Exhibit
10.112


 




 





FIRST INVESTORS
SERVICING CORPORATION,


as Servicer,


 


FIRST INVESTORS
AUTO FUNDING CORPORATION


as Depositor,


 


WELLS FARGO BANK
MINNESOTA, NATIONAL ASSOCIATION


 


as Indenture
Trustee and Securities Intermediary


 


and


 


FIRST INVESTORS
AUTO OWNER TRUST 2003-A


 












 


SALE AND
ALLOCATION AGREEMENT


 


Dated as of
November 20, 2003


 














 





 

















 


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

  	
   

  
					



 


ii

















 


SALE AND ALLOCATION
AGREEMENT, dated as of November 20, 2003 (as amended, supplemented or
otherwise modified and in effect from time to time, this “Agreement”), by and
among 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 “Indenture
Trustee”) and as securities intermediary (the “Securities
Intermediary”) and FIRST INVESTORS SERVICING CORPORATION, a
Georgia corporation, as servicer (together with its successors and assigns and
in such capacity, either “FISC” or the “Servicer”).


 


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


 


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


 


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


 


NOW, THEREFORE, in
consideration of the mutual covenants contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:


 


Article I


 


Definitions


 


Section 1.1.                                Definitions.


 


Whenever used in this
Agreement, the following words and phrases, unless the context otherwise
requires, whenever capitalized shall have the following meanings:


 


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


 


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


 


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


 


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


 


Additional Contract Purchase Date:
Any Business Day during the Prefunding Period that is designated by the
Depositor in writing to the Indenture Trustee and the Insurer as the date on
which 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 the
Class A Notes, the sum of (i) all accrued but unpaid Monthly Note Interest for
previous 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 and
the related Additional Conveyed Property, 100% of the outstanding balance of
such 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 or
indirectly controlling, controlled by or under direct or indirect common
control with such Person.  For purposes
of this definition, “control” when used with respect to any Person shall mean
the power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise.


 


Amount Financed:  With respect to any Contract, the aggregate
amount advanced to the related Obligor under such Contract toward the purchase
price of the Financed Vehicle and any related costs.


 


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


 


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


 


Available Funds:  For any Payment Date, (i) all Obligor
payments received with respect to the Contracts during the preceding Collection
Period, (ii) all Liquidation Proceeds and insurance proceeds received with
respect to the Contracts during the preceding Collection Period, (iii) all
interest earned on, and Eligible Investments of, funds on deposit in the
Collection Account, the Reserve Account and the Prefunding Account during the
preceding Collection Period, (iv) the Purchase Amount for all Contracts that
became Purchased Contracts during the preceding Collection Period and (v) all
prepayments received with respect to the Contracts during the preceding
Collection Period attributable to any refunded item included in the Amount
Financed (including amounts received as a result of rebates of extended
warranty contract costs and insurance premiums and proceeds received under
physical damage, credit life and credit disability insurance policies); provided,
however, that Available Funds for any Payment Date shall not include any
payments or other amounts (including Liquidation Proceeds and insurance
proceeds) received with respect to any Purchased Contract the Purchase Amount
for which was included in Available Funds for a previous Payment Date.


 


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Back-up Servicer:  Wells Fargo Bank Minnesota, National
Association, a national banking association, in its capacity as back-up
servicer, and its successors and assigns in such capacity.


 


Business Day:  Any day other than a Saturday, a Sunday or a
day 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 governmental
decree to remain closed.


 


Capitalized Interest Amount:  For the period from and including the
Closing Date to but excluding the first Payment Date, $254,518.75; for the
period from and including the first Payment Date to but excluding the second
Payment Date, $210,370.00; for the period from and including the second Payment
Date to but excluding the Prefunding Account Payout Date, $157,777.50; for the
period from and including the third Payment Date to but excluding the fourth
Payment Date, $105,185.00; and for the period from and including the fourth
Payment Date to but excluding the fifth Payment Date, $52,593.00; provided,
however, on any day on which the amount on deposit in the Prefunding
Account is zero and the Prefunding Period has terminated, the Capitalized
Interest Amount shall be zero.


 


Class A Monthly Note Principal:  For any Payment Date, the lesser of (i) the
Class A Note Balance as of the day preceding such Payment Date and (ii) the
amount necessary to reduce the Class A Note Balance as of the day preceding
such Payment Date to the sum of (A) 96.1% of the Pool Balance as of the last
day of the related Collection Period and (B) 96.5% of the Prefunding Account
Balance 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 the
Class A Notes shall equal the amount necessary to reduce the Class A Note
Balance to zero; provided, further, that for the purposes of
determining Class A Monthly Note Principal, the unpaid balance of any Defaulted
Contract or a Purchased Contract will be deemed zero on and after the last day
of the Collection Period during which such Contract became a Defaulted Contract
or a Purchased Contract.


 


Class B Monthly Note Principal:  For any Payment Date, the lesser of (i) the
Class B Note Balance as of the day preceding such Payment Date and (ii) the
amount necessary to reduce the Class B Note Balance as of the day preceding
such Payment Date to the sum of (1) 3.9% of the Pool Balance as of the last day
of the related Collection Period and (2) 3.5% of the Prefunding Account Balance
as 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 the
Class B Notes shall equal the amount necessary to reduce the Class B Note
Balance to zero; provided, further, that for the purposes of
determining Class B Monthly Note Principal, the unpaid balance of any Defaulted
Contract or a Purchased Contract will be deemed zero on and after the last day
of the Collection Period during which such Contract became a Defaulted Contract
or 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, the
Initial Class A Note Balance and, thereafter, an amount equal to the Initial
Class A Note Balance as reduced from time to time by all amounts allocable to
principal previously distributed to the Class A Noteholders or (ii) with
respect to any Class A Note, an amount equal to, initially, the initial
denomination of such Class A Note and,


 


3

















 


thereafter, an amount equal to such initial
denomination as reduced from time to time by all amounts allocable to principal
previously distributed in respect of such Class A Note; provided, however,
that in determining whether the Holders of Class A Notes evidencing the
requisite percentage of the Class A Note Balance have given any request,
demand, authorization, direction, notice, consent or waiver hereunder or under
any other Transaction Document, Class A Notes owned by the Trust, any other
obligor upon the Class A Notes, the Depositor, the Servicer or any Affiliate of
any of the foregoing Persons shall be disregarded and deemed to be excluded
from the Class A Note Balance (unless such Persons own 100% of the Class A Note
Balance), except that, in determining whether the Indenture Trustee or the
Owner Trustee shall be protected in relying on any such request, demand,
authorization, direction, notice, consent or waiver, only Class A Notes that a
Responsible Officer of the Indenture Trustee or the Owner Trustee, as
applicable, actually knows to be so owned shall be so disregarded; and, provided
further, that Class A Notes that, to the actual knowledge of a
Responsible Officer of the Indenture Trustee or the Owner Trustee, as
applicable, have been pledged in good faith may be regarded as included in the
Class A Note Balance if the pledgee establishes to the satisfaction of the
Indenture Trustee or the Owner Trustee, as applicable, the pledgee’s right so
to act with respect to such Class A Notes and that the pledgee is not the
Trust, any other obligor upon the Class A Notes, the Depositor, the Servicer or
any 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, the
Initial Class B Note Balance and, thereafter, an amount equal to the Initial
Class B Note Balance as reduced from time to time by all amounts allocable to
principal previously distributed to the Class B Noteholders or (ii) with
respect to any Class B Note, an amount equal to, initially, the initial
denomination of such Class B Note and, thereafter, an amount equal to such
initial denomination as reduced from time to time by all amounts allocable to
principal previously distributed in respect of such Class B Note.


 


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


 


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


 


Closing Date:  November 20, 2003.


 


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


 


Collection Period:  Each calendar month during the term of this
Agreement or, in the case of the initial Collection Period, the period from but
excluding the Initial Cutoff Date to and including November 30, 2003.


 


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


 


Contract File:  With respect to any Contract:


 


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(i)                                     the
sole original executed counterpart of the retail installment contract or
promissory note and security agreement evidencing each such Contract and any
and all amendments thereto;


 


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


 


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


 


Contribution Agreement: The
Contribution Agreement, dated as of the date hereof, between First Investors
Financial Services, Inc., as Seller, and First Investors Auto Funding
Corporation, as Depositor.


 


Corporate Trust Office:  As applicable, (i) the principal office of
the Indenture Trustee at which at any particular time its corporate trust
business shall be administered, which office at the date of the execution of
this Agreement is located at Sixth Street and Marquette Avenue, MAC N9311-161,
Minneapolis, Minnesota 55479, Attention: Corporate Trust Services Asset-Backed
Trust Administration, or at such other address as the Indenture Trustee may
designate from time to time by notice to the Noteholders, the Owner Trustee,
the Depositor and the Seller, or the principal corporate trust office of any
successor Indenture Trustee at the address designated by such successor
Indenture Trustee by notice to the Noteholders, the Owner Trustee, the
Depositor and the Seller or (ii) the principal office of the Owner Trustee at
which at any particular time its corporate trust business shall be
administered, which office at the date of the execution of this Agreement is
located at 1011 Centre Road, Suite 200, Wilmington, DE 19805, Attention:
Corporate Trust or at such other address as the Owner Trustee may designate
from time to time by notice to the Indenture Trustee, the Depositor and the
Seller, or the principal corporate trust office of any successor Owner Trustee
at the address designated by such successor Owner Trustee by notice to the
Indenture Trustee, the Depositor and the Seller.


 


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


 


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


 


Defaulted Contract:  Any Contract as to which the first of any of
the following has occurred (i) a scheduled payment, or any portion thereof in
excess of $10.00, is more than 120 days delinquent (or if the related obligor is
insolvent or has sought protection under the United States Bankruptcy Code and
such Contract is more than 180 days delinquent), (ii) 90 days have elapsed
since the Servicer repossessed the Financed Vehicle, (iii) the related Financed
Vehicle has been repossessed and sold, or (iv) consistent with the Servicer’s
Credit and Collection Policy, has been or should be written off as
uncollectible; provided, however, that any Contract which has
become 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 scheduled
payment remains unpaid for more than 30 days from the date at which it is
contractually due and payable.


 


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


 


Depositor:  First Investors Auto Funding Corporation, a Delaware corporation


 


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


 


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


 


Eligible Investments:  On any date of determination, book entry
securities, negotiable instruments or securities represented by instruments in
bearer or registered form with maturities not exceeding the next Payment Date
which evidence:


 


(i)                                     direct
obligations of, and obligations fully guaranteed by, the United States of
America or any agency or instrumentality thereof the obligations of which are
backed by the full faith and credit of the United States of America;


 


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


 


(iii)                               repurchase
obligations with respect to any security that is a direct obligation of, or
fully guaranteed by, the United States of America or any agency or


 


6

















 


instrumentality thereof
the obligations of which are backed by the full faith and credit of the United
States of America, in either case entered into with a depository institution or
trust company (acting as principal) described in clause (ii) above;


 


(iv)                              short
term corporate securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States of America or any
state thereof; the short term unsecured obligations of which are rated Prime-1
by Moody’s and A-1 by S&P at the time of the investment; provided, however
that the total amount of debt from Issuers rated A-1 by S&P must (i) be
limited to the investment of monthly principal and interest payments; (ii)
represent no more than 20% of the total Principal Balance; (iii) not mature
beyond 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 that
cannot be fixed or variable; and (vi) be tied to a single interest rate index
plus a single fixed rate spread (if any) and move proportionately with that
index;


 


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


 


(vi)                              guaranteed
investment contracts issued by an insurance company or other corporation
acceptable to the Rating Agencies and the Insurer (provided that no Insurer
Default shall have occurred and be continuing);


 


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


 


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


 


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


 


Eligible Institution:  The corporate trust department of the
Indenture Trustee or the corporate trust department of any other depository
institution organized under the laws of the United States of America or any
state thereof or the District of Columbia or any domestic branch of a foreign
bank which at all times has either a long term unsecured debt rating of at
least Baa3 from Moody’s and a long term unsecured debt rating, a short term
unsecured debt rating or a certificate of deposit rating acceptable to the
Rating Agencies and the Insurer (provided that no Insurer Default shall have
occurred and be continuing) and whose deposits are insured by the Federal
Deposit Insurance Corporation.


