Exhibit 10.117


 


EXECUTION COPY


 




 


MBIA INSURANCE CORPORATION,


as
Insurer


 


FIRST INVESTORS SERVICING CORPORATION,


as
Servicer


 


FIRST INVESTORS FINANCIAL SERVICES, INC.


as
Seller and as Administrator


 


FIRST INVESTORS AUTO FUNDING CORPORATION,


as
Depositor


 


FIRST INVESTORS AUTO OWNER TRUST 2005-A,


as
Issuer


 


WELLS FARGO DELAWARE TRUST COMPANY,


as
Owner Trustee


 


WELLS FARGO BANK, NATIONAL ASSOCIATION,


as
Back-up Servicer and Indenture Trustee


 


 


INSURANCE AGREEMENT


 





First Investors
Auto Owner Trust 2005-A

$69,000,000 3.57% Class A-l Asset-Backed Notes

$106,493,000 4.23% Class A-2 Asset-Backed Notes


 


Dated as of May 5,
2005




 





 





















 


	
   

  	
   

  	
  TABLE OF CONTENTS

  	
   

  



 


	
   

  	
   

  	
  ARTICLE I

  	
   

  
	
  DEFINITIONS

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARTICLE II

  	
   

  
	
   

  	
   

  	
  REPRESENTATIONS,
  WARRANTIES AND COVENANTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.01.

  	
   

  	
  Representations and Warranties of the
  Servicer, the Seller and the Depositor

  	
   

  
	
  Section 2.02.

  	
   

  	
  Affirmative Covenants of the Servicer,
  the Seller and the Depositor

  	
   

  
	
  Section 2.03.

  	
   

  	
  Negative Covenants of the Servicer, the
  Seller and the Depositor

  	
   

  
	
  Section 2.04.

  	
   

  	
  Representations and Warranties of the
  Issuer

  	
   

  
	
  Section 2.05.

  	
   

  	
  Affirmative Covenants of the Issuer

  	
   

  
	
  Section 2.06.

  	
   

  	
  Negative Covenants of the
  Issuer

  	
   

  
	
  Section 2.07.

  	
   

  	
  Representations,
  Warranties and Covenants of Indenture Trustee and Back-up Servicer

  	
   

  
	
  Section 2.08.

  	
   

  	
  Representations,
  Warranties and Covenants of Owner Trustee

  	
   

  
	
  Section 2.09.

  	
   

  	
  Negative Covenant
  of the Administrator

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARTICLE III

  	
   

  
	
   

  	
   

  	
  THE
  POLICY; REIMBURSEMENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.01.

  	
   

  	
  Issuance of the Policy

  	
   

  
	
  Section 3.02.

  	
   

  	
  Payment of Fees and
  Insurance Premium

  	
   

  
	
  Section 3.03.

  	
   

  	
  Reimbursement and
  Additional Payment Obligation

  	
   

  
	
  Section 3.04.

  	
   

  	
  Indemnification;
  Limitation of Liability

  	
   

  
	
  Section 3.05.

  	
   

  	
  Payment Procedure

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARTICLE IV

  	
   

  
	
   

  	
   

  	
  FURTHER
  AGREEMENTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.01.

  	
   

  	
  Effective Date; Term of
  the Insurance Agreement

  	
   

  
	
  Section 4.02.

  	
   

  	
  Further Assurances and
  Corrective Instruments

  	
   

  
	
  Section 4.03.

  	
   

  	
  Obligations
  Absolute

  	
   

  
	
  Section 4.04.

  	
   

  	
  Assignments;
  Reinsurance; Third-Party Rights

  	
   

  
	
  Section 4.05.

  	
   

  	
  Liability of the
  Insurer

  	
   

  
	
  Section 4.06.

  	
   

  	
  Parties
  Will Not Institute Insolvency Proceedings

  	
   

  
	
  Section 4.07.

  	
   

  	
  Indenture
  Trustee, Depositor, Back-up Servicer, Seller and Servicer To Join in
  Enforcement Action

  	
   

  



 





















 


	
  Section 4.08.

  	
   

  	
  Subrogation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARTICLE V

  	
   

  
	
   

  	
   

  	
  DEFAULTS;
  REMEDIES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.01.

  	
   

  	
  Defaults

  	
   

  
	
  Section 5.02.

  	
   

  	
  Remedies; No Remedy
  Exclusive

  	
   

  
	
  Section 5.03.

  	
   

  	
  Waivers

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARTICLE VI

  	
   

  
	
   

  	
   

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.01.

  	
   

  	
  Amendments, Etc

  	
   

  
	
  Section 6.02.

  	
   

  	
  Notices

  	
   

  
	
  Section 6.03.

  	
   

  	
  Severability

  	
   

  
	
  Section 6.04.

  	
   

  	
  Governing Law

  	
   

  
	
  Section 6.05.

  	
   

  	
  Consent to
  Jurisdiction

  	
   

  
	
  Section 6.06.

  	
   

  	
  Consent of the Insurer

  	
   

  
	
  Section 6.07.

  	
   

  	
  Counterparts

  	
   

  
	
  Section 6.08.

  	
   

  	
  Headings

  	
   

  
	
  Section 6.09.

  	
   

  	
  Trial by Jury Waived

  	
   

  
	
  Section 6.10.

  	
   

  	
  Limited Liability

  	
   

  
	
  Section 6.11.

  	
   

  	
  Entire Agreement

  	
   

  
	
  Section 6.12.

  	
   

  	
  Limitation of Liability

  	
   

  
	
  Section 6.13.

  	
   

  	
  Limited Recourse

  	
   

  
	
  Section 6.14.

  	
   

  	
  Subordination

  	
   

  



 


ii





















 


INSURANCE
AGREEMENT


 


This INSURANCE
AGREEMENT (this “Insurance Agreement”), dated as of May 5, 2005
by and among FIRST INVESTORS FINANCIAL
SERVICES, INC. as seller (together with its permitted successors and
assigns, the “Seller”) and as Administrator, FIRST
INVESTORS SERVICING CORPORATION, as Servicer (together with its
permitted successors and assigns, the “Servicer”), FIRST INVESTORS AUTO FUNDING CORPORATION, as Depositor (the “Depositor”),
FIRST INVESTORS AUTO OWNER TRUST 2005-A, as
Issuer (the “Issuer” or the “Trust”), WELLS
FARGO DELAWARE TRUST COMPANY, as Owner Trustee (the “Owner Trustee”)
MBIA INSURANCE CORPORATION, as
Insurer (the “Insurer”), WELLS FARGO BANK,
NATIONAL ASSOCIATION, as Back-up Servicer (the “Back-up Servicer”)
and as Indenture Trustee (the “Indenture Trustee”).


 


WHEREAS, the Indenture dated as of May 5, 2005 (the “Indenture”)
relating to the First Investors Auto Owner Trust 2005-A $69,000,000 3.57% Class A-l
Asset-Backed Notes and $106,493,000 4.23% Class A-2 Asset-Backed Notes
(the “Obligations”), between the Issuer and the Indenture Trustee, in its
capacity as Indenture Trustee and Custodian, provides for, among other things,
the issuance of asset backed notes and the Insurer has issued its note guaranty
insurance policy (the “Policy”) that guarantees certain payments on the
Obligations;


 


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


 


WHEREAS, the Servicer, the
Seller, the Depositor and the Issuer have undertaken certain obligations in
consideration for the Insurer’s issuance of the Policy;


 


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


 


ARTICLE I


 


DEFINITIONS


 


The terms defined in this Article I shall have
the meanings provided herein for all purposes of this Insurance Agreement,
unless the context clearly requires otherwise, in both singular and plural
form, as appropriate. Unless the context clearly requires otherwise, all
capitalized terms used herein and not otherwise defined in this Article I
shall have the meanings assigned to them in the Indenture, the Sale and
Allocation Agreement, or the Servicing Agreement. All words used herein shall
be construed to be of such gender or number as the circumstances require. This “Insurance
Agreement” shall mean this Insurance Agreement as a whole and as the same may,
from time to time hereafter, be amended, supplemented or modified. The words “herein,”
“hereby,” “hereof,” “hereto,” “hereinabove” and “hereinbelow,” and words of
similar import, refer to this Insurance Agreement as a whole and not to any
particular paragraph, clause or other subdivision hereof, unless otherwise
specifically noted.


 





















 


“Adjusted
Net Income” means,
for any period and any Person, such Person’s consolidated net income (or loss)
determined in accordance with GAAP, but excluding: (a) the income of any
other Person (other than its Subsidiaries) in which such Person or any of its
Subsidiaries has an ownership interest, unless received by such Person or its
Subsidiary in a cash distribution; (b) any after-tax gains or losses
attributable to an asset disposition other than in the ordinary course of
business; and (c) to the extent not included in clause (a) and clause
(b) above, any after-tax extraordinary, non-cash or nonrecurring gains or
losses.


 


“Administration
Agreement” means the
Administration Agreement dated as of May 5, 2005, between the
Administrator, the Issuer and the Indenture Trustee as the same may be amended
or supplemented from time to time in accordance with the terms thereof.


 


“Administrator” means First Investors Financial Services, Inc.
or any successor Administrator under the Administration Agreement.


 


“Adverse
Selection Procedure” means
any method of selecting or identifying a Contract eligible to be included in
the Trust Estate, other than in accordance with the Transaction Documents, that
materially and adversely affects the representative nature of the sample of
Contracts so selected.


 


“Business
Day” means any day
other than (a) a Saturday or a Sunday or (b) 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.


 


“Change in Control” shall mean the occurrence of any of the
following (a) any Person shall, at any time following the Closing Date,
acquire 51% or more of the total outstanding shares of FIFSG; (b) any
Person shall, at any time following the Closing Date, acquire directly or
indirectly 51% or more of the voting control with respect to the total outstanding
shares of FIFSG; (c) FIFSG shall cease to own, directly or indirectly, 51%
or more of the total outstanding shares of the Seller or the Servicer; or (d) FIFSG
shall not have directly or indirectly 51% or more of the voting control with
respect to the total outstanding shares of the Seller or the Servicer.


 


“Code” means the Internal Revenue Code of 1986,
including, unless the context otherwise requires, the rules and
regulations thereunder, as amended from time to time.


 


“Commission” means the Securities and Exchange Commission.


 


“Contribution Agreement” means the Contribution Agreement dated as of May 5,
2005 between the Seller and the Depositor.


 


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


 


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


 


2





















 


“Documents” shall have the meaning set forth in Section 2.01(j)
hereof.


 


“EBITDA” means, for any period and any Person, the
total of the following (calculated without duplication) for such Person on a
consolidated basis for such period: (a) Adjusted Net Income; plus (b) any
provision for (or less any benefit from) income or franchise taxes deducted in
determining Net Adjusted Income; plus (c) Interest Expense deducted in
determining Adjusted Net Income; plus amortization and depreciation expense
deducted in determining Adjusted Net Income, plus (e) other noncash
charges deducted in determining Net Adjusted Income and no already deducted in
accordance with clause (d) above or claus (b) and clause (c) of
the definition of Adjusted Net Income; minus (f) noncash credits included
in determining consolidated Adjusted Net Income and not already excluded in
accordance with the definitions of Adjusted Net Income.


 


“EBIDTA Coverage Ratio” means the ratio of EBITDA to Interest
Expense.


 


“Event of Default” means any event of default specified in Section 5.01
hereof.


 


“FIFSG” means First Investors Financial Services
Group, Inc.


 


“Financial Statements” means, with respect to FIFSG, the balance
sheets and the statements of income, retained earnings and cash flows and the
notes thereto which have been provided to the Insurer by FIFSG.


 


“Fiscal Agent”
means the Fiscal
Agent, if any, designated pursuant to the terms of the Policy.


 


“GAAP” means generally accepted accounting
principles of the United States as in effect from time to time.


 


“Guaranty” means the Guaranty entered into as of May 5,
2005, by First Investors Financial Services, Inc., as Guarantor, the
Servicer, the Back-up Servicer and the Indenture Trustee.


 


“Indemnification
Agreement” means the
Indemnification Agreement dated as of April 27, 2005, among the Insurer,
the Seller and the Initial Purchaser.


 


“Indenture”
means the Indenture
dated as of May 5, 2005 between the Issuer and the Indenture Trustee and
Custodian as the same may be amended or supplemented from time to time in
accordance with the terms thereof.


 


“Indenture
Trustee” means Wells
Fargo Bank, National Association, a national banking association, as Indenture
Trustee under the Indenture, and any successor Indenture Trustee under the
Indenture.


 


“Initial Purchaser” means Wachovia Capital Markets, LLC.


 


3





















 


“Insurance Premium” means the premium payable in accordance with Section 3.02
hereof.


 


“Insurer
Default” means the
occurrence and continuance of any failure of the Insurer to make payments under
the Policy in accordance with its terms.


