<PAGE>

                                                                   Exhibit 10.19

                                                                  EXECUTION COPY


                          MBIA INSURANCE CORPORATION,
                               as Surety Provider

                         FINANCIAL PACIFIC LEASING, LLC
                         as Originator and as Servicer

                         FINANCIAL PACIFIC FUNDING, LLC
                                  as Borrower

                 NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
                    as Standby Servicer and Collateral Agent

                        RECEIVABLES CAPITAL CORPORATION,
                                   as Lender

                        THE FINANCIAL INSTITUTIONS FROM
                           TIME TO TIME PARTY HERETO,
                              as Parallel Lenders

                                      and

            BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
                     as Administrative Agent and Bank Agent

                       INSURANCE AND INDEMNITY AGREEMENT

               Financial Pacific Funding, LLC Warehouse Facility

                          Dated as of February 1, 1999

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                              TABLE OF CONTENTS

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                                                                                                              Page
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                                                   ARTICLE I

DEFINITIONS................................................................................................    2

                                                   ARTICLE II

                                   REPRESENTATIONS, WARRANTIES AND COVENANTS

Section 2.01.     Representation and Warranties of the Servicer, the Originator and the Borrower...........    5
Section 2.02.     Affirmative Covenants of the Servicer, the Originator and the Borrower...................    8
Section 2.03.     Negative Covenants of the Servicer, the Originator and the Borrower......................   13
Section 2.04.     Representations, Warranties and Covenants of the Collateral Agent and Standby Servicer...   14

                                                  ARTICLE III

                                      APPOINTMENT OF THE COLLATERAL AGENT

Section 3.01.     Appointment of the Collateral Agent......................................................   16


                                                   ARTICLE IV

                                         THE SURETY BOND; REIMBURSEMENT

Section 4.01.     Issuance of the Surety Bond..............................................................   17
Section 4.02.     Payment of Fees and Premium..............................................................   19
Section 4.03.     Reimbursement and Additional Payment Obligation..........................................   19
Section 4.04.     Indemnification; Limitation of Liability.................................................   21
Section 4.05.     Payment Procedure........................................................................   22

                                                   ARTICLE V

                                               FURTHER AGREEMENTS

Section 5.01.     Effective Date; Term of the Insurance Agreement..........................................   23
Section 5.02.     Further Assurances and Corrective Instruments............................................   23
Section 5.03.     Obligations Absolute.....................................................................   24
Section 5.04.     Assignments; Reinsurance; Third-party Rights.............................................   25
Section 5.05.     Liability of the Surety Provider.........................................................   26
</TABLE>

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<TABLE>
<S>                                                                                                           <C>
Section 5.06.     Parties Will Not Institute Insolvency Proceedings........................................   26
Section 5.07.     Administrative Agent, Collateral Agent, Lender, Standby Servicer, Borrower,
                  Originator and Servicer To Join in Enforcement Action....................................   27
Section 5.08.     Subrogation..............................................................................   27

                                                   ARTICLE VI

                                               DEFAULTS; REMEDIES

Section 6.01.     Defaults.................................................................................   27
Section 6.02.     Remedies; No Remedy Exclusive............................................................   28
Section 6.03.     Waivers..................................................................................   29

                                                  ARTICLE VII

                                                 MISCELLANEOUS

Section 7.01.     Amendments, Etc..........................................................................   29
Section 7.02.     Notices..................................................................................   30
Section 7.03.     Severability.............................................................................   31
Section 7.04.     Governing Law............................................................................   32
Section 7.05.     Consent to Jurisdiction..................................................................   32
Section 7.06.     Consent of the Surety Provider...........................................................   32
Section 7.07.     Counterparts.............................................................................   33
Section 7.08.     Headings.................................................................................   33
Section 7.09.     Trial by Jury Waived.....................................................................   33
Section 7.10.     Limited Liability........................................................................   33
Section 7.11.     Entire Agreement.........................................................................   33
</TABLE>

                                       ii
<PAGE>

                              INSURANCE AGREEMENT

         This INSURANCE AND INDEMNITY AGREEMENT (as amended, supplemented or
otherwise modified from time to time, this "Insurance Agreement"), dated as of
February 1, 1999 is by and among MBIA INSURANCE CORPORATION, as Surety Provider
(the "Surety Provider"), FINANCIAL PACIFIC LEASING, LLC, as Originator (the
"Originator") and as Servicer (the "Servicer"), FINANCIAL PACIFIC FUNDING, LLC,
as Borrower (the "Borrower"), NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as
Standby Servicer and as Collateral Agent (the "Collateral Agent"), Receivables
Capital Corporation, the Lender (the "Lender"), THE FINANCIAL INSTITUTIONS FROM
TIME TO TIME PARTY HERETO, as Parallel Lenders (the "Parallel Lenders") and Bank
of America National TRUST and Savings Association, as Administrative Agent and
Bank Agent (the "Administrative Agent").

         WHEREAS, the Borrower, the Servicer, the Collateral Agent, the Standby
Servicer, the Lender, the Parallel Lenders and the Administrative Agent have
entered into a Warehouse Loan Agreement (as defined herein) dated as of December
30, 1998, pursuant to which, among other things, the Borrower has granted a
security interest in the Collateral to the Collateral Agent for the benefit of
the Secured Parties (as defined in the Warehouse Loan Agreement) including the
Surety Provider, to secure payments under the Notes, the Warehouse Loan
Agreement, this Insurance Agreement and under the other Transaction Documents
(as defined herein).

         WHEREAS, the Borrower and the Servicer have requested that the Surety
Provider issue its Surety Bond (the "Surety Bond") to guarantee payment of
Insured Amounts (as defined in Surety Bond) with respect to the Notes, upon such
terms and conditions as were mutually agreed upon by the parties and subject to
the terms and conditions of the Surety Bond.

         WHEREAS, the parties hereto desire to specify the conditions precedent
to the issuance of the Surety Bond by the Surety Provider, the indemnity and
reimbursement to be provided by the Borrower and the Servicer in respect of
amounts paid by the Surety Provider under the Surety Bond and to provide for
certain other matters.

         WHEREAS, the Surety Provider shall be paid an insurance premium in
accordance with the payment priorities set forth in the Warehouse Loan
Agreement, and the details of such premium are set forth herein; and

         WHEREAS, the Borrower, the Servicer, the Originator, the Collateral
Agent and the Standby Servicer have undertaken certain obligations in
consideration for the Surety Provider's issuance of the Surety Bond;

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

<PAGE>

                                    ARTICLE I

                                   DEFINITIONS

         The terms defined in this Article I shall have the meanings provided
herein for all purposes of this Insurance Agreement, unless the context clearly
requires otherwise, in both singular and plural form, as appropriate. Unless the
context clearly requires otherwise, all capitalized terms used herein and not
otherwise defined in this Article I shall have the meanings assigned to them in
the Warehouse Loan Agreement. All words used herein shall be construed to be of
such gender or number as the circumstances require. The words "herein,"
"hereby," "hereof," "hereto," "hereinabove" and "hereinbelow," and words of
similar import, refer to this Insurance Agreement as a whole and not to any
particular paragraph, clause or other subdivision hereof, unless otherwise
specifically noted.

         "Administrative Agent Fee Letter" shall mean the fee letter dated as of
December 30, 1998 between the Administrative Agent and the Borrower, which
letter has been consented to by the Surety Provider.

         "Business Day" shall have the meaning set forth in the Warehouse Loan
Agreement.

         "Collateral" shall have the meaning set forth in the Warehouse Loan
Agreement.

         "Collateral Agent" means Norwest Bank Minnesota, National Association,
a national banking association, as Collateral Agent under the Warehouse Loan
Agreement, and any successor to the Collateral Agent under the Warehouse Loan
Agreement.

         "Collateral Agent Fee Letter" shall mean the fee letter dated as of
November 4, 1998 between the Collateral Agent and the Borrower.

         "Commission" means the Securities and Exchange Commission.

         "Credit Policy" shall have the meaning set forth in the Warehouse Loan
Agreement.

         "Date of Issuance" means the date on which the Surety Bond is issued as
specified therein.

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

         "Event of Default" means any event of default specified in Section 6.01
hereof.

         "Financial Statements" means, with respect to the Borrower, the
Originator and the Servicer, the balance sheets and the statements of income,
retained earnings and cash flows and the notes thereto which have been provided
to the Surety Provider.

                                       2
<PAGE>

         "First Tier Purchase Agreement" shall mean the First Tier Purchase
Agreement dated as of December 30, 1998 between the Originator and the Borrower,
as the same may be amended or supplemented from time to time in accordance with
the terms thereof.

