the
financial statements and supporting schedules included in the Note Insurer
Financial Information (if applicable) are independent registered public
accountants as required by the Securities Act.

(o) Financial Information. As of the Pricing Date, the date of the Prospectus
Supplement and the Closing Date, the consolidated financial statements of the
Note Insurer and subsidiaries as of December 31, 2005 and 2004 and for each of
the years in the three-year period ended December 31, 2005, prepared in
accordance with U. S. generally accepted accounting principles, included in the
Annual Report on Form 10-K of Ambac Financial Group, Inc. (which was filed with
the Securities and Exchange Commission (the “Commission”) on March 13, 2006;
Commission File No. 1-10777), the unaudited consolidated financial statements of
the Note Insurer and subsidiaries as of March 31, 2006 and for the three-month
periods ended March 31, 2006 and 2005 included in the Quarterly Report on Form
10-Q of Ambac Financial Group, for the three-month period ended March 31, 2006
(which was filed with the Commission on May 10, 2006); Ambac Financial Group’s
Current Report on Form 8-K dated and filed on April 26, 2006; Ambac Financial
Group’s Current Report on Form 8-K dated and filed on July 26, 2006; Ambac
Financial Group’s Current Report on Form 8-K dated July 25, 2006 and filed on
July 26, 2006; Ambac Financial Group’s Current Report on Form 8-K dated and
filed on October 25, 2006; the unaudited consolidated financial statements of
the Note

 

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Insurer and subsidiaries as of June 30, 2006 and for the three – and six – month
periods ended June 30, 2006 and 2005 included in the Quarterly Report on Form
10-Q of Ambac Financial Group, for the three-month period ended June 30, 2006
(which was filed with the Commission on August 9, 2006); the unaudited
consolidated financial statements of the Note Insurer and subsidiaries as of
September 30, 2006 and for the three – and nine – month periods ended
September 30, 2006 and 2005 included in the Quarterly Report on Form 10-Q of
Ambac Financial Group, for the three-month period ended September 30, 2006
(which was filed with the Commission on November 8, 2006); and Ambac Financial
Group’s Current Report on Form 8-K dated and filed on January 31, 2007 as they
relate to the Note Insurer, fairly present in all material respects the
financial condition of the Note Insurer as of such dates and for the periods
covered by such statements in accordance with accounting principles generally
accepted in the United States of America. Since December 31, 2005 and as of the
Pricing Date, the date of the Prospectus Supplement and the Closing Date, there
has been no material change in the financial condition of the Note Insurer that
would materially adversely affect its ability to perform its obligations under
the Note Policy. As of the date filed with the Commission and incorporated by
reference in the Exchange Act Reports of the Seller as contemplated by
Section 4.08 or provided to the Seller pursuant to Section 2.07(b), such
financial statements fairly present in all material respects the financial
condition of the Note Insurer as of such dates and for the periods covered by
such financial statements in accordance with accounting principles generally
accepted in the United States (subject to normal year-end audit adjustments in
the case of any interim financial statements).

(p) As of the Closing Date and as of the date that Note Insurer Financial
Information is incorporated into the Prospectus on any Exchange Act Report, the
Note Insurer Financial Information incorporated by reference in the Registration
Statement relating to the Prospectus (including through filing of an Exchange
Act Report), complied in all material respects with the requirements of
Item 1114(b)(2) of Regulation AB.

Section 2.07. Covenants of Note Insurer. The Note Insurer hereby covenants as
follows:

(a) Confidentiality. The Note Insurer agrees that it and its shareholders,
directors, agents, accountants and attorneys shall keep confidential any matter
of which it becomes aware through such inspections or discussions (unless
readily available from public sources), except as may be otherwise required by
regulation, law or court order or requested by appropriate governmental
authorities or as necessary to preserve its rights or security under or to
enforce the Transaction Documents, provided that the foregoing shall not limit
the right of the Note Insurer to make such information available to its
regulators, securities rating agencies, reinsurers, credit and liquidity
providers, counsel and accountants. If the Note Insurer is requested or required
(by oral questions, interrogatories, requests for information or documents
subpoena, civil investigative demand or similar process) to disclose any
information of which it

 

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becomes aware through such inspections or discussions, the Note Insurer will
promptly notify COAF or the Servicer of such request(s) so that COAF or the
Servicer may seek an appropriate protective order and/or waive the Note
Insurer’s compliance with the provisions of this Insurance Agreement. If, in the
absence of a protective order or the receipt of a waiver hereunder, the Note
Insurer is, nonetheless, in the opinion of its counsel, compelled to disclose
such information to any tribunal or else stand liable for contempt or suffer
other censure or significant penalty, the Note Insurer may disclose such
information to such tribunal that the Note Insurer is compelled to disclose,
provided that a copy of all information disclosed is provided to COAF or the
Servicer, as the case maybe, promptly upon such disclosure, so long as the Note
Insurer is not prohibited from providing notice to COAF or Servicer by such
tribunal.

(b) Additional Information. The Note Insurer agrees to comply with reasonable
requests of the Seller for the delivery of such additional information as may be
necessary for the Seller to comply with Item 1114 of Regulation AB, so long as
such information is available to the Note Insurer and not otherwise available to
the Seller. For purposes of this Subsection 2.07(b) the term “Regulation AB”
shall mean Subpart 229.1100—Asset Backed Securities Regulation (Regulation AB)
17 C.F.R. §§229.1100-229.1123, as such may be amended from time to time, and
subject to such clarification and interpretation as have been provided by the
Commission in the adopting release (Asset-Backed Securities, Securities Act
Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the staff
of the Commission, or as may be provided by the Commission or its staff from
time to time.

ARTICLE III

THE POLICIES; REIMBURSEMENT

Section 3.01. Issuance of the Policies. The Note Insurer agrees to issue the
Policies on the Closing Date subject to satisfaction of the conditions precedent
set forth below:

(a) Payment of Initial Premium and Expenses. The Note Insurer shall have been
paid, by the Servicer, that portion of a nonrefundable Premium payable on the
Date of Issuance and the Servicer shall agree to reimburse or pay directly other
fees and expenses identified in Section 3.02 hereof as payable, and the Note
Insurer shall have received a fully executed copy of the Fee Letter.

(b) Transaction Documents. The Note Insurer shall have received a copy of each
of the Transaction Documents, in form and substance satisfactory to the Note
Insurer, duly authorized, executed and delivered by each party thereto.

(c) Certified Documents and Resolutions. The Note Insurer shall have received a
copy of (i) the certificate of incorporation, limited liability company
agreement and bylaws or other organizational documents, as applicable, of each
COAF Company and (ii) the resolutions of each COAF Company’s Board of Directors
or members or a committee thereof, as applicable, authorizing

 

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the issuance of the Notes and the execution, delivery and performance by each
COAF Company of the Transaction Documents and the transactions contemplated
thereby, certified by the Secretary or an Assistant Secretary of each COAF
Company (which certificate shall state that such certificate of incorporation,
bylaws and resolutions or other organizational documents are in full force and
effect without modification on the Date of Issuance).