 


“Insurer Insolvency” means (i) the entry against the Insurer
of a decree or order by a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a trustee, conservator,
receiver or liquidator in any insolvency, conservatorship, receivership,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding up or liquidation of the Insurer’s affairs, and
the continuance of any such decree or order unstayed and in effect or (ii) the
consent by the Insurer to the appointment of a trustee, conservator, receiver
or liquidator in any insolvency, conservatorship, receivership, readjustment of
debt, marshalling of assets and liabilities or similar proceedings of or
relating to such Insurer as of or relating to substantially all of its
property, or such Insurer shall admit in writing its liability to pay its debts
generally as they become due, file a petition (or have one filed against such
Insurer) to take advantage of any applicable insolvency or reorganization
statute, make an assignment for the benefit of its creditors, or suspend
(voluntarily or involuntarily) payment of its obligations.


 


“Interest
Expense” means, for
any period and any Person, interest expense of such Person calculated without
duplication on a consolidated basis for such period in accordance with GAAP.


 


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


 


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


 


“Liabilities” shall have the meaning ascribed to such term
in Section 3.04(a) hereof.


 


“Material
Adverse Change” means,
in respect of any Person, a material adverse change in (i) the business,
financial condition, results of operations or properties of such Person or (ii) the
ability of such Person to perform its obligations under any of the Transaction
Documents.


 


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


 


“Obligations” shall have the meaning as defined in the
Policy.


 


4





















 


“Obligor” means the original obligor under each
Contract, including any guarantor of such obligor and their respective
successors.


 


“Offering
Document” means the
offering memorandum dated April 27, 2005 in respect of the Obligations
(and any amendment or supplement thereto) and any other offering document in
respect of the Obligations prepared by the Servicer, the Seller, Depositor or
the Issuer that makes reference to the Policy.


 


“Opinion
Facts and Assumptions” means
the facts and assumptions contained in the insolvency opinions dated May 5,
2005 by Dechert LLP under the heading “Facts and Assumptions” insofar as they
relate to the Seller, the Issuer and the Depositor.


 


“Owners” means registered holders of Obligations.


 


“Owner
Trustee” means Wells
Fargo Delaware Trust Company, not in its individual capacity, but solely as
Owner Trustee of the Issuer.


 


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


 


“Premium
Percentage” shall
have the meaning ascribed to such term in Section 3.02 hereof.


 


“Premium
Side Letter Agreement” means
that certain Premium Letter dated as of May 5, 2005 among the Seller, the
Issuer, the Servicer, and the Insurer specifying the up-front Insurance Premium
payable on the Closing Date and the monthly Insurance Premium payable to the
Insurer pursuant to the Indenture.


 


“Purchase
Agreement” means the
Purchase Agreement between among the Initial Purchaser, the Seller and the
Issuer with respect to the offer and sale of the Obligations, as the same may
be amended from time to time.


 


“Sale and
Allocation Agreement” means
the Sale and Allocation Agreement dated as of May 5, 2005, among the
Servicer, the Indenture Trustee, the Depositor, the Securities Intermediary,
and the Issuer as the same may be amended or supplemented from time to time in
accordance with the terms thereof.


 


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


 


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


 


“Servicing
Agreement” means the
Servicing Agreement dated as of May 5, 2005 among the Servicer, the
Back-up Servicer, and the Issuer.


 


5





















 


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


 


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


 


“Transaction”
means the
transactions contemplated by the Transaction Documents, including the
transactions described in the Offering Document.


 


“Transaction Documents” means this Insurance Agreement, the Premium
Side Letter Agreement, the Indenture, the Guaranty, the Trust Agreement, the
Certificate of Trust, the Sale and Allocation Agreement, the Contribution
Agreement, the Servicing Agreement, the Administration Agreement, the Purchase
Agreement, and the Obligations.


 


“Trust” means the trust created pursuant to the
Indenture.


 


“Trust
Agreement” means the
Amended and Restated Trust Agreement dated as of May 5, 2005 among the
Depositor and the Owner Trustee as the same may be amended or supplemented from
time to time in accordance with the terms thereof.


 


“Trust
Indenture Act” means
the Trust Indenture Act of 1939, including, unless the context otherwise
requires, the rules and regulations thereunder, as amended from time to
time.


 


ARTICLE II


 


REPRESENTATIONS,
WARRANTIES AND COVENANTS


 


Section 2.01. Representations and Warranties of
the Servicer, the Seller and the Depositor. The Servicer, the Seller and the Depositor
represent, warrant and covenant as of the Date of Issuance, each as to those
matters relating to itself, as follows:


 


(a)                                 Due Organization and
Qualification. Each of the
Servicer, the Seller and the Depositor is a corporation, duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction of incorporation. Each of the Servicer, the Seller and the
Depositor is duly qualified to do business, is in good standing and has obtained
all licenses, permits, charters, registration and approvals (together, “approvals”)
necessary for the conduct of its business as currently conducted and as described
in the Offering Document and the performance of its obligations under the Transaction
Documents, in each jurisdiction in which the failure to be so qualified or to obtain
such approvals would render any Transaction Document unenforceable in any respect
or would have a material adverse effect upon the Transaction, the Owners or the
Insurer.


 


(b)                                Power and Authority.  Each of the Servicer, the Seller and the Depositor has all necessary
corporate power and authority to conduct its business as currently


 


6





















 


conducted and, as described in the Offering Document, to execute,
deliver and perform its obligations under the Transaction Documents and to
consummate the Transaction.


 


(c)                                 Due Authorization. The execution, delivery and performance of
the Transaction Documents by the Servicer, the Seller and the Depositor have
been duly authorized by all necessary corporate action and do not require any
additional approvals or consents of, or other action by or any notice to or
filing with any Person, including, without limitation,  any governmental entity or the Servicer’s,  the Seller’s or the Depositor’s stockholders,
which have not previously been obtained or given by the Servicer, the Seller or
the Depositor.


 


(d)                                Noncontravention. None of the execution and delivery of the
Transaction Documents by the Servicer, the Seller or the Depositor, the
consummation of the Transaction contemplated thereby or the satisfaction of the
terms and conditions of the Transaction Documents:


 


(i)                                    conflicts with or results in any breach or
violation of any provision of the certificate of incorporation or bylaws of the
Servicer, the Seller or the Depositor or any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award currently in effect
having applicability to the Servicer, the Seller or the Depositor or any of
their material properties, including regulations issued by an administrative
agency or other governmental authority having supervisory powers over the
Servicer, the Seller or the Depositor;


 


(ii)                                 constitutes a default by the Servicer, the
Seller or the Depositor under or a breach of any provision of any loan
agreement, mortgage, indenture or other agreement or instrument to which the
Servicer, the Seller or the Depositor is a party or by which any of its or
their respective properties, which individually or in the aggregate could have
a material adverse effect on the Transaction; or


 


(iii)                              results in or requires the creation of any
lien upon or in respect of any assets of the Servicer, the Seller or the
Depositor, except as contemplated by the Transaction Documents.


 


(e)                                 Legal Proceedings.  There is no action, proceeding or investigation by or before any court,
governmental or administrative agency or arbitrator against or affecting the
Servicer, the Seller, the Depositor or any of its or their subsidiaries, or any
properties or rights of the Servicer, the Seller, the Depositor or any of its
or their subsidiaries, pending or, to the Servicer’s, the Seller’s or the Depositor’s
knowledge after reasonable inquiry, threatened, which, in any case, could
reasonably be expected to result in a Material Adverse Change with respect to
the Servicer, the Seller or the Depositor.


 


(f)                                   Valid and Binding Obligations.
The Obligations, when executed,
authenticated and issued in accordance with the Indenture, and the Transaction Documents
(other than the Obligations), when executed and delivered by the Servicer, the
Seller and the Depositor, will constitute the legal, valid and binding obligations
of the


 


7





















 


Servicer, the Seller, the Depositor and the Trust, as applicable,
enforceable in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors’ rights generally and
general equitable principles and public policy considerations as to rights of
indemnification for violations of federal securities laws. None of the
Servicer, the Seller or the Depositor will at any time in the future deny that
the Transaction Documents constitute the legal, valid and binding obligations
of the Servicer, the Seller, the Depositor or the Trust, as applicable.


 


(g)                                Financial Statements. The Financial Statements of FIFSG, copies of
which have been furnished to the Insurer, (i) are, as of the dates and for
the periods referred to therein, complete and correct in all material respects,
(ii) present fairly the financial condition and results of operations of
the companies reported therein as of the dates and for the periods indicated
and (iii) have been prepared in accordance with generally accepted
accounting principles consistently applied, except as noted therein (subject as
to interim statements to normal year-end adjustments). Since the date of the
most recent Financial Statements, there has been no Material Adverse Change in
respect of the Servicer or the Seller. Except as disclosed in the Financial
Statements, the Servicer and the Seller are not subject to any contingent
liabilities or commitments that, individually or in the aggregate, have a
material possibility of causing a Material Adverse Change in respect of the
Servicer or the Seller.


 


(h)                                Compliance With Law, Etc. No practice, procedure or policy employed, or
proposed to be employed, by the Servicer, the Seller or the Depositor in the
conduct of its business violates any law, regulation, judgment, agreement,
order or decree applicable to any of them that, if enforced, could reasonably
be expected to result in a Material Adverse Change with respect to the
Servicer, the Seller or the Depositor. None of the Servicer, the Seller and the
Depositor is in breach of or in default under any applicable law or
administrative regulation of its respective jurisdiction of incorporation, or
any department, division, agency or instrumentality thereof or of the United
States or any applicable judgment or decree or any loan agreement, note,
resolution, certificate, agreement or other instrument to which the Servicer,
the Seller or the Depositor is a party or is otherwise subject which, if
enforced, would have a material adverse effect on the ability of the Servicer,
the Seller or the Depositor, as the case may be, to perform its respective
obligations under the Transaction Documents.


 


(i)                                    Taxes. The Servicer, the Seller and the Depositor
and the Servicer’s, the Seller’s and the Depositor’s parent company or
companies have filed prior to the date hereof all federal and state tax returns
that are required to be filed and paid all taxes, including any assessments
received by them that are not being contested in good faith, to the extent that
such taxes have become due, except for any failures to file or pay that,
individually or in the aggregate, would not result in a Material Adverse Change
with respect to the Servicer, the Seller or the Depositor.


 


(j)                                    Accuracy of Information. Neither the Transaction Documents, nor other
information relating to the Contracts, the operations of the Servicer, the
Seller or the


 


8





















 


Depositor (including servicing or origination of
loans) or the financial condition of the Servicer, the Seller or the Depositor
(collectively, the “Documents”), as amended, supplemented or superseded,
furnished to the Insurer by the Servicer, the Seller or the Depositor contains
any statement of a material fact by the Servicer, the Seller or Depositor which
was untrue or misleading in any material respect when made. None of the
Servicer, the Seller or the Depositor has any knowledge of circumstances that
could reasonably be expected to cause a Material Adverse Change with respect to
the Servicer, the Seller or the Depositor. Since the furnishing of the
Documents, there has been no change or any development or event involving a
prospective change known to the Servicer, the Seller or the Depositor that
would render any of the Documents untrue or misleading in any material respect.


 


(k)                                 Compliance With Securities
Laws. The offer and sale of
the Obligations comply in all material respects with all requirements of law,
including all registration requirements of applicable securities laws. Without
limitation of the foregoing, the Offering Document does not contain any untrue
statement of a material fact and does not omit to state a material fact
necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading; provided, however, that no
representation is made with respect to the information in the Offering Document
set forth under the heading “Description of the Insurer and the Insurance
Policy” or the consolidated financial statements of the Insurer incorporated by
reference in the Offering Document; and provided, further, that no
representation is made with respect to the statements set forth in the last
paragraph of the cover page of the Offering Document regarding the
delivery of the Obligations and the disclosure under the heading “Plan of
Distribution” in the Offering Document. Neither the offer nor the sale of the Obligations
has been or will be in violation of the Securities Act or any other federal or
state securities laws. The Issuer is not required to be registered as an “investment
company” under the Investment Company Act.


 


(l)                                    Transaction Documents. Each of the representations and warranties of
the Servicer, the Seller and the Depositor contained in the Transaction
Documents is true and correct in all material respects, and each of the
Servicer, the Seller and the Depositor hereby make each such representation and
warranty to, and for the benefit of, the Insurer as if the same were set forth
in full herein.


 


(m)                              Solvency, Fraudulent
Conveyance. The Servicer,
the Seller and the Depositor are solvent and will not be rendered insolvent by
the Transaction and, after giving effect to the Transaction, none of the
Servicer, the Seller or the Depositor will be left with an unreasonably small
amount of capital with which to engage in its business. None of the Servicer,
the Seller or the Depositor intend to incur, or believe that it has incurred,
debts beyond its ability to pay as they mature. None of the Servicer, the
Seller or the Depositor contemplates the commencement of insolvency,
bankruptcy, liquidation or consolidation proceedings or the appointment of a
receiver, liquidator, conservator, trustee or similar official in respect of
the Servicer, the Seller or the Depositor or any of their assets. The amount of
consideration being received by the Issuer upon the sale of the Obligations to
the Initial Purchaser constitutes reasonably equivalent value and fair


 


9





















 


consideration for the interest in the Contracts
evidenced by the Obligations. The Seller is not transferring the Contracts to
the Issuer and the Issuer is not selling the Obligations to any Initial
Purchaser, as provided in the Transaction Documents, with any intent to hinder,
delay or defraud any of the Seller’s or the Depositor’s creditors.