 


Event of Servicing Termination:  As defined in Section 5.1 of the
Servicing Agreement.


 


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


 


Fee Letters:  The Indenture Trustee Fee Letter and the
Owner Trustee Fee Letter.


 


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


 


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


 


Fiscal Agent:  As defined in the Policy.


 


Holder:  A Noteholder.


 


Indenture:  The Indenture, dated as of November 20, 2003, between the
Trust and Wells Fargo Bank Minnesota, National Association, as Indenture
Trustee and Custodian as the same may be amended, supplemented or otherwise
modified and in effect from time to time.


 


Indenture Trustee:  Wells Fargo Bank Minnesota, National
Association, not in its individual capacity but solely as Indenture Trustee
under the Indenture, its successors in interest and any successor trustee under
the Indenture.


 


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


 


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


 


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


 


Initial Class B Note Balance:  As the context may require, (i) with respect
to all of the Class B Notes, $5,065,890.91, or (ii) with respect to any Class B
Note, 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, the
proceeds, 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% of
the Principal Balance of the Initial Contracts as of the Initial Cutoff Date
and (ii) the Capitalized Interest Amount.


 


Insolvency Event:  With respect to any Person, (i) the making
by such Person of a general assignment for the benefit of creditors, (ii) the
filing by such Person of a voluntary petition in bankruptcy, (iii) such Person
being adjudged bankrupt or insolvent, or having had entered against such Person
an order for relief in any bankruptcy or insolvency proceeding, (iv) the filing
by such Person of a petition or answer seeking reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
statute, law or regulation, (v) the filing by such Person of an answer or other
pleading admitting or failing to contest the material allegations of a petition
filed against such Person in any proceeding specified in clause (vii)
below, (vi) seeking, consenting to or acquiescing in the appointment of a
trustee, receiver or liquidator of such Person or of all or any substantial
part of the assets of such Person or (vii) the failure to obtain dismissal
within 60 days of the commencement of any proceeding against such Person
seeking reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any statute, law or regulation, or the
entry of any order appointing a trustee, liquidator or receiver of such Person
of all or any substantial portion of the assets of such Person.


 


Insurance Agreement:  The Insurance Agreement, dated as of the
date hereof by and among the Seller, the Servicer, the Administrator, the
Depositor, the Trust, the Backup Servicer, the Owner Trustee, the Insurer and
the Indenture Trustee as the same may be amended, supplemented or otherwise
modified and in effect from time to time.


 


Insurance Payment Amount:  For any Payment Date, the premium payable
under the Insurance Agreement for that Payment Date plus any overdue premiums
payable under the Insurance Agreement for previous Payment Dates.


 


Insurance Premium: As defined in the
Insurance Agreement.


 


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


 


Insurer Default:  The failure of the Insurer to make any
required payment under the Policy or the occurrence of an Insolvency Event with
respect to the Insurer.


 


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


 


Liquidation Proceeds:  All amounts received by the Servicer with
respect to any Defaulted Contract, net of the sum of (i) any reasonable
expenses incurred by the Servicer in connection with collection of such
Contract and the disposition of the related Financed Vehicle (to the extent
determinable by the Servicer and not previously reimbursed) plus (ii)
any amounts required by law to be remitted to the related Obligor.


 


9

















 


Monthly Note Interest:  With respect to the Class A Notes, an amount
equal to (i) for the initial Payment Date, $300,271.15 and (ii) for each
Payment 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 of
business on the immediately preceding Payment Date (after giving effect to all
payments of principal made to the Holders of the Class A Notes on or before
such Payment Date).


 


Monthly Servicer Report:  As defined in the Servicing Agreement.


 


Monthly Servicing Fee:  The amount payable to the Servicer by the
Issuer on each Payment Date for the preceding Collection Period equal to one
twelfth times the sum of (i) the Servicing Rate multiplied by the Pool Balance
and (ii) the Servicing Rate multiplied by the Principal Balance of any Contract
pre-funded, but not included in the Pool Balance, during the such preceding
Collection Period.


 


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


 


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


 


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


 


Note Pool Factor:  With respect to the Class A Notes, (i) as of
the Closing Date, 1.0000000 and (ii) as of the close of business on the last
day of any Collection Period ending after the Closing Date, a seven digit
decimal figure equal to the Class A Note Balance as of such last day (after
giving effect to any reductions of the Class A Note Balance to be made on the
following 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 or
light-duty truck purchased in whole or in part by the execution and delivery of
a Contract or any other Person who owes or may be liable for payments under a
Contract.


 


Offering Memorandum:  That certain Offering Memorandum dated
November 13, 2003 relating to the Class A Notes.


 


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


 


Originator:  Each Person from whom the Seller has
acquired a Contract.


 


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


 


10

















 


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


 


Owner Trust Estate:  As defined in the Trust Agreement.


 


Owner Trustee:  Deutsche Bank Trust Company Delaware, not in
its 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, and
annually thereafter on each Payment Date in November, by the Issuer in
accordance 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 its
capacity as Owner Trustee related to the Transaction Documents.


 


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


 


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


 


Policy:  That certain financial guaranty insurance policy, dated as of
November 20, 2003, issued by MBIA Insurance Corporation in favor of the
Indenture Trustee for the benefit of the Class A Noteholders.


 


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


 


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


 


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


 


Prefunding Account Balance:  On any date of determination, the amount on
deposit in the Prefunding Account (including the proceeds of any Eligible
Investments therein).


 


Prefunding Account Ending Date:  March 31, 2004.


 


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


 


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


 


11

















 


Principal Balance:  With respect to any Contract as of any date,
the Amount Financed under such Contract minus the sum of (i) that portion of
all Scheduled Payments actually received on or prior to such date allocable to
principal (to the extent collected) plus (ii) any rebates of extended
warranty contract costs or physical damage, credit life or credit disability
insurance premiums included in the Amount Financed plus (iii) any full
or partial prepayment applied to reduce the unpaid principal balance of such
Contract; provided, however, that (A) the Principal Balance of a
Defaulted Contract shall be zero as of the last day of the Collection Period
during which it became a Defaulted Contract, (B) the Principal Balance of a
Purchased Contract shall be zero as of the date on which the related Purchase Amount
is remitted by the Depositor or the Servicer, and (C) the Principal Balance of
a Contract that has been foreclosed upon by the Indenture Trustee at the
direction of the Insurer pursuant to Section 5.4(a) of the Indenture shall
be zero as of the date of such foreclosure.


 


Principal Deficit:  As of any Payment Date, the excess, if any,
of (i) the Class A Note Balance as of such Payment Date (after giving effect to
all 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 related
Collection Period and (b) 96.5% of the amounts on deposit in the Prefunding
Account.


 


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


 


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


 


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


 


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


 


Rating Agencies:  Moody’s and S&P and their respective
successors; provided, however, that if no such organization or successor
is any longer in existence, Rating Agency shall mean a nationally recognized
statistical rating organization or other comparable Person designated by the
Trust and acceptable to the Insurer (provided that no Insurer Default shall
have occurred and is continuing), notice of which designation shall have been
given to the Indenture Trustee, the Owner Trustee and the Servicer.


 


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


 


12

















 


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


 


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


 


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


 


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


 


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


 


Reserve Account Amount:  For any Payment Date, the amount on deposit
in and available for withdrawal from the Reserve Account on such Payment Date
(after giving effect to all deposits to and withdrawals from the Reserve
Account on the preceding Payment Date, or, in the case of the first Payment
Date, the Closing Date), including, without limitation, all interest and other
income (net of losses and investment expenses) earned on such amount during the
preceding Collection Period.


 


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


 


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


 


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


 


(i)                                     the
average Delinquency Ratio for any three Collection Periods exceeds 6% during
the period commencing on the Closing Date through the end of October 2004
and the Delinquency Ratio exceeds 7.5% thereafter; or


 


(ii)                                  the
Cumulative Net Loss Rate at any month indicated in the following table exceeds
the 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

  	
  %

  






 


13

















 


Reserve Account Property:  All amounts, securities, investments,
financial assets and other property deposited in or credited to the Reserve
Account 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 with
direct responsibility for the administration of the Indenture and also, with
respect to a particular matter, any other officer of the Indenture Trustee to
whom such matter is referred because of such officer’s knowledge of and
familiarity with such matter or other similar matters and (ii) in the case of
the Owner Trustee, any officer within the Corporate Trust Office of the Owner Trustee
with direct responsibility for the administration of the Trust Agreement or
this Agreement and also, with respect to a particular matter, any other officer
of the Owner Trustee to whom such matter is referred because of such officer’s
knowledge of and familiarity with such matter or other similar matters.


 


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


 


Securities Intermediary:  As defined in Section 3.9.


 


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


 


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


 


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


 


Servicing Rate:  2.5% per annum or such other rate as
determined in the Servicing Agreement; provided, however, that if
the Back-up Servicer becomes the Successor Servicer, the Servicing Rate shall
be equal to the greater of (i) 2.5% per annum and (ii) the average of three
bids


 


14

















 


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


 


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


 


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


 


Total Note Interest:  For any Payment Date with respect to the
Class 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) all
accrued but unpaid Monthly Servicing Fees for previous Collection Periods.


 


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


 


Trust Agreement:  The Amended and Restated Trust Agreement,
dated as of the date hereof, between the Depositor and the Owner Trustee, as
the same may be further amended, supplemented or otherwise modified and in
effect 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 with
direct responsibility for the administration of the Indenture and also, with
respect to a particular matter, any other officer of the Indenture Trustee to
whom such matter is referred because of such officer’s knowledge of and
familiarity with such matter or other similar matters and (ii) in the case of
the Owner Trustee, any officer within the Corporate Trust Office of the Owner
Trustee with direct responsibility for the administration of the Trust
Agreement and this Agreement and also, with respect to a particular matter, any
other officer of the Owner Trustee to whom such matter is referred because of
such officer’s knowledge of and familiarity with such matter or other similar
matters.


 


Trust Property:  As of any date of determination, (i) the
Contracts and other related property sold, transferred, assigned and otherwise
conveyed by the Depositor to the Trust pursuant to Section 2.1(a) and
(b), (ii) rights under this Agreement to cause the Depositor to purchase
Contracts affected materially and adversely by breaches of the representations
and warranties of the Depositor made in this Agreement, and (iii) all amounts,
securities, financial assets, investments and other property deposited from
time 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 the
Reserve Account.


 


Section 1.2.                                Other
Definitional Provisions.


 


(a)                                  Capitalized
terms used herein and not otherwise defined herein have the meanings assigned
to them in the Indenture or the Servicing Agreement.


 


15

















 


(b)                                 All
terms defined in this Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto unless
otherwise defined therein.


 


(c)                                  As
used in this Agreement and in any certificate or other document made or
delivered pursuant hereto or thereto, accounting terms not defined in this Agreement
or in any such certificate or other document, and accounting terms partly
defined in this Agreement or in any such certificate or other document to the
extent not defined, shall have the respective meanings assigned to them under
generally accepted accounting principles. 
To the extent that the definitions of accounting terms in this Agreement
or in any such certificate or other document are inconsistent with the meanings
of such terms under generally accepted accounting principles, the definitions
contained in this Agreement or in any such certificate or other document shall
control.


 


(d)                                 The
words “hereof,” “herein,” and “hereunder” and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement.  Article,
Section, Schedule and Exhibit references contained in this Agreement are
references to Articles, Sections, Schedules and Exhibits in or to this
Agreement unless otherwise specified. 
The term “including” shall mean “including without limitation.”