(d) Incumbency Certificate. The Note Insurer shall have received a certificate
of the Secretary or an Assistant Secretary of each COAF Company certifying the
names and signatures of the officers of such COAF Company authorized to execute
and deliver the Transaction Documents and that shareholder, partner or member
(as applicable) consent to the execution and delivery of such documents is not
necessary.

(e) Representations and Warranties; Certificate. The representations and
warranties of each COAF Company set forth or incorporated by reference in this
Insurance Agreement shall be true and correct as of the Date of Issuance as if
made on the Date of Issuance, and the Note Insurer shall have received a
certificate of appropriate officers of each COAF Company to that effect.

(f) Opinions of Counsel.

(i) In-house counsel for COAF shall have issued its favorable opinion, in form
and substance acceptable to the Note Insurer and its counsel, regarding the
corporate existence and authority of COAF, in its individual capacity and in its
capacity as Servicer.

(ii) The law firm of Richards, Layton & Finger, P.A., shall have issued its
favorable opinion, in form and substance acceptable to the Note Insurer and its
counsel, regarding the corporate existence and authority of the Seller.

(iii) The law firm of Richards, Layton & Finger, P.A., shall have issued its
favorable opinion, in form and substance acceptable to the Note Insurer and its
counsel, regarding the corporate existence and authority of the Issuer.

(iv) The law firm of Mayer, Brown, Rowe & Maw LLP shall have furnished its
favorable opinion in form and substance acceptable to the Note Insurer and its
counsel, regarding the validity and enforceability of the Transaction Documents
against COAF, in its capacity as Seller under the Purchase Agreement and as
Servicer.

(v) The law firm of Mayer, Brown, Rowe & Maw LLP shall have furnished its
favorable opinion in form and substance acceptable to the Note Insurer and its
counsel, regarding the validity and enforceability of the Transaction Documents
against the Seller and the Issuer.

 

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(vi) The law firm of Mayer, Brown, Rowe & Maw LLP shall have furnished its
opinions, in form and substance acceptable to the Note Insurer and its counsel,
regarding the transfer of the Trust Estate, certain bankruptcy and
non-consolidation issues, security interest issues and the tax treatment of the
Class A Notes under federal tax laws.

(vii) The Note Insurer shall have received such other opinions of counsel, in
form and substance acceptable to the Note Insurer and its counsel, addressing
such other matters as the Note Insurer may reasonably request.

(g) Approvals, Etc. The Note Insurer shall have received true and correct copies
of all approvals, licenses and consents, if any, including, without limitation,
any required approval of the shareholders of any COAF Company, required in
connection with the Transaction.

(h) No Litigation, Etc. No suit, action or other proceeding, investigation or
injunction, or final judgment relating thereto, shall be pending or, to the
knowledge of any COAF Company, threatened before any court or governmental
agency in which it is sought to restrain or prohibit or to obtain damages or
other relief in connection with the Transaction Documents or the consummation of
the Transaction.

(i) Legality. No statute, rule, regulation or order shall have been enacted,
entered or deemed applicable by any government or governmental or administrative
agency or court that would make the transactions contemplated by any of the
Transaction Documents illegal or otherwise prevent the consummation thereof.

(j) Satisfaction of Conditions of the Underwriting Agreement. All conditions in
the Underwriting Agreement relating to the Underwriters’ obligation to purchase
the Class A Notes shall have been satisfied.

(k) Issuance of Ratings. The Note Insurer shall have received confirmation that
the risk secured by the Note Policy constitutes an investment-grade risk, that
the Class A-1 Notes when issued will be rated “A-1+” by S&P, “F1+” by Fitch, and
“Prime-1” by Moody’s and that the Class A-2 Notes, Class A-3-A Notes,
Class A-3-B Notes and Class A-4 Notes, when issued, will be rated “AAA” by S&P,
“Aaa” by Moody’s and “AAA” by Fitch.

(l) No Default. No Default or Event of Default shall have occurred.

(m) Additional Items. The Note Insurer shall have received such other documents,
instruments, approvals or opinions requested by the Note Insurer as may be
reasonably necessary to effect the Transaction, including, but not limited to,
evidence satisfactory to the Note Insurer that the conditions precedent, if any,
in the Transaction Documents have been satisfied.

 

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(n) Underwriting Agreement. The Note Insurer shall have received copies of each
of the documents, and specifically be entitled to rely on each of the documents,
required to be delivered to the Underwriters pursuant to the Underwriting
Agreement, other than the negative assurance letters of Dechert LLP, counsel to
the Underwriter, and Mayer, Brown, Rowe & Maw LLP, counsel to the COAF
Companies.

(o) Conform to Documents. The Note Insurer and its counsel shall have determined
that all documents, certificates and opinions to be delivered in connection with
the Class A Notes conform to the terms of the Transaction Documents.

(p) Perfection of Security Interest. All actions required to be taken to perfect
the security interest of the Issuer and the Indenture Trustee in the Trust
Estate shall have been performed.

Section 3.02. Payment of Fees and Premium.

(a) Legal and Accounting Fees. The Servicer shall pay or cause to be paid, on
the Date of Issuance, legal fees and disbursements incurred by the Note Insurer
in connection with the issuance of the Policies in accordance with the terms of
the Fee Letter. Any fees of the Note Insurer’s auditors payable in respect of
any amendment or supplement to the Prospectus, any other Prospectus or in
connection with any periodic filing made by the Seller (as contemplated by
Section 4.08 hereof) incurred after the Date of Issuance shall be paid by the
Servicer on demand.

(b) Rating Agency Fees. The Servicer shall promptly pay the initial fees of the
Rating Agencies with respect to the Class A Notes and the transactions
contemplated hereby following receipt of a statement with respect thereto, and
shall pay or cause to be paid any subsequent fees of the Rating Agencies with
respect to, and directly allocable to, the Class A Notes. The Note Insurer shall
not be responsible for any fees or expenses of the Rating Agencies. The fees for
any other rating agency shall be paid by the party requesting such other rating
agency’s rating.

(c) Premium. In consideration of the issuance by the Note Insurer of the
Policies, the Note Insurer shall be entitled to receive the Premium as and when
due in accordance with the terms of the Fee Letter (i) in the case of Premium
due on or before the Date of Issuance, directly from the Servicer and (ii) in
the case of Premium due after the Date of Issuance, pursuant to the Transaction
Documents. The Premium paid hereunder or under the Transaction Documents shall
be nonrefundable without regard to whether the Note Insurer makes any payment
under the Policies or any other circumstances relating to the Class A Notes or
provision being made for payment of the Class A Notes prior to maturity. The
Servicer or the Indenture Trustee, as the case may be, shall make all payments
or distributions of Premium to be made by them by wire transfer to an account
designated from time to time by the Note Insurer by written notice to the
Servicer or the Indenture Trustee, respectively.

 

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Section 3.03. Reimbursement and Additional Payment Obligation.