 


(n)                                Principal Place of Business.


 


(i)                                    The principal place of business of the
Servicer is located in Atlanta, Georgia, and the Servicer is a corporation
organized under the laws of the State of Delaware. “First Investors Servicing
Corporation” is the correct legal name of the Servicer indicated on the public
records of the Servicer’s jurisdiction of organization which shows the Servicer
to be organized.


 


(ii)                                 The principal place of business of the Seller
is located in Houston, Texas, and the Seller is a corporation organized under
the laws of the State of Texas. “First Investors Financial Services, Inc.”
is the correct legal name of the Seller indicated on the public records of the
Seller’s jurisdiction of organization which shows the Seller to be organized.


 


(iii)                              The principal place of business of the
Depositor is located in Houston, Texas and the Depositor is a corporation
organized under the laws of the State of Delaware. “First Investors Auto
Funding Corporation” is the correct legal name of the Depositor indicated on
the public records of the Depositor’s jurisdiction of organization which shows
the Depositor to be organized.


 


(o)                                Opinion Facts and
Assumptions. The Opinion
Facts and Assumptions insofar as they relate to the Seller and the Depositor
are true and correct as of the Date of Issuance.


 


(p)                                Requirements for Receivables.
The Seller and the Depositor
represent and warrant with respect to each Contract that: (a) the related
Obligor has no right of recission or cancellation, claims or defenses, set-offs
or counterclaims of any kind whatsoever as to or against each Contract; (b) the
obligation created by the contract evidencing each Contract is a bonafide sale
or refinancing in the ordinary course of the Originator’s business; (c) the
contract evidencing such Contract complies with all applicable state and
federal laws and regulations; (d) the contract evidencing each Contract,
including, but not limited to, description of the motor vehicle and/or services
contained therein, is in all respects complete, accurate and represents the
entire agreement between the Originator and the Obligor and complies with the
Federal Consumer Credit Protection Act and all other applicable state and
federal laws and regulations.


 


Section 2.02. Affirmative Covenants of the
Servicer, the Seller and the Depositor. The Servicer, the Seller and the Depositor
hereby agree, each as to itself, that during the Term of the Insurance
Agreement, unless the Insurer shall otherwise expressly consent in writing:


 


(a)                                 Compliance With Agreements
and Applicable Laws. The
Servicer, the Seller and the Depositor shall not be in default under the
Transaction Documents and


 


10





















 


shall comply with all material requirements of any law, rule or
regulation applicable to it. So long as no Insurer Default or Insurer
Insolvency exists, unless the Insurer shall otherwise consent, none of the
Servicer, the Seller or the Depositor shall agree to any amendment to or
modification of the terms of any Transaction Documents unless the Insurer shall
have given its prior written consent.


 


(b)                                Corporate Existence. The Servicer, its successors and assigns, the
Seller, its successors and assigns, and the Depositor, its successors and
assigns, shall maintain their corporate existence and shall at all times
continue to be duly organized under the laws of their respective jurisdictions
of incorporation and duly qualified and duly authorized (as described in
sections 2.01 (a), (b) and (c) hereof) and shall conduct its business
in accordance with the terms of its certificate or articles of incorporation
and bylaws.   The Seller, the Depositor
and the Servicer shall notify the Insurer within sixty (60) days prior to any
change in its legal name as indicated on the public records of the Servicer’s,
the Seller’s or the Depositor’s jurisdiction of organization which shows the Servicer,
the Seller, or the Depositor to be organized, jurisdiction of organization,
identity or corporate structure. The Seller, the Servicer and the Depositor
shall notify the Insurer within sixty (60) days prior to any relocation of its
principal office.


 


(c)                                 Financial Statements;
Accountants’ Reports; Other Information. The Servicer, the Seller and the Depositor shall keep or cause to be
kept in reasonable detail books and records of account of their assets and
business, including, but not limited to, books and records relating to the
Transaction. The Servicer and the Seller shall furnish or cause to be furnished
to the Insurer:


 


(i)                                    Annual Financial
Statements. As soon as
available, and in any event within 120 days after the close of each fiscal year
of FIFSG, the audited consolidated balance sheets of FIFSG and its subsidiaries
as of the end of such fiscal year and the related audited consolidated
statements of income, changes in shareholders’ equity and cash flows for such
fiscal year, all in reasonable detail and stating in comparative form the
respective figures for the corresponding date and period in the preceding
fiscal year, prepared in accordance with generally accepted accounting
principles, consistently applied, and accompanied by the audit opinion of FIFSG’s
independent accountants (which shall be a nationally recognized independent
public accounting firm) and by the certificate specified in Section 2.02(e) hereof.


 


(ii)                                 Quarterly Financial
Statements. As soon as
available, and in any event within 90 days after each of the first three fiscal
quarters of each fiscal year of FIFSG, the unaudited consolidated balance
sheets of FIFSG and its subsidiaries as of the end of such fiscal quarter and
the related unaudited consolidated statements of income, changes in
shareholders’ equity and cash flows for such fiscal quarter, all in reasonable
detail and stating in comparative form the respective figures for the
corresponding date and period in the preceding fiscal year, prepared in accordance
with generally accepted accounting principles,


 


11





















 


consistently applied, and accompanied by the certificate specified in Section 2.02(e) hereof.


 


(iii)                              Initial and Continuing
Reports. On or before the
Closing Date, the Servicer will provide the Insurer a copy of the electronic
file to be delivered to the Indenture Trustee on the Closing Date setting forth
as to each Contract, the information required under the definition of “Contract
Schedule” in Section 1.1 of the Sale and Allocation Agreement. Thereafter,
the Servicer shall deliver to the Insurer not later than 12:00 noon, New York
City time, on each Determination Date the report required by Section 3.8
of the Sale and Allocation Agreement.


 


(iv)                             Computer Diskette. Beginning in May 2005, the Servicer will
deliver to the Insurer on a monthly basis, a computer diskette or other
electronic file in a format acceptable to the Insurer, containing the
information provided to the Insurer pursuant to clause (iii) of this subsection 2.02(c) and
also containing information similar to the information provided in the Contract
Schedule delivered to the Indenture Trustee pursuant to the Sale and
Allocation Agreement and described in Schedule 1 of the Sale and Allocation
Agreement.


 


(v)                                Certain Information. Upon the reasonable request of the Insurer,
the Servicer and the Seller shall promptly provide copies of any requested
proxy statements, financial statements, reports and registration statements
which the Servicer or the Seller files with, or delivers to, the Commission or
any national securities exchange.


 


(vi)                             Other Information. Promptly upon receipt thereof, copies of all
schedules, list of contracts, financial statements or other similar reports
delivered to or by the Servicer, the Seller or the Depositor pursuant to the
terms of the Transaction Documents and, promptly upon request, such other data
as the Insurer may reasonably request. The Seller agrees, in the event of any
merger, consolidation or asset transfer of the Seller as described in Section 4.3
of the Sale and Allocation Agreement, to deliver the certificates and opinions
described therein to the Insurer.


 


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


 


(d)                                The Depositor Shareholder
Meetings. The Depositor
shall have annual shareholder meetings and at least annual board of director
meetings and shall prepare income and franchise tax returns as appropriate. The
Depositor shall deliver to the Insurer copies of the minutes of such meetings
no later than April 30 of each year and such tax returns promptly upon
filing but in no event later than August 31 of each year, beginning in
2005.


 


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(e)                                 Compliance Certificate. The Servicer and the Seller shall deliver to
the Insurer, concurrently with the delivery of the financial statements
required pursuant to Sections 2.02(c)(i) and (ii) hereof, one or more
certificates signed by an officer of the Servicer and an officer of the Seller
authorized to execute such certificates on behalf of the Servicer and the
Seller stating that:


 


(i)                                    a review of the Servicer’s performance under
the Transaction Documents during such period has been made under such officer’s
supervision;


 


(ii)                                 to the best of such individual’s knowledge
following reasonable inquiry, no Default or Event of Default has occurred, or
if a Default or Event of Default has occurred, specifying the nature thereof
and, if the Servicer has a right to cure pursuant to Section 5.1 of the
Indenture, stating in reasonable detail (including, if applicable, any
supporting calculations) the steps, if any, being taken by the Servicer to cure
such Default or Event of Default or to otherwise comply with the terms of the
agreement to which such Default or Event of Default relates;


 


(iii)                              the attached financial statements submitted
in accordance with Sections 2.02(c)(i) or (ii) hereof, as the case
may be, are complete and correct in all material respects and present fairly
the financial condition and results of operations of FIFSG as of the dates and
for the periods indicated, in accordance with generally accepted accounting
principles consistently applied; and


 


(iv)                             the Servicer has in full force and effect an
errors and omissions insurance policy in accordance with the terms and
requirements of Section 2.25 of the Servicing Agreement.


 


(f)                                   Access to Records;
Discussions With Officers and Accountants. On an annual basis, or upon the occurrence of a Material Adverse
Change, the Servicer and the Seller shall, upon the reasonable request of the
Insurer, permit the Insurer or its authorized agents (provided that no Insurer
Default shall have occurred and is continuing):


 


(i)                                    to inspect, audit and make copies of
abstracts from, the books and records of the Servicer and of the Seller as they
may relate to the Obligations, the Contracts, the obligations of the Servicer
or of the Seller under the Transaction Documents, and the Transaction;


 


(ii)                                 to discuss the affairs, finances and accounts
of the Servicer or of the Seller with the chief operating officer and the chief
financial officer of the Servicer or of the Seller, as the case may be; and


 


(iii)                              with the Servicer’s or the Seller’s consent,
as applicable, which consent shall not be unreasonably withheld, to discuss the
affairs, finances and accounts of the Servicer or the Seller with the Servicer’s
or the Seller’s


 


13





















 


independent accountants, provided that an officer of
the Servicer or the Seller shall have the right to be present during such
discussions.


 


Such inspections and
discussions shall be conducted during normal business hours and shall not
unreasonably disrupt the business of the Servicer or the Seller. The books and
records of the Servicer shall be maintained at the address of the Servicer
designated herein for receipt of notices, unless the Servicer shall otherwise
advise the parties hereto in writing, and the books and records of the Seller
shall be maintained at the address of the Seller designated herein for receipt
of notices, unless the Seller shall otherwise advise the parties hereto in
writing.


 


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


 


(g)                                Notice of Material Events. The Servicer, the Seller and the Depositor
shall be obligated (which obligation shall be satisfied as to each if performed
by the Servicer, the Seller or the Depositor) promptly to inform the Insurer in
writing of the occurrence of any of the following to the extent any of the
following relate to it:


 


(i)                                    the submission of any claim or the initiation
or threat of any legal process, litigation or administrative or judicial
investigation, or rule making or disciplinary proceeding by or against the
Servicer, the Seller or the Depositor that (A) could be required to be
disclosed to the Commission or to the Servicer’s, the Seller’s or the Depositor’s
shareholders or (B) could result in a Material Adverse Change with respect
to the Servicer, the Seller or the Depositor, or the promulgation of any
proceeding or any proposed or final rule which would result in a Material
Adverse Change with respect to the Servicer, the Seller or the Depositor;


 


(ii)                                 the submission of any claim or the initiation
or threat of any legal process, litigation or administrative or judicial
investigation in any federal, state or local court or before any arbitration
board, or any such proceeding threatened by any government agency, which, if
adversely determined, would have a material adverse effect on the Issuer, the
Owners or the Insurer;


 


(iii)                              any change in the location of the Servicer’s,
the Seller’s or the Depositor’s principal office, jurisdiction of organization,
legal name as indicated on the public records of the Servicer’s, the Seller’s
or the Depositor’s jurisdiction of organization which shows the Servicer, the
Seller, or the Depositor to be organized, any change in the location of the
Servicer’s, the Seller’s or the


 


14





















 


Depositor’s books and records, or any change in the
location of the Corporate Trust Office (as defined in the Sale and Allocation
Agreement), or any change in the account number or location of the Collection
Account, the Note Payment Account, the Certificate Payment Account or the
Reserve Account;


 


(iv)                             the occurrence of any Event of Servicing
Termination, Default or Event of Default or of any Material Adverse Change;


 


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


 


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


 


(vii)                          The occurrence of any merger, consolidation
or asset transfer of the Seller as described in Section 4.3 of the Sale
and Allocation Agreement.