 


(e)                                  The
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such terms.


 


(f)                                    Any
agreement, instrument or statute defined or referred to herein or in any
instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein.  References to a Person are also to its
permitted successors and assigns.


 


Article II


 


Trust Property


 


Section 2.1.                                Conveyance
of Trust Property.


 


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


 


(i)                                     the
Contracts;


 


(ii)                                  all
amounts received on or in respect of the Contracts after the applicable Cutoff
Date (except that interest accrued on the Contracts prior to the applicable
Cutoff Date and received after such Cutoff Date will be remitted by the Trust
to the Seller);


 


(iii)                               the
security interests in the Financed Vehicles;


 


16

















 


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


 


(v)                                 any
Liquidation Proceeds;


 


(vi)                              the
Contract Files;


 


(vii)                           rights
under the Contribution Agreement to cause the Seller to purchase Contracts
affected materially and adversely by breaches of the representations and
warranties of the Seller made in the Contribution Agreement;


 


(viii)                        rights
under the Servicing Agreement to cause the Servicer to purchase Contracts
affected materially and adversely by breaches of the representations and
warranties of the Servicer made in the Servicing Agreement; and


 


(ix)                                all
present and future claims, demands, causes of action and choses in action in
respect of any or all of the foregoing and all payments on or under and all
proceeds of every kind and nature whatsoever in respect of any or all of the
foregoing, including all proceeds of the conversion thereof, voluntary or
involuntary, into cash or other liquid property, all cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, insurance proceeds, condemnation awards, rights to payment of any and
every kind and other forms of obligations and receivables, instruments and
other property which at any time constitute all or part of or are included in
the proceeds of any of the foregoing.


 


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


 


(c)                                  The
Depositor and the Trust intend that each transfer of Trust Property
contemplated by Section 2.1(b) constitutes a sale of the Trust
Property, conveying good title to the related Trust Property, from the
Depositor to the Trust.  Notwithstanding
the foregoing, in the event that the Contracts are held to be property of the
Depositor, or if for any reason this Agreement is held or deemed to create
indebtedness or a security interest in the Contracts and the other Trust
Property, then it is intended that:


 


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


 


(ii)                                  The
sale provided for in Section 2.1(b) shall be deemed to be a grant
by the Depositor, and the Depositor hereby grants, to the Seller a security
interest in all of its


 


17

















 


right (including the
power to convey title thereto), title and interest, whether now owned or
hereafter acquired, in and to the Contracts and the other Trust Property, to
secure such indebtedness and the performance of the obligations of the
Depositor hereunder;


 


(iii)                               The
possession by the Trust or the Custodian of the Contract Files and any other
property as constitute instruments, money, negotiable documents or chattel
paper shall be deemed to be “possession by the secured party” or possession by
the purchaser or a person designated by such purchaser, for purposes of
perfecting the security interest pursuant to the UCC; and


 


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


 


(d)                                 The
sale, 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 the
Trust of any obligation of the Depositor to the Obligors or any other Person in
connection with the Contracts and the other Trust Property or any agreement,
document or instrument related thereto.


 


(e)                                  Upon
each of the transfers of the Trust Property pursuant to clause (b) of
this Section 2.1, the Depositor shall clearly mark its files,
documents, books and any other records (including computer records) in the
Depositor’s control pertaining to the Trust Property, in order to indicate that
the Trust Property has been transferred to the Trust.


 


(f)                                    The
Trust’s obligation to purchase Additional Contracts and Additional Conveyed
Property pursuant to clause (b) of this Section 2.1 is
subject to satisfaction on or before the related Additional Contract Purchase
Date of the following conditions precedent:


 


(i)                                     each
of the representations and warranties of the Depositor made pursuant to Section 2.2
with respect to the Additional Contracts shall be true and correct as of the
Additional Contract Purchase Date;


 


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


 


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


 


(iv)                              the
Trust shall have received release letters and related UCC-3 termination
statements and/or amendment statements (for each appropriate jurisdiction), to
release all security interests or similar rights of any Person in the Additional
Conveyed Property,


 


18

















 


including the security
interests in the Financed Vehicles securing the Contracts and any proceeds of
the foregoing;


 


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


 


(vi)                              the
Trust and the Insurer shall have each received such other documents as the
Trust or the Insurer may have reasonably requested.


 


(g)                                 It
is explicitly agreed by the Depositor and the Trust that the Purchase Price
delivered to the Depositor by the Trust pursuant to clause (b) of this Section 2.1
shall consist of the net proceeds from the sale of the Notes (minus the sum of
the Initial Reserve Account Deposit and the Additional Reserve Account
Deposits) and that the remaining portion of the Purchase Price shall be deemed
to constitute a capital contribution by the Seller to the Depositor (it being
understood that the Seller has a 100% ownership interest in the Depositor and
that the Depositor has a 100% ownership interest in the Trust).


 


Section 2.2.                                Representations
and Warranties of the Depositor as to the Contracts.


 


The Depositor makes the
following representations and warranties as to the Contracts on which the Trust
shall be deemed to have relied in accepting the Contracts.  The representations and warranties speak as
of the execution and delivery of this Agreement and, with respect to any
Additional 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 this
Agreement and the pledge of the Contracts to the Indenture Trustee pursuant to
the Indenture.


 


(a)                                  Characteristics
of Contracts.  Each Contract (i) has
either (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’s
business and was originated by such Person in connection with an advance made
for the sale or re-financing of a new or used automobile or light-duty truck
and has been fully and properly executed by the parties thereto or (B) has been
originated by the Seller through direct marketing to consumers who wish to
refinance 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 Depositor
pursuant to, and in accordance with the terms of, the Contribution Agreement ,
(ii) has created a valid, binding and enforceable security interest in favor of
the Seller in the related Financed Vehicle, which security interest has been
validly assigned by the Seller to the Depositor, by the Depositor to the Trust
and which will be assigned by the Trust to the Indenture Trustee pursuant to
the Indenture, (iii) contains customary and enforceable provisions such that
the rights and remedies of the holder thereof are adequate for realization
against the collateral of the benefits of the security, (iv) provides for level
monthly payments that fully amortize the Amount Financed by maturity (except
that the period between the date of such Contract and the date of the first
Scheduled Payment may be less than or greater than one month and the amount of
the first and last Scheduled Payments may be less than or greater than the level
payments, 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 that
fully pays the Principal Balance of such Contract with interest at the related
APR through the date of payment, (vi) is secured by a new or used


 


19

















 


automobile or light-duty truck, (vii) relates to an
Obligor who has made a down payment under such Contract as of the applicable
Cutoff Date,  (viii) satisfies in all
material respects the requirements under the Credit and Collection Policy, and
(ix) requires the Obligor thereunder to obtain and maintain physical damage
insurance covering the related Financed Vehicle in accordance with the Seller’s
normal requirements.


 


(b)                                 Contract
Schedule.  The information set forth
in the Contract Schedule was true and correct in all material respects as
of the opening of business on the applicable Cutoff Date, and no selection
procedures believed to be adverse to the Trust or the Noteholders were utilized
in selecting the Contracts from those retail installment sale contracts or
security agreements and promissory notes which met the criteria contained
herein.  The information set forth in
the compact disk or other listing regarding the Contracts made available to the
Trust and its assigns (which compact disk or other listing is required to be
delivered as specified herein) is true and correct in all material respects.


 


(c)                                  Compliance
with Law.  Each Contract and the sale
of the related Financed Vehicle complied, at the time such Contract was
originated and complies, as of the related Purchase Date, in all material
respects with all requirements of applicable federal, state and local laws, and
regulations thereunder, including, without limitation, usury laws, the Federal
Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit
Reporting Act, the Fair Credit Billing Act, the Fair Debt Collection Practices
Act, the Federal Trade Commission Act, the Magnuson-Moss Warranty Act, the
Federal Reserve Board’s Regulations B, M and Z, the Soldiers’ and Sailors’
Civil Relief Act of 1940 and state adaptations of the Uniform Consumer Credit
Code.


 


(d)                                 Binding
Obligation.  Each Contract
represents the genuine, legal, valid and binding payment obligation in writing
of the related Obligor, enforceable by the holder thereof in accordance with
its 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)                                  No
Government or Incorporated Obligor. 
No Contract is due from the United States of America or any state
thereof or from any agency, department or instrumentality of the United States
of America or any state thereof or from any incorporated entity.


 


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


 


(g)                                 Contracts
in Force.  No Contract has been
satisfied, subordinated or rescinded, nor has any Financed Vehicle been
released in whole or in part from the Lien granted by the related Contract.


 


20

















 


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


 


(i)                                     No
Defenses.  No Contract is subject to
any right of rescission, setoff, counterclaim or defense, including the defense
of usury, and the operation of any of the terms of any Contract, or the
exercise of any right thereunder, will not render such Contract unenforceable
in whole or in part or subject to any right of rescission, setoff, counterclaim
or defense, including the defense of usury, and the Depositor has not received
written notice of the assertion of any such right of rescission, setoff,
counterclaim or defense asserted with respect thereto.


 


(j)                                     No
Liens.  No liens or claims exist or
have been filed for work, labor or materials or unpaid state or federal taxes
relating to any Financed Vehicle that are prior to, or equal or coordinate
with, the security interest in such Financed Vehicle created by the related
Contract.


 


(k)                                  No
Default; Repossession.  No default,
breach, violation or event permitting acceleration under the terms of any
Contract has occurred (other than payments that are not more than 30 days past
due), no continuing condition that with notice or the lapse of time or both
would constitute a default, breach, violation or event permitting acceleration
under the terms of any Contract has arisen and no Financed Vehicle has been
repossessed as of the applicable Cutoff Date.


 


(l)                                     True
Sale.                                           The
Depositor 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 the
beneficial interest in, and title to, the Contracts not be part of the
Depositor’s estate in the event of the filing of a bankruptcy petition by or
against the Depositor under any bankruptcy law.  The Depositor has not sold, transferred, assigned or pledged any
Contract to any Person other than the Trust and such Contract has not been
released.


 


(m)                               Valid
Assignment.  No Contract has been
originated in, or is subject to the laws of, any jurisdiction under which the
sale, transfer, assignment and conveyance of such Contract under this Agreement
or the pledge of such Contract under the Indenture is unlawful, void or
voidable.  No Contract is subject to any
agreement with any account debtor that prohibits, restricts or conditions the
assignment of the Contracts.


 


(n)                                 [Reserved]


 


(o)                                 [Reserved]


 


(p)                                 One
Original.  There is only one
original executed copy of each Contract.


 


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


 


(r)                                    No
Bankrupt Obligors.  As of the
applicable Cutoff Date, no Contract was due from an Obligor that was the
subject of a proceeding under the Bankruptcy Code of the United States or was
bankrupt.


 


21

















 


(s)                                  Term
to Maturity.  Each Contract had an
original 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 Pool
Balance shall represent Contracts with an original term to maturity greater
than 66 months and less than or equal to 72 months and provided  further
that any Contracts acquired in the Prefunding Period with an original term to
maturity greater than 66 months and less than or equal to 72 months were either
originated via the Seller’s direct origination program or relate to vehicles
that were no more than one model year old as of the date of origination of the
related Contract.


 


(t)                                    Annual
Percentage Rate.  Each Contract has
an APR of at least 5.0%; provided, however, that as of the
Prefunding Account Ending Date, the weighted average APR of all Contracts shall
not be less than 15.45%.


 


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


 


(v).                              No
Delinquent Contracts or Defaulted Contracts.  As of the applicable Cutoff Date, no Contract was a Delinquent
Contract or a Defaulted Contract.


 


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


 


(x)                                   No
Defaults.  No Contract is due from
an Obligor that has previously defaulted on a retail installment sales contract
or promissory note and security agreement purchased by the Seller.


