EXECUTION COPY












                      Revolving Loan And Security Agreement

                          Dated As Of November 24, 2003

                                     between

                             Far East National Bank

                                   The Lender,

                                       And

                      AFCO Receivables Funding Corporation

                                  The Borrower





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                                TABLE OF CONTENTS

                                                                           Page


ARTICLE I DEFINITIONS........................................................6

ARTICLE II ADVANCES, NOTE AND PREPAYMENTS....................................19
    Section 2.01      Advances...............................................19
    Section 2.02      The Note...............................................19
    Section 2.03      Procedures for Borrowing...............................19
    Section 2.04      Repayment of Advances; Interest; Fees..................20
    Section 2.05      Take-Out Transactions..................................23
    Section 2.06      Release of Receivables.................................23

ARTICLE III COLLATERAL.......................................................24
    Section 3.01      Grant of Security Interest to Lender...................24
    Section 3.02      Other Security.........................................25

ARTICLE IV PRESERVATION AND CUSTODY OF COLLATERAL AND
    PERFECTION OF SECURITY INTERESTS THEREIN...................25
    Section 4.01      Perfection of Security Interests in Collateral.........25
    Section 4.02      Custody of Receivable Files............................26

ARTICLE V LOCK BOX ACCOUNT; COLLECTIONS......................................26
    Section 5.01      Establishment of and Deposits to Lock Box Account......26
    Section 5.02      Lender's Remedies Upon an Event of Default.............27
    Section 5.03      Investment of Funds in Lock Box Account................28

ARTICLE VI RESERVE ACCOUNT...................................................28
    Section 6.01      Establishment of and Deposits to Reserve Account.......28
    Section 6.02      Withdrawals From Reserve Account.......................28
    Section 6.03      Release of Funds From Reserve Account..................28
    Section 6.04      Investment of Funds in Reserve Account.................28
    Section 6.05      Filing of Claims Under Default Insurance Policy........29

ARTICLE VII REPAYMENT OF OBLIGATIONS.........................................29

ARTICLE VIII SERVICING AND FINANCIAL REPORTS.................................29
    Section 8.01      Servicing of the Receivables; Servicer's Certificate...30
    Section 8.02      Financial Statements...................................30
    Section 8.03      Other Information......................................30
    Section 8.04      Collateral Examination.................................30

ARTICLE IX TERMINATION.......................................................30

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ARTICLE X REPRESENTATIONS AND WARRANTIES OF THE BORROWER.....................31
    Section 10.01       Financial Statements and Other Information...........31
    Section 10.02       Locations............................................31
    Section 10.03       Loans by Borrower....................................31
    Section 10.04       Liens................................................31
    Section 10.05       Organization, Authority and No Conflict..............31
    Section 10.06       Litigation...........................................32
    Section 10.07       Compliance with Laws and Maintenance of Permits......32
    Section 10.08       Affiliate Transactions...............................32
    Section 10.09       Names and Tradenames.................................32
    Section 10.10       Enforceability.......................................32
    Section 10.11       Solvency.............................................32
    Section 10.12       Indebtedness.........................................32
    Section 10.13       Margin Security and Use of Proceeds..................33
    Section 10.14       No Defaults..........................................33
    Section 10.15       Employee Matters.....................................33
    Section 10.16       ERISA Matters........................................33

ARTICLE XI REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE RECEIVABLES....33

ARTICLE XII AFFIRMATIVE COVENANTS............................................37
    Section 12.01       Maintenance of Records...............................37
    Section 12.02       Notices..............................................38
    Section 12.03       Compliance with Laws and Maintenance of Permits......38
    Section 12.04       Inspection and Audits................................38
    Section 12.05       Default Insurance Policy.............................39
    Section 12.06       Use of Proceeds......................................39
    Section 12.07       Taxes................................................39
    Section 12.08       Intellectual Property................................39
    Section 12.09       Financial Covenants..................................39

ARTICLE XIII NEGATIVE COVENANTS..............................................40
    Section 13.01       Guaranties...........................................40
    Section 13.02       Indebtedness.........................................40
    Section 13.03       Liens................................................40
    Section 13.04       Mergers, Sales, Acquisitions, Subsidiaries
                        and Other Transactions Outside the Ordinary
                        Course of Business...................................40
    Section 13.05       Dividends and Distributions..........................40
    Section 13.06       Investments; Loans...................................40
    Section 13.07       Fundamental Changes, Line of Business................40
    Section 13.08       Guarantees...........................................41

                                       2

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ARTICLE XIV DEFAULT..........................................................41
    Section 14.01       Payment..............................................41
    Section 14.02       Breach of the Loan Documents.........................41
    Section 14.03       Breaches of Other Obligations........................41
    Section 14.04       Default under Indebtedness...........................41
    Section 14.05       Subordination of Obligations.........................41
    Section 14.06       Breach of Representations and Warranties.............41
    Section 14.07       Loss of Collateral...................................42
    Section 14.08       Levy, Seizure or Attachment..........................42
    Section 14.09       Bankruptcy or Similar Proceedings....................42
    Section 14.10       Appointment of Receiver..............................42
    Section 14.11       Judgment.............................................42
    Section 14.12       Criminal Proceedings.................................42
    Section 14.13       Material Adverse Change..............................42
    Section 14.14       Servicer Default.....................................42
    Section 14.15       Change of Control....................................42


ARTICLE XV REMEDIES UPON AN EVENT OF DEFAULT.................................43
    Section 15.01       Obligations Due and Payable..........................43
    Section 15.02       Rights under the UCC.................................43

ARTICLE XVI CONDITIONS PRECEDENT.............................................43
    Section 16.01       Conditions Precedent to Initial Advance..............43
    Section 16.02       Conditions Precedent to all Advances.................44

ARTICLE XVII INDEMNIFICATION.................................................45

ARTICLE XVIII NOTICE.........................................................45

ARTICLE XIX CHOICE OF GOVERNING LAW; CONSTRUCTION; FORUM SELECTION...........46

ARTICLE XX MODIFICATION AND BENEFIT OF AGREEMENT.............................46

ARTICLE XXI INTERPRETIVE PROVISIONS..........................................47

ARTICLE XXII POWER OF ATTORNEY...............................................47

ARTICLE XXIII CONFIDENTIALITY................................................47

ARTICLE XXIV COUNTERPARTS....................................................48

ARTICLE XXV ELECTRONIC SUBMISSIONS...........................................48

ARTICLE XXVI WAIVER OF JURY TRIAL; OTHER WAIVERS.............................48

ARTICLE XXVII ENTIRE AGREEMENT...............................................49

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         Schedule A        - .......Custodial Service Fee Schedule
         Schedule B        - .......Lock Box Service Fee Schedule

         Exhibit A         - .......Business and Collateral Locations
         Exhibit B         - .......Form of Compliance Certificate
         Exhibit C         - .......Form of Revolving Promissory Note
         Exhibit D.1       - .......Form of Guaranty
         Exhibit D.2       - .......Form of PEWC Guaranty
         Exhibit D.3       - .......Form of PEWC Promissory Note
         Exhibit E         - .......Form of Default Insurance Policy
         Exhibit F         -........Notice of Borrowing and Pledge
         Exhibit G.1       -........Form of Initial Extension Notice
         Exhibit G.2       -........Form of Second Extension Notice
         Exhibit I         - .......Form of Servicer's Certificate
         Exhibit J         - .......Form of Lock Box Agreement

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                      REVOLVING LOAN AND SECURITY AGREEMENT

     THIS REVOLVING LOAN AND SECURITY AGREEMENT (as amended, modified,  restated
or  supplemented  from  time to time,  this  "Agreement")  made this 24th day of
November,  2003 by and  between  Far East  National  Bank,  a  national  banking
association,  as lender ("Lender"),  and AFCO Receivables Funding Corporation, a
Nevada corporation, as borrower ("Borrower").

                                   WITNESSETH:

     WHEREAS,  Borrower is a wholly-owned limited purpose subsidiary of American
Finance  Company,  Inc.,  a Nevada  corporation  ("AFCO"),  which is an indirect
wholly-owned   subsidiary  of  Pacific  Electric  Wire  &  Cable  Co.,  Ltd.,  a
corporation organized under the Republic of China ("PEWC");

     WHEREAS,  Lender  has  agreed to make a  revolving  line of credit  loan to
Borrower (the "Loan") in an aggregate principal amount not to exceed TEN MILLION
and NO/100 Dollars ($10,000,000.00) (the "Maximum Loan Limit").

     WHEREAS, Borrower will use the proceeds of each Advance (as defined herein)
made  from  time  to time  under  the  Loan  to  acquire  motor  vehicle  retail
installment  sale  contracts  (each,  a  "Receivable"  and,  collectively,   the
"Receivables").

     WHEREAS,  the Loan and each  Advance made  thereunder  shall be secured by,
among  other  things,  all  of  Borrower's  right,  title  and  interest  in the
Receivables and certain other property;

     WHEREAS, Borrower is executing a revolving promissory note in substantially
the form attached hereto as Exhibit C (the "Note") payable to Lender  evidencing
the Loan and the Advances made thereunder;

     WHEREAS, each of AFCO, Pacific Auto Group, Inc. Ace Motor Company, Autocorp
Financial Services,  Inc. and AutoCorp Equities,  Inc. (each, a "Guarantor") has
agreed to guaranty Borrower's obligations to Lender in accordance with the terms
of one or more guaranty  agreements of even date herewith in  substantially  the
form attached hereto as Exhibit D.1 (the "Guaranty"); and

     WHEREAS,  PEWC has agreed to guaranty  Borrower's  obligations to Lender in
accordance  with the terms of a  guaranty  agreement  of even date  herewith  in
substantially  the form  attached  hereto as Exhibit D.2 (the "PEWC  Guaranty"),
which  obligation  shall also be  evidenced  by a  promissory  note of even date
herewith in  substantially  the form  attached  hereto as Exhibit D.3 (the "PEWC
Promissory Note"); and

     WHEREAS,  Great American Excess & Surplus Insurance Company (the "Insurer")
has issued an Auto Loan Protection  Insurance Policy in  substantially  the form
attached  hereto as Exhibit E  (together  with each  endorsement  and  bordereau
thereto, the "Default Insurance Policy") with respect to the Receivables;


                                       5
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     NOW,  THEREFORE,  for good and  valuable  consideration,  the  receipt  and
sufficiency  of which are  hereby  acknowledged,  the  parties  hereto  agree as
follows:

                                    ARTICLE I
                                   DEFINITIONS
                                   -----------

     "Account",  "Account Debtor",  "Chattel Paper",  "Documents",  "Equipment",
"General  Intangibles",   "Goods",   "Instruments",   "Inventory",   "Investment
Property",  and "Security  Interest" shall have the respective meanings assigned
to such terms, as of the date of this Agreement, in the UCC.

     "Accrual Period" means, a calendar month; provided that the initial Accrual
Period for any Advance  shall be the period from and including the day after the
related  Advance Date to and  including  the last day of the  calendar  month in
which such Advance occurs.

     "ACE"  means  AutoCorp  Equities,  Inc.,  a  Nevada  corporation,  and  its
successors.

     "Adjusted  Tangible Net Worth" means, as of any date of determination,  the
positive  excess  of  (a)  ACE's  total   stockholders'   equity  plus,  without
duplication,  any Indebtedness of the Borrower that is subordinated to Lender on
terms and conditions  satisfactory to Lender,  over (b) all Intangible Assets of
ACE and its consolidated subsidiaries.

     "Advance" shall have the meaning set forth in Section 2.01 hereof.

     "Advance Date" means,  (i) with respect to a Receivable,  the date on which
an Advance is made hereunder  relating to such  Receivable and (ii) with respect
to an Advance, the date on which such Advance is made.

     "Advance Amount" means, with respect to any Advance, the product of (i) 95%
and (ii) the  aggregate  Principal  Balance of the  Eligible  Receivables  to be
pledged to the Borrower on such Advance Date as of the related Cutoff Date.

     "Advance  Percentage" means, with respect to any Advance,  (i) prior to the
applicable  Maturity Date, 95%, (ii) during the Initial Extension  Period,  75%,
and (iii) during the Second Extension Period, 50%.

     "AFC" means Automotive Finance Corporation, an Indiana corporation.

     "AFCO" shall have the meaning set forth in the preamble hereof.

     "Affiliate" shall mean any Person (i) which directly or indirectly  through
one or more  intermediaries  controls,  is  controlled  by,  or is under  common
control with, Borrower,  (ii) which beneficially owns or holds five percent (5%)
or more of the voting  control or equity  interests of  Borrower,  or (iii) five
percent  (5%) or more of the  voting  control  or equity  interests  of which is
beneficially owned or held by Borrower.

     "Aggregate  Daily Interest Amount" means, for any day, the sum of the Daily
Interest Amounts for all Advances then outstanding.


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     "Aggregate  Principal  Distribution  Amount"  means,  for any Payment  Date
(other  than  the  Final  Scheduled  Payment  Date),  the  sum of the  Principal
Distribution Amounts for all Advances then outstanding.  The Aggregate Principal
Distribution Amount on the Final Scheduled Payment Date will equal the aggregate
outstanding principal amount of the Note.

     "Aggregate  Reserve  Account  Distribution  Amount" means,  for any Payment
Date, the sum of the Reserve Account  Distribution Amounts for all Advances then
outstanding.

     "Aggregate  Reserve Account  Reimbursement  Amount" means,  for any Payment
Date, the sum of the Reserve Account Reimbursement Amounts for all Advances then
outstanding.

     "Amount Financed" means, with respect to a Receivable, the aggregate amount
advanced under such Receivable toward the purchase price of the related Financed
Vehicle  as stated in the  related  Contract  and as  indicated  on the  related
Receivables Schedule.

     "Annual  Percentage  Rate"  or  "APR"  of a  Receivable  means  the  annual
percentage rate of finance charges or service charges,  as stated in the related
Contract and as indicated on the related Receivables Schedule.

     "Available  Commitment" means, as of any date of determination,  the amount
by which the Maximum Loan Limit exceeds the Total Outstanding Advances.

     "Available  Funds" means,  for each Payment  Date,  (A) with respect to the
Lock Box Account, the sum of the following amounts with respect to the preceding
Accrual  Period,  without  duplication:  (i) all  Collections  in respect of the
Receivables;  and (ii) all Investment Earnings for the related Payment Date; and
(B) with  respect to the Reserve  Account,  the amount on deposit in the Reserve
Account immediately preceding such Payment Date.

     "Back-Up  Servicer"  shall  mean  Consumer  Loan  Servicing,  Inc.  and its
successors and assigns.

         "Back-Up Servicing Agreement" shall mean the Back-Up Servicing
Agreement dated as of November 24, 2003 by and among Borrower, AFCO and Back-Up
Servicer.

     "Benefit Plan" means a "defined  benefit plan" (as defined in Section 3(35)
of ERISA) for which the  Borrower or any  Subsidiary  or ERISA  Affiliate of the
Borrower has been an "employer" (as defined in Section 3(5) of ERISA) within the
past six years.

     "Business  Day" shall mean any day other than a  Saturday,  a Sunday or any
day that banks in Los Angeles,  California  or in Dallas,  Texas are required or
permitted to close.

     "Capital  Adequacy  Charge" shall have the meaning assigned to such term in
Section 2.04(f).

     "Capital  Adequacy  Demand" shall have the meaning assigned to such term in
Section 2.04(f).

     "Capital  Lease"  means a lease  that is  required  to be  capitalized  for
financial accounting purposes in accordance with GAAP.


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     "Casualty"  means,  with respect to a Financed  Vehicle,  the total loss or
destruction of such Financed Vehicle.

     "Change of Control" shall mean the failure of Pacific Holdings Group to own
and have voting control of,  directly or indirectly,  at least fifty one percent
(51%) of the issued and outstanding  voting equity interests of each of AFCO and
the Borrower.

     "Closing Date" means November 24, 2003.

     "Collateral"  shall  mean all of the  property  of  Borrower  described  in
Article IV hereof, together with all other real or personal property of Borrower
now or hereafter  pledged to Lender to secure,  either  directly or  indirectly,
repayment of any of the Obligations.

     "Collections"  means all cash  receipts on account of or arising out of any
Receivable,  however  denominated,  received  by any Person,  including  without
limitation amounts owing to principal,  interest, delinquent payments, extension
fees,  late  payment  fees,  redemption  fees,  deficiency  amounts,  penalties,
insurance proceeds (including without limitation, proceeds from claims under the
Default Insurance Policy and any Receivables  Insurance Policy), Net Liquidation
Proceeds,  repossession fees, storage fees, or advances of principal,  sales tax
refunds, rights of recourse and special damages.

     "Commitment  Period"  means the period  beginning  on the Closing  Date and
ending on November 23, 2004.

     "Contract"  means a motor  vehicle  retail  installment  sale  contract and
promissory note evidencing a Receivable.

     "Contract Obligor" means, with respect to a Receivable,  the purchaser and,
if applicable,  any  co-purchasers  of the Financed Vehicle and any other Person
who owes payments under the related Contract.

     "Contract  Purchase  Guidelines"  means the guidelines  established by AFCO
with respect to its purchase of Contracts  and in effect as of the Closing Date,
as the same may be amended from time to time with prior  approval of the Insurer
and the Lender.

     "Cram  Down  Loss"  means,  with  respect  to a  Receivable,  if a court of
appropriate  jurisdiction in an insolvency proceeding shall have issued an order
reducing the amount owed on a Receivable or otherwise modifying or restructuring
Scheduled  Receivable  Payments to be made on a  Receivable,  an amount equal to
such reduction in the Principal  Balance of such  Receivable or the reduction in
the net present value (using as the discount rate the lower of the contract rate
or the rate of interest  specified by the court in such order) of the  Scheduled
Receivable  Payments as so modified or  restructured.  A Cram Down Loss shall be
deemed to have occurred on the date such order is entered.