(a) Pursuant to the Indenture, and in accordance with the priorities established
in Section 4.4(a) of the Sale and Servicing Agreement, the Note Insurer shall be
entitled to (i) reimbursement for any payment made by the Note Insurer under the
Policies, which reimbursement shall be due and payable on the date that any
amount is to be paid pursuant to a Notice (as defined in the Note Policy) or
Demand for Payment (as defined in the Swap Policy), in an amount equal to the
amount to be so paid and all amounts previously paid that remain unreimbursed,
together with interest on any and all amounts remaining unreimbursed (to the
extent permitted by law, if in respect of any unreimbursed amounts representing
interest) from the date such amounts became due until paid in full (after as
well as before judgment), at a rate of interest equal to the Late Payment Rate
and (ii) payment or reimbursement of any other amounts owed to the Note Insurer
under this Agreement together with interest thereon at a rate equal to the Late
Payment Rate.

(b) The Servicer agrees to pay to the Note Insurer as follows: anything in
Section 3.03(a) to the contrary notwithstanding, the Note Insurer shall be
entitled to reimbursement from the Servicer (i) for payments made under the
Policies arising as a result of the failure by any COAF Company to repurchase
any Receivable required to be repurchased pursuant to Section 2.3, Section 2.6
or Section 3.6 of the Sale and Servicing Agreement and Section 3.3 of the
Purchase Agreement, together with interest on any and all amounts remaining
unreimbursed (to the extent permitted by law, if in respect of any unreimbursed
amounts representing interest) from the date such amounts became due until paid
in full (after as well as before judgment), at a rate of interest equal to the
Late Payment Rate, and (ii) for payments made under the Policies, arising as a
result of the Servicer’s failure to deposit into the Collection Account any
amount required to be so deposited pursuant to any Transaction Document,
together with interest on any and all amounts remaining unreimbursed (to the
extent permitted by law, if in respect to any unreimbursed amounts representing
interest) from the date such amounts became due until paid in full (after as
well as before judgment), at a rate of interest equal to the Late Payment Rate.

(c) The Servicer and the Issuer agree to pay to the Note Insurer as follows: any
and all charges, fees, costs and expenses that the Note Insurer may reasonably
pay or incur, including, but not limited to, reasonable attorneys’ and
accountants’ fees and expenses, in connection with (i) the enforcement, defense
or preservation of any rights in respect of any of the Transaction Documents,
including, without limitation, instituting, defending, monitoring or
participating in any litigation or proceeding (including, without limitation,
any insolvency or bankruptcy proceeding in respect of any Transaction
participant or any affiliate

 

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thereof) relating to any of the Transaction Documents, any party to any of the
Transaction Documents, in its capacity as such a party, or the Transaction,
(ii) any action, proceeding or investigation affecting the Issuer, the Trust
Estate or the rights or obligations of the Note Insurer under the Policies or
the Transaction Documents, including (without limitation) any judgment or
settlement entered into affecting the Note Insurer or the Note Insurer’s
interests or (iii) any consent, amendment, waiver or other action with respect
to, or related to, any Transaction Document, whether or not executed or
completed (“Reimbursable Amounts”). Reimbursable Amounts due to the Note Insurer
shall bear interest at a rate equal to the Late Payment Rate. In the event that
the Servicer fails to pay to the Note Insurer any Reimbursable Amounts, the Note
Insurer shall be entitled to reimbursement of such amount together with interest
thereon from Section 4.4 of the Sale and Servicing Agreement or Section 5.4 of
the Indenture, as applicable. In addition, the Note Insurer reserves the right
to charge a reasonable fee as a condition to executing any waiver, consent or
amendment proposed in respect of any of the Transaction Documents.

(d) Servicer agrees to pay to the Note Insurer as follows: interest on any and
all amounts described in subclauses (b), (c) and (e) of this Section 3.03 from
the date payable or paid by such party until payment thereof in full, and
interest on any and all amounts described in Section 3.02 from the date due
until payment thereof in full, in each case, payable to the Note Insurer at the
Late Payment Rate per annum.

(e) The Servicer agrees to pay to the Note Insurer as follows: any payments made
by the Note Insurer on behalf of, or advanced to, the Servicer or COAF,
respectively, including, without limitation, any amounts payable by the Servicer
or COAF pursuant to the Notes or any other Transaction Documents. All such
amounts are to be immediately due and payable without demand.

(f) Notwithstanding any other provisions of this Agreement, none of the terms
and provisions of this Agreement shall ever be construed to create a contract to
pay to the Note Insurer for the use, forbearance or detention of money, interest
in excess of the maximum amount of interest permitted to be charged by the Note
Insurer to any of the COAF Companies under applicable state or federal law from
time to time in effect, and none of the COAF Companies shall ever be required to
pay interest in excess of such maximum amount. If, for any reason, interest is
paid hereunder in excess of such maximum amount, then promptly upon any
determination that such excess has been paid the Note Insurer will, at its
option, either refund such excess to the payor thereof or apply such excess to
the principal owing by such payor hereunder.

Section 3.04. Indemnification; Limitation of Liability.

(a) In addition to any and all rights of indemnification or any other rights of
the Note Insurer pursuant hereto or under law or equity, the Servicer, the
Issuer and COAF and any successor thereto agree to pay, and to protect,
indemnify and save harmless,

 

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the Note Insurer and its officers, directors, shareholders, employees, agents
and each person, if any, who controls the Note Insurer within the meaning of
either Section 15 of the Securities Act or Section 20 of the Securities Exchange
Act (the “Ambac Indemnified Parties”) from and against any and all claims,
losses, liabilities (including penalties), actions, suits, judgments, demands,
damages, costs or reasonable expenses (including, without limitation, reasonable
fees and expenses of attorneys, consultants and auditors and reasonable costs of
investigations) or obligations whatsoever paid by the Ambac Indemnified Parties
(herein collectively referred to as “Liabilities”) of any nature (but excluding
lost profits and other consequential damages) arising out of or relating to the
transactions contemplated by the Transaction Documents by reason of:

(i) any act or omission of any COAF Company in connection with the offering,
issuance, sale or delivery of the Notes other than by reason of false or
misleading Note Insurer Information or Underwriter Information;

(ii) any untrue statement or alleged untrue statement of a material fact
contained in any of the Capital One Information or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading;

(iii) the misfeasance or malfeasance of, or negligence or theft committed by,
any director, officer, employee or agent of any COAF Company;

(iv) the violation by any COAF Company of any federal or state securities,
banking or antitrust laws, rules or regulations in connection with the issuance,
offer and sale of the Notes or the transactions contemplated by the Transaction
Documents;

(v) the violation by any COAF Company of any federal or state laws, rules or
regulations relating to the Transaction or the origination of the Receivables,
including, without limitation, any consumer protection, lending and disclosure
laws or any laws with respect to the maximum amount of interest permitted to be
received on account of any loan of money or with respect to the Receivables;

(vi) the breach by the Servicer, the Issuer or COAF of any of its obligations
under this Insurance Agreement or any of the other Transaction Documents (other
than breaches under Section 3.2 of the Purchase Agreement or Sections 2.2, 3.2,
3.3, 3.4 or 3.5 of the Sale and Servicing Agreement); and

 

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(vii) the breach by the Servicer, the Issuer or COAF of any representation or
warranty on the part of the Servicer, the Issuer or COAF contained in this
Insurance Agreement or any of the other Transaction Documents or in any
certificate or report furnished or delivered to the Note Insurer thereunder
other than any breach for which the remedy under the Transaction Documents is
the repurchase of a Receivable, provided that such Receivable has been
repurchased in accordance with the Transaction Documents.

