**Exhibit 10.140**

 

 

 

 
|   | Subsidiary Guaranty Agreement       |
|--------|-------------------------------------|
|   |                                |
|   | Dated as of September 12, 2007 |
|   |                                |

 
| Re: | $5,000,000 12.75% Senior Subordinated Notes,   due September 12, 2017   $318,750 14.75% Senior Subordinated Paid-In-Kind Notes,   due September 12, 2017   of   First Investors Financial Services Group, Inc. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

 

 

 

----

 

**TABLE OF CONTENTS**

 

(Not a part of the Agreement)

 
| Section 1. | Definitions.                                      | 2      |
|-----------------|---------------------------------------------------|--------|
|            |                                              |   |
| Section 2. | Guaranty of Notes and Note Purchase Agreement     | 2      |
|            |                                              |   |
| Section 3. | Guaranty of Payment and Performance               | 3      |
|            |                                              |   |
| Section 4. | General Provisions Relating to the Guaranty.      | 3      |
|            |                                              |   |
| Section 5. | Representations and Warranties of the Guarantors. | 8      |
|            |                                              |   |
| Section 6. | Amendments, Waivers and Consents.                 | 10     |
|            |                                              |   |
| Section 7. | Notices.                                          | 11     |
|            |                                              |   |
| Section 8. | Miscellaneous.                                    | 11     |

 

 

ATTACHMENTS TOSUBSIDIARY GUARANTY AGREEMENT:

 
| Exhibit A | — | Guaranty  Supplement |
|----------------|--------|----------------------|

 

i

----

 

 

**SUBSIDIARYGUARANTY AGREEMENT**

 
| Re: | $5,000,000 12.75% Senior Subordinated Notes,   due September 12, 2017   $318,750 14.75% Senior Subordinated Paid-In-Kind Notes,   due September 12, 2017   of   First Investors Financial Services Group, Inc. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

This SUBSIDIARY GUARANTY AGREEMENT dated as of September 12, 2007(this “**Guaranty**”) is entered into on ajoint and several basis by each of the undersigned, together with any entitywhich may become a party hereto by execution and delivery of a SubsidiaryGuaranty Supplement in substantially the form set forth as Exhibit Ahereto (a “***Guaranty Supplement***”)(which parties are hereinafter referred to individually as a “Guarantor” and collectively as the “***Guarantors***”).

 

**RECITALS**

 

A.                                   EachGuarantor, directly or indirectly, is a subsidiary of First Investors FinancialServices Group, Inc., a corporation organized under the laws of the Stateof Texas (the “***Company***”).

 

B.                                     TheCompany has entered into a Note Purchase Agreement dated as of September 12,2007 (as the same may be amended, supplemented, restated or otherwise modifiedfrom time to time, the “***Note PurchaseAgreement***”) between the Company and each of the purchasersnamed on Schedule A attached to said Note Purchase Agreement (the “***Note Purchasers***”),providing for, among other things, the issue and sale by the Company to theNote Purchasers of (a) $5,000,000 aggregate principal amount of its 12.75%Senior Subordinated Notes, due September 12, 2017 (the “***Senior Subordinated Notes***”)and (b) $318,750 aggregate principal amount of its 14.75% SeniorSubordinated Paid-In-Kind Notes, due September 12, 2017 (the “***Senior Subordinated PIK Notes***”;the Senior Subordinated Notes together with the Senior Subordinated PIK Notesare collectively referred to herein as the “Notes”). The Note Purchasers togetherwith their respective successors and assigns are collectively referred toherein as the “***Holders***.”

 

C.                                     TheNote Purchasers have required as a condition of their purchase of the Notesthat the Company cause each of the undersigned to enter into this Guaranty andto cause each newly formed and acquired Subsidiary to enter into a GuarantySupplement, and the Company has agreed to cause each of the undersigned toexecute this Guaranty and to cause each newly formed and acquired Subsidiary toexecute a Guaranty Supplement, in each case in order to induce the NotePurchasers to purchase the Notes and thereby benefit the Company and itsSubsidiaries by providing funds to the Company for the purposes described inSchedule 5.14 of the Note Purchase Agreement.

 

----

 

Now, therefore, as required by Section 2.2 of the Note PurchaseAgreement and in consideration of the premises and other good and valuableconsideration, the receipt and sufficiency whereof are hereby acknowledged,each Guarantor does hereby covenant and agree, jointly and severally, asfollows:

 

# **SECTION 1.**                                                                            DEFINITIONS.

#  

Capitalized terms used herein shall have the meanings set forth in theNote Purchase Agreement unless otherwise defined herein.