         "Fiscal Agent" means the Fiscal Agent, if any, designated pursuant to
the terms of the Surety Bond.

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

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

         "Lenders" means, collectively, the Lender and the Parallel Lenders
pursuant to the Notes.

         "Liabilities" shall have the meaning ascribed to such term in Section
4.04(a) hereof.

         "Losses" means (a) any actual out-of-pocket loss paid by the Surety
Provider or its respective parents, subsidiaries and affiliates or any
shareholder, director, officer, employee, agent or any "controlling person" (as
such term is used in the Securities Act) of any of the foregoing, and (b) any
actual out-of-pocket costs and expenses paid by such party, including reasonable
fees and expenses of its counsel, to the extent not paid, satisfied or
reimbursed from funds provided by any other Person (provided that the foregoing
shall not create or imply any obligation to pursue recourse against any such
other Person).

         "Lock-Box Agreement" shall have the meaning set forth in the Warehouse
Loan Agreement.

         "Lock-Box Bank" shall have the meaning set forth in the Warehouse Loan
Agreement.

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

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

          "Obligor" means the original obligor under each Receivable, including
any guarantor of such obligor and their respective successors.

                                       3
<PAGE>

         "Opinion Facts and Assumptions" means the facts and assumptions
contained in the insolvency opinion dated December, 30, 1998 by Andrews & Kurth
under the heading "Facts and Assumptions" insofar as they relate to the
Originator and the Borrower.

         "Organizational Documents" means (i) with respect to a corporation, the
articles of incorporation and the bylaws thereof and (ii) with respect to a
limited liability company, the certificate of formation and limited liability
company agreement thereof.

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

         "Premium" means the premium payable in accordance with Section 4.02
hereof.

         "Premium Letter" means the premium letter from the Surety Provider to
the Borrower and the Originator dated February 1, 1999.

         "Premium Percentage" shall have the meaning ascribed to such term in
Section 4.02 hereof.

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

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

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

         "Term of the Insurance Agreement" shall be determined as provided in
Section 5.01 hereof.

         "Transaction" means the transactions contemplated by the Transaction
Documents.

         "Transaction Documents" means this Insurance Agreement, the Premium
Letter, the Notes, the Warehouse Loan Agreement, the First Tier Purchase
Agreement, the Lock-Box Agreement (if any), the Hedging Agreement, the Liquidity
Asset Purchase Agreement, the Administrative Agent Fee Letter and the Collateral
Agent Fee Letter.

         "Warehouse Loan Agreement" shall mean the Warehouse Loan and Security
Agreement dated as of December 30, 1998 among the Servicer, the Borrower, the
Standby Servicer, the Collateral Agent and the Administrative Agent, as the same
may be amended or supplemented from time to time in accordance with the terms
thereof.

                                       4
<PAGE>

                                   ARTICLE II

                   REPRESENTATIONS, WARRANTIES AND COVENANTS

         SECTION 2.01. REPRESENTATION AND WARRANTIES OF THE SERVICER, THE
ORIGINATOR AND THE BORROWER. The Servicer, the Originator and the Borrower
represent, warrant and covenant as of the Date of Issuance, each as to those
matters relating to itself, as follows:

                  (a)      Due Organization and Qualification. The Servicer, the
         Originator and the Borrower are each a limited liability company duly
         organized, validly existing and in good standing under the laws of its
         respective jurisdiction of organization. Each of the Servicer, the
         Originator and the Borrower is duly qualified to do business, is in
         good standing and has obtained all licenses, permits, charters,
         registrations and approvals (together, "approvals") necessary for the
         conduct of its business as currently conducted and the performance of
         its obligations under the Transaction Documents in each jurisdiction in
         which the failure to be so qualified or to obtain such approvals would
         render any Transaction Document unenforceable in any respect or would
         have a material adverse effect upon the Transaction or the Surety
         Provider.

                  (b)      Power and Authority. Each of the Servicer, the
         Originator and the Borrower has all necessary limited liability company
         power and authority to conduct its business as currently conducted and
         to execute, deliver and perform its obligations under the Transaction
         Documents and to consummate the Transaction.

                  (c)      Due Authorization. The execution, delivery and
         performance of the Transaction Documents by each of the Servicer, the
         Originator and the Borrower have been duly authorized by all necessary
         limited liability company action and do not require any additional
         approvals or consents of, or other action by or any notice to or filing
         with (except such future filings (e.g. filings under the UCC) as may be
         required under the Transaction Documents), any Person, including,
         without limitation, any governmental entity or the Servicer's, the
         Originator's or the Borrower's stockholders, which have not previously
         been obtained or given by the Servicer, the Originator or the Borrower.

                  (d)      Noncontravention. Neither the execution and delivery
         of the Transaction Documents by the Servicer, the Originator or the
         Borrower, the consummation of the transactions contemplated thereby or
         the satisfaction of the terms and conditions of the Transaction
         Documents:

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

                                       5
<PAGE>

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

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

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

                  (f)      Valid and Binding Obligations. The Notes, when
         executed, authenticated and issued in accordance with the Warehouse
         Loan Agreement, and the Transaction Documents (other than the Notes),
         when executed and delivered by the Servicer, the Originator and the
         Borrower, will constitute the legal, valid and binding obligations of
         the Servicer, the Originator, and the Borrower, as applicable,
         enforceable in accordance with their respective terms, except as such
         enforceability may be limited by bankruptcy, insolvency,
         reorganization, moratorium or other similar laws affecting creditors'
         rights generally and general equitable principles and public policy
         considerations as to rights of indemnification for violations of
         federal securities laws. None of the Servicer, the Originator or the
         Borrower will at any time in the future deny that the Transaction
         Documents constitute the legal, valid and binding obligations of the
         Servicer, the Originator or the Borrower, as applicable.

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

                                       6
<PAGE>

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

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

                  (j)      Accuracy of Information. Neither the Transaction
         Documents nor other information relating to the Receivables, the
         operations of the Servicer, the Originator or the Borrower (including
         servicing or origination of leases) or the financial condition of the
         Servicer, the Originator or the Borrower (collectively, the
         "Documents"), as amended, supplemented or superseded, furnished to the
         Surety Provider by the Servicer, the Originator or the Borrower
         contains any statement of a material fact by the Servicer, the
         Originator or the Borrower which was untrue or misleading in any
         material adverse respect when made. None of the Servicer, the
         Originator or the Borrower has any knowledge of circumstances that
         could reasonably be expected to cause a Material Adverse Change with
         respect to the Servicer, the Originator or the Borrower. Since the
         furnishing of the Documents, there has been no change or any
         development or event involving a prospective change known to the
         Servicer, the Originator or the Borrower that would render any of the
         Documents untrue or misleading in any material respect.

                  (k)      [RESERVED]

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

                                       7
<PAGE>

                  (m)      Solvency; Fraudulent Conveyance. The Servicer, the
         Originator and the Borrower are solvent and will not be rendered
         insolvent by the Transaction and, after giving effect to the
         Transaction, none of the Servicer, the Originator or the Borrower will
         be left with an unreasonably small amount of capital with which to
         engage in its business, nor does the Servicer, the Originator or the
         Borrower intend to incur, or believe that it has incurred, debts beyond
         its ability to pay as they mature. None of the Servicer, the Originator
         or the Borrower contemplates the commencement of insolvency,
         bankruptcy, liquidation or consolidation proceedings or the appointment
         of a receiver, liquidator, conservator, trustee or similar official in
         respect of the Servicer, the Originator or the Borrower or any of their
         assets.

                  (n)      Principal Place of Business. The principal place of
         business of each of the Originator, the Servicer and the Borrower is
         located in Tacoma, Washington.

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

         SECTION 2.02. AFFIRMATIVE COVENANTS OF THE SERVICER, THE ORIGINATOR AND
THE BORROWER For as long as Financial Pacific Leasing, LLC, or any Affiliate
thereof, is the Servicer, the Servicer, the Originator and the Borrower hereby
agree that during the Term of the Insurance Agreement, unless the Surety
Provider shall otherwise expressly consent in writing:

                  (a)      Compliance With Agreements and Applicable Laws. The
         Servicer, the Originator and the Borrower shall not be in default under
         the Transaction Documents and shall comply with all material
         requirements of any law, rule or regulation applicable to it. None of
         the Servicer, the Originator or the Borrower shall agree to any
         amendment to or modification of the terms of any Transaction Documents
         unless the Surety Provider shall have given its prior written consent
         or is a party to such amendment or modification.