 


(y)                                 Final
Scheduled Payment Date.  The
original final scheduled payment date for each Contract is on or before
March 31, 2010.


 


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


 


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


 


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


 


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


 


22

















 


(dd)                          No
Waiver or Modification.  No Contract
has been waived or modified as of the applicable Cutoff Date except as
permitted by the Servicing Agreement.


 


(ee)                            Perfection
Representations.  The perfection
representations, warranties and covenants made by the Depositor and set forth
on Schedule 3 hereto shall be a part of this Agreement for all
purposes.


 


(ff)                                Direct
Program Origination.  Not less than
21.0% of the aggregate Principal Balance of the Contracts, after giving effect
to the Prefunding Period, shall have been originated through the Seller’s
direct origination program.


 


(gg)                          Limited
Extension.  Not more than 12% of the
aggregate Principal Balance of the Contracts, after giving effect to the
Prefunding Period, shall have been extended.


 


Section 2.3.                                Repurchase
by Depositor for Breach.


 


The Seller, the Insurer,
the Depositor, the Servicer or the Trust, as the case may be, shall inform the
other parties to this Agreement and the Indenture Trustee promptly, in writing,
upon the discovery of any breach or failure to be true of the representations
and warranties made by the Depositor pursuant to Section 2.2.  If such breach or failure shall not have
been cured by the close of business on the last day of the Collection Period
which includes the thirtieth (30th) day after the date on which the Depositor
becomes aware of, or receives written notice from, the Servicer, the Insurer or
the Trust of such breach or failure, and such breach or failure materially and
adversely affects the interest of the Trust in a Contract, the Depositor shall
repurchase such Contract from the Trust on the Business Day preceding the
Payment Date immediately following such Collection Period.  In consideration of the repurchase of a
Contract hereunder, the Depositor shall remit the Purchase Amount of such
Contract in the manner specified in Section 3.4.  The sole remedy of the Trust, the Owner
Trustee, the Indenture Trustee and the Noteholders with respect to a breach or
failure to be true of the representations and warranties made by the Depositor
pursuant to Section 2.2 shall be to require the Depositor to
repurchase Contracts pursuant to this Section 2.3 or to enforce the
obligation of the Seller to repurchase such Contacts pursuant to the
Contribution Agreement.  Neither the
Owner Trustee nor the Indenture Trustee shall have any duty to conduct an
affirmative investigation as to the occurrence of any condition requiring the
repurchase of any Contract pursuant to this Section 2.3 or the
eligibility of any Contract for purposes of this Agreement.


 


Article III


 


Distributions;
Reserve Account; Statements to Noteholders and Certificateholders


 


Section 3.1.                                Accounts.


 


(a)                                  The
Trust shall establish, or shall cause to be established, on or before the
Closing Date, and shall maintain in the name of the Indenture Trustee at an
Eligible Institution (which shall initially be the Indenture Trustee) a
segregated trust account designated as the Collection Account (the “Collection
Account”).  The
Collection Account shall be held in trust for the benefit


 


23

















 


of the Insurer and the Noteholders and shall be under
the sole dominion and control of the Indenture Trustee; provided, however,
that the Servicer may make deposits to and direct the Indenture Trustee in
writing to make withdrawals from the Collection Account in accordance with this
Agreement and the Indenture.  All monies
deposited from time to time in the Collection Account pursuant to this
Agreement shall be held by the Indenture Trustee as part of the Trust Property
and shall be applied as provided in this Agreement.  All deposits to and withdrawals from the Collection Account shall
be made only upon the terms and conditions of the Transaction Documents.


 


If the Servicer is
required to remit collections within two Business Days pursuant to the first
sentence of Section 3.2, all amounts held in the Collection Account
shall, to the extent permitted by applicable law, rules and regulations, be
invested, as directed in writing by the Servicer, by the bank or trust company
then maintaining the Collection Account in Eligible Investments that mature not
later than the Business Day preceding the Payment Date following the Collection
Period to which such amounts relate.  If
the Collection Account is no longer to be maintained at the Indenture Trustee,
the Servicer shall, with the Indenture Trustee’s assistance as necessary, cause
the 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 as
to which each Rating Agency and the Insurer (provided that no Insurer Default
shall have occurred and is continuing) may consent).  The Servicer shall promptly notify the Indenture Trustee, the
Insurer (provided that no Insurer Default shall have occurred and is
continuing) and the Owner Trustee of any change in the account number or
location of the Collection Account.


 


(b)                                 The
Trust shall establish, or shall cause to be established, on or before the
Closing Date, and shall maintain in the name of the Indenture Trustee at an
Eligible Institution (which shall initially be the Indenture Trustee) the
following note payment accounts:


 


(i)                                     a
segregated trust account designated as the Class A Note Payment Account (the “Class A
Note Payment Account”). 
The Class A Note Payment Account shall be held in trust for the benefit
of the Class A Noteholders and the Insurer. 
The Class A Note Payment Account shall be under the sole dominion and
control of the Indenture Trustee; provided, however, that the
Servicer may make deposits to and direct the Indenture Trustee in writing to
make withdrawals from the Class A Note Payment Account in accordance with this
Agreement and the Indenture.  All monies
deposited from time to time in the Class A Note Payment Account pursuant to
this Agreement and the Indenture shall be held by the Indenture Trustee as part
of the Trust Property and shall be applied as provided in this Agreement and
the Indenture.  The amounts on deposit
in the Class A Note Payment Account shall not be invested.  If the Class A Note Payment Account is no
longer to be maintained at the Indenture Trustee, the Servicer shall, with the
Indenture Trustee’s assistance as necessary, cause the Class A Note Payment
Account 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 each
Rating Agency and the Insurer (provided that no Insurer Default shall have
occurred and is continuing) may consent). The Servicer shall promptly notify
the Indenture Trustee, the Insurer and the Owner Trustee of any change in the
account number or location of the Class A Note Payment Account; and


 


24

















 


(ii)                                  a
segregated trust account designated as the Class B Note Payment Account (the “Class B
Note Payment Account”). 
The Class B Note Payment Account shall be held in trust for the benefit
of the Class B Noteholders.  The Class B
Note Payment Account shall be under the sole dominion and control of the
Indenture Trustee; provided, however, that the Servicer may make
deposits to and direct the Indenture Trustee in writing to make withdrawals
from the Class B Note Payment Account in accordance with this Agreement and the
Indenture.  All monies deposited from
time to time in the Class B Note Payment Account pursuant to this Agreement and
the Indenture shall be held by the Indenture Trustee as part of the Trust
Property and shall be applied as provided in this Agreement and the
Indenture.  The amounts on deposit in
the Class B Note Payment Account shall not be invested.  If the Class B Note Payment Account is no
longer to be maintained at the Indenture Trustee, the Servicer shall, with the
Indenture Trustee’s assistance as necessary, cause the Class B Note Payment
Account 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 each
Rating Agency and the Insurer (provided that no Insurer Default shall have
occurred and is continuing) may consent). The Servicer shall promptly notify
the Indenture Trustee, the Insurer and the Owner Trustee of any change in the
account number or location of the Class B Note Payment Account.


 


(c)                                  The
Trust shall establish, or shall cause to be established, on or before the
Closing Date, and shall maintain in the name of the Depositor at an Eligible
Institution (which shall initially be the Owner Trustee) a segregated trust
account designated as the Depositor Account (the “Depositor Account”).  The Depositor Account shall be held in trust
for the benefit of the Depositor.  The
Depositor Account shall be under the sole dominion and control of the Depositor
and shall not constitute part of the Trust Estate; provided, however,
that the Servicer may direct the Indenture Trustee in writing to make deposits
to the Depositor Account in accordance with Section 3.5(d) of this
Agreement.  All monies deposited from
time to time in the Depositor Account pursuant to this Agreement shall be
applied in accordance with the terms of the Trust Agreement  The amounts on deposit in the Depositor
Account shall not be invested.  If the
Depositor Account is no longer to be maintained at the Owner Trustee, the
Servicer shall, with the Owner Trustee’s assistance as necessary, cause the
Depositor Account 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 each Rating Agency and the Insurer (provided that no Insurer Default
shall have occurred and is continuing) may consent).  The Servicer shall promptly notify the Indenture Trustee, the
Insurer (provided that no Insurer Default shall have occurred and is continuing)
and the Owner Trustee of any change in the account number or location of the
Depositor Account.


 


Section 3.2.                                Collections.


 


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


 


25

















 


A-1 by S&P or (ii)
the Rating Agency Condition shall have been satisfied and the written consent
of the Insurer shall have been obtained (each, a “Monthly Remittance Condition”),
the Servicer may remit any such amounts received during any Collection Period
to the Collection Account in immediately available funds on the Business Day
preceding the Payment Date following such Collection Period.  The Owner Trustee and the Indenture Trustee
shall not be deemed to have knowledge of any event or circumstance under clause
(ii) or (iii) of the definition of Monthly Remittance Condition that
would require daily remittance by the Servicer to the Collection Account (and
shall be entitled to presume and be fully protected in presuming that no such
event or circumstance has occurred or exists) unless the Owner Trustee or the
Indenture Trustee, as applicable, has received written notice of such event or
circumstance from the Seller or the Servicer in an Officer’s Certificate or
written notice from the Insurer (if no Insurer Default shall have occurred and
be continuing), the Holders of Notes evidencing not less than 25% of the Class
A Note Balance or a Responsible Officer of the Owner Trustee or the Indenture
Trustee, as applicable, has actual knowledge of such event or circumstance.


 


Section 3.3.                                Application
of Collections.


 


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


 


Section 3.4.                                Application
of Deposits.


 


The Depositor and the
Servicer shall deposit or cause to be deposited in the Collection Account the
aggregate Purchase Amount with respect to Purchased Contracts pursuant to Section 2.3
hereof or Sections 2.02 and 2.28 of the Servicing Agreement..  All such deposits with respect to a
Collection Period shall be made in immediately available funds no later than
5:00 p.m., New York City time, on the Business Day preceding the Payment Date
following such Collection Period.


 


Section 3.5.                                Determination
Date Calculations.


 


(a)                                  On
each Determination Date, the Servicer shall calculate the following amounts:


 


(i)                                     the
Available Funds for the following Payment Date;


 


(ii)                                  the
Total Servicing Fee for the preceding Collection Period;


 


(iii)                               the
Total Note Interest for the following Payment Date;


 


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


 


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


 


(vi)                              the
aggregate amount of any unreimbursed payments under the Policy to the extent
payable to the Insurer under the Insurance Agreement plus accrued
interest on


 


26

















 


any unreimbursed payments
under the Policy at the rate provided in the Insurance Agreement plus
any other amounts due the Insurer under the Insurance Agreement and the Policy;


 


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


 


(viii)                        the sum of
the amounts described in clauses (v) and (vi) above (the “Insurance
Payment Amount”);


 


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


 


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


 


(b)                                 On
each Determination Date, the Servicer shall calculate the following amounts:


 


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


 


(ii)                                  the
Policy Claim Amount;


 


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


 


(iv)                              the
amount, if any, by which the Required Reserve Account Amount for the following
Payment Date exceeds the Reserve Account Amount for such Payment Date (after
giving effect to the withdrawal of the Reserve Account Draw Amount for such
Payment Date) (such excess, the “Reserve Account Deficiency”).