 

# **SECTION 2.**                                                                            GUARANTY OF NOTES AND NOTE PURCHASE AGREEMENT

#  

## (a)                                  EachGuarantor jointly and severally does hereby irrevocably, absolutely andunconditionally guarantee unto the Holders: (1) the full and prompt payment of the principal of, premium, ifany, and interest on the Notes from time to time outstanding, as and when suchpayments shall become due and payable whether by lapse of time, upon redemptionor prepayment, by extension or by acceleration or declaration or otherwise(including, to the extent permitted by applicable law, interest due on overduepayments of principal, or interest at the rate set forth in the Notes) inFederal or other immediately available funds of the United States of Americawhich at the time of payment or demand therefore shall be legal tender for thepayment of public and private debts, (2) the full and prompt performanceand observance by the Company of each and all of the obligations, covenants andagreements required to be performed or owed by the Company under the terms ofthe Notes and the Note Purchase Agreement and (3) the full and promptpayment, upon demand by any Holder of all costs and expenses, legal orotherwise (including reasonable attorneys’ fees), if any, as shall have beenexpended or incurred in the protection or enforcement of any rights, privilegesor liabilities in favor of the Holders under or in respect of the Notes, theNote Purchase Agreement, or under this Guaranty or in any consultation oraction in connection therewith or herewith.

##  

## (b)                                 Tothe extent that any Guarantor shall make a payment hereunder (a “***Payment***”) which,taking into account all other Payments previously or concurrently made by anyof the other Guarantors, exceeds the amount which such Guarantor wouldotherwise have paid if each Guarantor had paid the aggregate obligationssatisfied by such Payment in the same proportion as such Guarantor’s “AllocableAmount” (as hereinafter defined) in effect immediately prior to such Paymentbore to the Aggregate Allocable Amount (as hereinafter defined) of all of theGuarantors in effect immediately prior to the making of such Payment, then suchGuarantor shall be entitled to contribution and indemnification from, and bereimbursed by, each of the other Guarantors for the amount of such excess, *pro rata* based upon their respectiveAllocable Amounts in effect immediately prior to such Payment; *provided* that each Guarantor covenants andagrees that such right of contribution and indemnification and any and allclaims of such Guarantor against any other Guarantor, any endorser or againstany of their property shall be junior and subordinate in right of payment tothe prior indefeasible final payment in cash in full of all of the Notes and satisfactionby the Company of its obligations under the Note Purchase Agreement and by theGuarantors of their obligations under this Guaranty, and the Guarantors shallnot take any action to enforce such right of contribution and indemnification,and the Guarantors shall not accept any payment in respect of such right ofcontribution and indemnification, until all of the Notes and all amountspayable by the Guarantors hereunder have 

##  

## 2

## 

##  

## indefeasiblybeen finally paid in cash in full and all of the obligations of the Companyunder the Note Purchase Agreement and of the Guarantors under this Guarantyhave been satisfied.

##  

As of any date of determination, (1) the “***Allocable Amount***”of any Guarantor shall be equal to the maximum amount which could then beclaimed by the Holders under this Guaranty without rendering such claimvoidable or avoidable under Section 548 of Chapter 11 of the United StatesBankruptcy Code (11 U.S.C. Sec. 101 et.seq.) or under any applicable state Uniform Fraudulent Transfer Act,Uniform Fraudulent Conveyance Act or similar statute or common law; and (2) the“***AggregateAllocable Amount***” shall be equal to the sum of eachGuarantor’s Allocable Amount.

 

This clause (b) is intended only to define the relative rights ofthe Guarantors, and nothing set forth in this clause (b) is intended to orshall impair the obligations of the Guarantors, jointly and severally, to payany amounts to the Holders as and when the same shall become due and payable inaccordance herewith.

 

Each Guarantor acknowledges that the rights of contribution andindemnification hereunder shall constitute an asset in favor of any Guarantorto which such contribution and indemnification is owing.

#  

# **SECTION 3.**                                                                            GUARANTY OF PAYMENT AND PERFORMANCE

#  

This is an irrevocable, absolute and unconditional guarantee of paymentand performance (but not of collection) and each Guarantor hereby waives, tothe fullest extent permitted by law, any right to require that any action on orin respect of any Note or the Note Purchase Agreement be brought against theCompany or any other Person or that resort be had to any direct or indirectsecurity for the Notes or for this Guaranty or any other remedy. Any Holdermay, at its option, proceed hereunder against any Guarantor in the firstinstance to collect monies when due, the payment of which is guaranteed hereby,without first proceeding against the Company or any other Person and withoutfirst resorting to any direct or indirect security for the Notes or for thisGuaranty or any other remedy. The liability of each Guarantor hereunder shallin no way be affected or impaired by any acceptance by any Holder of any director indirect security for, or other guaranties of, any Debt, liability orobligation of the Company or any other Person to any Holder or by any failure,delay, neglect or omission by any Holder to realize upon or protect any suchguarantees, Debt, liability or obligation or any notes or other instrumentsevidencing the same or any direct or indirect security therefore or by anyapproval, consent, waiver, or other action taken, or omitted to be taken by anysuch Holder.

 

The covenants and agreements on the part of the Guarantors hereincontained shall take effect as joint and several covenants and agreements, andreferences to the Guarantors shall take effect as references to each of themand none of them shall be released from liability hereunder by reason of theguarantee ceasing to be binding as a continuing security on any other of them.

 

# **SECTION 4.**                                                                            GENERAL PROVISIONS RELATING TO THE GUARANTY.