                  (b)      Continued Existence. Each of the Servicer, its
         successors and assigns (except in the case that the Standby Servicer
         becomes the Servicer), the Originator, its successors and assigns and
         the Borrower and its successors and assigns, shall maintain its
         existence as a limited liability company and shall at all times
         continue to be duly organized as limited liability companies under the
         laws of their respective jurisdictions of organization and duly
         qualified and duly authorized (as described in section 2.01(a), (b) and
         (c) hereof) and shall conduct its business in accordance with the terms
         of its Organizational Documents.

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

                                       8
<PAGE>

                           (i)      Financial Statements. The Financial
                  Statements set forth in Section 9.2(a) and (b) of the
                  Warehouse Loan Agreement.

                           (ii)     Initial and Continuing Reports. On or before
                  the Closing Date, the Servicer will provide the Surety
                  Provider a copy of the magnetic tape to be delivered to the
                  Collateral Agent on the Closing Date, setting forth, as to
                  each Receivable, the information required under the definition
                  of "Schedule of Receivables" at Section 1.01 of the Warehouse
                  Loan Agreement. Thereafter, the Servicer shall deliver to the
                  Surety Provider the report required by Section 3.15 of the
                  Warehouse Loan Agreement in the manner and time set forth
                  therein.

                           (iii)    Computer Diskette. Beginning in April, 1999,
                  the Servicer will deliver to the Surety Provider on a
                  quarterly basis in electronic form reasonably acceptable to
                  the Surety Provider a quarterly summary of the information
                  provided to the Surety Provider pursuant to the second
                  sentence of clause (ii) of this Section 2.02(c) and also
                  containing the information provided in the Schedule of
                  Receivables delivered to the Collateral Agent pursuant to the
                  Warehouse Loan Agreement and described in Schedule A of each
                  Funding Request with respect to the preceding calendar
                  quarterly period.

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

                           (v)      Other Information. Promptly upon receipt
                  thereof, copies of all schedules, financial statements or
                  other similar reports delivered to or by the Servicer, the
                  Originator or the Borrower pursuant to the terms of the
                  Warehouse Loan Agreement and, promptly upon request, such
                  other data as the Surety Provider may reasonably request.

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

                  (d)      Quarterly Audits. The Borrower, the Servicer and the
         Originator shall permit, at the Servicer's and the Originator's
         expense, the Surety Provider or a third party designated by or
         acceptable to the Surety Provider to perform quarterly audits
         consisting of, but not limited to (i) a review of the Scheduled
         Payments and verification of such information against the actual check
         and the computer generated list of Receivables by name and number; (ii)
         a review of a sample of the Receivable Files and of the Servicer's
         collection and administration of the Receivables to assess compliance
         of the portfolio of Receivables with the Collection Policy and the
         Transaction Documents; and (iii) a review

                                       9
<PAGE>

         of a sample of the Originator's contract files to assess compliance
         with the Credit Policy. Such audits shall be conducted during normal
         business hours and shall not unreasonably disrupt the business of the
         Borrower, the Originator or the Servicer.

                  (e)      Compliance Certificate. The Servicer shall deliver to
         the Surety Provider, concurrently with the delivery of the financial
         statements required pursuant to Section 9.2 of the Warehouse Loan
         Agreement, one or more certificates signed by an officer of the
         Servicer, an officer of the Originator, and/or an officer of the
         Borrower as applicable authorized to execute such certificates on
         behalf of the Servicer, the Originator and the Borrower, respectively,
         stating that:

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

                           (ii)     to the best of such individual's knowledge
                  following reasonable inquiry, no Default or Event of Default
                  has occurred or, if a Default or Event of Default has
                  occurred, specifying the nature thereof and, if the Servicer
                  has a right to cure pursuant to Section 10.1 of the Warehouse
                  Loan Agreement, stating in reasonable detail (including, if
                  applicable, any supporting calculations) the steps, if any,
                  being taken by the Servicer to cure such Default or Event of
                  Default or to otherwise comply with the terms of the agreement
                  to which such Default or Event of Default relates;

                           (iii)    in the case of the financial statements
                  delivered pursuant to Section 9.2(a) of the Warehouse Loan
                  Agreement, such financial statements are complete and correct
                  in all material respects and present fairly the financial
                  position and results of operations of the Servicer, the
                  Originator and the Borrower as of the dates and for the
                  periods indicated, in accordance with generally accepted
                  accounting principles consistently applied;

                           (iv)     the Servicer has in full force and effect an
                  insurance policy in accordance with the terms and requirements
                  of Section 3.16 of the Warehouse Loan Agreement; and

                           (v)      the Financial Covenants set forth in Section
                  9.1(e) of the Warehouse Loan Agreement are currently being
                  complied with, or, if there is not such compliance, stating
                  the particulars of such non-compliance.

                  (f)      Access to Records; Discussions With Officers and
         Accountants. On an annual basis, or upon the occurrence of a Material
         Adverse Change, the Servicer, the Originator and the Borrower shall,
         upon the reasonable request of the Surety Provider, permit the Surety
         Provider or its authorized agents:

                           (i)      to inspect the books and records of the
                  Servicer, the Originator and the Borrower as they may relate
                  to the Notes, the obligations of the Servicer, the

                                       10
<PAGE>

                  Originator or the Borrower under the Transaction Documents,
                  and the Transaction;

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

                           (iii)    with the Servicer's, the Originator's or the
                  Borrower's consent, as applicable, which consent shall not be
                  unreasonably withheld, to discuss the affairs, finances and
                  accounts of the Servicer, the Originator or the Borrower with
                  the Servicer's, the Originator's or the Borrower's independent
                  accountants, provided that an officer of the Servicer, the
                  Originator or the Borrower shall have the right to be present
                  during such discussions.

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

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

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

                           (i)      the submission of any claim or the
                  initiation or threat of any legal process, litigation or
                  administrative or judicial investigation or rule making or
                  disciplinary proceeding by or against the Servicer, the
                  Originator or the Borrower that (A) could be required to be
                  disclosed to the Commission or to the Servicer's, the
                  Originator's or the Borrower's shareholders or (B) could
                  result in a Material

                                       11
<PAGE>

                  Adverse Change with respect to the Servicer, the Originator or
                  the Borrower, or the promulgation of any proceeding or any
                  proposed or final rule which would result in a Material
                  Adverse Change with respect to the Servicer, the Originator or
                  the Borrower;

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

                           (iii)    any change in the location of the
                  Servicer's, the Originator's or the Borrower's principal
                  office or any change in the location of the Servicer's, the
                  Originator's or the Borrower's books and records;

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

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

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

                  (h)      Financing Statements and Further Assurances. The
         Servicer, the Originator and the Borrower will cause to be filed all
         necessary financing statements or other instruments, and any amendments
         or continuation statements relating thereto, necessary to be kept and
         filed in such manner and in such places as may be required by law to
         preserve and protect fully the interest of the Collateral Agent in the
         Collateral to the extent required by the Warehouse Loan Agreement. The
         Servicer, the Originator and the Borrower shall, upon the request of
         the Surety Provider, from time to time, execute, acknowledge and
         deliver, or cause to be executed, acknowledged and delivered, within 10
         days of such request, such amendments hereto and such further
         instruments and take such further action as may be reasonably necessary
         to effectuate the intention, performance and

                                       12
<PAGE>

         provisions of the Transaction Documents. In addition, each of the
         Servicer, the Originator and the Borrower agrees to cooperate with S&P
         and Moody's in connection with any review of the Transaction that may
         be undertaken by S&P and Moody's after the date hereof and to provide
         all information reasonably requested by S&P or Moody's.

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

                  (j)      Redemption of the Notes. The Servicer, the Originator
         and the Borrower shall instruct the Collateral Agent, upon redemption
         or payment of the Notes pursuant to the Warehouse Loan Agreement or
         otherwise, to furnish to the Surety Provider a notice of such
         redemption and, upon a redemption or other payment of the Notes, to
         surrender the Surety Bond to the Surety Provider for cancellation.

                  (k)      Servicing of Receivables. The Servicer shall perform
         such actions with respect to the Receivables as are required by or
         provided in the Warehouse Loan Agreement. The Servicer will provide the
         Surety Provider with written notice of any proposed change or amendment
         to any Transaction Document as currently in effect, if the Surety
         Provider will not be a party to such change or amendment.

                  (l)      Maintenance of Collateral. The Servicer shall provide
         the Surety Provider with the annual opinion of counsel required by
         Section 15.2(g) of the Warehouse Loan Agreement. Each of the Servicer,
         the Originator and the Borrower will use its best efforts to cause any
         necessary recordings or filings to be made with respect to the
         Collateral.