 


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


 


(i)                                    Maintenance of Licenses. The Servicer, the Seller and the Depositor, respectively,
or any successors thereof shall maintain or cause to be maintained all
licenses, permits, charters and registrations which are material to the conduct
of its business.


 


15





















 


(j)                                    Redemption of Obligations. The Servicer, the Seller and the Depositor
shall instruct the Indenture Trustee, upon redemption or payment of all of the
Obligations pursuant to the Indenture or otherwise, to furnish to the Insurer a
notice of such redemption and, upon a redemption or payment of all of the
Obligations, to surrender the Policy to the Insurer for cancellation.


 


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


 


(l)                                    Servicing of Contracts. The Servicer shall perform such actions with
respect to the Contracts as are required by or provided for in the Servicing
Agreement. The Servicer will provide the Insurer with written notice of any
change or amendment to any Transaction Document as currently in effect.


 


(m)                              Maintenance of Trust. On or before each March 31, beginning in
2006, so long as any of the Obligations are outstanding, and promptly after the
execution and delivery of each amendment to any financing statement, the
Servicer shall furnish to the Insurer and the Indenture Trustee an officers’
certificate and an opinion of counsel as described in Section 3.6(b) of
the Indenture, either stating that such action has been taken with respect to
the recording, filing, rerecording and refiling of any financing statements and
continuation statements as is necessary to maintain the interest of the
Indenture Trustee created by the Indenture with respect to the Trust and
reciting the details of such action or stating that no such action is necessary
to maintain such interests. Such officers’ certificate shall also describe the
recording, filing, rerecording and refiling of any financing statements and
continuation statements that will be required to maintain the interest of the
Indenture Trustee in the Trust until the date such next officers’ certificate
is due. The Servicer will use its best efforts to cause any necessary
recordings or filings to be made with respect to the Trust.


 


(n)                                Seller’s Indemnity. Notwithstanding anything in subsection 3.03
hereof, the Seller shall pay to the Insurer an amount equal to any amount paid
by the Insurer because of the Servicer’s failure to deposit into the Collection
Account any amount required to be so deposited by it pursuant to the Servicing
Agreement or the Sale and Allocation Agreement, together with interest on any
and all amounts remaining unreimbursed (to the extent permitted by law, if in
respect to any unreimbursed amounts representing interest) from the date such
amounts became due until paid in full (after as well as before judgment) at a
rate of interest equal to the Late Payment Rate. Notwithstanding anything
herein to the contrary, the Seller shall have no obligation to guaranty any
amounts representing (i) recourse for uncollectible Contracts and (ii) any
principal or interest on any Note.


 


(o)                                Closing Documents. The Servicer, the Seller and the Depositor
shall provide or cause to be provided to the Insurer a bound volume or volumes
of the Transaction Documents and an executed original copy of each document
executed in


 


16





















 


connection with the Transaction within 60 days after the date of
closing. Upon the reasonable request of the Insurer, the Servicer, the Seller
and the Depositor shall provide or cause to be provided to the Insurer a copy
of each of the Transaction Documents on computer diskette, in a format
acceptable to the Insurer; provided, however, that the failure to so deliver
shall not constitute (i) an Event of Default hereunder or under the
Indenture or (ii) an Event of Servicing Termination.


 


(p)                                Preference Payments. With respect to any Preference Amount (as
defined in the Policy), the Servicer shall provide to the Insurer upon the
request of the Insurer:


 


(i)                                    a certified copy of the final nonappealable
order of a court having competent jurisdiction ordering the recovery by a
trustee in bankruptcy as voidable preference amounts included in previous
distributions under Section 3.3 of the Sale and Allocation Agreement to
any Owner pursuant to the United States Bankruptcy Code, 11 U.S.C. §§ 101
et seq., as amended (the “Bankruptcy Code”);


 


(ii)                                 an opinion of counsel reasonably satisfactory
to the Insurer, and upon which the Insurer shall be entitled to rely, stating
that such order is final and is not subject to appeal;


 


(iii)                              an assignment in such form as reasonably
required by the Insurer, irrevocably assigning to the Insurer all rights and
claims of the Servicer, the Indenture Trustee and any Owner relating to or
arising under the Contracts against the debtor which made such preference
payment or otherwise with respect to such preference amount; and


 


(iv)                             appropriate instruments to effect (when
executed by the affected party) the appointment of the Insurer as agent for the
Indenture Trustee and any Owner in any legal proceeding relating to such
preference payment being in a form satisfactory to the Insurer.


 


(q)                                Seller To Hold Common Stock
of Depositor. The Seller
shall hold, either directly or indirectly, all of the common stock of the
Depositor during the Term of the Insurance Agreement. The Seller shall not
sell, pledge or otherwise transfer such stock without the prior written consent
of the Insurer.


 


(r)                                   Purchase Option. In the event the Depositor exercises its
purchase option pursuant to Section 5.16 of the Sale and Allocation
Agreement, the Depositor shall promptly deliver to the Insurer the documents
described in Section 5.16 of the Sale and Allocation Agreement.


 


Section 2.03. Negative Covenants of the Servicer,
the Seller and the Depositor. The Servicer, the Seller and the Depositor hereby agree that during the
Term of the Insurance Agreement, unless the Insurer shall otherwise expressly
consent in writing:


 


17





















 


(a)                                 Impairment of Rights.   None of the Servicer, the Seller or the Depositor shall take any
action, or fail to take any action, if reasonably requested by the Insurer at a
time when no Insurer Default or Insurer Insolvency exists or if such action or
failure to take action may result in a material adverse change as described in
clause (ii) of the definition of Material Adverse Change with respect to
the Servicer, the Seller or the Depositor, or may interfere with the
enforcement of any rights of the Insurer under or with respect to the
Transaction Documents.   The Servicer,
the Seller or the Depositor shall give the Insurer written notice of any such
action or failure to act on the earlier of: (i) the date upon which any
publicly available filing or release is made with respect to such action or
failure to act or (ii) promptly prior to the date of consummation of such action
or failure to act.   The Servicer, the
Seller and the Depositor shall furnish to the Insurer all information requested
by it that is reasonably necessary to determine compliance with this Section (a).


 


(b)                                Adverse Selection
Procedure.  The Servicer, the Seller and the Depositor will
not use any Adverse Selection Procedure in selecting Contracts to be
transferred to the Indenture Trustee from the outstanding contracts that
qualify under the Sale and Allocation Agreement for inclusion in the Trust.


 


(c)                                 Waiver, Amendments,
Assignments, Etc.    Except as may be otherwise expressly set
forth in the Transaction Documents, none of the Servicer, the Seller or the Depositor
shall waive, modify or amend, or consent to any waiver, modification or amendment
of, any of the terms, provisions or conditions of any of the Transaction Documents
without the prior written consent of the Insurer; and (if no Insurer Default or
Insurer Insolvency exists) none of the Servicer, the Seller or the Depositor
shall assign any of the Transaction Documents to which it is a party without
the prior written consent of the Insurer.


 


(d)                                Contracts; Charge-off
Policy.  Except as otherwise permitted in the Sale and
Allocation Agreement or the Servicing Agreement, the Servicer and the Seller
shall not, and the Depositor shall not cause the Servicer or the Seller to,
alter or amend any Contract or, with regard to the Servicer, alter or amend its
Collection Policy or, with regard to the Seller, prior to the day following the
Prefunding Account End Date, alter or amend its Credit Policy, in any case in a
manner that materially adversely affects the Insurer unless the Insurer shall
have previously given its consent, which consent shall not be withheld
unreasonably.


 


Section 2.04. Representations and Warranties of
the Issuer.    As of the Date of Issuance, the Issuer
represents, warrants and covenants as follows:


 


(a)                                 Due Organization and
Qualification. The Issuer is
a statutory trust and is duly organized, validly existing and in good standing
under the laws of the State of Delaware. The Issuer is duly qualified to do
business, is in good standing and has obtained all licenses, permits, charters,
registrations and approvals (together, “approvals”) necessary for the conduct
of its business as currently conducted and as described in the Offering
Document and the performance of its obligations under the


 


18





















 


Transaction Documents to which it is a party, in
each jurisdiction in which the failure to be so qualified or to obtain such
approvals would render any Transaction Document to which it is a party
unenforceable in any respect or would have a material adverse effect upon the
Transaction, the Owner or the Insurer.


 


(b)                                Power and Authority. The Issuer has all necessary power and
authority to conduct its business as currently conducted and, as described in
the Offering Document, to execute, deliver and perform its obligations under
the Transaction Documents to which it is a party and to consummate the
Transaction.


 


(c)                                 Due Authorization. The execution, delivery and performance of
the Transaction Documents by the Issuer have been duly authorized by all
necessary corporate action and do not require any additional approvals or
consents, or other action by or any notice to or filing with any Person,
including, without limitation, any governmental entity or the Issuer’s stockholders,
which have not previously been obtained or given by the Issuer.


 


(d)                                Noncontravention.  Neither the execution and delivery of the Transaction Documents by the
Issuer, the consummation of the Transaction contemplated thereby nor the
satisfaction of the terms and conditions of the Transaction Documents:


 


(i)                                    conflicts with or results in any breach or
violation of any provision of the Trust Agreement or any law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award currently in
effect having applicability to the Issuer or any of its material properties,
including regulations issued by an administrative agency or other governmental
authority having supervisory powers over the Issuer;


 


(ii)                                 constitutes a default by the Issuer under or
a breach of any provision of any loan agreement, mortgage, indenture or other
agreement or instrument to which the Issuer is a party or by which any of its
properties, which are individually or in the aggregate material to the Issuer,
is or may be bound or affected; or


 


(iii)                              results in or requires the creation of any
lien upon or in respect of any assets of the Issuer except as contemplated by
the Transaction Documents.


 


(e)                                 Legal Proceedings.  There is no action, proceeding or investigation by or before any court,
governmental or administrative agency or arbitrator against or affecting the
Issuer or any properties or rights of the Issuer pending or, to the Issuer’s
knowledge after reasonable inquiry, threatened, which, in any case, could
reasonably be expected to result in a Material Adverse Change with respect to
the Issuer.


 


(f)                                   Valid and Binding Obligations.  The Obligations, when executed, authenticated
and issued in accordance with the Indenture and the Transaction Documents
(other than the Obligations),
when executed and delivered by the Issuer, will constitute the legal, valid and
binding obligations of the Issuer enforceable in accordance


 


19





















 


with their respective terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors’ rights generally and general equitable principles and
public policy considerations as to rights of indemnification for violations of
federal securities laws. The Issuer will not at any time in the future deny
that the Transaction Documents constitute the legal, valid and binding
obligations of the Issuer.


 


(g)                                Compliance With Law, Etc. No practice, procedure or policy employed, or
proposed to be employed, by the Issuer in the conduct of its business violates
any law, regulation, judgment, agreement, order or decree applicable to it
that, if enforced, could reasonably be expected to result in a Material Adverse
Change with respect to the Issuer. The Issuer is not in breach of or default
under any applicable law or administrative regulation of its respective
jurisdiction or incorporation, or any department, division, agency or instrumentality
thereof or of the United States or any applicable judgment or decree or any
loan agreement, note, resolution, certificate, agreement or other instrument to
which the Issuer is a party or is otherwise subject which, if enforced, would
have a material adverse effect on the ability of the Issuer, to perform its
obligations under the Transaction Documents.


 


(h)                                Compliance With Securities
Laws. The offer and sale of
the Obligations comply in all material respects with all requirements of law,
including all registration requirements of applicable securities laws. Without
limitation of the foregoing, the Offering Document does not contain any untrue
statement of a material fact and does not omit to state a material fact
necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading; provided, however, that no
representation is made with respect to the information in the Offering Document
set forth under the heading “Description of the Insurer and the Insurance
Policy” or the consolidated financial statements of the Insurer incorporated by
reference in the Offering Document; and provided, further, that no
representation is made with respect to the statements set forth in the last
paragraph of the cover page of the Offering Document regarding the
delivery of the Obligations and the disclosure under the heading “Plan of
Distribution” in the Offering Document. Neither the offer nor the sale of the
Obligations has been or will be in violation of the Securities Act or any other
federal or state securities laws.


 


(i)                                    Taxes. The Issuer has filed prior to the date hereof
all federal and state tax returns that are required to be filed and paid all
taxes, including any assessments received by them that are not being contested
in good faith, to the extent that such taxes have become due, except for any
failures to file or pay that, individually or in the aggregate, would not
result in a Material Adverse Change with respect to the Issuer.


 


(j)                                    Transaction Documents. Each of the representations and warranties of
the Issuer contained in the Transaction Documents is true and correct in all
material respects, and the Issuer hereby makes each such representation and
warranty to, and for the benefit of, the Insurer as if the same were set forth
in full herein; provided that the remedy for


 


20





















 


any breach of this paragraph shall be limited to the remedies specified
in the related Transaction Document or in this Insurance Agreement.