In addition, the Servicer will pay any and all taxes levied or assessed upon the
Issuer or upon all or any part of the Trust Estate.

This indemnity provision shall survive the termination of this Insurance
Agreement and shall survive until the statute of limitations has run on any
causes of action which arise from one of these reasons and until all suits filed
as a result thereof have been finally concluded.

(b) In addition to any and all rights of indemnification or any other rights of
the Servicer, the Seller, the Issuer and COAF pursuant hereto or under law or
equity, the Note Insurer agrees to pay, and to protect, indemnify and save
harmless, the Servicer, the Seller, the Issuer and COAF and their respective
officers, directors, shareholders, employees, agents and each person, if any,
who controls the Servicer, the Seller, the Issuer or COAF within the meaning of
either Section 15 of the Securities Act or Section 20 of the Securities Exchange
Act (the “Capital One Indemnified Parties”) from and against any and all claims,
losses, liabilities (including penalties), actions, suits, judgments, demands,
damages, costs or reasonable expenses (including, without limitation, reasonable
fees and expenses of attorneys, consultants and auditors and reasonable costs of
investigations) or obligations whatsoever paid by the Capital One Indemnified
Parties (herein collectively referred to as “Liabilities”) of any nature arising
out of or relating to the transactions contemplated by the Transaction Documents
by reason of:

(i) any untrue statement or alleged untrue statement of a material fact
contained in any of the Note Insurer Information or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading;

(ii) a breach of any of the representations, warranties or agreements of Ambac
contained in Section 2.06 or 2.07(b) hereof; or

(iii) any failure of the Note Insurer to make a payment required to be made
under the Policies.

(c) In addition to any and all rights of indemnification or any rights of the
Servicer, the Seller, the Issuer and COAF pursuant hereto or under law or
equity, the Note Insurer agrees to pay, and to protect, indemnify and save
harmless, the Capital

 

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One Indemnified Parties from and against, any and all claims, losses,
liabilities (including penalties), actions, suits, judgments, demands, damages,
costs or expenses (including reasonable fees and expenses of attorneys,
consultants and auditors and reasonable costs of investigations) of any nature
arising out of or by reason of: (i) any untrue statement of a material fact or
an omission to state a material fact necessary in order to make the statements
therein in light of the circumstances in which they were made not misleading
contained in the consolidated financial statements of Ambac Assurance
Corporation and incorporated by reference into the Exchange Act Reports pursuant
to Section 4.08 of this Agreement; or (ii) subject to the limitations on
liability set forth in Section 4.08 of this Agreement, any failure of the Note
Insurer to comply with its obligations under Section 4.08 of this Agreement.

(d) Any party which proposes to assert the right to be indemnified under this
Section 3.04 will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim is to
be made against the indemnifying party under this Section 3.04(c), notify the
indemnifying party of the commencement of such action, suit or proceeding,
enclosing a copy of all papers served. In case any action, suit or proceeding
shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate in, and, to the extent that it shall wish, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified party,
and after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses other than
reasonable costs of investigation subsequently incurred by such indemnified
party in connection with the defense thereof. The indemnified party shall have
the right to employ its counsel in any such action the defense of which is
assumed by the indemnifying party in accordance with the terms of this
subsection (c), but the fees and expenses of such counsel shall be at the
expense of such indemnified party unless the employment of counsel by such
indemnified party has been authorized by the indemnifying party. The
indemnifying party shall not be liable for any settlement of any action or claim
effected without its consent.

Section 3.05. Payment Procedure. In the event of any payment by the Note
Insurer, the Indenture Trustee and the Servicer agree to accept the voucher or
other evidence of payment as prima facie evidence of the propriety thereof and
the liability therefor to the Note Insurer. All payments to be made to the Note
Insurer under this Insurance Agreement shall be made to the Note Insurer in
lawful currency of the United States of America in immediately available funds
at the notice address for the Note Insurer as specified in the Indenture on the
date when due or as the Note Insurer shall otherwise direct by written notice to
the other parties hereto. In the event that the date of any payment to the Note
Insurer or the expiration of any time period hereunder occurs on a day which is
not a Business Day, then such payment or expiration of time period shall be made
or occur on the next succeeding Business Day with the same force and effect as
if such payment was made or time period expired on the scheduled date of payment
or expiration date. Payments to be made to the Note Insurer under this Insurance
Agreement shall bear interest at the Late Payment Rate from the date when due to
the date paid.

 

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Section 3.06. Subrogation. The parties hereto acknowledge that, to the extent of
any payment made by the Note Insurer pursuant to the Policies, the Note Insurer
shall be fully subrogated to the extent of such payment plus interest thereon at
the Late Payment Rate, to the rights of the Noteholders to any moneys paid or
payable in respect of the Notes under the Transaction Documents or otherwise
subject to applicable law. The parties hereto agree to such subrogation and
further agree to execute such instruments and to take such actions as, in the
sole and reasonable judgment of the Note Insurer, are necessary to evidence such
subrogation and to perfect the rights of the Note Insurer to receive any such
moneys paid or payable in respect of the Notes, under the Transaction Documents
or otherwise.

Section 3.07. Reimbursement. The parties hereto acknowledge that, to the extent
of any payment made by the Note Insurer pursuant to the Policies, the Note
Insurer has the right to be reimbursed such amounts plus interest thereon at the
Late Payment Rate, pursuant to the Indenture, and in accordance with the
priorities set forth in Section 4.4(a) of the Sale and Servicing Agreement and
in accordance with the priorities set forth therein for reimbursement of the
Note Insurer.

ARTICLE IV

FURTHER AGREEMENTS

Section 4.01. Effective Date; Term of the Insurance Agreement. This Insurance
Agreement shall take effect on the Date of Issuance and shall remain in effect
until the later of (a) such time as the Note Insurer is no longer subject to a
claim under the Policies and the Policies shall have been surrendered to the
Note Insurer for cancellation and (b) all amounts payable to the Note Insurer by
any COAF Company or from any other source under the Transaction Documents and
all amounts payable under the Class A Notes have been paid in full; provided,
however, that the provisions of Sections 3.03 and 3.04 hereof shall survive any
termination of this Insurance Agreement.

 

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Section 4.02. Further Assurances and Corrective Instruments.

(a) Excepting at such times as a default in payment under the Policies shall
exist or shall have occurred, none of the COAF Companies or the Indenture
Trustee shall grant any waiver of rights under any of the Transaction Documents
to which any of them is a party without the prior written consent of the Note
Insurer, and any such waiver without the written consent of the Note Insurer
shall be null and void and of no force or effect.