#  

## (a)                                  EachGuarantor hereby consents and agrees that any Holder or Holders from time totime, with or without any further notice to or assent from any other Guarantormay, without in 

##  

## 3

## 

##  

## any manneraffecting the liability of any Guarantor under this Guaranty, and upon suchterms and conditions as any such Holder or Holders may deem advisable:

##  

### (1)                                  extendin whole or in part (by renewal or otherwise), modify, change, compromise,release or extend the duration of the time for the performance or payment ofany Debt, liability or obligation of the Company or of any other Person(including, without limitation, any other Guarantor) secondarily or otherwise liablefor any Debt, liability or obligation of the Company on the Notes, or waive anyDefault or Event of Default with respect thereto, or waive, modify, amend orchange any provision of the Note Purchase Agreement, any other agreement orwaive this Guaranty; or

###  

### (2)                                  sell,release, surrender, modify, impair, exchange or substitute any and allproperty, of any nature and from whomsoever received, held by, or for thebenefit of, any such Holder as direct or indirect security for the payment orperformance of any Debt, liability or obligation of the Company or of any otherPerson (including, without limitation, any other Guarantor) secondarily orotherwise liable for any Debt, liability or obligation of the Company on theNotes; or

###  

### (3)                                  settle,adjust or compromise any claim of the Company against any other Person(including, without limitation, any other Guarantor) secondarily or otherwiseliable for any Debt, liability or obligation of the Company on the Notes.

###  

Each Guarantor hereby ratifies and confirms any such extension,renewal, change, sale, release, waiver, surrender, exchange, modification,amendment, impairment, substitution, settlement, adjustment or compromise andthat the same shall be binding upon it, and hereby waives, to the fullestextent permitted by law, any and all defenses, counterclaims or offsets whichit might or could have by reason thereof, it being understood that suchGuarantor shall at all times be bound by this Guaranty and remain liablehereunder.

 

## (b)                                 EachGuarantor hereby waives, to the fullest extent permitted by law:

##  

### (1)                                  noticeof acceptance of this Guaranty by the Holders or of the creation, renewal oraccrual of any liability of the Company, present or future, or of the relianceof such Holders upon this Guaranty (it being understood that every Debt,liability and obligation described in Section 2 hereof shall conclusivelybe presumed to have been created, contracted or incurred in reliance upon theexecution of this Guaranty);

###  

### (2)                                  demandof payment by any Holder from the Company or any other Person (including,without limitation, any other Guarantor) indebted in any manner on or for anyof the Debt, liabilities or obligations hereby guaranteed; and

 

### (3)                                  presentmentfor the payment by any Holder or any other Person of the Notes or any otherinstrument, protest thereof and notice of its dishonor to any party thereto andto such Guarantor.

###  

The obligations of each Guarantor under this Guaranty and the rights ofany Holder to enforce such obligations by any proceedings, whether by action atlaw, suit in equity or otherwise, shall not be subject to any reduction,limitation, impairment or termination, whether 

 

4

----

 

by reason of any claim of any characterwhatsoever or otherwise and shall not be subject to any defense, set-off,counterclaim (other than any compulsory counterclaim), recoupment ortermination whatsoever.

 

## (c)                                  Theobligations of the Guarantors hereunder shall be binding upon the Guarantorsand their successors and assigns, and shall remain in full force and effectirrespective of:

##  

### (1)                                  thegenuineness, validity, regularity or enforceability of the Notes, the NotePurchase Agreement, or any other agreement or any of the terms of any thereof,the continuance of any obligation on the part of the Company or any otherPerson on or in respect of the Notes or under the Note Purchase Agreement, orany other agreement or the power or authority or the lack of power or authorityof the Company to issue the Notes or the Company to execute and deliver theNote Purchase Agreement, or any other agreement or of any Guarantor to executeand deliver this Guaranty or to perform any of its obligations hereunder or theexistence or continuance of the Company or any other Person as a legal entity; or

###  

### (2)                                  anydefault, failure or delay, willful or otherwise, in the performance by theCompany, any Guarantor or any other Person of any obligations of any kind orcharacter whatsoever under the Notes, the Note Purchase Agreement, thisGuaranty or any other agreement; or

###  

### (3)                                  anycreditors’ rights, bankruptcy, receivership or other insolvency proceeding ofthe Company, any Guarantor or any other Person or in respect of the property ofthe Company, any Guarantor or any other Person or any merger, consolidation,reorganization, dissolution, liquidation, the sale of all or substantially allof the assets of or winding up of the Company, any Guarantor or any otherPerson; or

###  

### (4)                                  impossibilityor illegality of performance on the part of the Company, any Guarantor or anyother Person of its obligations under the Notes, the Note Purchase Agreement,this Guaranty or any other agreements; or

###  

### (5)                                  inrespect of the Company or any other Person, any change of circumstances,whether or not foreseen or foreseeable, whether or not imputable to the Companyor any other Person, or other impossibility of performance through fire,explosion, accident, labor disturbance, floods, droughts, embargoes, wars(whether or not declared), civil commotion, acts of God or the public enemy, delaysor failure of suppliers or carriers, inability to obtain materials, action ofany Federal or state regulatory body or agency, change of law or any othercauses affecting performance, or any other force majeure, whether or not beyond the control of the Companyor any other Person and whether or not of the kind hereinbefore specified; or