     "Cumulative  Charge-off  Ratio" means, as of any date of determination  and
with  respect  to all  Receivables  owned  by  Borrower,  a  percentage  (A) the
numerator of which is the aggregate  outstanding  Principal  Balance of all such
Contracts that have been  charged-off as  uncollectable  in accordance  with the
Servicer's  standard policies and procedures as in effect as of the Closing Date
(less  recoveries)  since the Closing Date, and (B) the  denominator of which is
the aggregate original Principal Balance of all Contracts pledged by Borrower to
Lender since the Closing Date.


                                       8
<PAGE>


     "Custodial  Fees" means the fees  payable to the Lender in its  capacity as
custodian  and  bailee of any  Receivable  Files  pursuant  to  Section  4.02 in
accordance with the Custodial Service Fee Schedule.

     "Custodial  Service Fee  Schedule"  means the schedule  attached  hereto as
Schedule A.

     "Custodial  Fee" means the  monthly  fee payable to the Lender in the event
that it maintains  possession of any Receivable  Files pursuant to Section 4.02,
which fee shall be separately negotiated in good faith and mutually agreed to by
Lender and  Borrower,  and will be not greater  than  custodial  fees payable to
unaffiliated third party custodians in similar transactions.

     "Cutoff Date" means, with respect to any Advance, the date specified in the
related Notice of Borrowing and Pledge.

     "Daily Interest Amount" means, for any day, with respect to an Advance, the
product of (i) the Note  Interest  Rate for such Advance for such day,  (ii) the
outstanding  principal  amount of the Advance at the end of such day,  and (iii)
1/360.

     "Dealer"  means,  with respect to a  Receivable,  the seller of the related
Financed  Vehicle or other  finance  entity that  originated  and assigned  such
Receivable to AFCO.

     "Default Insurance Policy" shall have the meaning specified in the preamble
hereof.

     "Default  Interest  Rate" shall mean the lesser of (a) the Maximum  Rate or
(b) the rate of two  percent  (2%) per annum in excess  of the  applicable  Note
Interest Rate.

     "Defaulted  Receivable"  means,  with respect to any  Receivable  as of any
date, a Receivable with respect to which: (i) four or more Scheduled  Receivable
Payments are past due as of the end of the immediately preceding Accrual Period,
except  in the case  where at least  90% of the  earliest  Scheduled  Receivable
Payment has been satisfied, then that payment shall be deemed to have been fully
satisfied  for  purposes  of  this  definition   only,  (ii)  the  Servicer  has
repossessed  the  related  Financed  Vehicle  as of the  end of the  immediately
preceding  Accrual  Period,  or (iii) the Servicer has  determined in good faith
that payments thereunder are not likely to be resumed.

     "Delinquent  Receivable"  means  any  Receivable  (other  than a  Defaulted
Receivable) with respect to which two or more Scheduled  Receivable Payments are
past due as of the end of the immediately  preceding  Accrual Period,  except in
the case where at least 90% of the  earliest  Scheduled  Receivable  Payment has
been  satisfied,  then that payment shall be deemed to have been fully satisfied
for purposes of this definition only.

     "Delinquent Obligor" means a Contract Obligor under a Delinquent Receivable
or a Defaulted Receivable.


                                       9
<PAGE>


     "Determination  Date" means,  with respect to any Payment Date, the [third]
Business Day immediately preceding such Payment Date.

     "Dollar" means lawful money of the United States.

     "Draw Fee" shall equal $2,000 per Advance.

     "Eligible Investments" mean book-entry  securities,  negotiable instruments
or securities  represented  by  instruments  in bearer or registered  form which
evidence:

          (a) direct  obligations of, and obligations fully guaranteed as to the
full and timely payment by, the United States of America;

          (b) demand  deposits,  time deposits or certificates of deposit of any
depository  institution  or trust  company  incorporated  under  the laws of the
United  States of  America or any State  thereof  (or any  domestic  branch of a
foreign bank) and subject to  supervision  and  examination  by Federal or State
banking or depository institution authorities;

          (c) bankers' acceptances issued by any depository institution or trust
company referred to in clause (c) above;

          (d)  repurchase  obligations  with respect to any  security  that is a
direct  obligation of, or fully guaranteed as to the full and timely payment by,
the  United  States of  America or any  agency or  instrumentality  thereof  the
obligations  of which are  backed by the full  faith  and  credit of the  United
States of America, in either case entered into with a depository  institution or
trust company (acting as principal) described in clause (b);

          (e) money market mutual funds registered under the Investment  Company
Act of 1940, as amended,  having a rating, at the time of such investment,  from
one or more  nationally  recognized  statistical  rating agencies in the highest
investment category granted thereby; and

          (f) any other investment as may be acceptable to Lender.
Any of the foregoing Eligible  Investments may be purchased by or through Lender
or any of its Affiliates.

     "Eligible Receivables" means, as of any date of determination, Receivables,
other than Ineligible Receivables,  that are listed on the bordereau attached to
the applicable  endorsement to the Default Insurance  Policy.  Once a Receivable
has been listed on a bordereau,  it may not thereafter be listed on a subsequent
bordereau.

     "Enforcement Costs" means all expenses,  charges, costs and fees whatsoever
(including,  without  limitation,  outside  and  reasonably  allocated  in-house
counsel  attorney's fees and expenses) of any nature whatsoever paid or incurred
by or on  behalf  of  the  Lender  in  connection  with  (a)  any  or all of the
Obligations,  this  Agreement  and/or any of the other Loan  Documents,  (b) the
creation,   perfection,   collection,   maintenance,    preservation,   defense,
protection,  realization upon, foreclosure,  disposition, sale or enforcement of
all or any part of the  Collateral,  this  Agreement  or any of the  other  Loan
Documents,   including,  without  limitation,  those  costs  and  expenses  more
specifically  enumerated in this Agreement and any of the other Loan  Documents,


                                       10
<PAGE>

and further including, without limitation,  amounts paid to lessors, processors,
bailees, warehousemen,  sureties, judgment creditors and others in possession of
or  with a  Lien  against  or  claimed  against  the  Collateral,  and  (c)  the
monitoring,  administration,  processing  and/or  servicing of any or all of the
Obligations, the Loan Documents, and/or the Collateral.

     "ERISA"  means the Employee  Retirement  Income  Security  Act of 1974,  as
amended, and any successor statute thereto.

     "ERISA Affiliate" means (a) any Person subject to ERISA whose employees are
treated as employed by the same  employer as the  employees of a Borrower  under
Section  414(b) of the IRC,  (b) any trade or  business  subject to ERISA  whose
employees  are treated as employed by the same  employer as the  employees  of a
Borrower under Section 414(c) of the IRC, (c) solely for purposes of Section 302
of ERISA and Section 412 of the IRC, any organization subject to ERISA that is a
member of an  affiliated  service  group of which a Borrower  is a member  under
Section  414(m) of the IRC,  or (d) solely for  purposes of Section 302 of ERISA
and  Section 412 of the IRC,  any Person  subject to ERISA that is a party to an
arrangement  with a  Borrower  and  whose  employees  are  aggregated  with  the
employees of a Borrower under Section 414(o) of the IRC.

     "Event of Default" shall have the meaning specified in Article XIV hereof.

     "Extension  Notice"  means a written  notice from Lender to Borrower in the
form of Exhibit H hereto  extending the Maturity Date with respect to an Advance
for a period of ninety (90) days.

     "Final Scheduled Payment Date" means the Payment Date occurring in November
2004.

     "Financed  Vehicle"  means a new or used  automobile,  light truck,  van or
minivan,  together with all accessions  thereto,  securing a Contract  Obligor's
indebtedness under a Contract related to a Receivable.

     "Fiscal  Year"  shall  mean each  twelve  (12) month  accounting  period of
Borrower, which ends on December 31 of each year.

     "GAAP" means  generally  accepted  accounting  principles  set forth in the
opinions and  pronouncements of the Accounting  Principles Board of the American
Institute of Certified Public  Accountants and statements and  pronouncements of
the Financial  Accounting  Standards  Board, or in such other  statements by the
accounting profession,  which are applicable to the circumstances as of the date
of determination.

     "Guaranty" shall have the meaning specified in the preamble.

         "Guarantor" shall have the meaning specified in the preamble.

     "Incipient  Default" shall mean any event or condition which,  after notice
or lapse of time or both, would constitute an Event of Default.

     "Indemnified Party" shall have the meaning specified in Article XVII.


                                       11
<PAGE>


     "Indebtedness"  means (a) all  obligations of Borrower for borrowed  money,
(b) all obligations of Borrower evidenced by bonds,  debentures,  notes or other
similar  instruments and all  reimbursement or other  obligations of Borrower in
respect of letters of credit, bankers acceptances,  interest rate swaps or other
financial  products,  (c) all obligations of Borrower under Capital Leases,  (d)
all  obligations  or  liabilities  of others  secured  by a Lien on any asset of
Borrower,  irrespective of whether such obligation or liability is assumed,  (e)
all  obligations  of Borrower for the deferred  purchase  price of assets (other
than trade debt  incurred in the ordinary  course of business  and  repayable in
accordance with customary trade  practices),  and (f) any obligation of Borrower
guaranteeing   or  intended  to  guarantee   (whether   directly  or  indirectly
guaranteed,  endorsed,  co-made,  discounted, or sold with recourse to Borrower)
any obligations of any other Person.

     "Initial  Extension  Period"  shall have the meaning  specified  in Section
2.04(a).

     "Insured  Loss"  means a "Loss"  as such  term is  defined  in the  Default
Insurance Policy.

     "Ineligible   Receivables"  means  all  (a)  Liquidated  Receivables,   (b)
Repossessed Receivables or (c) Defaulted Receivables.

     "Insurer" shall have the meaning specified in the preamble hereof.

     "Insurer  Premium"  shall mean,  with respect to any  Advance,  the premium
charged by the Insurer to the Borrower to insure the Receivables related to such
Advance under the Default Insurance Policy.

     "Intangible  Assets" means, with respect to any Person, that portion of the
book value of all of such Person's  assets that would be treated as  intangibles
under GAAP.

     "Interest Carryover Shortfall" means, with respect to any Payment Date, the
excess of the Interest  Distribution  Amount for the preceding Payment Date over
the amount that was actually  remitted to Lender on such preceding  Payment Date
on account of the Interest Distribution Amount for such preceding Payment Date.

     "Interest Distribution Amount" means, with respect to any Payment Date, the
sum of the Monthly  Interest  Distribution  Amount for such Payment Date and the
Interest Carryover Shortfall for such Payment Date, if any, plus interest on the
Interest  Carryover  Shortfall,  to the  extent  permitted  by law,  at the Note
Interest Rate then applicable to such Advance for the related Accrual Period(s),
from and  including the preceding  Payment Date to, but  excluding,  the current
Payment Date.

     "Investment  Earnings" means, with respect to any Payment Date and the Lock
Box Account or the Reserve Account,  the earnings on any Eligible Investments in
such account during the related Accrual Period.

     "IRC" means the Internal  Revenue  Code of 1986,  as in effect from time to
time.

     "Lender" means Far East National Bank and its successors and assigns.


                                       12
<PAGE>


     "Lien"  means  a  security  interest,  lien,  charge,  pledge,  equity,  or
encumbrance of any kind,  other than tax liens,  mechanics'  liens and any liens
that attach to the  respective  Receivable  by operation of law as a result of a
Contract Obligor's failure to pay an obligation.

     "Lien Certificate"  means, with respect to a Financed Vehicle,  an original
certificate of title,  certificate of lien or other  notification  issued by the
Registrar of Titles of the applicable  state to a secured party which  indicates
that the lien of the secured  party on the  Financed  Vehicle is recorded on the
original  certificate  of  title.  In any  jurisdiction  in which  the  original
certificate of title is required to be given to the Contract  Obligor,  the term
"Lien  Certificate"  shall mean only a certificate or  notification  issued to a
secured party.

     "Liquidated  Receivable"  means a  Receivable  with  respect  to which  the
earliest of the following shall have occurred: (i) it has been liquidated by the
Servicer through the sale of the Financed Vehicle,  or (ii) the related Financed
Vehicle has been  repossessed  and 45 days have elapsed since the  expiration of
any applicable  mandatory  redemption  period,  or (iii) a Contract  Obligor has
failed to make more than 90% of a Scheduled  Receivable Payment of more than ten
Dollars  for  180 or  more  days as of the  end of an  Accrual  Period,  or (iv)
proceeds have been received  which, in the Servicer's  judgment,  constitute the
final  amounts  recoverable  in respect of such  Receivable,  or (v) it has been
written off by the Servicer as uncollectable.

     "Loan" shall have the meaning specified in the preamble.

     "Loan  Documents"  shall mean all  agreements,  instruments  and documents,
including, without limitation, this Agreement, each Guaranty, the PEWC Guaranty,
the Note, the Default Insurance Policy,  the Servicing  Agreement and any powers
of attorney,  consents,  assignments,  contracts,  notices, security agreements,
financing statements and all other writings heretofore, now or from time to time
hereafter executed by or on behalf of Borrower or any other Person and delivered
to Lender or to any parent, affiliate or subsidiary of Lender in connection with
the Obligations or the transactions contemplated hereby, as each of the same may
be amended, modified or supplemented from time to time.

     "Loan Fee" shall have the meaning specified in Section 2.04.

     "Lock Box" and "Lock Box  Account"  shall have the  meanings  specified  in
Section 5.01.

     "Lock Box Agreement" means that certain  Remittance  Banking and Processing
Agreement  dated  as of  November  24,  2003 by and  between  AFCO  and Lock Box
Provider, a form of which is attached hereto as Exhibit J.

     "Lock Box Provider" means as of any date a depository  institution named by
Borrower and  acceptable to Lender at which the Lock Box Account is  established
and  maintained as of such date. The initial Lock Box Provider shall be Far East
National Bank.

     "Lock Box Service  Fees" means the fees payable to the Lock Box Provider in
accordance with the Lock Box Service Fee Schedule.

     "Lock Box Service  Fee  Schedule"  means the  schedule  attached  hereto as
Schedule B.

     "Losses" means Insured Losses and Uninsured Losses, collectively.


                                       13
<PAGE>


     "Material  Adverse  Effect"  shall  mean a material  adverse  effect on the
business,  property,  assets, prospects,  operations or condition,  financial or
otherwise, of a Person.

     "Maturity Date" means with respect to an Advance,  the date which is ninety
(90)  days from the date of such  Advance  or,  if such  ninetieth  day is not a
Business  Day, the next  Business Day, as the same may be extended in accordance
with Section 2.04(a).

     "Maximum Loan Limit" shall have the meaning specified in the preamble.

     "Maximum  Rate"  means,  at any time,  the maximum  rate of interest  under
applicable  law that the Lender may charge the Borrower.  The Maximum Rate shall
be  calculated  in a manner that takes into account any and all fees,  payments,
and other  charges in respect of the Loan  Documents  that  constitute  interest
under applicable law. Each change in any interest rate provided for herein based
upon the Maximum  Rate  resulting  from a change in the Maximum  Rate shall take
effect  without notice to the Borrower at the time of such change in the Maximum
Rate.

     "Monthly  Distribution  Statement"  shall  have the  meaning  specified  in
Section 8.02.

     "Monthly Interest  Distribution  Amount" means, with respect to any Payment
Date,  the sum of the  Aggregate  Daily  Interest  Amounts  for  each day in the
related Accrual Period.

     "Monthly  Receivables  Aging  Report"  shall have the meaning  specified in
Section 8.02.

     "Net Liquidation Proceeds" means, with respect to a Liquidated  Receivable,
all  amounts  realized  with  respect to such  Receivable  (other  than  amounts
withdrawn  from the Reserve  Account and  drawings  under the Default  Insurance
Policy) net of (i)  reasonable  expenses  incurred by the Servicer in connection
with the collection of such Receivable and the  repossession  and disposition of
the  Financed  Vehicle  and  the  reasonable  cost of  legal  counsel  with  the
enforcement  of a  Liquidated  Receivable,  (ii) amounts that are required to be
refunded  to the  related  Contract  Obligor;  provided,  however,  that the Net
Liquidation  Proceeds with respect to any  Receivable  shall in no event be less
than zero.

         "Net Worth" means, as of any date of determination, ACE's total
stockholders' equity.

     "Note" means a Revolving Promissory Note substantially in the form attached
hereto as Exhibit C.

     "Note Interest Rate" means,  with respect to any Advance,  (i) prior to the
related  Maturity Date (without  giving effect to any extensions  thereof),  the
lesser of (a) the Maximum Rate and (b) the rate of two percent (2.00%) per annum
in excess of the Prime  Rate,  (ii)  during the Initial  Extension  Period,  the
lesser of (a) the  Maximum  Rate and (b) the rate of three  percent  (3.00%) per
annum in excess of the Prime Rate and (iii) during the Second Extension  Period,
the lesser of (a) the Maximum Rate and (b) the rate of four percent  (4.00%) per
annum in excess of the Prime Rate.

     "Notice of  Borrowing  and  Pledge"  shall have the  meaning  specified  in
Section 2.03.

     "Notice of Release" shall have the meaning specified in Section 2.06(a).


                                       14
<PAGE>


     "Obligations" shall mean any and all Advances, obligations, liabilities and
indebtedness of Borrower to Lender or to any parent,  affiliate or subsidiary of
Lender of any and every kind and nature,  however created,  arising or evidenced
and however owned, held or acquired,  whether now or hereafter existing, whether
now  due  or to  become  due,  whether  primary,  secondary,  direct,  indirect,
absolute, contingent or otherwise (including, without limitation, obligations of
performance),  whether several,  joint or joint and several, and whether arising
or existing under written or oral  agreement or by operation of law,  including,
without limitation, the Loan and all Enforcement Costs .

     "Obligor"  shall mean Borrower and each other Person who is or shall become
primarily or secondarily liable for any of the Obligations.

     "Parent" shall mean any Person now or at any time or times hereafter owning
or  controlling  (alone or with any other  Person)  at least a  majority  of the
issued and outstanding voting and non-voting equity of Borrower.

     "Payment Date" means, with respect to each Accrual Period,  the 10th day of
the  following  calendar  month,  or if  such  day is not a  Business  Day,  the
immediately  following Business Day,  commencing on December 10, 2003 and ending
on the Final Scheduled Payment Date.

