**Exhibit10.112**

 

 

FIRST INVESTORSSERVICING CORPORATION,

as Servicer,

 

FIRST INVESTORSAUTO FUNDING CORPORATION

as Depositor,

 

WELLS FARGO BANKMINNESOTA, NATIONAL ASSOCIATION

 

as IndentureTrustee and Securities Intermediary

 

and

 

FIRST INVESTORSAUTO OWNER TRUST 2003-A

 

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SALE ANDALLOCATION AGREEMENT

 

Dated as ofNovember 20, 2003

 

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TABLE OF CONTENTS

 
| Article I       Definitions                                                                         |
|---------------------------------------------------------------------------------------------------------------------------------------------|
| **Section 1.1.**                                                                                                                       | Definitions. |   |
| **Section 1.2.**                                                                                                                       | Other Definitional Provisions. |   |
|                                                                                                                                        |   |
| Article II       Trust  Property                                                                    |
| **Section 2.1.**                                                                                                                       | Conveyance of Trust Property. |   |
| **Section 2.2.**                                                                                                                       | Representations and Warranties of the  Depositor as to the Contracts. |   |
| **Section 2.3.**                                                                                                                       | Repurchase by Depositor for Breach. |   |
|                                                                                                                                        |   |   |
| Article III       Distributions;  Reserve Account; Statements to Noteholders and Certificateholders |
| **Section 3.1.**                                                                                                                       | Accounts. |   |
| **Section 3.2.**                                                                                                                       | Collections. |   |
| **Section 3.3.**                                                                                                                       | Application of Collections. |   |
| **Section 3.4.**                                                                                                                       | Application of Deposits. |   |
| **Section 3.5.**                                                                                                                       | Determination Date Calculations. |   |
| **Section 3.6.**                                                                                                                       | Reserve Account. |   |
| **Section 3.7.**                                                                                                                       | Prefunding Account. |   |
| **Section 3.8.**                                                                                                                       | Statements to Noteholders. |   |
| **Section 3.9.**                                                                                                                       | Control of Securities Accounts; The  Securities Intermediary. |   |
| **Section 3.10.**                                                                                                                      | Policy Matters. |   |
|                                                                                                                                        |   |
| Article IV       The  Depositor                                                                     |
| **Section 4.1.**                                                                                                                       | Representations and Warranties of the  Depositor. |   |
| **Section 4.2.**                                                                                                                       | Liability of Depositor; Indemnities. |   |
| **Section 4.3.**                                                                                                                       | Merger or Consolidation of, or Assumption  of the Obligations of Depositor. |   |
| **Section 4.4.**                                                                                                                       | Limitation on Liability of Depositor and  Others. |   |
| **Section 4.5.**                                                                                                                       | Depositor May Own Class A Notes. |   |
| **Section 4.6.**                                                                                                                       | Covenants of the Depositor. |   |
|                                                                                                                                        |   |
| Article V       Miscellaneous                                                                       |
| **Section 5.1.**                                                                                                                       | Amendment. |   |
| **Section 5.2.**                                                                                                                       | Protection of Title of Trust. |   |
| **Section 5.3.**                                                                                                                       | Governing Law. |   |
| **Section 5.4.**                                                                                                                       | Notices. |   |
| **Section 5.5.**                                                                                                                       | Severability of Provisions. |   |
| **Section 5.6.**                                                                                                                       | Assignment. |   |
| **Section 5.7.**                                                                                                                       | Further Assurances. |   |
| **Section 5.8.**                                                                                                                       | No Waiver; Cumulative Remedies. |   |
| **Section 5.9.**                                                                                                                       | Third-Party Beneficiaries. |   |
| **Section 5.10.**                                                                                                                      | Actions by Noteholders. |   |
| **Section 5.11.**                                                                                                                      | Counterparts. |   |

 

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| **Section 5.12.** | [Reserved].                                                      |   |
|------------------------|------------------------------------------------------------------|--------|
| **Section 5.13.** | No Bankruptcy.                                                   |   |
| **Section 5.14.** | Limitation  of Liability of Owner Trustee and Indenture Trustee. |   |
| **Section 5.15.** | Certain Rights of the  Insurer.                                  |   |
| **Section 5.16.** | Optional Redemption.                                             |   |
| **Section 5.17.** | Subordination.                                                   |   |
| **Section 5.18.** | Non-Confidential.                                                |   |
|                   |
| Exhibits               |
|                   |
| Exhibit A              | Form of Monthly  Servicer Report                                 |   |
| Exhibit B              | [Reserved]                                                       |   |
| Exhibit C              | Credit and Collection  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 ALLOCATIONAGREEMENT, dated as of November 20, 2003 (as amended, supplemented orotherwise modified and in effect from time to time, this “*Agreement*”), by andamong FIRST INVESTORS AUTO OWNER TRUST 2003-A, a Delaware statutory trust (the“*Trust*”),FIRST INVESTORS AUTO FUNDING CORPORATION, as depositor (the “*Depositor*”),WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as Indenture Trustee (the “*IndentureTrustee*”) and as securities intermediary (the “*SecuritiesIntermediary*”) and FIRST INVESTORS SERVICING CORPORATION, aGeorgia corporation, as servicer (together with its successors and assigns andin such capacity, either “*FISC*” or the “*Servicer*”).

 

WHEREAS, the Trustdesires to purchase the Contracts contributed by the Seller to the Depositor pursuant to the ContributionAgreement;

 

WHEREAS, the Depositor iswilling to sell the Contracts to the Trust as of the date hereof; and

 

WHEREAS, FISC is willingto service such Contracts on behalf of the Trust in accordance with the termsof the Servicing Agreement;

 

NOW, THEREFORE, inconsideration of the mutual covenants contained herein and other good andvaluable consideration, the receipt and sufficiency of which are herebyacknowledged, the parties hereto agree as follows:

 

# **Article I**

# ** **

# **Definitions**

# ** **

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

##  

Whenever used in thisAgreement, the following words and phrases, unless the context otherwiserequires, whenever capitalized shall have the following meanings:

 

Acceptable Extended Contract Rate:1.75% calculated as of the three month average Extended Contract Rate for thecurrent Collection Period and the prior two Collection Periods.

 

Accounts: The Collection Account,the Reserve Account, the Prefunding Account, the Class A Note Payment Accountand 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.

 

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

 

Additional Note Interest:  For any Payment Date, with respect to theClass A Notes, the sum of (i) all accrued but unpaid Monthly Note Interest forprevious Payment Dates plus (ii) to the extent permitted by law,interest on such accrued but unpaid Monthly Note Interest at the Note Rate.

 

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 Person directly orindirectly controlling, controlled by or under direct or indirect commoncontrol with such Person.  For purposesof this definition, “control” when used with respect to any Person shall meanthe power to direct the management and policies of such Person, directly orindirectly, whether through the ownership of voting securities, by contract orotherwise.

 

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) any state in which the Servicer regularly conducts servicing andcollection activities (other than purely ministerial activities) with respectto a material portion of the Contracts.

 

APR:  With respect to any Contract, the annual percentage rate ofinterest stated 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 insuranceproceeds) received with respect to any Purchased Contract the Purchase Amountfor which was included in Available Funds for a previous Payment Date.

 

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Back-up Servicer:  Wells Fargo Bank Minnesota, NationalAssociation, a national banking association, in its capacity as back-upservicer, and its successors 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 theClosing Date to but excluding the first Payment Date, $254,518.75; for theperiod from and including the first Payment Date to but excluding the secondPayment Date, $210,370.00; for the period from and including the second PaymentDate to but excluding the Prefunding Account Payout Date, $157,777.50; for theperiod from and including the third Payment Date to but excluding the fourthPayment Date, $105,185.00; and for the period from and including the fourthPayment Date to but excluding the fifth Payment Date, $52,593.00; 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 day precedingsuch Payment Date to the sum of (A) 96.1% of the Pool Balance as of the lastday of the related Collection Period and (B) 96.5% of the Prefunding AccountBalance as of the last day of the related Collection Period; provided, however,that the Class A Monthly Note Principal for the Final Note Payment Date for theClass A Notes shall equal the amount necessary to reduce the Class A NoteBalance to zero; provided, further, that for the purposes ofdetermining Class A Monthly Note Principal, the unpaid balance of any DefaultedContract or a Purchased Contract will be deemed zero on and after the last dayof the Collection Period during which such Contract became a Defaulted Contractor a Purchased Contract.

 

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 day precedingsuch Payment Date to the sum of (1) 3.9% of the Pool Balance as of the last dayof the related Collection Period and (2) 3.5% of the Prefunding Account Balanceas of the last day of the related Collection Period; provided, however,that the Class B Monthly Note Principal for the Final Note Payment Date for theClass B Notes shall equal the amount necessary to reduce the Class B NoteBalance to zero; provided, further, that for the purposes ofdetermining Class B Monthly Note Principal, the unpaid balance of any DefaultedContract or a Purchased Contract will be deemed zero on and after the last dayof the Collection Period during which such Contract became a Defaulted Contractor a Purchased Contract.

 

Class A Note Balance:  At any time, as the context may require, (i)with respect to all of the Class A Notes, an amount equal to, initially, theInitial Class A Note Balance and, thereafter, an amount equal to the InitialClass A Note Balance as reduced from time to time by all amounts allocable toprincipal previously distributed to the Class A Noteholders or (ii) withrespect to any Class A Note, an amount equal to, initially, the initialdenomination of such Class A Note and,

 

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thereafter, an amount equal to such initialdenomination as reduced from time to time by all amounts allocable to principalpreviously distributed in respect of such Class A Note; provided, however,that in determining whether the Holders of Class A Notes evidencing therequisite percentage of the Class A Note Balance have given any request,demand, authorization, direction, notice, consent or waiver hereunder or underany other Transaction Document, Class A Notes owned by the Trust, any otherobligor upon the Class A Notes, the Depositor, the Servicer or any Affiliate ofany of the foregoing Persons shall be disregarded and deemed to be excludedfrom the Class A Note Balance (unless such Persons own 100% of the Class A NoteBalance), except that, in determining whether the Indenture Trustee or theOwner Trustee shall be protected in relying on any such request, demand,authorization, direction, notice, consent or waiver, only Class A Notes that aResponsible Officer of the Indenture Trustee or the Owner Trustee, asapplicable, actually knows to be so owned shall be so disregarded; and, providedfurther, that Class A Notes that, to the actual knowledge of aResponsible Officer of the Indenture Trustee or the Owner Trustee, asapplicable, have been pledged in good faith may be regarded as included in theClass A Note Balance if the pledgee establishes to the satisfaction of theIndenture Trustee or the Owner Trustee, as applicable, the pledgee’s right soto act with respect to such Class A Notes and that the pledgee is not theTrust, any other obligor upon the Class A Notes, the Depositor, the Servicer orany Affiliate of any of the foregoing Persons.

 

Class B Note Balance:  At any time, as the context may require, (i)with respect to all of the Class B Notes, an amount equal to, initially, theInitial Class B Note Balance and, thereafter, an amount equal to the InitialClass B Note Balance as reduced from time to time by all amounts allocable toprincipal previously distributed to the Class B Noteholders or (ii) withrespect to any Class B Note, an amount equal to, initially, the initialdenomination of such Class B 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 B Note.

 

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

 

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

 

Closing Date:  November 20, 2003.

 

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 November 30, 2003.

 

Contract:  A retail installment sale contract or promissory note andsecurity agreement identified on the Contract Schedule (as such contractmay be amended, supplemented or otherwise modified and in effect from time totime).

 

Contract File:  With respect to any Contract:

 

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#### (i)                                     thesole original executed counterpart of the retail installment contract orpromissory note and security agreement evidencing each such Contract and anyand all amendments thereto;

####  

#### (ii)                                  (a)the original certificate of title or copies of correspondence to theappropriate State title registration agency, and all enclosures thereto, forissuance of the original certificate of title or (b) if the appropriate Statetitle registration agency issues a letter or other form of evidence of lien inlieu of a certificate of title, the original lien entry letter or other form ofevidence of lien in lieu of a certificate of title, the original lien entryletter or form or copies of correspondence to such State title registrationagency, and all enclosures thereto, for issuance of the original lien entryletter or form.

####  

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

 

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 office ofthe 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 Trustee atwhich at any particular time its corporate trust business shall beadministered, which office at the date of the execution of this Agreement islocated at 1011 Centre Road, Suite 200, Wilmington, DE 19805, Attention:Corporate Trust or at such other address as the Owner Trustee may designatefrom time to time by notice to the Indenture Trustee, the Depositor and theSeller, or the principal corporate trust office of any successor Owner Trusteeat the address designated by such successor Owner Trustee by notice to theIndenture Trustee, the Depositor and the Seller.