###  

### (6)                                  anyattachment, claim, demand, charge, Lien, order, process, encumbrance or anyother happening or event or reason, similar or dissimilar to the foregoing, orany withholding or diminution at the source, by reason of any taxes,assessments, expenses, Debt, obligations or liabilities of any character,foreseen or unforeseen, and whether or not valid, incurred by or against theCompany, any Guarantor or any other Person or any 

 

5

----

 

### claims, demands, charges orLiens of any nature, foreseen or unforeseen, incurred by the Company, anyGuarantor or any other Person, or against any sums payable in respect of theNotes or under the Note Purchase Agreement, or this Guaranty, so that such sumswould be rendered inadequate or would be unavailable to make the paymentsherein provided; or

###  

### (7)                                  anyorder, judgment, decree, ruling or regulation (whether or not valid) of anycourt of any nation or of any political subdivision thereof or any body,agency, department, official or administrative or regulatory agency of anythereof or any other action, happening, event or reason whatsoever which shalldelay, interfere with, hinder or prevent, or in any way adversely affect, theperformance by the Company, any Guarantor or any other Person of its respectiveobligations under or in respect of the Notes, the Note Purchase Agreement, thisGuaranty or any other agreement; or

###  

### (8)                                  thefailure of any Guarantor to receive any benefit from or as a result of itsexecution, delivery and performance of this Guaranty; or

###  

### (9)                                  anyfailure or lack of diligence in collection or protection, failure inpresentment or demand for payment, protest, notice of protest, notice ofdefault and of nonpayment, any failure to give notice to any Guarantor offailure of the Company, any Guarantor or any other Person to keep and performany obligation, covenant or agreement under the terms of the Notes, the NotePurchase Agreement, this Guaranty or any other agreement or failure to resortfor payment to the Company, any Guarantor or to any other Person or to anyother guaranty or to any property, security, Liens or other rights or remedies;or

###  

### (10)                            (theacceptance of any additional security or other guaranty, the advance ofadditional money to the Company or any other Person, the renewal or extensionof the Notes or amendments, modifications, consents or waivers with respect tothe Notes, the Note Purchase Agreement, or any other agreement, or the sale,release, substitution or exchange of any security for the Notes; or

###  

### (11)                            anymerger or consolidation of the Company, any Guarantor or any other Person intoor with any other Person or any sale, lease, transfer or other disposition ofany of the assets of the Company, any Guarantor or any other Person to anyother Person, or any change in the ownership of any shares or other equityinterests of the Company, any Guarantor or any other Person; or

###  

### (12)                            anydefense whatsoever that:  (i) theCompany or any other Person might have to the payment of the Notes (including,principal or interest), other than payment thereof in Federal or otherimmediately available funds or (ii) the Company or any other Person mighthave to the performance or observance of any of the provisions of the Notes,the Note Purchase Agreement, or any other agreement, whether through thesatisfaction or purported satisfaction by the Company or any other Person ofits debts due to any cause such as bankruptcy, insolvency, receivership,merger, consolidation, reorganization, dissolution, liquidation, winding-up orotherwise; or

 

6

----

 

### (13)                            anyact or failure to act with regard to the Notes, the Note Purchase Agreement,this Guaranty or any other agreement or anything which might vary the risk ofany Guarantor or any other Person; or

###  

### (14)                            anyother circumstance which might otherwise constitute a defense available to, ora discharge of, any Guarantor or any other Person in respect of the obligationsof any Guarantor or other Person under this Guaranty or any other agreement;

 

*provided* that the specific enumeration of the above-mentioned acts, failures oromissions shall not be deemed to exclude any other acts, failures or omissions,though not specifically mentioned above, it being the purpose and intent ofthis Guaranty and the parties hereto that the obligations of each Guarantorshall be absolute and unconditional and shall not be discharged, impaired orvaried except by the payment of the principal of, premium, if any, and intereston the Notes in accordance with their respective terms whenever the same shallbecome due and payable as in the Notes provided, at the place specified in andall in the manner and with the effect provided in the Notes and the NotePurchase Agreement, as each may be amended or modified from time to time. Withoutlimiting the foregoing, it is understood that repeated and successive demandsmay be made and recoveries may be had hereunder as and when, from time to time,the Company shall default under or in respect of the terms of the Notes or theNote Purchase Agreement and that notwithstanding recovery hereunder for or inrespect of any given default or defaults by the Company under the Notes or the NotePurchase Agreement, this Guaranty shall remain in full force and effect andshall apply to each and every subsequent default.

 

## (d)                                 Allrights of any Holder under this Guaranty shall be considered to be transferredor assigned at any time or from time to time upon the transfer of any Note heldby such Holder whether with or without the consent of or notice to theGuarantors under this Guaranty or to the Company.