     "Permitted  Advance  Date"  means any  Business  Day during the  Commitment
Period,  but in no event more often than once per week,  provided  that Borrower
has  delivered a Notice of  Borrowing  and Pledge to Lender,  with a copy to the
Servicer  and the  Insurer,  by no later than 3:00 p.m.  Los Angeles time on the
immediately preceding Business Day.

     "Person"  shall  mean  any   individual,   sole   proprietorship,   limited
partnership,   general  partnership,   joint  venture,   trust,   unincorporated
organization,  association, corporation, limited liability company, institution,
entity,  party or other  organization or any foreign or United States government
(whether  federal,  state,  county,  city,  municipal or otherwise),  including,
without limitation,  any instrumentality,  division,  agency, body or department
thereof.

     "PEWC" shall have the meaning specified in the preamble.

     "PEWC Guaranty" shall have the meaning specified in the preamble.

     "Prime Rate" shall mean Lender's  publicly  announced  prime rate (which is
not intended to be Lender's lowest or most favorable rate in effect at any time)
in effect from time to time.

     "Principal  Balance"  of a  Receivable,  as of the close of business on the
last day of an Accrual  Period,  means the Amount  Financed minus the sum of the
following  amounts  without  duplication:  (i)  the  portion  of  all  Scheduled
Receivable  Payments  actually  received  on or prior to such day  allocable  to
principal using the Simple Interest  Method;  (ii) any Cram Down Loss in respect
of such Receivable;  and (iii) any prepayment in full or any partial  prepayment
applied to reduce the principal balance of the Receivable.

     "Principal Distribution Amount" means, with respect to any Payment Date and
any  Advance,  an amount  equal to the  product  of (a) the  applicable  Advance
Percentage,  and (b) the principal portion of all Collections deposited into the
Lock Box Account in respect of the related  Receivables  during the  immediately


                                       15
<PAGE>

preceding  Accrual  Period,  less the amount of any Advances repaid to Lender in
accordance with Section 2.04 since the immediately preceding Payment Date.

     "PUSA" means Pacific USA Holdings Corp., a Texas corporation.

     "Quarterly  Compliance  Certificate"  shall have the meaning  specified  in
Section 8.02.

     "Receivable"  means the  obligation  evidenced  by a Contract of a Contract
Obligor to pay the  Amount  Financed  and any other  amounts  owed as  specified
thereunder.

     "Receivable  File"  means,  with  respect to a  Receivable,  the  following
documents:

          (a) The fully executed  originals of the related  Contracts  (together
with any agreements  modifying such Contracts,  including without limitation any
extension agreements); and

          (b) The  original  Lien  Certificate  in the name of  Borrower or such
documents  that Borrower  shall keep on file,  in accordance  with its customary
procedures,  evidencing the security  interest of AFCO, as collateral  agent, in
the Financed Vehicle or, if not yet received, a copy of the application therefor
showing AFCO, as collateral agent, or a dealer guarantee of title.

     "Receivable  Insurance  Policy"  means,  with respect to a Receivable,  any
insurance  policy  benefiting  the holder of the  Receivable  providing  loss or
physical damage, credit life, credit disability,  theft, mechanical breakdown or
similar  coverage  with respect to the related  Financed  Vehicle or the related
Contract Obligor.

     "Receivables  Purchase Agreement" means that certain  Receivables  Purchase
Agreement  dated as of November 24, 2003, by and between  AFCO,  as seller,  and
Borrower, as purchaser,  as such agreement may be amended in accordance with its
terms from time to time.

     "Receivables  Schedule"  means the  schedule of  Receivables  in respect of
which an Advance is to be made on the related  Advance Date in  accordance  with
Section 2.01, in electronic format acceptable to Lender.

     "Registrar of Titles" means,  with respect to any state,  the  governmental
agency  or body  responsible  for the  registration  of,  and  the  issuance  of
certificates of title relating to, motor vehicles and liens thereon.

     "Repossessed  Receivable"  means a  Receivable  with  respect  to which the
related Financed Vehicle has been repossessed.

     "Required Reserve Account Deposit" means, with respect to any Advance,  the
product of (a) 10.0% and (b) the  aggregate  Principal  Balance of the  Eligible
Receivables  as of  the  Cutoff  Date  identified  in the  Receivables  Schedule
delivered in connection with such Advance.

     "Reserve  Account" means the account  designated as such,  established  and
maintained pursuant to Article VI.


                                       16
<PAGE>


     "Reserve Account  Distribution  Amount" means,  with respect to any Payment
Date and any  Advance,  an amount  equal to the  product  of (a) the  applicable
Advance  Percentage,  and (b) the Losses  incurred  in  respect  of the  related
Receivables during the immediately preceding Accrual Period.

     "Reserve Account  Reimbursement  Amount" means, with respect to any Payment
Date and any  Advance,  an amount  equal to the  product  of (a) the  applicable
Advance  Percentage  and (b) the  Uninsured  Losses  incurred  in respect of the
related Receivables during the immediately preceding Accrual Period.

     "Reserve  Account Release  Amount" means, as of any date of  determination,
the amount,  if any, on deposit in the Reserve  Account in excess of the Reserve
Account Required Amount for such date.

     "Reserve  Account  Required  Amount"  means,  with  respect  to any date of
determination,  an amount equal to 10% of the aggregate Principal Balance of the
Eligible Receivables then securing the outstanding  Advances,  after taking into
account  any  Advances  repaid  on  such  date  in  connection  with a  Take-Out
Transaction or otherwise.

     "Responsible Officer" means, as to any Person, the chief executive officer,
president, the chief financial officer or any executive or senior vice president
of such Person;  provided,  that in the event any such officer is unavailable at
any time he or she is required to take any action hereunder, Responsible Officer
shall  mean  any  officer   authorized  to  act  on  such  officer's  behalf  as
demonstrated to Lender to its satisfaction.

     "Rolling 3 Month  Average  Delinquency  Rate"  means,  with  respect to any
Payment Date and all Contracts owned by Borrower, the quotient of (x) the sum of
the fraction,  expressed as a percentage (annualized) for each of the three most
recently  ended  Accrual  Periods,  the  numerator  of  which  is the  aggregate
outstanding  Principal Balance of all such Contracts that have become Delinquent
Receivables,  and the denominator of which is the average aggregate  outstanding
Principal  Balance of all Contracts  then owned by Borrower  during such Accrual
Period, divided by (y) three.

     "Scheduled  Receivable  Payment" means,  with respect to any Receivable for
any Accrual Period,  the amount set forth in the related Contract as required to
be paid by the Contract Obligor in such Accrual Period.

     "Second  Extension  Period"  shall have the  meaning  specified  in Section
2.04(a).

     "Servicer" shall mean AutoCorp Financial Services,  Inc. and its successors
and assigns.

     "Servicer  Default" shall mean the occurrence  and  continuance  beyond the
applicable cure period,  if any, of any of the events specified in subparagraphs
b. through e. of Section 7 of the Servicing Agreement.

     "Servicing  Agreement"  shall  mean  the  Servicing  Agreement  dated as of
November 24, 2003 by and among Borrower, AFCO and Servicer.


                                       17
<PAGE>


     "Servicing  Fee" shall mean the  monthly  fee  payable to the  Servicer  in
accordance with the terms of the Servicing Agreement.

     "Simple  Interest  Method"  means the method of  allocating  a fixed  level
payment  between  principal and interest,  pursuant to which the portion of such
payment  that is  allocated  to  interest is equal to the product of (x) the APR
multiplied  by (y) the  unpaid  balance  multiplied  by (z) the  period  of time
(expressed  as a fraction of a year,  based on the actual  number of days in the
calendar month and the actual number of days in the calendar year) elapsed since
the preceding payment of interest was made, and the remainder of such payment is
allocable to principal.

     "Strategic  Alliance  Agreement"  means  that  certain  Strategic  Alliance
Agreement  dated as of February  21, 2001 by and between  AFCO,  AFC and PAG, as
amended by Addendum No. 1 thereto  dated as of May 9, 2001 by and between  AFCO,
AFC,  PAG and PUSA,  as further  amended by Addendum  No. 2 thereto  dated as of
March 15, 2002 by and between AFCO, AFC, PAG and PUSA, and as further amended by
Addendum No. 3 thereto  dated as of October 31, 2002 by and between  AFCO,  AFC,
PAG, PUSA and PEWC.

     "Subsidiary"  shall mean any  corporation  of which more than fifty percent
(50%) of the  outstanding  capital stock having ordinary voting power to elect a
majority of the board of directors of such corporation  (irrespective of whether
at the time  stock of any other  class of such  corporation  shall have or might
have voting power by reason of the happening of any contingency) is at the time,
directly or indirectly, owned by Borrower, or any partnership,  joint venture or
limited  liability  company  of  which  more  than  fifty  percent  (50%) of the
outstanding equity interests are at the time,  directly or indirectly,  owned by
Borrower or any partnership of which Borrower is a general partner.

     "Take-Out Purchase Price" shall have the meaning specified in Section 2.05.

     "Take-Out Transaction" shall have the meaning specified in Section 2.05.

     "Tangible  Assets" means,  with respect to any Person,  that portion of the
book value of all of such  Person's  assets  that  would be treated as  tangible
assets under GAAP.

     "Tax" shall mean any tax, levy,  impost,  duty,  deduction,  withholding or
charges of  whatever  nature  required  to be paid by Lender  and/or  (ii) to be
withheld or deducted from any payment  otherwise  required  hereby to be made by
Borrower  to Lender;  provided,  that the term "Tax" shall not include any taxes
imposed upon the net income of Lender.

     "Termination  Date"  means the date on which all  obligations  of Lender to
make  Advances   hereunder  have  terminated  and  all  Obligations   have  been
indefeasibly paid in full in cash.

     "Total  Outstanding  Advances" means, as of any date of determination,  the
unpaid principal amount of all Advances outstanding hereunder.

     "UCC"  means the  Uniform  Commercial  Code as in  effect  in the  relevant
jurisdiction, as amended from time to time.


                                       18
<PAGE>


     "Uninsured  Loss"  means,  with  respect to any  Receivable  that becomes a
Liquidated  Receivable,  the excess of the Principal  Balance of such Liquidated
Receivable over Net Liquidation Proceeds allocable to principal thereof.

     "Weekly Title Status  Report"  shall have the meaning  specified in Section
8.02.

                                   ARTICLE II
                         ADVANCES, NOTE AND PREPAYMENTS
                         ------------------------------

          Section 2.01 Advances.

          (a) Subject to the terms  hereof,  Lender,  agrees to make one or more
loans (each,  an "Advance" and,  collectively,  the "Advances") to Borrower from
time to time during the Commitment  Period up to a maximum  principal  amount at
any one time  outstanding  equal to the Maximum Loan Limit;  provided,  however,
that no Advance  shall be made (i) on a day other than a Permitted  Advance Date
or (ii) in an amount which would exceed the Available  Commitment on the related
Advance Date.

          (b) Subject to the terms and conditions of this Agreement,  during the
Commitment  Period,  Borrower  may  borrow,  repay  and  reborrow  hereunder  in
accordance with the procedures set forth in this Article II.

          (c) In no event  shall an Advance be made when any Event of Default or
Incipient  Default has occurred and is  continuing or would occur as a result of
such Advance.

          (d) The  Lender  shall  have no  obligation  to make an Advance on any
Advance Date unless each condition precedent set forth in Article XVI shall have
been satisfied.

          Section  2.02......The  Note. (a) The Advances made by Lender shall be
evidenced by a promissory note of Borrower  substantially in the form of Exhibit
C hereto (the "Note"), duly executed by Borrower, dated the date hereof, payable
to the order of Lender in a principal amount equal to the Maximum Loan Limit and
otherwise  duly  completed.  The  Lender  shall  have the right to have the Note
subdivided,  by  exchange  for  promissory  notes  of  lesser  denominations  or
otherwise.

          (b) The date and  amount  of each  Advance  made by the  Lender to the
Borrower, and each payment made on account of the principal and interest thereof
as reflected on the Servicer's  Certificate,  shall be recorded by the Lender on
its books and may be  endorsed  by the Lender on the  schedule  attached  to and
constituting a part of the Note and any continuation  thereof.  Such recordation
and endorsement  shall be conclusive in the absence of manifest error;  provided
that the failure of the Lender to make any such  recordation  or  endorsement or
any error in such recordation or endorsement shall not affect the obligations of
the Borrower to make a payment  when due of any amount owing  hereunder or under
the Note.

          Section 2.03 Procedures for Borrowing.

          (a) On any Business  Day during the  Commitment  Period,  Borrower may
request  an  Advance  hereunder  by  delivering  to  Lender,  with a copy to the
Servicer and the Insurer,  an irrevocable written Notice of Borrowing and Pledge
substantially  in the form of  Exhibit  F hereto (a  "Notice  of  Borrowing  and


                                       19
<PAGE>

Pledge"),  appropriately  completed  and  executed by a  Responsible  Officer of
Borrower,  which Notice of Borrowing and Pledge must be received by Lender, with
a copy to the Servicer and the Insurer,  by no later than 3:00 p.m., Los Angeles
time not less  than one  Business  Day  prior  to the  requested  Advance  Date;
provided,  that  Borrower  may not request more than one Advance in any calendar
week.  Such  Notice of  Borrowing  and  Pledge  shall (i)  attach a  Receivables
Schedule  identifying the Receivables that Borrower proposes to pledge to Lender
in connection with such Advance,  (ii) contain the Advance Amount, (iii) specify
the requested  Advance Date, and (iv) contain  evidence of  insurability  of the
related Receivables under the Default Insurance Policy, either in the form of an
endorsement thereto or an amended bordereau thereto.

          (b) With respect to each requested  Advance,  upon satisfaction of all
conditions precedent set forth in Article XVI hereof and the satisfaction of all
procedures  set forth in this Section 2.03,  the Lender shall,  by no later than
2:00 p.m. Los Angeles time on the  requested  Advance  Date,  transfer an amount
equal to the  excess  of the  Advance  Amount  over the sum of (x) the  Required
Reserve Account  Deposit with respect to such Advance,  (y) the Draw Fee and (z)
the Insurer Premium to such account as the Borrower shall designate to Lender in
writing,  and the Lender shall retain the Draw Fee for its own account,  deposit
into the Reserve  Account the Required  Reserve  Account Deposit with respect to
such Advance,  and transfer to the Insurer,  upon its  instruction,  the Insurer
Premium.

          Section 2.04......Repayment of Advances; Interest; Fees

          (a) Repayment of Advances.

               (i)  The  Borrower  shall  pay  to  the  Lender  the  outstanding
          principal  amount of an Advance,  plus all accrued and unpaid interest
          thereon at the  applicable  Note  Interest  Rate, on the Maturity Date
          related thereto unless such Maturity Date is extended upon the written
          request of the Borrower, which request may be granted or denied in the
          sole discretion of the Lender pursuant to an Extension Notice, for one
          ninety (90) day period from the Maturity Date (the "Initial  Extension
          Period");  provided,  that,  unless  otherwise  agreed by Lender,  the
          Lender shall only grant the Borrower's  request to extend the Maturity
          Date  if the  outstanding  principal  amount  of such  Advance  on the
          Maturity  Date  is  then  equal  to or  less  than  75%  of  the  then
          outstanding   Principal  Balance  of  the  Receivables  securing  such
          Advance.  The Maturity  Date may be further  extended upon the written
          request of the  Borrower,  which  request may be approved or denied in
          the sole discretion of the Lender pursuant to an Extension Notice, for
          a second  ninety (90) day period from the extended  Maturity Date upon
          the expiration of the Initial  Extension Period (the "Second Extension
          Period");  provided,  that,  unless  otherwise  agreed by Lender,  the
          Lender shall only grant the Borrower's  request to extend the Maturity
          Date past the Initial  Extension  Period if the outstanding  principal
          amount of such Advance at the end of the Initial  Extension  Period is
          then  equal  to or less  than 50% of the  then  outstanding  Principal
          Balance of the  Receivables  securing  such  Advance.  The  Borrower's
          request to extend the Maturity Date for any Advance shall be delivered
          to the Lender in the form  attached  hereto as Exhibit  G.1 or Exhibit
          G.2, as  applicable,  no later than three (3)  Business  Days,  and no
          earlier than ten (10)  Business  Days,  prior to the Maturity Date (in
          the case of an initial  extension  request) or the  expiration  of the
          Initial Extension Period (in the case of a second extension  request).
          The Lender shall use reasonable  efforts to notify the Borrower within
          one (1)  Business  Day of the  Borrower's  request as to whether  such
          extension  will be granted or denied.  If the Lender shall not have so
          notified  the Borrower  within one (1) Business Day of the  Borrower's
          request, such request shall be deemed to have been denied.

                                       20
<PAGE>


               (ii) The Borrower  shall  otherwise  repay each Advance,  without
          duplication, as follows:

                    (A) from  amounts on deposit in the Lock Box Account and the
               Reserve  Account on each Payment Date in accordance  with Article
               VII; or

                    (B) on the date of any Take-Out  Transaction,  in accordance
               with Section 2.05.

               (iii)  Notwithstanding  anything  herein  to  the  contrary,  the
          Borrower may prepay any Advance in full or in part without  penalty on
          any Business Day prior to the Final Scheduled  Payment Date,  together
          with interest  thereon accrued to the date of prepayment and all other
          amounts  owed by the Borrower in respect  thereof,  upon not less than
          three (3) Business Days' prior written notice to the Lender.

     (b) Final Scheduled Payment Date. No later than the Final Scheduled Payment
Date, Borrower shall pay to the Lender the Total Outstanding Advances,  plus all
accrued and unpaid interest  thereon,  and shall pay all other  Obligations then
accrued, in full.

     (c)  Interest.  Each Advance  shall bear  interest at the  applicable  Note
Interest  Rate,  all such  interest  to be  payable  monthly  in arrears on each
Payment Date.  The Note  Interest  Rate shall  increase or decrease by an amount
equal to each increase or decrease in the Prime Rate  effective on the effective
date of each such change in the Prime Rate.  Upon the  occurrence of an Event of
Default and during the continuance thereof,  each Advance shall bear interest at
the  Default  Interest  Rate,  which  interest  shall be payable on demand.  All
interest shall be calculated on the basis of a 360-day year.