         SECTION 2.03. NEGATIVE COVENANTS OF THE SERVICER, THE ORIGINATOR AND
THE BORROWER. The Servicer, the Originator and the Borrower hereby agree that
during the Term of the Insurance Agreement, unless the Surety Provider shall
otherwise expressly consent in writing:

                  (a)      Impairment of Rights. None of the Servicer, the
         Originator or the Borrower shall take any action, or fail to take any
         action, if such action or failure to take action may result in a
         material adverse change as described in clause (b) of the definition of
         Material Adverse Change with respect to the Servicer, the Originator or
         the Borrower, or may interfere with the enforcement of any rights of
         the Surety Provider under or with respect to the Transaction Documents.
         The Servicer, the Originator or the Borrower shall give the Surety
         Provider written notice of any such action or failure to act promptly
         upon becoming aware of such action or failure to act. The Servicer, the
         Originator and the Borrower shall furnish to the Surety Provider all
         information requested by it that is reasonably necessary to determine
         compliance with this Section (a).

                  (b)      Adverse Selection Procedure. The Servicer, the
         Originator and the Borrower shall not knowingly use any adverse
         selection procedure in selecting

                                       13
<PAGE>

         Receivables to be pledged to the Collateral Agent from the outstanding
         Receivables that qualify under the Warehouse Loan Agreement for
         inclusion in the Collateral.

                  (c)      Waiver, Amendments, Etc. Neither the Servicer, the
         Originator or the Borrower shall waive, modify or amend, or consent to
         any waiver, modification or amendment of, any of the terms, provisions
         or conditions of any of the Transaction Documents without the prior
         written consent of the Surety Provider.

                  (d)      Receivable Agreements; Charge-off Policy. Except as
         otherwise permitted in the Warehouse Loan Agreement, the Servicer, the
         Originator and the Borrower shall not alter or amend any Receivable,
         their respective collection policies or their respective charge-off
         policies in a manner that materially adversely affects the Surety
         Provider unless the Surety Provider shall have previously given its
         consent, which consent shall not be withheld unreasonably.

         SECTION 2.04. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
COLLATERAL AGENT AND STANDBY SERVICER. The Collateral Agent and the Standby
Servicer represent and warrant to, as of the Date of Issuance, and covenant with
the other parties hereto, each as to those matters relating to itself, as
follows:

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

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

                  (c)      Noncontravention. Neither the execution and delivery
         of the Transaction Documents by the the Collateral Agent or the Standby
         Servicer, the consummation of the transactions contemplated thereby nor
         the satisfaction of the terms and conditions of the Transaction
         Documents:

                                       14
<PAGE>

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

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

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

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

                  (e)      Valid and Binding Obligations. The Transaction
         Documents to which they are parties, when executed and delivered by the
         Collateral Agent and the Standby Servicer, will constitute the legal,
         valid and binding obligations of the Collateral Agent and the Standby
         Servicer, as applicable, enforceable in accordance with their
         respective terms, except as such enforceability may be limited by
         bankruptcy, insolvency, reorganization, moratorium or other similar
         laws affecting creditors' rights generally and general equitable
         principles. None of the Collateral Agent or the Standby Servicer will
         at any time in the future deny that the Transaction Documents
         constitute the legal, valid and binding obligations of the Collateral
         Agent and the Standby Servicer, as applicable.

                  (f)      Compliance With Law, Etc. No practice, procedure or
         policy employed, or proposed to be employed, by the Collateral Agent or
         the Standby Servicer in the conduct of their business violates any law,
         regulation, judgment, agreement, order or decree applicable to the
         Collateral Agent or the Standby Servicer that, if enforced, could
         reasonably be expected to result in a Material Adverse Change with
         respect to the Collateral Agent or the Standby Servicer. None of the
         Collateral Agent or the Standby Servicer is in breach of or in default
         under any applicable law or administrative regulation

                                       15
<PAGE>

         of its respective jurisdiction of organization, or any department,
         division, agency or instrumentality thereof or of the United States or
         any applicable judgment or decree or any loan agreement, note,
         resolution, certificate, agreement or other instrument to which the
         Collateral Agent or the Standby Servicer is a party or is otherwise
         subject which, if enforced, would have a material adverse effect on the
         ability of the Collateral Agent or the Standby Servicer, as the case
         may be, to perform its respective obligations under the Transaction
         Documents.

                  (g)      Transaction Documents. Each of the representations
         and warranties of the Collateral Agent and the Standby Servicer
         contained in the Transaction Documents is true and correct in all
         material respects, and the Collateral Agent and the Standby Servicer
         hereby make each such representation and warranty to, and for the
         benefit of, the Surety Provider as if the same were set forth in full
         herein.

                  (h)      Compliance and Amendments. The Collateral Agent and
         the Standby Servicer shall comply in all material respects with the
         terms and conditions of the Transaction Documents to which it is a
         party and the Collateral Agent and the Standby Servicer shall not agree
         to any amendment to or modification of the terms of any of the
         Transaction Documents to which it is a party unless the Surety Provider
         shall otherwise give its prior written consent.

                                  ARTICLE III

                      APPOINTMENT OF THE COLLATERAL AGENT

         SECTION 3.01. APPOINTMENT OF THE COLLATERAL AGENT. The Surety Provider
hereby appoints Norwest Bank Minnesota, National Association as its agent and
bailee to act on the Surety Provider's behalf as a Secured Party in accordance
with the terms of the Warehouse Loan Agreement and the other Transaction
Documents with respect to its interest in the Collateral. Norwest Bank
Minnesota, National Association hereby accepts and acknowledges such
appointment.

                                   ARTICLE IV

                         THE SURETY BOND; REIMBURSEMENT

         SECTION 4.01. ISSUANCE OF THE SURETY BOND. The Surety Provider agrees
to issue the Surety Bond on the Closing Date subject to satisfaction of the
conditions precedent set forth below:

                  (a)      Payment of Initial Premium and Expenses. The
         Servicer, the Originator and the Borrower shall agree to reimburse the
         Surety Provider for or pay directly all fees and expenses identified in
         Section 4.02 hereof as payable.

                                       16
<PAGE>

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

                  (c)      Certified Documents and Resolutions. The Surety
         Provider shall have received a copy of (i) the Organizational Documents
         of the Servicer, the Originator, and the Borrower, (ii) the resolutions
         of the Servicer's, the Originator's and the Borrower's Board of
         Managers authorizing the sale and pledge, as applicable, of the
         Receivables and the execution, delivery and performance by the
         Servicer, the Originator and the Borrower of the Transaction Documents
         and the transactions contemplated thereby, certified by the Secretary
         or an Assistant Secretary of the Servicer, the Originator and the
         Borrower (which certificate shall state that such Organizational
         Documents and resolutions are in full force and effect without
         modification on the Date of Issuance).

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

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

                  (f)      Opinions of Counsel.

                           (i)      Counsel to the Servicer, the Originator and
                  the Borrower shall have issued its favorable opinion, in form
                  and substance acceptable to the Surety Provider and its
                  counsel, regarding the limited liability company existence and
                  authority of the Servicer, the Originator and the Borrower and
                  the validity and enforceability of the Transaction Documents
                  against such parties.

                           (ii)     Counsel to the Standby Servicer and
                  Collateral Agent shall have issued its favorable opinion, in
                  form and substance acceptable to the Surety Provider and its
                  counsel, regarding the corporate existence and authority of
                  the Standby Servicer and Collateral Agent and the validity and
                  enforceability of the Transaction Documents against such
                  party.

                           (iii)    Counsel acceptable to the Surety Provider
                  shall have furnished its opinions, in form and substance
                  acceptable to the Surety Provider and its counsel,

                                       17
<PAGE>

                  regarding the sale of the Collateral, certain bankruptcy
                  issues and the tax treatment of the Notes under federal tax
                  laws.

                           (iv)     Counsel acceptable to the Surety Provider
                  shall have issued its favorable opinions, in form and
                  substance acceptable to the Surety and its counsel, regarding
                  the perfection of the Collateral Agent's interest in the
                  Collateral.

                           (v)      The Surety Provider shall have received such
                  other opinions of counsel, in form and substance acceptable to
                  the Surety Provider and its counsel, addressing such other
                  matters as the Surety Provider may reasonably request. Each
                  opinion of counsel delivered in connection with the
                  Transaction shall be addressed to and delivered to the Surety
                  Provider.

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

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

                  (i)      Issuance of Ratings. The Surety Provider shall have
         received confirmation that the risk secured by the Surety Bond
         constitutes at least an investment grade risk by S&P and Moody's.

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

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

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

                  (m)      Compliance With Premium Letter. All other terms,
         conditions and requirements of the Premium Letter shall have been
         satisfied.

         SECTION 4.02. PAYMENT OF FEES AND PREMIUM.