##  

## (e)                                  Tothe extent of any payments made under this Guaranty, the Guarantors shall besubrogated to the rights of the Holder or Holders upon whose Notes such paymentwas made, but each Guarantor covenants and agrees that such right ofsubrogation and any and all claims of such Guarantor against the Company, anyendorser or other Guarantor or against any of their respective properties shallbe junior and subordinate in right of payment to the prior indefeasible finalpayment in cash in full of all of the Notes and satisfaction by the Company ofits obligations under the Note Purchase Agreement and by the Guarantors oftheir obligations under this Guaranty, and the Guarantors shall not take anyaction to enforce such right of subrogation, and the Guarantors shall notaccept any payment in respect of such right of subrogation, until all of theNotes and all amounts payable by the Guarantors hereunder have indefeasiblybeen finally paid in cash in full and all of the obligations of the Companyunder the Note Purchase Agreement and of the Guarantors under this Guarantyhave been satisfied. Notwithstanding any right of any Guarantor to ask, demand,sue for, take or receive any payment from the Company, all rights, Liens andsecurity interests of each Guarantor, whether now or hereafter arising andhowsoever existing, in any assets of the Company shall be and hereby aresubordinated to the rights, if any, of the Holders in those assets. NoGuarantor shall have any right to possession of any such asset or to forecloseupon any such asset, whether by judicial action or otherwise, unless and untilall of the Notes and the obligations of the Company under the Note PurchaseAgreement shall have been paid in cash in full and satisfied.

##  

## 7

## 

##  

## (f)                                    EachGuarantor agrees that to the extent the Company or any other Person makes anypayment on any Note, which payment or any part thereof is subsequentlyinvalidated, voided, declared to be fraudulent or preferential, set aside,recovered, rescinded or is required to be retained by or repaid to a trustee,receiver, or any other Person under any bankruptcy code, common law, orequitable cause, then and to the extent of such payment, the obligation or thepart thereof intended to be satisfied shall be revived and continued in fullforce and effect with respect to the Guarantors’ obligations hereunder, as ifsaid payment had not been made. The liability of the Guarantors hereunder shallnot be reduced or discharged, in whole or in part, by any payment to any Holderfrom any source that is thereafter paid, returned or refunded in whole or inpart by reason of the assertion of a claim of any kind relating thereto,including, but not limited to, any claim for breach of contract, breach ofwarranty, preference, illegality, invalidity or fraud asserted by any accountdebtor or by any other Person.

##  

## (g)                                 NoHolder shall be under any obligation:  (1) tomarshall any assets in favor of the Guarantors or in payment of any or all ofthe liabilities of the Company under or in respect of the Notes and the NotePurchase Agreement or the obligations of the Guarantors hereunder or (2) topursue any other remedy that the Guarantors may or may not be able to pursuethemselves and that may lighten the Guarantors’ burden, any right to which eachGuarantor hereby expressly waives.

##  

# **SECTION 5.**                                                                            REPRESENTATIONS AND WARRANTIES OF THE GUARANTORS.

#  

Each Guarantor represents and warrants to each Holder that:

 

## (a)                                  SuchGuarantor is a corporation or other legal entity duly organized, validlyexisting and in good standing under the laws of its jurisdiction of organization,and is duly qualified as a foreign corporation or other legal entity and is ingood standing in each jurisdiction in which such qualification is required bylaw, other than those jurisdictions as to which the failure to be so qualifiedor in good standing would not, individually or in the aggregate, reasonably beexpected to have a material adverse effect on (1) the business,operations, affairs, financial condition, assets or properties of suchGuarantor and its subsidiaries, taken as a whole, or (2) the ability ofsuch Guarantor to perform its obligations under this Guaranty or (3) thevalidity or enforceability of this Guaranty (herein in this Section 5, a “***Material Adverse Effect***”).Such Guarantor has the power and authority to own or hold under lease theproperties it purports to own or hold under lease, to transact the business ittransacts and proposes to transact, to execute and deliver this Guaranty and toperform the provisions hereof and thereof.

 

## (b)                                 Eachsubsidiary of such Guarantor is a corporation or other legal entity dulyorganized, validly existing and in good standing under the laws of itsjurisdiction of organization, and is duly qualified as a foreign corporation orother legal entity and is in good standing in each jurisdiction in which suchqualification is required by law, other than those jurisdictions as to whichthe failure to be so qualified or in good standing would not, individually orin the aggregate, reasonably be expected to have a Material Adverse Effect. Eachsubsidiary of such Guarantor has the power and authority to own or hold underlease the properties it purports to own or hold under lease and to transact thebusiness it transacts and proposes to transact.

 

8

----

 

## (c)                                  ThisGuaranty has been duly authorized by all necessary action on the part of suchGuarantor, and this Guaranty constitutes a legal, valid and binding obligationof such Guarantor enforceable against such Guarantor in accordance with itsterms, except as such enforceability may be limited by (1) applicablebankruptcy, insolvency, reorganization, moratorium or other similar lawsaffecting the enforcement of creditors’ rights generally and (2) generalprinciples of equity (regardless of whether such enforceability is consideredin a proceeding in equity or at law).