     (d) Fees. Borrower shall pay to Lender a loan fee in immediately  available
funds  in  the  amount  of  ONE  HUNDRED  FIFTY   THOUSAND  AND  NO/100  DOLLARS
($150,000.00)  (the "Loan Fee") representing an amount equal to one and one-half
percent (1.50%) of the Maximum Loan Limit before or  contemporaneously  with the
closing of the Loan. In addition,  Borrower  shall pay to Lender the Draw Fee on
each Advance Date in accordance with Section 2.03(b). Furthermore, to the extent
the  Lender  grants  an  extension  of the  Maturity  Date (i) to the end of the
Initial Extension Period,  Borrower shall pay Lender prior to or contemporaneous
with the  commencement of the Initial  Extension  Period a fee equal to 0.25% of
the then outstanding  principal  amount of the related Advance,  and (ii) to the
end of the  Second  Extension  Period,  Borrower  shall pay  Lender  prior to or
contemporaneous with the commencement of the Second Extension Period a fee equal
to 0.50% of the then outstanding principal amount of the related Advance.


                                       21
<PAGE>


     (e)  Reimbursable  Expenses of Lender.  Borrower shall reimburse Lender for
all costs and  expenses,  including,  without  limitation,  legal  expenses  and
attorneys' fees, incurred by Lender in connection with the (i) documentation and
consummation of this transaction and any other transactions between Borrower and
Lender, including, without limitation,  Uniform Commercial Code and other public
record  searches and filings,  overnight  courier or other  express or messenger
delivery,  appraisal costs, surveys,  title insurance and environmental audit or
review costs;  (ii)  collection,  foreclosure,  protection or enforcement of any
rights in or to the Collateral;  (iii) collection of any  Obligations;  and (iv)
administration  and  enforcement of any of Lender's rights under this Agreement.
Borrower shall also pay all normal service  charges with respect to all accounts
maintained  by Borrower  with Lender and any  additional  services  requested by
Borrower  from Lender.  All such costs,  expenses and charges  shall  constitute
Obligations  hereunder,  shall be payable by Borrower to Lender on demand,  and,
until  paid,  shall bear  interest  at the highest  rate then  applicable  to an
Advance hereunder.

     (f) Capital  Adequacy  Charges.  If Lender shall have  determined  that the
adoption of any law,  rule or  regulation  regarding  capital  adequacy,  or any
change therein or in the interpretation or application thereof, or compliance by
Lender with any request or directive  regarding capital adequacy (whether or not
having the force of law) from any central bank or governmental authority enacted
after the date  hereof,  does or shall have the effect of  reducing  the rate of
return on Lender's  capital as a consequence of its  obligations  hereunder to a
level below that which Lender could have achieved but for such adoption,  change
or  compliance  (taking into  consideration  Lender's  policies  with respect to
capital adequacy) by a material amount, then from time to time, after submission
by Lender to Borrower of a written demand therefor  ("Capital  Adequacy Demand")
together with the certificate described below, Borrower shall pay to Lender such
additional  amount or amounts  ("Capital  Adequacy  Charge") as will  compensate
Lender  for  such  reduction,  such  Capital  Adequacy  Demand  to be made  with
reasonable  promptness  following  such  determination.  A certificate of Lender
claiming  entitlement  to payment as set forth above shall be  conclusive in the
absence of manifest error.  Such  certificate  shall set forth the nature of the
occurrence  giving rise to such  reduction,  the amount of the Capital  Adequacy
Charge to be paid to Lender, and the method by which such amount was determined.
In  determining  such  amount,  Lender  may use  any  reasonable  averaging  and
attribution method, applied on a non-discriminatory basis.

     (g) Maximum Rate of Interest.  No provision of this  Agreement or any other
Loan Document  shall require the payment or the collection of interest in excess
of the maximum amount  permitted by applicable law. If any excess of interest in
such respect is hereby  provided for, or shall be adjudicated to be so provided,
in any Loan Document or otherwise in connection with this loan transaction,  the
provisions of this Section shall govern and prevail and neither the Borrower nor
the  sureties,  guarantors,  successors,  or  assigns of the  Borrower  shall be
obligated to pay the excess amount of such interest or any other excess sum paid
for the use,  forbearance,  or detention of sums loaned pursuant hereto.  In the
event the Lender ever receives,  collects,  or applies as interest any such sum,
such  amount  which  would be in  excess  of the  maximum  amount  permitted  by
applicable  law shall be applied as a payment and  reduction of the principal of
the  indebtedness  evidenced by the Note;  and, if the principal of the Note has
been paid in full, any remaining excess shall forthwith be paid to the Borrower.
In determining  whether or not the interest paid or payable  exceeds the Maximum
Rate, the Borrower and the Lender shall,  to the extent  permitted by applicable
law, (a) characterize any non-principal  payment as an expense,  fee, or premium
rather than as  interest,  (b)  exclude  voluntary  prepayments  and the effects


                                       22
<PAGE>

thereof,  and (c) amortize,  prorate,  allocate,  and spread in equal or unequal
parts the total amount of interest  throughout the entire  contemplated  term of
the indebtedness evidenced by the Note so that interest for the entire term does
not exceed the Maximum Rate.

          Section 2.05 Take-Out Transactions.

     >From time to time (subject to the  provisions of this Section 2.05) on any
Business Day prior to the Final  Scheduled  Payment Date, the Borrower may, upon
not less than three (3) Business Days' prior written notice to the Lender,  sell
and assign to any Person any or all of the  Receivables  and related  Collateral
then owned by the Borrower, or an undivided ownership interest therein,  without
recourse,  representation  or warranty or any indemnity (other than recourse for
breaches of customary representations and warranties),  for a net purchase price
(after deducting all reasonable  expenses incurred by the Borrower in connection
with such  sale) at least  equal to the  product of (i) the  applicable  Advance
Percentage  and  (ii)  the  aggregate  outstanding  Principal  Balance  of  such
Receivables,  plus all accrued  interest  with respect  thereto  (the  "Take-Out
Purchase Price" and, each such transaction, a "Take-Out Transaction"); provided,
that such Take-Out  Transaction shall not cause, or result in the occurrence of,
any Event of Default;  provided  further that Borrower may sell any  Receivables
and related  Collateral  for an amount less than the Take-Out  Purchase Price so
long as Borrower pays down the related Advance by the amount of such deficiency.
The  Borrower  shall  remit the  Take-Out  Purchase  Price by wire  transfer  in
immediately  available funds to the account  specified by the Lender on the date
of the Take-Out Transaction; provided that the Borrower may off-set the Take-Out
Purchase  Price by an amount equal to the  applicable  Reserve  Account  Release
Amount.  If Borrower so off-sets the Take-Out  Purchase  Price,  then Lender may
apply an amount equal to the applicable  Reserve Account Release Amount for such
Take-Out  Transaction  to the  repayment  of  the  applicable  Advances.  On the
Business Day prior to the Take-Out  Transaction,  the Borrower  shall deliver to
the Lender,  the  Servicer and the Insurer a schedule of the  Receivables  to be
sold and  assigned  pursuant to the  Take-Out  Transaction  and the date of each
Advance to which each  Receivable  so sold and assigned  relates.  The principal
amount of each Advance shall be reduced by the principal portion of the Take-Out
Purchase Price applicable to such Advance as indicated on such schedule.

          Section 2.06 Release of Receivables.(a)Partial Release.

     From time to time in connection with a Take-Out Transaction, subject to the
payment of the Take-Out  Purchase Price, the Borrower may request the release of
any or all of the Receivables and related  Collateral then owned by the Borrower
by delivering to the Lender, the Servicer and the Insurer a notice (a "Notice of
Release"),  which Notice of Release shall state that the Borrower plans to enter
into a Take-Out  Transaction and shall identify the Receivables  which are to be
the subject of such Take-Out  Transaction on a schedule  attached to such Notice
of Release.  Concurrently with the consummation of such Take-Out Transaction and
the payment of the Take-Out  Purchase Price in accordance with Section 2.05, the
Lender shall  execute and deliver to the  Borrower  such  documents,  if any, as
shall be  necessary  or  appropriate  to release  such  Receivables  and related
Collateral  from the liens and security  interests  evidenced by this Agreement,
which documents  shall be prepared by the Borrower or at the Borrower's  expense
but shall be in form and substance reasonably satisfactory to the Lender.

     (b) Full  Release.  The  Lender's  right,  title and interest in all of the
Receivables  and  related   Collateral  shall  be  released   effective  on  the
Termination Date. Upon such release and at the cost and expense of the Borrower,


                                       23
<PAGE>

the  Lender  hereby  authorizes  the  Servicer  to  prepare  and file such UCC-3
financing  statements  or such other  instruments  (if any) as are  necessary or
desirable to terminate  and remove of record any documents  constituting  public
notice of the  security  interest  granted  under  Article III, and Lender shall
assign and transfer, or cause to be assigned and transferred,  and shall deliver
or cause to be delivered to the Borrower,  all  property,  including all moneys,
instruments and  securities,  of the Borrower then held by the Lender related to
the Receivables and related Collateral.

     (c)  Effect of  Release.  When the  release of any of the  Receivables  and
related  Collateral is effective in accordance  with  subsection (a) or (b), all
right,  title and interest of the Lender in, to and under such  Receivables  and
related  Collateral  shall  terminate  and  shall  revert to the  Borrower,  its
successors and assigns,  and the right, title and interest of the Lender therein
shall thereupon cease, terminate and become void.

                                   ARTICLE III
                                   COLLATERAL
                                   ----------

     Section 3.01 Grant of Security Interest to Lender.

     As  security  for the  payment  of  Advances  made by  Lender  to  Borrower
hereunder and for the payment or other  satisfaction  of all other  Obligations,
Borrower  hereby  assigns to Lender and grants to Lender a  continuing  security
interest in all right,  title and interest of Borrower,  whether now existing or
hereafter arising, in, to and under:

     (a) all Receivables identified on the Receivables Schedule attached to each
Notice of Borrowing  and Pledge  delivered by the Borrower to the Lender and the
Insurer from time to time;

     (b) all  monies  and  proceeds  received  under the  Receivables  after the
related Cutoff Date and all Net  Liquidation  Proceeds  received with respect to
the Receivables after the related Cutoff Date;

     (c) the security  interests in the  Financed  Vehicles  granted by Contract
Obligors pursuant to the related Contracts and any other interest of Borrower in
such Financed Vehicles, including, without limitation, the certificates of title
or other  appropriate  evidence of title issued by the applicable  Department of
Motor Vehicles or similar authority, with respect to such Financed Vehicles;

     (d) any Receivable  Insurance  Policies and any proceeds from claims on any
Receivables Insurance Policies or certificates relating to the Financed Vehicles
securing the Receivables or the Contract Obligors thereunder;

     (e) the  Default  Insurance  Policy  and any  proceeds  from  claims on the
Default Insurance Policy in respect of the Receivables;

     (f)  all  proceeds  from  recourse  against  Dealers  with  respect  to the
Receivables;

     (g) all rights of Borrower to require AFCO to repurchase  Receivables under
Section 6.2 of the Receivables Purchase Agreement;


                                       24
<PAGE>


     (h) all rights of Borrower to require AFC to repurchase  Receivables  under
Section 2. c. of the Strategic Alliance Agreement;

     (i) refunds for the costs of extended  service  contracts  with  respect to
Financed  Vehicles  securing  Receivables,  refunds of  unearned  premiums  with
respect to credit  life and credit  accident  and health  insurance  policies or
certificates  covering a Contract Obligor or Financed Vehicle under a Receivable
or his or her obligations with respect to a Financed Vehicle and any recourse to
Dealers for any of the foregoing;

     (j) the Receivable File related to each Receivable and all other documents,
books and records that Borrower  keeps on file in accordance  with its customary
procedures  relating to the Receivables,  the Contract  Obligors or the Financed
Vehicles;

     (k) all amounts and  property  from time to time held in or credited to any
deposit  account  maintained  by the Borrower  with respect to the  Receivables,
including without limitation, the Lock Box Account and the Reserve Account;

     (l) all property  (including  the right to receive  future Net  Liquidation
Proceeds)  that secures a Receivable  that has been  acquired by or on behalf of
Borrower pursuant to a liquidation of such Receivable; and

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

     Section 3.02 Other Security.

     Lender,   in  its  sole  discretion,   without  waiving  or  releasing  any
obligation, liability or duty of Borrower under this Agreement or the other Loan
Documents or any Event of Default, may at any time or times hereafter, but shall
not be  obligated  to,  pay,  acquire or accept an  assignment  of any  security
interest,  lien, encumbrance or claim asserted by any Person in, upon or against
the Collateral.  All sums paid by Lender in respect thereof and all costs,  fees
and expenses including, without limitation,  reasonable attorney fees, all court
costs and all other charges relating thereto incurred by Lender shall constitute
Obligations, payable by Borrower to Lender on demand and, until paid, shall bear
interest at the highest rate then applicable to an Advance hereunder.

                                   ARTICLE IV
                     PRESERVATION AND CUSTODY OF COLLATERAL
                     --------------------------------------
                  AND PERFECTION OF SECURITY INTERESTS THEREIN
                  --------------------------------------------

     Section 4.01 Perfection of Security Interests in Collateral

     .  Borrower  shall at the  Lender's  request,  at any time and from time to
time, execute and deliver to the Lender such financing statements, documents and
other  agreements and  instruments  (and pay the cost of filing or recording the
same in all public offices deemed  necessary or desirable by Lender) and do such
other


                                       25
<PAGE>

acts and things as Lender may deem necessary or desirable in its sole discretion
in order to establish  and maintain a valid,  attached  and  perfected  security
interest  in the  Collateral  in favor of  Lender  (free  and clear of all other
liens,  claims,  encumbrances  and rights of third parties  whatsoever,  whether
voluntarily  or  involuntarily  created,  other than  subrogation  rights of the
Insurer  under  the  Default   Insurance   Policy)  to  secure  payment  of  the
Obligations,  and in order to facilitate the collection of the Collateral.  With
respect to the Collateral that may be perfected by control,  Borrower shall take
such steps as the Lender may  reasonably  require in order that  Lender may have
such control. Borrower irrevocably hereby makes, constitutes and appoints Lender
(and all Persons  designated by Lender for that purpose) as Borrower's  true and
lawful  attorney and  agent-in-fact  to file such  financing  statements,  other
notices,  documents and other  agreements and instruments and do such other acts
and  things as may be  necessary  to  preserve  and  perfect  Lender's  security
interest in the Collateral. Borrower further agrees that a carbon, photographic,
photostatic or other reproduction of this Agreement or of a financing  statement
shall be sufficient as a financing  statement.  Further, to the extent permitted
by applicable  law,  Lender may file one or more  financing  statements or other
notices  disclosing  Lender's  liens and other  security  interests  under  this
Agreement.

     Section 4.02 Custody of Receivable Files

     . Borrower shall initially maintain  possession of the Receivable Files for
the Receivables  securing each Advance.  If an Advance has not been fully repaid
by the applicable Maturity Date, then upon the request of Lender, Borrower shall
deliver  or cause  to be  delivered  to  Lender  the  Receivable  Files  for the
Receivables  securing such Advance.  Upon its receipt of the  Receivable  Files,
Lender shall maintain continuous  possession and control of the Receivable Files
as custodian and bailee of Borrower until the earlier of (i) the date on which a
Take-Out  Transaction occurs with respect to such Receivables in accordance with
Section 2.05, or (ii) the Termination  Date. Until such time,  Lender shall hold
the Receivable  Files in a secure facility located in the State of California in
accordance with customary  standards for custody by financial  institutions  and
shall  physically  separate  the  Receivable  Files  from all other  instruments
similar in nature to the Receivable  Files in its possession.  Lender shall mark
its books, accounts and records to reflect that the Receivable Files are held by
it as  custodian  and bailee for  Borrower.  Lender shall  maintain  records and
procedures,  in accordance with prudent industry practices,  with respect to the
Receivable  Files  sufficient to create a verifiable audit trail with respect to
any  Receivable  Files that are released from the  possession of the Lender from
time to time in accordance with the terms of this paragraph. Lender shall permit
the  Servicer  to access the  Receivable  Files at all  reasonable  times,  upon
reasonable  notice,  during  Lender's  normal business hours and as permitted by
applicable  law.  Lender shall release  Receivable  Files in its possession from
time to time in accordance  with Section 2.06. In addition,  on the  Termination
Date,  Lender shall release the  Receivable  Files then in its possession to the
Borrower or its designee.



                                   ARTICLE V
                          LOCK BOX ACCOUNT; COLLECTIONS
                          -----------------------------

     Section 5.01 Establishment of and Deposits to Lock Box Account.