 


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


 


(c)                                  If
the Servicer determines on any Determination Date that the Available Funds for
the following Payment Date plus the Reserve Account Draw Amount (excluding that
portion


 


27

















 


attributable to clause (ii) of Section 3.5(a))
for such Payment Date will be insufficient to pay in full the Required Payment
Amount (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 later
than 2:00 p.m., New York City time, on such Determination Date, a written
notice specifying the Policy Claim Amount for such Payment Date.  The Indenture Trustee shall, no later than
12:00 p.m., New York City time, on the second Business Day prior to such
Payment Date, make a claim under the Policy for such Policy Claim Amount by
delivering to the Insurer and the Fiscal Agent, with a copy to the Servicer, a
Notice (as defined in the Policy) for such Policy Claim Amount.  In making any such claim, the Indenture
Trustee shall comply with all the terms and conditions of the Policy.  The “Policy Claim Amount” with respect to a
Payment Date shall equal the sum of the following amounts:


 


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


 


(ii)                                  the
Principal Deficit; and


 


(iii)                               the
Class A Note Balance outstanding on the Final Note Payment Date, after giving
effect to all other distributions to the Class A Noteholders to be made on such
Final Note Payment Date.


 


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


 


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


 


(d)                                 On
each Payment Date, the Servicer shall instruct the Indenture Trustee to apply
the Available Funds for such Payment Date to make the following payments and
deposits in the following order of priority and the Indenture Trustee shall
apply as so instructed:


 


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


 


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


 


28

















 


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


 


(iv)                              unless
an Insurer Default has occurred and is continuing, to the Insurer, the
Insurance Premium for such Payment Date plus any overdue Insurance Premiums for
previous Payment Dates;


 


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


 


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


 


(vii)                           if the
Class A Notes have been declared immediately due and payable following the
occurrence of an Event of Default under the Indenture, to the Class A Note
Payment 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 the
Reserve Account, the Reserve Account Deficiency, if any, for such Payment Date;


 


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


 


(x)                                   to
the Class B Note Payment Account, the Class B Monthly Note Principal for such
Payment Date;


 


(xi)                                other
amounts, if any, due the Owner Trustee in its individual capacity, the
Indenture Trustee, the Custodian, the Back-up Servicer, the Servicer and the
Insurer, respectively, pursuant to the Transaction Documents to the extent not
paid pursuant to clause (i); and


 


(xii)                             to
the Depositor Account, any remaining amount of Available Funds.


 


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


 


(e)                                  On
each Payment Date, the Servicer shall instruct the Indenture Trustee to apply,
and the Indenture Trustee shall apply as so instructed, the amount withdrawn
from the Reserve Account in respect of the Reserve Account Draw Amount in
accordance with paragraph (b) of this Section 3.5 to make
the following payments in the following order of priority:


 


29

















 


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


 


(ii)                                  to
the Class A Note Payment Account, the Total Note Interest for such Payment
Date;


 


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


 


(iv)                              unless
an Insurer Default has occurred and is continuing, to the Insurer, the
Insurance Premium for such Payment Date plus any overdue Insurance Premiums for
previous Payment Dates; and


 


(v)                                 to
the Insurer, the aggregate amount of any unreimbursed payments under the Policy
to the extent payable to the Insurer under the Insurance Agreement plus
accrued interest on any unreimbursed payments under the Policy at the rate
provided in the Insurance Agreement plus any other amounts due the Insurer
under the Insurance Agreement and the Policy.


 


(f)                                    On
any Payment Date on or after which the Class A Notes have become due and
payable, the Servicer may, with the prior written consent (a copy of which
written consent shall be forwarded by the Servicer to the Indenture Trustee) of
the Insurer, and shall, at the written direction (a copy of which written
direction shall be forwarded by the Servicer to the Indenture Trustee) of the
Insurer (provided that no Insurer Default shall have occurred and be
continuing), instruct the Indenture Trustee to withdraw from the Reserve
Account, and the Indenture Trustee upon receipt of such instructions shall
withdraw from the Reserve Account, an amount up to the remainder of the Class A
Note Balance after the application of all other amounts distributable to the
Class A Noteholders on such Payment Date pursuant to the Transaction
Documents.  The Servicer may, with the
prior written consent (a copy of which written consent shall be forwarded by
the Servicer to the Indenture Trustee) of the Insurer (provided that no Insurer
Default shall have occurred and be continuing), and shall, at the written
direction (a copy of which written direction shall be forwarded by the Servicer
to the Indenture Trustee) of the Insurer, instruct the Indenture Trustee to
apply, and the Indenture Trustee shall apply, such amount to the payment of the
Class A Note Balance until the Class A Note Balance has been reduced zero.


 


Section 3.6.                                Reserve
Account.


 


(a)                                  The
Trust shall establish, or shall cause to be established, on or before the
Closing Date, and shall maintain in the name of the Indenture Trustee at an
Eligible Institution (which shall initially be the Indenture Trustee) a
segregated trust account designated as the Reserve Account (the “Reserve
Account”).  The Reserve
Account shall be held in trust for the benefit of the Class A Noteholders, the
Servicer and the Insurer.  The Reserve
Account shall be under the sole dominion and control of the Indenture Trustee; provided,
however, that the Servicer may make deposits to and direct the Indenture
Trustee in writing to make withdrawals from the Reserve Account in accordance
with this Agreement and the Indenture. 
On the Closing Date, the


 


30

















 


Trust shall deposit the Initial Reserve Account
Deposit into the Reserve Account from the net proceeds of the sale of the
Notes.  On each Additional Contract
Purchase Date, the Reserve Account shall be funded by deposits from proceeds of
the sale by the Depositor of Additional Contracts to the Trust in an amount equal
to 0.5% of the aggregate Principal Balance of the Additional Contracts as of
the applicable Cut-Off Date.  Pursuant
to the Indenture, the Trust will pledge all of its right, title and interest
in, to and under the Reserve Account and the Reserve Account Property to the
Indenture Trustee for the benefit of the Class A Noteholders and the Insurer to
secure its obligations under the Class A Notes and the Indenture.


 


(b)                                 The
Reserve Account Property shall, to the extent permitted by applicable law,
rules and regulations, be invested, as directed in writing by the Servicer, by
the bank or trust company then maintaining the Reserve Account in Eligible
Investments that mature not later than the Business Day preceding the next
Payment Date.  All such Eligible Investments
shall be held to maturity.  All interest
and other income (net of losses and investment expenses) on funds on deposit in
the Reserve Account shall, at the written direction of the Servicer, be paid to
the Trust on any Payment Date to the extent that funds on deposit therein, as
certified by the Servicer, exceed the Required Reserve Account Amount.  If the Reserve Account is no longer to be
maintained at the Indenture Trustee, the Servicer shall, with the Indenture
Trustee’s assistance as necessary, cause the Reserve Account 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 each Rating Agency and the
Insurer (provided that no Insurer Default shall have occurred and is
continuing) may consent).  The Servicer
shall promptly notify the Insurer (provided that no Insurer Default shall have
occurred and is continuing) and the Indenture Trustee of any change in the
account number or location of the Reserve Account.


 


(c)                                  With
respect to any Reserve Account Property:


 


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


 


(ii)                                  any
Reserve Account Property that is held in deposit accounts shall be held solely
in the name of the Indenture Trustee at one or more depository institutions
having the Required Rating and each such deposit account shall be subject to
the exclusive custody and control of the Indenture Trustee and the Indenture
Trustee shall have sole signature authority with respect thereto; and


 


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


 


(d)                                 If
the Reserve Account Amount for any Payment Date (after giving effect to the
withdrawal of the Reserve Account Draw Amount for such Payment Date) exceeds
the Required Reserve Account Amount for such Payment Date, the Servicer shall,
unless an Event of Default


 


31

















 


has occurred and is continuing, instruct the Indenture
Trustee in writing to distribute, and the Indenture Trustee upon receipt of
such instructions shall distribute, the amount of such excess to the Paying
Agent for distribution to the Depositor in accordance with Section 5.2
of the Trust Agreement.  The Indenture
Trustee hereby releases, on each Payment Date, its security interest in, to and
under Reserve Account Property distributed to the Depositor pursuant to this Section 3.6.  If an Event of Default has occurred and is
continuing, the Servicer shall instruct the Indenture Trustee to apply, and the
Indenture Trustee upon receipt of such instructions shall apply, the amount of
such excess in the Reserve Account to the Collection Account for application to
Available Funds pursuant to Section 3.5(d).


 


(e)                                  If
the Class A Note Balance and all other amounts owing or to be distributed
hereunder or under the Indenture to the Class A Noteholders and the Insurer
have been paid in full and the Trust has been terminated, any remaining Reserve
Account Property shall be distributed to the Depositor in accordance with Section 5.2
of the Trust Agreement.


 


Section 3.7.                                Prefunding
Account.


 


(a)                                  The
Trust shall establish, or shall cause to be established, on or before the
Closing Date, and shall maintain in the name of the Indenture Trustee at an
Eligible Institution (which shall initially be the Indenture Trustee) a
segregated trust account designated as the Prefunding Account (the “Prefunding
Account”).  The
Prefunding Account shall be held in trust for the benefit of the Insurer and
the Noteholders.  The Prefunding Account
shall be under the sole dominion and control of the Indenture Trustee; provided,
however, that the Servicer may make deposits to and direct the Indenture
Trustee in writing to make withdrawals from the Prefunding Account in
accordance with this Agreement and the Indenture.  All monies deposited from time to time in the Prefunding Account
pursuant to this Agreement shall be held by the Indenture Trustee as part of
the Trust Property and shall be applied as provided in this Agreement.  All deposits to and withdrawals from the
Prefunding Account shall be made only upon the terms and conditions of the
Transaction Documents.


 


(b)                                 All
amounts held in the Prefunding Account shall, to the extent permitted by
applicable law, rules and regulations, be invested, as directed in writing by
the Servicer, by the bank or trust company then maintaining the Prefunding
Account in Eligible Investments that mature not later than the Business Day
preceding the Payment Date following the Collection Period to which such amounts
relate.  All such Eligible Investments
shall be held to maturity.  If the
Prefunding Account is no longer to be maintained at the Indenture Trustee, the
Servicer shall, with the Indenture Trustee’s assistance as necessary, cause the
Prefunding Account 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 each Rating Agency and the Insurer (provided that no Insurer Default
shall have occurred and is continuing) may consent).  The Servicer shall promptly notify the Indenture Trustee, the
Insurer (provided that no Insurer Default shall have occurred and is
continuing) and the Owner Trustee of any change in the account number or location
of the Prefunding Account.


 


(c)                                  On
the Closing Date, the Trust will deposit an amount equal to the Initial
Prefunding Account Amount from the aggregate proceeds of the sale of the Notes
into the Prefunding Account.  The Trust
shall cause the Servicer to notify the Insurer and the Indenture


 


32

















 


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


 


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


 


Section 3.8.                                Statements
to Noteholders.


 


(a)                                  On
or prior to each Determination Date, the Servicer shall provide to the
Indenture Trustee (with copies to the Rating Agencies and each Paying Agent)
for the Indenture Trustee to forward to each Noteholder of record as of the
most recent Record Date upon a written request from any such Noteholder, a
statement which shall set forth at least the following information as to the
Notes (to the extent applicable) with respect to the distribution to be made on
such Payment Date:


 


(i)                                     the
amount of such distribution allocable to Total Note Interest;


 


(ii)                                  the
amount of such distribution allocable to interest, overdue interest and
interest on overdue interest for the Class A Notes;


 


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


 


(iv)                              the
Total Servicing Fee for the preceding Collection Period;


 


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


 


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


 


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


 


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


 


33

















 


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


 


(x)                                   Cumulative
Net Loss Rate information with respect to the preceding Collection Periods; and


 


(xi)                                prior
to the Prefunding Account Ending Date, the Prefunding Account Balance and the
Capitalized Interest Amount.


 


(b)                                 Within
150 days after the Closing Date and each Additional Contract Purchase Date, the
Servicer shall provide, or shall cause to be provided, to the Indenture Trustee
and the Insurer a notice indicating which Contract Files, if any, do not
contain a certificate of title or other evidence in lieu of a certificate of
title.


 


Section 3.9.                                Control
of Securities Accounts; The Securities Intermediary.


