**Exhibit10.126(u)**

** **

**EXECUTION COPY**

 

 

 

FIRST INVESTORS SERVICINGCORPORATION

as Servicer,

 

FIRST INVESTORS AUTO FUNDINGCORPORATION

as Depositor,

 

WELLS FARGO BANK, NATIONALASSOCIATION

as Indenture Trustee andSecurities Intermediary

 

and

 

FIRST INVESTORS AUTO OWNERTRUST 2006-A

as Issuer

 

 

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SALE AND ALLOCATION AGREEMENT

 

Dated as of January 26,2006

 

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**TABLE OF CONTENTS**

 
| **Exhibits**        |                                                      |   |
|---------------------|-----------------------------------------------------------|--------|
|                |                                                      |   |
| **Exhibit A**  | **Form of Monthly Servicer Report**                  |   |
| **Exhibit B**  | **[Reserved]**                                            |   |
| **Exhibit C**  | **Credit Policy**                                         |   |
| **Exhibit D**  | **[Reserved]**                                            |   |
| **Exhibit E**  | **Form of Originator Agreement**                     |   |
| **Exhibit F**  | **Form of Additional Contract Assignment**           |   |
|                |                                                      |   |
| **Schedules**       |                                                      |   |
|                |                                                      |   |
| **Schedule 1** | **Schedule of Initial Contracts**                    |   |
| **Schedule 2** | **Location of Contract Files**                            |   |
| **Schedule 3** | **Perfection Representations, Warranties and  Covenants** |   |

 

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SALE AND ALLOCATION AGREEMENT, dated as of January 26,2006 (as amended, supplemented or otherwise modified and in effect from time totime, this “*Agreement*”), by and amongFIRST INVESTORS AUTO OWNER TRUST 2006-A, a Delaware statutory trust (the “*Trust*”), FIRST INVESTORS AUTOFUNDING CORPORATION, as depositor (the “*Depositor*”),WELLS FARGO BANK, NATIONAL ASSOCIATION, as Indenture Trustee (the “*Indenture Trustee*”) and assecurities intermediary (the “*Securities Intermediary*”)and FIRST INVESTORS SERVICING CORPORATION, a Delaware corporation, as servicer(together with its successors and assigns and in such capacity, either “*FISC*” or the “*Servicer*”).

 

WHEREAS, the Trust desires to purchase the Contracts  contributed by the Seller to the Depositorpursuant to the Contribution Agreement;

 

WHEREAS, the Depositor is willing to sell theContracts to the Trust as of the date hereof; and

 

WHEREAS, FISC is willing to service such Contracts onbehalf of the Trust in accordance with the terms of the Servicing Agreement;

 

NOW, THEREFORE, in consideration of the mutualcovenants contained herein and other good and valuable consideration, thereceipt and sufficiency of which are hereby acknowledged, the parties heretoagree as follows:

 

# **Article I**

# ** **

# **Definitions**

# ** **

## **Section 1.1.**           **Definitions**.

##  

Whenever used in this Agreement, the following wordsand phrases, unless the context otherwise requires, whenever capitalized shallhave the following meanings:

 

Accounts: The Collection Account,the Reserve Account, the Prefunding Account, the Depositor Account, the Class ANote Payment Account and the Class B Note Payment Account.

 

Additional Contract: Any Contractpurchased by the Trust from the Depositor during the Prefunding Period fromproceeds available in the Prefunding Account.

 

Additional Contract Cutoff Date:With respect to any Additional Contract, the date that is two Business Daysprior to the related Additional Contract Purchase Date.

 

Additional Contract Purchase Date:Any Business Day during the Prefunding Period that is designated by theDepositor in writing to the Indenture Trustee and the Insurer as the date onwhich Additional Contracts will be purchased by the Trust from the Depositor.

 

Additional Conveyed Property:  With respect to any Additional Contracts, theproceeds, rights and other items described in Section 2.1(a)(ii) through(ix).

 

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Additional Note Interest:  For any Payment Date, with respect to the Class ANotes, the sum of (i) all accrued but unpaid Monthly Note Interest forprevious Payment Dates plus (ii) the sum of, to the extentpermitted by law, (A) interest at the applicable Note Rate on all accruedand unpaid interest on the Class A-1 Notes for previous Payment Dates, (B) interestat the applicable Note Rate on all accrued and unpaid interest on the Class A-2Notes for previous Payment Dates, (C) interest at the applicable Note Rateon all accrued and unpaid interest on the Class A-3 Notes for previousPayment Dates and (D) interest at the applicable Note Rate on all accruedand unpaid interest on the Class A-4 Notes for previous Payment Dates.

 

Additional Purchase Price:  With respect to any Additional Contract andthe related Additional Conveyed Property, 100% of the outstanding balance ofsuch Additional Contract as of the related Additional Contract Cutoff Date.

 

Additional Reserve Account Deposit:  As defined in Section 2.1(f)(iii).

 

Affiliate:  With respect to any Person, any other Persondirectly or indirectly controlling, controlled by or under direct or indirectcommon control with such Person.  Forpurposes of this definition, “control” when used with respect to any Personshall mean the power to direct the management and policies of such Person,directly or indirectly, whether through the ownership of voting securities, bycontract or otherwise.

 

Amount Financed:  With respect to any Contract, the aggregateamount advanced to the related Obligor under such Contract toward the purchaseprice of the Financed Vehicle and any related costs.

 

Applicable Tax State:  As of any date of determination, (i) anystate in which the Owner Trustee maintains the Corporate Trust Office, (ii) anystate in which the Owner Trustee maintains its principal executive offices and (iii) anystate in which the Servicer regularly conducts servicing and collectionactivities (other than purely ministerial activities) with respect to amaterial portion of the Contracts.

 

APR: With respect to any Contract, the annual percentage rate of intereststated in such Contract.

 

Available Funds:  For any Payment Date, (i) all Obligorpayments received with respect to the Contracts during the preceding CollectionPeriod, (ii) all Liquidation Proceeds and insurance proceeds received withrespect to the Contracts during the preceding Collection Period, (iii) allinterest earned on, and Eligible Investments of, funds on deposit in theCollection Account, the Reserve Account and the Prefunding Account during thepreceding Collection Period, (iv) the Purchase Amount for all Contracts thatbecame Purchased Contracts during the preceding Collection Period and (v) allprepayments received with respect to the Contracts during the precedingCollection Period attributable to any refunded item included in the AmountFinanced (including amounts received as a result of rebates of extendedwarranty contract costs and insurance premiums and proceeds received underphysical damage, credit life and credit disability insurance policies); provided,however, that Available Funds for any Payment Date shall not include anypayments or other amounts (including Liquidation Proceeds and insurance 

 

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proceeds) received with respect to any PurchasedContract the Purchase Amount for which was included in Available Funds for aprevious Payment Date.

 

Back-up Servicer:  Wells Fargo Bank, National Association, anational banking association, in its capacity as back-up servicer, and itssuccessors and assigns in such capacity.

 

Business Day:  Any day other than a Saturday, a Sunday or aday on which banking institutions or trust companies in New York, New York;Wilmington, Delaware; Houston, Texas; Minneapolis, Minnesota; or Atlanta,Georgia are authorized or obligated by law, executive order or governmentaldecree to remain closed.

 

Capitalized Interest Amount:  For the period from and including the ClosingDate to but excluding the first Payment Date, $352,731.78; for the period fromand including the first Payment Date to but excluding the second Payment Date,$272,319.67; and for the period from and including the second Payment Date tobut excluding the Prefunding Account Payout Date, $136,159.83; provided,however, on any day on which the amount on deposit in the PrefundingAccount is zero and the Prefunding Period has terminated, the CapitalizedInterest Amount shall be zero.

 

Class A Monthly Note Principal:  For any Payment Date, the lesser of (i) theClass A Note Balance as of the day preceding such Payment Date and (ii) theamount necessary to reduce the Class A Note Balance as of the daypreceding such Payment Date to the sum of (A) 96.75% of the Pool Balanceas of the last day of the related Collection Period and (B) on or prior tothe Prefunding Account Payout Date and the distribution of the Excess PrefundingAmount, 98.5% of the Prefunding Account Balance as of the last day of therelated Collection Period; provided, however, that if suchPayment Date is the Final Note Payment Date for any Class of Class ANotes, the Class A Monthly Note Principal for such Payment Date shallequal the greater of (a) the amount determined above and (b) theoutstanding principal balance of such Class of Class A Notes as ofthe day preceding its Final Note Payment Date; provided, further,that for the purposes of determining Class A Monthly Note Principal, theunpaid balance of any Defaulted Contract or a Purchased Contract will be deemedto be zero on and after the last day of the Collection Period during which suchContract became a Defaulted Contract or a Purchased Contract.

 

Class A Note Parity Amount:  For any Payment Date: (i) if suchPayment Date is the Final Note Payment Date for the Class A-1 Notes, Class A-2Notes or Class A-3 Notes, the greater of: (A) the amount necessary toreduce the outstanding principal balance of the Class A-1 Notes, Class A-2Notes or Class A-3 Notes, as applicable, to zero and (B) the amountnecessary to reduce the Class A Note Balance (calculated after givingeffect to principal payments made on the Class A Notes on the immediatelypreceding Payment Date) to the sum of the Pool Balance and 98.5% of the amounton deposit in the Prefunding Account as of the last day of the relatedCollection Period; (ii) for the Final Note Payment Date for the Class A-4Notes, the amount necessary to reduce the outstanding principal balance of the Class A-4Notes to zero; and (iii) for any other Payment Date, the amount calculatedpursuant to clause (i)(B) of the definition hereof.

 

Class A Note Balance:  At any time, as the context may require, (i) withrespect to all of the Class A Notes, an amount equal to, initially, theInitial Class A Note Balance and, thereafter, an 

 

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amount equal to the Initial Class A Note Balanceas reduced from time to time by all amounts allocable to principal previouslydistributed to each Class of Class A Noteholders or (ii) withrespect to any Class A-1 Note, Class A-2 Note, Class A-3 Noteand Class A-4 Note, an amount equal to, initially, the initialdenomination of such Class A Note and, thereafter, an amount equal to suchinitial denomination as reduced from time to time by all amounts allocable toprincipal previously distributed in respect of such Class A Note; provided,however, that in determining whether the Holders of Class A Notesevidencing the requisite percentage of the Class A Note Balance have givenany request, demand, authorization, direction, notice, consent or waiverhereunder or under any other Transaction Document, Class A Notes owned bythe Trust, any other obligor upon the Class A Notes, the Depositor, theServicer or any Affiliate of any of the foregoing Persons shall be disregardedand deemed to be excluded from the Class A Note Balance (unless suchPersons own 100% of the Class A Note Balance), except that, in determiningwhether the Indenture Trustee or the Owner Trustee shall be protected inrelying on any such request, demand, authorization, direction, notice, consentor waiver, only Class A Notes that a Responsible Officer of the IndentureTrustee or the Owner Trustee, as applicable, actually knows to be so ownedshall be so disregarded; and, providedfurther, that Class ANotes that, to the actual knowledge of a Responsible Officer of the IndentureTrustee or the Owner Trustee, as applicable, have been pledged in good faithmay be regarded as included in the Class A Note Balance if the pledgeeestablishes to the satisfaction of the Indenture Trustee or the Owner Trustee,as applicable, the pledgee’s right so to act with respect to such Class ANotes and that the pledgee is not the Trust, any other obligor upon the Class ANotes, the Depositor, the Servicer or any Affiliate of any of the foregoingPersons.

 

Class A Note Payment Account:  The account established and maintained assuch pursuant to Section 3.1(b)(i).

 

Class A-1 Monthly Interest: Forthe initial Payment Date, $81,217.78, and for any Payment Date thereafter, theproduct of: (i) the actual number of days that have elapsed from andincluding the prior Payment to but excluding the current Payment Date dividedby 360; (ii) 4.5685%; and (iii) the outstanding principal balance ofthe Class A-1 Notes as of the preceding Payment Date (after giving effectto all principal payments to the holders of the Class A-1 Notes on orbefore such date).

 

Class A-2 Monthly Interest: Forthe initial Payment Date, $120,803.06, and for any Payment Date thereafter,1/12 of the product of: (i) 4.87% and (ii) the outstanding principalbalance of the Class A-2 Notes as of the preceding Payment Date (aftergiving effect to all principal payments to the holders of the Class A-2Notes on or before such date).

 

Class A-3 Monthly Interest: Forthe initial Payment Date, $192,543.89, and for any Payment Date thereafter,1/12 of the product of: (i) 4.93% and (ii) the outstanding principalbalance of the Class A-3 Notes as of the preceding Payment Date (aftergiving effect to all principal payments to the holders of the Class A-3Notes on or before such date).

 

Class A-4 Monthly Interest: Forthe initial Payment Date, $95,158.33, and for any Payment Date thereafter, 1/12of the product of: (i) 5.00% and (ii) the outstanding principalbalance of the Class A-4 Notes as of the preceding Payment Date (aftergiving effect to all principal payments to the holders of the Class A-4Notes on or before such date).

 

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Class B Monthly Note Principal:  For any Payment Date, the lesser of (i) theClass B Note Balance as of the day preceding such Payment Date and (ii) theamount necessary to reduce the Class B Note Balance as of the daypreceding such Payment Date to the sum of (A) 3.25% of the Pool Balance asof the last day of the related Collection Period and (B) on or prior tothe Prefunding Account Payout Date and the distribution of the ExcessPrefunding Amount, 1.50% of the Prefunding Account Balance as of the last dayof the related Collection Period; provided, however, that the Class BMonthly Note Principal for the Final Note Payment Date for the Class BNotes shall equal the principal balance of the Class B Notes as of the daypreceding such Final Note Payment Date; provided, further, thatfor the purposes of determining Class B Monthly Note Principal, the unpaidbalance of any Defaulted Contract or a Purchased Contract will be deemed zeroon and after the last day of the Collection Period during which such Contractbecame a Defaulted Contract or a Purchased Contract.

 

Class B Note Balance:  At any time, as the context may require, (i) withrespect to all of the Class B Notes, an amount equal to, initially, theInitial Class B Note Balance and, thereafter, an amount equal to theInitial Class B Note Balance as reduced from time to time by all amountsallocable to principal previously distributed to the Class B Noteholdersor (ii) with respect to any Class B Note, an amount equal to,initially, the initial denomination of such Class B Note and, thereafter,an amount equal to such initial denomination as reduced from time to time byall amounts allocable to principal previously distributed in respect of such Class BNote.

 

Class B Note Payment Account:  The account established and maintained assuch pursuant to Section 3.1(b)(ii).

 

Closing Date:  January 26, 2006.

 

Collection Account:  The account established and maintained assuch pursuant to Section 3.1(a).

 

Collection Period:  Each calendar month during the term of thisAgreement or, in the case of the initial Collection Period, the period from butexcluding the Initial Cutoff Date to and including January 31, 2006.

 

Contract:  A retail installment sale contract orpromissory note and security agreement identified on the Contract Schedule (assuch contract may be amended, supplemented or otherwise modified and in effectfrom time to time).

 

Contract File:  With respect to any Contract:

 

#### (i)            the sole original executedcounterpart of the retail installment contract or promissory note and securityagreement evidencing each such Contract and any and all amendments thereto; and

####  

#### (ii)           (a) the original certificate oftitle or copies of correspondence to the appropriate State title registrationagency, and all enclosures thereto, for issuance of the original certificate oftitle or (b) if the appropriate State title registration agency issues aletter or other form of evidence of lien in lieu of a certificate of title, theoriginal lien entry letter or other form of evidence of lien in lieu of acertificate of title, the original 

 

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lien entryletter or form or copies of correspondence to such State title registration agency,and all enclosures thereto, for issuance of the original lien entry letter orform.

####  

Contract Schedule:  The list identifying the Contracts attachedas Schedule 1 to this Agreement (which list may be in the form ofan electronic file or compact disk), as such schedule may be amended fromtime to time.

 

Contribution Agreement: TheContribution Agreement, dated as of the date hereof, between First InvestorsFinancial Services, Inc., as Seller, and First Investors Auto FundingCorporation, as Depositor.

 

Corporate Trust Office:  As applicable, (i) the principal officeof the Indenture Trustee at which at any particular time its corporate trustbusiness shall be administered, which office at the date of the execution ofthis Agreement is located at Sixth Street and Marquette Avenue, MAC N9311-161,Minneapolis, Minnesota 55479, Attention: Corporate Trust Services Asset-BackedTrust Administration, or at such other address as the Indenture Trustee maydesignate from time to time by notice to the Noteholders, the Owner Trustee,the Depositor and the Seller, or the principal corporate trust office of anysuccessor Indenture Trustee at the address designated by such successorIndenture Trustee by notice to the Noteholders, the Owner Trustee, theDepositor and the Seller or (ii) the principal office of the Owner Trusteeat which at any particular time its corporate trust business shall beadministered, which office at the date of the execution of this Agreement islocated at c/o Wells Fargo Delaware Trust Company, 919 North Market Street, Suite 700,Wilmington, DE 19801, Attention: Corporate Trust Administration or at suchother address as the Owner Trustee may designate from time to time by notice tothe Indenture Trustee, the Depositor and the Seller, or the principal corporatetrust office of any successor Owner Trustee at the address designated by suchsuccessor Owner Trustee by notice to the Indenture Trustee, the Depositor andthe Seller.

 

Credit Policy:  The credit policy of the Seller substantiallyin the form attached hereto as Exhibit C.

 

Cumulative Net Loss Rate:  The ratio of (i) cumulative Net Lossesfor the related Collection Period and all preceding Collection Periods to (ii) theexcess of (I) the sum of (a) the aggregate Principal Balances of all the Contractsas of the Initial Cutoff Date and (b) the sum, for each AdditionalContract Cutoff Date, of the aggregate Principal Balances of all Contracts thatbecame Additional Contracts on such Additional Contract Cutoff Date over (II)the aggregate Principal Balance of each Purchased Contract as of its relatedCutoff Date.

 

Cutoff Date:  (i) With respect to the InitialContracts, the Initial Cutoff Date and (ii) with respect to any AdditionalContract, the Additional Contract Cutoff Date for such Contract.

 

Defaulted Contract:  Any Contract as to which the first of any ofthe following has occurred (i) a Scheduled Payment, or any portion thereofin excess of $10.00, is more than 120 days delinquent (or if the relatedObligor is insolvent or has sought protection under the United StatesBankruptcy Code and such Contract is more than 180 days delinquent), (ii) 90days have elapsed since the Servicer repossessed the Financed Vehicle, (iii) therelated Financed Vehicle has been repossessed and sold, or (iv) consistentwith the Servicer’s Collection Policy, has been or should 

 

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be written off as uncollectible; provided, however,that any Contract which has become a Purchased Contract will not be deemed tobe a Defaulted Contract.

 

Delinquent Contract:  Any Contract (other than a DefaultedContract) as to which more than $10.00 of any Scheduled Payment remains unpaidfor more than 30 days from the date at which it is contractually due andpayable.

 

Delinquency Ratio:  With respect to any date of determination,the ratio (expressed as a percentage) of (i) the Principal Balance of allContracts that were Delinquent Contracts at the end of the preceding CollectionPeriod to (ii) the Principal Balance of all Contracts at the end of suchpreceding Collection Period.

 

Depositor:  First Investors Auto Funding Corporation, aDelaware corporation.