     Borrower shall direct the Contract Obligors to make all payments in respect
of the Receivables directly to a post office box (the "Lock Box") designated by,
and  under  the  exclusive  control  of,  Lender,  at  a  financial  institution
acceptable  to  Lender.  Borrower  shall  establish  an  account  (the "Lock Box


                                       26
<PAGE>

Account") in Lender's name with the Lock Box  Provider,  into which all payments
received  in the Lock Box  shall be  deposited,  and into  which  Borrower  will
immediately  deposit  all  payments  received  by  Borrower  in  respect  of the
Collateral in the identical form in which such payments were  received,  whether
by cash or  check.  The Lock Box  Account  shall  initially  be  maintained  and
processed  by the Lock Box  Provider  pursuant  to the  Lock Box  Agreement.  If
Borrower,  any Affiliate or  Subsidiary,  any  shareholder,  officer,  director,
employee or agent of  Borrower  or any  Affiliate  or  Subsidiary,  or any other
Person acting for or in concert with Borrower shall receive any monies,  checks,
notes,  drafts or other payments  relating to or as proceeds of the  Collateral,
Borrower and each such Person shall  receive all such items in trust for, and as
the sole and  exclusive  property  of,  Lender  and,  immediately  upon  receipt
thereof,  shall remit the same (or cause the same to be remitted) in kind to the
Lock Box  Account.  If the Lock Box  Provider  is not the  Lender,  the Lock Box
Provider shall acknowledge and agree, in a manner  satisfactory to Lender,  that
the  amounts  on  deposit in such Lock Box  Account  are the sole and  exclusive
property  of Lender and that it (i) has no right to setoff  against the Lock Box
Account or against any other account  maintained by such  financial  institution
into which the  contents of the Lock Box Account are  transferred,  (ii) has not
and will not enter into a control agreement with any third party with respect to
the Lock Box Account, and (iii) shall wire, or otherwise transfer in immediately
available funds to Lender in a manner satisfactory to Lender, funds deposited in
the Lock Box  Account  on a daily  basis as such funds are  collected.  Borrower
agrees that all payments made to such Lock Box Account or otherwise  received by
Lender,  whether in respect of the  Collateral or otherwise,  will be applied on
account  of the  Obligations  in  accordance  with the terms of this  Agreement.
Borrower  agrees to pay all fees,  costs and expenses in connection with opening
and  maintaining the Lock Box Account.  All of such fees,  costs and expenses if
not paid by  Borrower,  may be paid by Lender and in such event all amounts paid
by Lender shall constitute Obligations hereunder,  shall be payable to Lender by
Borrower upon demand,  and, until paid,  shall bear interest at the highest rate
then applicable to any Advance hereunder.  All checks,  drafts,  instruments and
other items of payment or proceeds of  Collateral  shall be endorsed by Borrower
to Lender,  and, if that  endorsement of any such item shall not be made for any
reason,  Lender  is  hereby  irrevocably  authorized  to  endorse  the  same  on
Borrower's behalf. For the purpose of this section,  Borrower irrevocably hereby
makes, constitutes and appoints Lender (and all Persons designated by Lender for
that purpose) as Borrower's  true and lawful attorney and  agent-in-fact  (i) to
endorse Borrower's name upon said items of payment and/or proceeds of Collateral
and upon any Chattel Paper, Document, Instrument, invoice or similar document or
agreement relating to the Collateral;  (ii) to take control in any manner of any
item of payment or proceeds  thereof and (iii) to have access to any lock box or
postal box into which any of Borrower's mail is deposited,  and open and process
all mail addressed to Borrower and deposited therein.

     Section 5.02 Lender's Remedies Upon an Event of Default.

     Upon the occurrence and continuance of an Event of Default,  in addition to
any other remedies specified herein, Lender may (i) enforce collection of any of
the  Receivables  or other amounts owed to Borrower by suit or  otherwise;  (ii)
exercise  all of  Borrower's  rights and remedies  with  respect to  proceedings
brought to collect any  Receivables  or other  amounts owed to  Borrower;  (iii)
surrender,  release  or  exchange  all or any part of any  Receivables  or other
amounts  owed to  Borrower,  or  compromise  or extend  or renew for any  period
(whether or not longer than the original  period) any  indebtedness  thereunder;
(iv) sell or assign any  Receivables  or other amount owed to Borrower upon such


                                       27
<PAGE>

terms, for such amount and at such time or times as Lender deems advisable;  (v)
prepare,  file and sign  Borrower's  name on any proof of claim in bankruptcy or
other similar document against any Contract Obligor or other Person obligated to
Borrower; and (vi) do all other acts and things which are necessary, in Lender's
sole and  absolute  discretion,  to fulfill  Borrower's  obligations  under this
Agreement  and the other  Loan  Documents  and to allow  Lender to  collect  the
Receivables  or  other  amounts  owed to  Borrower.  In  addition  to any  other
provision  hereof,  Lender may at any time,  after the occurrence and during the
continuance of an Event of Default, at Borrower's  expense,  notify any Contract
Obligors to make payment  directly to Lender of any amounts due or to become due
under the Receivables.

     Section 5.03 Investment of Funds in Lock Box Account.

     Funds on deposit in the Lock Box  Account  shall be  invested  by Lender in
Eligible  Investments  selected  in writing by  Borrower  (pursuant  to standing
instructions or otherwise) that will mature so that such funds will be available
at the close of business on the Business Day immediately preceding the following
Payment  Date.  Funds  deposited in the Lock Box Account on the day  immediately
preceding a Payment Date upon the maturity of any Eligible  Investments  are not
required to be invested  overnight.  All  Eligible  Investments  will be held to
maturity.  Lender  shall  not in  any  way  be  held  liable  by  reason  of any
insufficiency  in the Lock Box Account  resulting  from any loss on any Eligible
Investment  included  therein except for losses  attributable  to Lender's gross
negligence or willful misconduct.

                                   ARTICLE VI
                                 RESERVE ACCOUNT
                                 ---------------

     Section 6.01Establishment of and Deposits to Reserve Account.

     On the Closing Date, the Borrower shall  establish an account (the "Reserve
Account")  in  Lender's  name with a  financial  institution  acceptable  to the
Lender.  On each Advance Date, the Lender shall deposit or cause to be deposited
into the  Reserve  Account  (out of  Advance  proceeds)  an amount  equal to the
Required Reserve Account Deposit.

     Section 6.02 Withdrawals From Reserve Account.

     On each  Payment  Date,  the Lender  shall  withdraw  the  Reserve  Account
Distribution  Amount  from the  Reserve  Account  and shall  retain  for its own
account such amount pursuant to subparagraph (f) of Article VII.

     Section 6.03 Release of Funds From Reserve Account.

     On each Payment  Date,  Lender shall  release the Reserve  Account  Release
Amount to the Borrower or its designee  pursuant to subparagraph  (h) of Article
VII. On the  Termination  Date,  Lender shall release and distribute all amounts
remaining on deposit in the Reserve Account to Borrower or its designee.

     Section 6.04 Investment of Funds in Reserve Account.

     Funds on deposit in the Reserve Account from time to time shall be invested
by Lender in Eligible  Investments  selected in writing by Borrower (pursuant to
standing  instructions or otherwise) that will mature so that such funds will be
available at the close of business on the Business Day immediately preceding the
following  Payment  Date.  Funds  deposited  in the  Reserve  Account on the day
immediately  preceding  a  Payment  Date  upon  the  maturity  of  any  Eligible
Investments are not required to be invested overnight.  All Eligible Investments
will be held to  maturity.  Lender shall not in any way be held liable by reason
of any  insufficiency  in the  Reserve  Account  resulting  from any loss on any


                                       28
<PAGE>

Eligible  Investment included therein except for losses attributable to Lender's
gross  negligence or willful  misconduct or its failure to make payments on such
Eligible  Investments issued by Lender, in its commercial  capacity as principal
obligor, in accordance with their terms.

     Section 6.05 Filing of Claims Under Default Insurance Policy.

     Borrower shall make or cause to be made claims for Insured Losses under the
Default  Insurance Policy and shall cause all amounts received under the Default
Insurance  Policy in respect of Insured  Losses to be deposited into the Reserve
Account.

                                  ARTICLE VII
                            REPAYMENT OF OBLIGATIONS
                            ------------------------

     On each Payment  Date,  Lender (based on the  information  contained in the
Servicer's  Certificate  delivered on the related Determination Date) shall make
the following distributions in the following order of priority:

          (a) to the Lock Box Provider,  from Available  Funds on deposit in the
Lock Box  Account,  an amount equal to the  aggregate  Lock Box Service Fees for
each outstanding Contract as of the related Determination Date;

          (b) to the  Lender,  from  Available  Funds on deposit in the Lock Box
Account, the Custodial Fee, if any, for such Payment Date;

          (c) to the Servicer,  from Available  Funds on deposit in the Lock Box
Account, an amount equal to the applicable Servicing Fee for the related Accrual
Period;

          (d) to the  Lender,  from  Available  Funds on deposit in the Lock Box
Account, the Interest Distribution Amount for such Payment Date;

          (e) to the  Lender,  from  Available  Funds on deposit in the Lock Box
Account, the Aggregate Principal Distribution Amount for such Payment Date;

          (f) to the  Lender,  from  Available  Funds on deposit in the  Reserve
Account,  the Aggregate  Reserve  Account  Distribution  Amount for such Payment
Date;

          (g) to the Reserve  Account,  from  Available  Funds on deposit in the
Lock Box Account, an amount equal to the Aggregate Reserve Account Reimbursement
Amount for such Payment Date;

          (h) to the Borrower,  from the Reserve  Account,  the Reserve  Account
Release Amount, if any, for such Payment Date; and

          (i) to the Borrower, the remaining Available Funds, if any, on deposit
in the Lock Box Account.


                                       29
<PAGE>



                                  ARTICLE VIII
                         SERVICING AND FINANCIAL REPORTS
                         -------------------------------

     Section 8.01 Servicing of the Receivables; Servicer's Certificate.

     Borrower shall cause the Servicer to service the  Receivables in accordance
with the terms and provisions of the Servicing Agreement and, if the Servicer is
terminated thereunder,  Borrower shall cause the Back-Up Servicer to service the
Receivables in accordance with the terms and provisions of the Back-Up Servicing
Agreement. On each Determination Date, Borrower shall cause the Servicer (or the
Back-Up Servicer,  as applicable) to deliver to Lender a Servicer's  Certificate
in substantially the form attached hereto as Exhibit I.

     Section 8.02 Financial Statements.

     Borrower  shall  deliver or cause to be delivered  to Lender the  following
certificates and financial reports, all of which shall be prepared in accordance
with generally accepted accounting principles consistently applied: (i) on every
Thursday  during  the  term of this  Agreement  (or if  such  Thursday  is not a
Business Day, then the immediately  preceding  Business Day), a report as to the
status of the titles for the Financed  Vehicles with respect to the  Receivables
that have been  pledged  to Lender to secure any  Advances  (the  "Weekly  Title
Status  Report");  (ii) no later  than  fifteen  (15) days after the end of each
calendar month, a statement with respect to the amounts distributed  pursuant to
Article VII hereof (the "Monthly Distribution  Statement");  (iii) no later than
thirty (30) days after the end of each calendar  month, a report as to the aging
of all of the  Receivables  then owned by AFCO and/or the Borrower (the "Monthly
Receivables  Aging  Report");  (iv) no later than forty-five (45) days after the
end of each calendar quarter, a compliance  certificate in the form of Exhibit B
hereto (the "Quarterly Compliance  Certificate"),  which compliance  certificate
shall  include  a  calculation  of all  financial  covenants  contained  in this
Agreement; (v) no later than forty-five (45) days after the end of each calendar
quarter,  copies  of  internally-prepared   consolidated  financial  statements,
including, without limitation, balance sheets and statements of income, retained
earnings  and cash flow,  of ACE and its  subsidiaries  (including  Borrower and
AFCO),  certified  by the Chief  Financial  Officer  of ACE;  (vi) no later than
ninety (90) days after the end of each Fiscal Year, audited annual  consolidated
financial  statements of ACE and its subsidiaries  (including Borrower and AFCO)
with  a  copy  of  an  unqualified  opinion  by  independent   certified  public
accountants  selected  by ACE  and  reasonably  satisfactory  to  Lender,  which
financial  statements  shall be accompanied by copies of any management  letters
sent to ACE by such accountants;  (vii) no later than thirty (30) days after the
filing thereof with the Internal  Revenue  Service,  a copy of the  consolidated
federal income tax returns for Pacific USA Holdings Corp.;  (viii) no later than
one hundred twenty (120) days after the end of each Fiscal Year,  audited annual
consolidated financial statements of PEWC and its subsidiaries with a copy of an
unqualified opinion from PEWC's independent certified public accountants.

     Section 8.03 Other Information.

     Promptly  upon Lender's  request,  such other  business or financial  data,
reports, appraisals and projections as Lender may reasonably request.

     Section 8.04 Collateral Examination.

     No later than 30 days after each six calendar  month period during the term
of this Agreement, Borrower shall permit Lender's approved auditors, at Lender's
expense,  to review  and  examine  the  Collateral  at  Borrower's  location  as
specified in Exhibit A.


                                       30
<PAGE>




                                   ARTICLE IX
                                   TERMINATION
                                   -----------

     This  Agreement  shall  be  in  effect  from  the  date  hereof  until  the
Termination  Date. On the Termination  Date,  Borrower shall deliver to Lender a
release,  in form and substance  satisfactory to Lender,  of all obligations and
liabilities of Lender and its officers,  directors,  employees, agents, parents,
subsidiaries and affiliates to Borrower.

                                   ARTICLE X
                 REPRESENTATIONS AND WARRANTIES OF THE BORROWER
                 ----------------------------------------------

     Borrower hereby  represents and warrants to Lender,  which  representations
and warranties  (whether appearing in this Article X or elsewhere) shall be true
at the time of Borrower's  execution  hereof,  the Closing Date and each Advance
Date, and shall remain true until the repayment in full and  satisfaction of all
the Obligations and termination of this Agreement.

     Section 10.01 Financial Statements and Other Information.

     The financial statements and other information delivered or to be delivered
by  Borrower  to  Lender  at or prior to the date of this  Agreement  accurately
reflect  the  financial  condition  of  Borrower,  and there has been no adverse
change  in the  financial  condition,  the  operations  or any  other  status of
Borrower  since the date of the  financial  statements  delivered to Lender most
recently prior to the date of this  Agreement.  All written  information  now or
heretofore  furnished  by  Borrower to Lender is true and correct as of the date
with respect to which such information was furnished.

     Section 10.02 Locations.

     The office where Borrower keeps its books,  records and accounts (or copies
thereof) concerning the Collateral,  Borrower's  principal place of business and
all of Borrower's  other places of business,  locations of  Collateral  and post
office boxes and locations of bank accounts are as set forth in Exhibit A and at
other locations  within the  continental  United States of which Lender has been
advised by Borrower.

     Section 10.03 Loans by Borrower.

     Borrower  has not made any  loans or  advances  to any  Affiliate  or other
Person  except for  advances  authorized  hereunder to  employees,  officers and
directors  of Borrower  for travel and other  expenses  arising in the  ordinary
course of Borrower's business.

     Section 10.04 Liens.

     Borrower is the lawful owner of all  Collateral  now  purportedly  owned or
hereafter  purportedly  acquired  by  Borrower,  free  from all  Liens,  claims,
security  interests  and  encumbrances   whatsoever,   whether   voluntarily  or
involuntarily created and whether or not perfected, other than the lien in favor
of Lender created  hereby.  Other than the security  interest  granted to Lender
hereunder,  Borrower  has not  pledged,  assigned,  sold,  or granted a security
interest  in, or  otherwise  conveyed  any of the  Collateral,  other  than such
security  interests as are released on or before the Closing Date.  Borrower has
not authorized the filing of and is not aware of any financing  statements filed
against  Borrower  that include a description  of any portion of the  Collateral
other than any financing  statement relating to the Security Interest granted to
Lender hereunder or that has been terminated or released as to the Collateral on
or prior to the Closing Date.  There are no judgment or tax lien filings against
Borrower.

     Section 10.05 Organization, Authority and No Conflict.

     Borrower is duly  organized,  validly  existing  and in good  standing as a
corporation under the laws of the State of Nevada (File No.: C12085-2001) and is
duly qualified and in good standing in all states where the nature and extent of
the  business  transacted  by it or the  ownership  of  its  assets  makes  such
qualification necessary. Borrower has the right and power and is duly authorized
and  empowered to enter into,  execute and deliver this  Agreement and the other


                                       31
<PAGE>

Loan Documents to which it is a party and perform its obligations  hereunder and
thereunder. Borrower's execution, delivery and performance of this Agreement and
the other  Loan  Documents  to which it is a party  does not  conflict  with the
provisions of the organizational documents of Borrower, any statute, regulation,
ordinance or rule of law, or any agreement, contract or other document which may
now or hereafter be binding on Borrower, and Borrower's execution,  delivery and
performance  of this  Agreement  and the other Loan  Documents  to which it is a
party shall not result in the imposition of any lien or other  encumbrance  upon
any of  Borrower's  property  under any existing  indenture,  mortgage,  deed of
trust,  loan or credit  agreement  or other  agreement  or  instrument  by which
Borrower or any of its property may be bound or affected.

     Section 10.06 Litigation.

     There are no actions or proceedings which are pending or threatened against
Borrower which might have a Material  Adverse  Effect on Borrower,  and Borrower
shall,  promptly upon becoming aware of any such pending or threatened action or
proceeding, give written notice thereof to Lender.

     Section 10.07 Compliance with Laws and Maintenance of Permits.

     Borrower has obtained all governmental consents, franchises,  certificates,
licenses, authorizations,  approvals and permits, the lack of which would have a
Material  Adverse Effect on Borrower.  Borrower is in compliance in all material
respects with all applicable federal, state, local and foreign statutes, orders,
regulations, rules and ordinances, the failure to comply with which would have a
Material Adverse Effect on Borrower.

     Section 10.08 Affiliate Transactions.

     Borrower  is not  conducting,  permitting  or  suffering  to be  conducted,
transaction  with any Affiliate  other than  transactions  with  Affiliates  for
services in the ordinary  course of business  pursuant to terms that are no less
favorable to Borrower than the terms upon which such  transfers or  transactions
would  have  been  made had they  been  made to or with a Person  that is not an
Affiliate.

     Section 10.09 Names and Tradenames.

     Borrower's  name has  always  been as set forth on the  first  page of this
Agreement and Borrower uses no tradenames,  assumed names,  fictitious  names or
division names in the operation of its business.

     Section 10.10 Enforceability.

     This  Agreement and the other Loan  Documents to which  Borrower is a party
are the legal,  valid and binding  obligations  of Borrower and are  enforceable
against  Borrower in accordance with their  respective  terms,  except as may be
limited by laws affecting creditors' rights generally.

     Section 10.11 Solvency.

     Borrower is, after giving effect to the transactions  contemplated  hereby,
solvent,  is able to pay its debts as they become due, has capital sufficient to
carry on its business,  now owns property  having a value both at fair valuation
and at present fair saleable  value greater than the amount  required to pay its
debts, and will not be rendered  insolvent by the execution and delivery of this
Agreement  or  any  of  the  other  Loan  Documents  or  by  completion  of  the
transactions contemplated hereunder or thereunder.