 

Credit and Collection Policy:  The credit and collection policy of theSeller substantially in the form attached hereto as Exhibit C as amendedand restated from time to time with the consent of the Insurer and inaccordance with the Transaction Documents.

 

Cumulative Net Loss Rate:  The ratio of (i) cumulative Net Losses forthe related Collection Period and all preceding Collection Periods to (ii) theexcess of (I) the sum of (a) the aggregate Principal Balances of all theContracts as 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.

 

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Cutoff Date:  (i) With respect to the Initial Contracts,the Initial Cutoff Date and (ii) with respect to any Additional Contract, theAdditional 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 thereof inexcess of $10.00, is more than 120 days delinquent (or if the related obligor isinsolvent or has sought protection under the United States Bankruptcy Code andsuch Contract is more than 180 days delinquent), (ii) 90 days have elapsedsince the Servicer repossessed the Financed Vehicle, (iii) the related FinancedVehicle has been repossessed and sold, or (iv) consistent with the Servicer’sCredit and Collection Policy, has been or should be written off asuncollectible; provided, however, that any Contract which hasbecome a Purchased Contract will not be deemed to be a Defaulted Contract.

 

Delinquent Contract:  The entire principal balance of any Contract(other than a Defaulted Contract) as to which more than $10.00 of any scheduledpayment remains unpaid for more than 30 days from the date at which it iscontractually due and payable.

 

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

 

Depositor:  First Investors Auto Funding Corporation, a Delaware corporation

 

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

 

Determination Date:  The third Business Day preceding eachPayment Date commencing on December 17, 2003.

 

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)                                     directobligations of, and obligations fully guaranteed by, the United States ofAmerica or any agency or instrumentality thereof the obligations of which arebacked by the full faith and credit of the United States of America;

####  

#### (ii)                                  demanddeposits, time deposits, bankers’ acceptances or certificates of deposit of anydepository institution or trust company incorporated under the laws of theUnited States of America or any state thereof (or any domestic branch of aforeign bank) and subject to supervision and examination by federal or statebanking or depository institution authorities, including the Indenture Trusteeor the Owner Trustee, acting in their respective commercial capacities; provided,however, that, at the time of the investment or contractual commitmentto invest therein, such depository institution or trust company shall be ratedPrime-1 by Moody’s and A-1+ by S&P or any other deposit which is fullyinsured by the Federal Deposit Insurance Corporation;

####  

#### (iii)                               repurchaseobligations with respect to any security that is a direct obligation of, orfully guaranteed by, the United States of America or any agency or

 

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#### instrumentality thereofthe obligations of which are backed by the full faith and credit of the UnitedStates of America, in either case entered into with a depository institution ortrust company (acting as principal) described in clause (ii) above;

####  

#### (iv)                              shortterm corporate securities bearing interest or sold at a discount issued by anycorporation incorporated under the laws of the United States of America or anystate thereof; the short term unsecured obligations of which are rated Prime-1by Moody’s and A-1 by S&P at the time of the investment; provided, howeverthat the total amount of debt from Issuers rated A-1 by S&P must (i) belimited to the investment of monthly principal and interest payments; (ii)represent no more than 20% of the total Principal Balance; (iii) not maturebeyond 30 days; (iv) shall not have an ‘r’ suffix attached to its rating; (v)have a predetermined fixed dollar amount of principal due at its maturity thatcannot be fixed or variable; and (vi) be tied to a single interest rate indexplus a single fixed rate spread (if any) and move proportionately with thatindex;

####  

#### (v)                                 commercialpaper, at the time of the investment or contractual commitment to investtherein, rated Prime-1 by Moody’s and A-1+ by S&P at the time of theinvestment;

####  

#### (vi)                              guaranteedinvestment contracts issued by an insurance company or other corporationacceptable to the Rating Agencies and the Insurer (provided that no InsurerDefault shall have occurred and be continuing);

####  

#### (vii)                           investmentsin money market funds having a rating of AAA-m by Moody’s and AAAm-G byS&P; and

####  

#### (viii)                        any otherinvestment approved in writing by the Insurer in advance with notice to theRating Agencies.

 

Each of the EligibleInvestments may be purchased by or through the Indenture Trustee or anAffiliate 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 a long term unsecured debt rating of atleast Baa3 from Moody’s and a long term unsecured debt rating, a short termunsecured debt rating or a certificate of deposit rating acceptable to theRating Agencies and the Insurer (provided that no Insurer Default shall haveoccurred and be continuing) and whose deposits are insured by the FederalDeposit Insurance Corporation.

 

Event of Servicing Termination:  As defined in Section 5.1 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.

 

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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 be returnedprior to the end of the Term of the Insurance Agreement (as defined in theInsurance Agreement) as a voidable preference under the United StatesBankruptcy Code (11 U.S.C.), as amended from time to time.

 

Financed Vehicle:  A new or used automobile or light-dutytruck, together with all accessions thereto, securing an Obligor’s indebtednessunder a Contract.

 

Fiscal Agent:  As defined in the Policy.

 

Holder:  A Noteholder.

 

Indenture:  The Indenture, dated as of November 20, 2003, between theTrust and Wells Fargo Bank Minnesota, 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 Minnesota, NationalAssociation, not in its individual capacity but solely as Indenture Trusteeunder the Indenture, its successors in interest and any successor trustee underthe 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 Balance asof the close of business on the first day of the related Collection Period; and(B) $750.

 

Indenture Trustee Fee Letter:  The letter agreement dated October 28,2003 entered into between the Seller and Wells Fargo Bank Minnesota, NationalAssociation relating to fees and expenses related to the Transaction Documentsof Wells Fargo Bank Minnesota, National Association in its capacities asIndenture Trustee, Custodian and Back-up Servicer.

 

Initial Class A Note Balance:  As the context may require, (i) with respectto all of the Class A Notes, $139,661,000, or (ii) with respect to any Class ANote, an amount equal to the initial denomination of such Class A Note.

 

Initial Class B Note Balance:  As the context may require, (i) with respectto all of the Class B Notes, $5,065,890.91, or (ii) with respect to any Class BNote, an amount equal to the initial denomination of such Class B Note.

 

Initial Contract Price:  $114,726,890.91.

 

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:  October 31, 2003.

 

Initial Prefunding Account Amount:  $30,000,000.

 

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Initial Reserve Account Deposit:  An amount equal to the sum of (i) 0.5% ofthe Principal Balance of the Initial Contracts as of the Initial Cutoff Dateand (ii) the Capitalized Interest Amount.

 

Insolvency Event:  With respect to any Person, (i) the makingby such Person of a general assignment for the benefit of creditors, (ii) thefiling by such Person of a voluntary petition in bankruptcy, (iii) such Personbeing adjudged bankrupt or insolvent, or having had entered against such Personan order for relief in any bankruptcy or insolvency proceeding, (iv) the filingby such Person of a petition or answer seeking reorganization, arrangement,composition, readjustment, liquidation, dissolution or similar relief under anystatute, law or regulation, (v) the filing by such Person of an answer or otherpleading admitting or failing to contest the material allegations of a petitionfiled against 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 thedate hereof 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 premium payableunder the Insurance Agreement for that Payment Date plus any overdue premiumspayable under the Insurance Agreement for previous Payment Dates.

 

Insurance Premium: As defined in theInsurance Agreement.

 

Insurer:  MBIA Insurance Corporation, a stock insurance corporationincorporated 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 encumbranceof any kind, other than tax liens, mechanics’ or materialmen’s liens, judicialliens and any liens that may attach to a Financed Vehicle 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)any amounts required by law to be remitted to the related Obligor.

 

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Monthly Note Interest:  With respect to the Class A Notes, an amountequal to (i) for the initial Payment Date, $300,271.15 and (ii) for eachPayment Date thereafter, one-twelfth of the product of (A) the Note Rate and(B) the outstanding principal balance of the Class A Notes as of the close ofbusiness on the immediately preceding Payment Date (after giving effect to allpayments of principal made to the Holders of the Class A Notes on or beforesuch Payment Date).

 

Monthly Servicer Report:  As defined in the Servicing Agreement.

 

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 the Pool Balanceand (ii) the Servicing Rate multiplied by the Principal Balance of any Contractpre-funded, but not included in the Pool Balance, during the such precedingCollection Period.

 

Moody’s:  Moody’s Investors Service, Inc., and its successors.

 

Net Losses:  With respect to any Collection Period, theexcess, if any, of (i) the aggregate Principal Balance of all Contracts thatbecame 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 Pool Factor:  With respect to the Class A Notes, (i) as ofthe Closing Date, 1.0000000 and (ii) as of the close of business on the lastday of any Collection Period ending after the Closing Date, a seven digitdecimal figure equal to the Class A Note Balance as of such last day (aftergiving effect to any reductions of the Class A Note Balance to be made on thefollowing Payment Date) divided by the Initial Class A Note Balance.

 

Note Rate:  With respect to the Class A Notes, 2.58% per annum.

 

Obligor:  The purchaser or co-purchasers of a new or used automobile orlight-duty truck purchased in whole or in part by the execution and delivery ofa Contract or any other Person who owes or may be liable for payments under aContract.

 

Offering Memorandum:  That certain Offering Memorandum datedNovember 13, 2003 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 or the Servicer, as the case may be, anddelivered to the Owner Trustee and the Indenture Trustee.

 

Originator:  Each Person from whom the Seller hasacquired a Contract.

 

Originator Agreement:  An agreement substantially in the form of ExhibitE hereto.

 

10

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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, whetherby way of a sale, capital contribution or by virtue of the granting of a lien.

 

Owner Trust Estate:  As defined in the Trust Agreement.

 

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

 

Owner Trustee Fee:  $3,000 payable on the Closing Date, andannually thereafter on each Payment Date in November, by the Issuer inaccordance with the terms of Section 3.5(d) hereof.

 

Owner Trustee Fee Letter:  The letter agreement dated October 29,2003 entered into between Deutsche Bank Trust Company Delaware and the Seller,relating to fees and expenses of Deutsche Bank Trust Company Delaware in itscapacity as Owner Trustee related to the Transaction Documents.

 

Payment Date:  The 20th day of each month or, if such 20thday is not a Business Day, the following Business Day, commencing onDecember 22, 2003.

 

Person:  A legal person, including any individual, corporation, estate,partnership, joint venture, association, joint stock company, limited liabilitycompany, limited liability partnership, trust, unincorporated organization, orgovernment or any agency or political subdivision thereof, or any other entityof whatever nature.

 

Policy:  That certain financial guaranty insurance policy, dated as ofNovember 20, 2003, issued by MBIA Insurance Corporation in favor of theIndenture 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 Balance of the Contracts calculated as of thelast day of the most recently ended Collection Period.

 

Prefunding Account:  The account established and maintained as suchpursuant 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:  March 31, 2004.

 

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

 

Prepayment Date:  As defined in Section 5.16(a).

 

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Principal Balance:  With respect to any Contract as of any date,the Amount Financed under such Contract minus the sum of (i) that portion ofall Scheduled Payments actually received on or prior to such date allocable toprincipal (to the extent collected) plus (ii) any rebates of extendedwarranty contract costs or physical damage, credit life or credit disabilityinsurance premiums included in the Amount Financed plus (iii) any fullor partial prepayment applied to reduce the unpaid principal balance of suchContract; provided, however, that (A) the Principal Balance of aDefaulted Contract shall be zero as of the last day of the Collection Periodduring which it became a Defaulted Contract, (B) the Principal Balance of aPurchased Contract shall be zero as of the date on which the related Purchase Amountis remitted by the Depositor or the Servicer, and (C) the Principal Balance ofa Contract that has been foreclosed upon by the Indenture Trustee at thedirection of the Insurer pursuant to Section 5.4(a) of the Indenture shallbe 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 giving effect toall distributions of principal in reduction of the Class A Note Balance) over(ii) the sum of (a) the Pool Balance as of the last day of the relatedCollection Period and (b) 96.5% of the amounts on deposit in the PrefundingAccount.

 

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) the PrincipalBalance of such Contract plus (ii) the amount of accrued but unpaidinterest on such Principal Balance at the related APR to but excluding suchPayment Date.

 

Purchase Price:  (i) With respect to the Initial Contractsand the related Initial Conveyed Property, the Initial Contract Price and (ii)with respect to any Additional Contract and the related Additional ConveyedProperty, 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 or successoris any longer in existence, Rating Agency shall mean a nationally recognizedstatistical rating organization or other comparable Person designated by theTrust and acceptable to the Insurer (provided that no Insurer Default shallhave occurred and is continuing), notice of which designation shall have beengiven to the Indenture Trustee, the Owner Trustee and the Servicer.