 


(a)                                  Wells
Fargo Bank Minnesota, National Association agrees to act as securities
intermediary hereunder (in such capacity, the “Securities Intermediary”)
and the Securities Intermediary represents, warrants and covenants as follows:


 


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


 


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


 


(iii)                               The
Securities 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)                              The
Securities Intermediary waives any lien, claim or encumbrance in favor of the
Securities Intermediary in the Collateral.


 


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


 


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


 


(b)                                 Any
securities intermediary hereunder shall be, and the Securities Intermediary
hereby represents and warrants that it is as of the date hereof and shall be,
for so long as it is the


 


34

















 


Securities Intermediary hereunder, a corporation or
national banking association that in the ordinary course of its business
maintains securities accounts for others and is acting in that capacity
hereunder.  Any securities intermediary
hereunder shall, and the Securities Intermediary does, agree with the parties
hereto that each Account shall be an account to which financial assets may be
credited and undertake to treat the Indenture Trustee as entitled to exercise
rights that comprise such financial assets. 
Any securities intermediary hereunder shall, and the Securities Intermediary
does, agree with the parties hereto that each item of property credited to each
Account shall be treated as a “financial asset” as defined in
Section 8-102 of the UCC.  Any
securities intermediary hereunder shall, and the Securities Intermediary does,
acknowledge that the “securities intermediary’s jurisdiction” as defined in the
UCC of the Securities Intermediary with respect to the Collateral, shall be the
State of New York.  Any securities
intermediary hereunder shall, and the Securities Intermediary does, represent
and covenant that it is not and will not be (as long as it is the Securities
Intermediary hereunder) a party to any agreement in respect of the Collateral
that is inconsistent with the provisions of this Agreement.  Any securities intermediary hereunder shall,
and the Securities Intermediary does, covenant that it will not take action
inconsistent 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 credited
to any Account shall not be subject to any security interest, lien, or right of
setoff in favor of it or anyone claiming through it (other than the Indenture
Trustee).


 


(c)                                  It
is the intent of the Indenture Trustee and the Trust that each of the Reserve
Account, the Collection Account and the Prefunding Account shall be a
securities 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 the
UCC).  Nonetheless, (i) any securities
intermediary hereunder shall agree to comply with entitlement orders originated
by the Indenture Trustee without further consent by the Trust, and (ii) the
Securities Intermediary agrees that so long as it is the Securities
Intermediary hereunder, it will comply with entitlement orders originated by
the Indenture Trustee without further consent by the Trust.  Any securities intermediary hereunder shall
covenant that it will not agree with any person or entity other than the
Indenture Trustee that it will comply with entitlement orders originated by
such person or entity, and the Securities Intermediary hereby covenants that it
will not agree with any person or entity other than the Indenture Trustee that
it will comply with entitlement orders originated by such person or entity.


 


(d)                                 Nothing
herein shall imply or impose upon the Securities Intermediary any duty or
obligations other than those expressly set forth herein and those applicable to
a securities intermediary under the UCC (and the Securities Intermediary shall
be entitled to all of the protections available to a securities intermediary
under the UCC).  Without limiting the
foregoing, nothing herein shall imply or impose upon the Securities
Intermediary any duties of a fiduciary nature.


 


(e)                                  The
Securities Intermediary may at any time resign by notice to the Indenture
Trustee 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 to
appoint a successor securities intermediary and to cause the Accounts to be
established and maintained with such successor securities intermediary in
accordance with the terms hereof; and the responsibilities and duties of the
retiring Securities Intermediary hereunder shall remain in effect until all of
the Collateral credited to the Accounts held by such retiring Securities
Intermediary have been 


 


35

















 


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


 


Section 3.10.                         Policy
Matters.


 


(a)                                  The
Indenture Trustee hereby agrees on behalf of the Class A Noteholders (and each
Class A Noteholder, by its acceptance of its Class A Notes, shall agree) for
the benefit of the Insurer, that the Indenture Trustee shall recognize that to
the extent the Insurer makes a payment under the Policy, either directly or indirectly
(by paying through the Indenture Trustee) to the Class A Noteholders, the
Insurer will be entitled to be subrogated to the rights of the Class A
Noteholders to the extent of such payment made under the Policy.  Any rights of subrogation acquired by the
Insurer as a result of any payment made under the Policy shall, in all
respects, be subordinate and junior in right of payment to the prior
indefeasible payment in full of all amounts due under the Class A Notes.


 


(b)                                 The
Indenture Trustee, for itself and on behalf of the Noteholders, hereby agrees
that the Insurer may at any time during the continuation of any proceeding
relating to a Final Order, provided that no Insurer Default shall have occurred
and be continuing, direct all matters relating to such Final Order, including,
without limitation, the direction of any appeal of any order relating to such
Final Order and the posting of any surety, supersedeas or performance bond
pending any such appeal.  In addition
and without limitation of the foregoing, the Insurer shall be subrogated, to
the extent of any payments made under the Policy relating to a Final Order, to
the rights of the Depositor, the Servicer, the Seller, the Trust, the Indenture
Trustee and the Class A Noteholders in the conduct of any preference claim
relating to a Final Order, including, without limitation, all rights of any
party to any adversarial proceeding or action with respect to any court order
issued in connection with any such preference claim; provided, that such
subrogation rights shall remain subject to the last sentence of paragraph
(a) of this Section 3.10.


 


Article IV


 


The Depositor


 


Section 4.1.                                Representations
and Warranties of the Depositor.


 


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


 


36

















 


(a)                                  Organization
and Good Standing.  The Depositor
has been duly organized and is validly existing as a corporation in good
standing under the laws of the State of Delaware, has the power, authority and
legal right to own its properties and to conduct its business as such
properties are currently owned and such business is currently conducted, and
has the power, authority and legal right to acquire, own and sell the
Contracts.


 


(b)                                 Due
Qualification.  The Depositor is
duly qualified to do business as a foreign corporation in good standing and has
obtained all necessary licenses and approvals in each jurisdiction in which the
failure to so qualify or to obtain such licenses and approvals would, in the
reasonable judgment of the Depositor, materially and adversely affect the
performance by the Depositor of its obligations under, or the validity or
enforceability of, this Agreement, the Indenture, the Trust Agreement, any of
the other Transaction Documents, the Contracts or the Notes.


 


(c)                                  Power
and Authority.  The Depositor has
the power and authority to execute, deliver and perform its obligations under
this Agreement and the other Transaction Documents to which it is a party.  The Depositor has the power and authority to
sell, assign, transfer and convey the property to be transferred to and
deposited with the Trust and has duly authorized such transfer and deposit by
all necessary corporate action, and the execution, delivery and performance of
this Agreement and the other Transaction Documents to which the Depositor is a
party have been duly authorized by the Depositor by all necessary corporate
action.


 


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


 


(e)                                  No
Violation.  The execution, delivery
and performance by the Depositor of this Agreement and the other Transaction
Documents to which the Depositor is a party, the consummation of the
transactions contemplated hereby and thereby and the fulfillment of the terms
hereof and thereof will not conflict with, result in a breach of any of the
terms and provisions of or constitute (with or without notice or lapse of time
or both) a default under the certificate of incorporation or by-laws of the
Depositor or any material indenture, agreement, mortgage, deed of trust or
other instrument to which the Depositor is a party or by which the Depositor is
bound or to which any of its properties are subject, or result in the creation
or imposition of any lien upon any of its properties pursuant to the terms of
any such indenture, agreement, mortgage, deed of trust or other instrument
(other than pursuant to this Agreement), or violate any law, order, rule or
regulation applicable to the Depositor or its properties of any federal or
state regulatory body, court, administrative agency or other governmental
instrumentality having jurisdiction over the Depositor or any of its
properties.


 


(f)                                    No
Proceedings.  There are no
proceedings or investigations pending, or, to the knowledge of the Depositor,
threatened, against the Depositor before any court, regulatory body,


 


37

















 


administrative agency or other tribunal or
governmental instrumentality having jurisdiction over the Depositor or its
properties (i) asserting the invalidity of this Agreement, the Indenture, the
Trust Agreement, any of the other Transaction Documents to which the Depositor
is a party, or the Notes, (ii) seeking to prevent the issuance of the Notes or
the consummation of any of the transactions contemplated by this Agreement, the
Indenture, the Trust Agreement or any of the other Transaction Documents to
which the Depositor is a party, (iii) seeking any determination or ruling that,
in the reasonable judgment of the Depositor, would materially and adversely affect
the performance by the Depositor of its obligations under, or the validity or
enforceability of, this Agreement, the Indenture, the Trust Agreement, any of
the other Transaction Documents to which the Depositor is a party, the
Contracts or the Notes, or (iv) that, in the reasonable judgment of the
Depositor, 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.                                Liability
of Depositor; Indemnities.


 


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


 


(b)                                 Notwithstanding
any other provision in any Transaction Document, the Depositor shall indemnify,
defend and hold harmless the Trust, the Owner Trustee in its individual
capacity, Deutsche Bank Trust Company Americas, and the Indenture Trustee from
and against any taxes that may at any time be asserted against any such Person
with respect to, and as of the date of, the transfer of the Contracts and
Additional Contracts to the Trust or the issuance and original sale of the
Notes, including any sales, gross receipts, general corporation, tangible
personal property, privilege or license taxes (but, in the case of the Trust,
not including any taxes asserted with respect to ownership of the Contracts and
Additional Contracts or federal or other Applicable Tax State income taxes
arising out of the transactions contemplated by this Agreement and the other
Transaction Documents), and all costs and expenses in defending against such
taxes.


 


(c)                                  Notwithstanding
any other provision in any Transaction Document, the Depositor shall indemnify,
defend and hold harmless the Trust, the Owner Trustee in its individual
capacity, Deutsche Bank Trust Company Americas, the Indenture Trustee and the
Noteholders from and against any loss, liability or expense incurred by reason
of (i) the Depositor’s willful misfeasance, bad faith or negligence in the
performance of its duties under this Agreement or any other Transaction
Document to which it is a party or by reason of a reckless disregard of its
obligations and duties under this Agreement or any other Transaction Document
to which it is a party and (ii) the Depositor’s violation of federal or state
securities laws in connection with the registration or the sale of the Notes
and (iii) any action taken, or failed to be taken, by the Depositor in respect
of any portion of the Trust Property.


 


(d)                                 Notwithstanding
any other provision in any Transaction Document, the Depositor shall indemnify,
defend and hold harmless the Owner Trustee in its individual capacity, Deutsche
Bank Trust Company Americas, and the Indenture Trustee and their respective
officers, directors, employees and agents from and against all costs, expenses,
unpaid fees, losses, claims, damages and liabilities arising out of or incurred
in connection with the acceptance or performance of the trusts and duties
contained herein and in the Trust Agreement,


 


38

















 


in the case of the Owner Trustee, and in the
Indenture, in the case of the Indenture Trustee, except to the extent that such
cost, expense, loss, claim, damage or liability (i) shall be due to the willful
misfeasance, bad faith or gross negligence (except for errors in judgment) of
the Owner Trustee or the Indenture Trustee, as applicable, (ii) in the case of
the Owner Trustee, shall arise from the breach by the Owner Trustee of any of
its representations or warranties in its individual capacity set forth in the
Trust Agreement, (iii) in the case of the Indenture Trustee, shall arise from
the breach by the Indenture Trustee of any of its representations and
warranties set forth in the Indenture or (iv) relates to any tax other than the
taxes with respect to which either the Depositor or the Servicer shall be
required to indemnify the Owner Trustee or the Indenture Trustee, as
applicable.


 


(e)                                  The
Depositor shall pay any and all taxes levied or assessed upon all or any part
of the Owner Trust Estate.


 


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


 


Section 4.3.                                Merger or
Consolidation of, or Assumption of the Obligations of, Depositor.