##  

## (d)                                 Theexecution, delivery and performance by such Guarantor of this Guaranty will not(1) contravene, result in any breach of, or constitute a default under, orresult in the creation of any Lien in respect of any property of such Guarantoror any of its subsidiaries under any indenture, mortgage, deed of trust, loan,purchase or credit agreement, lease, organizational document or any otheragreement or instrument to which such Guarantor or any of its subsidiaries isbound or by which such Guarantor or any of its subsidiaries or any of theirrespective properties may be bound or affected, (2) conflict with orresult in a breach of any of the terms, conditions or provisions of any order,judgment, decree, or ruling of any court, arbitrator or Governmental Authorityapplicable to such Guarantor or any of its subsidiaries or (3) violate anyprovision of any statute or other rule or regulation of any GovernmentalAuthority applicable to such Guarantor or any of its subsidiaries.

##  

## (e)                                  Noconsent, approval or authorization of, or registration, filing or declarationwith, any Governmental Authority is required in connection with the execution,delivery or performance by such Guarantor of this Guaranty.

##  

## (f)                                    Thereare no actions, suits or proceedings pending or, to the knowledge of suchGuarantor, threatened against or affecting such Guarantor or any of itssubsidiaries or any property of such Guarantor or any of its subsidiaries inany court or before any arbitrator of any kind or before or by any GovernmentalAuthority that, individually or in the aggregate, would reasonably be expectedto have a Material Adverse Effect.

##  

## (g)                                 Neithersuch Guarantor nor any of its Subsidiaries is in default under any term of anyagreement or instrument to which it is a party or by which it is bound, or anyorder, judgment, decree or ruling of any court, arbitrator or GovernmentalAuthority or is in violation of any applicable law, ordinance, rule orregulation (including, without limitation, Environmental Laws) of anyGovernmental Authority, which default or violation, individually or in theaggregate, would reasonably be expected to have a Material Adverse Effect.

##  

## (h)                                 Neithersuch Guarantor nor any of its Subsidiaries is subject to regulation underInvestment Company Act of 1940, as amended, the Interstate Commerce Act, asamended, or the Federal Power Act, as amended.

##  

## (i)                                     SuchGuarantor is solvent, has capital not unreasonably small in relation to itsbusiness or any contemplated or undertaken transaction and has assets having avalue both at fair valuation and at present fair salable value greater than theamount required to pay its debts as they become due and greater than the amountthat will be required to pay its probable liability on its existing debts asthey become absolute and matured. Such Guarantor does not intend to incur, orbelieve or should have believed that it will incur, debts beyond its ability topay such debts as 

##  

## 9

## 

##  

## they becomedue. Such Guarantor will not be rendered insolvent by the execution anddelivery of, and performance of its obligations under, this Guaranty. SuchGuarantor does not intend to hinder, delay or defraud its creditors by orthrough the execution and delivery of, or performance of its obligations under,this Guaranty.

##  

# **SECTION 6.**                                                                            AMENDMENTS, WAIVERS AND CONSENTS.

#  

## (a)                                  ThisGuaranty may be amended, and the observance of any term hereof may be waived(either retroactively or prospectively), with (and only with) the writtenconsent of each Guarantor and the Required Holders, except that (1) noamendment or waiver of any of the provisions of Sections 3, 4 or 5, or anydefined term (as it is used therein), will be effective as to any Holder unlessconsented to by such Holder in writing, and (2) no such amendment orwaiver may, without the written consent of each Holder, (i) change thepercentage of the principal amount of the Notes the Holders of which arerequired to consent to any such amendment or waiver or (ii) amend Section 2or this Section 6.

##  

## (b)                                 TheGuarantors will provide each Holder (irrespective of the amount of Notes thenowned by it) with sufficient information, sufficiently far in advance of thedate a decision is required, to enable such Holder to make an informed andconsidered decision with respect to any proposed amendment, waiver or consentin respect of any of the provisions hereof. The Guarantors will deliverexecuted or true and correct copies of each amendment, waiver or consent effectedpursuant to the provisions of this Section 6 to each Holder promptlyfollowing the date on which it is executed and delivered by, or receives theconsent or approval of, the requisite Holders.

##  

## (c)                                  NoGuarantor will directly or indirectly pay or cause to be paid any remuneration,whether by way of fee or otherwise, or grant any security, to any Holder asconsideration for or as an inducement to the entering into by such Holder ofany waiver or amendment of any of the terms and provisions hereof unless suchremuneration is concurrently paid, or security is concurrently granted, on thesame terms, ratably to each Holder even if such Holder did not consent to suchwaiver or amendment.

##  

## (d)                                 Anyamendment or waiver consented to as provided in this Section 6 appliesequally to all Holders of Notes affected thereby and is binding upon them andupon each future holder and upon the Guarantors. No such amendment or waiverwill extend to or affect any obligation, covenant or agreement not expresslyamended or waived or impair any right consequent thereon. No course of dealingbetween the Guarantors and any Holder nor any delay in exercising any rightshereunder shall operate as a waiver of any rights of any Holder. As usedherein, the term “***thisGuaranty***” and references thereto shall mean this Guaranty as itmay from time to time be amended or supplemented.