 

Depositor Account:  The account established and maintained assuch pursuant to Section 3.1(c).

 

Determination Date:  The third Business Day preceding each PaymentDate commencing on February 10, 2006.

 

Eligible Investments:  On any date of determination, book entrysecurities, negotiable instruments or securities represented by instruments inbearer or registered form with maturities not exceeding the next Payment Datewhich evidence:

 

#### (i)            direct obligations of, andobligations fully guaranteed by, the United States of America or any agency orinstrumentality thereof the obligations of which are backed by the full faithand credit of the United States of America;

####  

#### (ii)           demand deposits, time deposits,bankers’ acceptances or certificates of deposit of any depository institutionor trust company incorporated under the laws of the United States of America orany State thereof (or any domestic branch of a foreign bank) and subject tosupervision and examination by federal or state banking or depositoryinstitution authorities, including the Indenture Trustee or the Owner Trustee,acting in their respective commercial capacities; provided, however,that, at the time of the investment or contractual commitment to investtherein, such depository institution or trust company shall be rated Prime-1 byMoody’s and A-1+ by S&P or any other deposit which is fully insured by theFederal Deposit Insurance Corporation;

####  

#### (iii)          repurchase obligations with respect toany security that is a direct obligation of, or fully guaranteed by, the UnitedStates of America or any agency or instrumentality thereof the obligations ofwhich are backed by the full faith and credit of the United States of America,in either case entered into with a depository institution or trust company(acting as principal) described in clause (ii) above;

####  

#### (iv)          short term corporate securitiesbearing interest or sold at a discount issued by any corporation incorporatedunder the laws of the United States of America or any state thereof; the shortterm unsecured obligations of which are rated Prime-1 by Moody’s and A-1 byS&P at the time of the investment; provided, however that thetotal amount of debt from Issuers rated A-1 by S&P must (i) be limitedto the investment of 

 

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monthlyprincipal and interest payments; (ii) represent no more than 20% of thetotal Principal Balance; (iii) not mature beyond 30 days; (iv) shallnot have an ‘r’ suffix attached to its rating; (v) have a predeterminedfixed dollar amount of principal due at its maturity that cannot be fixed orvariable; and (vi) be tied to a single interest rate index plus a singlefixed rate spread (if any) and move proportionately with that index;

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#### (v)           commercial paper, at the time of theinvestment or contractual commitment to invest therein, rated Prime-1 by Moody’sand A-1+ by S&P at the time of the investment;

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#### (vi)          guaranteed investment contracts issuedby an insurance company or other corporation acceptable to the Rating Agenciesand the Insurer (provided that no Insurer Default shall have occurred and becontinuing);

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#### (vii)         investments in money market fundshaving a rating of AAA-m by Moody’s and AAAm-G by S&P; and

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#### (viii)        any other investment approved in advancein writing by the Insurer with notice to the Rating Agencies.

####  

Each of the Eligible Investments may be purchased byor through the Indenture Trustee or an Affiliate thereof.

 

Eligible Institution:  The corporate trust department of theIndenture Trustee or the corporate trust department of any other depositoryinstitution organized under the laws of the United States of America or anystate thereof or the District of Columbia or any domestic branch of a foreignbank which at all times has either: (i) a long term unsecured debt ratingof at least Baa3 from Moody’s and a short term debt rating of A-2 by S&P;or (ii) a long term unsecured debt rating, a short term unsecured debtrating or a certificate of deposit rating acceptable to the Rating Agencies andthe Insurer (provided that no Insurer Default shall have occurred and becontinuing) and, in each case, whose deposits are insured by the FederalDeposit Insurance Corporation.

 

Event of Servicing Termination:  As defined in Section 5.01 of theServicing Agreement.

 

Extended Contract Rate:  A fraction (expressed as a percentage)calculated as of the last day of the related Collection Period, the numeratorof which is the number of Contracts extended during the related CollectionPeriod and the denominator of which is the number of all Contracts.

 

Fee Letters:  The Indenture Trustee Fee Letter and theOwner Trustee Fee Letter.

 

Final Order:  A final, non-appealable order of a courtexercising jurisdiction in a proceeding relating to an Insolvency Event withrespect to the Seller, the Servicer or the Depositor to the effect that all orany portion of any payment made to the Class A Noteholders must bereturned prior to the end of the Term (as defined in the Insurance Agreement)of the Insurance Agreement as a voidable preference under the United StatesBankruptcy Code (11 U.S.C.), as amended from time to time.

 

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Financed Vehicle:  A new or used automobile or light-duty truck,together with all accessions thereto, securing an Obligor’s indebtedness undera Contract.

 

Fiscal Agent:  As defined in the Policy.

 

Holder:  A Noteholder.

 

Indenture:  The Indenture, dated as of the date hereof,between the Trust and Wells Fargo Bank, National Association, as IndentureTrustee and Custodian as the same may be amended, supplemented or otherwisemodified and in effect from time to time.

 

Indenture Trustee:  Wells Fargo Bank, National Association, notin its individual capacity but solely as Indenture Trustee under the Indenture,its successors in interest and any successor trustee under the Indenture.

 

Indenture Trustee Fee:  The amount payable by the Issuer to theIndenture Trustee on each Payment Date for the previous Collection Period equalto the greater of (A) the product of 0.015% per annum and the Pool Balanceas of the close of business on the first day of the related Collection Period;and (B) $750.

 

Indenture Trustee Fee Letter:  The letter agreement dated January 26,2006 between the Seller and Wells Fargo Bank, National Association in itscapacities as Indenture Trustee, Custodian and Back-up Servicer.

 

Initial Class A Note Balance:  As the context may require, (i) withrespect to all of the Class A Notes, $189,060,000.00, or (ii) withrespect to any Class A Note, an amount equal to the initial denominationof such Class A Note.

 

Initial Class B Note Balance:  As the context may require, (i) withrespect to all of the Class B Notes, $2,879,112.45 or (ii) withrespect to any Class B Note, an amount equal to the initial denominationof such Class B Note.

 

Initial Contract Price:  $151,939,112.45.

 

Initial Conveyed Property:  With respect to the Initial Contracts, theproceeds, rights and other items described in Section 2.1(a)(ii) through(ix).

 

Initial Cutoff Date:  December 31, 2005.

 

Initial Prefunding Account Amount:  $40,000,000.

 

Initial Reserve Account Deposit:  An amount equal to the sum of (i) 1.0%of the Principal Balance of the Initial Contracts as of the Initial Cutoff Dateand (ii) the initial Capitalized Interest Amount.

 

Insolvency Event:  With respect to any Person, (i) themaking by such Person of a general assignment for the benefit of creditors, (ii) thefiling by such Person of a voluntary petition in bankruptcy, (iii) suchPerson being adjudged bankrupt or insolvent, or having had entered 

 

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against such Person an order for relief in anybankruptcy or insolvency proceeding, (iv) the filing by such Person of apetition or answer seeking reorganization, arrangement, composition,readjustment, liquidation, dissolution or similar relief under any statute, lawor regulation, (v) the filing by such Person of an answer or other pleadingadmitting or failing to contest the material allegations of a petition filedagainst such Person in any proceeding specified in clause (vii) below,(vi) seeking, consenting to or acquiescing in the appointment of atrustee, receiver or liquidator of such Person or of all or any substantialpart of the assets of such Person or (vii) the failure to obtain dismissalwithin 60 days of the commencement of any proceeding against such Personseeking reorganization, arrangement, composition, readjustment, liquidation,dissolution or similar relief under any statute, law or regulation, or theentry of any order appointing a trustee, liquidator or receiver of such Personof all or any substantial portion of the assets of such Person.

 

Insurance Agreement:  The Insurance Agreement, dated as of the datehereof, by and among the Seller, the Servicer, the Administrator, theDepositor, the Trust, the Backup Servicer, the Owner Trustee, the Insurer andthe Indenture Trustee as the same may be amended, supplemented or otherwisemodified and in effect from time to time.

 

Insurance Payment Amount:  For any Payment Date, the amount payable bythe Issuer to the Insurer specified in Section 3.5(a)(ix).

 

Insurance Premium: As defined in theInsurance Agreement.

 

Insurer:  MBIA Insurance Corporation, a stock insurancecorporation incorporated under the laws of the State of New York.

 

Insurer Default:  The failure of the Insurer to make anyrequired payment under the Policy or the occurrence of an Insolvency Event withrespect to the Insurer.

 

Lien:  A security interest, lien, charge, pledge,equity or encumbrance of any kind, other than tax liens, mechanics’ ormaterialmen’s liens, judicial liens and any liens that may attach to a FinancedVehicle by operation of law.

 

Liquidation Proceeds:  All amounts received by the Servicer withrespect to any Defaulted Contract, net of the sum of (i) any reasonableexpenses incurred by the Servicer in connection with collection of suchContract and the disposition of the related Financed Vehicle (to the extentdeterminable by the Servicer and not previously reimbursed) plus (ii) anyamounts required by law to be remitted to the related Obligor.

 

Monthly Note Interest:  With respect to any Payment Date, the sum ofthe Class A-1 Monthly Interest, the Class A-2 Monthly Interest, the Class A-3Monthly Interest and the Class A-4 Monthly Interest.

 

Monthly Remittance Condition:  As defined in Section 3.2.

 

Monthly Servicer Report:  As defined in the Servicing Agreement.

 

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Monthly Servicing Fee:  The amount payable to the Servicer by theIssuer on each Payment Date for the preceding Collection Period equal to onetwelfth times the sum of (i) the Servicing Rate multiplied by theaggregate principal balance of the Contracts as of the beginning of the firstday of such Collection Period and (ii) the Servicing Rate multiplied bythe sum of the Principal Balances of each Contract purchased by the Issuerduring such Collection Period on the date of its purchase, but not listed onthe Contract Schedule, during such preceding Collection Period.

 

Moody’s:  Moody’s Investors Service, Inc., and itssuccessors.

 

Net Losses:  With respect to any Collection Period, theexcess, if any, of (i) the aggregate Principal Balance of all Contractsthat became Defaulted Contracts during such Collection Period over (ii) theaggregate Liquidation Proceeds received by the Servicer during such CollectionPeriod.

 

Note Payment Accounts:  Collectively, the Class A Note PaymentAccount and the Class B Note Payment Account.

 

Note Factor:  With respect to each Class of Class ANotes, (i) as of the Closing Date, 1.0000000 and (ii) as of the closeof business on the last day of any Collection Period ending after the ClosingDate, a seven digit decimal figure equal to the outstanding principal balanceof such Class of Class A Notes as of such last day (after givingeffect to any reductions of the principal balance of such Class of Class ANotes to be made on the following Payment Date) divided by the initialprincipal balance of such Class of Class A Notes.

 

Note Rate:  With respect to the Class A-1 Notes,4.5685% per annum, with respect to the Class A-2 Notes, 4.87% per annum,with respect to the Class A-3 Notes, 4.93% per annum and with respect tothe Class A-4 Notes, 5.00% per annum.

 

Obligor:  The purchaser or co-purchasers of a new orused automobile or light-duty truck purchased in whole or in part by theexecution and delivery of a Contract or any other Person who owes or may beliable for payments under a Contract.

 

Offering Memorandum:  That certain Offering Memorandum dated January 10,2006 relating to the Class A Notes.

 

Officer’s Certificate:  A certificate signed by the chairman, thepresident, any executive vice president, senior vice president, vice presidentor the treasurer of the Depositor, the Seller, the Trust or the Servicer, asthe case may be, and delivered to the Owner Trustee and the Indenture Trustee.

 

Originator:  Each Person from whom the Seller has acquireda Contract.

 

Originator Agreement:  An agreement substantially in the form of Exhibit Ehereto.

 

Other Assets: Any assets, orinterests therein, (other than the Trust Property) conveyed or purported to beconveyed by the Depositor to another Person or Persons other than the Trust,whether by way of a sale, capital contribution or by virtue of the granting ofa lien.

 

11

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Owner Trust Estate:  As defined in the Trust Agreement.

 

Owner Trustee:  Wells Fargo Delaware Trust Company, not inits individual capacity but solely as Owner Trustee under the Trust Agreement,its successors in interest and any successor owner trustee under the TrustAgreement.

 

Owner Trustee Fee:  The fee payable by the Issuer to the OwnerTrustee, set forth in the Owner Trustee Fee Letter, payable annually in advanceon the Closing Date, and annually thereafter on each Payment Date in May inaccordance with Section 3.5(d) hereof.

 

Owner Trustee Fee Letter:  The letter agreement dated January 26,2006 between Wells Fargo Delaware Trust Company and the Seller, relating to thefees and expenses of Wells Fargo Delaware Trust Company in its capacity asOwner Trustee.

 

Payment Date:  The 15th day of each month or, if such 15thday is not a Business Day, the following Business Day, commencing on February 15,2006.

 

Person:  A legal person, including any individual,corporation, estate, partnership, joint venture, association, joint stockcompany, limited liability company, limited liability partnership, trust,unincorporated organization, or government or any agency or politicalsubdivision thereof, or any other entity of whatever nature.

 

Policy:  That certain financial guaranty insurancepolicy, dated January 26, 2006, issued by MBIA Insurance Corporation infavor of the Indenture Trustee for the benefit of the Class A Noteholders.

 

Policy Claim Amount:  As defined in Section 3.5(c).

 

Pool Balance:  On any day, the aggregate Principal Balanceof the Contracts calculated as of the last day of the most recently endedCollection Period.

 

Prefunding Account:  The account established and maintained assuch pursuant to Section 3.7.

 

Prefunding Account Balance:  On any date of determination, the amount ondeposit in the Prefunding Account (including the proceeds of any EligibleInvestments therein).

 

Prefunding Account Ending Date:  April 4, 2006.

 

Prefunding Account Payout Date:  April 17, 2006.

 

Prefunding Period:  The period beginning on the Closing Date andending on the Prefunding Account Ending Date.

 

Prepayment Date:  As defined in Section 5.16.

 

Principal Balance:  With respect to any Contract as of any date,the Amount Financed under such Contract minus the sum of (i) that portionof all Scheduled Payments actually received on or prior to such date allocableto principal (to the extent collected) plus (ii) any rebates ofextended 

 

12

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warranty contract costs or physical damage, creditlife or credit disability insurance premiums included in the Amount Financed plus(iii) any full or partial prepayment applied to reduce the unpaidprincipal balance of such Contract; provided, however, that (A) thePrincipal Balance of a Defaulted Contract shall be zero as of the last day ofthe Collection Period during which it became a Defaulted Contract, (B) thePrincipal Balance of a Purchased Contract shall be zero as of the date on whichthe related Purchase Amount is remitted by the Depositor or the Servicer, and (C) thePrincipal Balance of a Contract that has been foreclosed upon by the IndentureTrustee at the direction of the Insurer pursuant to Section 5.4(a) ofthe Indenture shall be zero as of the date of such foreclosure.

 

Principal Deficit:  As of any Payment Date, the excess, if any,of (i) the Class A Note Balance as of such Payment Date (after givingeffect to all distributions of principal in reduction of the Class A NoteBalance) over (ii) the sum of (a) the Pool Balance as of the last dayof the related Collection Period and (b) 98.5% of the amounts on deposit inthe Prefunding Account.

 

Purchase Amount:  With respect to any Payment Date and anyContract to be repurchased by the Depositor or the Seller or purchased by theServicer on such Payment Date, an amount equal to the sum of (i) thePrincipal Balance of such Contract plus (ii) the amount of accruedbut unpaid interest on such Principal Balance at the related APR to butexcluding such Payment Date.

 

Purchase Price:  (i) With respect to the InitialContracts and the related Initial Conveyed Property, the Initial Contract Priceand (ii) with respect to any Additional Contract and the relatedAdditional Conveyed Property, the Additional Purchase Price.

 

Purchased Contract:  A Contract as to which payment of thePurchase Amount has been made by the Depositor pursuant to Section 2.3hereof or by the Servicer pursuant to Section 2.02 or 2.28 of theServicing Agreement.

 

Purchase Date:  With respect to the Initial Contracts, theClosing Date and with respect to any Additional Contract, the applicableAdditional Contract Purchase Date.

 

Rating Agencies:  Moody’s and S&P and their respectivesuccessors; provided, however, that if no such organization orsuccessor is any longer in existence, Rating Agency shall mean a nationallyrecognized statistical rating organization or other comparable Persondesignated by the Trust and acceptable to the Insurer (provided that no InsurerDefault shall have occurred and is continuing), notice of which designationshall have been given to the Indenture Trustee, the Owner Trustee and theServicer.

 

Rating Agency Condition:  With respect to any action, that each RatingAgency shall have been given prior notice thereof and shall have notified theSeller, the Depositor, the Insurer, the Servicer, the Owner Trustee and theIndenture Trustee that such action will not result in a reduction or withdrawalof the then current rating of the Class A Notes, without giving effect tothe Policy.

 

Re-Liening Trigger:  The occurrence of any Event of Default.

 

Relevant UCC:  The Uniform Commercial Code as in effect fromtime to time in any relevant jurisdiction.

 

13

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Required Payment Amount:  For any Payment Date, the meaning specifiedfor such Payment Date in Section 3.5(a).

 

Required Rating:  A short term unsecured debt rating of Prime-1by Moody’s and A-1+ by S&P.

 

Required Reserve Account Amount:  For the Closing Date, the Initial ReserveAccount Deposit and, thereafter, for any Payment Date, (i) if a ReserveAccount Increase Event has not occurred and is not continuing, an amount equalto the sum of (A) 2.0% of the aggregate initial Principal Balance of theContracts as of the applicable Cutoff Date for each such Contract and (B) theapplicable Capitalized Interest Amount, or (ii) if a Reserve Account IncreaseEvent has occurred and is continuing, the sum of (A) the greater of (x)2.0% of the aggregate initial Principal Balance of the Contracts as of theapplicable Cutoff Date for each such Contract, and (y) 6.0% of the Pool Balanceas of the last day of the related Collection Period and (B) the applicableCapitalized Interest Amount; provided, however, that in eithercase the amount on deposit in the Reserve Account shall not at any time exceedthe Class A Note Balance.

 

Reserve Account:  The account established and maintained assuch pursuant to Section 3.6(a).

 

Reserve Account Amount:  For any Payment Date, the amount on depositin and available for withdrawal from the Reserve Account on such Payment Date(after giving effect to all deposits to and withdrawals from the ReserveAccount on the preceding Additional Contract Purchase Date or Payment Date, or,in the case of the first Payment Date, the Closing Date), including, withoutlimitation, all interest and other income (net of losses and investment expenses)earned on such amount during the preceding Collection Period.

 

Reserve Account Deficiency:  For any Payment Date, the meaning specifiedfor such Payment Date in Section 3.5(b).

 

Reserve Account Draw Amount:  As defined in Section 3.5(b).