 

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 regard to the Policy.

 

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

 

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 ofPrime-1 by 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 Reserve AccountIncrease Event has not occurred or is not continuing, an amount equal to thesum of (A) 2.0% of the aggregate initial Principal Balance of the Contracts asof the applicable Cutoff Date for each such Contract and (B) the applicableCapitalized Interest Amount, or (ii) if a Reserve Account Increase Event hasoccurred and is continuing, the sum of (A) the greater of (x) 2.0% of theaggregate initial Principal Balance of the Contracts as of the applicableCutoff Date for each such Contract, and (y) 6.0% of the Pool Balance as of thelast day of the related Collection Period and (B) the applicable CapitalizedInterest Amount; provided, however, that in either case theamount on deposit in the Reserve Account shall not at any time exceed the ClassA 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 Payment Date, or, in the case of the first PaymentDate, the Closing Date), including, without limitation, all interest and otherincome (net of losses and investment expenses) earned on such amount during thepreceding 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)                                     theaverage Delinquency Ratio for any three Collection Periods exceeds 6% duringthe period commencing on the Closing Date through the end of October 2004and the Delinquency Ratio exceeds 7.5% thereafter; or

####  

#### (ii)                                  theCumulative Net Loss Rate at any month indicated in the following table exceedsthe percentage corresponding thereto:

 

| **Months**                               |   | **Cumulative  Net Loss Rate** |   |
|------------------------------------------|--------|-------------------------------|--------|
| November 2003  - December 2003 |   | 0.30                          | %      |
| January 2004                        |   | 0.60                          | %      |
| February 2004-April 2004       |   | 1.20                          | %      |
| May  2004-July 2004                 |   | 2.25                          | %      |
| August 2004-October 2004       |   | 3.25                          | %      |
| November 2004-January 2005     |   | 4.25                          | %      |
| February 2005-April 2005       |   | 5.10                          | %      |
| May  2005-July 2005                 |   | 6.00                          | %      |
| August 2005-October 2005       |   | 6.70                          | %      |
| November 2005-January 2006     |   | 7.30                          | %      |
| February 2006-April 2006       |   | 7.90                          | %      |
| May  2006-July 2006                 |   | 8.30                          | %      |
| August 2006-October 2006       |   | 8.70                          | %      |
| November 2006-January 2007     |   | 9.00                          | %      |
| February 2007-April 2007       |   | 9.25                          | %      |
| May  2007-July 2007                 |   | 9.50                          | %      |
| August 2007-October 2007       |   | 9.75                          | %      |
| November 2007  & thereafter     |   | 10.00                         | %      |

 

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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 Indenture Trustee,any officer within the Corporate Trust Department of the Indenture Trustee withdirect responsibility for the administration of the Indenture and also, withrespect to a particular matter, any other officer of the Indenture Trustee towhom such matter is referred because of such officer’s knowledge of andfamiliarity with such matter or other similar matters and (ii) in the case ofthe Owner Trustee, any officer within the Corporate Trust Office of the Owner Trusteewith direct responsibility for the administration of the Trust Agreement orthis Agreement and also, with respect to a particular matter, any other officerof the Owner Trustee to whom such matter is referred because of such officer’sknowledge of and familiarity with such matter or other similar matters.

 

Scheduled Payment:  For any Contract, each payment required tobe made 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, inits capacity as seller of the Contracts under this Agreement, and itssuccessors and assigns in such capacity.

 

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

 

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

 

Servicing Rate:  2.5% 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) 2.5% per annum and (ii) the average of threebids

 

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obtained by the Back-up Servicer from third partyservicers, who are qualified to act as servicers, selected by the Back-upServicer and approved by the Insurer.

 

S & P:  Standard & Poor’s Ratings Services, a division of TheMcGraw-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 Account DrawAmount, if any, for such Payment Date.

 

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

 

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

 

Trust:  First Investors Auto Owner Trust 2003-A, a Delaware statutorytrust.

 

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 Officer:  (i) in the case of the Indenture Trustee,any officer within the Corporate Trust Department of the Indenture Trustee withdirect responsibility for the administration of the Indenture and also, withrespect to a particular matter, any other officer of the Indenture Trustee towhom such matter is referred because of such officer’s knowledge of andfamiliarity with such matter or other similar matters and (ii) in the case ofthe Owner Trustee, any officer within the Corporate Trust Office of the OwnerTrustee with direct responsibility for the administration of the TrustAgreement and 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.

 

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 to purchaseContracts affected materially and adversely by breaches of the representationsand warranties of the Depositor made in this Agreement, and (iii) all amounts,securities, financial assets, investments and other property deposited fromtime to time in or credited to the Collection Account, the Prefunding Account,the Class A Note Payment Amount, the Class B Note Payment Account and theReserve Account.

 

## **Section 1.2.**                                **OtherDefinitional Provisions**.

##  

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

 

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### (b)                                 Allterms defined in this Agreement shall have the defined meanings when used in anycertificate 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 this Agreementor in any such certificate or other document, and accounting terms partlydefined in this Agreement or in any such certificate or other document to theextent not defined, shall have the respective meanings assigned to them undergenerally 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 any particularprovision of this Agreement.  Article,Section, Schedule and Exhibit references contained in this Agreement arereferences to Articles, Sections, Schedules and Exhibits in or to thisAgreement unless otherwise specified. The term “including” shall mean “including without 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.

###  

### (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**

# ** **

# **Trust Property**

# ** **

## **Section 2.1.**                                **Conveyanceof Trust Property**.

##  

### (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 theobligations herein), all right, title and interest of the Depositor, whethernow owned or hereafter acquired, in, to and under the following:

###  

#### (i)                                     theContracts;

####  

#### (ii)                                  allamounts received on or in respect of the Contracts after the applicable CutoffDate (except that interest accrued on the Contracts prior to the applicableCutoff Date and received after such Cutoff Date will be remitted by the Trustto the Seller);

####  

#### (iii)                               thesecurity interests in the Financed Vehicles;

 

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#### (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 Obligors;

####  

#### (v)                                 anyLiquidation Proceeds;

####  

#### (vi)                              theContract Files;

####  

#### (vii)                           rightsunder the Contribution Agreement to cause the Seller to purchase Contractsaffected materially and adversely by breaches of the representations andwarranties of the Seller made in the Contribution Agreement;

####  

#### (viii)                        rightsunder the Servicing Agreement to cause the Servicer to purchase Contractsaffected materially and adversely by breaches of the representations andwarranties of the Servicer made in the Servicing Agreement; and

####  

#### (ix)                                allpresent and future claims, demands, causes of action and choses in action inrespect 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.

####  

### (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 otherwise conveyand the Trust will purchase from the Depositor such Additional Contracts andAdditional Conveyed Property as the Depositor may specify by written notice tothe 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)                                     ThisAgreement shall be deemed to be a security agreement within the meaning ofArticles 8 and 9 of the UCC;

####  

#### (ii)                                  Thesale provided for in Section 2.1(b) shall be deemed to be a grantby the Depositor, and the Depositor hereby grants, to the Seller a securityinterest in all of its

 

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#### right (including thepower to convey title thereto), title and interest, whether now owned orhereafter acquired, in and to the Contracts and the other Trust Property, tosecure such indebtedness and the performance of the obligations of theDepositor hereunder;

####  

#### (iii)                               Thepossession by the Trust or the Custodian of the Contract Files and any otherproperty as constitute instruments, money, negotiable documents or chattelpaper shall be deemed to be “possession by the secured party” or possession bythe purchaser or a person designated by such purchaser, for purposes ofperfecting the security interest pursuant to the UCC; and

####  

#### (iv)                              Notificationsto persons holding such property, and acknowledgments, receipts orconfirmations from persons holding such property, shall be deemed to benotifications to, or acknowledgments, receipts or confirmations from, baileesor agents (as applicable) of the Trust for the purpose of perfecting such securityinterest under the UCC.

####  

### (d)                                 Thesale, transfer, assignment and conveyance of the Trust Property made under Section 2.1(b)shall not constitute and is not intended to result in an assumption by theTrust of any 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 (including computer records) in theDepositor’s control pertaining to the Trust Property, in order to indicate thatthe 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)                                     eachof the representations and warranties of the Depositor made pursuant to Section 2.2with respect to the Additional Contracts shall be true and correct as of theAdditional Contract Purchase Date;

####  

#### (ii)                                  theDepositor shall have executed and delivered to the Trust and the Trust shallhave executed and delivered to the Indenture Trustee, written assignments inthe form of Exhibit F hereto conveying such Additional Contracts andAdditional Conveyed Property to the Trust and the Indenture Trustee,respectively;

####  

#### (iii)                               theTrust shall have deposited, or cause to be deposited, in the Reserve Account,an amount equal to 0.5% of the aggregate outstanding principal balance ofAdditional Contracts to be conveyed on such Additional Contract Purchase Date(the “*AdditionalReserve Account Deposit*”);

####  

#### (iv)                              theTrust shall have received release letters and related UCC-3 terminationstatements and/or amendment statements (for each appropriate jurisdiction), torelease all security interests or similar rights of any Person in the AdditionalConveyed Property,

 

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#### including the securityinterests in the Financed Vehicles securing the Contracts and any proceeds ofthe foregoing;

####  

#### (v)                                 theTrust shall have received the prior written consent of the Insurer; and

####  

#### (vi)                              theTrust and the Insurer shall have each received such other documents as theTrust or the Insurer may have reasonably 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) of this Section 2.1shall consist of the net proceeds from the sale of the Notes (minus the sum ofthe Initial Reserve Account Deposit and the Additional Reserve AccountDeposits) and that the remaining portion of the Purchase Price shall be deemedto constitute a capital contribution by the Seller to the Depositor (it beingunderstood that the Seller has a 100% ownership interest in the Depositor andthat the Depositor has a 100% ownership interest in the Trust).

###  

## **Section 2.2.**                                **Representationsand Warranties of the Depositor as to the Contracts**.

##  

The Depositor makes thefollowing representations and warranties as to the Contracts on which the Trustshall be deemed to have relied in accepting the Contracts.  The representations and warranties speak asof the execution and delivery of this Agreement and, with respect to anyAdditional Contracts, as of the related Additional Contract Purchase Date,except to the extent otherwise provided, but shall survive the sale, transfer,assignment and conveyance of the Contracts to the Trust pursuant to thisAgreement and the pledge of the Contracts to the Indenture Trustee pursuant tothe 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) has beenoriginated 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) has created a valid, binding and enforceable security interest in favor ofthe Seller 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 such thatthe rights and remedies of the holder thereof are adequate for realizationagainst the collateral of the benefits of the security, (iv) provides for levelmonthly payments that fully amortize the Amount Financed by maturity (exceptthat the period between the date of such Contract and the date of the firstScheduled Payment may be less than or greater than one month and the amount ofthe first and last Scheduled Payments may be less than or greater than the levelpayments, but not by a material amount) and yield interest at the related APR,(v) provides for, in the event that such Contract is prepaid, a prepayment thatfully pays the Principal Balance of such Contract with interest at the relatedAPR through the date of payment, (vi) is secured by a new or used

 

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### automobile or light-duty truck, (vii) relates to anObligor who has made a down payment under such Contract as of the applicableCutoff Date,  (viii) satisfies in allmaterial respects the requirements under the Credit and Collection Policy, and(ix) requires the Obligor thereunder to obtain and maintain physical damageinsurance covering the related Financed Vehicle in accordance with the Seller’snormal requirements.

###  

### (b)                                 ContractSchedule.  The information set forthin the Contract Schedule was true and correct in all material respects asof the opening 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 inthe compact 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, the FederalTruth-in-Lending Act, the Equal Credit Opportunity Act, the Fair CreditReporting Act, the Fair Credit Billing Act, the Fair Debt Collection PracticesAct, the Federal Trade Commission Act, the Magnuson-Moss Warranty Act, theFederal Reserve Board’s Regulations B, M and Z, the Soldiers’ and Sailors’Civil Relief Act of 1940 and state adaptations of the Uniform Consumer CreditCode.

###  

### (d)                                 BindingObligation.  Each Contractrepresents the genuine, legal, valid and binding payment obligation in writingof the related Obligor, enforceable by the holder thereof in accordance withits terms, 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.

 

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### (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 any Contract has arisen and no Financed Vehicle has beenrepossessed as of the applicable Cutoff Date.