     Section 10.12 Indebtedness.

     Borrower is not obligated (directly or indirectly),  for any loans or other
indebtedness for borrowed money other than the Loan.


                                       32
<PAGE>


     Section 10.13 Margin Security and Use of Proceeds.

     Borrower  does not own any margin  securities,  and none of the proceeds of
the Loans  hereunder shall be used for the purpose of purchasing or carrying any
margin  securities  or for the purpose of reducing or retiring any  indebtedness
which was originally incurred to purchase any margin securities or for any other
purpose not  permitted by  Regulation U of the Board of Governors of the Federal
Reserve System as in effect from time to time.

     Section 10.14 No Defaults.

     Borrower is not in default under any material contract, lease or commitment
to which it is a party or by which it is bound,  nor does  Borrower  know of any
dispute regarding any contract,  lease or commitment which would have a Material
Adverse Effect on Borrower.

     Section 10.15 Employee Matters.

     There are no controversies  pending or threatened  between Borrower and any
of  its  employees,  agents  or  independent  contractors  other  than  employee
grievances  arising in the ordinary  course of business  which would not, in the
aggregate,  have a Material  Adverse  Effect on  Borrower,  and  Borrower  is in
compliance with all Federal and State laws respecting  employment and employment
terms,  conditions and practices except for such non-compliance  which would not
have a Material Adverse Effect on Borrower.

Section 10.16 ERISA Matters.

     None of Borrower, any of its Subsidiaries, or any of their ERISA Affiliates
maintains or contributes to any Benefit Plan.

                                   ARTICLE XI
                       REPRESENTATIONS AND WARRANTIES WITH
                       -----------------------------------
                           RESPECT TO THE RECEIVABLES
                           --------------------------

     Borrower  hereby makes the  following  representations  and  warranties  to
Lender  as to the  Receivables  to be  pledged  on  each  Advance  Date.  Unless
specified  otherwise,  such representations and warranties speak as of each such
Advance Date.

          (a) Characteristics of Receivables. Each Receivable (1) is an Eligible
Receivable,  (2) has been originated in the United States of America by a Dealer
for the  retail  sale of a  Financed  Vehicle  in the  ordinary  course  of such
Dealer's  business,  such  Dealer  had all  necessary  licenses  and  permits to
originate such Receivables in the state where such Dealer was located,  has been
fully and properly  executed by the parties thereto,  has been purchased by AFCO
in  connection  with the sale of  Financed  Vehicles by the Dealers and has been
validly  assigned by such  Dealer to AFCO and by AFCO to Borrower in  accordance
with its terms,  (3) has  created a valid,  subsisting,  and  enforceable  first
priority  perfected  security interest in favor of AFCO in the Financed Vehicle,
which  security  interest has been  validly  assigned by AFCO to Borrower and by
Borrower to Lender, (4) contains customary and enforceable  provisions such that
the rights and remedies of the holder or assignee  thereof shall be adequate for
realization  against the  collateral  of the benefits of the security  including
without limitation a right of repossession following a default, (5) provides for
level monthly payments that fully amortize the Amount Financed over the original
term (except for the last payment, which may be different from the level payment
but in no event shall exceed three times such level  payment) and yield interest
at the Annual  Percentage  Rate,  (6) was  originated  by a Dealer to a Contract
Obligor and was sold by the Dealer to AFCO and by AFCO to  Borrower  without any
fraud or  misrepresentation on the part of such Dealer or the Obligor and (7) is
denominated in Dollars.


                                       33
<PAGE>


                    (b)  Additional  Receivables  Characteristics.   As  of  the
               Advance Date:

                    (i) each  Receivable has been  originated in accordance with
               AFCO's Contract Purchase Guidelines;

                    (ii)  each   Receivable  is  not  more  than  two  Scheduled
               Receivable Payments past due with respect to more than 10% of any
               Scheduled Receivable Payment as of the related Cutoff Date and is
               not due from a Delinquent Obligor;

                    (iii) no Receivable  has been  extended  beyond its original
               term,  except in accordance  with the Servicer's  stated policies
               and procedures for deferments or extensions;

                    (iv) each  Receivable  satisfies  in all  material  respects
               AFCO's Contract Purchase Guidelines;

                    (v) no Financed Vehicle financed under the Receivables is on
               the list of  excluded  vehicles  referenced  in  AFCO's  Contract
               Purchase Guidelines.

          (c) Information on Receivables Schedule.  The information with respect
to the Receivables set forth in the Receivables  Schedule is true and correct in
all material respects as of the close of business on the related Cutoff Date.

          (d)  Compliance  with Law. Each  Receivable,  the sale of the Financed
Vehicle and the sale of any physical damage, credit life and credit accident and
health insurance and any extended  warranties or service  contracts  complied at
the time the  Receivable was originated or made and at the Advance Date complies
in all material respects with all requirements of applicable Federal, State, and
local laws, and regulations  thereunder  including,  without  limitation,  usury
laws, the Federal  Truth-in-Lending  Act, the Equal Credit  Opportunity Act, the
Fair Credit  Reporting Act, the Fair Debt Collection  Practices Act, the Federal
Trade  Commission  Act, the  Magnuson-Moss  Warranty  Act,  the Federal  Reserve
Board's  Regulations  B and Z, the  Soldiers'  and Sailors'  Civil Relief Act of
1940, the Texas Consumer  Credit Code, the California  Automobile  Sales Finance
Act and  State  adaptations  of the  National  Consumer  Act and of the  Uniform
Consumer   Credit  Code,  and  other  consumer  credit  laws  and  equal  credit
opportunity and disclosure laws.

          (e) No Government  Obligor.  None of the  Receivables are due from the
United  States  of  America  or any  State or from any  agency,  department,  or
instrumentality of the United States of America or any State.

          (f) Security  Interest in Financed  Vehicle.  Immediately prior to the
pledge  thereof to Lender (or, in the case of any  Receivables  with  respect to
which the related Lien Certificates have not been received by the Borrower as of
the Advance Date, within 90 days from their respective  origination dates), each
Receivable  shall be  secured by a validly  perfected  first  priority  security
interest  in the  Financed  Vehicle  in favor of AFCO,  which  has been  validly
assigned  from AFCO to Borrower and from  Borrower to Lender,  and such assigned
security  interest is prior to all other liens upon and  security  interests  in
such  Financed  Vehicle  which now exist or may  hereafter  arise or be  created
(except,  as to priority,  for any tax liens or mechanics' liens which may arise
after the Advance  Date as a result of a Contract  Obligor's  failure to pay its
obligations, as applicable).


                                       34
<PAGE>


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

          (h) No Waiver.  Except as permitted by the Servicer in accordance with
the Servicer's  stated policies and procedures in effect on the Closing Date, no
provision  of a Receivable  has been waived,  altered or modified in any respect
since its origination.

          (i) No  Defenses.  No right of  rescission,  setoff,  counterclaim  or
defense exists or has been asserted or threatened  with respect to a Receivable.
The  operation  of the  terms of any  Receivable  or the  exercise  of any right
thereunder will not render such Receivable unenforceable in whole or in part and
such  Receivable  is not  subject  to any  such  right  of  rescission,  setoff,
counterclaim, or defense.

          (j) No Liens. As of the related Cutoff Date, (a) there are no liens or
claims existing or which have been filed for work,  labor,  storage or materials
relating to a Financed  Vehicle  financed under a Receivable that shall be liens
prior to, or equal or  coordinate  with,  the security  interest in the Financed
Vehicle  granted by the Receivable and (b) there is no lien against the Financed
Vehicle financed under a Receivable for delinquent taxes.

          (k) No Default; Repossession. Except for delinquencies with respect to
not more than two Scheduled  Receivable  Payments as of the related Cutoff Date,
no default,  breach,  violation or event permitting acceleration under the terms
of any Receivable has occurred;  and no continuing condition that with notice or
the  lapse of time  would  constitute  a  default,  breach,  violation  or event
permitting  acceleration  under  the terms of any  Receivable  has  arisen;  and
neither  the  Borrower  nor the  Servicer  shall  waive or has waived any of the
foregoing (except in a manner consistent with the Servicer's stated policies and
procedures in effect as of the Closing Date);  and no Financed  Vehicle financed
under a Receivable shall have been repossessed.

          (l)  Insurance;  Other.  (A) Each  Contract  Obligor  has  obtained an
insurance  policy  covering  the  related  Financed  Vehicle  as of the  date of
execution of the related Contract  insuring against loss and damage due to fire,
theft, transportation, collision and other risks generally covered by automobile
comprehensive and collision coverage and AFCO and its successors and assigns are
named the loss payee or an additional insured of such insurance policy, and each
Receivable  requires the Contract  Obligor to obtain and maintain such insurance
naming  AFCO and its  successors  and  assigns  as loss  payee or an  additional
insured,  (B) each Receivable that finances the cost of premiums for credit life
and credit  accident and health  insurance is covered by an insurance  policy or
certificate of insurance naming AFCO as policyholder  (creditor) under each such
insurance policy and certificate of insurance and (C) as to each Receivable that
finances  the cost of an extended  service  contract,  the  respective  Financed
Vehicle which secures the Receivable is covered by an extended service contract.
Pursuant to the Receivables  Purchase  Agreement,  AFCO has assigned to Borrower
all of its rights described in clauses (A) and (B) above.


                                       35
<PAGE>


          (m) All Filings Made. All filings (including,  without limitation, UCC
filings or other actions)  necessary in any  jurisdiction to give Lender a first
priority  perfected security interest in the Collateral have been made, taken or
performed.

          (n)  Receivable  File;  One  Original.  Borrower has  delivered to the
Servicer a complete  Receivable File with respect to each  Receivable.  There is
only one original  executed copy of each  Receivable.  (o) Chattel  Paper.  Each
Receivable constitutes "chattel paper" under the UCC.

          (p) Title  Documents.  (A) If the Receivable was originated in a State
in which  notation of a security  interest on the title  document of the related
Financed Vehicle is required or permitted to perfect such security interest, the
title document of the related Financed Vehicle for such Receivable  shows, or if
a new or  replacement  title  document is being applied for with respect to such
Financed  Vehicle the title  document  (or other  appropriate  evidence of title
issued by the applicable Department of Motor Vehicles or similar authority) will
be received  within 180 days and will show,  AFCO named as the original  secured
party under the Receivable as the holder of a first priority  security  interest
in such Financed Vehicle, and (B) if the Receivable was originated in a State in
which the filing of a financing statement under the UCC is required to perfect a
security  interest in motor vehicles,  such filings or recordings have been duly
made and show AFCO named as the original secured party under the Receivable, and
in either case,  upon the  assignment  of such  security  interest  from AFCO to
Borrower and from Borrower to Lender,  Lender shall have the same rights as such
secured  party has or would have (if such secured  party were still the owner of
the  Receivable)  against  all parties  claiming  an  interest in such  Financed
Vehicle.  With respect to each  Receivable  for which the title document has not
yet been returned from the  Registrar of Titles,  Borrower has received  written
evidence from the related Dealer that such title document  showing AFCO as first
lienholder has been applied for.

          (q) Valid and Binding Obligation of Contract Obligor.  Each Receivable
is the legal,  valid and binding  obligation in writing of the related  Contract
Obligor and is enforceable  against the related  Contract  Obligor in accordance
with its terms,  except only as such  enforcement  may be limited by bankruptcy,
insolvency  or similar laws  affecting  the  enforcement  of  creditors'  rights
generally,  and all parties to such contract had full legal  capacity to execute
and deliver such contract and all other  documents  related thereto and to grant
the security  interest  purported to be granted thereby.  Each Receivable is not
subject to any right of set-off by the related Contract Obligor.

          (r)  Characteristics  of  Contract  Obligors.  As of the  date of each
Contract  Obligor's  application for the loan from which the Receivable  arises,
such Contract Obligor (a) did not have any material past due credit  obligations
or any personal or real property  repossessed or wages garnished within one year
prior to the date of such  application,  unless such amounts have been repaid or
discharged through bankruptcy,  (b) was not the subject of any Federal, State or
other  bankruptcy,  insolvency  or  similar  proceeding  pending  on the date of
application  that is not  discharged,  (c) had not been the subject of more than
one Federal, State or other bankruptcy, insolvency or similar proceeding and (d)
was domiciled in the United States.


                                       36
<PAGE>


          (s) Lock Box. On or prior to the next billing period after the related
Cutoff Date,  Borrower will notify (or will cause to be notified)  each Contract
Obligor to make payments with respect to its respective  Receivables  after such
Cutoff Date  directly to the Lock Box, and will provide  each  Contract  Obligor
with a  monthly  statement  in order to enable  such  Contract  Obligor  to make
payments directly to the Lock Box.

          (t) Casualty. To the best of Borrower's knowledge, no Financed Vehicle
financed under a Receivable has suffered a Casualty.

          (u) Receivables  Not Assumable.  No Receivable is assumable by another
Person in a manner which would  release the related  Contract  Obligor from such
Contract Obligor's obligations to Borrower with respect to such Receivable.

          (v)  Servicing.  The servicing of each  Receivable  and the collection
practices  relating  thereto have been lawful and in  accordance  with usual and
customary industry the standards;  and, other than the Servicer, no other person
has the right to service the Receivable.

          (w) Creation of Security Interest.  This Agreement creates a valid and
continuing  security interest (as defined in the UCC) in the Collateral in favor
of  Lender,  which  security  interest  is  prior  to  all  other  Liens  and is
enforceable as such as against creditors of and purchasers from Borrower.

          (x) Perfection of Security Interest in Collateral. Borrower has caused
the filing of all appropriate  financing  statements in the proper filing office
in the appropriate  jurisdictions  under  applicable law in order to perfect the
security  interest in the Collateral  granted to Lender pursuant to Section 3.01
hereunder.

          (y) No Other  Security  Interests.  Other than the  security  interest
granted to Lender pursuant to Section 3.01 hereunder,  Borrower has not pledged,
assigned,  sold, or granted a security interest in, or otherwise conveyed any of
the Collateral,  other than such Security Interests as are released on or before
the Closing Date.  Borrower has not authorized the filing of and is not aware of
any financing  statements  filed against  Borrower that include a description of
any portion of the Collateral other than any financing statement relating to the
Security  Interest  granted to Lender  hereunder or that has been  terminated or
released as to the  Collateral on or prior to the Closing Date.  Borrower is not
aware of any judgment or tax lien filings against Borrower.



                                  ARTICLE XII
                              AFFIRMATIVE COVENANTS
                              ---------------------

     Until payment and  satisfaction  in full of all Obligations and termination
of this  Agreement,  unless  Borrower  obtains  Lender's  prior written  consent
waiving or  modifying  any of  Borrower's  covenants  hereunder  in any specific
instance, Borrower covenants and agrees as follows:

          Section 12.01 Maintenance of Records.

Borrower  shall at all times keep  accurate  and  complete  books,  records  and
accounts with respect to all of Borrower's  business  activities,  in accordance
with sound accounting  practices and generally  accepted  accounting  principles
consistently  applied, and shall keep such books, records and accounts,  and any
copies thereof,  only at the addresses  indicated for such purpose on Exhibit A.
During the term of this  Agreement,  Borrower  shall maintain all of its deposit
accounts and cash reserves with Lender.


                                       37
<PAGE>


          Section 12.02 Notices. Borrower shall:


          (a) Locations. Promptly (but in no event less than ten (10) days prior
to the  occurrence  thereof)  notify  Lender of the proposed  opening of any new
place of business or new  location of  Collateral,  the closing of any  existing
place of business or location of  Collateral,  any change of in the  location of
Borrower's books, records and accounts (or copies thereof).

          (b) Litigation and Proceedings.  Promptly upon becoming aware thereof,
notify  Lender of any actions or  proceedings  which are  pending or  threatened
against Borrower which might have a Material Adverse Effect on Borrower.

          (c) Names and Trade Names.  Notify  Lender within ten (10) days of the
change of its name or the use of any trade name,  assumed name,  fictitious name
or division name not previously disclosed to Lender in writing.

          (d) Default;  Material  Adverse Change.  Promptly advise Lender of any
material adverse change in the business, property, assets, prospects, operations
or condition,  financial or otherwise,  of Borrower, the occurrence of any Event
of Default  hereunder or the  occurrence  of any event which,  if uncured,  will
become an Event of Default after notice or lapse of time (or both).

All of the foregoing notices shall be provided by Borrower to Lender in writing.

          Section 12.03 Compliance with Laws and Maintenance of Permits.

Borrower shall maintain all  governmental  consents,  franchises,  certificates,
licenses, authorizations,  approvals and permits, the lack of which would have a
Material Adverse Effect on Borrower and Borrower shall remain in compliance with
all applicable federal, state, local and foreign statutes, orders,  regulations,
rules and  ordinances,  the failure  with which to comply  would have a Material
Adverse Effect on Borrower.

          Section 12.04 Inspection and Audits.

Borrower  shall  permit  Lender,  or any  Persons  designated  by it, to call at
Borrower's places of business at any reasonable times, and, without hindrance or
delay, to inspect the Collateral and to inspect,  audit, check and make extracts
from   Borrower's   books,   records,   journals,   orders,   receipts  and  any
correspondence and other data relating to Borrower's business, the Collateral or
any  transactions  between the parties hereto,  and shall have the right to make
such  verification   concerning  Borrower's  business  as  Lender  may  consider
reasonable  under the  circumstances.  Borrower  shall  furnish  to Lender  such
information  relevant to Lender's rights under this Agreement as Lender shall at
any time and from time to time request. Lender, through its officers,  employees
or agents shall have the right,  at any time and from time to time,  in Lender's
name, to verify the validity,  amount or any other matter relating to any of the
Receivables,  by mail,  telephone,  telegraph or otherwise.  Borrower authorizes
Lender to discuss the  affairs,  finances  and  business  of  Borrower  with any
officers, employees or directors of Borrower or with its Parent or any Affiliate
or the officers,  employees or directors of its Parent or any Affiliate,  and to
discuss the financial  condition of Borrower with Borrower's  independent public


                                       38
<PAGE>

accountants.  Any such  discussions  shall be without  liability to Lender or to
Borrower's independent public accountants. Borrower shall pay to Lender all fees
and all costs and  out-of-pocket  expenses incurred by Lender in the exercise of
its rights hereunder,  and all of such fees, costs and expenses shall constitute
Obligations  hereunder,  shall be payable on demand and, until paid,  shall bear
interest at the highest rate then applicable to any Advance hereunder.