 

Reserve Account Increase Event:  The occurrence of either of the following:

 

#### (i)            the average Delinquency Ratio forany three Collection Periods: (i) exceeds 4.20% during the period from January 2006through August 2006; (ii) exceeds 5.25% during the period from September 2006through January 2008; and (iii) exceeds 6.25% thereafter; or

####  

#### (ii)           the Cumulative Net Loss Rate for anyCollection Period indicated in the following table exceeds the percentagecorresponding thereto:

 
| **Collection Period** | ** ** | **Cumulative Net Loss  Rate** | ** ** |
|-----------------------|------------|-------------------------------|------------|
| January 2006     |       | 0.175                         | %          |
| February 2006    |       | 0.25                          | %          |
| March 2006       |       | 0.40                          | %          |
| April 2006       |       | 0.60                          | %          |
| May 2006         |       | 0.75                          | %          |

 

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| **Collection Period**              | ** ** | **Cumulative  Net Loss  Rate** | ** ** |
|------------------------------------|------------|--------------------------------|------------|
| June 2006                     |       | 0.90                           | %          |
| July 2006                     |       | 1.00                           | %          |
| August 2006                   |       | 1.15                           | %          |
| September 2006                |       | 1.40                           | %          |
| October 2006                  |       | 1.50                           | %          |
| November 2006                 |       | 1.75                           | %          |
| December 2006                 |       | 1.90                           | %          |
| January 2007                  |       | 2.00                           | %          |
| February 2007                 |       | 2.20                           | %          |
| March 2007                    |       | 2.40                           | %          |
| April 2007                    |       | 2.50                           | %          |
| May 2007                      |       | 2.75                           | %          |
| June 2007                     |       | 2.90                           | %          |
| July 2007                     |       | 3.00                           | %          |
| August 2007                   |       | 3.30                           | %          |
| September 2007                |       | 3.50                           | %          |
| October 2007                  |       | 3.55                           | %          |
| November 2007                 |       | 3.80                           | %          |
| December 2007                 |       | 4.10                           | %          |
| January 2008                  |       | 4.20                           | %          |
| February 2008                 |       | 4.40                           | %          |
| March 2008                    |       | 4.50                           | %          |
| April 2008                    |       | 4.65                           | %          |
| May 2008                      |       | 4.80                           | %          |
| June 2008                     |       | 4.95                           | %          |
| July 2008                     |       | 5.10                           | %          |
| August 2008                   |       | 5.30                           | %          |
| September 2008                |       | 5.50                           | %          |
| October 2008                  |       | 5.65                           | %          |
| November 2008                 |       | 5.80                           | %          |
| December 2008                 |       | 5.90                           | %          |
| January 2009                  |       | 6.00                           | %          |
| February 2009                 |       | 6.10                           | %          |
| March 2009                    |       | 6.15                           | %          |
| April 2009                    |       | 6.20                           | %          |
| May 2009                      |       | 6.30                           | %          |
| June 2009                     |       | 6.40                           | %          |
| July 2009                     |       | 6.50                           | %          |
| August 2009                   |       | 6.50                           | %          |
| September 2009                |       | 6.50                           | %          |
| October 2009                  |       | 6.50                           | %          |
| November 2009                 |       | 6.50                           | %          |
| December 2009  and thereafter |       | 6.50                           | %          |

 

15

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Reserve Account Property:  All amounts, securities, investments,financial assets and other property deposited in or credited to the ReserveAccount from time to time.

 

Responsible Officer:  (i) in the case of the IndentureTrustee, any officer within the Corporate Trust Department of the IndentureTrustee with direct responsibility for the administration of the Indenture andalso, with respect to a particular matter, any other officer of the IndentureTrustee to whom such matter is referred because of such officer’s knowledge ofand familiarity with such matter or other similar matters and (ii) in thecase of the Owner Trustee, any officer within the Corporate Trust Office of theOwner Trustee with direct responsibility for the administration of the TrustAgreement or this Agreement and also, with respect to a particular matter, anyother officer of the Owner Trustee to whom such matter is referred because ofsuch officer’s knowledge of and familiarity with such matter or other similarmatters.

 

Scheduled Payment:  For any Contract, each payment required to bemade by the related Obligor in accordance with the terms of such Contract(after giving effect to any deferral of payments pursuant to the ServicingAgreement or any rescheduling of payments as a result of any Insolvency Eventwith respect to such Obligor).

 

Securities Intermediary:  As defined in Section 3.9.

 

Seller:  First Investors Financial Services, Inc.,a Texas corporation, in its capacity as seller of the Contracts under theContribution Agreement, and its successors and assigns in such capacity.

 

Servicer:  FISC, in its capacity as servicer of theContracts under the Servicing Agreement, and its successors and assigns(including, if applicable, the Back-up Servicer) in such capacity.

 

Servicing Agreement:  That certain Servicing Agreement, dated as ofthe date hereof, among the Back-up Servicer, the Indenture Trustee, theServicer and the Trust.

 

Servicing Rate:  2.0% per annum or such other rate asdetermined in the Servicing Agreement; provided, however, that ifthe Back-up Servicer becomes the Successor Servicer, the Servicing Rate shallbe equal to the greater of (i) 2.0% per annum and (ii) the average ofthree bids obtained by the Back-up Servicer from third party servicers, who arequalified to act as servicers, selected by the Back-up Servicer and approved bythe Insurer.

 

S & P:  Standard & Poor’s Ratings Services,a division of The McGraw-Hill Companies, Inc., and its successors.

 

Total Available Funds:  For any Payment Date, the sum of (i) theAvailable Funds for such Payment Date plus (ii) the Reserve AccountDraw Amount, if any, for such Payment Date.

 

Total Note Interest:  For any Payment Date with respect to the Class ANotes, the sum of (i) the Monthly Note Interest for such Payment Date plus(ii) the Additional Note Interest for such Payment Date.

 

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Total Servicing Fee:  For any Collection Period, the sum of (i) theMonthly Servicing Fee for such Collection Period plus (ii) allaccrued but unpaid Monthly Servicing Fees for previous Collection Periods.

 

Trust:  First Investors Auto Owner Trust 2006-A, aDelaware statutory trust.

 

Trust Agreement:  The Amended and Restated Trust Agreement,dated as of the date hereof, between the Depositor and the Owner Trustee, asthe same may be further amended, supplemented or otherwise modified and ineffect from time to time.

 

Trust Property:  As of any date of determination, (i) theContracts and other related property sold, transferred, assigned and otherwiseconveyed by the Depositor to the Trust pursuant to Section 2.1(a) and(b), (ii) rights under this Agreement to cause the Depositor topurchase Contracts affected materially and adversely by breaches of therepresentations and warranties of the Depositor made in this Agreement, and (iii) allamounts, securities, financial assets, investments and other property depositedfrom time to time in or credited to the Collection Account, the PrefundingAccount, the Class A Note Payment Account, the Class B Note PaymentAccount and the Reserve Account.

 

## **Section 1.2.**           **Other DefinitionalProvisions**.

##  

### (a)           Capitalizedterms used herein and not otherwise defined herein have the meanings assignedto them in the Indenture or the Servicing Agreement.

###  

### (b)           Allterms defined in this Agreement shall have the defined meanings when used inany certificate or other document made or delivered pursuant hereto unlessotherwise defined therein.

###  

### (c)           Asused in this Agreement and in any certificate or other document made ordelivered pursuant hereto or thereto, accounting terms not defined in thisAgreement or in any such certificate or other document, and accounting termspartly defined in this Agreement or in any such certificate or other documentto the extent not defined, shall have the respective meanings assigned to themunder generally accepted accounting principles. To the extent that the definitions of accounting terms in this Agreementor in any such certificate or other document are inconsistent with the meaningsof such terms under generally accepted accounting principles, the definitionscontained in this Agreement or in any such certificate or other document shallcontrol.

###  

### (d)           Thewords “hereof,” “herein,” and “hereunder” and words of similar import when usedin this Agreement shall refer to this Agreement as a whole and not to anyparticular provision of this Agreement. Article, Section, Schedule and Exhibit references contained inthis Agreement are references to Articles, Sections, Schedules and Exhibits inor to this Agreement unless otherwise specified.  The term “including” shall mean “includingwithout limitation.”

###  

### (e)           Thedefinitions contained in this Agreement are applicable to the singular as wellas the plural forms of such terms and to the masculine as well as to thefeminine and neuter genders of such terms.

 

17

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### (f)            Anyagreement, instrument or statute defined or referred to herein or in anyinstrument or certificate delivered in connection herewith means suchagreement, instrument or statute as from time to time amended, modified orsupplemented and includes (in the case of agreements or instruments) referencesto all attachments thereto and instruments incorporated therein.  References to a Person are also to itspermitted successors and assigns.

###  

# **Article II**

# ** **

# **TrustProperty**

# ** **

## **Section 2.1.**           **Conveyance of TrustProperty**.

##  

### (a)           Subjectto Section 2.1(b), in consideration of the Trust’s delivery to theDepositor of the Purchase Price, the Depositor hereby agrees to sell, transfer,assign and otherwise convey to the Trust, without recourse (subject to the obligationsherein), all right, title and interest of the Depositor, whether now owned orhereafter acquired, in, to and under the following:

###  

#### (i)            the Contracts;

####  

#### (ii)           all amounts received on or in respectof the Contracts after the applicable Cutoff Date (except that interest accruedon the Contracts prior to the applicable Cutoff Date and received after suchCutoff Date will be remitted by the Trust to the Seller);

####  

#### (iii)          the security interests in the FinancedVehicles;

####  

#### (iv)          any proceeds from claims on or refundsof premiums with respect to extended warranties or physical damage, theft,credit life and credit disability insurance policies relating to the FinancedVehicles or the related Obligors;

####  

#### (v)           any Liquidation Proceeds;

####  

#### (vi)          the Contract Files;

####  

#### (vii)         rights under the Contribution Agreementto cause the Seller to repurchase Contracts affected materially and adverselyby breaches of the representations and warranties of the Seller made in theContribution Agreement;

####  

#### (viii)        rights under the Servicing Agreement tocause the Servicer to purchase Contracts affected materially and adversely bybreaches of the representations and warranties of the Servicer made in theServicing Agreement; and

####  

#### (ix)           all present and future claims,demands, causes of action and choses in action in respect of any or all of theforegoing and all payments on or under and all proceeds of every kind andnature whatsoever in respect of any or all of the foregoing, including allproceeds of the conversion thereof, voluntary or involuntary, into cash orother liquid property, all cash proceeds, accounts, accounts receivable, notes,drafts, acceptances, chattel paper, checks, deposit accounts, insuranceproceeds, condemnation awards, rights to payment of any and every kind andother forms of obligations and 

 

18

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receivables,instruments and other property which at any time constitute all or part of orare included in the proceeds of any of the foregoing.

####  

### (b)           Onthe Closing Date, subject to the terms and conditions of this Agreement, inconsideration of the Trust’s delivery of the Initial Contract Price, theDepositor hereby irrevocably sells, transfers, assigns and otherwise conveys tothe Trust and the Trust hereby purchases from the Depositor the InitialContracts and the Initial Conveyed Property. On each Additional Contract Purchase Date subject to the terms andconditions of this Agreement, in consideration of the Trust’s delivery of theAdditional Purchase Price, the Depositor will transfer, assign and otherwiseconvey and the Trust will purchase from the Depositor such Additional Contractsand Additional Conveyed Property as the Depositor may specify by written noticeto the Indenture Trustee, the Owner Trustee, the Rating Agencies and the Trust.

###  

### (c)           TheDepositor and the Trust intend that each transfer of Trust Propertycontemplated by Section 2.1(b) constitutes a sale of the TrustProperty, conveying good title to the related Trust Property, from theDepositor to the Trust.  Notwithstandingthe foregoing, in the event that the Contracts are held to be property of theDepositor, or if for any reason this Agreement is held or deemed to createindebtedness or a security interest in the Contracts and the other TrustProperty, then it is intended that:

###  

#### (i)            This Agreement shall be deemed to bea security agreement within the meaning of Articles 8 and 9 of the RelevantUCC;

####  

#### (ii)           The sale provided for in Section 2.1(b) shallbe deemed to be a grant by the Depositor, and the Depositor hereby grants, tothe Seller a security interest in all of its right (including the power toconvey title thereto), title and interest, whether now owned or hereafteracquired, in and to the Contracts and the other Trust Property, to secure suchindebtedness and the performance of the obligations of the Depositor hereunder;

####  

#### (iii)          The possession by the Trust or theCustodian of the Contract Files and any other property as constituteinstruments, money, negotiable documents or chattel paper shall be deemed to be“possession by the secured party” or possession by the purchaser or a persondesignated by such purchaser, for purposes of perfecting the security interestpursuant to the Relevant UCC; and

####  

#### (iv)          Notifications to persons holding suchproperty, and acknowledgments, receipts or confirmations from persons holdingsuch property, shall be deemed to be notifications to, or acknowledgments,receipts or confirmations from, bailees or agents (as applicable) of the Trustfor the purpose of perfecting such security interest under the Relevant UCC.

####  

### (d)           Thesale, transfer, assignment and conveyance of the Trust Property made under Section 2.1(b) shallnot constitute and is not intended to result in an assumption by the Trust ofany obligation of the Depositor to the Obligors or any other Person inconnection with the Contracts and the other Trust Property or any agreement,document or instrument related thereto.

###  

### (e)           Uponeach of the transfers of the Trust Property pursuant to clause (b) ofthis Section 2.1, the Depositor shall clearly mark its files,documents, books and any other records

 

19

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(including computer records) inthe Depositor’s control pertaining to the Trust Property, in order to indicatethat the Trust Property has been transferred to the Trust.

###  

### (f)            TheTrust’s obligation to purchase Additional Contracts and Additional ConveyedProperty pursuant to clause (b) of this Section 2.1 issubject to satisfaction on or before the related Additional Contract PurchaseDate of the following conditions precedent:

###  

#### (i)            each of the representations andwarranties of the Depositor made pursuant to Section 2.2 withrespect to the Additional Contracts shall be true and correct as of theAdditional Contract Purchase Date;

####  

#### (ii)           the Depositor shall have executed anddelivered to the Trust and the Trust shall have executed and delivered to theIndenture Trustee, written assignments in the form of Exhibit Fhereto conveying such Additional Contracts and Additional Conveyed Property tothe Trust and the Indenture Trustee, respectively;

####  

#### (iii)          the Trust shall have deposited, orcause to be deposited, in the Reserve Account, an amount equal to 1.0% of theaggregate outstanding principal balance of Additional Contracts to be conveyedon such Additional Contract Purchase Date (the “*AdditionalReserve Account Deposit*”);

####  

#### (iv)          the Trust shall have received releaseletters and related UCC-3 termination statements and/or amendment statements(for each appropriate jurisdiction), to release all security interests orsimilar rights of any Person in the Additional Conveyed Property, including thesecurity interests in the Financed Vehicles securing the Contracts and anyproceeds of the foregoing;

####  

#### (v)           the Trust shall have received theprior written consent of the Insurer; and

####  

#### (vi)          the Trust and the Insurer shall haveeach received such other documents as the Trust or the Insurer may havereasonably requested.

####  

### (g)           Itis explicitly agreed by the Depositor and the Trust that the Purchase Pricedelivered to the Depositor by the Trust pursuant to clause (b) ofthis Section 2.1 shall consist of the net proceeds from the sale ofthe Notes (minus the sum of the Initial Reserve Account Deposit and theAdditional Reserve Account Deposits) and that the remaining portion of thePurchase Price shall be deemed to constitute a capital contribution by theSeller to the Depositor (it being understood that the Seller has a 100%ownership interest in the Depositor and that the Depositor has a 100% ownershipinterest in the Trust).

###  

## **Section 2.2.**           **Representations andWarranties of the Depositor as to the Contracts**.

##  

The Depositor makes the following representations andwarranties as to the Contracts on which the Trust shall be deemed to haverelied in accepting the Contracts.  Therepresentations and warranties speak as of the execution and delivery of thisAgreement with respect to the Contracts transferred to the Trust on the ClosingDate and, with respect to any Additional Contracts, as of the relatedAdditional Contract Purchase Date, except, in each case, to the extent 

 

20

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otherwiseprovided, but shall survive the sale, transfer, assignment and conveyance ofthe Contracts to the Trust pursuant to this Agreement and the pledge of theContracts to the Indenture Trustee pursuant to the Indenture.

 

### (a)           Characteristicsof Contracts.  Each Contract (i) haseither (A) been purchased in a bona fide sale by the Seller from a dealer,bank, finance company or similar entity in the ordinary course of the Seller’sbusiness and was originated by such Person in connection with an advance madefor the sale or re-financing of a new or used automobile or light-duty truckand has been fully and properly executed by the parties thereto or (B) hasbeen originated by the Seller through direct marketing to consumers who wish torefinance loans obtained by a different lender and, in the case of each of (A) and(B) above, has been validly assigned by the Seller to the Depositorpursuant to, and in accordance with the terms of, the Contribution Agreement, (ii) hascreated a valid, binding and enforceable security interest in favor of theSeller in the related Financed Vehicle, which security interest has beenvalidly assigned by the Seller to the Depositor, by the Depositor to the Trustand which will be assigned by the Trust to the Indenture Trustee pursuant tothe Indenture, (iii) contains customary and enforceable provisions suchthat the rights and remedies of the holder thereof are adequate for realizationagainst the collateral of the benefits of the security, (iv) provides forlevel monthly payments that fully amortize the Amount Financed by maturity(except that the period between the date of such Contract and the date of thefirst Scheduled Payment may be less than or greater than one month and theamount of the first and last Scheduled Payments may be less than or greaterthan the level payments, but not by a material amount) and yield interest atthe related APR, (v) provides for, in the event that such Contract isprepaid, a prepayment that fully pays the Principal Balance of such Contractwith interest at the related APR through the date of payment, (vi) wasselected by selection procedures believed by the Depositor not to be adverse tothe Trust and the Class A Noteholders and with respect to whichinformation provided to the Trust and its assigns pursuant to the TransactionDocuments is true and correct in all material respects, (vii) is securedby a new or used automobile or light-duty truck, (viii) relates to anObligor who has made a down payment under such Contract as of the applicableCutoff Date, if required, (ix) satisfies in all material respects therequirements under the Credit Policy and (x) requires the Obligor thereunder toobtain and maintain physical damage insurance covering the related FinancedVehicle in accordance with the Seller’s normal requirements.

###  

### (b)           ContractSchedule.  The information set forthin the Contract Schedule was true and correct in all material respects asof the close of business on the applicable Cutoff Date, and no selectionprocedures believed to be adverse to the Trust or the Noteholders were utilizedin selecting the Contracts from those retail installment sale contracts orsecurity agreements and promissory notes which met the criteria containedherein.  The information set forth in thecompact disk or other listing regarding the Contracts made available to theTrust and its assigns (which compact disk or other listing is required to bedelivered as specified herein) is true and correct in all material respects.

###  

### (c)           Compliancewith Law.  Each Contract and the saleof the related Financed Vehicle complied, at the time such Contract wasoriginated and complies, as of the related Purchase Date, in all materialrespects with all requirements of applicable federal, state and local laws, andregulations thereunder, including, without limitation, usury laws, theTruth-in-Lending Act, the Equal Credit Opportunity Act, the Fair CreditReporting Act, the Fair Credit Billing Act,

 

21

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the Fair Debt CollectionPractices Act, the Federal Trade Commission Act, the Magnuson-Moss WarrantyAct, the Federal Reserve Board’s Regulations B and Z, the Servicemembers CivilRelief Act and state adaptations of the Uniform Consumer Credit Code.

###  

### (d)           BindingObligation.  Each Contract representsthe genuine, legal, valid and binding payment obligation in writing of therelated Obligor, enforceable by the holder thereof in accordance with itsterms, except as enforceability may be limited by bankruptcy, insolvency,reorganization or other similar laws affecting the enforcement of creditors’rights generally and by general principles of equity.