 


Any Person (a) into which
the Depositor shall be merged or consolidated, (b) resulting from any merger,
conversion or consolidation to which the Depositor shall be a party or (c) that
shall succeed by purchase and assumption to all or substantially all of the
business of the Depositor, which Person in any of the foregoing cases executes
an agreement of assumption to perform every obligation of the Depositor under
this Agreement, shall be the successor to the Depositor under this Agreement
without the execution or filing of any other document or any further act on the
part of any of the parties to this Agreement; provided, however,
that (i) the Depositor shall have delivered to the Owner Trustee and the
Indenture Trustee an Officer’s Certificate and an Opinion of Counsel each
stating that such merger, conversion, consolidation or succession and such
agreement of assumption comply with this Section 4.3 and (ii) the
Depositor shall have delivered to the Owner Trustee and the Indenture Trustee
an Opinion of Counsel either (A) stating that, in the opinion of such counsel,
all financing statements and continuation statements and amendments thereto
have been authorized and filed that are necessary to fully preserve and protect
the interest of the Trust and the Indenture Trustee, respectively, in the
Contracts and the other Trust Property, and reciting the details of such
filings, or (B) stating that, in the opinion of such counsel, no such action
shall be necessary to fully preserve and protect such interest.  The Depositor shall provide notice of any
merger, conversion, consolidation or succession pursuant to this Section 4.3
to the Rating Agencies.  Notwithstanding
anything herein to the contrary, the execution of the foregoing agreement of
assumption and compliance with clauses (i) and (ii) above shall be conditions
to the consummation of the transactions referred to in clauses (a), (b) and (c)
above.


 


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Section 4.4.                                Limitation
on Liability of Depositor and Others.


 


(a)                                  Neither
the Depositor nor any of the directors, officers, employees or agents of the
Depositor shall be under any liability to the Trust or the Noteholders for any
action taken or for refraining from the taking of any action pursuant to this
Agreement or for errors in judgment; provided, however, that this
provision shall not protect the Depositor or any such Person against any
liability that would otherwise be imposed by reason of willful misfeasance or
bad faith in the performance of duties or by reason of reckless disregard of
obligations and duties under this Agreement, or by reason of negligence in the
performance of duties under this Agreement (except for errors in
judgment).  The Depositor, and its
directors, officers, employees and agents, may rely in good faith on the advice
of counsel or on any document of any kind prima  facie properly
executed and submitted by any Person in respect of any matters arising under
this Agreement.


 


(b)                                 The
Depositor shall not be under any obligation to appear in, prosecute or defend
any legal action that shall not be incidental to its obligations under this
Agreement and that in its opinion may involve it in any expense or liability.


 


Section 4.5.                                Depositor
May Own Class A Notes.


 


The Depositor, and any
Affiliate 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 would
have if it were not the Depositor or an Affiliate of the Depositor, except as
otherwise expressly provided herein (including in the definition of Class A
Note Balance) or in the other Transaction Documents.  Except as otherwise expressly provided herein (including the
definition 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 shall
have an equal and proportionate benefit under the provisions of this Agreement
and the other Transaction Documents, without preference, priority or
distinction as among the Class A Notes.


 


Section 4.6.                                Covenants
of the Depositor.


 


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


 


(a)                                  not
commingle its assets with those of any other Person;


 


(b)                                 maintain
separate records, financial statements and books of account from those of any
other Person;


 


(c)                                  hold
meetings as appropriate to authorize all action on behalf of the Depositor and observe
all of its other organizational formalities;


 


(d)                                 not
become involved in the day to day management of any other Person;


 


(e)                                  operate
so as not to be substantively consolidated with any other Person;


 


(f)                                    maintain
its assets separately from any other Person (including through the maintenance
of a separate bank account);


 


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(g)                                 hold
itself out as a separate entity from any other Person, shall conduct business
in its own name on its own stationary, invoices and checks, and shall correct
any known misunderstanding regarding its separate identity;


 


(h)                                 except
as is expressly set forth in the Administration Agreement, pay from its assets
all obligations and indebtedness of any kind incurred by it, and shall not pay
from its assets any obligations or indebtedness of any other Person;


 


(i)                                     pay
salaries of its employees, if any, from its own funds, and shall fairly
allocate any expenses shared with an Affiliate;


 


(j)                                     not
guarantee or become obligated for the debts of any other Person or hold out its
credit as being available to satisfy the obligations of others;


 


(k)                                  not
acquire obligations or securities of its members or its Affiliates;


 


(l)                                     allocate
fairly and reasonably any overhead for shared office space;


 


(m)                               maintain
adequate capital and a sufficient number of employees (which may be zero) in
light of its contemplated business activities; and


 


(n)                                 insure
that any financial transaction between the Depositor and any of its Affiliates
shall be on arm’s length, commercially reasonable terms.


 


Article V


 


Miscellaneous


 


Section 5.1.                                Amendment.


 


(a)                                  This
Agreement may be amended from time to time by the Seller, the Servicer, the
Depositor and the Trust, with the consent of the Indenture Trustee and the
Insurer (provided that no Insurer Default shall have occurred and be
continuing), but without the consent of any of the Noteholders, to cure any
ambiguity, to correct or supplement any provision in this Agreement that may be
inconsistent with any other provisions in this Agreement or any offering
document used in connection with the initial offer and sale of the Notes or to
add, change or eliminate any other provisions with respect to matters or
questions arising under this Agreement that are not inconsistent with the
provisions of this Agreement; provided, however, that such
amendment shall not, as evidenced by an Opinion of Counsel delivered to the
Owner Trustee, the Indenture Trustee and the Insurer, materially and adversely
affect the interests of any Noteholder.  Any such amendment shall be deemed not to materially and adversely
affect the interests of any Noteholder if the Rating Agency Condition is
satisfied or the Person requesting the amendment obtains an Opinion of Counsel
satisfactory to the Indenture Trustee and the Owner Trustee to that effect.


 


(b)                                 This
Agreement may also be amended from time to time by the Seller, the Servicer,
the Depositor, the Trust and the Insurer (provided that no Insurer Default
shall have


 


41

















 


occurred and be continuing and if so, provided further
that such amendment shall not have a material adverse effect on the Insurer),
with the consent of the Indenture Trustee and the Holders of Notes evidencing
not less than 51% of the Class A Note Balance, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement, or of modifying in any manner the rights of the Noteholders; provided,
however, that no such amendment shall (i) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, or change the
allocation or priority of, collections on or in respect of the Contracts or
distributions that are required to be made for the benefit of the Noteholders
or change the Note Rate, or the Required Reserve Account Amount, without the
consent of all adversely affected Noteholders (ii) reduce the percentage
required to consent to any such amendment, without the consent of all adversely
affected Noteholders or (iii) adversely affect the rating of the Notes by the
Rating Agencies without the consent of the Holders of Notes evidencing not less
than 66-2/3% of the Class A Note Balance.


 


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


 


(d)                                 Promptly
after the execution of any amendment or consent pursuant to Section 5.1(b),
the Trust shall furnish written notification of the substance of such amendment
or consent to the Indenture Trustee and each of the Rating Agencies.  It shall not be necessary for the consent of
the Noteholders pursuant to Section 5.1(b) to approve the
particular form of any proposed amendment or consent, but it shall be
sufficient if such consent shall approve the substance thereof.  The manner of obtaining such consents (and
any other consents of the Noteholders provided for in this Agreement) and of evidencing
the authorization of the execution thereof by the Noteholders shall be subject
to such reasonable requirements as the Owner Trustee and the Indenture Trustee
may prescribe.


 


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


 


Section 5.2.                                Protection
of Title of Trust.


 


(a)                                  The
Depositor or the Servicer, or both, shall authorize and file such financing
statements 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 to
preserve, maintain and protect the interest of the Trust and the Indenture
Trustee for the benefit of the Noteholders and the Insurer in the Contracts and
the proceeds thereof.  The Depositor or
the Servicer, or both, shall deliver (or


 


42

















 


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


 


(b)                                 Neither
the Depositor, the Seller nor the Servicer shall change its name, identity or
corporate structure in any manner that would make any financing statement or
continuation statement filed by the Depositor or the Servicer in accordance
with Section 5.2(a) seriously misleading within the meaning of
Section 9-507 of the Relevant UCC, unless it shall have given the Owner
Trustee and the Indenture Trustee at least sixty (60) days’ prior written
notice thereof and shall have promptly filed such amendments to previously
filed financing statements or continuation statements or such new financing
statements as may be necessary to continue the perfection of the interest of
the Trust and the Indenture Trustee for the benefit of the Noteholders and the
Insurer in the Contracts and the proceeds thereof.


 


(c)                                  The
Depositor, the Seller and the Servicer shall give the Owner Trustee and the
Indenture Trustee at least sixty (60) days’ prior written notice of any
relocation of its principal executive office or change of its jurisdiction of
formation and shall promptly file any such amendment, continuation statement or
any new financing statement.  The
Servicer shall at all times maintain each office from which it shall service
Contracts, and its principal executive office, within the United States of
America.


 


(d)                                 The
Servicer shall maintain accounts and records as to each Contract accurately and
in sufficient detail to permit (i) the reader thereof to know at any time the
status of such Contract, including payments and recoveries made and payments
owing (and the nature of each) and (ii) reconciliation between payments or
recoveries on (or with respect to) each Contract and the amounts from time to
time deposited in the Collection Account and the Reserve Account in respect of
such Contract.


 


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


 


(f)                                    If
at 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 motor
vehicle retail installment sale contract or security interest and promissory
note to any prospective purchaser, lender or other transferee, the Servicer
shall give to such prospective purchaser, lender or other transferee computer
tapes, compact disks, records or print-outs (including any restored from
back-up archives) that, if they shall refer in any manner whatsoever to any
Contract, shall indicate clearly that such Contract has been sold and is owned
by the Trust and has been pledged to the Indenture Trustee (unless such
Contract has been paid in full or repurchased by the Depositor or purchased by
the Servicer).


 


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(g)                                 The
Servicer shall permit the Owner Trustee, the Indenture Trustee and their respective
agents at any time during normal business hours to inspect, audit and make
copies of and abstracts from the Servicer’s records regarding any Contract.


 


(h)                                 Upon
request, the Servicer shall furnish to the Owner Trustee and the Indenture
Trustee, within ten (10) Business Days, a list of all Contracts (by contract
number and name of Obligor) then held as part of the Trust, together with a
reconciliation of such list to the Contract Schedule and to each of the
Monthly Servicer Reports furnished before such request indicating removal of
Contracts from the Trust.


 


(i)                                     The
Servicer shall deliver to the Owner Trustee and the Indenture Trustee:


 


(i)                                     promptly
after 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 and
filed that are necessary fully to preserve and protect the interest of the
Trust and the Indenture Trustee in the Contracts, and reciting the details of
such filings or referring 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 necessary to preserve and protect such interest; and


 


(ii)                                  within
ninety (90) days after the beginning of each calendar year (beginning with the
year 2004), an Opinion of Counsel, dated as of a date during such 90-day
period, either (A) stating that, in the opinion of such counsel, all financing
statements and continuation statements have been authorized and filed that are
necessary fully to preserve and protect the interest of the Trust and the
Indenture Trustee in the Contracts, and reciting the details of such filings or
referring 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 necessary
to preserve and protect such interest.


 


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


 


Section 5.3.                                Governing
Law.


 


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


 


Section 5.4.                                Notices.


 


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

















 


following address: 675
Bering Drive, Suite 710, Houston, Texas 77057, Attention: Bennie Duck, (d) in
the case of the Owner Trustee, at the related Corporate Trust Office, with a
copy to Deutsche Bank Trust Company Americas, 60 Wall Street, 26th
Floor, New York, New York 10005, Attention: Structured Finance Services, (e) in
the 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’s
Ratings Services, a division of The McGraw-Hill Companies, Inc., 55 Water
Street, New York, New York 10041, Attention: Asset Backed Surveillance
Department, 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, Structured
Finance.


 


Section 5.5.                                Severability
of Provisions.


 


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


 


Section 5.6.                                Assignment.