                                       18
<PAGE>

                  (a)      Legal and Accounting Fees. The Servicer, the
         Originator and the Borrower shall pay or cause to be paid, on the Date
         of Issuance, legal fees, disbursements and all out of pocket expenses
         incurred by the Surety Provider or agents of the Surety Provider in
         connection with the issuance of the Surety Bond and any fees of the
         Surety Provider's auditors in accordance with the terms of the Premium
         Letter.

                  (b)      Premium. In consideration of the issuance by the
         Surety Provider of the Surety Bond, the Surety Provider shall be
         entitled to receive the Premium as and when due in accordance with the
         terms of the Premium Letter, first, pursuant to the Warehouse Loan
         Agreement, and second, to the extent the amounts in subclause first are
         not sufficient, directly from the Originator. For purposes of the
         Warehouse Loan Agreement, the term "Premium Percentage" shall have the
         meaning set forth in the Premium Letter. The Premium paid hereunder or
         under the Warehouse Loan Agreement shall be nonrefundable without
         regard to whether the Surety Provider makes any payment under the
         Surety Bond or any other circumstances relating to the Notes or
         provision being made for payment of the Notes prior to maturity. The
         Servicer, the Borrower, the Originator and the Collateral Agent shall
         make all payments of Premium to be made by them by wire transfer to an
         account designated from time to time by the Surety Provider by written
         notice to the Servicer, the Borrower, the Originator and the Collateral
         Agent.

         SECTION 4.03. REIMBURSEMENT AND ADDITIONAL PAYMENT OBLIGATION.

                  (a)      In accordance with the priorities established in
         Section 4.6(b) of the Warehouse Loan Agreement, the Surety Provider
         shall be entitled to reimbursement for any payment made by the Surety
         Provider under the Surety Bond, which reimbursement shall be due and
         payable on the date that any amount is to be paid pursuant to a Notice
         (as defined in the Surety Bond), in an amount equal to the amount to be
         so paid and all amounts previously paid that remain unreimbursed,
         together with interest on any and all amounts remaining unreimbursed
         (to the extent permitted by law, if in respect of any unreimbursed
         amounts representing interest) from the date such amounts became due
         until paid in full (after as well as before judgment), at a rate of
         interest equal to the Late Payment Rate.

                  (b)      Notwithstanding anything in Section 4.03(a) to the
         contrary, the initial Servicer, the Borrower and the Originator agree
         to reimburse the Surety Provider as follows: (i) from the Originator,
         for payments made under the Surety Bond arising as a result of the
         Originator's failure to repurchase any Receivable required to be
         repurchased pursuant to Section 2.7 or Section 2.10 of the Warehouse
         Loan Agreement or Section 6.2 of the First Tier Purchase Agreement,
         together with interest on any and all amounts remaining unreimbursed
         (to the extent permitted by law, if in respect of any unreimbursed
         amounts representing interest) from the date such amounts became due
         until paid in full (after as well as before judgment), at a rate of
         interest equal to the Late Payment Rate, and (ii) from the initial
         Servicer, for payments made under the Surety Bond, arising as a result
         of (A) the Servicer's failure to deposit into the Collection Account
         any amount required to be so deposited pursuant to the Warehouse Loan
         Agreement or (B) the initial

                                       19
<PAGE>

         Servicer's failure to repurchase any Receivable required to be
         repurchased under Section 3.2 or Section 3.7 of the Warehouse Loan
         Agreement, together with interest on any and all amounts remaining
         unreimbursed (to the extent permitted by law, if in respect to any
         unreimbursed amounts representing interest) from the date such amounts
         became due until paid in full (after as well as before judgment), at a
         rate of interest equal to the Late Payment Rate.

                  (c)      The initial Servicer, the Borrower and the Originator
         agree to pay to the Surety Provider as follows: any and all charges,
         fees, costs and out of pocket expenses as may be reasonably paid or
         incurred by the Surety Provider or agent of the Surety Provider,
         including, but not limited to, reasonable attorneys' and accountants'
         fees and expenses, in connection with (i) any accounts established to
         facilitate payments under the Surety Bond to the extent the Surety
         Provider has not been immediately reimbursed on the date that any
         amount is paid by the Surety Provider under the Surety Bond, (ii) the
         enforcement, defense or preservation of any rights in respect of any of
         the Transaction Documents, including defending, monitoring or
         participating in any litigation or proceeding (including any insolvency
         or bankruptcy proceeding in respect of any Transaction participant or
         any affiliate thereof) relating to any of the Transaction Documents,
         any party to any of the Transaction Documents, in its capacity as such
         a party, or the Transaction, or (iii) any amendment, waiver or other
         action with respect to, or related to, any Transaction Document,
         whether or not executed or completed; costs and expenses shall include
         a reasonable allocation of compensation and overhead attributable to
         the time of employees of the Surety Provider spent in connection with
         the actions described in clause (ii) above, and the Surety Provider
         reserves the right to charge a reasonable fee as a condition to
         executing any waiver or consent proposed in respect of any of the
         Transaction Documents.

                  (d)      The initial Servicer, the Borrower and the Originator
         agree to pay to the Surety Provider as follows: interest on any and all
         amounts described in subsections (b), (c), (e) and (f) of this Section
         4.03 from the date payable or paid by such party until payment thereof
         in full, and interest on any and all amounts described in Section 4.02
         hereof from the date due until payment thereof in full, in each case
         payable to the Surety Provider at the Late Payment Rate per annum.

                  (e)      The initial Servicer, the Borrower and the Originator
         agree to pay to the Surety Provider as follows: any payments made by
         the Surety Provider on behalf of, or advanced to the Servicer, the
         Originator or the Borrower, respectively, including, without
         limitation, any amounts payable by the Servicer, the Originator or the
         Borrower pursuant to the Notes or any other Transaction Documents.

                  (f)      Following termination of the Warehouse Loan Agreement
         pursuant to Section 14.1 thereof, the Borrower agrees to reimburse the
         Surety Provider for any Insured Payments required to be made pursuant
         to the Surety Bond subsequent to the date of such termination.

                                       20
<PAGE>

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

         SECTION 4.04. INDEMNIFICATION; LIMITATION OF LIABILITY.

                  (a)      In addition to any and all rights of indemnification
         or any other rights of the Surety Provider pursuant hereto or under law
         or equity, the Borrower, the initial Servicer, the Originator and any
         successors thereto (other than the Standby Servicer) agree to pay, and
         to protect, indemnify and save harmless, the Surety Provider and its
         officers, directors, shareholders, employees, agents and each person,
         if any, who controls the Surety Provider within the meaning of either
         Section 15 of the Securities Act or Section 20 of the Securities
         Exchange Act from and against any and all claims, Losses, liabilities
         (including penalties), actions, suits, judgments, demands, damages,
         costs or reasonable expenses (including, without limitation, reasonable
         fees and expenses of attorneys, consultants and auditors and reasonable
         costs of investigations) or obligations whatsoever paid by the Surety
         Provider (herein collectively referred to as "Liabilities") of any
         nature arising out of or relating to the transactions contemplated by
         the Transaction Documents by reason of:

                           (i)      any act or omission of the Borrower, the
                  Servicer or the Originator, or the allegation thereof, in
                  connection with the offering, issuance, sale or delivery of
                  the Notes;

                           (ii)     the misfeasance or malfeasance of, or
                  negligence or theft committed by, any director, officer,
                  employee or agent of the Servicer, the Originator or the
                  Borrower;

                           (iii)    the violation by the Borrower, the Servicer
                  or the Originator of any federal or state trust, banking or
                  antitrust laws, rules or regulations in connection with the
                  issuance, offer and sale of the Notes or the transactions
                  contemplated by the Transaction Documents;

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

                           (v)      the breach by the Servicer, the Originator
                  or the Borrower of any of its obligations under this Insurance
                  Agreement or any of the other Transaction Documents; and

                           (vi)     the breach by the Servicer, the Originator
                  or the Borrower of any representation or warranty on the part
                  of the Servicer, the Originator or the Borrower contained in
                  the Transaction Documents or in any certificate or report
                  furnished or delivered to the Surety Provider thereunder.

                                       21
<PAGE>

This indemnity provision shall survive the termination of this Insurance
Agreement and shall survive until the statute of limitations has run on any
causes of action which arise from one of these reasons and until all suits filed
as a result thereof have been finally concluded.