###  

### (e)           NoGovernment or Incorporated Obligor. No Contract is due from the United States of America or any statethereof or from any agency, department or instrumentality of the United Statesof America or any state thereof or from any incorporated entity.

###  

### (f)            SecurityInterest in Financed Vehicles. Immediately prior to the transfer of the Contracts by the Seller to theDepositor and by the Depositor to the Trust, each Contract was secured by avalid, binding and enforceable first priority perfected security interest infavor of the Seller in the related Financed Vehicle and, at such time asenforcement of such security interest is sought, there shall exist a valid,binding and enforceable first priority perfected security interest in suchFinanced Vehicle for the benefit of the Seller and the Trust, respectively,which is subject to regulatory registration with a clear legal right ofrepossession in favor of the Seller and the Trust.

###  

### (g)           Contractsin Force.  No Contract has beensatisfied, subordinated or rescinded, nor has any Financed Vehicle beenreleased in whole or in part from the Lien granted by the related Contract.

###  

### (h)           NoWaiver.  No provision of a Contracthas been waived in such a manner that such Contract fails to meet all of therepresentations and warranties made by the Depositor in this Section 2.2with respect thereto and no provision of any Contract has been waived except asnoted in the Contract Files.

###  

### (i)            NoDefenses.  No Contract is subject toany right of rescission, setoff, counterclaim or defense, including the defenseof usury, and the operation of any of the terms of any Contract, or theexercise of any right thereunder, will not render such Contract unenforceablein whole or in part or subject to any right of rescission, setoff, counterclaimor defense, including the defense of usury, and the Depositor has not receivedwritten notice of the assertion of any such right of rescission, setoff,counterclaim or defense asserted with respect thereto.

###  

### (j)            NoLiens.  No liens or claims exist orhave been filed for work, labor or materials or unpaid state or federal taxesrelating to any Financed Vehicle that are prior to, or equal or coordinatewith, the security interest in such Financed Vehicle created by the relatedContract.

###  

### (k)           NoDefault; Repossession.  No default,breach, violation or event permitting acceleration under the terms of anyContract has occurred (other than payments that are not more than 30 days pastdue), no continuing condition that with notice or the lapse of time or bothwould constitute a default, breach, violation or event permitting accelerationunder the terms of 

 

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any Contract has arisen and noFinanced Vehicle has been repossessed as of the applicable Cutoff Date.

 

### (l)            TrueSale.              The Depositor intendsthat the transfer of the Contracts contemplated by Section 2.1(b) constitutesa sale of the Contracts from the Depositor to the Trust and that the beneficialinterest in, and title to, the Contracts not be part of the Depositor’s estatein the event of the filing of a bankruptcy petition by or against the Depositorunder any bankruptcy law.  The Depositorhas not sold, transferred, assigned or pledged any Contract to any Person otherthan the Trust and such Contract has not been released.

###  

### (m)          ValidAssignment.  No Contract has beenoriginated in, or is subject to the laws of, any jurisdiction under which thesale, transfer, assignment and conveyance of such Contract under this Agreementor the pledge of such Contract under the Indenture is unlawful, void orvoidable.  No Contract is subject to anyagreement with any account debtor that prohibits, restricts or conditions theassignment of the Contracts.

###  

### (n)           [Reserved]

###  

### (o)           [Reserved]

###  

### (p)           OneOriginal.  There is only one originalexecuted copy of each Contract.

###  

### (q)           PrincipalBalance.  Each Contract acquired bythe Issuer on the Closing Date had a Principal Balance as of the Initial CutoffDate of not more than $50,000 and each Contract acquired by the Issuer duringthe Prefunding Period had a Principal Balance as of the applicable Cutoff Dateof not more than $50,000.

###  

### (r)            NoBankrupt Obligors.  As of theapplicable Cutoff Date, no Contract was due from an Obligor that was thesubject of a proceeding under the Bankruptcy Code of the United States or wasbankrupt.

###  

### (s)           Termto Maturity.  As of the applicableCutoff Date, each Contract had an original term to maturity of not more than 72payments; provided, however, that as of the Prefunding AccountEnding Date, the weighted average remaining term to maturity of all Contractsshall not exceed 65 payments.

###  

### (t)            AnnualPercentage Rate.  Each Contract hasan APR of at least 5.0%; provided, however, that as of thePrefunding Account Ending Date, the weighted average APR of all Contracts shallnot be less than 13.60%.

###  

Location of Contract Files.  The Contract Files are complete and have beendelivered to the Custodian prior to the applicable Purchase Date and aremaintained at the location listed in Schedule 2 to this Agreement; provided,however, that the Depositor shall have 180 days after the date that theapplicable Contract is transferred to the Trust to deliver to the Custodian anycertificate of title or other evidence in lieu of a certificate of titlereasonably acceptable to the Insurer contained in such Contract File.

 

23

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### (v)           NoDelinquent Contracts or Defaulted Contracts.  As of the applicable Cutoff Date, no Contractwas a Delinquent Contract or a Defaulted Contract.

###  

### (w)          OfferingMemorandum Data.  The tabular andnumerical data contained in the Offering Memorandum relating to thecharacteristics of the Contracts is true and correct in all material respects.

###  

### (x)            NoDefaults.  No Contract is due from anObligor that has previously defaulted on a retail installment sales contract orpromissory note and security agreement purchased by the Seller.

###  

### (y)           FinalScheduled Payment Date.  As of theapplicable Cutoff Date, each Contract had a final Scheduled Payment date on orbefore March 31, 2012.

###  

### (z)            OriginatorAgreement.  Each Contract is subjectto an Originator Agreement with the Seller and which if acquired by the Sellerpursuant to a “bulk purchase” from another Originator has been approved by theInsurer; provided, however that receivables originated under theSeller’s direct origination program are evidenced by a promissory note.

###  

### (aa)         Lockbox.  The Obligor with respect to each contract hasbeen instructed to make payments under the Contract to a Lockbox which is underthe control of the Servicer.

###  

### (bb)         UnitedStates Obligor.  Each Contract is duefrom an Obligor which has provided as its most recent billing address anaddress located in the United States of America.

###  

### (cc)         U.S.Dollars.  Each Contract is payable inthe lawful money of the United States of America.

###  

### (dd)         NoWaiver or Modification.  No Contracthas been waived or modified as of the applicable Cutoff Date except aspermitted by the Servicing Agreement.

###  

### (ee)         PerfectionRepresentations.  The perfectionrepresentations, warranties and covenants made by the Depositor and set forthon Schedule 3 hereto shall be a part of this Agreement for allpurposes.

###  

### (ff)           DirectProgram Origination.  Not less than65.0% of the aggregate Principal Balance of the Contracts, after giving effectto the Prefunding Period, shall have been originated through the Seller’sdirect origination program.

###  

## **Section 2.3.**           **Repurchase by Depositorfor Breach**.

##  

The Seller, the Insurer, the Depositor, theServicer or the Trust, as the case may be, shall inform the other parties tothis Agreement and the Indenture Trustee promptly, in writing, upon thediscovery of any breach or failure to be true of the representations andwarranties made by the Depositor pursuant to Section 2.2.  If such breach or failure shall not have beencured by the close of business on the last day of the Collection Period whichincludes the thirtieth (30th) day after the date on which the Depositor becomesaware of, or receives 

 

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written notice from, theServicer, the Insurer or the Trust of such breach or failure, and such breachor failure materially and adversely affects the interest of the Trust in aContract, the Depositor shall repurchase such Contract from the Trust on theBusiness Day preceding the Payment Date immediately following such CollectionPeriod.  In consideration of therepurchase of a Contract hereunder, the Depositor shall remit the PurchaseAmount of such Contract in the manner specified in Section 3.4.  The sole remedy of the Trust, the OwnerTrustee, the Indenture Trustee and the Noteholders with respect to a breach orfailure to be true of the representations and warranties made by the Depositorpursuant to Section 2.2 shall be to require the Depositor torepurchase Contracts pursuant to this Section 2.3 or to enforce theobligation of the Seller to repurchase such Contacts pursuant to theContribution Agreement.  Neither theOwner Trustee nor the Indenture Trustee shall have any duty to conduct anaffirmative investigation as to the occurrence of any condition requiring therepurchase of any Contract pursuant to this Section 2.3 or theeligibility of any Contract for purposes of this Agreement.

 

# **Article IIIDistributions; Reserve Account; Statements to Noteholders andCertificateholders**

# ** **

## **Section 3.1.**           **Accounts**.

##  

### (a)           TheTrust shall establish, or shall cause to be established, on or before theClosing Date, and shall maintain in the name of the Indenture Trustee at anEligible Institution (which shall initially be the Indenture Trustee) asegregated trust account designated as the Collection Account (the “*Collection Account*”).  The Collection Account shall be held in trustfor the benefit of the Insurer and the Noteholders and shall be under the soledominion and control of the Indenture Trustee; provided, however,that the Servicer may make deposits to and direct the Indenture Trustee inwriting to make withdrawals from the Collection Account in accordance with thisAgreement and the Indenture.  All moniesdeposited from time to time in the Collection Account pursuant to thisAgreement shall be held by the Indenture Trustee as part of the Trust Propertyand shall be applied as provided in this Agreement.  All deposits to and withdrawals from theCollection Account shall be made only upon the terms and conditions of theTransaction Documents.

###  

If the Servicer is required to remit collectionswithin two (2) Business Days pursuant to the first sentence of Section 3.2,all amounts held in the Collection Account shall, to the extent permitted byapplicable law, rules and regulations, be invested, as directed in writingby the Servicer, by the bank or trust company then maintaining the CollectionAccount in Eligible Investments that mature not later than the Business Daypreceding the Payment Date following the Collection Period to which suchamounts relate.  If the CollectionAccount is no longer to be maintained at the Indenture Trustee, the Servicershall, with the Indenture Trustee’s assistance as necessary, cause theCollection Account to be moved to an Eligible Institution within ten (10) BusinessDays (or such longer period not to exceed thirty (30) calendar days as to whicheach Rating Agency and the Insurer (provided that no Insurer Default shall haveoccurred and is continuing) may consent). The Servicer shall promptly notify the Indenture Trustee, the RatingAgencies, the Insurer (provided that no Insurer Default shall have occurred andis continuing) and the Owner Trustee of any change in the account number orlocation of the Collection Account.

 

25

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### (b)           TheTrust shall establish, or shall cause to be established, on or before theClosing Date, and shall maintain in the name of the Indenture Trustee at anEligible Institution (which shall initially be the Indenture Trustee) thefollowing note payment accounts:

###  

#### (i)            a segregated trust accountdesignated as the Class A Note Payment Account (the “*Class ANote Payment Account*”). The Class A Note Payment Account shall be held in trust for thebenefit of the Class A Noteholders and the Insurer.  The Class A Note Payment Account shallbe under the sole dominion and control of the Indenture Trustee; provided,however, that the Servicer may make deposits to and direct the IndentureTrustee in writing to make withdrawals from the Class A Note PaymentAccount in accordance with this Agreement and the Indenture.  All monies deposited from time to time in theClass A Note Payment Account pursuant to this Agreement and the Indentureshall be held by the Indenture Trustee as part of the Trust Property and shallbe applied as provided in this Agreement and the Indenture.  The amounts on deposit in the Class ANote Payment Account shall not be invested. If the Class A Note Payment Account is no longer to be maintainedat the Indenture Trustee, the Servicer shall, with the Indenture Trustee’sassistance as necessary, cause the Class A Note Payment Account to bemoved to an Eligible Institution within ten (10) Business Days (or suchlonger period not to exceed thirty (30) calendar days as to which each RatingAgency and the Insurer (provided that no Insurer Default shall have occurredand is continuing) may consent). The Servicer shall promptly notify theIndenture Trustee, the Rating Agencies, the Insurer and the Owner Trustee ofany change in the account number or location of the Class A Note PaymentAccount; and

####  

#### (ii)           a segregated trust account designatedas the Class B Note Payment Account (the “*Class BNote Payment Account*”). The Class B Note Payment Account shall be held in trust for thebenefit of the Class B Noteholders. The Class B Note Payment Account shall be under the sole dominionand control of the Indenture Trustee; provided, however, that theServicer may make deposits to and direct the Indenture Trustee in writing tomake withdrawals from the Class B Note Payment Account in accordance withthis Agreement and the Indenture.  Allmonies deposited from time to time in the Class B Note Payment Accountpursuant to this Agreement and the Indenture shall be held by the IndentureTrustee as part of the Trust Property and shall be applied as provided in thisAgreement and the Indenture.  The amountson deposit in the Class B Note Payment Account shall not be invested.  If the Class B Note Payment Account isno longer to be maintained at the Indenture Trustee, the Servicer shall, withthe Indenture Trustee’s assistance as necessary, cause the Class B NotePayment Account to be moved to an Eligible Institution within ten (10) BusinessDays (or such longer period not to exceed thirty (30) calendar days as to whicheach Rating Agency and the Insurer (provided that no Insurer Default shall haveoccurred and is continuing) may consent). The Servicer shall promptly notifythe Indenture Trustee, the Rating Agencies, the Insurer and the Owner Trusteeof any change in the account number or location of the Class B NotePayment Account.

####  

### (c)           TheTrust shall establish, or shall cause to be established, on or before theClosing Date, and shall maintain in the name of the Trust at an EligibleInstitution (which shall initially be the Owner Trustee or an affiliate of theOwner Trustee) a segregated trust account designated

###  

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as the Depositor Account (the “*Depositor Account*”).  The Depositor Account shall be held in trustfor the benefit of the Certificateholder. The Depositor Account shall not constitute part of the TrustEstate.  The Servicer may direct theIndenture Trustee in writing to make deposits to the Depositor Account inaccordance with Section 3.5(d) of this Agreement.  All monies deposited from time to time in theDepositor Account pursuant to this Agreement shall be applied in accordancewith the terms of the Trust Agreement. The amounts on deposit in the Depositor Account shall not be invested.  If the Depositor Account is no longer to bemaintained at the Owner Trustee or an affiliate of the Owner Trustee, theServicer shall, with the Owner Trustee’s assistance as necessary, cause theDepositor Account to be moved to an Eligible Institution within ten (10) BusinessDays (or such longer period not to exceed thirty (30) calendar days as to whicheach Rating Agency and the Insurer (provided that no Insurer Default shall haveoccurred and is continuing) may consent). The Servicer shall promptly notify the Indenture Trustee, the Insurer(provided that no Insurer Default shall have occurred and is continuing) andthe Owner Trustee of any change in the account number or location of theDepositor Account.

###  

## **Section 3.2.**           **Collections**.

##  

The Servicer shall remit to the Collection Account allamounts received by the Servicer on or in respect of the Contracts (excludingpayments with respect to Purchased Contracts) as soon as practicable and in noevent after the close of business on the second Business Day after suchreceipt; provided, however, that for so long as (a) FISC isthe Servicer, (b) no Event of Servicing Termination shall have occurredand be continuing and (c) (i) the short term unsecured debt of FISC(for so long as it is Servicer) shall be rated at least Prime-1 by Moody’s andat least A-1 by S&P or (ii) the Rating Agency Condition shall havebeen satisfied and the written consent of the Insurer shall have been obtained(each, a “*Monthly Remittance Condition*”),the Servicer may remit any such amounts received during any Collection Periodto the Collection Account in immediately available funds on the Business Daypreceding the Payment Date following such Collection Period.  The Owner Trustee and the Indenture Trusteeshall not be deemed to have knowledge of any event or circumstance under clause(b) or (c) of the definition of Monthly RemittanceCondition that would require daily remittance by the Servicer to the CollectionAccount (and shall be entitled to presume and be fully protected in presumingthat no such event or circumstance has occurred or exists) unless the OwnerTrustee or the Indenture Trustee, as applicable, has received written notice ofsuch event or circumstance from the Seller or the Servicer in an Officer’sCertificate or written notice from the Insurer (if no Insurer Default shallhave occurred and be continuing), the Holders of Notes evidencing not less than25% of the Class A Note Balance or a Responsible Officer of the OwnerTrustee or the Indenture Trustee, as applicable, has actual knowledge of suchevent or circumstance.

 

## **Section 3.3.**           **Application of Collections**.

##  

For purposes of this Agreement, all amounts receivedon or in respect of a Contract during any Collection Period (excluding paymentswith respect to Purchased Contracts) shall be applied by the Servicer, on thedate received, to interest and principal on such Contract in accordance withthe terms of such Contract.

 

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## **Section 3.4.**           **Application of Deposits**.

##  

The Depositor and the Servicer shall deposit or causeto be deposited in the Collection Account the aggregate Purchase Amount withrespect to Purchased Contracts pursuant to Section 2.3 hereof orSections 2.02 and 2.28 of the Servicing Agreement.  All such deposits with respect to aCollection Period shall be made in immediately available funds no later than5:00 p.m., New York City time, on the Business Day preceding the PaymentDate following such Collection Period.

 

## **Section 3.5.**           **Determination DateCalculations**.

##  

### (a)           Oneach Determination Date, the Servicer shall calculate the following amounts:

###  

#### (i)            the Available Funds for the relatedPayment Date;

####  

#### (ii)           the Total Servicing Fee for therelated Payment Date;

####  

#### (iii)          the Total Note Interest for therelated Payment Date;

####  

#### (iv)          the Class A Monthly Note Principalfor the related Payment Date;

####  

#### (v)           the Insurance Premium for the relatedPayment Date plus any overdue Insurance Premiums for previous Payment Dates;

####  

#### (vi)          the aggregate amount of anyunreimbursed payments under the Policy to the extent payable to the Insurerunder the Insurance Agreement plus accrued interest on any unreimbursedpayments under the Policy at the rate provided in the Insurance Agreement plusany other amounts due the Insurer under the Insurance Agreement and the Policy;

####  

#### (vii)         the Class A Note Parity Amount forthe related Payment Date;

####  

#### (viii)        the sum of the amounts described in clauses(ii), (iii) and (vii) above (the “*Required Payment Amount*”);

####  

#### (ix)           the sum of the amounts described in clauses(v) and (vi) above (the “*InsurancePayment Amount*”);

####  

#### (x)            the Class B Monthly NotePrincipal for the related Payment Date; and

####  

#### (xi)           any unpaid or unreimbursed fees andexpenses (including but not limited to, attorneys’ fees and transitionexpenses) due to the Back-up Servicer, the Indenture Trustee, the Custodian andthe Owner Trustee.

####  

### (b)           Oneach Determination Date, the Servicer shall calculate the following amounts:

###  

#### (i)            the lesser of (A) the amount,if any, by which the sum of the Required Payment Amount plus the InsurancePayment Amount exceeds the Available Funds for the related Payment Date and (B) theReserve Account Amount for such Payment Date 

 

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(before givingeffect to any deposits to or withdrawals from the Reserve Account on suchPayment Date) (such lesser amount, the “*Reserve Account DrawAmount*”);

####  

#### (ii)           the Policy Claim Amount;

####  

#### (iii)          the Reserve Account Amount for therelated Payment Date (after giving effect to the withdrawal of the ReserveAccount Draw Amount for such Payment Date); and

####  

#### (iv)          the amount, if any, by which theRequired Reserve Account Amount for the related Payment Date exceeds theReserve Account Amount for such Payment Date (after giving effect to thewithdrawal of the Reserve Account Draw Amount for such Payment Date) (suchexcess, the “*Reserve Account Deficiency*”).