 


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


 


(l)                                    Principal Place of
Business. The principal
place of business of the Issuer is located in Wilmington, Delaware and the
Issuer is a statutory trust organized under the laws of the State of Delaware. “First
Investors Auto Owner Trust 2005-A” is the correct legal name of the Issuer
indicated on the public records of the Issuer’s jurisdiction of organization
which shows the Issuer to be organized.


 


(m)                              Investment Company Act. The Issuer is not an “investment company,” or
an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment
company,” as such terms are defined in the Investment Company Act. The Issuer
is not required to be registered as an “investment company” under the
Investment Company Act.


 


(n)                                No Consents. No authorization or approval or other action
by, and no notice to or filing with, any Person, including, without limitation,
any governmental entity or regulatory body, is required for the due execution,
delivery and performance by the Issuer of the Transaction Documents or any
other material document or instrument to be delivered thereunder, except (in
each case) such as have been obtained or the failure of which to be obtained
would not be reasonably likely to have a material adverse effect on the
Transaction.


 


(o)                                No Material Event of
Default. There is no
material event of default on the part of the Issuer under any agreement
involving financial obligations which would materially adversely impact the
financial conditions or operations of the Trust or its obligations under any
document associated with this Transaction.


 


(p)                                Opinion Facts and
Assumptions. The opinion
Facts and Assumptions insofar as they relate to the Issuer are true and correct
as of the Date of Issuance.


 


Section 2.05. Affirmative Covenants of the
Issuer. The Issuer
hereby agrees that during the Term of the Insurance Agreement, unless the
Insurer shall otherwise expressly consent in writing:


 


(a)                                 Compliance With Agreements
and Applicable Laws. The
Issuer shall not be in default under the Transaction Documents and shall comply
with all material requirements of any law, rule or regulation applicable
to it. Except in accordance with


 


21





















 


the terms of the Transaction Documents, the Issuer
shall not agree to or consent to any waiver of, any material amendment to, or
any modification of the terms of any Transaction Documents unless the Insurer
shall have given its prior written consent; provided, however, that if an
Insurer Default has occurred and is continuing, the Issuer need not obtain the
consent of the Insurer for any waiver, amendment, or modification which is not
materially adverse to the Insurer.


 


(b)                                Maintain Existence.    The Issuer and its successors and assigns shall maintain their
existence and shall at all times continue to be duly organized under the laws
of its respective jurisdiction and duly qualified and duly authorized and shall
conduct its business in accordance with the terms of its organizational
documents.


 


(c)                                 Notice of Material
Events.   The Issuer shall be obligated promptly to inform
the Insurer in writing of the occurrence of any of the following to the extent
any of the following relate to it and to the extent that it receives actual
notice of the occurrence of any of the following events:


 


(i)                                    the submission of any claim or the initiation
or threat of any legal process, litigation or administrative or judicial
investigation, or rule making or disciplinary proceeding by or against the
Issuer that (A) could be required to be disclosed to the Commission or to
the Issuer’s owners or (B) could result in a Material Adverse Change with
respect to the Issuer or the promulgation of any proceeding or any proposed or
final rule which would result in a Material Adverse Change with respect to
the Issuer;


 


(ii)                                 any change in the location of the Issuer’s or
the Owner Trustee’s principal place of business, jurisdiction of organization,
legal name as indicated on the public records of the Issuer’s or the Owner
Trustee’s jurisdiction of organization which shows the Issuer’s or the Owner
Trustee’s to be organized or any change in the location of the Issuer’s books
and records;


 


(iii)                              the occurrence of any Default or Event of
Default or of any Material Adverse Change;


 


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


 


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


 


22





















 


(d)                                Financing Statements and
Further Assurances. To the
extent provided in the Indenture, the Issuer will cause to be filed all
necessary financing statements or other instruments, and any amendments or
continuation statements relating thereto, necessary to be kept and filed in
such manner and in such places as may be required by law to preserve and
protect fully the interest of the Indenture Trustee. The Issuer shall, upon the
request of the Insurer, from time to time, execute, acknowledge and deliver, or
cause to be executed, acknowledged and delivered, within ten days of such
request, such amendments hereto and such further instruments and take such
further action as may be reasonably necessary to effectuate the intention,
performance and provisions of the Transaction Documents to which it is a party.  In addition, the Issuer agrees to cooperate with
S&P and Moody’s in connection with any review of the Transaction that may
be undertaken by S&P and Moody’s after the date hereof.


 


(e)                                 Maintenance of
Licenses.   The Issuer, or any successors thereof, shall maintain
all licenses, permits, charters and registrations which are material to the
conduct of its business.


 


(f)                                   Third-Party
Beneficiary.  The Issuer agrees that the Insurer shall have
all rights of a third-party beneficiary in respect of each Transaction Document
and hereby incorporates and restates its representations, warranties and
covenants as set forth therein for the benefit of the Insurer.


 


(g)                                Tax Matters.  The Issuer will take all actions necessary to ensure that the Issuer is
treated as a trust for federal and state income tax purposes and not as an association
(or publicly traded partnership), taxable as a corporation.


 


(h)                                Financial Statements;
Accountants’ Reports; Other Information. The Issuer shall keep or cause to be kept in reasonable detail books
and records of account of its assets and business, including, but not limited
to, books and records relating to the Transaction. The Issuer shall furnish or
cause to be furnished to the Insurer promptly upon receipt thereof, copies of
all schedules, opinions of counsel or accountants, officer’s certificates,
financial statements or other similar reports delivered to or by the Issuer
pursuant to the terms of the Transaction Documents and, promptly upon request,
such other data as the Insurer may reasonably request.


 


(i)                                    Access to Records;
Discussions With Officers and Accountants. On an annual basis, or upon the occurrence of a Material Adverse
Change, the Issuer shall, upon the reasonable request of the Insurer, at its
expense, permit the Insurer or its authorized agents:


 


(i)                                    to inspect the books and records of the
Issuer as they may relate to the Obligations, the obligations of the Issuer
under the Transaction Documents, and the Transaction;


 


(ii)                                 to discuss the affairs, finances and accounts
of the Issuer; and


 


23





















 


(iii)                              with the Issuer’s consent, as the case may
be, which consent shall not be unreasonably withheld, to discuss the affairs,
finances and accounts of the Issuer with the Issuer’s independent accountants,
provided that a representative of the Seller or the Issuer shall have the right
to be present during such discussions.


 


Such inspections and
discussions shall be conducted during normal business hours and shall not
unreasonably disrupt the business of the Issuer. The books and records of the
Issuer will be maintained at the address of the Issuer designated herein for
receipt of notices, unless the Issuer shall otherwise advise the parties hereto
in writing.


 


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


 


Section 2.06. Negative Covenants of the Issuer. The Issuer hereby agrees that during the Term
of the Insurance Agreement, unless the Insurer shall otherwise expressly
consent in writing:


 


(a)                                 Impairment of Rights. The Issuer shall not take any action, or fail
to take any action, if such action or failure to take action may result in a
material adverse change as described in clause (ii) of the definition of
Material Adverse Change with respect to the Issuer, or may interfere with the
enforcement of any rights of the Insurer under or with respect to the
Transaction Documents. The Issuer shall give the Insurer written notice of any
such action or failure to act on the earlier of: (i) the date upon which
any publicly available filing or release is made with respect to such action or
failure to act or (ii) promptly prior to the date of consummation of such
action or failure to act. The Issuer shall furnish to the Insurer all
information requested by it that is reasonably necessary to determine
compliance with this paragraph.


 


(b)                                Waiver, Amendments, Etc. Except upon the prior written consent of the Insurer
which consent shall not unreasonably be withheld, the Issuer shall not allow
the transfer, modification or amendment, nor consent to any transfer, modification
or amendment of the Certificate of Trust unless such amendment is required
under the Delaware Statutory Trust Act.


 


(c)                                 Restrictions on Liens. The Issuer shall not, except as contemplated
by the Transaction Documents, (i) create, incur or suffer to exist, or
agree to create, incur or suffer to exist, or consent to cause or permit in the
future (upon the happening of a contingency or otherwise) the creation,
incurrence or existence of any lien of the Contracts or (ii) file under
the Uniform Commercial Code of any jurisdiction any financing statement which
names the Issuer as a debtor, or sign any security agreement


 


24





















 


authorizing any secured party thereunder to file such financing
statement, with respect to the Contracts.


 


(d)                                Successors. The Issuer shall not remove or replace, or
cause to be removed or replaced, the Servicer, the Indenture Trustee or the
Owner Trustee without the prior written approval of the Insurer.


 


(e)                                 Subsidiaries. The Issuer shall not form, or cause to be
formed, any subsidiaries.


 


(f)                                   No Mergers. The Issuer shall not consolidate with or
merge into any Person or transfer all or any material amount of its assets to
any Person, liquidate or dissolve except as permitted by the Trust Agreement
and as contemplated by the Transaction Documents.


 


(g)                                Other Activities. The Issuer shall not (i) sell, pledge,
transfer, exchange or otherwise dispose of any of its assets except as
permitted under the Transaction Documents; or (ii) engage in any business
or activity except as contemplated by the Transaction Documents and as
permitted by the Trust Agreement.


 


(h)                                Trust Agreement. The Issuer shall not amend the Trust
Agreement without the prior written consent of the Insurer.


 


Section 2.07. Representations, Warranties and
Covenants of Indenture Trustee and Back-up Servicer. The Indenture Trustee and the Back-up
Servicer represents and warrants to, as of the Date of Issuance, and covenants
with the other parties hereto as follows:


 


(a)                                 Due Organization and
Qualification. The Indenture
Trustee and the Back-up Servicer are each a national banking association or
corporation, duly organized, validly existing and in good standing under the
laws of its respective jurisdiction of incorporation. Each of the Indenture
Trustee and the Back-up Servicer is duly qualified to do business, is in good
standing and has obtained all licenses, permits, charters, registrations and
approvals (together, “approvals”) necessary for the conduct of its business as
currently conducted and as described in the Offering Document and the performance
of its obligations under the Transaction Documents, in each jurisdiction in which
the failure to be so qualified or to obtain such approvals would render any Transaction
Document unenforceable in any respect or would have a material adverse effect
upon the Transaction, the Owners or the Insurer.


 


(b)                                Due Authorization. The execution, delivery and performance of
the Transaction Documents by the Indenture Trustee and the Back-up Servicer
have been duly authorized by all necessary corporate action and do not require
any additional approvals or consents of, or other action by or any notice to or
filing with any Person, including, without limitation, any governmental entity
or the Indenture Trustee’s or the Back-up Servicer’s stockholders, which have
not previously been obtained or given by the Indenture Trustee or the Back-up
Servicer, as applicable.


 


25





















 


(c)                                 Noncontravention. None of the execution and delivery of the
Transaction Documents by the Indenture Trustee or the Back-up Servicer, the
consummation of the Transaction contemplated thereby or the satisfaction of the
terms and conditions of the Transaction Documents:


 


(i)                                    conflicts with or results in any breach or
violation of any provision of the certificate or articles of incorporation or
bylaws of the Indenture Trustee or the Back-up Servicer or any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
currently in effect having applicability to the Indenture Trustee or the
Back-up Servicer or any of their material properties, including regulations
issued by an administrative agency or other governmental authority having
supervisory powers over the Indenture Trustee or the Back-up Servicer;


 


(ii)                                 constitutes a default by the Indenture
Trustee or the Back-up Servicer under or a breach of any provision of any loan
agreement, mortgage, indenture or other agreement or instrument to which the
Indenture Trustee or the Back-up Servicer is a party or by which any of their
respective properties, which are individually or in the aggregate material to
the Indenture Trustee or the Back-up Servicer, is or may be bound or affected;
or


 


(iii)                              results in or requires the creation of any
lien upon or in respect of any assets of the Indenture Trustee or the Back-up
Servicer, except as contemplated by the Transaction Documents.


 


(d)                                Legal Proceedings. There is no action, proceeding or
investigation by or before any court, governmental or administrative agency or
arbitrator against or affecting the Indenture Trustee, the Back-up Servicer, or
any of their subsidiaries, or any properties or rights of the Indenture Trustee,
the Back-up Servicer or any of their subsidiaries, pending or, to the Indenture
Trustee’s or the Back-up Servicer’s knowledge after reasonable inquiry,
threatened, which, in any case, could reasonably be expected to result in a
Material Adverse Change with respect to the Indenture Trustee or the Back-up Servicer.


 


(e)                                 Valid and Binding
Obligations and Agreements. The
Obligations, when executed, authenticated and issued in accordance with the
Indenture, and the Transaction Documents (other than the Obligations), to which
they are parties when executed and delivered by the Indenture Trustee and the
Back-up Servicer, will constitute the legal, valid and binding obligations of
the Indenture Trustee and the Back-up Servicer, as applicable, enforceable in accordance
with their respective terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors’ rights generally and general equitable principles. Neither
the Indenture Trustee nor the Back-up Servicer will at any time in the future
deny that the Transaction Documents constitute the legal, valid and binding
obligations of the Indenture Trustee and the Back-up Servicer, as applicable.