          Section 12.05 Default Insurance Policy.

Borrower  shall take all action  within its power and  control to  maintain  the
Default  Insurance  Policy in full  force  and  effect  during  the term of this
Agreement,  including  without  limitation  the timely payment of all applicable
insurance  premiums.  If Borrower at any time or times  hereafter  shall fail to
obtain or maintain the Default  Insurance  Policy or to pay any premium relating
thereto, then Lender,  without waiving or releasing any obligation or default by
Borrower  hereunder,  may  (but  shall be under no  obligation  to)  obtain  and
maintain such Default Insurance Policy and pay such premiums and take such other
actions with respect  thereto as Lender deems  advisable.  All sums disbursed by
Lender in connection with any such actions, including, without limitation, court
costs, expenses,  other charges relating thereto and reasonable attorneys' fees,
shall  constitute  Loans  hereunder,  shall be payable on demand by  Borrower to
Lender and, until paid,  shall bear interest at the highest rate then applicable
to Loans hereunder.

          Section 12.06 Use of Proceeds.

All monies and other property  obtained by Borrower from Lender pursuant to this
Agreement shall be used solely for business purposes of Borrower.

          Section 12.07 Taxes.

Borrower  shall file all  required tax returns and pay all of its Taxes when due
and shall  cause any liens for Taxes to be  promptly  released;  provided,  that
Borrower shall have the right to contest the payment of such Taxes in good faith
by  appropriate  proceedings  so long as (i) the amount so contested is shown on
Borrower's  financial  statements;  (ii) the contesting of any such payment does
not give rise to a lien for Taxes;  (iii)  Borrower keeps on deposit with Lender
(such deposit to be held without interest) an amount of money which, in the sole
judgment  of  Lender,  is  sufficient  to pay such  Taxes  and any  interest  or
penalties that may accrue thereon;  and (iv) if Borrower fails to prosecute such
contest  within 90 days,  Lender may apply the money so  deposited in payment of
such Taxes.  If  Borrower  fails to pay any such Taxes and in the absence of any
such  contest by  Borrower,  Lender may (but  shall be under no  obligation  to)
advance  and pay any sums  required  to pay any such Taxes  and/or to secure the
release  of any  lien  therefor,  and  any  sums so  advanced  by  Lender  shall
constitute Advances hereunder, shall be payable by Borrower to Lender on demand,
and, until paid,  shall bear interest at the highest rate then applicable to any
Advance hereunder.

          Section 12.08 Intellectual Property.

Borrower  shall  maintain  adequate  licenses,   patents,  patent  applications,
copyrights, service marks, trademarks,  trademark applications, trade styles and
trade  names to  continue  its  business  as  heretofore  conducted  by it or as
hereafter conducted by it.

          Section 12.09 Financial Covenants.

For the fiscal  quarter  ending on  December  31,  2003,  ACE shall  maintain an
Adjusted Tangible Net Worth of not less than ($250,000);  for the fiscal quarter
ending on March 31, 2004, ACE shall  maintain an Adjusted  Tangible Net Worth of
not less than $15,000;  and for the fiscal  quarter  ending on June 30, 2004 and
for all subsequent fiscal quarters during the term of this Agreement,  ACE shall


                                       39
<PAGE>

maintain an Adjusted Tangible Net Worth of not less than $600,000.  In addition,
during the term of this  Agreement,  (A) ACE shall maintain a ratio of Net Worth
to Tangible  Assets of not less than  0.15:1.00;  (B) the Cumulative  Charge-off
Ratio  shall  be not  more  than  10%;  and (C)  the  Rolling  3  Month  Average
Delinquency Rate shall be not more than 7.5%.

                                  ARTICLE XIII
                               NEGATIVE COVENANTS

     Until payment and  satisfaction  in full of all Obligations and termination
of this  Agreement,  unless  Borrower  obtains  Lender's  prior written  consent
waiving or  modifying  any of  Borrower's  covenants  hereunder  in any specific
instance, Borrower agrees as follows:

     Section 13.01 Guaranties.

Borrower shall not assume,  guarantee or endorse,  or otherwise become liable in
connection  with,  the  obligations  of any  Person,  except by  endorsement  of
instruments  for deposit or collection or similar  transactions  in the ordinary
course of business.

     Section 13.02 Indebtedness.

Borrower  shall not  create,  incur,  assume or become  obligated  (directly  or
indirectly),  for any loans or other  Indebtedness for borrowed money other than
the Loan.

     Section 13.03 Liens.

Borrower shall not grant or permit to exist  (voluntarily or involuntarily)  any
lien,  claim,   security  interest  or  other  encumbrance   whatsoever  on  the
Collateral.

     Section  13.04  Mergers,  Sales,   Acquisitions,   Subsidiaries  and  Other
     Transactions Outside the Ordinary Course of Business.

Borrower shall not (i) enter into any merger or consolidation;  (ii) sell, lease
or otherwise  dispose of any of its assets other than in the ordinary  course of
business;  (iii) purchase the stock, other equity interests or all or a material
portion of the assets of any Person or  division of such  Person;  or (iv) enter
into any other transaction  outside the ordinary course of Borrower's  business,
including,  without  limitation,  any purchase,  redemption or retirement of any
shares of any class of its stock or any other equity interest,  and any issuance
of any shares of, or warrants or other  rights to receive or purchase any shares
of, any class of its stock or any other equity interest.

     Section 13.05 Dividends and Distributions.

Neither  AFCO  nor  Borrower   shall  declare  or  pay  any  dividend  or  other
distribution  (whether in cash or in kind) on any class of its stock, except for
distributions  in respect of  payments  required  to be made by AFCO or Borrower
under tax  sharing  agreements  between  AFCO,  Borrower  and  their  respective
Affiliates.

     Section 13.06 Investments; Loans.

Borrower  shall not  purchase or otherwise  acquire,  or contract to purchase or
otherwise  acquire,  the  obligations or stock of any Person,  other than direct
obligations of the United States;  nor shall Borrower lend or otherwise  advance
funds  to any  Person  except  for  advances  made to  employees,  officers  and
directors  for  travel and other  expenses  arising  in the  ordinary  course of
business.


                                       40
<PAGE>


     Section 13.07 Fundamental Changes, Line of Business.

Borrower shall not amend its organizational  documents or change its Fiscal Year
or enter  into a new  line of  business  materially  different  from  Borrower's
current  business.  In  addition,  Borrower  shall  not  change  its name or its
jurisdiction of incorporation.

     Section 13.08 Guarantees.

Borrower shall not guarantee or otherwise  become in any way liable with respect
to the  obligations  of any third Person except by endorsement of instruments or
items of payment for  deposit to the account of Borrower or which a  transmitted
or turned over to Lender.


                                  ARTICLE XIV
                                     DEFAULT
                                     -------

     The occurrence of any one or more of the following  events shall constitute
an "Event of Default" hereunder:

     Section 14.01 Payment.

The failure of any Obligor to pay when due, declared due, or demanded by Lender,
any of the  Obligations.  Section  14.02.....Breach  of the Loan Documents.  The
failure  of any  Obligor  to  perform,  keep or  observe  any of the  covenants,
conditions, promises, agreements or obligations of such Obligor under any of the
Loan Documents.

     Section 14.03 Breaches of Other Obligations.

The  failure of any Obligor to  perform,  keep or observe any of the  covenants,
conditions,  promises, agreements or obligations of such Obligor under any other
agreement  with any Person if such failure might have a Material  Adverse Effect
on such Obligor.

     Section 14.04 Default under Indebtedness.

A default shall have occurred under any  Indebtedness  of Borrower or any of its
Subsidiaries, or (whether at stated maturity, required prepayment, acceleration,
demand or otherwise),  individually or in the aggregate in excess of $250,000 or
any default or event of default  shall occur under any  agreement or  instrument
evidencing  or  relating  to such  Indebtedness,  if the  effect  thereof  is to
accelerate  the  maturity  thereof  or to permit  the  holder or holders of such
Indebtedness,  or an agent or trustee on its or their behalf,  to accelerate the
maturity thereof or to require the mandatory prepayment or redemption thereof.

     Section 14.05 Subordination of Obligations.

If  Borrower  or any  of its  Subsidiaries  makes  any  payment  on  account  of
Indebtedness that has been contractually subordinated in right of payment to the
payment of the  Obligations,  except to the extent such  payment is permitted by
the terms of the subordination provisions applicable to such Indebtedness.

     Section 14.06 Breach of Representations and Warranties.

The  making or  furnishing  by any  Obligor  to  Lender  of any  representation,
warranty,  certificate,  schedule,  report or other  communication  within or in
connection with this Agreement or the other Loan Documents or in connection with
any  other  agreement  between  such  Obligor  and  Lender,  which is  untrue or
misleading in any respect.


                                       41
<PAGE>


     Section 14.07 Loss of Collateral.

The loss, theft, damage or destruction of a material portion of the Collateral.


     Section 14.08 Levy, Seizure or Attachment.

The making or any attempt by any Person to make any levy,  seizure or attachment
upon the Collateral.

     Section 14.09 Bankruptcy or Similar Proceedings.

The  commencement  of any proceedings in bankruptcy by or against any Obligor or
for the  liquidation  or  reorganization  of any Obligor,  or alleging that such
Obligor  is  insolvent  or unable to pay its  debts as they  mature,  or for the
readjustment  or  arrangement of any Obligor's  debts,  whether under the United
States Bankruptcy Code or under any other law, whether state or federal,  now or
hereafter  existing,  for the  relief of  debtors,  or the  commencement  of any
analogous  statutory  or  non-statutory   proceedings   involving  any  Obligor;
provided, however, that if such commencement of proceedings against such Obligor
is involuntary, such action shall not constitute an Event of Default unless such
proceedings are not dismissed  within thirty (30) days after the commencement of
such proceedings.

     Section 14.10 Appointment of Receiver.

The  appointment  of a  receiver  or  trustee  for any  Obligor,  for any of the
Collateral  or  for  any  substantial  part  of  any  Obligor's  assets  or  the
institution  of any  proceedings  for the  dissolution,  or the full or  partial
liquidation,  or  the  merger  or  consolidation,  of  any  Obligor  which  is a
corporation, limited liability company or a partnership; provided, however, that
if such  appointment  or  commencement  of  proceedings  against such Obligor is
involuntary,  such action shall not  constitute an Event of Default  unless such
appointment is not revoked or such  proceedings are not dismissed  within thirty
(30) days after the commencement of such proceedings.

     Section 14.11 Judgment.

The entry of any judgment or order against any Obligor which remains unsatisfied
or  undischarged  and in effect for thirty (30) days after such entry  without a
stay of enforcement or execution.

     Section 14.12 Criminal Proceedings.

The institution in any court of a criminal  proceeding against any Obligor for a
felony, or the indictment of any Obligor for any felonious crime.

     Section 14.13 Material Adverse Change.

Any material  adverse  change in the  Collateral,  business,  property,  assets,
prospects,  operations or condition,  financial or otherwise, of any Obligor, as
determined  by Lender in its sole and  commercially  reasonable  judgment or the
occurrence  of any event which,  in Lender's  sole and  commercially  reasonable
judgment, could have a Material Adverse Effect.

     Section 14.14 Servicer Default.

A Servicer Default shall have occurred and be continuing.

     Section 14.15 Change of Control.

A Change of Control shall have occurred.


                                       42
<PAGE>


                                   ARTICLE XV
                        REMEDIES UPON AN EVENT OF DEFAULT
                        ---------------------------------

     Section 15.01 Obligations Due and Payable.

Upon the  occurrence of an Event of Default  described in Section 14.09 or 14.10
hereof,  all of the Obligations shall  immediately and automatically  become due
and payable,  without notice of any kind. Upon the occurrence of any other Event
of Default,  all Obligations  may, at the option of Lender,  and without demand,
notice or legal process of any kind, be declared,  and immediately shall become,
due and payable.

     Section 15.02 Rights under the UCC.

Upon the  occurrence  of an Event of Default,  Lender may exercise  from time to
time  any  rights  and  remedies  available  to it under  the UCC and any  other
applicable  law in  addition  to, and not in lieu of,  any  rights and  remedies
expressly  granted in this  Agreement or in any of the other Loan  Documents and
all of Lender's rights and remedies shall be cumulative and non-exclusive to the
extent  permitted by law. In  particular,  but not by way of  limitation  of the
foregoing, Lender may, without notice, demand or legal process of any kind, take
possession of any or all of the  Collateral  (in addition to Collateral of which
it already has possession, including without limitation the Lock Box Account and
the Reserve Account),  wherever it may be found, and for that purpose may pursue
the same wherever it may be found, and may enter onto any of Borrower's premises
where any of the Collateral may be, and search for, take  possession of, remove,
keep and store any of the  Collateral  until the same shall be sold or otherwise
disposed  of,  and  Lender  shall  have the  right  to store  the same at any of
Borrower's premises without cost to Lender. At Lender's request, Borrower shall,
at Borrower's  expense,  assemble the Collateral and make it available to Lender
at one or more places to be  designated by Lender and  reasonably  convenient to
Lender and  Borrower.  Borrower  recognizes  that if Borrower  fails to perform,
observe or discharge any of its  Obligations  under this  Agreement or the other
Loan Documents,  no remedy at law will provide  adequate  relief to Lender,  and
agrees that  Lender  shall be entitled to  temporary  and  permanent  injunctive
relief in any such case without the  necessity of proving  actual  damages.  Any
notification  of intended  disposition of any of the Collateral  required by law
will be deemed reasonably and properly given if given at least five (5) calendar
days before such  disposition.  Any proceeds of any disposition by Lender of any
of the  Collateral  may be  applied  by Lender to the  payment  of  expenses  in
connection with the Collateral,  including,  without limitation,  legal expenses
and reasonable  attorneys' fees, and any balance of such proceeds may be applied
by Lender  toward the payment of such of the  Obligations,  and in such order of
application, as Lender may from time to time elect.

                                  ARTICLE XVI
                              CONDITIONS PRECEDENT
                              --------------------

     Section 16.01 Conditions Precedent to Initial Advance.

The  obligation  of  Lender  to make  the  initial  Advance  is  subject  to the
satisfaction  or waiver on or before the initial  Advance Date of the  following
conditions precedent:

     (a) Lender shall have  received  each of the Loan  Documents  and the other
agreements, reports, approvals, consents,  certificates,  opinions and documents
set forth on the closing document list attached hereto as Schedule 16.01(a) (the
"Closing Document List");


                                       43
<PAGE>


     (b) No event  shall  have  occurred  which has had or could  reasonably  be
expected to have a Material  Adverse  Effect on any Obligor,  as  determined  by
Lender in its sole and commercially reasonable discretion;

     (c) Lender  shall have  received  payment in full of all fees and  expenses
payable to it by Borrower or any other Person in connection herewith;

     (d) The Obligors shall have executed and delivered to Lender all such other
documents,  instruments  and agreements  which Lender  determines are reasonably
necessary to consummate the transactions contemplated hereby.

     Section 16.02 Conditions Precedent to all Advances.

Each Advance  (including the initial Advance)  hereunder shall be subject to the
further  conditions  precedent  that on the related  Advance Date the  following
statements shall be true (and the Borrower by accepting the Advance Amount shall
be deemed to have certified that):

     (a) the  representation  and warranties  contained in Articles X and XI are
correct in all  material  respects  on and as of such day as though made on such
day (unless they relate to an earlier  date,  in which case they were correct in
all material  respects as of such earlier date) and shall be deemed to have been
made on such day;

     (b) the  Insurer  shall have  issued an  endorsement  or  bordereau  to the
Default Insurance Policy with respect to the related Receivables

     (c) no  event  has  occurred  or  would  result  from  such  Advance,  that
constitutes an Incipient Default or an Event of Default that has not been waived
in writing by the Lender;

     (d) after giving effect to such  proposed  Advance,  the Total  Outstanding
Advances shall not exceed the Maximum Loan Limit;

     (e) the Advance shall be effected on a Permitted Advance Date;

     (f) the Commitment Period shall not have expired;

     (g) the  Borrower  shall have  provided  the Lender,  the  Servicer and the
Insurer a completed Notice of Borrowing and Pledge;

     (h) on or prior to the  related  Advance  Date,  the  Borrower  shall  have
delivered to the  Servicer  the  Receivable  Files  relating to the  Receivables
included in the Collateral;

     (i) the Borrower  shall have  deposited in the Lock Box Account all amounts
received since the relevant Cutoff Date in respect of the  Receivables  included
in the  Collateral  (other  than  amounts to which the  Servicer  is entitled to
retain pursuant to this Agreement);

     (j) neither AFCO nor the Borrower was  insolvent  nor will any of them have
been made insolvent by the transfer of the Receivables from AFCO to the Borrower
nor is any of them aware of any pending insolvency;


                                       44
<PAGE>


     (k) the  Borrower,  the  Servicer  and AFCO  shall  have  taken any  action
necessary,  or, if  requested  by the Lender,  advisable  to maintain  the first
perfected security interest of the Lender in the Receivables, including, without
limitation,  the filing of additional UCC financing  statements  identifying the
Receivables included in the Collateral; and

     (l) no  selection  procedures  reasonably  believed by the  Borrower or the
Servicer to be materially adverse to the interests of the Lender shall have been
utilized in selecting the Receivables.