####  

On each Payment Date, the Servicer shall instruct theIndenture Trustee to withdraw, and the Indenture Trustee upon receipt of suchinstructions shall withdraw, the Reserve Account Draw Amount, if any, for suchPayment Date from the Reserve Account and apply such amount in accordance with paragraph(e) of this Section 3.5.

 

### (c)           Ifthe Servicer determines on any Determination Date that the Available Funds forthe following Payment Date plus the Reserve Account Draw Amount (excluding thatportion attributable to clause (ii) of Section 3.5(a))for such Payment Date will be insufficient to pay in full the Required PaymentAmount (excluding that portion attributable to clause (ii) of Section 3.5(a))for such Payment Date, the Servicer shall deliver to the Indenture Trustee,with a copy to the Insurer, the Owner Trustee and the Fiscal Agent, no laterthan 2:00 p.m., New York City time, on such Determination Date, a writtennotice specifying the Policy Claim Amount for such Payment Date.  The Indenture Trustee shall, no later than12:00 p.m., New York City time, on the second Business Day prior to suchPayment Date, make a claim under the Policy for such Policy Claim Amount bydelivering to the Insurer and the Fiscal Agent, with a copy to the Servicer, aNotice (as defined in the Policy) for such Policy Claim Amount.  In making any such claim, the IndentureTrustee shall comply with all the terms and conditions of the Policy.  The “*Policy Claim Amount*”with respect to a Payment Date shall equal the sum of the following amounts:

###  

#### (i)            the excess, if any, of (A) theTotal Note Interest for such Payment Date over (B) the portion of TotalAvailable Funds for such Payment Date applied to the payment thereof pursuantto Sections 3.5(d) and (e); and

####  

#### (ii)           the Principal Deficit; and

####  

#### (iii)          on the Final Note Payment Date foreach Class of Class A Notes, the outstanding principal balance ofsuch Class of Class A Notes, after giving effect to all otherdistributions to the Class A Noteholders to be made on such Final NotePayment Date and without duplication of the Principal Deficit.

####  

The Servicer shall instruct the Indenture Trustee todeposit, and the Indenture Trustee upon receipt of such instructions shalldeposit, the proceeds of any drawing under the Policy in respect of clauses(i), (ii) and (iii) above to the Class A NotePayment Account.

 

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It is understood that this Section 3.5(c) shallhave no effect upon the Insurer’s obligations under the Policy, which aregoverned solely by the Policy.

 

### (d)           Oneach Payment Date, prior to any acceleration of the Notes after an Event ofDefault, the Servicer shall instruct the Indenture Trustee to apply theAvailable Funds for such Payment Date to make the following payments anddeposits in the following order of priority, and the Indenture Trustee shallapply as so instructed:

###  

#### (i)            to the Back-up Servicer, theIndenture Trustee, the Custodian and the Owner Trustee in its individual capacity,respectively, any unpaid or unreimbursed Back-up Servicer Fee, IndentureTrustee Fee and Owner Trustee Fee, as applicable, and expenses (including, butnot limited to, attorneys’ fees and transition expenses) in accordance with theterms of the Fee Letters and the Transaction Documents; provided thatany such expenses shall not exceed $50,000.00 in the aggregate per year and (A) priorto an Event of Servicing Termination, $100,000.00 in the total aggregate or (B) afteran Event of Servicing Termination, $200,000.00 in the total aggregate so longas the Notes shall remain outstanding and the Policy has not been cancelled;

####  

#### (ii)           to the Servicer, the Total ServicingFee for the preceding Collection Period;

####  

#### (iii)          to the Class A Note PaymentAccount, for distribution to the Class A Noteholders in accordance with Section 2.8(b)(i) ofthe Indenture, the Total Note Interest for such Payment Date;

####  

#### (iv)          unless an Insurer Default has occurredand is continuing, to the Insurer, the Insurance Premium for such Payment Dateplus any overdue Insurance Premiums for previous Payment Dates;

####  

#### (v)           to the Class A Note PaymentAccount, for distribution to the Class A Noteholders in accordance with Section 2.8(b)(i) ofthe Indenture, the Class A Monthly Note Principal for such Payment Date;

####  

#### (vi)          to the Insurer, the aggregate amountof any unreimbursed payments under the Policy to the extent payable to theInsurer under the Insurance Agreement plus accrued interest on anyunreimbursed payments under the Policy at the rate provided in the InsuranceAgreement plus any other amounts due the Insurer under the InsuranceAgreement and the Policy;

####  

#### (vii)         to the Reserve Account, the ReserveAccount Deficiency, if any, for such Payment Date;

####  

#### (viii)        after the occurrence of a Re-Liening Trigger,to the Servicer (if not First Investors Servicing Corporation), any and allexpenses incurred in connection with re-titling the Financed Vehicles, to theextent not previously paid;

 

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#### (ix)           to the Class B Note PaymentAccount for distribution to the Class B Noteholders in accordance with Section 2.8(b)(ii) ofthe Indenture, the Class B Monthly Note Principal for such Payment Date;

####  

#### (x)            other amounts, if any, due the OwnerTrustee in its individual capacity, the Indenture Trustee, the Custodian, theBack-up Servicer, the Servicer and the Insurer, respectively, pursuant to theTransaction Documents to the extent not paid pursuant to clause (i); and

####  

#### (xi)           to the Depositor Account, anyremaining Available Funds.

####  

On each Payment Date, the Servicer shall instruct theIndenture Trustee to make the payments described in Section 2.8(b) andSection 2.8(f) of the Indenture, as applicable, from the Note PaymentAccounts.

 

### (e)           Oneach Payment Date, the Servicer shall instruct the Indenture Trustee to apply,and the Indenture Trustee shall apply as so instructed, the amount, if any,withdrawn from the Reserve Account in respect of the Reserve Account DrawAmount in accordance with paragraph (b) of this Section 3.5to make the following payments and deposits after giving effect to and withoutduplication of amounts paid or deposited pursuant to Section 3.5(d) inthe following order of priority:

###  

#### (i)            to the Servicer, the Total ServicingFee for the preceding Collection Period;

####  

#### (ii)           to the Class A Note PaymentAccount, the Total Note Interest for such Payment Date, to be applied inaccordance with Section 2.8(b)(i) of the Indenture;

####  

#### (iii)          to the Class A Note PaymentAccount, the Class A Monthly Note Principal for such Payment Date (onlyif, and to the extent that, at such time the Class A Note Balance exceedsthe sum of the Pool Balance and 98.5% of the amount on deposit in thePrefunding Account as of the last day of the related Collection Period), to beapplied in accordance with Section 2.8(b)(i) of the Indenture;

####  

#### (iv)          if such Payment Date is the Final NotePayment Date for any Class of Class A Notes, the outstandingprincipal balance of such Class of Class A Notes;

####  

#### (v)           unless an Insurer Default hasoccurred and is continuing, to the Insurer, the Insurance Premium for suchPayment Date plus any overdue Insurance Premiums for previous Payment Dates;and

####  

#### (vi)          to the Insurer, the aggregate amountof any unreimbursed payments under the Policy to the extent payable to theInsurer under the Insurance Agreement plus accrued interest on anyunreimbursed payments under the Policy at the rate provided in the InsuranceAgreement plus any other amounts due the Insurer under the Insurance Agreementand the Policy.

 

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### (f)            Onany Payment Date on or after which the Notes have been accelerated after anEvent of Default, the Servicer may, with the prior written consent (a copy ofwhich written consent shall be forwarded by the Servicer to the IndentureTrustee) of the Insurer, and shall, at the written direction (a copy of whichwritten direction shall be forwarded by the Servicer to the Indenture Trustee)of the Insurer (provided that no Insurer Default shall have occurred and becontinuing), instruct the Indenture Trustee to withdraw from the ReserveAccount, and the Indenture Trustee upon receipt of such instructions shallwithdraw from the Reserve Account, an amount up to the remainder of the Class ANote Balance after the application of all other amounts distributable to the Class ANoteholders on such Payment Date pursuant to Section 2.8(f)(i) and Section 5.4(b) ofthe Indenture and deposit such amount to the Class A Note Payment Account.  The Servicer may, with the prior written consent(a copy of which written consent shall be forwarded by the Servicer to theIndenture Trustee) of the Insurer (provided that no Insurer Default shall haveoccurred and be continuing), and shall, at the written direction (a copy ofwhich written direction shall be forwarded by the Servicer to the IndentureTrustee) of the Insurer, instruct the Indenture Trustee to apply, and theIndenture Trustee shall apply, such amount to the payment of principal on theNotes in accordance with Section 2.8(f)(i) and Section 5.4(b) ofthe Indenture.

###  

### (g)           Onany Payment Date on or after which the Class A Notes have been paid infull and all amounts due to the Insurer have been paid in full, after givingeffect to the Reserve Account Draw Amount for such Payment Date, if any, theIndenture Trustee shall withdraw from the Reserve Account an amount up to theoutstanding principal balance of the Class B Notes and deposit such amountto the Class B Note Payment Account, to be applied in accordance with Section 2.8(f)(ii) andSection 5.4(b) of the Indenture.

###  

## **Section 3.6.**           **Reserve Account**.

##  

### (a)           TheTrust shall establish, or shall cause to be established, on or before theClosing Date, and shall maintain in the name of the Indenture Trustee at anEligible Institution (which shall initially be the Indenture Trustee) asegregated trust account designated as the Reserve Account (the “*Reserve Account*”).  The Reserve Account shall be held in trustfor the benefit of the Class A Noteholders, the Servicer and theInsurer.  The Reserve Account shall beunder the sole dominion and control of the Indenture Trustee; provided, however,that the Servicer may make deposits to and direct the Indenture Trustee inwriting to make withdrawals from the Reserve Account in accordance with thisAgreement and the Indenture.  On theClosing Date, the Trust shall deposit the Initial Reserve Account Deposit intothe Reserve Account from the net proceeds of the sale of the Notes.  On each Additional Contract Purchase Date,the Reserve Account shall be funded by deposits from proceeds of the sale bythe Depositor of Additional Contracts to the Trust in an amount equal to 1.0%of the aggregate Principal Balance of the Additional Contracts as of theapplicable Cutoff Date.  Pursuant to theIndenture, the Trust will pledge all of its right, title and interest in, toand under the Reserve Account and the Reserve Account Property to the IndentureTrustee for the benefit of the Noteholders and the Insurer to secure itsobligations under the Notes and the Indenture.

###  

### (b)           TheReserve Account Property shall, to the extent permitted by applicable law, rules andregulations, be invested, as directed in writing by the Servicer, by the bankor trust company then maintaining the Reserve Account in Eligible Investmentsthat mature not later 

 

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than the Business Day precedingthe next Payment Date.  All such EligibleInvestments shall be held to maturity. All interest and other income (net of losses and investment expenses) onfunds on deposit in the Reserve Account shall, at the written direction of theServicer, be paid to the Trust on any Payment Date to the extent that funds ondeposit therein, as certified by the Servicer, exceed the Required ReserveAccount Amount.  If the Reserve Accountis no longer to be maintained at the Indenture Trustee, the Servicer shall,with the Indenture Trustee’s assistance as necessary, cause the Reserve Accountto be moved to an Eligible Institution within ten (10) Business Days (orsuch longer period not to exceed thirty (30) calendar days as to which eachRating Agency and the Insurer (provided that no Insurer Default shall haveoccurred and is continuing) may consent). The Servicer shall promptly notify the Insurer (provided that no InsurerDefault shall have occurred and is continuing) and the Indenture Trustee of anychange in the account number or location of the Reserve Account.

###  

### (c)           Withrespect to any Reserve Account Property:

###  

#### (i)            any Reserve Account Property that isa “financial asset” as defined in Section 8-102(a)(9) of the RelevantUCC shall be physically delivered to, or credited to an account in the name of,the Eligible Institution maintaining the Reserve Account, in accordance withsuch institution’s customary procedures such that such institution establishesa “securities entitlement” in favor of the Indenture Trustee with respectthereto;

####  

#### (ii)           any Reserve Account Property that isheld in deposit accounts shall be held solely in the name of the IndentureTrustee at one or more depository institutions having the Required Rating andeach such deposit account shall be subject to the exclusive custody and controlof the Indenture Trustee and the Indenture Trustee shall have sole signatureauthority with respect thereto; and

####  

#### (iii)          except for any deposit accountsspecified in clause (ii) above, the Reserve Account shall only beinvested in securities or in other assets which the Eligible Institutionmaintaining the Reserve Account agrees to treat as “financial assets” asdefined in Section 8-102(a)(9) of the Relevant UCC.

####  

### (d)           Ifthe Reserve Account Amount for any Payment Date (after giving effect to thewithdrawal of the Reserve Account Draw Amount for such Payment Date) exceedsthe Required Reserve Account Amount for such Payment Date, the Servicer shall,unless an Event of Default has occurred and is continuing, instruct theIndenture Trustee in writing to distribute, and the Indenture Trustee uponreceipt of such instructions shall distribute, the amount of such excess to thePaying Agent for distribution to the Depositor in accordance with Section 5.2of the Trust Agreement.  The IndentureTrustee hereby releases, on each Payment Date, its security interest in, to andunder Reserve Account Property distributed to the Depositor pursuant to this Section 3.6.  If an Event of Default has occurred and iscontinuing, the Servicer shall instruct the Indenture Trustee to apply, and theIndenture Trustee upon receipt of such instructions shall apply, the amount ofsuch excess in the Reserve Account to the Collection Account for application toAvailable Funds pursuant to Section 3.5(d).

 

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### (e)           Ifthe Class A Note Balance and all other amounts owing or to be distributedhereunder or under the Indenture to the Class A Noteholders, the Insurerand the Class B Noteholders have been paid in full and the Trust has beenterminated, any remaining Reserve Account Property shall be distributed to theDepositor in accordance with Section 5.2 of the Trust Agreement.

###  

## **Section 3.7.**           **Prefunding Account**.

##  

### (a)           TheTrust shall establish, or shall cause to be established, on or before theClosing Date, and shall maintain in the name of the Indenture Trustee at anEligible Institution (which shall initially be the Indenture Trustee) asegregated trust account designated as the Prefunding Account (the “*Prefunding Account*”).  The Prefunding Account shall be held in trustfor the benefit of the Insurer and the Noteholders.  The Prefunding Account shall be under thesole dominion and control of the Indenture Trustee; provided, however,that the Servicer may make deposits to and direct the Indenture Trustee inwriting to make withdrawals from the Prefunding Account in accordance with thisAgreement and the Indenture.  All moniesdeposited from time to time in the Prefunding Account pursuant to thisAgreement shall be held by the Indenture Trustee as part of the Trust Propertyand shall be applied as provided in this Agreement.  All deposits to and withdrawals from thePrefunding Account shall be made only upon the terms and conditions of theTransaction Documents.

###  

### (b)           Allamounts held in the Prefunding Account shall, to the extent permitted byapplicable law, rules and regulations, be invested, as directed in writingby the Servicer, by the bank or trust company then maintaining the PrefundingAccount in Eligible Investments that mature not later than the Business Daypreceding the Payment Date following the Collection Period to which suchamounts relate.  All such Eligible Investmentsshall be held to maturity.  If thePrefunding Account is no longer to be maintained at the Indenture Trustee, theServicer shall, with the Indenture Trustee’s assistance as necessary, cause thePrefunding Account to be moved to an Eligible Institution within ten (10) BusinessDays (or such longer period not to exceed thirty (30) calendar days as to whicheach Rating Agency and the Insurer (provided that no Insurer Default shall haveoccurred and is continuing) may consent). The Servicer shall promptly notify the Indenture Trustee, the Insurer(provided that no Insurer Default shall have occurred and is continuing) andthe Owner Trustee of any change in the account number or location of thePrefunding Account.

###  

### (c)           Onthe Closing Date, the Trust will deposit an amount equal to the InitialPrefunding Account Amount from the aggregate proceeds of the sale of the Notesinto the Prefunding Account.  The Trustshall cause the Servicer to notify the Insurer and the Indenture Trustee two (2) BusinessDays prior to any proposed purchase of Additional Contracts, such notice tocontain (i) a Contract Schedule listing the relevant information forsuch Additional Contracts, (ii) the Additional Purchase Price and (iii) theproposed Additional Contract Purchase Date. During the Prefunding Period, unless the Indenture Trustee, on suchproposed Additional Contract Purchase Date, has actual knowledge of theoccurrence of a Default or Event of Default, the Indenture Trustee shall transferthe Additional Purchase Price for such Additional Contracts from the PrefundingAccount to such account as the Trust, through the Servicer, may specify.

 

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### (d)           Onthe Prefunding Account Ending Date, upon direction from the Servicer, the IndentureTrustee shall transfer 98.5% of the Excess Prefunding Amount to the Class ANote Payment Account and the remaining 1.5% of the Excess Prefunding Amount tothe Class B Note Payment Account. If the aggregate remaining amount in the Prefunding Account is: (i) $100,000or less on the Prefunding Account Ending Date, the portion of the ExcessPrefunding Amount payable to the Class A Notes shall be applied to reducethe outstanding principal amount of the Class of Class A Notes thenentitled to receive principal payments on the Class A Notes prior togiving effect to the payment of principal on the immediately following PaymentDate; and (ii) $100,000 or greater, the portion of the Excess PrefundingAmount payable to Class A Notes shall be paid pro rata to each Class ofClass A Notes based on the outstanding principal balance of each Class ofClass A Notes prior to giving effect to the payment of principal on thatPayment Date.  Such amounts shall be paidin accordance with Section 2.8(b)(i) of the Indenture.

###  

## **Section 3.8.**           **Statements to Noteholders**.

##  

### (a)           Onor prior to each Determination Date, the Servicer shall provide to theIndenture Trustee (with copies to the Insurer, the Rating Agencies and eachPaying Agent) for the Indenture Trustee to forward to each Noteholder of recordas of the most recent Record Date upon a written request from any suchNoteholder, a statement which shall set forth at least the followinginformation as to the Notes (to the extent applicable) with respect to thedistribution to be made on such Payment Date:

###  

#### (i)            the amount of such distributionallocable to Total Note Interest;

####  

#### (ii)           the amount of such distributionallocable to interest, overdue interest and interest on overdue interest foreach Class of Class A Notes;

####  

#### (iii)          the amount of such distributionallocable to principal on each Class of Class A Notes and the Class BNotes;

####  

#### (iv)          the Total Servicing Fee for thepreceding Collection Period;

####  

#### (v)           the Class A Note Balance and theNote Factor relating to each Class of Class A Notes, in each case asof the close of business on the last day of the preceding Collection Period(after giving effect to payments allocated to principal reported under clause(iii) above);

####  

#### (vi)          the Pool Balance as of the close ofbusiness on the last day of the preceding Collection Period;

####  

#### (vii)         the Reserve Account Amount on suchPayment Date (after giving effect to all deposits to or withdrawals from theReserve Account on such Payment Date);

####  

#### (viii)        the aggregate Purchase Amount ofPurchased Contracts, if any, with respect to the preceding Collection Period;

 

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#### (ix)           the number and aggregate PrincipalBalance of Contracts that were 31-59 days, 60-89 days or 90 days or moredelinquent as of the last day of the preceding Collection Period;

####  

#### (x)            Cumulative Net Loss Rate informationwith respect to the preceding Collection Periods; and

####  

#### (xi)           prior to the Prefunding AccountEnding Date, the Prefunding Account Balance and the Capitalized InterestAmount.