 


26





















 


(f)                                   Compliance With Law, Etc. No practice, procedure or policy employed, or
proposed to be employed, by the Indenture Trustee or the Back-up Servicer in
the conduct of their business violates any law, regulation, judgment,
agreement, order or decree applicable to any the Indenture Trustee or the
Back-up Servicer that, if enforced, could reasonably be expected to result in a
Material Adverse Change with respect to the Indenture Trustee or the Back-up
Servicer. Neither the Indenture Trustee nor the Back-up Servicer is in breach
of or in default under any applicable law or administrative regulation of its
respective jurisdiction of organization, or any department, division, agency or
instrumentality thereof or of the United States or any applicable judgment or decree
or any loan agreement, note, resolution, certificate, agreement or other
instrument to which the Indenture Trustee or the Back-up Servicer is a party or
is otherwise subject which, if enforced, would have a material adverse effect
on the ability of the Indenture Trustee or the Back-up Servicer, as the case
may be, to perform their respective obligations under the Transaction
Documents.


 


(g)                                Transaction Documents. Each of the representations and warranties of
the Indenture Trustee and the Back-up Servicer contained in the Transaction
Documents is true and correct in all material respects, and the Indenture
Trustee and the Back-up Servicer hereby makes each such representation and
warranty to, and for the benefit of, the Insurer as if the same were set forth
in full herein.


 


(h)                                Compliance and Amendments. The Indenture Trustee and the Back-up
Servicer shall comply in all material respects with the terms and conditions of
the Transaction Documents to which it is a party and the Indenture Trustee and
the Back-up Servicer shall not agree to any amendment to or modification of the
terms of any of the Transaction Documents to which it is a party unless the
Insurer shall otherwise give its prior written consent.


 


(i)                                    Notices. The Indenture Trustee shall promptly notify
the Insurer of any merger, consolidation or asset transfer with respect to it
as described in Section 6.9 of the Indenture.


 


Section 2.08. Representations, Warranties and Covenants
of Owner Trustee. The Owner
Trustee hereby represents and warrants as follows:


 


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


 


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


 


27





















 


Section 2.09. Negative Covenant of the
Administrator. The
Administrator shall not remove the Owner Trustee pursuant to Section 10.2
of the Trust Agreement unless it has obtained the prior written consent of the
Insurer if no Insurer Default or Insurer Insolvency exists.


 


ARTICLE III


 


THE POLICY;
REIMBURSEMENT


 


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


 


(a)                                 Payment of Initial
Insurance Premium and Expenses. The Insurer shall have been paid by the Servicer or the Seller, in
accordance with the terms of the Premium Side Letter Agreement, that portion of
a nonrefundable Insurance Premium payable on the Date of Issuance and the
Servicer shall agree to reimburse or pay directly other fees and expenses
identified in Section 3.02 hereof as payable.


 


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


 


(c)                                 Certified Documents and
Resolutions. The Insurer
shall have received a copy of (i) the certificate or articles of
incorporation and bylaws of the Servicer, the Seller and the Depositor and (ii) the
resolutions of the Seller’s Board of Directors authorizing the sale of the
Contracts and (iii) the execution, delivery and performance by the
Servicer, the Seller and the Depositor of the Transaction Documents and the Transaction
contemplated thereby, certified by the Secretary or an Assistant Secretary of the
Servicer, the Seller and the Depositor (which certificate shall state that such
certificate or articles of incorporation, bylaws and resolutions are in full
force and effect without modification on the Date of Issuance).


 


(d)                                Incumbency Certificate. The Insurer shall have received a certificate
of the Secretary or an Assistant Secretary of the Servicer, the Seller and the
Depositor certifying the names and signatures of the officers of the Servicer,
the Seller and the Depositor authorized to execute and deliver the Transaction
Documents and that shareholder consent to the execution and delivery of such
documents is not necessary.


 


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


 


(f)                                   Opinions of Counsel.


 


28





















 


(i)                                    The law firm of Dechert LLP shall have issued
its favorable opinion, in form and substance reasonably acceptable to the
Insurer and its counsel, regarding and the validity and enforceability of the
Transaction Documents, other than the Trust Agreement, against the Depositor,
the Servicer, the Issuer and the Seller.


 


(ii)                                 The law firm of Dechert LLP shall have issued
its favorable opinions, in form and substance reasonably acceptable to the
Insurer and its counsel, regarding the transfer of the Contracts from the
Seller to the Depositor and from the Depositor to the Issuer, and consolidation
of the Depositor and the Seller and the Seller and the Issuer in the event of
the Seller’s bankruptcy.


 


(iii)                              The law firm of Richards, Layton &
Finger, P.A. shall have issued its favorable opinions, in form and substance
reasonably acceptable to the Insurer and its counsel, regarding the perfection
of the Indenture Trustee’s interest in the Trust Estate, including in the
Reserve Account Property.


 


(iv)                             The law firm of Richards, Layton &
Finger, P.A. shall have issued its favorable opinion, in form and substance
reasonably acceptable to the Insurer and its counsel, regarding and the
validity and enforceability of the Trust Agreement.


 


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


 


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


 


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


 


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


 


(j)                                    Issuance of Ratings. The Insurer shall have received confirmation
that the risk secured by the Policy constitutes at least an investment grade
risk by S&P and Moody’s, and that the Obligations, when issued, will be
rated “AAA” by S&P and “Aaa” by Moody’s.


 


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


 


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


 


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


 


(n)                                Satisfaction of Conditions
of the Purchase Agreement. All
conditions in the Purchase Agreement relating to the Initial Purchaser’s
obligation to purchase the Obligations shall have been satisfied.


 


(o)                                Purchase Agreement. The Insurer shall have received copies of
each of the documents, and shall be entitled to rely on each of the documents,
required to be delivered to the Initial Purchaser pursuant to the Purchase
Agreement.


 


(p)                                Guaranty. The Guaranty shall be executed by all parties
thereto and delivered to the Indenture Trustee.


 


Section 3.02. Payment of Fees and Insurance Premium.


 


(a)                                 Legal and Accounting Fees. The Servicer or Seller shall pay or cause to be
paid, on the Date of Issuance, legal fees and disbursements incurred by the
Insurer in connection with the issuance of the Policy and any fees of the
Insurer’s auditors. Any fees of the Insurer’s auditors payable in respect of
any amendment or supplement to the Offering Document or any other Offering
Document incurred after the Date of Issuance shall be paid by the Servicer
after presentation of an invoice therefor.


 


(b)                                Insurance Premium. In consideration of the issuance by the
Insurer of the Policy, the Insurer shall be entitled to receive the Insurance
Premium, so long as no Insurer Default or Insurer Insolvency has occurred, as
and when due in accordance with the terms of the Premium Side Letter Agreement (i) in
the case of Insurance Premium due on or before the Date of Issuance, directly
from the Servicer or the Seller and (ii) in the case of Insurance Premium
due after the Date of Issuance, first, pursuant to the Sale and Allocation
Agreement, and second, to the extent the amounts in
subclause first are not
sufficient, directly from the Servicer. For purposes of the Sale and Allocation
Agreement, the term “Premium Percentage” shall have the meaning set forth in
the Premium Side Letter Agreement. The Insurance Premium shall be calculated
according to the Premium Side Letter Agreement for the amount due on or before
the Date of Issuance and for the amount due on each Payment Date. The Insurance
Premium paid hereunder or under the Sale and Allocation Agreement shall be
nonrefundable without regard to whether the Insurer makes any payment under the
Policy or any other circumstances relating to the Obligations or provision
being made for payment of the Obligations prior


 


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to maturity. All payments of Insurance Premium to be
made to the Insurer shall be made by wire transfer to an account designated
from time to time by the Insurer by written notice to the Servicer and the
Indenture Trustee.


 


Section 3.03. Reimbursement and Additional
Payment Obligation.


 


(a)                                 In accordance with the priorities established
in Section 3.5 of the Sale and Allocation Agreement, the Insurer shall be
entitled to (i) reimbursement for any payment made by the Insurer under
the Policy, which reimbursement by the Issuer shall be due and payable on the
date that any amount is to be paid pursuant to a Notice (as defined in the
Policy), in an amount equal to the amount to be so paid and all amounts
previously paid that remain unreimbursed, together with interest on any and all
amounts remaining unreimbursed (to the extent permitted by law, if in respect
of any unreimbursed amounts representing interest) from the date such amounts
became due until paid in full (after as well as before judgment), at a rate of
interest equal to the Late Payment Rate, (ii) payment or reimbursement of
any other amounts owed to the Insurer under this Agreement together with interest
thereon at a rate equal to the Late Payment Rate and (iii) reimbursement
for any payments made by the Insurer with respect to the fees and expenses of a
successor Servicer or with respect to any transition costs relating to the transfer
of servicing from the Servicer to such successor Servicer together with
interest thereon at a rate equal to the Late Payment Rate.


 


(b)                                Notwithstanding anything in Section 3.03(a) to
the contrary, the Servicer and the Seller agree to reimburse the Insurer as
follows: (i) from the Seller, for payments made under the Policy arising
as a result of the Seller’s failure to repurchase any Contract required to be
repurchased pursuant to Section 2.3 of the Contribution Agreement, together
with interest on any and all amounts remaining unreimbursed (to the extent permitted
by law, if in respect of any unreimbursed amounts representing interest) from the
date such amounts became due until paid in full (after as well as before
judgment), at a rate of interest equal to the Late Payment Rate, and (ii) from
the Servicer, for payments made under the Policy, arising as a result of (A) the
Servicer’s failure to deposit into the Collection Account any amount required
to be so deposited pursuant to the Sale and Allocation Agreement or the
Servicing Agreement or (B) the Servicer’s failure to repurchase any Contract
to be repurchased under Section 2.28 of the Servicing Agreement, together with
interest on any and all amounts remaining unreimbursed (to the extent permitted
by law, if in respect to any unreimbursed amounts representing interest) from
the date such amounts became due until paid in full (after as well as before judgment),
at a rate of interest equal to the Late Payment Rate.


 


(c)                                 The Servicer and the Seller agree to pay to
the Insurer as follows: any and all charges, fees, costs and expenses that the
Insurer may reasonably pay or incur, including, but not limited to, attorneys’ and
accountants’ fees and expenses, in connection with (i) any accounts
established to facilitate payments under the Policy to the extent the Insurer
has not been immediately reimbursed on the date that any amount is paid by the
Insurer under the Policy, (ii) the enforcement, defense or preservation of
any rights in respect of any of the Transaction Documents, including defending,
monitoring


 


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or participating in any litigation or proceeding
(including any insolvency or bankruptcy proceeding in respect of any
Transaction participant or any affiliate thereof) relating to any of the
Transaction Documents, any party to any of the Transaction Documents, in its
capacity as such a party, or the Transaction, (iii) any amendment,
consent, waiver or other action with respect to, or related to, any Transaction
Document, whether or not executed or completed, or (iv) any reliening, any
replacement servicer or any transition costs relating to the transfer of
servicing from the Servicer to a replacement servicer; provided, however, that
the amounts recovered by the Insurer from the Seller and the Servicer pursuant
to this paragraph for the items set forth in (v) above shall be limited to
$250,000.00; provided, further, that costs and expenses shall include a
reasonable allocation of compensation and overhead attributable to the time of
employees of the Insurer spent in connection with the actions described in
clause (ii) above, and the Insurer reserves the right to charge a
reasonable fee as a condition to executing any waiver or consent proposed in
respect of any of the Transaction Documents. Notwithstanding anything herein to
the contrary, the Seller and the Servicer shall have no obligation to pay any
amounts representing (i) recourse for uncollectible Contracts and (ii) any
principal or interest on any Note.


 


(d)                                The Servicer, the Seller and the Depositor
agree to pay, severally but not jointly to the Insurer as follows: interest on
any and all amounts described in subsections (b), (c), (e) and (f) of
this Section 3.03 from the date payable or paid by such party until payment
thereof in full, and interest on any and all amounts described in Section 3.02
hereof from the date due until payment thereof in full, in each case, payable to
the Insurer at the Late Payment Rate per annum.


 


(e)                                 (i) The Servicer and the Seller agree to
pay to the Insurer as follows: any payments made by the Insurer on behalf of,
or advanced to, the Servicer or the Seller, respectively, including, without
limitation, any amounts payable by the Servicer or the Seller pursuant to the
Transaction Documents (other than the Obligations).


 


(ii)                                 The Depositor agrees to pay to the Insurer as
follows: any payments made by the Insurer on behalf of, or advanced to, the
Depositor, including, without limitation, any amounts payable by the Depositor
pursuant to the Transaction Documents (other than the Obligations).


 


(f)                                   Following termination of the Indenture
pursuant to Section 10.1 thereof, the Servicer agrees to reimburse the
Insurer for any Insured Payments (including, without limitation, any Insured
Payments relating to Preference Amounts as defined in the Policy) required to
be made pursuant to the Policy subsequent to the date of such termination.