(b) To the extent permitted by law, the COAF Companies agree that they will,
from time to time, execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered, such supplements hereto and such further instruments
as the Note Insurer may reasonably request and as may be required in the Note
Insurer’s reasonable judgment to effectuate the intention of or facilitate the
performance of this Insurance Agreement.

Section 4.03. Obligations Absolute.

(a) The obligations of the COAF Companies hereunder shall be absolute and
unconditional and shall be paid or performed strictly in accordance with this
Insurance Agreement under all circumstances irrespective of:

(i) any lack of validity or enforceability of, or any amendment or other
modifications of, or waiver, with respect to any of the Transaction Documents,
the Class A Notes or either Policy;

(ii) any exchange or release of any other obligations hereunder;

(iii) the existence of any claim, setoff, defense, reduction, abatement or other
right that any of the COAF Companies may have at any time against the Note
Insurer or any other Person;

(iv) any document presented in connection with the Policies proving to be
forged, fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect;

(v) any payment by the Note Insurer under the Policies against presentation of a
certificate or other document that does not strictly comply with terms of the
Policies;

(vi) any failure of any of the COAF Companies to receive the proceeds from the
sale of the Notes;

(vii) any Bankruptcy Event with respect to any COAF Company; and

 

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(viii) any other circumstances, other than payment in full, that might otherwise
constitute a defense available to, or discharge of, such party in respect of any
Transaction Document.

(b) Each of the COAF Companies and any and all others who are now or may become
liable for all or part of the obligations of any of the COAF Companies under
this Insurance Agreement agree to be bound by this Insurance Agreement and
(i) to the extent permitted by law, waive and renounce any and all redemption
and exemption rights and the benefit of all valuation and appraisement
privileges against the indebtedness and obligations evidenced by any Transaction
Document or by any extension or renewal thereof; (ii) waive presentment and
demand for payment, notices of nonpayment and of dishonor, protest of dishonor
and notice of protest; (iii) waive all notices in connection with the delivery
and acceptance hereof and all other notices in connection with the performance,
default or enforcement of any payment hereunder, except as required by the
Transaction Documents; (iv) waive all rights of abatement, diminution,
postponement or deduction, or any defense other than payment, or to any right of
setoff or recoupment arising out of any breach under any of the Transaction
Documents, by any party thereto or any beneficiary thereof, or out of any
obligation at any time owing to any of the COAF Companies; (v) agree that its
liabilities hereunder shall, except as otherwise expressly provided in this
Section 4.03, be unconditional and without regard to any setoff, counterclaim or
the liability of any other Person for the payment hereof; (vi) agree that any
consent, waiver or forbearance hereunder with respect to an event shall operate
only for such event and not for any subsequent event; (vii) consent to any and
all extensions of time that may be granted by the Note Insurer with respect to
any payment hereunder or other provisions hereof and to the release of any
security at any time given for any payment hereunder, or any part thereof, with
or without substitution, and to the release of any Person or entity liable for
any such payment; and (viii) consent to the addition of any and all other
makers, endorsers, guarantors and other obligors for any payment hereunder, and
to the acceptance of any and all other security for any payment hereunder, and
agree that the addition of any such obligors or security shall not affect the
liability of the parties hereto for any payment hereunder.

(c) Nothing herein shall be construed as prohibiting any COAF Company from
pursuing any rights or remedies it may have against any other Person in a
separate legal proceeding.

Section 4.04. Assignments; Reinsurance; Third-party Rights.

(a) This Insurance Agreement shall be a continuing obligation of the parties
hereto and shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns. No COAF Company may
assign its rights under this Insurance Agreement, or delegate any of its duties
hereunder, without the prior written consent of the Note Insurer.

 

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(b) The Note Insurer shall have the right to give participations in its rights
under this Insurance Agreement and to enter into contracts of reinsurance with
respect to the Policies upon such terms and conditions as the Note Insurer may
in its discretion determine; provided, however, that no such participation or
reinsurance agreement or arrangement shall relieve the Note Insurer of any of
its obligations hereunder or under the Policies.

(c) In addition, the Note Insurer shall be entitled to assign or pledge to any
bank or other lender providing liquidity or credit with respect to the
Transaction or the obligations of the Note Insurer in connection therewith any
rights of the Note Insurer under the Transaction Documents or with respect to
any real or personal property or other interests pledged to the Note Insurer, or
in which the Note Insurer has a security interest, in connection with the
Transaction.

(d) Except as provided herein with respect to participants and reinsurers,
nothing in this Insurance Agreement shall confer any right, remedy or claim,
express or implied, upon any Person, including, particularly, any Owner, other
than the Note Insurer against any COAF Company, and all the terms, covenants,
conditions, promises and agreements contained herein shall be for the sole and
exclusive benefit of the parties hereto and their successors and permitted
assigns. Neither the Indenture Trustee, the Issuer nor any Owner shall have any
right to payment from any Premiums paid or payable hereunder or under the
Transaction Documents or from any other amounts paid by any COAF Company
pursuant to Section 3.02, 3.03 or 3.04 hereof.

Section 4.05. Liability of the Note Insurer. Neither the Note Insurer nor any of
its officers, directors or employees shall be liable or responsible for (a) the
use that may be made of the Policies by the Indenture Trustee, or the Swap
Counterparty, as applicable, or for any acts or omissions of the Indenture
Trustee in connection therewith; or (b) the validity, sufficiency, accuracy or
genuineness of documents delivered to the Note Insurer in connection with any
claim under the Policies, or of any signatures thereon, even if such documents
or signatures should in fact prove to be in any or all respects invalid,
insufficient, fraudulent or forged (unless the Note Insurer shall have actual
knowledge thereof). In furtherance and not in limitation of the foregoing, the
Note Insurer may accept documents that appear on their face to be in order,
without responsibility for further investigation.

Section 4.06. Nonpetition Covenant. Each party hereto agrees that, prior to the
date which is one year and one day after payment in full of all obligations of
each Bankruptcy Remote Party in respect of all securities issued by any
Bankruptcy Remote Party involved in this Transaction (a) such party shall not
authorize such Bankruptcy Remote Party to commence a voluntary winding-up or
other voluntary case or other proceeding seeking liquidation, reorganization or
other relief with respect to such Bankruptcy Remote Party or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect in any
jurisdiction or seeking the appointment of an administrator, a trustee,
receiver, liquidator, custodian or other similar official with respect to such
Bankruptcy Remote Party or any substantial part of its property or to consent to
any such relief or to the appointment of or taking possession by

 

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any such official in an involuntary case or other proceeding commenced against
such Bankruptcy Remote Party, or to make a general assignment for the benefit
of, its creditors generally, any party hereto or any other creditor of such
Bankruptcy Remote Party, and (b) of the parties hereto shall commence or join
with any other Person in commencing any proceeding against such Bankruptcy
Remote Party under any bankruptcy, reorganization, liquidation or insolvency law
or statute now or hereafter in effect in any jurisdiction. This Section shall
survive the termination of this Agreement.

Section 4.07. Parties To Join in Enforcement Action.