###  

### (l)                                     TrueSale.                                           TheDepositor intends that the transfer of the Contracts contemplated by Section 2.1(b)constitute a sale of the Contracts from the Depositor to the Trust and that thebeneficial interest in, and title to, the Contracts not be part of theDepositor’s estate in the event of the filing of a bankruptcy petition by oragainst the Depositor under any bankruptcy law.  The Depositor has not sold, transferred, assigned or pledged anyContract to any Person other than the Trust and such Contract has not beenreleased.

###  

### (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 oneoriginal executed copy of each Contract.

###  

### (q)                                 PrincipalBalance.  Each Contract had aPrincipal Balance as of the Cutoff Date of not more than $45,000.

###  

### (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.

 

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### (s)                                  Termto Maturity.  Each Contract had anoriginal term to maturity of not more than 72 months; provided, however,that as of the Prefunding Account Ending Date, no more than 30% of the PoolBalance shall represent Contracts with an original term to maturity greaterthan 66 months and less than or equal to 72 months and providedfurtherthat any Contracts acquired in the Prefunding Period with an original term tomaturity greater than 66 months and less than or equal to 72 months were eitheroriginated via the Seller’s direct origination program or relate to vehiclesthat were no more than one model year old as of the date of origination of therelated Contract.

###  

### (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 15.45%.

###  

### (u)                                 Locationof Contract Files.  The ContractFiles are complete and have been delivered to the Custodian prior to theapplicable Purchase Date and are maintained at the location listed in Schedule 2to this Agreement; provided, however, that the Depositor shallhave 180 days after the date that the applicable Contract is transferred to theTrust to deliver to the Custodian any certificate of title or other evidence inlieu of a certificate of title reasonably acceptable to the Insurer containedin such Contract File.

###  

### (v).                              NoDelinquent Contracts or Defaulted Contracts.  As of the applicable Cutoff Date, no Contract was a DelinquentContract 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 froman Obligor that has previously defaulted on a retail installment sales contractor promissory note and security agreement purchased by the Seller.

###  

### (y)                                 FinalScheduled Payment Date.  Theoriginal final scheduled payment date for each Contract is on or beforeMarch 31, 2010.

###  

### (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 contracthas been instructed to make payments under the Contract to a Lockbox which isunder the control of the Servicer.

###  

### (bb)                          UnitedStates Obligor.  Each Contract isdue from 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 payablein the lawful money of the United States of America.

 

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### (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 than21.0% of the aggregate Principal Balance of the Contracts, after giving effectto the Prefunding Period, shall have been originated through the Seller’sdirect origination program.

###  

### (gg)                          LimitedExtension.  Not more than 12% of theaggregate Principal Balance of the Contracts, after giving effect to thePrefunding Period, shall have been extended.

###  

## **Section 2.3.**                                **Repurchaseby Depositor for Breach**.

##  

The Seller, the Insurer,the Depositor, the Servicer or the Trust, as the case may be, shall inform theother parties to this Agreement and the Indenture Trustee promptly, in writing,upon the discovery of any breach or failure to be true of the representationsand warranties made by the Depositor pursuant to Section 2.2.  If such breach or failure shall not havebeen cured by the close of business on the last day of the Collection Periodwhich includes the thirtieth (30th) day after the date on which the Depositorbecomes aware of, or receives written notice from, the Servicer, the Insurer orthe Trust of such breach or failure, and such breach or failure materially andadversely affects the interest of the Trust in a Contract, the Depositor shallrepurchase such Contract from the Trust on the Business Day preceding thePayment Date immediately following such Collection Period.  In consideration of the repurchase of aContract hereunder, the Depositor shall remit the Purchase Amount of suchContract 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 III**

# ** **

# **Distributions;Reserve Account; Statements to Noteholders and Certificateholders**

# ** **

## **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 “*CollectionAccount*”).  TheCollection Account shall be held in trust for the benefit

 

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### of the Insurer and the Noteholders and shall be underthe 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 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 the Collection Account shallbe made only upon the terms and conditions of the Transaction Documents.

###  

If the Servicer isrequired to remit collections within two Business Days pursuant to the firstsentence of Section 3.2, all amounts held in the Collection Accountshall, to the extent permitted by applicable law, rules and regulations, beinvested, as directed in writing by the Servicer, by the bank or trust companythen maintaining the Collection Account in Eligible Investments that mature notlater than the Business Day preceding the Payment Date following the CollectionPeriod to which such amounts relate.  Ifthe Collection Account is no longer to be maintained at the Indenture Trustee,the Servicer shall, with the Indenture Trustee’s assistance as necessary, causethe Collection Account to be moved to an Eligible Institution within ten (10)Business Days (or such longer period not to exceed thirty (30) calendar days asto which each Rating Agency and the Insurer (provided that no Insurer Defaultshall have occurred and is continuing) may consent).  The Servicer shall promptly notify the Indenture Trustee, theInsurer (provided that no Insurer Default shall have occurred and iscontinuing) and the Owner Trustee of any change in the account number orlocation of the Collection Account.

 

### (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)                                     asegregated trust account designated as the Class A Note Payment Account (the “*Class ANote Payment Account*”). The Class A Note Payment Account shall be held in trust for the benefitof the Class A Noteholders and the Insurer. The Class A Note Payment Account shall be under the sole dominion andcontrol of the Indenture Trustee; provided, however, that theServicer may make deposits to and direct the Indenture Trustee in writing tomake withdrawals from the Class A Note Payment Account in accordance with thisAgreement and the Indenture.  All moniesdeposited from time to time in the Class A Note Payment Account pursuant tothis Agreement and the Indenture shall be held by the Indenture Trustee as partof the Trust Property and shall be applied as provided in this Agreement andthe Indenture.  The amounts on depositin the Class A Note Payment Account shall not be invested.  If the Class A Note Payment Account is nolonger to be maintained at the Indenture Trustee, the Servicer shall, with theIndenture Trustee’s assistance as necessary, cause the Class A Note PaymentAccount to be moved to an Eligible Institution within ten (10) Business Days(or such 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 notifythe Indenture Trustee, the Insurer and the Owner Trustee of any change in theaccount number or location of the Class A Note Payment Account; and

 

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#### (ii)                                  asegregated trust account designated as the Class B Note Payment Account (the “*Class BNote Payment Account*”). The Class B Note Payment Account shall be held in trust for the benefitof the Class B Noteholders.  The Class BNote Payment Account shall be under the sole dominion and control of theIndenture Trustee; provided, however, that the Servicer may makedeposits to and direct the Indenture Trustee in writing to make withdrawalsfrom the Class B Note Payment Account in accordance with this Agreement and theIndenture.  All monies deposited fromtime to time in the Class B Note Payment Account pursuant to this Agreement andthe Indenture shall be held by the Indenture Trustee as part of the TrustProperty and shall be applied as provided in this Agreement and theIndenture.  The amounts on deposit inthe Class B Note Payment Account shall not be invested.  If the Class B Note Payment Account is nolonger to be maintained at the Indenture Trustee, the Servicer shall, with theIndenture Trustee’s assistance as necessary, cause the Class B Note PaymentAccount to be moved to an Eligible Institution within ten (10) Business Days(or such 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 notifythe Indenture Trustee, the Insurer and the Owner Trustee of any change in theaccount number or location of the Class B Note Payment Account.

####  

### (c)                                  TheTrust shall establish, or shall cause to be established, on or before theClosing Date, and shall maintain in the name of the Depositor at an EligibleInstitution (which shall initially be the Owner Trustee) a segregated trustaccount designated as the Depositor Account (the “*Depositor Account*”).  The Depositor Account shall be held in trustfor the benefit of the Depositor.  TheDepositor Account shall be under the sole dominion and control of the Depositorand shall not constitute part of the Trust Estate; provided, however,that the Servicer may direct the Indenture Trustee in writing to make depositsto the Depositor Account in accordance with Section 3.5(d) of thisAgreement.  All monies deposited fromtime to time in the Depositor Account pursuant to this Agreement shall beapplied in accordance with the terms of the Trust Agreement  The amounts on deposit in the DepositorAccount shall not be invested.  If theDepositor Account is no longer to be maintained at 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)Business Days (or such longer period not to exceed thirty (30) calendar days asto which each Rating Agency and the Insurer (provided that no Insurer Defaultshall have occurred and is continuing) may consent).  The Servicer shall promptly notify the Indenture Trustee, theInsurer (provided that no Insurer Default shall have occurred and is continuing)and the Owner Trustee of any change in the account number or location of theDepositor Account.

###  

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

##  

The Servicer shall remitto the Collection Account all amounts received by the Servicer on or in respectof the Contracts (excluding payments with respect to Purchased Contracts) assoon as practicable and in no event after the close of business on the secondBusiness Day after such receipt; provided, however, that for solong as (a) FISC is the Servicer, (b) no Event of Servicing Termination shallhave occurred and be continuing and (c) (i) the short term unsecured debt ofFISC (for so long as it is Servicer) shall be rated at least Prime-1 by Moody’sand at least

 

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A-1 by S&P or (ii)the Rating Agency Condition shall have been satisfied and the written consentof 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(ii) or (iii) of the definition of Monthly Remittance Condition thatwould require daily remittance by the Servicer to the Collection Account (andshall be entitled to presume and be fully protected in presuming that no suchevent or circumstance has occurred or exists) unless the Owner Trustee or theIndenture Trustee, as applicable, has received written notice of such event orcircumstance from the Seller or the Servicer in an Officer’s Certificate orwritten notice from the Insurer (if no Insurer Default shall have occurred andbe continuing), the Holders of Notes evidencing not less than 25% of the ClassA Note Balance or a Responsible Officer of the Owner Trustee or the IndentureTrustee, as applicable, has actual knowledge of such event or circumstance.

 

## **Section 3.3.**                                **Applicationof Collections**.

##  

For purposes of thisAgreement, all amounts received on or in respect of a Contract during anyCollection Period (excluding payments with respect to Purchased Contracts)shall be applied by the Servicer, on the date received, to interest andprincipal on such Contract in accordance with the terms of such Contract.

 

## **Section 3.4****.**                                **Applicationof Deposits**.

##  

The Depositor and theServicer shall deposit or cause to be deposited in the Collection Account theaggregate Purchase Amount with respect to Purchased Contracts pursuant to Section 2.3hereof or Sections 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 Payment Datefollowing such Collection Period.

 

## **Section 3.5.**                                **DeterminationDate Calculations**.

##  

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

###  

#### (i)                                     theAvailable Funds for the following Payment Date;

####  

#### (ii)                                  theTotal Servicing Fee for the preceding Collection Period;

####  

#### (iii)                               theTotal Note Interest for the following Payment Date;

####  

#### (iv)                              theClass A Monthly Note Principal for the following Payment Date;

####  

#### (v)                                 theInsurance Premium for the following Payment Date plus any overdue InsurancePremiums for previous Payment Dates;

####  

#### (vi)                              theaggregate amount of any unreimbursed payments under the Policy to the extentpayable to the Insurer under the Insurance Agreement plus accruedinterest on

 

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#### any unreimbursed paymentsunder 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 sumof the amounts described in clauses (ii), (iii) and (iv)above (the “*Required Payment Amount*”);

####  

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

####  

#### (ix)                                theClass B Monthly Note Principal for the following Payment Date; and

####  

#### (x)                                   anyunpaid or unreimbursed fees and expenses (including but not limited to,attorneys’ fees and transition expenses) due to the Back-up Servicer, theIndenture Trustee, the Custodian and the Owner Trustee.

####  

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

###  

#### (i)                                     thelesser of (A) the amount, if any, by which the sum of the Required PaymentAmount (for purposes of this subsection (b)(i)(A), the Required PaymentAmount shall be calculated assuming that the Class A Monthly Note Principal isequal to the amount by which the Class A Note Balance as of the relatedDetermination Date exceeds the sum of the Pool Balance for such DeterminationDate and 96.5% of the amount on deposit in the Prefunding Account on the lastday of the related Collection Period) plus the Insurance Payment Amount for thefollowing Payment Date exceeds the Available Funds for such Payment Date and(B) the Reserve Account Amount for such Payment Date (before giving effect toany deposits to or withdrawals from the Reserve Account on such Payment Date)(such lesser amount, the “*Reserve Account Draw Amount*”);

####  

#### (ii)                                  thePolicy Claim Amount;

####  

#### (iii)                               theReserve Account Amount for the following Payment Date (after giving effect tothe withdrawal of the Reserve Account Draw Amount for such Payment Date); and

####  

#### (iv)                              theamount, if any, by which the Required Reserve Account Amount for the followingPayment Date exceeds the Reserve Account Amount for such Payment Date (aftergiving effect to the withdrawal of the Reserve Account Draw Amount for suchPayment Date) (such excess, the “*Reserve Account Deficiency*”).