 


All such amounts are to be immediately due and payable without demand.


 


Section 3.04. Indemnification; Limitation of Liability.


 


(a)                                 In addition to any and all rights of
indemnification or any other rights of the Insurer pursuant hereto or under law
or equity, the Seller, the Servicer and any


 


32





















 


successors thereto agree to pay, and to protect,
indemnify and save harmless, the Insurer and its officers, directors,
shareholders, employees, agents, and each person, if any, who controls the
Insurer within the meaning of either Section 15 of the Securities Act or Section 20
of the Securities Exchange Act from and against any and all claims, losses,
liabilities (including penalties), actions, suits, judgments, demands, damages,
costs or reasonable expenses (including, without limitation, reasonable fees
and expenses of attorneys, consultants and auditors and reasonable costs of
investigations) or obligations whatsoever paid by the Insurer (herein
collectively referred to as “Liabilities”) of any nature arising out of or
relating to the Transaction contemplated by the Transaction Documents by reason
of:


 


(i)                                    any untrue statement or alleged untrue
statement of a material fact contained in the Offering Document or in any
amendment or supplement thereto or in any preliminary offering document, or
arising out of or based upon any omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such Liabilities arise out
of or are based upon any such untrue statement or omission or allegation
thereof based upon information set forth (a) in the Offering Document
under the caption “Description of the Insurer and the Insurance Policy” or in
the financial statements of the Insurer, including any information in any
amendment or supplement to the Offering Document furnished by the Insurer in
writing expressly for use therein that amends or supplements such information
(all such information being referred to herein as “Insurer Information”) or (b) in
the last paragraph of the cover page of the Offering Document regarding
the delivery of the Obligations and under the heading “Plan of Distribution” in
the Offering Document;


 


(ii)                                 to the extent not covered by clause (i) above,
any act or omission of the Seller, the Depositor, the Servicer, or the allegation
thereof, in connection with the offering, issuance, sale or delivery of the
Obligations other than by reason of false or misleading information provided by
the Insurer in writing for inclusion in the Offering Document as specified in
clause (i) above;


 


(iii)                              the misfeasance or malfeasance of, or
negligence or theft committed by, any director, officer, employee or agent of
the Servicer, the Seller or the Depositor;


 


(iv)                             the violation by the Depositor, the Seller or
the Servicer of any federal or state securities, banking or antitrust laws, rules or
regulations in connection with the issuance, offer and sale of the Obligations
or the Transaction contemplated by the Transaction Documents;


 


(v)                                the violation by the Depositor, the Seller or
the Servicer of any federal or state laws, rules or regulations relating
to the Transaction, including without limitation the maximum amount of interest
permitted to be received on account of any loan of money or with respect to the
Contracts;


 


33





















 


(vi)                             the breach by the Seller or the Servicer of
any of its obligations under this Insurance Agreement or any of the other
Transaction Documents; and


 


(vii)                          the breach by the Servicer or the Seller of
any representation or warranty on the part of the Servicer or the Seller
contained in the Transaction Documents or in any certificate or report
furnished or delivered to the Insurer thereunder.


 


This indemnity provision
shall survive the termination of this Insurance Agreement and shall survive
until the statute of limitations has run on any causes of action which arise
from one of these reasons and until all suits filed as a result thereof have
been finally concluded. Notwithstanding anything else in this Section 3.04(a),
the Seller shall have no obligation for amounts due under this Section 3.04(a) for
acts or omissions of or any liabilities attributable to the Depositor or the
Issuer.


 


(b)                                [Reserved]


 


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


 


(d)                                In addition to any and all rights of
indemnification or any other rights of the Insurer pursuant hereto or under law
or equity, the Indenture Trustee agrees to pay, and to protect, indemnify and
save harmless, the Insurer and its officers, directors, shareholders,
employees, agents, including each person, if any, who controls the Insurer within
the meaning of either Section 15 of the Securities Act or Section 20
of the Securities Exchange Act from and against any and all claims, losses,
liabilities (including penalties), actions, suits, judgments, demands, damages,
costs or reasonable expenses


 


34





















 


(including, without limitation, reasonable fees and expenses of
attorneys, consultants and auditors and reasonable costs of investigations) or
obligations whatsoever of any nature arising out of the breach by the Indenture
Trustee of any of its obligations under this Insurance Agreement or the
Indenture. This indemnity provision shall survive the termination of this
Insurance Agreement and shall survive until the statute of limitations has run
on any causes of action which arise from one of these reasons and until all
suits filed as a result thereof have been finally concluded.


 


(e)                                 In addition to any and all rights of
indemnification or any other rights of the Insurer pursuant hereto or under law
or equity, the Back-up Servicer agrees to pay, and to protect, indemnify and
save harmless, the Insurer and its officers, directors, shareholders,
employees, agents, including each person, if any, who controls the Insurer
within the meaning of either Section 15 of the Securities Act or Section 20
of the Securities Exchange Act from and against any and all claims, losses,
liabilities (including penalties), actions, suits, judgments, demands, damages,
costs or reasonable expenses (including, without limitation, reasonable fees
and expenses of attorneys, consultants and auditors and reasonable costs of
investigations) or obligations whatsoever of any nature arising out of the
breach by the Back-up Servicer of any of its obligations under this Insurance
Agreement or the Servicing Agreement. This indemnity provision shall survive
the termination of this Insurance Agreement and shall survive until the statute
of limitations has run on any causes of action which arise from one of these
reasons and until all suits filed as a result thereof have been finally
concluded.


 


Section 3.05. Payment Procedure. In the event of any payment by the Insurer,
the Indenture Trustee, the Servicer, the Back-up Servicer, the Seller and the
Depositor agree to accept the voucher or other evidence of payment as prima
facie evidence of the propriety thereof and the liability therefor to the
Insurer. All payments to be made to the Insurer under this Insurance Agreement
shall be made to the Insurer in lawful currency of the United States of America
in immediately available funds at the notice address for the Insurer as
specified in Section 6.02 hereof on the date when due or as the Insurer
shall otherwise direct by written notice to the other parties hereto. In the
event that the date of any payment to the Insurer or the expiration of any time
period hereunder occurs on a day which is not a Business Day, then such payment
or expiration of time period shall be made or occur on the next succeeding
Business Day with the same force and effect as if such payment was made or time
period expired on the scheduled date of payment or expiration date. Payments to
be made to the Insurer under this Insurance Agreement shall bear interest at
the Late Payment Rate from the date when due to the date paid.


 


ARTICLE IV


 


FURTHER
AGREEMENTS


 


Section 4.01. Effective Date; Term of the
Insurance Agreement. This
Insurance Agreement shall take effect on the Date of Issuance and shall remain
in effect until the later of (a) such time as the Insurer is no longer subject
to a claim under the Policy and the Policy shall have been surrendered to the
Insurer for cancellation and (b) all amounts payable to the Insurer


 


35





















 


by the Servicer, the Indenture Trustee, the Back-up Servicer, the
Seller or the Depositor or from any other source under the Transaction
Documents and all amounts payable under the Obligations have been paid in full;
provided, however, that the provisions of Sections 3.02, 3.03, 3.04 and 4.06
hereof shall survive any termination of this Insurance Agreement.


 


Section 4.02. Further Assurances and Corrective
Instruments.


 


(a)                                 Excepting at such times as an Insurer
Insolvency or an Insurer Default shall exist or shall have occurred and be
continuing, none of the Servicer, the Indenture Trustee, the Back-up Servicer,
the Seller, the Depositor, the Issuer, the Owner Trustee or the Indenture
Trustee shall grant any waiver of rights under any of the Transaction Documents
to which any of them is a party without the prior written consent of the Insurer,
and any such waiver without the prior written consent of the Insurer shall be
null and void and of no force or effect.


 


(b)                                To the extent permitted by law, the Servicer,
the Indenture Trustee, the Back-up Servicer, the Seller, the Issuer, the Owner
Trustee and the Depositor agree that they will, from time to time, execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
such supplements hereto and such further instruments as the Insurer may request
and as may be required in the Insurer’s judgment to effectuate the intention of
or facilitate the performance of this Insurance Agreement.


 


Section 4.03. Obligations Absolute.


 


(a)                                 The obligations of the Servicer, the
Indenture Trustee, the Back-up Servicer, the Seller, the Issuer, the Owner
Trustee and the Depositor hereunder shall be absolute and unconditional and
shall be paid or performed strictly in accordance with this Insurance Agreement
under all circumstances irrespective of:


 


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


 


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


 


(iii)                              the existence of any claim, setoff, defense,
reduction, abatement or other right that the Servicer, the Indenture Trustee,
the Back-up Servicer, the Seller, the Issuer, the Owner Trustee or the
Depositor may have at any time against the Insurer or any other Person;


 


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


 


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


 


36





















 


(vi)                             any failure of the Servicer, the Indenture
Trustee, the Back-up Servicer, the Seller, the Issuer or the Depositor to
receive the proceeds from the sale of the Obligations; or


 


(vii)                          any breach by the Servicer, the Indenture
Trustee, the Back-up Servicer, the Seller, the Issuer, the Owner Trustee or the
Depositor of any representation, warranty or covenant contained in any of the
Transaction Documents.


 


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


 


(c)                                 Nothing herein shall be construed as prohibiting
the Servicer, the Indenture Trustee, the Back-up Servicer, the Seller, the
Issuer, the Owner Trustee or the Depositor from pursuing any rights or remedies
it may have against any other Person in a separate legal proceeding.


 


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


 


(a)                                 This Insurance Agreement shall be a
continuing obligation of the parties hereto and shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns. None of the Servicer, the Indenture Trustee, the Back-up
Servicer, the Seller, the Issuer, the Owner Trustee nor the Depositor may assign
its rights under this Insurance Agreement, or delegate any of its duties
hereunder, without the prior written consent of the Insurer. Any assignment
made in violation of this Insurance Agreement shall be null and void.


 


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


 


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


 


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


 


(e)                                 The Servicer, the Seller, the Depositor, the
Back-up Servicer, the Issuer, the Owner Trustee and the Indenture Trustee agree
that the Insurer shall have all rights of a third-party beneficiary in respect
of the Indenture and each other Transaction Document to which it is not a
signing party and hereby incorporate and restate their representations, warranties
and covenants as set forth therein for the benefit of the Insurer.


 


Section 4.05. Liability of the Insurer. Neither the Insurer nor any of its officers,
directors or employees shall be liable or responsible for: (a) the use
that may be made of the Policy by the Indenture Trustee or for any acts or
omissions of the Indenture Trustee in connection therewith; or (b) the
validity, sufficiency, accuracy or genuineness of documents delivered to the
Insurer (or its Fiscal Agent) in connection with any claim under the Policy, or
of any signatures thereon, even if such documents or signatures should in fact
prove to be in any or all respects invalid, insufficient, fraudulent or forged
(unless the Insurer shall have actual


 


38





















 


knowledge
thereof). In furtherance and not in limitation of the foregoing, the Insurer
(or its Fiscal Agent) may accept documents that appear on their face to be in
order, without responsibility for further investigation.


 


Section 4.06. Parties Will Not Institute
Insolvency Proceedings. So
long as this Agreement is in effect, and for one year following its
termination, none of the parties hereto will file any involuntary petition or
otherwise institute any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding or other proceedings under any federal or state
bankruptcy or similar law against the Depositor or the Issuer.


 


Section 4.07. Indenture Trustee, Depositor, Back-up
Servicer, Seller and Servicer To Join in Enforcement Action.


 


(a)                                 To the extent necessary to enforce any right
of the Insurer in or remedy of the Insurer under any Contract, the Indenture
Trustee, the Depositor, the Back-up Servicer, the Seller, the Issuer, the Owner
Trustee and the Servicer agree to join in any action initiated by the Trust or
the Insurer for the protection of such right or exercise of such remedy.


 


(b)                                In the event of any court proceeding (x) with
respect to which the Servicer, Depositor, the Seller or any affiliate thereof
(each a “First Investors Company”) is a party (including, without limitation,
an insolvency or bankruptcy proceeding in respect of any First Investors
Company) which affects the Trust Estate, the Policy or the obligations of the
Insurer under the Transaction Documents, and (y) with respect to which such
First Investors Company fails to defend or answer, the Insurer shall have the right
to direct, assume or otherwise participate in the defense thereof (so long as
no Insurer Default has occurred and is continuing). In such event, the Insurer
shall, following written notice to the Indenture Trustee, have the
exclusive-right to determine, in its sole discretion, the actions necessary to
preserve and protect the Trust Estate. All costs and expenses of the Insurer in
connection with such action, proceeding or investigation, (including, without
limitation, any judgment or settlement entered into or paid by the Insurer),
shall be included in the Insurance Payment Amount and shall be payable to the
Insurer pursuant to Section 3.5(d)(vi) of the Sale and Allocation Agreement.