(a) To the extent necessary to enforce any right of the Note Insurer in or
remedy of the Note Insurer under any Receivable or related asset, the Issuer and
each COAF Company agree to join in any action initiated by the Indenture Trustee
or the Note Insurer and the Indenture Trustee agrees to join in any action
initiated by the Note Insurer for the protection of such right or exercise of
such remedy.

(b) In the event of any court proceeding (x) with respect to which a COAF
Company is a party (including, without limitation, an insolvency or bankruptcy
proceeding in respect of any COAF Company) which affects the Trust Estate, the
Policies or the obligations of the Note Insurer under the Transaction Documents,
and (y) with respect to which such COAF Company fails to defend or answer, the
Note Insurer shall have the right to direct, assume or otherwise participate in
the defense thereof. In such event, the Note Insurer shall, following written
notice to the Indenture Trustee, have the exclusive-right to determine, in its
sole discretion, the actions necessary to preserve and protect the Trust Estate.
All costs and expenses of the Note Insurer in connection with such action,
proceeding or investigation, (including, without limitation, any judgment or
settlement entered into or paid by the Note Insurer), shall be included in the
Reimbursement Obligations.

(c) The Indenture Trustee shall cooperate with, and take such action as directed
by, the Note Insurer, including (without limitation) entering into such
agreements and settlements as the Note Insurer in its sole discretion shall
direct with respect to such court proceeding. The Indenture Trustee shall not be
liable to the Note Insurer for any such action that conforms to the direction of
the Note Insurer. The Indenture Trustee’s reasonable out-of-pocket costs and
expenses (including attorneys’ fees and expenses) with respect to any such
action shall be reimbursed pursuant to the Indenture in accordance with the
priorities set forth in Section 4.4(a) of the Sale and Servicing Agreement;
provided, however, that if such costs and expenses are not so reimbursed on the
Payment Date immediately following the date incurred, then the Note Insurer
shall reimburse the Indenture Trustee for such costs and expenses within 60 days
of such nonpayment.

(d) The Indenture Trustee hereby agrees to provide to the Note Insurer prompt
written notice of any action, proceeding or investigation that names the Owner
Trustee or the Issuer as a party or that could adversely affect the Trust Estate
or the rights or

 

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obligations of the Note Insurer hereunder or under the Policies or the other
Transaction Documents, including (without limitation) any insolvency or
bankruptcy proceeding in respect of the Servicer, COAF, the Seller or any
affiliate thereof.

(e) Notwithstanding anything contained herein or in any of the other Transaction
Documents to the contrary, the Indenture Trustee shall not, without the Note
Insurer’s prior written consent or unless directed by the Note Insurer,
undertake or join any litigation or agree to any settlement of any action,
proceeding or investigation affecting the Owner Trustee, the Issuer or the Trust
Estate or the rights or obligations of the Note Insurer hereunder or under the
Policies or the other Transaction Documents.

Section 4.08 Regulation AB Reports. The Note Insurer agrees that (i) the Note
Insurer Financial Information containing the financial information required by
Item 1114(b)(2) of Regulation AB included in documents filed by Ambac Financial
Group, Inc. with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act (the “Ambac Exchange Act Reports”), may be
incorporated by reference by the Seller or the Issuer into the Prospectus or any
Exchange Act Report to the extent required under Regulation AB or Item 7 on Form
10-D, (ii) only until the Seller and the Issuer would become eligible to suspend
filing of periodic reports, assuming their compliance in good faith with the
covenant in Section 2.02(o) hereof, Ambac Exchange Act Reports will continue to
be filed (even if not required to be filed) and such Ambac Exchange Act Reports
will (or during the continuance of a Positive Guidance Condition (as defined
below), use its best efforts to) be filed on a timely basis (it being
acknowledged that any such filings so made pursuant to any extensions granted by
the Commission or otherwise in accordance with the Securities Act and the Rules
and Regulations thereunder will be considered filed “timely”) and, (iii) on not
less than five (5) Business Days’ notice, it will use commercially reasonable
efforts to cause its accountants, if required by the Seller or the Issuer in
order to comply with the Securities Exchange Act, to issue their consent to the
incorporation by reference of any Ambac Exchange Act Report into the Prospectus
or any Exchange Act Report; provided, however, that the Note Insurer’s
liability, in the case of a breach of this Section 4.08, will be limited to
(a) the actual damages incurred by the Sponsor and the Seller (or the Capital
One Indemnified Parties in the case of the indemnity provided in
Section 3.04(c)(ii) of this Agreement), and (b) lost profits and other
consequential damages, in each case as a direct result of a determination by the
Commission that the Seller is no longer eligible to file registration statements
on Form S-3, such determination being based solely on the Note Insurer’s breach
of this Section 4.08, and the Note Insurer’s liability for the damages described
in clause (b) above shall in no event exceed as of any date the sum of (x) the
aggregate amount of premium received by the Note Insurer in connection with the
transactions described by this Agreement as of such date and (y) as of such date
and without duplication of (x) above the aggregate amount of premium expected to
be received by the Note Insurer assuming that the Loans pay down using a 1.7%
ABS prepayment speed (as described in the Prospectus Supplement) and further
assuming that the clean up call is exercised by the Servicer at its earliest
opportunity. It is understood and agreed that, to the

 

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extent any consent letter of the Note Insurer’s accountants is required by the
Seller or the Issuer in connection with such filing, the fees and expenses
payable in respect thereof shall be paid by the Servicer upon demand.

As used in this Section 4.08, the term “Positive Guidance Condition” means that
either (a) the Commission has not issued any Interpretive Guidance or (b) the
Commission has issued Interpretive Guidance and the Note Insurer has delivered
an Opinion of Counsel addressed to COAF, the Seller and the Issuer in form and
substance satisfactory to COAF, the Seller, the Issuer and their counsel, to the
effect that under the Interpretive Guidance, the failure of a credit enhancement
provider to timely file or deliver financial information under Item 1114(b)(2)
of Regulation AB would not constitute a breach by COAF, the Seller or the Issuer
of its obligations under Item 1114(b)(2) of Regulation AB or Form 10-D and would
not cause COAF, the Seller or the Issuer to fail to satisfy the eligibility
requirements for the use of Form S-3 as described in General Instruction I to
Form S-3. The term “Interpretive Guidance” means any release, no-action letter,
telephone interpretation or other publicly available guidance issued by the
Commission which addresses the issue of a sponsor’s, depositor’s or issuing
entity’s responsibility for the timely delivery of financial information under
Item 1114(b)(2) of Regulation AB. The term “Opinion of Counsel” means the
opinion of Dewey Ballantine LLP or another nationally recognized securitization
counsel to Ambac reasonably acceptable to COAF.