                  (b)      Any party which proposes to assert the right to be
         indemnified under this Section 4.04 will, promptly after receipt of
         notice of commencement of any action, suit or proceeding against such
         party in respect of which a claim is to be made against the Servicer,
         the Originator or the Borrower under this Section 4.04, notify the
         Servicer, the Originator or the Borrower of the commencement of such
         action, suit or proceeding, enclosing a copy of all papers served. In
         case any action, suit or proceeding shall be brought against any
         indemnified party and it shall notify the Servicer, the Originator or
         the Borrower of the commencement thereof, the Servicer, the Originator
         or the Borrower shall be entitled to participate in, and, to the extent
         that it shall wish, to assume the defense thereof, with counsel
         satisfactory to such indemnified party, and after notice from the
         Servicer, the Originator or the Borrower to such indemnified party of
         its election so to assume the defense thereof, the Servicer, the
         Originator or the Borrower shall not be liable to such indemnified
         party for any legal or other expenses other than reasonable costs of
         investigation subsequently incurred by such indemnified party in
         connection with the defense thereof. The indemnified party shall have
         the right to employ its counsel in any such action the defense of which
         is assumed by the Servicer, the Originator or the Borrower in
         accordance with the terms of this subsection (c), but the fees and
         expenses of such counsel shall be at the expense of such indemnified
         party unless the employment of counsel by such indemnified party has
         been authorized by the Servicer, the Originator or the Borrower. The
         Servicer, the Originator or the Borrower shall not be liable for any
         settlement of any action or claim effected without its consent.

         SECTION 4.05. PAYMENT PROCEDURE. In the event of any payment by the
Surety Provider, the Collateral Agent, the Servicer, the Originator and the
Borrower agree to accept the voucher or other evidence of payment as prima facie
evidence of the propriety thereof and the liability therefor to the Surety
Provider. All payments to be made to the Surety Provider under this Insurance
Agreement shall be made to the Surety Provider in lawful currency of the United
States of America in immediately available funds at the notice address for the
Surety Provider as specified in Section 7.02 hereof on the date when due or as
the Surety Provider shall otherwise direct by written notice to the other
parties hereto. In the event that the date of any payment to the Surety Provider
or the expiration of any time period hereunder occurs on a day which is not a
Business Day, then such payment or expiration of time period shall be made or
occur on the next succeeding Business Day with the same force and effect as if
such payment was made or time period expired on the scheduled date of payment or
expiration date. Payments to be made to the Surety Provider under this Insurance
Agreement shall bear interest at the Late Payment Rate from the date when due to
the date paid.

                                   ARTICLE V

                               FURTHER AGREEMENTS

                                       22
<PAGE>

         SECTION 5.01. EFFECTIVE DATE; TERM OF THE INSURANCE AGREEMENT. This
Insurance Agreement shall take effect on the Date of Issuance and shall remain
in effect until the later of (a) such time as the Surety Provider is no longer
subject to a claim under the Surety Bond and the Surety Bond shall have been
surrendered to the Surety Provider for cancellation and (b) all amounts payable
to the Surety Provider by the Servicer, the Originator, the Administrative
Agent, the Collateral Agent, the Lender, the Standby Servicer, or the Borrower
or from any other source under the Transaction Documents and all amounts payable
under the Notes have been paid in full; provided, however, that the provisions
of Sections 4.02, 4.03, 4.04 and 5.06 hereof and this Section 5.01 shall survive
any termination of this Insurance Agreement.

         SECTION 5.02. FURTHER ASSURANCES AND CORRECTIVE INSTRUMENTS.

                  (a)      Excepting at such times as a default in payment under
         the Surety Bond shall exist, none of the Servicer, the Originator, the
         Administrative Agent, the Collateral Agent, the Lender, the Standby
         Servicer or the Borrower shall grant any waiver of rights under any of
         the Transaction Documents to which any of them is a party without the
         prior written consent of the Surety Provider, and any such waiver
         without the prior written consent of the Surety Provider shall be null
         and void and of no force or effect.

                  (b)      To the extent permitted by law, the Servicer, the
         Originator, the Administrative Agent, the Collateral Agent, the Lender,
         the Standby Servicer and the Borrower agree that they will, from time
         to time, execute, acknowledge and deliver, or cause to be executed,
         acknowledged and delivered, such supplements hereto and such further
         instruments as the Surety Provider may reasonably request and as may be
         reasonably required in the Surety Provider's judgment to effectuate the
         intention of or facilitate the performance of this Insurance Agreement.

                                       23
<PAGE>

         SECTION 5.03. OBLIGATIONS ABSOLUTE.

                  (a)      The obligations of the Servicer, the Originator, the
         Collateral Agent, the Standby Servicer and the Borrower hereunder shall
         be absolute and unconditional and shall be paid or performed strictly
         in accordance with this Insurance Agreement under all circumstances
         irrespective of:

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

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

                           (iii)    the existence of any claim, setoff, defense,
                  reduction, abatement or other right that the Servicer, the
                  Originator, the Administrative Agent, the Collateral Agent,
                  the Lender, the Standby Servicer or the Borrower may have at
                  any time against the Surety Provider or any other Person;

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

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

                           (vi)     any breach by the Servicer, the Originator,
                  the Administrative Agent, the Collateral Agent, the Lender,
                  the Standby Servicer or the Borrower of any representation,
                  warranty or covenant contained in any of the Transaction
                  Documents.

                  (b)      The Servicer, the Originator, the Collateral Agent,
         the Standby Servicer, the Borrower and any and all others who are now
         or may become liable for all or part of the obligations of the
         Servicer, the Originator, the Collateral Agent, the Standby Servicer or
         the Borrower under this Insurance Agreement agree to be bound by this
         Insurance Agreement and (i) to the extent permitted by law, waive and
         renounce any and all redemption and exemption rights and the benefit of
         all valuation and appraisement privileges against the indebtedness and
         obligations evidenced by any Transaction Document or by any extension
         or renewal thereof; (ii) waive presentment and demand for payment,
         notices of nonpayment and of dishonor, protest of dishonor and notice
         of protest; (iii) waive all notices in connection with the delivery and
         acceptance hereof and all other notices in connection with the
         performance, default or enforcement of any payment hereunder, except as
         required by the Transaction Documents; (iv) waive all rights of
         abatement, diminution, postponement or deduction, or any defense other
         than

                                       24
<PAGE>

         payment, or any right of setoff or recoupment arising out of any breach
         under any of the Transaction Documents by any party thereto or any
         beneficiary thereof, or out of any obligation at any time owing to the
         Servicer, the Originator, the Administrative Agent, the Collateral
         Agent, the Lender, the Standby Servicer or the Borrower; (v) agree that
         its liabilities hereunder shall, except as otherwise expressly provided
         in this Section 5.03, be unconditional and without regard to any
         setoff, counterclaim or the liability of any other Person for the
         payment hereof; (vi) agree that any consent, waiver or forbearance
         hereunder with respect to an event shall operate only for such event
         and not for any subsequent event; (vii) consent to any and all
         extensions of time that may be granted by the Surety Provider with
         respect to any payment hereunder or other provisions hereof and to the
         release of any security at any time given for any payment hereunder, or
         any part thereof, with or without substitution, and to the release of
         any Person or entity liable for any such payment; and (viii) consent to
         the addition of any and all other makers, endorsers, guarantors and
         other obligors for any payment hereunder, and to the acceptance of any
         and all other security for any payment hereunder, and agree that the
         addition of any such obligors or security shall not affect the
         liability of the parties hereto for any payment hereunder.

                  (c)      Nothing herein shall be construed as prohibiting the
         Servicer, the Originator, the Administrative Agent, the Collateral
         Agent, the Lender, the Standby Servicer or the Borrower from pursuing
         any rights or remedies it may have against any other Person in a
         separate legal proceeding.

         SECTION 5.04. ASSIGNMENTS; REINSURANCE; THIRD-PARTY RIGHTS.

                  (a)      This Insurance Agreement shall be a continuing
         obligation of the parties hereto and shall be binding upon and inure to
         the benefit of the parties hereto and their respective successors and
         permitted assigns. None of the Servicer, the Originator, the
         Administrative Agent, the Collateral Agent, the Standby Servicer or the
         Borrower may assign its rights under this Insurance Agreement, or
         delegate any of its duties hereunder, without the prior written consent
         of the Surety Provider. Any assignment made in violation of this
         Insurance Agreement shall be null and void.

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

                  (c)      In addition, the Surety Provider shall be entitled to
         assign or pledge to any bank or other lender providing liquidity or
         credit with respect to the Transaction or the obligations of the Surety
         Provider in connection therewith any rights of the Surety Provider
         under the Transaction Documents or with respect to any real or personal

                                       25
<PAGE>

         property or other interests pledged to the Surety Provider, or in which
         the Surety Provider has a security interest, in connection with the
         Transaction.