####  

On each Payment Date, theServicer shall instruct the Indenture Trustee to withdraw, and the IndentureTrustee upon receipt of such instructions shall withdraw, the Reserve AccountDraw Amount, if any, for such Payment Date from the Reserve Account and applysuch 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

 

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### 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 aPayment Date shall equal the sum of the following amounts:

###  

#### (i)                                     theexcess, if any, of (A) the Total Note Interest for such Payment Date over (B)the portion of Total Available Funds for such Payment Date applied to thepayment thereof pursuant to Sections 3.5(d) and (e); and

####  

#### (ii)                                  thePrincipal Deficit; and

####  

#### (iii)                               theClass A Note Balance outstanding on the Final Note Payment Date, after givingeffect to all other distributions to the Class A Noteholders to be made on suchFinal Note Payment Date.

####  

The Servicer shallinstruct the Indenture Trustee to deposit, and the Indenture Trustee uponreceipt of such instructions shall deposit, the proceeds of any drawing underthe Policy in respect of clauses (i), (ii) and (iii) aboveto the Class A Note Payment Account.

 

It is understood thatthis Section 3.5(c) shall have no effect upon the Insurer’sobligations under the Policy, which are governed solely by the Policy.

 

### (d)                                 Oneach Payment Date, the Servicer shall instruct the Indenture Trustee to applythe Available 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)                                     tothe Back-up Servicer, the Indenture Trustee, the Custodian and the OwnerTrustee in its individual capacity, respectively, any unpaid or unreimbursedBack-up Servicer Fee, Indenture Trustee Fee and Owner Trustee Fee, asapplicable and expenses (including, but not limited to, attorneys’ fees andtransition expenses) in accordance with the terms of the Fee Letters and theTransaction Documents; provided that any such expenses shall not exceed$50,000.00 in the aggregate per year and (A) prior to an Event of ServicingTermination, $100,000.00 in the total aggregate or (B) after an Event ofServicing Termination, $200,000.00 in the total aggregate so long as the Notesshall remain outstanding and the Policy has not been cancelled;

####  

#### (ii)                                  tothe Servicer, the Total Servicing Fee for the preceding Collection Period;

 

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#### (iii)                               tothe Class A Note Payment Account, for distribution to the Class A Noteholders,the Total Note Interest for such Payment Date;

####  

#### (iv)                              unlessan Insurer Default has occurred and is continuing, to the Insurer, theInsurance Premium for such Payment Date plus any overdue Insurance Premiums forprevious Payment Dates;

####  

#### (v)                                 tothe Class A Note Payment Account, for distribution to the Class A Noteholders,the Class A Monthly Note Principal for such Payment Date;

####  

#### (vi)                              tothe Insurer, the aggregate amount of any unreimbursed payments under the Policyto the extent payable to the Insurer under the Insurance Agreement plusaccrued interest on any unreimbursed payments under the Policy at the rateprovided in the Insurance Agreement plus any other amounts due theInsurer under the Insurance Agreement and the Policy;

####  

#### (vii)                           if theClass A Notes have been declared immediately due and payable following theoccurrence of an Event of Default under the Indenture, to the Class A NotePayment Account, for distribution to the Class A Noteholders, the lesser of (a)the amount of Available Funds available after payment of items (i) through (vi)above and (b) the Class A Note Balance (after giving effect to clause (v)above);

####  

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

####  

#### (ix)                                afterthe occurrence of a Re-Liening Trigger, to the Servicer (if not First InvestorsServicing Corporation), any and all expenses incurred in connection withre-titling the Financed Vehicles, to the extent not previously paid;

####  

#### (x)                                   tothe Class B Note Payment Account, the Class B Monthly Note Principal for suchPayment Date;

####  

#### (xi)                                otheramounts, if any, due the Owner Trustee in its individual capacity, theIndenture Trustee, the Custodian, the Back-up Servicer, the Servicer and theInsurer, respectively, pursuant to the Transaction Documents to the extent notpaid pursuant to clause (i); and

####  

#### (xii)                             tothe Depositor Account, any remaining amount of Available Funds.

####  

On each Payment Date, theServicer shall instruct the Indenture Trustee to make the payments described inSection 2.8(b) of the Indenture, as applicable, from the NotePayment Accounts.

 

### (e)                                  Oneach Payment Date, the Servicer shall instruct the Indenture Trustee to apply,and the Indenture Trustee shall apply as so instructed, the amount withdrawnfrom the Reserve Account in respect of the Reserve Account Draw Amount inaccordance with paragraph (b) of this Section 3.5 to makethe following payments in the following order of priority:

 

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#### (i)                                     tothe Servicer, the Total Servicing Fee for the preceding Collection Period;

####  

#### (ii)                                  tothe Class A Note Payment Account, the Total Note Interest for such PaymentDate;

####  

#### (iii)                               tothe Class A Note Payment Account, the Class A Monthly Note Principal for suchPayment Date (only if, and to the extent that, at such time the Class A Balanceexceeds the sum of the Pool Balance and 96.5% of the amount on deposit in thePrefunding Account as of the last day of the related Collection Period);

####  

#### (iv)                              unlessan Insurer Default has occurred and is continuing, to the Insurer, theInsurance Premium for such Payment Date plus any overdue Insurance Premiums forprevious Payment Dates; and

####  

#### (v)                                 tothe Insurer, the aggregate amount of any unreimbursed payments under the Policyto the extent payable to the Insurer under the Insurance Agreement plusaccrued interest on any unreimbursed payments under the Policy at the rateprovided in the Insurance Agreement plus any other amounts due the Insurerunder the Insurance Agreement and the Policy.

####  

### (f)                                    Onany Payment Date on or after which the Class A Notes have become due andpayable, the Servicer may, with the prior written consent (a copy of whichwritten consent shall be forwarded by the Servicer to the Indenture Trustee) ofthe Insurer, and shall, at the written direction (a copy of which writtendirection shall be forwarded by the Servicer to the Indenture Trustee) of theInsurer (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 theClass A Noteholders on such Payment Date pursuant to the TransactionDocuments.  The Servicer may, with theprior written consent (a copy of which written consent shall be forwarded bythe Servicer to the Indenture Trustee) of the Insurer (provided that no InsurerDefault shall have occurred and be continuing), and shall, at the writtendirection (a copy of which written direction shall be forwarded by the Servicerto the Indenture Trustee) of the Insurer, instruct the Indenture Trustee toapply, and the Indenture Trustee shall apply, such amount to the payment of theClass A Note Balance until the Class A Note Balance has been reduced zero.

###  

## **Section 3.6.**                                **ReserveAccount**.

##  

### (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 “*ReserveAccount*”).  The ReserveAccount shall be held in trust for the benefit of the Class A Noteholders, theServicer and the Insurer.  The ReserveAccount shall be 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 Reserve Account in accordancewith this Agreement and the Indenture. On the Closing Date, the

 

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### Trust shall deposit the Initial Reserve AccountDeposit into the Reserve Account from the net proceeds of the sale of theNotes.  On each Additional ContractPurchase Date, the Reserve Account shall be funded by deposits from proceeds ofthe sale by the Depositor of Additional Contracts to the Trust in an amount equalto 0.5% of the aggregate Principal Balance of the Additional Contracts as ofthe applicable Cut-Off Date.  Pursuantto the Indenture, the Trust will pledge all of its right, title and interestin, to and under the Reserve Account and the Reserve Account Property to theIndenture Trustee for the benefit of the Class A Noteholders and the Insurer tosecure its obligations under the Class A Notes and the Indenture.

###  

### (b)                                 TheReserve Account Property shall, to the extent permitted by applicable law,rules and regulations, be invested, as directed in writing by the Servicer, bythe bank or trust company then maintaining the Reserve Account in EligibleInvestments that mature not later than the Business Day preceding the nextPayment Date.  All such Eligible Investmentsshall be held to maturity.  All interestand other income (net of losses and investment expenses) on funds on deposit inthe Reserve Account shall, at the written direction of the Servicer, be paid tothe Trust on any Payment Date to the extent that funds on deposit therein, ascertified by the Servicer, exceed the Required Reserve Account Amount.  If the Reserve Account is no longer to bemaintained at the Indenture Trustee, the Servicer shall, with the IndentureTrustee’s assistance as necessary, cause the Reserve Account to be moved to anEligible Institution within ten (10) Business Days (or such longer period notto exceed thirty (30) calendar days as to which each Rating Agency and theInsurer (provided that no Insurer Default shall have occurred and iscontinuing) may consent).  The Servicershall promptly notify the Insurer (provided that no Insurer Default shall haveoccurred and is continuing) and the Indenture Trustee of any change in theaccount number or location of the Reserve Account.

###  

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

###  

#### (i)                                     anyReserve Account Property that is a “financial asset” as defined inSection 8-102(a)(9) of the UCC shall be physically delivered to, orcredited to an account in the name of, the Eligible Institution maintaining theReserve Account, in accordance with such institution’s customary proceduressuch that such institution establishes a “securities entitlement” in favor ofthe Indenture Trustee with respect thereto;

####  

#### (ii)                                  anyReserve Account Property that is held in deposit accounts shall be held solelyin the name of the Indenture Trustee at one or more depository institutionshaving the Required Rating and each such deposit account shall be subject tothe exclusive custody and control of the Indenture Trustee and the IndentureTrustee shall have sole signature authority with respect thereto; and

####  

#### (iii)                               exceptfor any deposit accounts specified in clause (ii) above, the ReserveAccount shall only be invested in securities or in other assets which theEligible Institution maintaining the Reserve Account agrees to treat as“financial assets” as defined in Section 8-102(a)(9) of the 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

 

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### has occurred and is continuing, instruct the IndentureTrustee in writing to distribute, and the Indenture Trustee upon receipt ofsuch instructions shall distribute, the amount of such excess to the PayingAgent 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).

###  

### (e)                                  Ifthe Class A Note Balance and all other amounts owing or to be distributedhereunder or under the Indenture to the Class A Noteholders and the Insurerhave been paid in full and the Trust has been terminated, any remaining ReserveAccount Property shall be distributed to the Depositor in accordance with Section 5.2of the Trust Agreement.

###  

## **Section 3.7.**                                **PrefundingAccount**.

##  

### (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 “*PrefundingAccount*”).  ThePrefunding Account shall be held in trust for the benefit of the Insurer andthe Noteholders.  The Prefunding Accountshall be 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 Prefunding Account inaccordance with this Agreement and the Indenture.  All monies deposited from time to time in the Prefunding Accountpursuant to this Agreement shall be held by the Indenture Trustee as part ofthe Trust Property and 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 writing bythe 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 such amountsrelate.  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)Business Days (or such longer period not to exceed thirty (30) calendar days asto which each Rating Agency and the Insurer (provided that no Insurer Defaultshall have occurred and is continuing) may consent).  The Servicer shall promptly notify the Indenture Trustee, theInsurer (provided that no Insurer Default shall have occurred and iscontinuing) and the Owner Trustee of any change in the account number or locationof the Prefunding 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

 

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### Trustee five Business Days prior to any proposedpurchase of Additional Contracts, such notice to contain (i) a ContractSchedule listing the relevant information for such Additional Contracts,(ii) the Additional Purchase Price and (iii) the proposed Additional ContractPurchase Date.  During the PrefundingPeriod, unless the Indenture Trustee, on such proposed Additional ContractPurchase Date, has actual knowledge of the occurrence of a Default or Event ofDefault, the Indenture Trustee shall transfer the Additional Purchase Price forsuch Additional Contracts from the Prefunding Account to such account as theTrust, through the Servicer, may specify.

###  

### (d)                                 Onthe Prefunding Account Ending Date, upon direction from the Servicer, theIndenture Trustee shall transfer 96.5% of the Excess Prefunding Amount to theClass A Note Payment Account and the remaining 3.5% of the Excess PrefundingAmount to the Class B Note Payment Account.