##  

## (e)                                  Solelyfor the purpose of determining whether the Holders of the requisite percentageof the aggregate principal amount of Notes then outstanding approved orconsented to any amendment, waiver or consent to be given under this Guaranty,Notes directly or indirectly owned by any Guarantor, the Company or any oftheir respective subsidiaries or Affiliates shall be deemed not to beoutstanding.

##  

## 10

## 

##  

# **SECTION 7.**                                                                            NOTICES.

#  

All notices and communications provided for hereunder shall be inwriting and sent (a) by telefacsimile if the sender on the same day sendsa confirming copy of such notice by a recognized overnight delivery service(charges prepaid), (b) by registered or certified mail with return receiptrequested (postage prepaid) or (c) by a recognized overnight deliveryservice (charges prepaid). Any such notice must be sent:

 

### (1)                                  ifto a Note Purchaser or its nominee, to such Note Purchaser or its nominee atthe address specified for such communications in Schedule A to the Note PurchaseAgreement, or at such other address as such Note Purchaser or its nominee shallhave specified to any Guarantor or the Company in writing,

###  

### (2)                                  ifto any other Holder, to such Holder at such address as such Holder shall havespecified to any Guarantor or the Company in writing, or

###  

### (3)                                  ifto any Guarantor, to such Guarantor c/o the Company at its address set forth atthe beginning of the Note Purchase Agreement to the attention of each of theChief Financial Officer and the General Counsel of the Company, or at suchother address as such Guarantor shall have specified to the Holders in writing.

###  

Notices underthis Section 7 will be deemed given only when actually received.

 

# **SECTION 8.**                                                                            MISCELLANEOUS.

#  

## (a)                                  Noremedy herein conferred upon or reserved to any Holder is intended to beexclusive of any other available remedy or remedies, but each and every suchremedy shall be cumulative and shall be in addition to every other remedy givenunder this Guaranty now or hereafter existing at law or in equity. No delay oromission to exercise any right or power accruing upon any default, omission orfailure of performance hereunder shall impair any such right or power or shallbe construed to be a waiver thereof but any such right or power may beexercised from time to time and as often as may be deemed expedient. In orderto entitle any Holder to exercise any remedy reserved to it under this Guaranty,it shall not be necessary for such Holder to physically produce its Note in anyproceedings instituted by it or to give any notice, other than such notice asmay be herein expressly required.

##  

## (b)                                 TheGuarantors will pay all sums becoming due under this Guaranty by the method andat the address specified for such purpose for such Holder, in the case of aHolder that is a Note Purchaser, on Schedule A to the Note PurchaseAgreement or by such other method or at such other address as any Holder shallhave from time to time specified to the Guarantors or the Company on behalf ofthe Guarantors in writing for such purpose, without the presentation orsurrender of this Guaranty or any Note.

##  

## (c)                                  Anyprovision of this Guaranty that is prohibited or unenforceable in anyjurisdiction shall, as to such jurisdiction, be ineffective to the extent ofsuch prohibition or unenforceability without invalidating the remainingprovisions hereof, and any such prohibition or unenforceability in anyjurisdiction shall (to the full extent permitted by law) not invalidate orrender unenforceable such provision in any other jurisdiction.

 

11

----

 

## (d)                                 Ifthe whole or any part of this Guaranty shall be now or hereafter become unenforceableagainst any one or more of the Guarantors for any reason whatsoever or if it isnot executed by any one or more of the Guarantors, this Guaranty shallnevertheless be and remain fully binding upon and enforceable against eachother Guarantor as if it had been made and delivered only by such otherGuarantors.

##  

## (e)                                  ThisGuaranty shall be binding upon each Guarantor and its successors and assignsand shall inure to the benefit of each Holder and its successors and assigns solong as its Notes remain outstanding and unpaid.

##  

## (f)                                    ThisGuaranty may be executed in any number of counterparts, each of which shall bean original but all of which together shall constitute one instrument. Eachcounterpart may consist of a number of copies hereof, each signed by less thanall, but together signed by all, of the parties hereto.

##  

## (g)                                 ThisGuaranty shall be construed and enforced in accordance with, and the rights ofthe parties shall be governed by, the law of the State of New York excludingchoice-of-law principles of the law of such State that would require theapplication of the laws of a jurisdiction other than such State.

##  

## (h)                                 EACHGUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANYSTATE OF NEW YORK COURT OR ANY FEDERAL COURT LOCATED IN NEW YORK COUNTY, NEWYORK, NEW YORK FOR THE ADJUDICATION OF ANY MATTER ARISING OUT OF OR RELATING TOTHIS GUARANTY, AND CONSENTS TO THE SERVICE OF ALL WRITS, PROCESS AND SUMMONSESBY REGISTERED OR CERTIFIED MAIL OUT OF ANY SUCH COURT OR BY SERVICE OF PROCESSON SUCH GUARANTOR AT ITS ADDRESS TO WHICH NOTICES ARE TO BE GIVEN PURSUANT TO SECTION 7HEREOF AND HEREBY WAIVES ANY REQUIREMENT TO HAVE AN AGENT FOR SERVICE OFPROCESS IN THE STATE OF NEW YORK. NOTHING CONTAINED HEREIN SHALL AFFECT THERIGHT OF ANY HOLDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER OR TO BRING ANYPROCEEDING HEREUNDER IN ANY JURISDICTION WHERE SUCH GUARANTOR MAY BEAMENABLE TO SUIT. EACH GUARANTOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO ANYSUIT, ACTION OR PROCEEDING IN ANY NEW YORK COURT OR FEDERAL COURT LOCATED INNEW YORK COUNTY, NEW YORK, NEW YORK ON THE GROUNDS OF VENUE AND HEREBY FURTHERIRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHTIN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