                  (d)      Except as provided herein with respect to
         participants and reinsurers, nothing in this Insurance Agreement shall
         confer any right, remedy or claim, express or implied, upon any Person,
         including, particularly, any of the Lenders, other than the Surety
         Provider, against the Servicer, the Originator, the Administrative
         Agent, Collateral Agent, the Lender, the Standby Servicer or the
         Borrower, and all the terms, covenants, conditions, promises and
         agreements contained herein shall be for the sole and exclusive benefit
         of the parties hereto and their successors and permitted assigns.
         Neither the Collateral Agent nor any Lenders shall have any right to
         payment from any Premium paid or payable hereunder or under the
         Warehouse Loan Agreement or from any other amounts paid by the
         Servicer, the Originator, the Collateral Agent, the Standby Servicer or
         the Borrower pursuant to Section 4.02, 4.03 or 4.04 hereof.

                  (e)      The Servicer, the Originator, the Borrower, the
         Collateral Agent, the Lender, the Standby Servicer and the
         Administrative Agent agree that the Surety Provider shall have all
         rights of a third-party beneficiary in respect of the Warehouse Loan
         Agreement and each other Transaction Document to which it is not a
         signing party and hereby incorporate and restate their representations,
         warranties and covenants, if any, as set forth therein for the benefit
         of the Surety Provider.

         SECTION 5.05. LIABILITY OF THE SURETY PROVIDER. Neither the Surety
Provider nor any of its officers, directors or employees shall be liable or
responsible for (a) the use that may be made of the Surety Bond by the
Administrative Agent or for any acts or omissions of the Administrative Agent in
connection therewith or (b) the validity, sufficiency, accuracy or genuineness
of documents delivered to the Surety Provider (or its Fiscal Agent) in
connection with any claim under the Surety Bond, or of any signatures thereon,
even if such documents or signatures should in fact prove to be in any or all
respects invalid, insufficient, fraudulent or forged (unless the Surety Provider
shall have actual knowledge thereof). In furtherance and not in limitation of
the foregoing, the Surety Provider (or its Fiscal Agent) may accept documents
that appear on their face to be in order, without responsibility for further
investigation.

         SECTION 5.06. PARTIES WILL NOT INSTITUTE INSOLVENCY PROCEEDINGS.

                  (a)      So long as this Agreement is in effect, and for one
         year and one day following its termination, none of the parties hereto
         will file any involuntary petition or otherwise institute any
         bankruptcy, reorganization, arrangement, insolvency or liquidation
         proceeding or other proceedings under any federal or state bankruptcy
         or similar law against the Borrower.

                  (b)      So long as this Agreement is in effect, and for one
         year and one day following the date on which the latest maturing
         commercial paper note issued by the Lender is paid, none of the parties
         hereto will file any involuntary petition or otherwise institute any
         bankruptcy, reorganization, arrangement, insolvency or liquidation

                                       26
<PAGE>

         proceeding or other proceedings under any federal or state bankruptcy
         or similar law against the Lender.

         SECTION 5.07. ADMINISTRATIVE AGENT, COLLATERAL AGENT, LENDER, STANDBY
SERVICER, BORROWER, ORIGINATOR AND SERVICER TO JOIN IN ENFORCEMENT ACTION. To
the extent necessary to enforce any right of the Surety Provider in or remedy of
the Surety Provider under any Receivable, the Administrative Agent, the
Collateral Agent, the Lender, the Borrower, the Servicer and the Originator
agree to join in any action initiated by the Collateral Agent or the Surety
Provider for the protection of such right or exercise of such remedy.

         SECTION 5.08. SUBROGATION. To the extent of any payments under the
Surety Bond, but subject to the priorities set forth in Section 4.6 of the
Warehouse Loan Agreement, the Surety Provider shall be fully subrogated to any
remedies against the Borrower, the Servicer or the Originator or in respect of
the Receivables available to the Lenders (or the Administrative Agent on behalf
of the Lenders) under the Warehouse Loan Agreement. The Collateral Agent
acknowledges such subrogation and, further, agrees to execute such instruments
prepared by the Surety Provider and to take such reasonable actions as, in the
sole judgment of the Surety Provider, are necessary to evidence such subrogation
and to perfect the rights of the Surety Provider to receive any moneys paid or
payable under the Warehouse Loan Agreement.

                                   ARTICLE VI

                               DEFAULTS; REMEDIES

         SECTION 6.01. DEFAULTS. The occurrence of any of the following events
shall constitute an Event of Default hereunder:

                  (a)      any representation or warranty made by the Servicer,
         the Originator, the Collateral Agent, the Standby Servicer or the
         Borrower hereunder or under the Transaction Documents, or in any
         certificate furnished hereunder or under the Transaction Documents,
         shall prove to be untrue or incomplete in any material respect;

                  (b)      (i) the Servicer, the Originator, the Collateral
         Agent, the Standby Servicer or the Borrower shall fail to pay when due
         any amount payable by the Servicer, the Originator, the Collateral
         Agent, the Standby Servicer or the Borrower hereunder or (ii) a
         legislative body has enacted any law that declares or a court of
         competent jurisdiction shall find or rule that any Transaction Document
         is not valid and binding on the Servicer, the Originator, the
         Collateral Agent, the Standby Servicer or the Borrower;

                  (c)      the occurrence of an "Event of Default" under the
         Warehouse Loan Agreement (as defined therein);

                  (d)      any failure on the part of the Servicer, the
         Originator, the Collateral Agent, the Standby Servicer or the Borrower
         duly to observe or perform in any material respect any other of the
         covenants or agreements on the part of the Servicer, the Originator,
         the

                                       27
<PAGE>

         Collateral Agent, the Standby Servicer or the Borrower contained in
         this Insurance Agreement or in any other Transaction Document which
         continues unremedied for a period of 30 days with respect to this
         Insurance Agreement, or, with respect to any other Transaction
         Document, beyond any cure period provided for therein, after the date
         on which written notice of such failure, requiring the same to be
         remedied, shall have been given to the Servicer, the Originator, the
         Collateral Agent, the Standby Servicer or the Borrower, as applicable,
         by the Surety Provider (with a copy to the Collateral Agent and the
         Administrative Agent) or by the Collateral Agent (with a copy to the
         Surety Provider and the Administrative Agent);

                  (e)      a decree or order of a court or agency or supervisory
         authority having jurisdiction in the premises in an involuntary case
         under any present or future federal or state bankruptcy, insolvency or
         similar law or the appointment of a conservator or receiver or
         liquidator or other similar official in any insolvency, readjustment of
         debt, marshalling of assets and liabilities or similar proceedings, or
         for the winding-up or liquidation of its affairs, shall have been
         entered against the Servicer, the Originator or the Borrower and such
         decree or order shall have remained in force undischarged or unstayed
         for a period of 90 consecutive days;

                  (f)      the Servicer, the Originator or the Borrower shall
         consent to the appointment of a conservator or receiver or liquidator
         or other similar official in any insolvency, readjustment of debt,
         marshalling of assets and liabilities or similar proceedings of or
         relating to the Servicer, the Originator or the Borrower or of or
         relating to all or substantially all of the property of either;

                  (g)      the Servicer, the Originator or the Borrower shall
         admit in writing its inability to pay its debts generally as they
         become due, file a petition to take advantage of or otherwise
         voluntarily commence a case or proceeding under any applicable
         bankruptcy, insolvency, reorganization or other similar statute, make
         an assignment for the benefit of its creditors or voluntarily suspend
         payment of its obligations; or

                  (h)      the failure of the Borrower and the Originator to
         comply with, or maintain the accuracy of, the Opinion Facts and
         Assumptions.

         SECTION 6.02. REMEDIES; NO REMEDY EXCLUSIVE.

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

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

                                       28
<PAGE>

                           (ii)     take whatever action at law or in equity as
                  may appear necessary or desirable in its judgment to collect
                  the amounts then due under the Transaction Documents or to
                  enforce performance and observance of any obligation,
                  agreement or covenant of the Servicer, the Originator, the
                  Collateral Agent, the Standby Servicer or the Borrower under
                  the Transaction Documents.

                  (b)      Unless otherwise expressly provided, no remedy herein
         conferred upon or reserved is intended to be exclusive of any other
         available remedy, but each remedy shall be cumulative and shall be in
         addition to other remedies given under the Transaction Documents or
         existing at law or in equity. No delay or omission to exercise any
         right or power accruing under the Transaction Documents upon the
         happening of any event set forth in Section 6.01 hereof shall impair
         any such right or power or shall be construed to be a waiver thereof,
         but any such right and power may be exercised from time to time and as
         often as may be deemed expedient. In order to entitle the Surety
         Provider to exercise any remedy reserved to the Surety Provider in this
         Article, it shall not be necessary to give any notice other than such
         notice as may be required in this Article VI.

         SECTION 6.03. WAIVERS.