###  

## **Section 3.8.**                                **Statementsto Noteholders**.

##  

### (a)                                  Onor prior to each Determination Date, the Servicer shall provide to theIndenture Trustee (with copies to the Rating Agencies and each Paying Agent)for the Indenture Trustee to forward to each Noteholder of record as of themost recent Record Date upon a written request from any such Noteholder, astatement which shall set forth at least the following information as to theNotes (to the extent applicable) with respect to the distribution to be made onsuch Payment Date:

###  

#### (i)                                     theamount of such distribution allocable to Total Note Interest;

####  

#### (ii)                                  theamount of such distribution allocable to interest, overdue interest andinterest on overdue interest for the Class A Notes;

####  

#### (iii)                               theamount of such distribution allocable to principal on the Class A Notes and theClass B Notes;

####  

#### (iv)                              theTotal Servicing Fee for the preceding Collection Period;

####  

#### (v)                                 theClass A Note Balance and the Note Pool Factor, in each case as of the close ofbusiness on the last day of the preceding Collection Period (after givingeffect to payments allocated to principal reported under clause (c)above);

####  

#### (vi)                              thePool Balance as of the close of business on the last day of the precedingCollection Period;

####  

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

####  

#### (viii)                        theaggregate Purchase Amount of Purchased Contracts, if any, with respect to thepreceding Collection Period;

 

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#### (ix)                                thenumber and aggregate Principal Balance of Contracts that were 31-59 days, 60-89days or 90 days or more delinquent as of the last day of the precedingCollection Period;

####  

#### (x)                                   CumulativeNet Loss Rate information with respect to the preceding Collection Periods; and

####  

#### (xi)                                priorto the Prefunding Account Ending Date, the Prefunding Account Balance and theCapitalized Interest Amount.

####  

### (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.**                                **Controlof Securities Accounts; The Securities Intermediary**.

##  

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

###  

#### (i)                                     Withrespect to any of the Collateral that is a book-entry security, such Collateralhas been credited to the Indenture Trustee’s securities account by accuratebook entry.

####  

#### (ii)                                  TheSecurities Intermediary will comply with all “Entitlement Orders” (as such termis defined in Section 8-102 of the UCC) of the Indenture Trustee, withoutfurther consent of the Trust, and shall not accept Entitlement Orders from anyother person except as authorized by the Indenture Trustee.

####  

#### (iii)                               TheSecurities Intermediary has received no notice of, and has no knowledge of any“adverse claim” (as such term is defined in the UCC) as to the Collateral.

####  

#### (iv)                              TheSecurities Intermediary waives any lien, claim or encumbrance in favor of theSecurities Intermediary in the Collateral.

####  

#### (v)                                 TheSecurities Intermediary is a “securities intermediary” as such term is definedin Section 8-102(a)(14) of the UCC and in the ordinary course of itsbusiness maintains “securities accounts” for others, as such terms are used inSection 8-501 of the UCC.

####  

#### (vi)                              TheSecurities Intermediary is not a “clearing corporation,” as such term isdefined in Section 8-102(a)(5) of the 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

 

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### Securities Intermediary hereunder, a corporation ornational banking association that in the ordinary course of its businessmaintains securities accounts for others and is acting in that capacityhereunder.  Any securities intermediaryhereunder shall, and the Securities Intermediary does, agree with the partieshereto that each Account shall be an account to which financial assets may becredited and undertake to treat the Indenture Trustee as entitled to exerciserights that comprise such financial assets. Any securities intermediary hereunder shall, and the Securities Intermediarydoes, agree with the parties hereto that each item of property credited to eachAccount shall be treated as a “financial asset” as defined inSection 8-102 of the UCC.  Anysecurities intermediary hereunder shall, and the Securities Intermediary does,acknowledge that the “securities intermediary’s jurisdiction” as defined in theUCC of the Securities Intermediary with respect to the Collateral, shall be theState of New York.  Any securitiesintermediary hereunder shall, and the Securities Intermediary does, representand covenant that it is not and will not be (as long as it is the SecuritiesIntermediary hereunder) a party to any agreement in respect of the Collateralthat is inconsistent 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“entitlement holder” (within the meaning of Section 8-102(a)(7) of theUCC).  Nonetheless, (i) any securitiesintermediary hereunder shall agree to comply with entitlement orders originatedby 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 UCC (and the Securities Intermediary shallbe entitled to all of the protections available to a securities intermediaryunder the UCC).  Without limiting theforegoing, nothing herein shall imply or impose upon the SecuritiesIntermediary any duties of a fiduciary nature.

###  

### (e)                                  TheSecurities Intermediary may at any time resign by notice to the IndentureTrustee and 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 Collateral credited to the Accounts held by such retiring SecuritiesIntermediary have been 

 

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### transferred to such successor.  Any corporation into which the SecuritiesIntermediary may be merged or converted or with which it may be consolidated,or any corporation resulting from such merger, consolidation or conversion towhich the Securities Intermediary shall be a party, shall be the successor ofthe Securities Intermediary hereunder, without the execution or filing of anyfurther act on the part of the parties hereto or such securities intermediaryor such successor corporation.

###  

## **Section 3.10.**                         **PolicyMatters**.

##  

### (a)                                  TheIndenture Trustee hereby agrees on behalf of the Class A Noteholders (and eachClass A Noteholder, by its acceptance of its Class A Notes, shall agree) forthe benefit of the Insurer, that the Indenture Trustee shall recognize that tothe extent the Insurer makes a payment under the Policy, either directly or indirectly(by paying through the Indenture Trustee) to the Class A Noteholders, theInsurer will be entitled to be subrogated to the rights of the Class ANoteholders to the extent of such payment made under the Policy.  Any rights of subrogation acquired by theInsurer as a result of any payment made under the Policy shall, in allrespects, 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 additionand without limitation of the foregoing, the Insurer shall be subrogated, tothe extent of any payments made under the Policy relating to a Final Order, tothe rights 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) of this Section 3.10.

###  

# **Article IV**

# ** **

# **The Depositor**

# ** **

## **Section 4.1.**                                **Representationsand Warranties of the Depositor**.

##  

The Depositor makes thefollowing representations and warranties on which the Trust shall be deemed tohave relied in accepting the Trust Property. The representations and warranties speak as of the execution anddelivery of this Agreement and as of each Additional Contract Purchase Date andshall survive the sale, transfer, assignment and conveyance of the TrustProperty to the Trust pursuant to this Agreement and the pledge of the TrustProperty to the Indenture Trustee pursuant to the Indenture:

 

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### (a)                                  Organizationand Good Standing.  The Depositorhas been duly organized and is validly existing as a corporation in goodstanding under the laws of the State of Delaware, has the power, authority andlegal right to own its properties and to conduct its business as suchproperties are currently owned and such business is currently conducted, andhas the power, authority and legal right to acquire, own and sell theContracts.

###  

### (b)                                 DueQualification.  The Depositor isduly qualified 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 hasthe power and authority to execute, deliver and perform its obligations underthis Agreement 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,

 

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### administrative agency or other tribunal orgovernmental instrumentality having jurisdiction over the Depositor or itsproperties (i) asserting the invalidity of this Agreement, the Indenture, theTrust Agreement, any of the other Transaction Documents to which the Depositoris a party, or the Notes, (ii) seeking to prevent the issuance of the Notes orthe consummation of any of the transactions contemplated by this Agreement, theIndenture, the Trust Agreement or any of the other Transaction Documents towhich the Depositor is a party, (iii) seeking any determination or ruling that,in the reasonable judgment of the Depositor, would materially and adversely affectthe performance by the Depositor of its obligations under, or the validity orenforceability of, this Agreement, the Indenture, the Trust Agreement, any ofthe other Transaction Documents to which the Depositor is a party, theContracts or the Notes, or (iv) that, in the reasonable judgment of theDepositor, would adversely affect the federal or Applicable Tax State income,excise, franchise or similar tax attributes of the Notes or the Trust.

###  

## **Section 4.2.**                                **Liabilityof 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, Deutsche Bank Trust Company Americas, and the Indenture Trustee fromand against any taxes that may at any time be asserted against any such Personwith respect to, and as of the date of, the transfer of the Contracts andAdditional Contracts to the Trust or the issuance and original sale of theNotes, including any sales, gross receipts, general corporation, tangiblepersonal property, privilege or license taxes (but, in the case of the Trust,not including any taxes asserted with respect to ownership of the Contracts andAdditional Contracts or federal or other Applicable Tax State income taxesarising out of the transactions contemplated by this Agreement and the otherTransaction Documents), and all costs and expenses in defending against suchtaxes.

###  

### (c)                                  Notwithstandingany other provision in any Transaction Document, the Depositor shall indemnify,defend and hold harmless the Trust, the Owner Trustee in its individualcapacity, Deutsche Bank Trust Company Americas, the Indenture Trustee and theNoteholders from and against any loss, liability or expense incurred by reasonof (i) the Depositor’s willful misfeasance, bad faith or negligence in theperformance of its duties under this Agreement or any other TransactionDocument to which it is a party or by reason of a reckless disregard of itsobligations and duties under this Agreement or any other Transaction Documentto which it is a party and (ii) the Depositor’s violation of federal or statesecurities laws in connection with the registration or the sale of the Notesand (iii) any action taken, or failed to be taken, by the Depositor in respectof any portion of the Trust Property.

###  

### (d)                                 Notwithstandingany other provision in any Transaction Document, the Depositor shall indemnify,defend and hold harmless the Owner Trustee in its individual capacity, DeutscheBank Trust Company Americas, and the Indenture Trustee and their respectiveofficers, directors, employees and agents from and against all costs, expenses,unpaid fees, losses, claims, damages and liabilities arising out of or incurredin connection with the acceptance or performance of the trusts and dutiescontained herein and in the Trust Agreement,

 

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### in the case of the Owner Trustee, and in theIndenture, in the case of the Indenture Trustee, except to the extent that suchcost, expense, loss, claim, damage or liability (i) 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 the case ofthe Owner Trustee, shall arise from the breach by the Owner Trustee of any ofits representations or warranties in its individual capacity set forth in theTrust Agreement, (iii) in the case of the Indenture Trustee, shall arise fromthe breach by the Indenture Trustee of any of its representations andwarranties set forth in the Indenture or (iv) relates to any tax other than thetaxes with respect to which either the Depositor or the Servicer shall berequired 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 underthis Section 4.2 shall survive the resignation or removal of theOwner Trustee or the Indenture Trustee and the termination of this Agreementand shall include reasonable fees and expenses of counsel and expenses oflitigation.  If the Depositor shall havemade any indemnity payments pursuant to this Section 4.2 and thePerson to or on behalf of whom such payments are made thereafter shall collectany of such amounts from others, such Person shall promptly repay such amountsto the Depositor, without interest.

 

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

##  

Any Person (a) into whichthe Depositor shall be merged or consolidated, (b) resulting from any merger,conversion or consolidation to which the Depositor shall be a party or (c) thatshall succeed by purchase and assumption to all or substantially all of thebusiness of the Depositor, which Person in any of the foregoing cases executesan agreement of assumption to perform every obligation of the Depositor underthis Agreement, shall be the successor to the Depositor under this Agreementwithout the execution or filing of any other document or any further act on thepart of any of the parties to this Agreement; provided, however,that (i) the Depositor shall have delivered to the Owner Trustee and theIndenture Trustee an Officer’s Certificate and an Opinion of Counsel eachstating that such merger, conversion, consolidation or succession and suchagreement of assumption comply with this Section 4.3 and (ii) theDepositor shall have delivered to the Owner Trustee and the Indenture Trusteean Opinion of Counsel either (A) stating that, in the opinion of such counsel,all financing statements and continuation statements and amendments theretohave been authorized and filed that are necessary to fully preserve and protectthe interest of the Trust and the Indenture Trustee, respectively, in theContracts and the other Trust Property, and reciting the details of suchfilings, or (B) stating that, in the opinion of such counsel, no such actionshall be necessary to fully preserve and protect such interest.  The Depositor shall provide notice of anymerger, conversion, consolidation or succession pursuant to this Section 4.3to the Rating Agencies.  Notwithstandinganything herein to the contrary, the execution of the foregoing agreement ofassumption and compliance with clauses (i) and (ii) above shall be conditionsto the consummation of the transactions referred to in clauses (a), (b) and (c)above.

 

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## **Section 4.4.**                                **Limitationon Liability of Depositor 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.**                                **DepositorMay Own Class A Notes**.

##  

The Depositor, and anyAffiliate of the Depositor, may, in its individual or any other capacity,become the owner or pledgee of Class A Notes with the same rights as it wouldhave if it were not the Depositor or an Affiliate of the Depositor, except asotherwise expressly provided herein (including in the definition of Class ANote Balance) or in the other Transaction Documents.  Except as otherwise expressly provided herein (including thedefinition of Class A Note Balance) or in the other Transaction Documents,Class A Notes so owned by or pledged to the Depositor or such Affiliate shallhave an equal and proportionate benefit under the provisions of this Agreementand the other Transaction Documents, without preference, priority ordistinction as among the Class A Notes.