12

----

 

In Witness Whereof, the undersigned has caused this Guaranty to be dulyexecuted by an authorized representative as of the date first written above.

 
|   | FIRST INVESTORS  FINANCIAL SERVICES, INC., a   Texas corporation |
|--------|------------------------------------------------------------------|
|   |                                                             |
|   | FARRAGUT FINANCIAL  CORPORATION, a Delaware   corporation        |
|   |                                                             |
|   | FIRST INVESTORS  SERVICING CORP., a Delaware   corporation       |
|   |                                                             |
|   |                                                             |
|   | By:                                                              |   |
|   |                                                             | Authorized Signatory for all the above  listed Guarantors |
|   |                                                             |
|        |                                                                  |  |  |

 

13

----

 

**GUARANTYSUPPLEMENT**

 

To the Holders(as defined in the hereinafterdefined Guaranty Agreement)

 

Ladies andGentlemen:

 

Whereas, First Investors Financial ServicesGroup, Inc., a corporation organized under the laws of the State of Texas(the “***Compan****y*”) issued its (a) $5,000,000aggregate principal amount of its 12.75% Senior Subordinated Notes, due September 12,2017 (the “***Senior Subordinated Notes***”)and (b) $318,750 aggregate principal amount of its 14.75% SeniorSubordinated Paid-In-Kind Notes, due September 12, 2017 (the “***Senior Subordinated PIK Notes***”;the Senior Subordinated Notes together with the Senior Subordinated PIK Notesare collectively referred to herein as the “Notes”) pursuant to a Note PurchaseAgreement dated as of September 12, 2007 (“***Note Purchase Agreement***”) between theCompany and each of the purchasers named on Schedule A attached to saidNote Purchase Agreement (the “Note Purchasers”) for the purposes described in Schedule 5.14of the Note Purchase Agreement. Capitalized terms used herein shall have themeanings set forth in the hereinafter defined Guaranty Agreement unless hereindefined or the context shall otherwise require.

 

Whereas, as a condition precedent to their purchase of the Notes, theNote Purchasers required that from time to time certain subsidiaries of theCompany enter into that certain Subsidiary Guaranty Agreement dated as of September 12,2007 as security for the Notes (as amended, supplemented, restated or otherwisemodified from time to time, the “***Guaranty Agreement***”).

 

Pursuant to Section 9.6(a) of the Note Purchase Agreement,the Company has agreed to cause the undersigned,                        ,a [corporation] organized under the laws of                            (the “***Additional Guarantor***”),to join in the Guaranty Agreement. In accordance with the requirements of theGuaranty Agreement, the Additional Guarantor desires to amend the definition ofGuarantor (as the same may have been heretofore amended) set forth in theGuaranty Agreement attached hereto so that at all times from and after the datehereof, the Additional Guarantor shall be jointly and severally liable as setforth in the Guaranty Agreement for the obligations of the Company under theNotes and the Note Purchase Agreement to the extent and in the manner set forthin the Guaranty Agreement.

 

The undersigned is the duly elected                        of the Additional Guarantor, a subsidiary of the Company, and is duly authorizedto execute and deliver this Guaranty Supplement to each of you. The executionby the undersigned of this Guaranty Supplement shall evidence such AdditionalGuarantor’s consent to and acknowledgment and approval of the terms set forthherein and in the Guaranty Agreement and its agreement to be bound by thecovenants, terms and provisions of the Guaranty Agreement as a Guarantorthereunder and by such execution the Additional Guarantor shall be deemed tohave made in favor of the Holders the representations and warranties set forthin Section 5 of the Guaranty Agreement.

 

Exhibit A

(to Guaranty Agreement)

----

 

Upon execution of this Guaranty Supplement, the Guaranty Agreementshall be deemed to be amended as set forth above. Except as amended herein, theterms and provisions of the Guaranty Agreement are hereby ratified, confirmedand approved in all respects.

 

Any and all notices, requests, certificates and other instruments(including the Notes) may refer to the Guaranty Agreement without makingspecific reference to this Guaranty Supplement, but nevertheless all suchreferences shall be deemed to include this Guaranty Supplement unless thecontext shall otherwise require.

 

Dated:                                   ,20  .

 
|   | [NAME OF ADDITIONAL GUARANTOR] |
|--------|--------------------------------|
|   |                           |
|   |                           |
|   | By                             |   |   |
|   |                           | Its |

 

A-2

----