####  

### (b)           Within150 days after the Closing Date and each Additional Contract Purchase Date, theServicer shall provide, or shall cause to be provided, to the Indenture Trusteeand the Insurer a notice indicating which Contract Files, if any, do notcontain a certificate of title or other evidence in lieu of a certificate oftitle.

###  

## **Section 3.9.**           **Control of SecuritiesAccounts; The Securities Intermediary**.

##  

### (a)           WellsFargo Bank, National Association agrees to act as securities intermediaryhereunder (in such capacity, the “Securities Intermediary”) and theSecurities Intermediary represents, warrants and covenants as follows:

###  

#### (i)            With respect to any of theCollateral that is a book-entry security, such Collateral has been credited tothe Indenture Trustee’s securities account by accurate book entry.

####  

#### (ii)           The Securities Intermediary willcomply with all “Entitlement Orders” (as such term is defined in Section 8-102of the Relevant UCC) of the Indenture Trustee, without further consent of theTrust, and shall not accept Entitlement Orders from any other person except asauthorized by the Indenture Trustee.

####  

#### (iii)          The Securities Intermediary hasreceived no notice of, and has no knowledge of any “adverse claim” (as suchterm is defined in the Relevant UCC) as to the Collateral.

####  

#### (iv)          The Securities Intermediary waives anylien, claim or encumbrance in favor of the Securities Intermediary in theCollateral.

####  

#### (v)           The Securities Intermediary is a “securitiesintermediary” as such term is defined in Section 8-102(a)(14) of the RelevantUCC and in the ordinary course of its business maintains “securities accounts”for others, as such terms are used in Section 8-501 of the Relevant UCC.

####  

#### (vi)          The Securities Intermediary is not a “clearingcorporation,” as such term is defined in Section 8-102(a)(5) of theRelevant UCC.

####  

### (b)           Anysecurities intermediary hereunder shall be, and the Securities Intermediaryhereby represents and warrants that it is as of the date hereof and shall be,for so long as it is the 

 

36

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Securities Intermediaryhereunder, a corporation or national banking association that in the ordinarycourse of its business maintains securities accounts for others and is actingin that capacity hereunder.  Any securitiesintermediary hereunder shall, and the Securities Intermediary does, agree withthe parties hereto that each Account shall be an account to which financialassets may be credited and undertake to treat the Indenture Trustee as entitledto exercise rights that comprise such financial assets.  Any securities intermediary hereunder shall,and the Securities Intermediary does, agree with the parties hereto that eachitem of property credited to each Account shall be treated as a “financialasset” as defined in Section 8-102 of the Relevant UCC.  Any securities intermediary hereunder shall,and the Securities Intermediary does, acknowledge that the “securitiesintermediary’s jurisdiction” as defined in the Relevant UCC of the SecuritiesIntermediary with respect to the Collateral, shall be the State of NewYork.  Any securities intermediaryhereunder shall, and the Securities Intermediary does, represent and covenantthat it is not and will not be (as long as it is the Securities Intermediaryhereunder) a party to any agreement in respect of the Collateral that isinconsistent with the provisions of this Agreement.  Any securities intermediary hereunder shall,and the Securities Intermediary does, covenant that it will not take actioninconsistent with the provisions of this Agreement applicable to it.  Any securities intermediary hereunder shall,and the Securities Intermediary does, agree that any item of property creditedto any Account shall not be subject to any security interest, lien, or right ofsetoff in favor of it or anyone claiming through it (other than the IndentureTrustee).

###  

### (c)           Itis the intent of the Indenture Trustee and the Trust that each of the ReserveAccount, the Collection Account and the Prefunding Account shall be asecurities account as to which the Indenture Trustee and not the Trust is the “entitlementholder” (within the meaning of Section 8-102(a)(7) of the RelevantUCC).  Nonetheless, (i) anysecurities intermediary hereunder shall agree to comply with entitlement ordersoriginated by the Indenture Trustee without further consent by the Trust, and (ii) theSecurities Intermediary agrees that so long as it is the SecuritiesIntermediary hereunder, it will comply with entitlement orders originated bythe Indenture Trustee without further consent by the Trust.  Any securities intermediary hereunder shallcovenant that it will not agree with any person or entity other than theIndenture Trustee that it will comply with entitlement orders originated bysuch person or entity, and the Securities Intermediary hereby covenants that itwill not agree with any person or entity other than the Indenture Trustee thatit will comply with entitlement orders originated by such person or entity.

###  

### (d)           Nothingherein shall imply or impose upon the Securities Intermediary any duty orobligations other than those expressly set forth herein and those applicable toa securities intermediary under the Relevant UCC (and the SecuritiesIntermediary shall be entitled to all of the protections available to asecurities intermediary under the Relevant UCC).  Without limiting the foregoing, nothingherein shall imply or impose upon the Securities Intermediary any duties of afiduciary nature.

###  

### (e)           TheSecurities Intermediary may at any time resign by notice to the Indenture Trusteeand may at any time be removed by notice from the Indenture Trustee; provided,however, that it shall be the responsibility of the Indenture Trustee toappoint a successor securities intermediary and to cause the Accounts to beestablished and maintained with such successor securities intermediary inaccordance with the terms hereof; and the responsibilities and duties of theretiring Securities Intermediary hereunder shall remain in effect until all ofthe 

 

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Collateral credited to theAccounts held by such retiring Securities Intermediary have been transferred tosuch successor.  Any corporation intowhich the Securities Intermediary may be merged or converted or with which itmay be consolidated, or any corporation resulting from such merger,consolidation or conversion to which the Securities Intermediary shall be aparty, shall be the successor of the Securities Intermediary hereunder, withoutthe execution or filing of any further act on the part of the parties hereto orsuch securities intermediary or such successor corporation.

###  

## **Section 3.10.**        **Policy Matters**.

##  

### (a)           TheIndenture Trustee hereby agrees on behalf of the Class A Noteholders (andeach Class A Noteholder, by its acceptance of its Class A Notes,shall agree) for the benefit of the Insurer, that the Indenture Trustee shallrecognize that to the extent the Insurer makes a payment under the Policy,either directly or indirectly (by paying through the Indenture Trustee) to the Class ANoteholders, the Insurer will be entitled to be subrogated to the rights of theClass A Noteholders to the extent of such payment made under thePolicy.  Any rights of subrogationacquired by the Insurer as a result of any payment made under the Policy shall,in all respects, be subordinate and junior in right of payment to the priorindefeasible payment in full of all amounts due under the Class A Notes.

###  

### (b)           TheIndenture Trustee, for itself and on behalf of the Noteholders, hereby agreesthat the Insurer may at any time during the continuation of any proceedingrelating to a Final Order, provided that no Insurer Default shall have occurredand be continuing, direct all matters relating to such Final Order, including,without limitation, the direction of any appeal of any order relating to suchFinal Order and the posting of any surety, supersedeas or performance bondpending any such appeal.  In addition andwithout limitation of the foregoing, the Insurer shall be subrogated, to theextent of any payments made under the Policy relating to a Final Order, to therights of the Depositor, the Servicer, the Seller, the Trust, the IndentureTrustee and the Class A Noteholders in the conduct of any preference claimrelating to a Final Order, including, without limitation, all rights of anyparty to any adversarial proceeding or action with respect to any court orderissued in connection with any such preference claim; provided, that suchsubrogation rights shall remain subject to the last sentence of paragraph (a) ofthis Section 3.10.

###  

# **Article IV**

# ** **

# **TheDepositor**

# ** **

## **Section 4.1.**           **Representations andWarranties of the Depositor**.

##  

The Depositor makes the following representations andwarranties on which the Trust shall be deemed to have relied in accepting theTrust Property.  The representations andwarranties speak as of the execution and delivery of this Agreement and as ofeach Additional Contract Purchase Date and shall survive the sale, transfer,assignment and conveyance of the Trust Property to the Trust pursuant to this Agreementand the pledge of the Trust Property to the Indenture Trustee pursuant to theIndenture:

 

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### (a)           Organizationand Good Standing.  The Depositor hasbeen duly organized and is validly existing as a corporation in good standingunder the laws of the State of Delaware, has the power, authority and legalright to own its properties and to conduct its business as such properties arecurrently owned and such business is currently conducted, and has the power,authority and legal right to acquire, own and sell the Contracts.

###  

### (b)           DueQualification.  The Depositor is dulyqualified to do business as a foreign corporation in good standing and hasobtained all necessary licenses and approvals in each jurisdiction in which thefailure to so qualify or to obtain such licenses and approvals would, in thereasonable judgment of the Depositor, materially and adversely affect theperformance by the Depositor of its obligations under, or the validity orenforceability of, this Agreement, the Indenture, the Trust Agreement, any ofthe other Transaction Documents, the Contracts or the Notes.

###  

### (c)           Powerand Authority.  The Depositor has thepower and authority to execute, deliver and perform its obligations under thisAgreement and the other Transaction Documents to which it is a party.  The Depositor has the power and authority tosell, assign, transfer and convey the property to be transferred to anddeposited with the Trust and has duly authorized such transfer and deposit byall necessary corporate action, and the execution, delivery and performance ofthis Agreement and the other Transaction Documents to which the Depositor is aparty have been duly authorized by the Depositor by all necessary corporateaction.

###  

### (d)           ValidTransfer; Binding Obligation.  ThisAgreement effects a valid sale, transfer, assignment and conveyance to theTrust of the Contracts and the other Trust Property enforceable againstcreditors of and purchasers from the Depositor. This Agreement and the other Transaction Documents to which theDepositor is a party constitute legal, valid and binding obligations of theDepositor, enforceable against the Depositor in accordance with their terms,subject, as to enforceability, to applicable bankruptcy, insolvency,reorganization, conservatorship, receivership, liquidation and other similarlaws and to general equitable principles.

###  

### (e)           NoViolation.  The execution, deliveryand performance by the Depositor of this Agreement and the other TransactionDocuments to which the Depositor is a party, the consummation of thetransactions contemplated hereby and thereby and the fulfillment of the termshereof and thereof will not conflict with, result in a breach of any of theterms and provisions of or constitute (with or without notice or lapse of timeor both) a default under the certificate of incorporation or by-laws of theDepositor or any material indenture, agreement, mortgage, deed of trust orother instrument to which the Depositor is a party or by which the Depositor isbound or to which any of its properties are subject, or result in the creationor imposition of any lien upon any of its properties pursuant to the terms ofany such indenture, agreement, mortgage, deed of trust or other instrument(other than pursuant to this Agreement), or violate any law, order, rule orregulation applicable to the Depositor or its properties of any federal orstate regulatory body, court, administrative agency or other governmentalinstrumentality having jurisdiction over the Depositor or any of itsproperties.

###  

### (f)            NoProceedings.  There are noproceedings or investigations pending, or, to the knowledge of the Depositor,threatened, against the Depositor before any court, regulatory body,

 

39

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administrative agency or othertribunal or governmental instrumentality having jurisdiction over the Depositoror its properties (i) asserting the invalidity of this Agreement, theIndenture, the Trust Agreement, any of the other Transaction Documents to whichthe Depositor is a party, or the Notes, (ii) seeking to prevent theissuance of the Notes or the consummation of any of the transactionscontemplated by this Agreement, the Indenture, the Trust Agreement or any ofthe other Transaction Documents to which the Depositor is a party, (iii) seekingany determination or ruling that, in the reasonable judgment of the Depositor,would materially and adversely affect the performance by the Depositor of itsobligations under, or the validity or enforceability of, this Agreement, theIndenture, the Trust Agreement, any of the other Transaction Documents to whichthe Depositor is a party, the Contracts or the Notes, or (iv) that, in thereasonable judgment of the Depositor, would adversely affect the federal orApplicable Tax State income, excise, franchise or similar tax attributes of theNotes or the Trust.

###  

## **Section 4.2.**           **Liability of Depositor;Indemnities**.

##  

### (a)           TheDepositor shall be liable in accordance herewith only to the extent of theobligations specifically undertaken by the Depositor under this Agreement.

###  

### (b)           Notwithstandingany other provision in any Transaction Document, the Depositor shall indemnify,defend and hold harmless the Trust, the Owner Trustee in its individualcapacity and the Indenture Trustee from and against any taxes that may at anytime be asserted against any such Person with respect to, and as of the dateof, the transfer of the Contracts and Additional Contracts to the Trust or theissuance and original sale of the Notes, including any sales, gross receipts,general corporation, tangible personal property, privilege or license taxes(but, in the case of the Trust, not including any taxes asserted with respectto ownership of the Contracts and Additional Contracts or federal or otherApplicable Tax State income taxes arising out of the transactions contemplatedby this Agreement and the other Transaction Documents), and all costs andexpenses in defending against such taxes.

###  

### (c)           Notwithstandingany other provision in any Transaction Document, the Depositor shall indemnify,defend and hold harmless the Trust, the Owner Trustee in its individualcapacity, the Indenture Trustee and the Noteholders from and against any loss,liability or expense incurred by reason of (i) the Depositor’s willfulmisfeasance, bad faith or negligence in the performance of its duties underthis Agreement or any other Transaction Document to which it is a party or byreason of a reckless disregard of its obligations and duties under thisAgreement or any other Transaction Document to which it is a party and (ii) theDepositor’s violation of federal or state securities laws in connection withthe registration or the sale of the Notes and (iii) any action taken, orfailed to be taken, by the Depositor in respect of any portion of the TrustProperty.

###  

### (d)           Notwithstandingany other provision in any Transaction Document, the Depositor shall indemnify,defend and hold harmless the Owner Trustee in its individual capacity and theIndenture Trustee and their respective officers, directors, employees andagents from and against all costs, expenses, unpaid fees, losses, claims,damages and liabilities arising out of or incurred in connection with theacceptance or performance of the trusts and duties contained herein and in theTrust Agreement, in the case of the Owner Trustee, and in the Indenture, in thecase of the Indenture Trustee, except to the extent that such cost, expense,loss, claim, damage or liability (i)

 

40

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shall be due to the willfulmisfeasance, bad faith or gross negligence (except for errors in judgment) ofthe Owner Trustee or the Indenture Trustee, as applicable, (ii) in thecase of the Owner Trustee, shall arise from the breach by the Owner Trustee ofany of its representations or warranties in its individual capacity set forthin the Trust Agreement, (iii) in the case of the Indenture Trustee, shallarise from the breach by the Indenture Trustee of any of its representationsand warranties set forth in the Indenture or (iv) relates to any tax otherthan the taxes with respect to which either the Depositor or the Servicer shallbe required to indemnify the Owner Trustee or the Indenture Trustee, asapplicable.

###  

### (e)           TheDepositor shall pay any and all taxes levied or assessed upon all or any partof the Owner Trust Estate.

###  

Indemnification under this Section 4.2shall survive the resignation or removal of the Owner Trustee or the IndentureTrustee and the termination of this Agreement and shall include reasonable feesand expenses of counsel and expenses of litigation.  If the Depositor shall have made anyindemnity payments pursuant to this Section 4.2 and the Person toor on behalf of whom such payments are made thereafter shall collect any of suchamounts from others, such Person shall promptly repay such amounts to theDepositor, without interest.

 

## **Section 4.3.**           **Merger or Consolidationof, or Assumption of the Obligations of, Depositor**.

##  

Any Person (a) into which the Depositor shall bemerged or consolidated, (b) resulting from any merger, conversion orconsolidation to which the Depositor shall be a party or (c) that shallsucceed by purchase and assumption to all or substantially all of the businessof the Depositor, which Person in any of the foregoing cases executes anagreement of assumption to perform every obligation of the Depositor under thisAgreement, shall be the successor to the Depositor under this Agreement withoutthe execution or filing of any other document or any further act on the part ofany of the parties to this Agreement; provided, however, that (i) theDepositor shall have delivered to the Owner Trustee and the Indenture Trusteean Officer’s Certificate and an Opinion of Counsel each stating that suchmerger, conversion, consolidation or succession and such agreement ofassumption comply with this Section 4.3 and (ii) the Depositorshall have delivered to the Owner Trustee and the Indenture Trustee an Opinionof Counsel either (A) stating that, in the opinion of such counsel, allfinancing statements and continuation statements and amendments thereto havebeen authorized and filed that are necessary to fully preserve and protect theinterest of the Trust and the Indenture Trustee, respectively, in the Contractsand the other Trust Property, and reciting the details of such filings, or (B) statingthat, in the opinion of such counsel, no such action shall be necessary tofully preserve and protect such interest. The Depositor shall provide notice of any merger, conversion, consolidationor succession pursuant to this Section 4.3 to the RatingAgencies.  Notwithstanding anythingherein to the contrary, the execution of the foregoing agreement of assumptionand compliance with clauses (i) and (ii) above shall be conditions tothe consummation of the transactions referred to in clauses (a), (b) and (c) above.

 

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## **Section 4.4.**           **Limitation on Liability ofDepositor and Others**.

##  

### (a)           Neitherthe Depositor nor any of the directors, officers, employees or agents of theDepositor shall be under any liability to the Trust or the Noteholders for anyaction taken or for refraining from the taking of any action pursuant to thisAgreement or for errors in judgment; provided, however, that thisprovision shall not protect the Depositor or any such Person against anyliability that would otherwise be imposed by reason of willful misfeasance orbad faith in the performance of duties or by reason of reckless disregard ofobligations and duties under this Agreement, or by reason of negligence in theperformance of duties under this Agreement (except for errors injudgment).  The Depositor, and itsdirectors, officers, employees and agents, may rely in good faith on the adviceof counsel or on any document of any kind primafacie properlyexecuted and submitted by any Person in respect of any matters arising underthis Agreement.

###  

### (b)           TheDepositor shall not be under any obligation to appear in, prosecute or defendany legal action that shall not be incidental to its obligations under thisAgreement and that in its opinion may involve it in any expense or liability.

###  

## **Section 4.5.**           **Depositor May Own Class ANotes**.

##  

The Depositor, and any Affiliate of the Depositor,may, in its individual or any other capacity, become the owner or pledgee of Class ANotes with the same rights as it would have if it were not the Depositor or anAffiliate of the Depositor, except as otherwise expressly provided herein(including in the definition of Class A Note Balance) or in the otherTransaction Documents.  Except asotherwise expressly provided herein (including the definition of Class ANote Balance) or in the other Transaction Documents, Class A Notes soowned by or pledged to the Depositor or such Affiliate shall have an equal andproportionate benefit under the provisions of this Agreement and the otherTransaction Documents, without preference, priority or distinction as among theClass A Notes.