 

## **Section 4.6.**                                **Covenantsof the Depositor**.

##  

The Depositor herebycovenants and agree that, so long as any Note is outstanding, it shall:

 

### (a)                                  notcommingle its assets with those 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 and observeall 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;

###  

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

 

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### (g)                                 holditself out as a separate entity from any other Person, shall conduct businessin its own name on its own stationary, invoices and checks, and shall correctany known misunderstanding 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 shall not payfrom its assets any obligations or indebtedness of any other Person;

###  

### (i)                                     paysalaries of its employees, if any, from its own funds, and shall fairlyallocate any expenses 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 Affiliatesshall be 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 delivered to theOwner Trustee, the Indenture Trustee and the Insurer, materially and adverselyaffect the interests of any Noteholder.  Any such amendment shall be deemed not to materially and adverselyaffect the interests of any Noteholder if the Rating Agency Condition issatisfied or the Person requesting the amendment obtains an Opinion of Counselsatisfactory to the Indenture Trustee and the Owner Trustee to 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

 

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### occurred and be continuing and if so, provided furtherthat such amendment shall not have a material adverse effect on the Insurer),with the consent of the Indenture Trustee and the Holders of Notes evidencingnot less than 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 (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, or the Required Reserve Account Amount, without theconsent of all adversely affected Noteholders (ii) reduce the percentagerequired to consent to any such amendment, without the consent of all adverselyaffected Noteholders or (iii) adversely affect the rating of the Notes by theRating Agencies without the consent of the Holders of Notes evidencing not lessthan 66-2/3% of the Class A Note Balance.

###  

### (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 besufficient if 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 of evidencingthe authorization of the execution thereof by the Noteholders shall be subjectto such reasonable requirements as the Owner Trustee and the Indenture Trusteemay prescribe.

###  

### (e)                                  Priorto the execution of any amendment pursuant to this Section 5.1, theOwner Trustee and the Indenture Trustee shall be entitled to receive and relyupon (i) an Opinion of Counsel stating that the execution of such amendment (A)is authorized or permitted by this Agreement, (B) will not materially adverselyaffect the federal or any Applicable Tax State income or franchise taxation ofany Outstanding Note or any Holder thereof and (C) will not cause the Trust tobe taxable as a corporation for federal or any Applicable Tax State income orfranchise tax purposes and (ii) an Officer’s Certificate of the Servicer thatall conditions precedent provided for in this Agreement to the execution ofsuch amendment have been complied with. The Owner Trustee or the Indenture Trustee may, but shall not beobligated to, enter into any such amendment which affects such Owner Trustee’sor Indenture Trustee’s own rights, duties or immunities under this Agreement orotherwise.

###  

## **Section 5.2.**                                **Protectionof Title of Trust**.

##  

### (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 and in such places as may be required by law fully topreserve, maintain and protect the interest of the Trust and the IndentureTrustee for the benefit of the Noteholders and the Insurer in the Contracts andthe proceeds thereof.  The Depositor orthe Servicer, or both, shall deliver (or

 

42

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### cause to be delivered) to the Owner Trustee and theIndenture Trustee file-stamped copies of, or filing receipts for, any documentfiled as provided above as soon as available following such filing.

###  

### (b)                                 Neitherthe Depositor, the Seller nor the Servicer shall change its name, identity orcorporate structure in any manner that would make any financing statement orcontinuation statement filed by the Depositor or the Servicer in accordancewith Section 5.2(a) seriously misleading within the meaning ofSection 9-507 of the Relevant UCC, unless it shall have given the OwnerTrustee and the Indenture Trustee at least sixty (60) days’ prior writtennotice thereof and shall have promptly filed such amendments to previouslyfiled financing statements or continuation statements or such new financingstatements as may be necessary to continue the perfection of the interest ofthe Trust and the Indenture Trustee for the benefit of the Noteholders and theInsurer in the Contracts and the proceeds thereof.

###  

### (c)                                  TheDepositor, the Seller and the Servicer shall give the Owner Trustee and theIndenture Trustee at least sixty (60) days’ prior written notice of anyrelocation of its principal executive office or change of its jurisdiction offormation and shall promptly file any such amendment, continuation statement orany new financing statement.  TheServicer shall at all times maintain each office from which it shall serviceContracts, and its principal executive office, within the United States ofAmerica.

###  

### (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 time thestatus of such Contract, including payments and recoveries made and paymentsowing (and the nature of each) and (ii) reconciliation between payments orrecoveries on (or with respect to) each Contract and the amounts from time totime deposited in the Collection Account and the Reserve Account in respect ofsuch 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, the Seller or the Servicer shall propose to sell,grant a security interest in or otherwise transfer any interest in any motorvehicle retail installment sale contract or security interest and promissorynote to any prospective purchaser, lender or other transferee, the Servicershall give to such prospective purchaser, lender or other transferee computertapes, compact disks, records or print-outs (including any restored fromback-up archives) that, if they shall refer in any manner whatsoever to anyContract, shall indicate clearly that such Contract has been sold and is ownedby the Trust and has been pledged to the Indenture Trustee (unless suchContract has been paid in full or repurchased by the Depositor or purchased bythe Servicer).

 

43

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### (g)                                 TheServicer shall permit the Owner Trustee, the Indenture Trustee and their respectiveagents at any time during normal business hours to inspect, audit and makecopies of and abstracts from the Servicer’s records regarding any Contract.

###  

### (h)                                 Uponrequest, the Servicer shall furnish to the Owner Trustee and the IndentureTrustee, within ten (10) Business Days, a list of all Contracts (by contractnumber and name of Obligor) then held as part of the Trust, together with areconciliation of such list to the Contract Schedule and to each of theMonthly Servicer Reports furnished before such request indicating removal ofContracts from the Trust.

###  

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

###  

#### (i)                                     promptlyafter the execution and delivery of each amendment to any financing statement,an Opinion of Counsel either (A) stating that, in the opinion of such Counsel,all financing statements and continuation statements have been authorized andfiled that are necessary fully to preserve and protect the interest of theTrust and the Indenture Trustee in the Contracts, and reciting the details ofsuch filings or referring to prior Opinions of Counsel in which such detailsare given, or (B) stating that, in the opinion of such Counsel, no such actionshall be necessary to preserve and protect such interest; and

####  

#### (ii)                                  withinninety (90) days after the beginning of each calendar year (beginning with theyear 2004), an Opinion of Counsel, dated as of a date during such 90-dayperiod, either (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)stating that, in the opinion of such counsel, no such action shall be necessaryto preserve and protect such interest.

####  

Each Opinion of Counselreferred to in clause (i)(A) or (i)(B) above shall specify any action necessary(as of the date of such opinion) to be taken in the following year to preserveand protect such interest.

 

## **Section 5.3.**                                **GoverningLaw**.

##  

This Agreement shall beconstrued in accordance with the laws of the State of New York, withoutreference to its conflict of law provisions, and the obligations, rights andremedies of the parties under this Agreement shall be determined in accordancewith such laws.

 

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

##  

All demands, notices andother communications under this Agreement shall be in writing, personallydelivered, sent by telecopier, overnight courier or mailed by certified mail,return receipt requested, and shall be deemed to have been duly given uponreceipt (a) in the case of the Seller, at the following address: 675 BeringDrive, Suite 710, Houston, Texas 77057 Attention: Bennie Duck, (b) in the caseof the Depositor, at the following address: 675 Bering Drive, Suite 710,Houston, Texas 77057 Attention: Bennie Duck, (c) in the case of the Servicer,at the 

 

44

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following address: 675Bering Drive, Suite 710, Houston, Texas 77057, Attention: Bennie Duck, (d) inthe case of the Owner Trustee, at the related Corporate Trust Office, with acopy to Deutsche Bank Trust Company Americas, 60 Wall Street, 26thFloor, New York, New York 10005, Attention: Structured Finance Services, (e) inthe case of the Indenture Trustee, at the related Corporate Trust Office, (f)in the case of Moody’s, at the following address: Moody’s Investors Service,Inc., ABS Monitoring Department, 99 Church Street, New York, New York 10007,and (g) in the case of S&P, at the following address: Standard & Poor’sRatings Services, a division of The McGraw-Hill Companies, Inc., 55 WaterStreet, New York, New York 10041, Attention: Asset Backed SurveillanceDepartment, and (h) in the case of the Insurer, at the following address:  MBIA Insurance Corporation, 113 King Street,Armonk, New York 10504, Attention: Insured Portfolio Management, StructuredFinance.

 

## **Section 5.5.**                                **Severabilityof Provisions**.

##  

If any one or more of thecovenants, agreements, provisions or terms of this Agreement shall be for anyreason whatsoever held invalid, then such covenants, agreements, provisions orterms shall be deemed severable from the remaining covenants, agreements,provisions or terms of this Agreement and shall in no way affect the validityor enforceability of the other provisions of this Agreement, or of the Notes,or the rights of the Holders thereof.

 

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

##  

Notwithstanding anythingto the contrary contained herein this Agreement may not be assigned by theDepositor or the Servicer without the prior written consent of the Trust, theIndenture Trustee and the Holders of Notes evidencing not less than 66-2/3% ofthe Class A Note Balance.

 

## **Section 5.7.**                                **FurtherAssurances**.

##  

The Depositor and theServicer agree to do and perform, from time to time, any and all acts and toexecute any and all further instruments required or reasonably requested by theOwner Trustee or the Indenture Trustee more fully to effect the purposes ofthis Agreement, including, without limitation, the execution of any financingstatements or continuation statements relating to the Contracts for filingunder the provisions of the Relevant UCC of any applicable jurisdiction.

 

## **Section 5.8.**                                **NoWaiver; Cumulative Remedies**.

##  

No failure to exerciseand no delay in exercising, on the part of the Owner Trustee, the IndentureTrustee, the Insurer or the Noteholders, any right, remedy, power or privilegehereunder, shall operate as a waiver thereof, nor shall any single or partialexercise of any right, remedy, power or privilege hereunder preclude any otheror further exercise thereof or the exercise of any other right, remedy, poweror privilege.  The rights, remedies,powers and privileges provided in this Agreement are cumulative and notexhaustive of any rights, remedies, powers and privileges provided by law.

 

45

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## **Section 5.9.**                                **Third-PartyBeneficiaries**.

##  

This Agreement shallinure to the benefit of and be binding upon the parties hereto, the Noteholdersand their respective successors and permitted assigns.  Except as otherwise provided in Section 4.2and this Article V, no other Person shall have any right or obligationhereunder.  The parties hereto herebyacknowledge and consent to the pledge of this Agreement by the Trust to theIndenture Trustee for the benefit of the Noteholders and the Insurer pursuantto the Indenture.  The Insurer is anexpress third party beneficiary of this Agreement and is entitled to enforcethe provisions hereof as if a party hereto.

 

## **Section 5.10.**                         **Actionsby 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 the OwnerTrustee, the Indenture Trustee or the Servicer in reliance thereon, whether ornot notation of such action is made upon such Note.

###  

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

##  

For the purpose offacilitating the execution of this Agreement and for other purposes, thisAgreement may be executed simultaneously in any number of counterparts, each ofwhich counterparts shall be deemed to be an original, and all of whichcounterparts shall constitute but one and the same instrument.

 

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

##  

## **Section 5.13.**                         **NoBankruptcy**.

##  

The Owner Trustee, theIndenture Trustee, the Trust, the Seller, the Depositor and the Servicer eachcovenants and agrees that, prior to the date which is one year and one dayafter the payment in full of all securities issued by the Trust, whichsecurities were rated by any nationally recognized statistical ratingorganization, 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 Depositor or the Trust any bankruptcy,reorganization, arrangement, insolvency or liquidation proceedings or otherproceedings under any federal or state bankruptcy or similar law.  This Section 5.13 shall survivethe resignation or removal of the Owner Trustee under the Trust Agreement andthe Indenture Trustee under the Indenture and shall survive the termination ofthe 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

 

46

----

 

### 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 InsurerDefault shall have occurred and be continuing, the Insurer shall have the rightto exercise all rights, including voting rights, which the Class A Noteholdersare entitled to exercise pursuant to this Sale and Allocation Agreement,without any consent of such Class A Noteholders; provided, however,that the foregoing shall not apply to the rights of the Class A Noteholders setforth in the proviso to paragraph (b) of Section 5.1 of thisAgreement.