 


(c)                                 The Indenture Trustee shall cooperate with,
and take such action as directed by, the Insurer (so long as no Insurer Default
has occurred and is continuting), including (without limitation) entering into
such agreements and settlements as the Insurer in its sole discretion shall
direct with respect to such court proceeding. The Indenture Trustee shall not
be liable to the Insurer for any such action that conforms to the direction of
the Insurer. The Indenture Trustee’s reasonable out-of-pocket costs and expenses
(including attorneys’ fees and expenses) with respect to any such action shall
be reimbursed pursuant to the Sale and Allocation Agreement; provided, however,
that if such costs and expenses are not so reimbursed on the Payment Date
immediately following the date incurred, then the Insurer shall reimburse the
Indenture Trustee for such costs and expenses within 60 days of such
nonpayment.


 


39





















 


(d)                                The Indenture Trustee hereby agrees to
provide to the Insurer prompt written notice of any action, proceeding or
investigation that names the Owner Trustee or the Issuer as a party or that
could adversely affect the Trust Estate or the rights or obligations of the
Insurer hereunder or under the Policy or the other Transaction Documents,
including (without limitation) any insolvency or bankruptcy proceeding in respect
of the Servicer, Depositor, the Seller or any affiliate thereof.


 


(e)                                 Notwithstanding anything contained herein or
in any of the other Transaction Documents to the contrary, the Indenture
Trustee shall not, without the Insurer’s prior written consent or unless
directed by the Insurer (so long as no Insurer Default has occurred and is
continuing), undertake or join any litigation or agree to any settlement of any
action, proceeding or investigation affecting the Owner Trustee, the Issuer or
the Trust Estate or the rights or obligations of the Insurer hereunder or under
the Policy or the other Transaction Documents.


 


Section 4.08. Subrogation. To the extent of any payments under the
Policy, the Insurer shall be fully subrogated to any remedies against the Depositor,
the Seller or the Servicer or in respect of the Contracts available to the
Indenture Trustee under the Indenture or Sale and Allocation Agreement. The
Indenture Trustee acknowledges such subrogation and, further, agrees to execute
such instruments prepared by the Insurer and to take such reasonable actions
as, in the sole judgment of the Insurer, are necessary to evidence such
subrogation and to perfect the rights of the Insurer to receive any moneys paid
or payable under the Indenture or Sale and Allocation Agreement.


 


ARTICLE V


 


DEFAULTS;
REMEDIES


 


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


 


(a)                                 the occurrence and continuance of an “Event
of Default” under the Indenture (as defined therein);


 


(b)                                a legislative body has enacted any law that
declares or a court of competent jurisdiction shall find or rule that this
Insurance Agreement or any of the Transaction Documents are not valid and
binding on the Servicer, the Indenture Trustee, the Back-up Servicer, the
Seller, the Issuer, the Owner Trustee or the Depositor


 


(c)                                 The occurrence and continuance of an “Event
of Servicing Termination” under the Servicing Agreement as defined therein;


 


(d)                                The failure of the Seller, the Issuer or the
Depositor to comply with, or maintain the accuracy of, the Opinion Facts and
Assumptions, to the extent they are related to a date after the Closing Date;


 


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(e)                                 The occurrence of final rulings against the
Seller or its affiliates by a court of competent jurisdiction assessing
monetary damages in excess of $1,000,000 or settlements resulting in the
payment by the Seller or its affiliates of amounts in excess of $1,000,000;


 


(f)                                   The departure of both Tommy Moore and Bennie
Duck from the Seller or its consolidated subsidiaries, if replacement for such
individuals acceptable to the Insurer is not made within 90 days;


 


(g)                                The Seller fails to maintain a minimum GAAP
equity as a percentage of on-balance sheet portfolio of 10%. Equity may include
50% of subordinated debt with a maturity equal to or greater than five years,
subject to MBIA review of and satisfaction with the subordinated debt
agreement;


 


(h)                                The Seller fails to maintain a $9 million
non-MBIA insured, non-asset backed financing facility;


 


(i)                                    The Seller fails to maintain a minimum EBITDA
Coverage of 1.1:1.0. The test shall be measured quarterly (coinciding with FIFS
quarterly fiscal reporting) on a rolling six months basis;


 


(j)                                    A Change in Control occurs;


 


(k)                                 A material change occurs in the operations of
the Servicer which materially adversely affects the ability of the Servicer to
service the Contracts or to perform its obligations under the Servicing
Agreement;


 


(l)                                    As of the end of any of its fiscal quarters,
FIFSG shareholder’s equity (determined in accordance with GAAP) is less than
the sum of $24,120,545 and 50% of the aggregate of the net income of FIFSG
(determined in accordance with GAAP and without deduction for any net losses)
for such fiscal quarter and all prior fiscal quarters ending after January 31,
2005; or


 


(m)                              The Servicer or a wholly owned subsidiary of
the Seller fails to maintain a warehouse facility of at least $150,000,000.


 


Section 5.02. Remedies; No Remedy Exclusive.


 


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


 


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


 


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(ii)                                 take whatever action at law or in equity as
may appear necessary or desirable in its judgment to collect the amounts then
due under the Transaction Documents or to enforce performance and observance of
any obligation, agreement or covenant of the Servicer, the Indenture Trustee,
the Back-up Servicer, the Seller, the Issuer, the Owner Trustee or the
Depositor under the Transaction Documents.


 


(b)                                Unless otherwise expressly provided, no
remedy herein conferred upon or reserved is intended to be exclusive of any
other available remedy, but each remedy shall be cumulative and shall be in
addition to other remedies given under the Transaction Documents or existing at
law or in equity. No delay or omission to exercise any right or power accruing
under the Transaction Documents upon the happening of any event set forth in Section 5.01
hereof shall impair any such right or power or shall be construed to be a
waiver thereof, but any such right and power may be exercised from time to time
and as often as may be deemed expedient. In order to entitle the Insurer to
exercise any remedy reserved to the Insurer in this Article, it shall not be
necessary to give any notice, other than such notice as may be required in this
Article V.


 


Section 5.03. Waivers.


 


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


 


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


 


ARTICLE VI


 


MISCELLANEOUS


 


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


 


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


 


(a)                                 To the Insurer:


 


MBIA Insurance Corporation


113 King Street


Armonk, NY 10504


Attention:  Insured Portfolio
Management-Structured Finance (IPM-SF)


(First Investors Auto Owner
Trust 2005-A)


Telecopy No.: (914) 765-3810


Confirmation: (914) 273-4545


 


(in each case in which notice or other communication to the Insurer
refers to an Event of Default, a claim on the Policy or with respect to which
failure on the part of the Insurer to respond shall be deemed to constitute
consent or acceptance, then a copy of such notice or other communication should
also be sent to the attention of each of the general counsel and the Insurer
and shall be marked to indicate “URGENT MATERIAL ENCLOSED.”)


 


(b)                                To the Seller and Administrator:


 


First Investors Financial Services, Inc.


Suite 710


675 Bering Drive


Houston, TX 77057


Attention: Bennie H. Duck


Telecopy No.: (713) 977-0657


Confirmation: (713) 977-2600


 


(c)                                 To the Servicer:


 


First Investors Servicing Corporation


380 Interstate North Parkway


Sixth Floor


Atlanta, GA 30339


Attention: Bennie H. Duck


 


(d)                                To the Indenture Trustee:


 


Wells Fargo Bank, National Association


MAC N9311-161


 


43





















 


Sixth and Marquette Streets


Minneapolis, MN 55479


Attention: Corporate Trust Services — Asset-Backed Administration


 


(e)                                 To the Depositor:


 


First Investors Auto Funding Corporation


675 Bering Drive


Houston, TX 77057


Attention: Bennie H. Duck


Telecopy No.: (713) 977-0657


Confirmation: (713) 977-2600


 


(f)                                   To the Issuer:


 


First Investors Auto Owner Trust 2005-A


c/o Wells Fargo Delaware Trust Company


919 N. Market Street, Suite 700


Wilmington, DE 19801


Attention: Corporate Trust Administration


 


(g)                                To the Owner Trustee:


 


c/o Wells Fargo Delaware Trust Company


919 N. Market Street, Suite 700


Wilmington, DE 19801


Attention: Corporate Trust


 


(h)                                To the Back-up Servicer:


 


Wells Fargo Bank, National Association


Sixth and Marquette Streets


Minneapolis, MN 55479-0070


Attention: Asset-Backed Trust Administration


 


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


 


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


 


44





















 


Section 6.04. Governing Law. This Insurance Agreement shall be governed by
and construed in accordance with the laws of the State of New York without
giving effect to the conflict of law provisions thereof.


 


Section 6.05. Consent to Jurisdiction.


 


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


 


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


 


(c)                                 Except as provided in Section 4.06
herein, nothing contained in this Insurance Agreement shall limit or affect the
Insurer’s right to serve process in any other manner permitted by law or to start
legal proceedings relating to any of the Transaction Documents any party hereto
or its or their property in the courts of any jurisdiction.


 


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


 


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


 


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


 


45





















 


otherwise indicated, all references to Articles and Sections in this
Insurance Agreement refer to the corresponding Articles and Sections of this
Insurance Agreement.


 


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


 


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


 


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


 


Section 6.12. No Recourse. It is expressly understood and agreed to by
the parties hereto that (a) this Insurance Agreement is executed and
delivered by Wells Fargo Delaware Trust Company, not individually or personally
but solely as trustee of the Issuer, in the exercise of the powers and
authority conferred and vested in it, (b) each of the representations,
undertakings and agreements herein made on the part of the Issuer or the Trust
is made and intended not as personal representations, undertakings and
agreements by Wells Fargo Delaware Trust Company but is made and intended for
the purpose of binding only the Issuer or the Owner Trustee, as applicable, (c) nothing
herein contained shall be construed as creating any liability on the part of
Wells Fargo Delaware Trust Company, individually or personally, to perform any
covenant either expressed or implied contained herein, all such liability, if
any, being expressly waived by the parties hereto and by any Person claiming
by, through or under the parties hereto and (d) under no circumstances
should Wells Fargo Delaware Trust Company be personally liable for the breach
or failure of any obligation, representation, warranty or covenant made or
undertaken by the Issuer or the Trust under this Insurance Agreement or any
other Transaction Documents.


 


Section 6.13. Limited Recourse. Notwithstanding any other provision contained
herein or in any of the Transaction Documents, the liability of the Issuer to
the Insurer hereunder is


 


46





















 


limited
in recourse to the Collateral, when and as applied in accordance with the
priority of payments set forth in Section 3.5 of the Sale and Allocation
Agreement, and to the extent such proceeds of the Collateral are insufficient
to meet the obligations of the Issuer hereunder in full, the Issuer shall have
no further liability in respect of any such outstanding obligations, it being
agreed between the parties that, upon realization of the Collateral and its
reduction to zero, all claims arising out of or in connection with this
Agreement against the Issuer shall thereupon extinguish and shall not
thereafter revive.


 


Section 6.14. 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, the parties hereto (other than the Depositor),
by entering into or accepting this Agreement, each 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 hereto 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 hereto
(other than the Depositor) further acknowledges and agrees that no adequate
remedy at law exists for a breach of this Section 6.14 and the terms of
this Section 6.14 may be enforced by an action for specific performance.
The provisions of the Section 6.14 will be for the third party benefit of
those entitled to rely thereon and will survive the termination of this
Agreement.


 


[REMAINDER OF PAGE INTENTIONALLY BLANK; SIGNATURE PAGE FOLLOWS]


 


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


 


	
   

  	
  MBIA
  INSURANCE CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Assistant Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FIRST
  INVESTORS SERVICING

  CORPORATION, as Servicer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Title

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FIRST
  INVESTORS FINANCIAL SERVICES,

  INC., as Seller and as Administrator

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Title

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FIRST
  INVESTORS AUTO FUNDING

  CORPORATION, as Depositor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Title

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WELLS
  FARGO BANK, NATIONAL

  ASSOCIATION, as Back-up Servicer and Indenture

  Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Title

  	
   

  	
   

  
					



 


 


 


First
Investors Auto Owner Trust 2005-A


Insurance
Agreement


Signature Page


Kutak Rock - Firm
Library-4830-8254-2336.5


 





















 


	 
	
   

  	
  FIRST
  INVESTORS AUTO OWNER TRUST

  2005-A, as Issuer,

  
	 
	
   

  	
   

  
	 
	
   

  	
  By:        WELLS
  FARGO DELAWARE TRUST

  COMPANY, not in its individual capacity, but

  solely as Owner Trustee

  
	 
	
   

  	
   

  
	 
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Title

  	
   

  	
   

  
	 
	
   

  	
   

  
	 
	
   

  	
   

  
	 
	
   

  	
  WELLS
  FARGO DELAWARE TRUST

  COMPANY, not in its individual capacity, but

  solely as Owner Trustee

  
	 
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Title