                                  ARTICLE XVII
                                 INDEMNIFICATION
                                 ---------------

     Borrower agrees to defend (with counsel  satisfactory to Lender),  protect,
indemnify and hold harmless Lender,  each affiliate or subsidiary of Lender, and
each of their respective officers,  directors,  employees,  attorneys and agents
(each  an  "Indemnified  Party")  from  and  against  any and  all  liabilities,
obligations,  losses, damages,  penalties,  actions,  judgments,  suits, claims,
costs,  expenses and  disbursements  of any kind or nature  (including,  without
limitation,  the  disbursements  and the  reasonable  fees of  counsel  for each
Indemnified  Party in  connection  with  any  investigative,  administrative  or
judicial proceeding,  whether or not the Indemnified Party shall be designated a
party thereto),  which may be imposed on, incurred by, or asserted against,  any
Indemnified  Party (whether direct,  indirect or consequential and whether based
on  any  federal,  state  or  local  laws  or  regulations,  including,  without
limitation,  securities laws and regulations,  Environmental Laws and commercial
laws and  regulations,  under  common law or in equity,  or based on contract or
otherwise)  in any manner  relating to or arising out of this  Agreement  or any
Loan Document,  or any act, event or transaction  related or attendant  thereto,
the making or issuance  and the  management  of the Loans or the use or intended
use of the proceeds of the Advances;  provided, however, that Borrower shall not
have any obligation  hereunder to any Indemnified  Party with respect to matters
caused by or resulting from the willful  misconduct or gross  negligence of such
Indemnified  Party. To the extent that the undertaking to indemnify set forth in
the preceding  sentence may be unenforceable  because it is violative of any law
or public policy,  Borrower shall satisfy such undertaking to the maximum extent
permitted by applicable law. Any liability,  obligation,  loss, damage, penalty,
cost or expense  covered  by this  indemnity  shall be paid to each  Indemnified
Party on demand,  and,  failing prompt  payment,  shall,  together with interest
thereon at the highest rate then  applicable  to Loans  hereunder  from the date
incurred  by each  Indemnified  Party  until paid by  Borrower,  be added to the
Obligations of Borrower and be secured by the Collateral. The provisions of this
Article XVII shall survive the  satisfaction  and payment of the Obligations and
the termination of this Agreement.

                                 ARTICLE XVIII
                                     NOTICE
                                     ------

     All written notices and other written  communications  with respect to this
Agreement shall be sent by ordinary, certified or overnight mail, by telecopy or
delivered  in  person,  and in the  case of  Lender  shall be sent to it at 4699
Jamboree Road, Newport Beach, California 92692, Attention: Kandy Hung, Assistant
Vice President,  Facsimile: (949) 442-3256, and in the case of Borrower shall be
sent to it at its  principal  place of business set forth on Exhibit A hereto or
as  otherwise  directed  by Borrower  in  writing.  All notices  shall be deemed
received upon actual receipt thereof or refusal of delivery.


                                       45
<PAGE>


                                  ARTICLE XIX
                            CHOICE OF GOVERNING LAW;
                            ------------------------
                          CONSTRUCTION; FORUM SELECTION
                          -----------------------------

     This  Agreement  and the other Loan  Documents are submitted by Borrower to
Lender for  Lender's  acceptance  or rejection  at Lender's  principal  place of
business as an offer by Borrower to borrow  monies from Lender now and from time
to time  hereafter,  and shall not be binding  upon  Lender or become  effective
until accepted by Lender, in writing, at said place of business.  If so accepted
by Lender,  this Agreement and the other Loan Documents  shall be deemed to have
been made at said  place of  business.  THIS  AGREEMENT  SHALL BE  GOVERNED  AND
CONTROLLED BY THE INTERNAL LAWS OF THE STATE OF CALIFORNIA AS TO INTERPRETATION,
ENFORCEMENT,   VALIDITY,  CONSTRUCTION,  EFFECT,  AND  IN  ALL  OTHER  RESPECTS,
INCLUDING,  WITHOUT  LIMITATION,  THE  LEGALITY OF THE  INTEREST  RATE AND OTHER
CHARGES,  BUT  EXCLUDING  PERFECTION  OF THE SECURITY  INTERESTS  IN  COLLATERAL
LOCATED  OUTSIDE  OF THE  STATE  OF  CALIFORNIA,  WHICH  SHALL BE  GOVERNED  AND
CONTROLLED BY THE LAWS OF THE RELEVANT  JURISDICTION IN WHICH SUCH COLLATERAL IS
LOCATED. If any provision of this Agreement shall be held to be prohibited by or
invalid under  applicable law, such provision  shall be ineffective  only to the
extent of such prohibition or invalidity,  without invalidating the remainder of
such provision or remaining provisions of this Agreement.

     To induce  Lender to accept this  Agreement,  Borrower  irrevocably  agrees
that, subject to Lender's sole and absolute election, ALL ACTIONS OR PROCEEDINGS
IN ANY  WAY,  MANNER  OR  RESPECT,  ARISING  OUT OF OR FROM OR  RELATED  TO THIS
AGREEMENT OR THE COLLATERAL SHALL BE LITIGATED IN COURTS HAVING SITUS WITHIN THE
STATE OF CALIFORNIA. BORROWER HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF
ANY LOCAL,  STATE OR FEDERAL COURTS LOCATED WITHIN SAID STATE.  Borrower  hereby
irrevocably appoints and designates CSC - Lawyers  Incorporating Service (or any
other  person  having and  maintaining  a place of  business  in such state whom
Borrower may from time to time  hereafter  designate  upon ten (10) days written
notice to Lender and whom Lender has agreed in its sole discretion in writing is
satisfactory   and  who  has  executed  an  agreement  in  form  and   substance
satisfactory  to  Lender  agreeing  to act  as  such  attorney  and  agent),  as
Borrower's true and lawful attorney and duly authorized  agent for acceptance of
service of legal process. Borrower agrees that service of such process upon such
person shall constitute personal service of such process upon Borrower. BORROWER
HEREBY  WAIVES  ANY RIGHT IT MAY HAVE TO  TRANSFER  OR  CHANGE  THE VENUE OF ANY
LITIGATION BROUGHT AGAINST BORROWER BY LENDER IN ACCORDANCE WITH THIS SECTION.

                                   ARTICLE XX
                      MODIFICATION AND BENEFIT OF AGREEMENT

     This  Agreement  and the Loan  Documents  may not be  modified,  altered or
amended  except by an  agreement  in writing  signed by  Borrower  or such other
person who is a party to such Loan  Document and Lender.  Borrower may not sell,
assign or transfer  this  Agreement,  or any other Loan  Document or any portion
thereof,  including,  without limitation,  Borrower's rights, titles,  interest,


                                       46
<PAGE>

remedies, powers or duties hereunder and thereunder. Borrower hereby consents to
Lender's sale, assignment,  transfer or other disposition,  at any time and from
time to time hereafter,  of this Agreement,  or the other Loan Documents,  or of
any portion thereof, or participations therein,  including,  without limitation,
Lender's rights,  titles,  interest,  remedies,  powers and/or duties and agrees
that it shall  execute  and  deliver  such  documents  as Lender may  request in
connection with any such sale, assignment, transfer or other disposition.

                                  ARTICLE XXI
                             INTERPRETIVE PROVISIONS
                             -----------------------

     The headings of  subdivisions  in this  Agreement  are for  convenience  of
reference only, and shall not govern the interpretation of any of the provisions
of this  Agreement.  As used in this  Agreement:  (a) The singular  number shall
include  the  plural,  the plural  the  singular  and the use of the  masculine,
feminine or neuter gender shall include all genders, as the context may require.
(b)  The  term  "documents"   includes  any  and  all  instruments,   documents,
agreements, certificates, indentures, notices, other writings, and other records
(authenticated and not authenticated), however evidenced. (c) The term "writing"
shall have its ordinary  meaning except that, to the limited extent Lender in an
authenticated  record  expressly  so agrees from time to time in the exercise of
its sole and absolute  discretion,  the term may also include a record in a form
other than a writing.  (d) The terms "sign," "signed" and signatures" shall have
their   ordinary   meanings   except  that,  to  limited  extent  Lender  in  an
authenticated  record  expressly  agrees  otherwise  from  time  to  time in the
exercise of its sole and absolute  discretion,  the terms may also include other
methods used to authenticate.  Unless otherwise  specified herein, any reference
in this  Agreement to the exercise of  discretion or a  determination  by Lender
shall mean the  reasonable  exercise  of such  discretion  or the making of such
determination in good faith.

                                  ARTICLE XXII
                                POWER OF ATTORNEY
                                -----------------

     Borrower  acknowledges  and agrees  that its  appointment  of Lender as its
attorney and  agent-in-fact  for the purposes  specified in this Agreement is an
appointment  coupled with an interest and shall be irrevocable  until all of the
Obligations are satisfied and paid in full and this Agreement is terminated.

                                 ARTICLE XXIII
                                 CONFIDENTIALITY
                                 ---------------

     Borrower  and  Lender  hereby  agree  and  acknowledge  that  any  and  all
information  relating to Borrower  which is (i)  furnished by Borrower to Lender
(or  to  any  affiliate  of  Lender);  and  (ii)  non-public,   confidential  or
proprietary in nature, shall be kept confidential by Lender or such affiliate in
accordance with applicable law;  provided,  however,  that such  information and
other credit  information  relating to Borrower may be  distributed by Lender or
such affiliate to Lender's or such affiliate's directors,  officers,  employees,
attorneys, affiliates, assignees, participants, auditors, agents and regulators,
and upon the order of a court or other governmental  agency having  jurisdiction
over Lender or such affiliate,  to any other party.  Borrower and Lender further
agree that this  provision  shall  survive the  termination  of this  Agreement.
Notwithstanding  the foregoing,  Borrower hereby consents to Lender publishing a
tombstone or similar advertising material relating to the financing  transaction
contemplated by this Agreement.


                                       47
<PAGE>


                                  ARTICLE XXIV
                                  COUNTERPARTS
                                  ------------

     This Agreement and any amendments,  waivers, consents or supplements may be
executed  in any  number of  counterparts  and by  different  parties  hereto in
separate counterparts,  each of which, when so executed and delivered,  shall be
deemed an original,  but all of which counterparts together shall constitute but
one agreement.

                                  ARTICLE XXV
                             ELECTRONIC SUBMISSIONS
                             ----------------------

     Upon not less than thirty (30) days' prior  written  notice (the  "Approved
Electronic  Form  Notice"),  Lender  may  permit  or  require  that  any  of the
documents, certificates, forms, deliveries or other communications,  authorized,
required or  contemplated  by this  Agreement  or the other Loan  Documents,  be
submitted  to Lender in  "Approved  Electronic  Form"  (as  hereafter  defined),
subject to any reasonable  terms,  conditions and requirements in the applicable
Approved  Electronic Forms Notice.  For purposes hereof  "Electronic Form" means
e-mail,  e-mail  attachments,  data  submitted on  web-based  forms or any other
communication  method that  delivers  machine  readable data or  information  to
Lender,  and "Approved  Electronic  Form" means an Electronic Form that has been
approved in writing by Lender  (which  approval has not been revoked or modified
by Lender) and sent to Borrower in an Approved Electronic Form Notice. Except as
otherwise  specifically  provided in the  applicable  Approved  Electronic  Form
Notice,  any submissions  made in an applicable  Approved  Electronic Form shall
have the same force and effect that the same submissions  would have had if they
had  been  submitted  in any  other  applicable  form  authorized,  required  or
contemplated by this Agreement or the other Loan Documents.

                                  ARTICLE XXVI
                       WAIVER OF JURY TRIAL; OTHER WAIVERS
                       -----------------------------------

          BORROWER  AND LENDER EACH HEREBY  WAIVE ALL RIGHTS TO TRIAL BY JURY IN
ANY  ACTION  OR  PROCEEDING  WHICH  PERTAINS  DIRECTLY  OR  INDIRECTLY  TO  THIS
AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS, THE OBLIGATIONS, THE COLLATERAL, ANY
ALLEGED TORTIOUS CONDUCT BY BORROWER OR LENDER OR WHICH, IN ANY WAY, DIRECTLY OR
INDIRECTLY,  ARISES OUT OF OR RELATES TO THE  RELATIONSHIP  BETWEEN BORROWER AND
LENDER.  IN NO EVENT SHALL LENDER BE LIABLE FOR LOST PROFITS OR OTHER SPECIAL OR
CONSEQUENTIAL DAMAGES.

          Borrower  hereby  waives  demand,  presentment,  protest and notice of
nonpayment,  and further  waives the  benefit of all  valuation,  appraisal  and
exemption laws.

          Borrower  hereby  waives the  benefit of any law that would  otherwise
restrict  or limit  Lender or any  affiliate  of Lender in the  exercise  of its
right,  which is hereby  acknowledged  and  agreed  to, to  set-of  against  the
Obligations, without notice at any time hereafter, any indebtedness,  matured or
unmatured,  owing by Lender or such affiliate of Lender to Borrower,  including,
without limitation any deposit account at Lender or such affiliate.


                                       48
<PAGE>



          BORROWER  HEREBY  WAIVES ALL RIGHTS TO NOTICE AND  HEARING OF ANY KIND
PRIOR TO THE EXERCISE BY LENDER OF ITS RIGHTS TO  REPOSSESS  THE  COLLATERAL  OF
BORROWER  WITHOUT  JUDICIAL  PROCESS  OR TO  REPLEVY,  ATTACH  OR LEVY UPON SUCH
COLLATERAL.

          Lender's  failure,  at any time or times hereafter,  to require strict
performance  by Borrower of any  provision of this  Agreement or any of the Loan
Documents shall not waive,  affect or diminish any right of Lender thereafter to
demand strict compliance and performance therewith.  Any suspension or waiver by
Lender of an Event of Default  under this  Agreement or any default under any of
the other Loan Documents  shall not suspend,  waive or affect any other Event of
Default  under this  Agreement or any other  default under any of the other Loan
Documents,  whether the same is prior or  subsequent  thereto and whether of the
same or of a different kind or character.  No delay on the part of Lender in the
exercise of any right or remedy under this  Agreement or any other Loan Document
shall preclude other or further exercise thereof or the exercise of any right or
remedy.  None  of  the  undertakings,   agreements,  warranties,  covenants  and
representations of Borrower contained in this Agreement or any of the other Loan
Documents and no Event of Default  under this  Agreement or default under any of
the other Loan  Documents  shall be deemed to have been  suspended  or waived by
Lender  unless  such  suspension  or  waiver  is in  writing,  signed  by a duly
authorized officer of Lender and directed to Borrower specifying such suspension
or waiver.

                                 ARTICLE XXVII
                                ENTIRE AGREEMENT
                                ----------------

THIS  AGREEMENT,  TOGETHER  WITH THE OTHER LOAN  DOCUMENTS,  REPRESENT THE FINAL
AGREEMENT  BETWEEN THE PARTIES  REGARDING THE SUBJECT  MATTER HEREIN AND THEREIN
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL  AGREEMENTS OF THE PARTIES  HERETO.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.

     IN  WITNESS   WHEREOF,   the  parties  hereto  by  their  duly   authorized
representatives  have duly  executed  this  Agreement  under seal as of the date
first written above.

AFCO RECEIVABLES FUNDING                          FAR EAST NATIONAL BANK
CORPORATION


By:                                                By:
    --------------------                               --------------------
Name:  Michael K. McCraw                           Name:
Title:  President                                  Title:






                                       49
<PAGE>





                  EXHIBIT A - BUSINESS AND COLLATERAL LOCATIONS

         Attached to and made a part of that certain Loan and Security Agreement
of even date herewith between AFCO RECEIVABLES FUNDING CORPORATION ("Borrower"),
AMERICAN FINANCE COMPANY, INC. and FAR EAST NATIONAL BANK.

A.   Borrower's  Business  Locations  (please  indicate  which  location  is the
principal place of business and at which  locations  originals and all copies of
Borrower's books, records and accounts are kept):

2901 N. Dallas Parkway, Suite 100, Plano, Texas  75093

B.   Other locations of Collateral:

         Same as above.

C.   Bank Accounts of Borrower (other than those at Far East National Bank):

      Bank (with address)        Account Number         Type of Account
      -------------------        --------------         ---------------

     None.









                               Exhibit A - Page 1


<PAGE>


                       EXHIBIT B - COMPLIANCE CERTIFICATE

     Attached to and made a part of that certain Loan and Security Agreement, as
it may be amended in accordance with its terms from time to time,  including all
exhibits  attached thereto (the  "Agreement") of even date herewith between AFCO
RECEIVABLES  FUNDING  CORPORATION   ("Borrower")  and  FAR  EAST  NATIONAL  BANK
("Lender").

     This Certificate is submitted pursuant to subsection 8.02 of the Agreement.

     The  undersigned  hereby  certifies  to Lender  that as of the date of this
Certificate:

1. The undersigned is the __________________________ of the Borrower.

2. There exists no event or  circumstance  which is or which with the passage of
time,  the giving of notice,  or both would  constitute an Event of Default,  as
that term is  defined  in the  Agreement,  or, if such an event or  circumstance
exists, a writing  attached hereto  specifies the nature thereof,  the period of
existence  thereof  and the action that  Borrower  has taken or proposes to take
with respect thereto.

3.  No  material  adverse  change  in the  condition,  financial  or  otherwise,
business,  property,  or results of  operations  of Borrower has occurred  since
[date of last Compliance  Certificate/last  financial statements delivered prior
to  closing],  or, if such a change  has  occurred,  a writing  attached  hereto
specifies the nature  thereof and the action that Borrower has taken or proposes
to take with respect thereto.

4. Borrower is in compliance with the representations,  warranties and covenants
in the Agreement, or, if Borrower is not in compliance with any representations,
warranties or covenants in the Agreement,  a writing  attached hereto  specifies
the nature thereof, the period of existence thereof and the action that Borrower
has taken or proposes to take with respect thereto.

5.  The  financial  statements  of the  Borrower  and  AFCO  being  concurrently
delivered  herewith  have been prepared in accordance  with  generally  accepted
accounting  principles  consistently  applied  and there  have been no  material
changes in accounting  policies or financial reporting practices of the Borrower
and AFCO, as applicable,  since [date of the last compliance certificate/date of
last financial statements delivered prior to closing] or, if any such change has
occurred, such changes are set forth in a writing attached hereto.

6. Attached hereto is a true and correct  calculation of the financial covenants
contained in the Agreement.

                                             AFCO RECEIVABLE FUNDING CORPORATION



                                             By:
                                                --------------------------------
                                             Its:
                                                --------------------------------