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

                  (b)      The Surety Provider shall have the right, to be
         exercised in its complete discretion, to waive any Event of Default
         hereunder, by a writing setting forth the terms, conditions and extent
         of such waiver signed by the Surety Provider and delivered to the
         Servicer, the Originator, the Administrative Agent, the Collateral
         Agent, the Lender, the Standby Servicer and the Borrower. Unless such
         writing expressly provides to the contrary, any waiver so granted shall
         extend only to the specific event or occurrence which gave rise to the
         Event of Default so waived and not to any other similar event or
         occurrence which occurs subsequent to the date of such waiver.

                                  ARTICLE VII

                                 MISCELLANEOUS

         SECTION 7.01. AMENDMENTS, ETC. This Insurance Agreement may be amended,
modified or terminated only by written instrument or written instruments signed
by the parties hereto. No act or course of dealing shall be deemed to constitute
an amendment, modification or termination hereof.

                                       29
<PAGE>

         SECTION 7.02. NOTICES. All demands, notices and other communications to
be given hereunder shall be in writing (except as otherwise specifically
provided herein) and shall be mailed by registered mail or personally delivered
or telecopied to the recipient as follows:

                  (a)      To the Surety Provider:

                           MBIA Insurance Corporation
                           113 King Street
                           Armonk, NY  10504
                           Attention: Insured Portfolio Management-Structured
                                      Finance
                                   (IPM-SF) (Financial Pacific Funding Corp.
                                      Warehouse Facility)
                           Telecopy No.: (914) 765-3810
                           Confirmation: (914) 765-3781

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

                  (b)      To the Borrower:

                           Financial Pacific Funding, LLC
                           3901 South Fife Street
                           Tacoma, WA  98409
                           Attention: Dale A. Winter
                           Telecopy No.:  (253) 474-4444
                           Confirmation:  (253) 474-5000

                  (c)      To the Servicer and the Originator:

                           Financial Pacific Leasing, LLC
                           3901 South Fife Street
                           Tacoma, WA  98409
                           Attention: Dale A. Winter
                           Telecopy No.:  (253) 474-4444
                           Confirmation:  (253) 474-5000

                                       30
<PAGE>

                  (d)      To the Administrative Agent:

                           Bank of America National Trust and Savings
                           Association
                           231 South LaSalle Street
                           Chicago IL, 60697
                           Attention: Global Asset-Backed Securitization Group
                           NationsBanc Montgomery Securities, LLC
                           Telecopy No.:  (312) 974-8975
                           Confirmation:  (312) 828-8975

                  (e)      To the Standby Servicer and Collateral Agent

                           Norwest Bank Minnesota, National Association
                           Sixth and Marquette Avenue
                           Minneapolis, MN  55479-0070
                           Attention: Corporate Trust Department, Asset-Backed
                                      Securities
                           Telecopy No.:  (612) 667-3464
                           Confirmation:  (612) 667-8058

                  (f)      To the Lender

                           Receivables Capital Corporation
                           c/o Merrill Lynch Money Markets Inc.
                           World Financial Center - North Tower
                           250 Vesey Street -11th Floor
                           New York, NY  10281-1311

                           With a copy to:

                           Bank of America National Trust and Savings
                           Association
                           231 South LaSalle Street
                           Chicago IL, 60697
                           Attention: Global Asset-Backed Securitization Group
                                      NationaBanc Montgomery Securities, LLC
                           Telecopy No.:  (312) 974-8975
                           Confirmation:  (312)  828-8975

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

         SECTION 7.03. SEVERABILITY. In the event that any provision of this
Insurance Agreement shall be held invalid or unenforceable by any court of
competent jurisdiction, the parties hereto

                                       31
<PAGE>

agree that such holding shall not invalidate or render unenforceable any other
provision hereof. The parties hereto further agree that the holding by any court
of competent jurisdiction that any remedy pursued by any party hereto is
unavailable or unenforceable shall not affect in any way the ability of such
party to pursue any other remedy available to it.

         SECTION 7.04. GOVERNING LAW. THIS INSURANCE AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO CHOICE OF LAW PROVISIONS (OTHER THAN SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW).

         SECTION 7.05. CONSENT TO JURISDICTION.

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

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

                  (c)      Except as provided in Section 5.06 herein, nothing
         contained in this Insurance Agreement shall limit or affect the Surety
         Provider's right to serve process in any other manner permitted by law
         or to start legal proceedings relating to any of the Transaction
         Documents against any party hereto or its or their property in the
         courts of any jurisdiction.

         SECTION 7.06. CONSENT OF THE SURETY PROVIDER. In the event that the
consent of the Surety Provider is required under any of the Transaction
Documents, the determination whether to grant or withhold such consent shall be
made by the Surety Provider in its sole discretion without any

                                       32
<PAGE>

         implied duty towards any other Person except in those instances where
         this Agreement or such other Transaction Document expressly requires
         reasonable discretion.

         SECTION 7.07. COUNTERPARTS. This Insurance Agreement may be executed in
counterparts by the parties hereto, and all such counterparts shall constitute
one and the same instrument.

         SECTION 7.08. HEADINGS. The headings of Articles and Sections and the
Table of Contents contained in this Insurance Agreement are provided for
convenience only. They form no part of this Insurance Agreement and shall not
affect its construction or interpretation. Unless otherwise indicated, all
references to Articles and Sections in this Insurance Agreement refer to the
corresponding Articles and Sections of this Insurance Agreement.

         SECTION 7.09. TRIAL BY JURY WAIVED. Each party hereto hereby waives, to
the fullest extent permitted by law, any right to a trial by jury in respect of
any litigation arising directly or indirectly out of, under or in connection
with any of the Transaction Documents or any of the transactions contemplated
thereunder. Each party hereto (a) certifies that no representative, agent or
attorney of any party hereto has represented, expressly or otherwise, that it
would not, in the event of litigation, seek to enforce the foregoing waiver and
(b) acknowledges that it has been induced to enter into the Transaction
Documents to which it is a party by, among other things, this waiver.

         SECTION 7.10. LIMITED LIABILITY. No recourse under any Transaction
Document shall be had against, and no personal liability shall attach to, any
officer, employee, director, affiliate or shareholder of any party hereto, as
such, by the enforcement of any assessment or by any legal or equitable
proceeding, by virtue of any statute or otherwise in respect of any of the
Transaction Documents, the Notes or the Surety Bond, it being expressly agreed
and understood that each Transaction Document is solely a corporate obligation
or limited liability company obligation, as applicable, of each party hereto,
and that any and all personal liability, either at common law or in equity, or
by statute or constitution, of every such officer, employee, director, affiliate
or shareholder for breaches by any party hereto of any obligations under any
Transaction Document is hereby expressly waived as a condition of and in
consideration for the execution and delivery of this Insurance Agreement.

         SECTION 7.11. ENTIRE AGREEMENT. The Transaction Documents and the
Surety Bond set forth the entire agreement between the parties with respect to
the subject matter thereof, and this Insurance Agreement supersedes and replaces
any agreement or understanding that may have existed between the parties prior
to the date hereof in respect of the subject matter hereof.

                    [REMAINDER OF PAGE INTENTIONALLY BLANK;
                            SIGNATURE PAGE FOLLOWS]

                                       33
<PAGE>

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

                                          MBIA INSURANCE CORPORATION

                                          By /s/ MBIA INSURANCE CORPORATION
                                             ----------------------------------
                                          Title
                                                -------------------------------

                                          FINANCIAL PACIFIC LEASING, LLC, as
                                          Originator and as Servicer

                                          By /s/ Dale A. Winter
                                             ----------------------------------
                                          Title Chief Financial Officer

                                          FINANCIAL PACIFIC FUNDING, LLC, as
                                          Borrower

                                          By /s/ Dale A. Winter
                                             ----------------------------------
                                          Title Chief Financial Officer

                                          NORWEST BANK MINNESOTA, NATIONAL
                                          ASSOCIATION, as Standby Servicer and
                                          Collateral Agent

                                          By /s/ Stephen P. Seitz
                                             ----------------------------------
                                          Title Assistant Vice President

<PAGE>

                                          BANK OF AMERICA NATIONAL TRUST AND
                                          SAVINGS ASSOCIATION, as Administrative
                                          Agent and Bank Agent

                                          By /s/ BANK OF AMERICA NATIONAL TRUST
                                             ----------------------------------
                                          AND SAVINGS ASSOCIATION
                                          -------------------------------------
                                          Title
                                                -------------------------------

                                          RECEIVABLES CAPITAL CORPORATION, as
                                          Lender

                                          By /s/ RECEIVABLES CAPITAL CORPORATION
                                             -----------------------------------
                                          Title
                                                --------------------------------