 

## **Section 5.16.**                         **OptionalRedemption.**

##  

### (a)                                  If,as of the last day of any Collection Period, the Pool Balance shall be less than or equal to 15% of the sum of (a)the aggregate Principal Balances of all of the Contracts as of the InitialCutoff Date 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, on the following Payment Date, the Owner Trust Estate, other than theCollection Account, the Class A Note Payment Account, the Class B Note PaymentAccount, the Prefunding Account and  theReserve Account.  To exercise suchoption, the Depositor shall notify in writing the Owner Trustee, the IndentureTrustee and the Insurer no later than fifteen (15) days prior to the PaymentDate on which such repurchase is to be effected (the “*Prepayment Date*”) andshall deposit into the Collection Account on the Business Day preceding suchPayment 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 B NotePayment Account, the Prefunding Account or the Reserve Account, such value tobe determined by an appraiser mutually agreed upon by the Servicer, the Trust,the Indenture Trustee and the Insurer; provided, however, thatthe Depositor shall not be permitted to exercise such option unless the amountto be deposited in the Collection Account pursuant to this Section 5.16(a)is at least equal to the sum of the Class A Note Balance and the Class B NoteBalance plus all accrued but unpaid interest (including any overdue interest)on the Class A Notes plus all amounts due the Insurer under theInsurance Agreement and the Policy. Upon such payment, the Depositor shall succeed to and own all interests inand to the Owner Trust Estate other than the Collection Account, the Class ANote Payment Account, the Class B Note Payment, the

 

47

----

 

### Prefunding Account and the Reserve Account.  Such payment amount, plus, to theextent necessary, all amounts in the Collection Account, the Class A NotePayment Account, the Class B Note Payment Account, the Prefunding Account andthe Reserve Account, shall be used to make payments in full to the Noteholdersand the Insurer in the manner set forth in Article III of this Agreement.

###  

### (b)                                 If,at the time the Depositor exercises its purchase option hereunder, theDepositor’s long-term unsecured debt has a rating lower than investment gradeby any Rating Agency, the Depositor shall deliver to the Owner Trustee and theIndenture Trustee on such Payment Date (i) a letter from an Independentinvestment bank or an Independent public accountant to the effect that theprice paid by the Depositor for the Owner Trust Estate other than the CollectionAccount, the Class A Note Payment Account, the Class B Note Payment Account,the Prefunding Account and the Reserve Account at the time of transfer pursuantto such purchase option represented a fair market price for such assets or (ii)a letter from the Rating Agencies to the effect that no such letter isrequired.

###  

## **Section 5.17.****                         Subordination**.

##  

Any obligations of theDepositor under this Agreement are obligations solely of the Depositor and willnot constitute a claim against the Depositor to the extent that the Depositordoes not have funds 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)asserts an interest or claim to, or benefit from, Other Assets, or (ii) isdeemed to have any such interest, claim to, or benefit in or from Other Assets,whether by operation of law, legal process, pursuant to applicable provisionsof insolvency 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 deemeda subordination 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 5.17and the terms of this Section 5.17 may be enforced by an action forspecific performance.  The provisions ofthis Section 5.17 will be for the third party benefit of thoseentitled to rely thereon and will survive the termination of this Agreement.

 

## **Section 5.18.**                         **Non-Confidential**.

##  

Notwithstandinganything herein or in any express or implied agreement or understanding to thecontrary, any party to this Agreement (and any employee, representative or

 

48

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otheragent of any party to this Agreement) may disclose to any and all persons,without limitation of any kind, the tax treatment and tax structure of thetransactions contemplated by this Agreement and all materials of any kind(including opinions or other tax analyses) that are provided to it relating tosuch tax treatment and tax structure; provided, however, thatsuch disclosure may not be made to the extent required to be kept confidentialto comply with any applicable federal or state securities laws; and providedfurther that (to the extent not inconsistent with the foregoing) suchdisclosure shall be made without disclosing the names or other identifyinginformation of any party.

 

[REMAINDER OF PAGEINTENTIONALLY LEFT BLANK]

 

49

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IN WITNESS WHEREOF, theparties hereto have caused this Sale and Allocation Agreement to be dulyexecuted by their respective officers, thereunto duly authorized, all as of theday and year first above written.

 
|   | FIRST INVESTORS  SERVICING  CORPORATION, as Servicer     |
|--------|----------------------------------------------------------|
|   |                                                     |
|   |                                                     |
|   | By:                                                      |   |   |
|   | Name:                                                    |   |   |
|   | Title:                                                   |   |   |
|   |                                                     |
|   | FIRST INVESTORS AUTO  OWNER TRUST 2003-A                 |
|   |                                                     |
|   | By:                                                      | DEUTSCHE BANK TRUST  COMPANY  DELAWARE, not in its individual capacity  but solely as Owner Trustee |
|   |                                                     |
|   | By:                                                      |   |   |
|   | Name:                                                    |   |   |
|   | Title:                                                   |   |   |
|   |                                                     |
|   |                                                     |
|   | FIRST INVESTORS AUTO  FUNDING  CORPORATION, as Depositor |
|   |                                                     |
|   | By:                                                      |   |   |
|   | Name:                                                    |   |   |
|   | Title:                                                   |   |   |

 

Accepted and agreed:

 

WELLS FARGO BANKMINNESOTA, NATIONAL ASSOCIATION,

not in its individualcapacity but solely as Indenture Trustee and Securities Intermediary

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

 

Sale andAllocation Agreement Signature Page

 

----

 

Schedule 1

 

Contract Schedule

 

 

Schedule 1

----

 

Schedule 2

 

Location ofContract Files

 

Sixth Street andMarquette Avenue

MAC N9328-011

Suite ABS

751 Kasota Avenue

Minneapolis, MN 55414

Attn:  Corporate Trust Services — Asset BackedSecurities Vault

 

Schedule 2

----

 

Schedule 3

 

PerfectionRepresentations, Warranties and Covenants

 

In addition to therepresentations, warranties and covenants contained in this Agreement, theDepositor hereby represents, warrants, and covenants to the Trust as follows onthe Closing Date and on each Additional Contract Purchase Date on which theTrust purchases Contracts, in each case only with respect to the Collateralsold to the Trust on the Closing Date or the relevant Additional ContractPurchase Date:

 

**General**

 

1.                                       TheAgreement creates a valid and continuing security interest (as defined in UCCSection 9-102) in the Collateral in favor of the Trust, which securityinterest is prior to all other Liens, except as set forth below and isenforceable as such against creditors of and purchasers from and assignees ofthe Trust.

 

2.                                       EachContract constitutes “tangible chattel paper” and not “electronic chattelpaper” within the meaning of UCC Section 9-102.

 

3.                                       TheDepositor has taken or will take all steps necessary actions with respect tothe Contracts to perfect the security interest of the Trust in the Contracts .

 

**Creation**

 

1.                                       TheDepositor owns and has good and marketable title to the Collateral, free andclear of any Lien, claim or encumbrance of any Person, excepting only taxliens, some mechanics’ liens and other liens that arise by the operation oflaw, in each case on any of the Financed Vehicles and arising solely as aresult of an action or omission of the related Obligor.

 

**Perfection**

 

1.                                       TheDepositor has caused the filing of all appropriate financing statements in theproper filing office in the appropriate jurisdictions under applicable law inorder to perfect the security interest in the Collateral granted to the Trusthereunder.

 

2.                                       Withrespect to Collateral that constitutes tangible chattel paper, such tangiblechattel paper is in the possession of the Custodian.  All financing statements filed or to be filed against theDepositor in favor of the Trust in connection with this Agreement describingthe Collateral contain a statement to the following effect: “A purchase of orsecurity interest in any collateral described in this financing statement willviolate the rights of the Secured Party.”

 

**Priority**

 

1.                                       Otherthan the security interest granted to the Trust pursuant to this Agreement, theDepositor has not pledged, assigned, sold, granted a security interest in, orotherwise conveyed

 

Schedule 3 - 1

----

 

any of theCollateral.  Neither the Seller nor theDepositor has authorized the filing of, or is aware of any financing statementsagainst either the Seller or the Depositor that includes a description of theCollateral and 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)relating to the sale of the Contracts by the Depositor to the Trust under thisAgreement; (iii) relating to the security interest granted to the Indenture Trusteeby the Trust under the Indenture; or (iv) that has been terminated or amendedto reflect a release of the Collateral.

 

2.                                       Neitherthe Seller nor the Depositor is aware of any judgment, ERISA or tax lienfilings against either the Seller or the Depositor.

 

3.                                       Noneof the tangible chattel paper that constitutes or evidences the Contracts hasany marks or notations indicating that it has been pledged, assigned orotherwise conveyed to any Person other than the Depositor, the Trust or theIndenture Trustee.

 

**Survival of PerfectionRepresentations**

 

1.                                       Notwithstandingany other provision of this Agreement, the Contribution Agreement, theIndenture or any other Transaction Document, the Perfection Representations,Warranties and Covenants contained in this Schedule shall be continuing,and remain in full force and effect until such time as all obligations underthis Sale and Allocation Agreement, the Contribution Agreement and theIndenture have been finally and fully paid and performed.

 

**No Waiver**

 

1.                                       Theparties hereto: (i) shall not, without obtaining a confirmation of thethen-current rating of the Class A Notes (without giving effect to the Policy),waive any of the Perfection Representations, Warranties or Covenants; (ii)shall provide the Rating Agencies with prompt written notice of any breach ofthe Perfection Representations, Warranties or Covenants, and shall not, withoutobtaining a confirmation of the then-current rating of the Class A Notes(without giving effect to the Policy) as determined after any adjustment orwithdrawal of the ratings following notice of such breach) waive a breach ofany of the Perfection Representations, Warranties or Covenants

 

Schedule 3 - 2

----

 

Exhibit A

 

Form of MonthlyServicer Report

 

 

Exhibit A

----

 

Exhibit B

 

[Reserved]

 

Exhibit B

----

 

Exhibit C

 

Credit andCollection Policy

 

Exhibit C

----

 

Exhibit D

 

[Reserved]

 

Exhibit D

----

 

Exhibit E

 

Form of OriginatorAgreement

 

Exhibit E -1

----

 

Exhibit F

 

Form Of AdditionalContract Assignment

 

For value received, inaccordance with the Sale and Allocation Agreement (the “*Sale and Allocation Agreement*”),dated as of November 20, 2003, by and among First Investors FinancialServices, Inc., First Investors Servicing Corporation, First Investors AutoFunding Corporation, Wells Fargo Bank Minnesota, National Association and FirstInvestors Auto Owner Trust 2003-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 Additional Contractslisted on Schedule 1 hereto, (ii) all amounts received on or inrespect of such Additional Contracts after the Additional Cutoff Date relatedthereto; (iii) the security interests in the Financed Vehicles related thereto;(iv) any proceeds from claims on or refunds of premiums with respect toextended warranties or physical damage, theft, credit life and creditdisability insurance policies relating to the Financed Vehicles or the relatedObligors with respect to such Additional Contracts; (v) any LiquidationProceeds with respect to such Additional Contracts; (vi) the Contract Fileswith respect to such  AdditionalContracts; (vii) rights under the Contribution Agreement to cause the Seller topurchase such Additional Contracts affected materially and adversely bybreaches of the representations and warranties of the Seller made in theContribution Agreement; (viii) rights under the Servicing Agreement to causethe Servicer to purchase such Additional Contracts affected materially andadversely by breaches of the representations and warranties of the Servicermade in the Servicing Agreement; and (ix) and 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 receivables, instruments and other propertywhich at any time constitute all or part of or are included in the proceeds ofany of the foregoing.

 

All provisions of theSale and Allocation Agreement are incorporated herein by reference.  All capitalized terms not defined hereinshall have the meanings set forth in the Sale and Allocation Agreement.

 

In consideration for theconveyance of the Additional Contracts to the Purchaser, Purchaser shall pay tothe Seller, contemporaneously with the execution of this Additional ContractAssignment, cash in the amount of$                .

 

The Depositor does herebymake each of the representations and warranties referred to in Section 2.2of the Sale and Allocation Agreement with respect to this Agreement with fullforce and effect as if fully set forth herein. The Depositor does hereby certify that each of the

 

Exhibit F-2

----

 

conditions precedent setforth in Section 2.1(f) of the Sale and Allocation Agreement hasbeen satisfied.

 

This Additional ContractAssignment shall be governed by, and construed in accordance with, the laws ofthe State of New York, without giving effect to the conflicts of lawsprinciples thereof.

 

IN WITNESS WHEREOF, theundersigned has caused this Additional Contract Assignment to be executed byits officer thereunto duly authorized, as of                                ,200[  ].

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

 

Exhibit F -3

----

 

Schedule 1

to

AdditionalContract Assignment

Dated

 

                    ,200[  ]

 

List of AdditionalContracts

 

Schedule 1 toAdditional Contract Assignment

 

----