ARTICLE V

DEFAULTS; REMEDIES

Section 5.01. Defaults. The occurrence of any of the following events shall
constitute an Event of Default hereunder:

(a) An Insurance Agreement Event of Default shall occur and be continuing;

(b) (i) Any COAF Company shall fail to pay when due any amount payable by such
COAF Company hereunder and such failure has continued for a period of at least
five (5) Business Days upon receipt of notice by the applicable COAF Company
from the Note Insurer, or if specified in the applicable Transaction Document,
the applicable grace period set forth therein, or (ii) a legislative body has
enacted any law that declares or a court of competent jurisdiction shall find or
rule that any of the Transaction Documents are not valid and binding on any COAF
Company;

(c) A decree or order of a court or agency or supervisory authority having
jurisdiction in the premises in an involuntary case under any present or future
federal or state bankruptcy, insolvency or similar law or the appointment of a
conservator or receiver or liquidator or other similar official in any
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings, or for the winding-up or liquidation of its affairs, shall
have been entered against any COAF Company and such decree or order shall have
remained in force undischarged or unstayed for a period of 90 consecutive days;

 

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(d) Any COAF Company shall consent to the appointment of a conservator or
receiver or liquidator or other similar official in any insolvency, readjustment
of debt, marshalling of assets and liabilities or similar proceedings of or
relating to any COAF Company or of or relating to all or substantially all of
the property of any of them; or

(e) Any COAF Company shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of or otherwise
voluntarily commence a case or proceeding under any applicable bankruptcy,
insolvency, reorganization or other similar statute, make an assignment for the
benefit of its creditors or voluntarily suspend payment of its obligations.

Section 5.02. Remedies; No Remedy Exclusive.

(a) Upon the occurrence of an Event of Default, the Note Insurer may exercise
any one or more of the rights and remedies set forth below:

(i) declare all indebtedness of every type or description then owed by any COAF
Company to the Note Insurer pursuant to the Transaction Documents to be
immediately due and payable, and the same shall thereupon be immediately due and
payable provided, however, that any such payment by the Seller or the Issuer
shall be paid in accordance with Section 4.4 of the Sale and Servicing Agreement
or Section 5.4 of the Indenture, as applicable;

(ii) exercise any rights and remedies under the Transaction Documents in
accordance with the terms of the Transaction Documents or direct the Indenture
Trustee to exercise such remedies in accordance with the terms of the
Transaction Documents; or

(iii) take whatever action at law or in equity as may appear necessary or
desirable in its judgment to collect the amounts then due under this Insurance
Agreement or the Transaction Documents or to enforce performance and observance
of any obligation, agreement or covenant of any COAF Company under this
Insurance Agreement or the Transaction Documents.

(b) Unless otherwise expressly provided, no remedy herein conferred upon or
reserved is intended to be exclusive of any other available remedy, but each
remedy shall be cumulative and shall be in addition to other remedies given
under this Insurance Agreement, the Transaction Documents or existing at law or
in equity. No delay or omission to exercise any right or power accruing under
this Insurance Agreement or the Transaction Documents upon the happening of any
event set forth in Section 5.01 hereof shall impair any such right or power or
shall be construed to be a waiver thereof, but any such right and

 

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power may be exercised from time to time and as often as may be deemed
expedient. In order to entitle the Note Insurer to exercise any remedy reserved
to the Note Insurer in this Article, it shall not be necessary to give any
notice, other than such notice as may be required in this Article.

(c) Each party to this Insurance Agreement hereby agrees that, in addition to
any other rights or remedies existing in its favor, it shall be entitled to
specific performance and/or injunctive relief in order to enforce any of its
rights or any obligation owed to it under the Transaction Documents.

Section 5.03. Waivers.

(a) No failure by the Note Insurer to exercise, and no delay by the Note Insurer
in exercising, any right hereunder shall operate as a waiver thereof. The
exercise by the Note Insurer of any right hereunder shall not preclude the
exercise of any other right, and the remedies provided herein to the Note
Insurer are declared in every case to be cumulative and not exclusive of any
remedies provided by law or equity.

(b) The Note Insurer shall have the right, to be exercised in its complete
discretion, to waive any Event of Default hereunder, by a writing setting forth
the terms, conditions and extent of such waiver signed by the Note Insurer and
delivered to the Servicer. Unless such writing expressly provides to the
contrary, any waiver so granted shall extend only to the specific event or
occurrence which gave rise to the Event of Default so waived and not to any
other similar event or occurrence which occurs subsequent to the date of such
waiver.

ARTICLE VI

MISCELLANEOUS

Section 6.01. Amendments, Etc. This Insurance Agreement may be amended, modified
or terminated only by written instrument or written instruments signed by the
parties hereto. The Servicer agrees to promptly provide a copy of any amendment
to this Insurance Agreement to the Indenture Trustee and the Rating Agencies. No
act or course of dealing shall be deemed to constitute an amendment,
modification or termination hereof.

Section 6.02. Notices. All demands, notices and other communications to be given
hereunder shall be in writing (except as otherwise specifically provided herein)
and shall be mailed by registered mail or personally delivered or telecopied to
the recipient as follows:

 

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(a)    To the Note Insurer:    Ambac Assurance Corporation    One State Street
Plaza    New York, New York 10004    Attention:    Structured Finance
Department- ABS    Facsimile:    (212) 208-3547    Confirmation:    (212)
668-0340    Michael Babick    Vice President    Telephone: (212) 208-3407   
Facsimile: (212) 363-1459 (b)    To the Servicer:    Capital One Auto Finance,
Inc.    1680 Capital One Drive    McLean, Virginia 22102    Attention: Director
of Auto Securitization    Facsimile: (703) 720-2121    Confirmation:
(703)-720-1000    With a copy to Legal Department    Facsimile: (703) 720-2121
   Confirmation: (703) 875-1000 (c)    To COAF:    Capital One Auto Finance,
Inc.    1680 Capital One Drive    McLean, Virginia 22102    Attention: Director
of Auto Securitization   

Facsimile: (703) 720-2121

Confirmation: (703)-720-1000

   With a copy to Legal Department    Facsimile: (703) 720-2121    Confirmation:
(703)-720-1000 (d)    To the Seller:    Capital One Auto Receivables, LLC   

140 E. Shore Drive

Room 1052-D

Glen Allen, Virginia 22102

  

Attention: Capital Markets

Facsimile: (804) 290-6666

Confirmation: (804)-290-6736

 

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   With a copy to Legal Department    Facsimile: (703) 720-2121    Confirmation:
(703)-720-1000 (e)    To the Indenture Trustee:    The Bank of New York   

101 Barclay Street

4 West

New York, New York 10286

  

Attention: Corporate Trust Administration-Capital

One Auto Finance 2007-A

Facsimile: (212) 815-8093

Confirmation: (212) 815-8176

(f)    To the Issuer:    Capital One Auto Finance Trust 2007-A   

c/o Wilmington Trust Company

1100 North Market Street

Wilmington, DE 19890

   Attention:    Corporate Trust Administration-Capital One Auto       Finance
Trust 2007-A    Facsimile: (302) 636-4144    Confirmation: (302) 636-6188 (g)   
To the Representatives of the Underwriters:    J.P. Morgan Securities Inc.   

270 Park Avenue, Floor 10

New York, New York 10017

   Attention: John Cho   

Facsimile: (212) 834-6154

Confirmation: (212) 834-8005

   and   

Barclays Capital Inc.