 

## **Section 4.6.**           **Covenants of the Depositor**.

##  

The Depositor hereby covenants and agreesthat, so long as any Note is outstanding, it shall:

 

### (a)           not commingle its assets withthose of any other Person;

###  

### (b)           maintainseparate records, financial statements and books of account from those of anyother Person;

###  

### (c)           holdmeetings as appropriate to authorize all action on behalf of the Depositor andobserve all of its other organizational formalities;

###  

### (d)           notbecome involved in the day to day management of any other Person;

###  

### (e)           operateso as not to be substantively consolidated with any other Person;

 

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### (f)            maintainits assets separately from any other Person (including through the maintenanceof a separate bank account);

###  

### (g)           holditself out as a separate entity from any other Person, conduct business in itsown name on its own stationary, invoices and checks, and correct any knownmisunderstanding regarding its separate identity;

###  

### (h)           exceptas is expressly set forth in the Administration Agreement, pay from its assetsall obligations and indebtedness of any kind incurred by it, and not pay fromits assets any obligations or indebtedness of any other Person;

###  

### (i)            paysalaries of its employees, if any, from its own funds, and fairly allocate anyexpenses shared with an Affiliate;

###  

### (j)            notguarantee or become obligated for the debts of any other Person or hold out itscredit as being available to satisfy the obligations of others;

###  

### (k)           notacquire obligations or securities of its members or its Affiliates;

###  

### (l)            allocatefairly and reasonably any overhead for shared office space;

###  

### (m)          maintainadequate capital and a sufficient number of employees (which may be zero) inlight of its contemplated business activities; and

###  

### (n)           insurethat any financial transaction between the Depositor and any of its Affiliatesbe on arm’s length, commercially reasonable terms.

###  

# **Article V**

# ** **

# **Miscellaneous**

# ** **

## **Section 5.1.**           **Amendment**.

##  

### (a)           ThisAgreement may be amended from time to time by the Seller, the Servicer, theDepositor and the Trust, with the consent of the Indenture Trustee and theInsurer (provided that no Insurer Default shall have occurred and becontinuing), but without the consent of any of the Noteholders, to cure anyambiguity, to correct or supplement any provision in this Agreement that may beinconsistent with any other provisions in this Agreement or any offeringdocument used in connection with the initial offer and sale of the Notes or toadd, change or eliminate any other provisions with respect to matters orquestions arising under this Agreement that are not inconsistent with theprovisions of this Agreement; provided, however, that suchamendment shall not, as evidenced by an Opinion of Counsel, which may be basedon an Officer’s Certificate of the Seller, the Servicer, the Depositor or theTrust delivered to the Owner Trustee, the Indenture Trustee and the Insurer,materially and adversely affect the interests of any Noteholder.  Any such amendment shall be deemed not tomaterially and adversely affect the interests of any Noteholder if the RatingAgency Condition is satisfied or the Person requesting 

 

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the amendment obtains anOpinion of Counsel satisfactory to the Indenture Trustee and the Owner Trusteeto that effect.

###  

### (b)           ThisAgreement may also be amended from time to time by the Seller, the Servicer,the Depositor, the Trust and the Insurer (provided that no Insurer Defaultshall have occurred and be continuing and if so, provided further that suchamendment shall not have a material adverse effect on the Insurer), with theconsent of the Indenture Trustee and the Holders of Notes evidencing not lessthan 51% of the Class A Note Balance, for the purpose of adding anyprovisions to or changing in any manner or eliminating any of the provisions ofthis Agreement, or of modifying in any manner the rights of the Noteholders; provided,however, that no such amendment shall, without the consent of theholders of all of the outstanding Notes, (i) increase or reduce in anymanner the amount of, or accelerate or delay the timing of, or change theallocation or priority of, collections on or in respect of the Contracts ordistributions that are required to be made for the benefit of the Noteholdersor change the Note Rate of any Class of Notes, (ii) reduce thepercentage required to consent to any such amendment or (iii) adverselyaffect the rating of the Notes by the Rating Agencies.

###  

### (c)           Priorto the execution of any amendment or consent pursuant to Section 5.1(b),the Servicer shall provide written notification of the substance of suchamendment or consent to each Rating Agency and the Insurer.

###  

### (d)           Promptlyafter the execution of any amendment or consent pursuant to Section 5.1(b),the Trust shall furnish written notification of the substance of such amendmentor consent to the Indenture Trustee and each of the Rating Agencies.  It shall not be necessary for the consent ofthe Noteholders pursuant to Section 5.1(b) to approve theparticular form of any proposed amendment or consent, but it shall be sufficientif such consent shall approve the substance thereof.  The manner of obtaining such consents (andany other consents of the Noteholders provided for in this Agreement) and ofevidencing the authorization of the execution thereof by the Noteholders shall besubject to such reasonable requirements as the Owner Trustee and the IndentureTrustee may prescribe.

###  

### (e)           Priorto the execution of any amendment pursuant to this Section 5.1, theOwner Trustee and the Indenture Trustee shall receive and be entitled to relyupon (i) an Opinion of Counsel stating that the execution of suchamendment (A) is authorized or permitted by this Agreement, (B) willnot materially adversely affect the federal or any Applicable Tax State incomeor franchise taxation of any Outstanding Note or any Holder thereof and (C) willnot cause the Trust to be taxable as a corporation for federal or anyApplicable Tax State income or franchise tax purposes and (ii) an Officer’sCertificate of the Servicer that all conditions precedent provided for in thisAgreement to the execution of such amendment have been complied with.  The Owner Trustee or the Indenture Trusteemay, but shall not be obligated to, enter into any such amendment which affectssuch Owner Trustee’s or Indenture Trustee’s own rights, duties or immunitiesunder this Agreement or otherwise.

###  

## **Section 5.2.**           **Protection of Title ofTrust**.

##  

### (a)           TheDepositor or the Servicer, or both, shall authorize and file such financingstatements and cause to be authorized and filed such continuation statements,all in such manner 

 

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and in such places as may berequired by law fully to preserve, maintain and protect the interest of theTrust and the Indenture Trustee for the benefit of the Noteholders and theInsurer in the Contracts and the proceeds thereof.  The Depositor or the Servicer, or both, shalldeliver (or cause to be delivered) to the Owner Trustee and the IndentureTrustee file-stamped copies of, or filing receipts for, any document filed asprovided above as soon as available following such filing.

###  

### (b)           TheDepositor shall not change (i) its name, identity or corporate structurein any manner that would make any financing statement or continuation statementfiled against the Depositor by the Depositor or the Servicer in accordance withSection 5.2(a) seriously misleading within the meaning of Section 9-507of the Relevant UCC or (ii) its jurisdiction of organization, unless, ineach case, it shall have given the Owner Trustee and the Indenture Trustee atleast sixty (60) days’ prior written notice thereof and shall have promptlyfiled such amendments to previously filed financing statements or continuationstatements or such new financing statements as may be necessary to continue theperfection of the interest of the Trust and the Indenture Trustee for thebenefit of the Noteholders and the Insurer in the Contracts and the proceedsthereof.

###  

### (c)           TheDepositor and the Servicer shall give the Owner Trustee and the IndentureTrustee at least sixty (60) days’ prior written notice of any relocation of itsprincipal executive office or change of its jurisdiction of formation and shallpromptly file any such amendment, continuation statement or any new financingstatement.  The Servicer shall at alltimes maintain each office from which it shall service Contracts, and itsprincipal executive office, within the United States of America.

###  

### (d)           TheServicer shall maintain accounts and records as to each Contract accurately andin sufficient detail to permit (i) the reader thereof to know at any timethe status of such Contract, including payments and recoveries made andpayments owing (and the nature of each) and (ii) reconciliation betweenpayments or recoveries on (or with respect to) each Contract and the amountsfrom time to time deposited in the Collection Account and the Reserve Accountin respect of such Contract.

###  

### (e)           TheServicer shall maintain its computer systems so that, from and after the timeof the transfer of the Contracts to the Trust pursuant to this Agreement, theServicer’s master computer records (including any back-up archives) that referto a Contract shall indicate clearly the interest of the Trust and theIndenture Trustee in such Contract and that such Contract is owned by the Trustand has been pledged to the Indenture Trustee pursuant to the Indenture.  Indication of the Trust’s and the IndentureTrustee’s interest in a Contract shall be deleted from or modified on theServicer’s computer systems when, and only when, such Contract shall have beenpaid in full or repurchased by the Depositor or purchased by the Servicer.

###  

### (f)            Ifat any time the Depositor or the Servicer shall propose to sell, grant asecurity interest in or otherwise transfer any interest in any motor vehicleretail installment sale contract or security interest and promissory note toany prospective purchaser, lender or other transferee, the Servicer shall giveto such prospective purchaser, lender or other transferee computer tapes,compact disks, records or print-outs (including any restored from back-uparchives) that, if they shall refer in any manner whatsoever to any Contract,shall indicate clearly that such Contract 

###  

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has been sold and is owned bythe Trust and has been pledged to the Indenture Trustee (unless such Contracthas been paid in full or repurchased by the Depositor or purchased by theServicer).

###  

### (g)           TheServicer shall permit the Owner Trustee, the Indenture Trustee and theirrespective agents at any time during normal business hours to inspect, auditand make copies of and abstracts from the Servicer’s records regarding anyContract.

###  

### (h)           Uponrequest, the Servicer shall furnish to the Owner Trustee and the IndentureTrustee, within ten (10) Business Days, a list of all Contracts (bycontract number and name of Obligor) then held as part of the Trust, togetherwith a reconciliation of such list to the Contract Schedule and to each ofthe Monthly Servicer Reports furnished before such request indicating removalof Contracts from the Trust.

###  

### (i)            TheServicer shall deliver to the Owner Trustee and the Indenture Trustee:

###  

#### (i)            promptly after the execution anddelivery of each amendment to any financing statement, an Opinion of Counseleither (A) stating that, in the opinion of such Counsel, all financingstatements and continuation statements have been authorized and filed that arenecessary fully to preserve and protect the interest of the Trust and theIndenture Trustee in the Contracts, and reciting the details of such filings orreferring to prior Opinions of Counsel in which such details are given, or (B) statingthat, in the opinion of such Counsel, no such action shall be necessary topreserve and protect such interest; and

####  

#### (ii)           within ninety (90) days after thebeginning of each calendar year (beginning with the year 2007), an Opinion ofCounsel, dated as of a date during such 90-day period, either (A) statingthat, in the opinion of such counsel, all financing statements and continuationstatements have been authorized and filed that are necessary fully to preserveand protect the interest of the Trust and the Indenture Trustee in theContracts, and reciting the details of such filings or referring to priorOpinions of Counsel in which such details are given, or (B) stating that,in the opinion of such counsel, no such action shall be necessary to preserveand protect such interest.

####  

Each Opinion of Counsel referred to in clause (i)(A) or(i)(B) above shall specify any action necessary (as of the date of suchopinion) to be taken in the following year to preserve and protect suchinterest.

 

## **Section 5.3.**           **Governing Law**.

##  

This Agreement shall be construed in accordance withthe laws of the State of New York, without reference to its conflict of law provisions,and the obligations, rights and remedies of the parties under this Agreementshall be determined in accordance with such laws.

 

## **Section 5.4.**           **Notices**.

##  

All demands, notices and other communications underthis Agreement shall be in writing, personally delivered, sent by telecopier,overnight courier or mailed by certified mail, return 

 

46

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receipt requested, and shall bedeemed to have been duly given upon receipt (a) in the case of the Seller,at the following address: 675 Bering Drive, Suite 710, Houston, Texas77057 Attention: Bennie Duck, (b) in the case of the Depositor, at thefollowing address: 675 Bering Drive, Suite 710, Houston, Texas 77057Attention: Bennie Duck, (c) in the case of the Servicer, at the followingaddress: 675 Bering Drive, Suite 710, Houston, Texas 77057, Attention:Bennie Duck, (d) in the case of the Owner Trustee, at the relatedCorporate Trust Office, (e) in the case of the Indenture Trustee, at therelated Corporate Trust Office, (f) in the case of Moody’s, at thefollowing address: Moody’s Investors Service, Inc., 99 Church Street, 4thFloor, New York, New York 10007, ServicerReports@moodys.com, Attn: Yan Yan,with an additional copy to Moody’s Investors Service, Inc., 99 ChurchStreet, 4th Floor, New York, New York 10007, Attn: ABS Monitoring Department,and (g) in the case of S&P, if available electronically, atServicer_reports@sandp.com, and if not available electronically, at thefollowing address: Standard & Poor’s Ratings Services, a division ofThe McGraw-Hill Companies, Inc., 55 Water Street, 43rd Floor, New York,New York 10041, Attention: ABS Surveillance Group, and (h) in the case ofthe Insurer, at the following address: MBIA Insurance Corporation, 113 King Street, Armonk, New York 10504,Attention: Insured Portfolio Management, Structured Finance.

 

## **Section 5.5.**           **Severability of Provisions**.

##  

If any one or more of the covenants, agreements,provisions or terms of this Agreement shall be for any reason whatsoever heldinvalid, then such covenants, agreements, provisions or terms shall be deemedseverable from the remaining covenants, agreements, provisions or terms of thisAgreement and shall in no way affect the validity or enforceability of theother provisions of this Agreement, or of the Notes, or the rights of theHolders thereof.

 

## **Section 5.6.**           **Assignment**.

##  

Notwithstanding anything to the contrary containedherein this Agreement may not be assigned by the Depositor or the Servicerwithout the prior written consent of the Trust, the Indenture Trustee and theHolders of Notes evidencing not less than 66-2/3% of the Class A NoteBalance.

 

## **Section 5.7.**           **Further Assurances**.

##  

The Depositor and the Servicer agree to do andperform, from time to time, any and all acts and to execute any and all furtherinstruments required or reasonably requested by the Owner Trustee or theIndenture Trustee more fully to effect the purposes of this Agreement,including, without limitation, the execution of any financing statements or continuationstatements relating to the Contracts for filing under the provisions of theRelevant UCC of any applicable jurisdiction.

 

## **Section 5.8.**           **No Waiver; CumulativeRemedies**.

##  

No failure to exercise and no delay in exercising, onthe part of the Owner Trustee, the Indenture Trustee, the Insurer or theNoteholders, any right, remedy, power or privilege hereunder, shall operate asa waiver thereof, nor shall any single or partial exercise of any right,remedy, power or privilege hereunder preclude any other or further exercisethereof or the exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and 

 

47

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privileges provided in thisAgreement are cumulative and not exhaustive of any rights, remedies, powers andprivileges provided by law.

 

## **Section 5.9.**           **Third-Party Beneficiaries**.

##  

This Agreement shall inure to the benefit of and bebinding upon the parties hereto, the Noteholders and their respectivesuccessors and permitted assigns.  Exceptas otherwise provided in Section 4.2 and this Article V,no other Person shall have any right or obligation hereunder.  The parties hereto hereby acknowledge andconsent to the pledge of this Agreement by the Trust to the Indenture Trusteefor the benefit of the Noteholders and the Insurer pursuant to theIndenture.  The Insurer is an expressthird party beneficiary of this Agreement and is entitled to enforce theprovisions hereof as if a party hereto.

 

## **Section 5.10.**        **Actions by Noteholders**.

##  

### (a)           Whereverin this Agreement a provision is made that an action may be taken or a notice,demand or instruction given by the Noteholders, such action, notice orinstruction may be taken or given by any Noteholder, as applicable, unless suchprovision requires a specific percentage of the Noteholders.

###  

### (b)           Anyrequest, demand, authorization, direction, notice, consent, waiver or other actby a Noteholder shall bind such Noteholder and every subsequent Holder of suchNote issued upon the registration of transfer thereof or in exchange thereforor in lieu thereof in respect of anything done or omitted to be done by theOwner Trustee, the Indenture Trustee or the Servicer in reliance thereon,whether or not notation of such action is made upon such Note.

###  

## **Section 5.11.**        **Counterparts**.

##  

For the purpose of facilitating the execution of thisAgreement and for other purposes, this Agreement may be executed simultaneouslyin any number of counterparts, each of which counterparts shall be deemed to bean original, and all of which counterparts shall constitute but one and thesame instrument.

 

## **Section 5.12.**        **[Reserved]**.

##  

## **Section 5.13.**        **No Bankruptcy**.

##  

### (a)           TheOwner Trustee, the Indenture Trustee and the Servicer each covenants and agreesthat, prior to the date which is one year and one day after the payment in fullof all securities issued by the Trust, which securities were rated by anynationally recognized statistical rating organization, it will not instituteagainst, or join any other Person in instituting against, or knowingly orintentionally cooperate or encourage any other Person in instituting against,the Depositor any bankruptcy, reorganization, arrangement, insolvency orliquidation proceedings or other proceedings under any federal or statebankruptcy or similar law.

###  

(b)           The Owner Trustee, the IndentureTrustee, the Servicer and the Depositor each covenants and agrees that, priorto the date which is one year and one day after the payment in full of allsecurities issued by the Trust, which securities were rated by any nationallyrecognized

 

48

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statisticalrating organization, it will not institute against, or join any other Person ininstituting against, or knowingly or intentionally cooperate or encourage anyother Person in instituting against, the Trust any bankruptcy, reorganization,arrangement, insolvency or liquidation proceedings or other proceedings underany federal or state bankruptcy or similar law.

 

(c)           ThisSection 5.13 shall survive the resignation or removal of the OwnerTrustee under the Trust Agreement and the Indenture Trustee under the Indentureand shall survive the termination of the Trust Agreement and the Indenture.

 

**Section 5.14.       Limitationof Liability of Owner Trustee and Indenture Trustee.**

 

(a)           Notwithstandinganything contained herein or contemplated hereby to the contrary, thisAgreement has been signed by the Owner Trustee not in its individual capacitybut solely in its capacity as Owner Trustee of the Trust, and in no event shallthe Owner Trustee in its individual capacity have any liability for therepresentations, warranties, covenants, agreements or other obligations of theTrust hereunder or in any of the certificates, notices or agreements deliveredpursuant hereto or contemplated hereby, as to all of which recourse shall behad solely to the assets of the Trust. For all purposes of this Agreement, the Owner Trustee (as such and inits individual capacity) shall be subject to, and entitled to the benefits of,the terms and provisions of the Trust Agreement.

 

(b)           Notwithstandinganything contained herein to the contrary, this Agreement has been accepted bythe Indenture Trustee not in its individual capacity but solely as IndentureTrustee, and in no event shall the Indenture Trustee in its individual capacityhave any liability for the representations, warranties, covenants, agreementsor other obligations of the Trust hereunder or in any of the certificates,notices or agreements delivered pursuant hereto, as to all of which recourseshall be had solely to the assets of the Trust.

 

**Section 5.15.       CertainRights of the Insurer.**

 

So long as no Insurer Default shall haveoccurred and be continuing, the Insurer shall have the right to exercise allrights, including voting rights, which the Class A Noteholders areentitled to exercise pursuant to this Sale and Allocation Agreement, withoutany consent of such Class A Noteholders; provided, however,that the foregoing shall not apply to the rights of the Class ANoteholders set forth in the proviso to paragraph (b) of Section 5.1of this Agreement.