 


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


 


Section 5.7.                                Further
Assurances.


 


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


 


Section 5.8.                                No
Waiver; Cumulative Remedies.


 


No failure to exercise
and no delay in exercising, on the part of the Owner Trustee, the Indenture
Trustee, the Insurer or the Noteholders, any right, remedy, power or privilege
hereunder, shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power
or privilege.  The rights, remedies,
powers and privileges provided in this Agreement are cumulative and not
exhaustive of any rights, remedies, powers and privileges provided by law.


 


45

















 


Section 5.9.                                Third-Party
Beneficiaries.


 


This Agreement shall
inure to the benefit of and be binding upon the parties hereto, the Noteholders
and their respective successors and permitted assigns.  Except as otherwise provided in Section 4.2
and this Article V, no other Person shall have any right or obligation
hereunder.  The parties hereto hereby
acknowledge and consent to the pledge of this Agreement by the Trust to the
Indenture Trustee for the benefit of the Noteholders and the Insurer pursuant
to the Indenture.  The Insurer is an
express third party beneficiary of this Agreement and is entitled to enforce
the provisions hereof as if a party hereto.


 


Section 5.10.                         Actions
by Noteholders.


 


(a)                                  Wherever
in 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 or
instruction may be taken or given by any Noteholder, as applicable, unless such
provision requires a specific percentage of the Noteholders.


 


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


 


Section 5.11.                         Counterparts.


 


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


 


Section 5.12.                         [Reserved].


 


Section 5.13.                         No
Bankruptcy.


 


The Owner Trustee, the
Indenture Trustee, the Trust, the Seller, the Depositor and the Servicer each
covenants and agrees that, prior to the date which is one year and one day
after the payment in full of all securities issued by the Trust, which
securities were rated by any nationally recognized statistical rating
organization, it will not institute against, or join any other Person in
instituting against, or knowingly or intentionally cooperate or encourage any
other Person in instituting against, the Depositor or the Trust any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
proceedings under any federal or state bankruptcy or similar law.  This Section 5.13 shall survive
the resignation or removal of the Owner Trustee under the Trust Agreement and
the Indenture Trustee under the Indenture and shall survive the termination of
the Trust Agreement and the Indenture.


 


Section 5.14.                         Limitation
of Liability of Owner Trustee and Indenture Trustee.


 


(a)                                  Notwithstanding
anything contained herein or contemplated hereby to the contrary, this
Agreement has been signed by the Owner Trustee not in its individual capacity
but solely in its capacity as Owner Trustee of the Trust, and in no event shall
the Owner Trustee in


 


46

















 


its individual capacity have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Trust hereunder or in any of the certificates, notices or agreements delivered
pursuant hereto or contemplated hereby, as to all of which recourse shall be
had solely to the assets of the Trust. 
For all purposes of this Agreement, the Owner Trustee (as such and in
its individual capacity) shall be subject to, and entitled to the benefits of,
the terms and provisions of the Trust Agreement.


 


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


 


Section 5.15.                         Certain
Rights of the Insurer.


 


So long as no Insurer
Default shall have occurred and be continuing, the Insurer shall have the right
to exercise all rights, including voting rights, which the Class A Noteholders
are 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 set
forth in the proviso to paragraph (b) of Section 5.1 of this
Agreement.


 


Section 5.16.                         Optional
Redemption.


 


(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 Initial
Cutoff Date and (b) the sum, for each Additional Contract Cutoff Date, of the
Aggregate Principal Balances of all Contracts that became Additional Contracts
on such Additional Contract Cutoff Date, the Depositor shall have the option to
purchase, on the following Payment Date, the Owner Trust Estate, other than the
Collection Account, the Class A Note Payment Account, the Class B Note Payment
Account, the Prefunding Account and  the
Reserve Account.  To exercise such
option, the Depositor shall notify in writing the Owner Trustee, the Indenture
Trustee and the Insurer no later than fifteen (15) days prior to the Payment
Date on which such repurchase is to be effected (the “Prepayment Date”) and
shall deposit into the Collection Account on the Business Day preceding such
Payment Date an amount equal to the aggregate Purchase Amount for the
Contracts, plus the appraised value of any other Trust Property, other
than the Collection Account, the Class A Note Payment Account, the Class B Note
Payment Account, the Prefunding Account or the Reserve Account, such value to
be determined by an appraiser mutually agreed upon by the Servicer, the Trust,
the Indenture Trustee and the Insurer; provided, however, that
the Depositor shall not be permitted to exercise such option unless the amount
to 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 Note
Balance plus all accrued but unpaid interest (including any overdue interest)
on the Class A Notes plus all amounts due the Insurer under the
Insurance Agreement and the Policy. 
Upon such payment, the Depositor shall succeed to and own all interests in
and to the Owner Trust Estate other than the Collection Account, the Class A
Note Payment Account, the Class B Note Payment, the


 


47

















 


Prefunding Account and the Reserve Account.  Such payment amount, plus, to the
extent necessary, all amounts in the Collection Account, the Class A Note
Payment Account, the Class B Note Payment Account, the Prefunding Account and
the Reserve Account, shall be used to make payments in full to the Noteholders
and 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, the
Depositor’s long-term unsecured debt has a rating lower than investment grade
by any Rating Agency, the Depositor shall deliver to the Owner Trustee and the
Indenture Trustee on such Payment Date (i) a letter from an Independent
investment bank or an Independent public accountant to the effect that the
price paid by the Depositor for the Owner Trust Estate other than the Collection
Account, the Class A Note Payment Account, the Class B Note Payment Account,
the Prefunding Account and the Reserve Account at the time of transfer pursuant
to 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 is
required.


 


Section 5.17.                         Subordination.


 


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


 


Section 5.18.                         Non-Confidential.


 


Notwithstanding
anything herein or in any express or implied agreement or understanding to the
contrary, any party to this Agreement (and any employee, representative or


 


48

















 


other
agent 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 the
transactions contemplated by this Agreement and all materials of any kind
(including opinions or other tax analyses) that are provided to it relating to
such tax treatment and tax structure; provided, however, that
such disclosure may not be made to the extent required to be kept confidential
to comply with any applicable federal or state securities laws; and provided
further that (to the extent not inconsistent with the foregoing) such
disclosure shall be made without disclosing the names or other identifying
information of any party.


 


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INTENTIONALLY LEFT BLANK]


 


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IN WITNESS WHEREOF, the
parties hereto have caused this Sale and Allocation Agreement to be duly
executed by their respective officers, thereunto duly authorized, all as of the
day 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 BANK
MINNESOTA, NATIONAL ASSOCIATION,


not in its individual
capacity but solely as Indenture Trustee and 

Securities Intermediary


 


	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  



 


Sale and
Allocation Agreement Signature Page


 

















 


Schedule 1


 


Contract Schedule


 


 


Schedule 1

















 


Schedule 2


 


Location of
Contract Files


 


Sixth Street and
Marquette Avenue


MAC N9328-011


Suite ABS


751 Kasota Avenue


Minneapolis, MN 55414


Attn:  Corporate Trust Services — Asset Backed
Securities Vault


 


Schedule 2

















 


Schedule 3


 


Perfection
Representations, Warranties and Covenants


 


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


 


General


 


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


 


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


 


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


 


Creation


 


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


 


Perfection


 


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


 


2.                                       With
respect to Collateral that constitutes tangible chattel paper, such tangible
chattel paper is in the possession of the Custodian.  All financing statements filed or to be filed against the
Depositor in favor of the Trust in connection with this Agreement describing
the Collateral contain a statement to the following effect: “A purchase of or
security interest in any collateral described in this financing statement will
violate the rights of the Secured Party.”


 


Priority


 


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


 


Schedule 3 - 1

















 


any of the
Collateral.  Neither the Seller nor the
Depositor has authorized the filing of, or is aware of any financing statements
against either the Seller or the Depositor that includes a description of the
Collateral and proceeds related thereto other than any financing statement:  (i) relating to the transfer of the
Contracts 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 this
Agreement; (iii) relating to the security interest granted to the Indenture Trustee
by the Trust under the Indenture; or (iv) that has been terminated or amended
to reflect a release of the Collateral.


 


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


 


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


 


Survival of Perfection
Representations


 


1.                                       Notwithstanding
any other provision of this Agreement, the Contribution Agreement, the
Indenture 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 under
this Sale and Allocation Agreement, the Contribution Agreement and the
Indenture have been finally and fully paid and performed.


 


No Waiver


 


1.                                       The
parties hereto: (i) shall not, without obtaining a confirmation of the
then-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 of
the Perfection Representations, Warranties or Covenants, and shall not, without
obtaining a confirmation of the then-current rating of the Class A Notes
(without giving effect to the Policy) as determined after any adjustment or
withdrawal of the ratings following notice of such breach) waive a breach of
any of the Perfection Representations, Warranties or Covenants


 


Schedule 3 - 2

















 


Exhibit A


 


Form of Monthly
Servicer Report


 


 


Exhibit A

















 


Exhibit B


 


[Reserved]


 


Exhibit B

















 


Exhibit C


 


Credit and
Collection Policy


 


Exhibit C

















 


Exhibit D


 


[Reserved]


 


Exhibit D

















 


Exhibit E


 


Form of Originator
Agreement


 


Exhibit E -1

















 


Exhibit F


 


Form Of Additional
Contract Assignment


 


For value received, in
accordance with the Sale and Allocation Agreement (the “Sale and Allocation Agreement”),
dated as of November 20, 2003, by and among First Investors Financial
Services, Inc., First Investors Servicing Corporation, First Investors Auto
Funding Corporation, Wells Fargo Bank Minnesota, National Association and First
Investors Auto Owner Trust 2003-A (the “Purchaser”) the undersigned does
hereby sell, transfer, assign and otherwise convey unto the Purchaser, without
recourse (subject to the obligations in the Sale and Allocation Agreement) all
right, title and interest of the Seller in and to (i) the Additional Contracts
listed on Schedule 1 hereto, (ii) all amounts received on or in
respect of such Additional Contracts after the Additional Cutoff Date related
thereto; (iii) the security interests in the Financed Vehicles related thereto;
(iv) any proceeds from claims on or refunds of premiums with respect to
extended warranties or physical damage, theft, credit life and credit
disability insurance policies relating to the Financed Vehicles or the related
Obligors with respect to such Additional Contracts; (v) any Liquidation
Proceeds with respect to such Additional Contracts; (vi) the Contract Files
with respect to such  Additional
Contracts; (vii) rights under the Contribution Agreement to cause the Seller to
purchase such Additional Contracts affected materially and adversely by
breaches of the representations and warranties of the Seller made in the
Contribution Agreement; (viii) rights under the Servicing Agreement to cause
the Servicer to purchase such Additional Contracts affected materially and
adversely by breaches of the representations and warranties of the Servicer
made 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 the
foregoing and all payments on or under and all proceeds of every kind and
nature whatsoever in respect of any or all of the foregoing, including all
proceeds of the conversion thereof, voluntary or involuntary, into cash or
other liquid property, all cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, insurance
proceeds, condemnation awards, rights to payment of any and every kind and
other forms of obligations and receivables, instruments and other property
which at any time constitute all or part of or are included in the proceeds of
any of the foregoing.


 


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


 


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


 


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


 


Exhibit F-2

















 


conditions precedent set
forth in Section 2.1(f) of the Sale and Allocation Agreement has
been satisfied.


 


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


 


IN WITNESS WHEREOF, the
undersigned has caused this Additional Contract Assignment to be executed by
its officer thereunto duly authorized, as of
                                ,
200[  ].


 


	
   

  	
  FIRST INVESTORS
  FINANCIAL SERVICES, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  



 


Exhibit F -3

















 


Schedule 1


to


Additional
Contract Assignment


Dated


 


                    ,
200[  ]


 


List of Additional
Contracts


 


Schedule 1 to

Additional Contract Assignment