200 Park Avenue

5th Floor

  

New York, New York 10166

Attention: Jon-Claude Zucconi

Facsimile: (212) 412-6846

   Confirmation: (212) 412-7646

 

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A party may specify an additional or different address or addresses by writing
mailed or delivered to the other parties as aforesaid. All such notices and
other communications shall be effective upon receipt.

Section 6.03. Severability. In the event that any provision of this Insurance
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, the parties hereto agree that such holding shall not invalidate or
render unenforceable any other provision hereof. The parties hereto further
agree that the holding by any court of competent jurisdiction that any remedy
pursued by any party hereto is unavailable or unenforceable shall not affect in
any way the ability of such party to pursue any other remedy available to it.

Section 6.04. Governing Law. This Insurance Agreement shall be governed by and
construed in accordance with the laws of the State of New York.

Section 6.05. Consent to Jurisdiction.

(a) The parties hereto hereby irrevocably submit to the jurisdiction of the
United States District Court for the Southern District of New York and any court
in the State of New York located in the City and County of New York, and any
appellate court from any thereof, in any action, suit or proceeding brought
against it and to or in connection with any of the Transaction Documents or the
transactions contemplated thereunder or for recognition or enforcement of any
judgment, and the parties hereto hereby irrevocably and unconditionally agree
that all claims in respect of any such action or proceeding may be heard or
determined in such New York state court or, to the extent permitted by taw, in
such federal court. The parties hereto agree that a final judgment in any such
action, suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law. To
the extent permitted by applicable law, the parties hereto hereby waive and
agree not to assert by way of motion, as a defense or otherwise in any such
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of such courts, that the suit, action or proceeding is brought in
an inconvenient forum, that the venue of the suit, action or proceeding is
improper or that the related documents or the subject matter thereof may not be
litigated in or by such courts.

(b) To the extent permitted by applicable law, the parties hereto shall not seek
and hereby waive the right to any review of the judgment of any such court by
any court of any other nation or jurisdiction which may be called upon to grant
an enforcement of such judgment.

(c) Nothing contained in this Insurance Agreement shall limit or affect the Note
Insurer’s right to serve process in any other manner permitted by law or to
start legal proceedings relating to any of the Transaction Documents against any
COAF Company or its or their property in the courts of any jurisdiction.

 

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Section 6.06. Consent of the Note Insurer. In the event that the consent of the
Note Insurer is required under any of the Transaction Documents, the
determination whether to grant or withhold such consent shall be made by the
Note Insurer in its sole discretion without any implied duty towards any other
Person, except as otherwise expressly provided therein.

Section 6.07. Counterparts. This Insurance Agreement may be executed in
counterparts by the parties hereto, and all such counterparts shall constitute
one and the same instrument.

Section 6.08. Headings. The headings of Articles and Sections and the Table of
Contents contained in this Insurance Agreement are provided for convenience
only. They form no part of this Insurance Agreement and shall not affect its
construction or interpretation. Unless otherwise indicated, all references to
Articles and Sections in this Insurance Agreement refer to the corresponding
Articles and Sections of this Insurance Agreement.

Section 6.09. Trial by Jury Waived. Each party hereto hereby waives, to the
fullest extent permitted by law, any right to a trial by jury in respect of any
litigation arising directly or indirectly out of, under or in connection with
any of the Transaction Documents or any of the transactions contemplated
thereunder. Each party hereto (a) certifies that no representative, agent or
attorney of any party hereto has represented, expressly or otherwise, that it
would not, in the event of litigation, seek to enforce the foregoing waiver and
(b) acknowledges that it has been induced to enter into the Transaction
Documents to which it is a party by, among other things, this waiver.

Section 6.10. Limited Liability. No recourse under any Transaction Document
shall be had against, and no personal liability shall attach to, any officer,
employee, director, affiliate or shareholder of any party hereto, as such, by
the enforcement of any assessment or by any legal or equitable proceeding, by
virtue of any statute or otherwise in respect of any of the Transaction
Documents, the Notes or the Policies, it being expressly agreed and understood
that each Transaction Document is solely a corporate obligation of each party
hereto, and that any and all personal liability, either at common law or in
equity, or by statute or constitution, of every such officer, employee,
director, affiliate or shareholder for breaches by any party hereto of any
obligations under any Transaction Document is hereby expressly waived as a
condition of and in consideration for the execution and delivery of this
Insurance Agreement.

Section 6.11. Entire Agreement. This Insurance Agreement and the Policies set
forth the entire agreement between the parties with respect to the subject
matter thereof, and this Insurance Agreement supersedes and replaces any
agreement or understanding that may have existed between the parties prior to
the date hereof in respect of such subject matter.

Section 6.12. Limitation of Liability. It is expressly understood and agreed by
and among the parties hereto (i) that this Insurance Agreement is executed and
delivered by Wilmington Trust Company, not in its individual capacity but solely
as Owner

 

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Trustee under the Amended and Restated Trust Agreement dated as of February 15,
2007 with Capital One Auto Receivables, LLC (the “Trust Agreement”) in the
exercise of the power and authority conferred and vested in it as such Owner
Trustee, (ii) each of the representations, undertakings and agreements made
herein by the Issuer are not personal representations, undertakings and
agreements of Wilmington Trust Company, but are binding only on the Issuer,
(iii) nothing contained herein shall be construed as creating any liability on
Wilmington Trust Company, individual or personally, to perform any covenant of
the Issuer either expressed or implied contained herein, all such liability, if
any, being expressly waived by the parties hereto and by any person claiming by,
through or under any such party, and (iv) under no circumstances shall
Wilmington Trust Company be personally liable for the payment of any
indebtedness or expense of the Issuer or be liable for the breach or failure of
any obligation, representation, warranty or covenant made or undertaken by the
Issuer under this Insurance Agreement.

[Remainder of page intentionally left blank; signature page follows]

 

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

 

AMBAC ASSURANCE CORPORATION,

as Note Insurer

By:  

/s/ Michael N. Babick

Name:   Michael N. Babick Title:   Managing Director

CAPITAL ONE AUTO FINANCE, INC.,

in its individual capacity and as Servicer

By:  

/s/ Richard Johns

Name:   Richard Johns Title:   Assistant Vice President

CAPITAL ONE AUTO RECEIVABLES, LLC,

as Seller

By:  

/s/ Jerry Hamstead

Name:   Jerry Hamstead Title:   Assistant Vice President CAPITAL ONE AUTO
FINANCE TRUST 2007-A By:  

WILMINGTON TRUST COMPANY,

not in its individual capacity but solely in its capacity as Owner Trustee

By:  

/s/ J. Christopher Murphy

Name:   J. Christopher Murphy Title:   Financial Services Officer

Capital One Auto Finance Trust 2007-A

Insurance Agreement Signature Page

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THE BANK OF NEW YORK,

not in its individual capacity but solely as Indenture Trustee

By:  

/s/ Karim Rochelle

Name:   Karim Rochelle Title:   Trust Officer

Capital One Auto Finance Trust 2007-A

Insurance Agreement Signature Page