 

**Section 5.16.        OptionalRedemption.**

 

If, as of the last day of any Collection Period,the Pool Balance is less than or equal to 15% of the sum of (a) theaggregate Principal Balances of all of the Contracts as of the Initial CutoffDate and (b) the sum, for each Additional Contract Cutoff Date, of theAggregate Principal Balances of all Contracts that became Additional Contractson such Additional Contract Cutoff Date, the Depositor shall have the option topurchase from the Issuer, on the following Payment Date, the Owner TrustEstate, other than the Collection Account, the Class A Note PaymentAccount, the Class B Note Payment Account, the Prefunding Account and theReserve Account.  To exercise suchoption, the Depositor shall notify in writing the Owner Trustee, the IndentureTrustee, the Issuer and the Insurer no later than fifteen (15) days prior to 

 

49

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the Payment Date on which suchrepurchase is to be effected (the “*Prepayment Date*”)and shall deposit into the Collection Account on the Business Day precedingsuch Payment Date an amount equal to the aggregate Purchase Amount for theContracts, plus the appraised value of any other Trust Property, otherthan the Collection Account, the Class A Note Payment Account, the Class BNote Payment Account, the Prefunding Account or the Reserve Account, such valueto be determined by an appraiser mutually agreed upon by the Servicer, theTrust, the Indenture Trustee and the Insurer; provided, however,that the Depositor shall not be permitted to exercise such option unless theamount to be deposited in the Collection Account pursuant to this Section 5.16plus all amounts on deposit in the Collection Account, the Class A NotePayment Account, the Class B Note Payment Account, the Prefunding Accountand the Reserve Account are at least equal to the sum of the Class A NoteBalance and the Class B Note Balance plus all accrued but unpaid interest(including any Additional Note Interest) on each Class of Class ANotes plus all amounts due the Insurer under the Insurance Agreement andthe Policy plus all amounts due to the Owner Trustee, the Indenture Trustee,the Custodian, the Servicer and the Back-up Servicer under the TransactionDocuments (the “Redemption Price”). Such amount shall be paid in accordance with Section 3.5(d).  Such payment amount, plus, to the extentnecessary, all amounts in the Collection Account, the Class A Note PaymentAccount, the Class B Note Payment Account, the Prefunding Account and theReserve Account, shall be used to make payments in full to the Noteholders andthe Insurer in the manner set forth in Article III of thisAgreement.

 

**Section 5.17.        Subordination.**

 

Any obligations of the Depositor under thisAgreement are obligations solely of the Depositor and will not constitute aclaim against the Depositor to the extent that the Depositor does not havefunds sufficient to make payment of such obligations.  In furtherance of and not in derogation ofthe foregoing, each party to this Agreement, by entering into or accepting thisAgreement, acknowledges and agrees that it has no right, title or interest inor to the Other Assets of the Depositor. To the extent that, notwithstanding the agreements and provisionscontained in the preceding sentence, any party to this Agreement either (i) assertsan interest or claim to, or benefit from, Other Assets, or (ii) is deemedto have any such interest, claim to, or benefit in or from Other Assets,whether by operation of law, legal process, pursuant to applicable provisions ofinsolvency laws or otherwise (including by virtue of Section 1111(b) ofthe Bankruptcy Code or any successor provision having similar effect under theBankruptcy Code), then such party further acknowledges and agrees that any suchinterest, claim or benefit in or from Other Assets is and will be expresslysubordinated to the indefeasible payment in full, which, under the terms of therelevant documents relating to the securitization or conveyance of such OtherAssets, are entitled to be paid from, entitled to the benefits of, or otherwisesecured by such Other Assets (whether or not any such entitlement or securityinterest is legally perfected or otherwise entitled to a priority ofdistributions or application under applicable law, including insolvency laws,and whether or not asserted against the Depositor), including the payment ofpost-petition interest on such other obligations and liabilities.  This subordination provision will be deemed asubordination provision within the meaning of Section 510(a) of theBankruptcy Code.  Each party to thisAgreement further acknowledges and agrees that no adequate remedy at law existsfor a breach of this Section 5.17 and the terms of this Section 5.17may be enforced by an action for specific performance.  The provisions of this Section 5.17will be for the third party benefit of those entitled to rely thereon and willsurvive the termination of this Agreement.

 

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[REMAINDER OF PAGEINTENTIONALLY LEFT BLANK]

 

51

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IN WITNESS WHEREOF, the parties hereto havecaused this Sale and Allocation Agreement to be duly executed by theirrespective officers, thereunto duly authorized, all as of the day and yearfirst above written.

 
|   | FIRST  INVESTORS SERVICING CORPORATION, as Servicer       |                                                                                                |
|--------|-----------------------------------------------------------|-----------------------------------------------------------------------------------------------------|
|   |                                                      |                                                                                                |
|   |                                                      |                                                                                                |   |
|   | By:                                                       |                                                                                                |   |
|   | Name:                                                     |                                                                                                |   |
|   | Title:                                                    |                                                                                                |   |
|   |                                                      |
|   |                                                      |
|   | FIRST  INVESTORS AUTO OWNER TRUST  2006-A                 |
|   |                                                      |
|   |                                                      |
|   | By:                                                       | WELLS  FARGO DELAWARE TRUST   COMPANY, not in its individual capacity   but solely as Owner Trustee |
|   |                                                      |
|   | By:                                                       |                                                                                                |   |
|   | Name:                                                     |                                                                                                |   |
|   | Title:                                                    |                                                                                                |   |
|   |                                                      |
|   |                                                      |
|   | FIRST  INVESTORS AUTO FUNDING   CORPORATION, as Depositor |
|   |                                                      |
|   |                                                      |
|   | By:                                                       |                                                                                                |   |
|   | Name:                                                     |                                                                                                |   |
|   | Title:                                                    |                                                                                                |   |

 

 

Acceptedand agreed:

 

WELLSFARGO BANK, NATIONAL ASSOCIATION,

notin its individual capacity but solely as Indenture Trustee and

SecuritiesIntermediary

 
| By:    |   |   |
|--------|--------|--------|
| Name:  |   |   |
| Title: |   |   |

 

----

 

Schedule 1

 

Schedule of InitialContracts

 

Schedule 1

----

 

Schedule 2

 

Location of ContractFiles

 

ABSCustody Vault

751Kasota Avenue

MACN9328-011

Minneapolis,MN 55414

 

Schedule 2

----

 

Schedule 3

 

PerfectionRepresentations, Warranties and Covenants

 

In addition to the representations, warrantiesand covenants contained in this Agreement, the Depositor hereby represents,warrants, and covenants to the Trust as follows on the Closing Date and on eachAdditional Contract Purchase Date on which the Trust purchases Contracts, ineach case only with respect to the Collateral sold to the Trust on the ClosingDate or the relevant Additional Contract Purchase Date, as applicable:

 

**General**

 

1.             The Agreement creates a valid andcontinuing security interest (as defined in the Relevant UCC Section 9-102)in the Collateral in favor of the Trust, which security interest is prior toall other Liens, except as set forth below and is enforceable as such againstcreditors of and purchasers from and assignees of the Trust.

 

2.             Each Contract constitutes “tangiblechattel paper” and not “electronic chattel paper” within the meaning of theRelevant UCC Section 9-102.

 

3.             The Depositor has taken or willtake all steps necessary actions with respect to the Contracts to perfect thesecurity interest of the Trust in the Contracts.

 

**Creation**

 

1.             The Depositor owns and has good andmarketable title to the Collateral, free and clear of any Lien, claim orencumbrance of any Person, excepting only tax liens, some mechanics’ liens andother liens that arise by the operation of law, in each case on any of theFinanced Vehicles and arising solely as a result of an action or omission ofthe related Obligor.

 

**Perfection**

 

1.             The Depositor has caused the filingof all appropriate financing statements in the proper filing office in theappropriate jurisdictions under applicable law in order to perfect the securityinterest in the Collateral granted to the Trust hereunder.

 

2.             With respect to Collateral thatconstitutes tangible chattel paper, such tangible chattel paper is in thepossession of the Custodian.  Allfinancing statements filed or to be filed against the Depositor in favor of theTrust in connection with this Agreement describing the Collateral contain astatement to the following effect: “A purchase of or security interest in anycollateral described in this financing statement will violate the rights of theSecured Party.”

 

**Priority**

 

1.             Other than the security interestgranted to the Trust pursuant to this Agreement, the Depositor has not pledged,assigned, sold, granted a security interest in, or otherwise conveyed 

 

Schedule 3-1

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any of the Collateral.  Neither the Seller nor the Depositor hasauthorized the filing of, or is aware of any financing statements againsteither the Seller or the Depositor that includes a description of the Collateraland proceeds related thereto other than any financing statement:  (i) relating to the transfer of theContracts by the Seller to the Depositor under the Contribution Agreement; (ii) relatingto the sale of the Contracts by the Depositor to the Trust under thisAgreement; (iii) relating to the security interest granted to theIndenture Trustee by the Trust under the Indenture; or (iv) that has beenterminated or amended to reflect a release of the Collateral.

 

2.             Neither the Seller nor theDepositor is aware of any judgment, ERISA or tax lien filings against eitherthe Seller or the Depositor.

 

3.             None of the tangible chattel paperthat constitutes or evidences the Contracts has any marks or notationsindicating that it has been pledged, assigned or otherwise conveyed to anyPerson other than the Depositor, the Trust or the Indenture Trustee.

 

**Survival of PerfectionRepresentations**

 

1.             Notwithstanding any other provisionof this Agreement, the Contribution Agreement, the Indenture or any otherTransaction Document, the Perfection Representations, Warranties and Covenantscontained in this Schedule shall be continuing, and remain in full forceand effect until such time as all obligations under this Sale and AllocationAgreement, the Contribution Agreement and the Indenture have been finally andfully paid and performed.

 

**No Waiver**

 

1.             The parties hereto: (i) shallnot, without obtaining a confirmation of the then-current rating of the Class ANotes (without giving effect to the Policy), waive any of the PerfectionRepresentations, Warranties or Covenants; (ii) shall provide the RatingAgencies with prompt written notice of any breach of the PerfectionRepresentations, Warranties or Covenants, and shall not, without obtaining aconfirmation of the then-current rating of the Class A Notes (withoutgiving effect to the Policy) as determined after any adjustment or withdrawalof the ratings following notice of such breach) waive a breach of any of thePerfection Representations, Warranties or Covenants.

 

Schedule 3-2

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Exhibit A

 

Form of MonthlyServicer Report

 

Exhibit A-1

----

 

Exhibit B

 

[Reserved]

 

Exhibit B-1

----

 

**Exhibit C**

 

**Credit Policy**

 

[See Attached]

 

----

 

Exhibit D

 

[Reserved]

 

Exhibit D-1

----

 

Exhibit E

 

Form of OriginatorAgreement

 

Exhibit E-1

----

 

Exhibit F

 

Form of AdditionalContract Assignment

 

For value received, in accordance with the Saleand Allocation Agreement (the “*Sale and AllocationAgreement*”), dated as of January 26, 2006, by and amongFirst Investors Financial Services, Inc., First Investors ServicingCorporation, First Investors Auto Funding Corporation, Wells Fargo Bank,National Association and First Investors Auto Owner Trust 2006-A (the “*Purchaser*”) the undersigned doeshereby sell, transfer, assign and otherwise convey unto the Purchaser, withoutrecourse (subject to the obligations in the Sale and Allocation Agreement) allright, title and interest of the Seller in and to (i) the AdditionalContracts listed on Schedule 1 hereto, (ii) all amountsreceived on or in respect of such Additional Contracts after the AdditionalCutoff Date related thereto (except that interest accrued on the AdditionalContracts prior to the Additional Cutoff Date related thereto and receivedafter such Additional Cutoff Date will be remitted by the Trust to the Seller);(iii) the security interests in the Financed Vehicles related thereto; (iv) anyproceeds from claims on or refunds of premiums with respect to extendedwarranties or physical damage, theft, credit life and credit disabilityinsurance policies relating to the Financed Vehicles or the related Obligorswith respect to such Additional Contracts; (v) any Liquidation Proceedswith respect to such Additional Contracts; (vi) the Contract Files withrespect to such Additional Contracts; (vii) rights under the ContributionAgreement to cause the Seller to purchase such Additional Contracts affectedmaterially and adversely by breaches of the representations and warranties ofthe Seller made in the Contribution Agreement; (viii) rights under theServicing Agreement to cause the Servicer to purchase such Additional Contractsaffected materially and adversely by breaches of the representations andwarranties of the Servicer made in the Servicing Agreement; and (ix) andall present and future claims, demands, causes of action and choses in actionin respect of any or all of the foregoing and all payments on or under and allproceeds of every kind and nature whatsoever in respect of any or all of theforegoing, including all proceeds of the conversion thereof, voluntary orinvoluntary, into cash or other liquid property, all cash proceeds, accounts,accounts receivable, notes, drafts, acceptances, chattel paper, checks, depositaccounts, insurance proceeds, condemnation awards, rights to payment of any andevery kind and other forms of obligations and receivables, instruments andother property which at any time constitute all or part of or are included inthe proceeds of any of the foregoing.

 

All provisions of the Sale and AllocationAgreement are incorporated herein by reference. All capitalized terms not defined herein shall have the meanings setforth in the Sale and Allocation Agreement.

 

In consideration for the conveyance of theAdditional Contracts to the Purchaser, Purchaser shall pay to the Seller,contemporaneously with the execution of this Additional Contract Assignment,cash in the amount of $         .

 

Exhibit F-1

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The Depositor does hereby make each of therepresentations and warranties referred to in Section 2.2 of the Sale andAllocation Agreement with respect to this Agreement with full force and effectas if fully set forth herein.  TheDepositor does hereby certify that each of the conditions precedent set forthin Section 2.1(f) of the Sale and Allocation Agreement has beensatisfied.

 

This Additional Contract Assignment shall begoverned by, and construed in accordance with, the laws of the State of NewYork, without giving effect to the conflicts of laws principles thereof.

 

IN WITNESS WHEREOF, the undersigned has causedthis Additional Contract Assignment to be executed by its officer thereuntoduly authorized, as of             ,200[  ].

 
|   | FIRST  INVESTORS FINANCIAL SERVICES, INC. |
|--------|-------------------------------------------|
|   |                                      |
|   | By:                                       |   |   |
|   | Name:                                     |   |   |
|   | Title:                                    |   |   |

 

Exhibit F -2

----

 

Schedule 1

to

Additional ContractAssignment

Dated

, 200[  ]

 

List of AdditionalContracts

 

Exhibit F -3

----

 

**TABLE OF CONTENTS**

 
| ** **       | ** **                                                                        | ** **                                                                  | **Page** |
|------------------|-----------------------------------------------------------------------------------|-----------------------------------------------------------------------------|----------|
|             |                                                                              |                                                                        |
| Article I   | Definitions                                                                       | 1                                                                           |
|             |                                                                              |                                                                        |
|             | Section 1.1.                                                                 | Definitions                                                                 | 1        |
|             |                                                                              |                                                                        |     |
|             | Section 1.2.                                                                 | Other  Definitional Provisions                                              | 17       |
|             |                                                                              |                                                                        |     |
| Article II  | Trust  Property                                                                   | 18                                                                          |
|             |                                                                              |                                                                        |     |
|             | Section 2.1.                                                                 | Conveyance  of Trust Property                                               | 18       |
|             |                                                                              |                                                                        |     |
|             | Section 2.2.                                                                 | Representations  and Warranties of the Depositor as to the Contracts.       | 20       |
|             |                                                                              |                                                                        |     |
|             | Section 2.3.                                                                 | Repurchase  by Depositor for Breach                                         | 24       |
|             |                                                                              |                                                                        |
| Article III | Distributions;  Reserve Account; Statements to Noteholders and Certificateholders | 25                                                                          |
|             |                                                                              |                                                                        |
|             | Section 3.1.                                                                 | Accounts                                                                    | 25       |
|             |                                                                              |                                                                        |     |
|             | Section 3.2.                                                                 | Collections                                                                 | 27       |
|             |                                                                              |                                                                        |     |
|             | Section 3.3.                                                                 | Application  of Collections                                                 | 27       |
|             |                                                                              |                                                                        |     |
|             | Section 3.4.                                                                 | Application  of Deposits                                                    | 28       |
|             |                                                                              |                                                                        |     |
|             | Section 3.5.                                                                 | Determination  Date Calculations                                            | 28       |
|             |                                                                              |                                                                        |     |
|             | Section 3.6.                                                                 | Reserve  Account                                                            | 32       |
|             |                                                                              |                                                                        |     |
|             | Section 3.7.                                                                 | Prefunding  Account                                                         | 34       |
|             |                                                                              |                                                                        |     |
|             | Section 3.8.                                                                 | Statements  to Noteholders                                                  | 35       |
|             |                                                                              |                                                                        |     |
|             | Section 3.9.                                                                 | Control  of Securities Accounts; The Securities Intermediary                | 36       |
|             |                                                                              |                                                                        |     |
|             | Section 3.10.                                                                | Policy  Matters                                                             | 38       |
|             |                                                                              |                                                                        |
| Article IV  | The  Depositor                                                                    | 38                                                                          |
|             |                                                                              |                                                                        |
|             | Section 4.1.                                                                 | Representations  and Warranties of the Depositor                            | 38       |
|             |                                                                              |                                                                        |     |
|             | Section 4.2.                                                                 | Liability  of Depositor; Indemnities                                        | 40       |
|             |                                                                              |                                                                        |     |
|             | Section 4.3.                                                                 | Merger  or Consolidation of, or Assumption of the Obligations of, Depositor | 41       |
|             |                                                                              |                                                                        |     |
|             | Section 4.4.                                                                 | Limitation  on Liability of Depositor and Others                            | 42       |
|             |                                                                              |                                                                        |     |
|             | Section 4.5.                                                                 | Depositor  May Own Class A Notes                                  | 42       |
|             |                                                                              |                                                                        |     |
|             | Section 4.6.                                                                 | Covenants  of the Depositor                                                 | 42       |
|             |                                                                              |                                                                        |
| Article V   | Miscellaneous                                                                     | 43                                                                          |
|             |                                                                              |                                                                        |
|             | Section 5.1.                                                                 | Amendment                                                                   | 43       |
|             |                                                                              |                                                                        |     |
|             | Section 5.2.                                                                 | Protection  of Title of Trust                                               | 44       |
|                  |                                                                                   |                                                                             |          |  |  |

 

i

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|   |               |                                                            | **Page** |
|--------|--------------------|-----------------------------------------------------------------|----------|
|   |               |                                                            |     |
|   | Section 5.3.  | Governing  Law                                                  | 46       |
|   |               |                                                            |     |
|   | Section 5.4.  | Notices                                                         | 46       |
|   |               |                                                            |     |
|   | Section 5.5.  | Severability  of Provisions                                     | 47       |
|   |               |                                                            |     |
|   | Section 5.6.  | Assignment                                                      | 47       |
|   |               |                                                            |     |
|   | Section 5.7.  | Further  Assurances                                             | 47       |
|   |               |                                                            |     |
|   | Section 5.8.  | No  Waiver; Cumulative Remedies                                 | 47       |
|   |               |                                                            |     |
|   | Section 5.9.  | Third-Party  Beneficiaries                                      | 48       |
|   |               |                                                            |     |
|   | Section 5.10. | Actions  by Noteholders                                         | 48       |
|   |               |                                                            |     |
|   | Section 5.11. | Counterparts                                                    | 48       |
|   |               |                                                            |     |
|   | Section 5.12. | [Reserved]                                                      | 48       |
|   |               |                                                            |     |
|   | Section 5.13. | No  Bankruptcy                                                  | 48       |
|   |               |                                                            |     |
|   | Section 5.14. | Limitation  of Liability of Owner Trustee and Indenture Trustee | 49       |
|   |               |                                                            |     |
|   | Section 5.15. | Certain  Rights of the Insurer                                  | 49       |
|   |               |                                                            |     |
|   | Section 5.16. | Optional  Redemption                                            | 49       |
|   |               |                                                            |     |
|   | Section 5.17. | Subordination                                                   | 50       |

 

ii

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