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                       NATIONAL AUTO FINANCE 1998-1 TRUST

                    5.88% AUTOMOBILE RECEIVABLES-BACKED NOTES


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                                    INDENTURE

                          DATED AS OF DECEMBER 15, 1997



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                          HARRIS TRUST AND SAVINGS BANK

                  INDENTURE TRUSTEE AND TRUST COLLATERAL AGENT





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                                TABLE OF CONTENTS

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                                                                         ----


                                    ARTICLE I

                   DEFINITIONS AND INCORPORATION BY REFERENCE


SECTION 1.1         Definitions...............................................2
SECTION 1.2         Incorporation by Reference of the Trust Indenture Act.....9
SECTION 1.3         Rules of Construction.....................................9
SECTION 1.4         Action by or Consent of Noteholders......................10
SECTION 1.5         Material Adverse Effect..................................10
SECTION 1.6         Conflict with TIA........................................10

                                   ARTICLE II

                                    THE NOTES


SECTION 2.1         Form.....................................................10
SECTION 2.2         Execution, Authentication and Delivery...................11
SECTION 2.3         Temporary Notes..........................................11
SECTION 2.4         Registration; Registration of Transfer and Exchange......12
SECTION 2.5         Mutilated, Destroyed, Lost or Stolen Notes...............13
SECTION 2.6         Persons Deemed Owner.....................................14
SECTION 2.7         Payment of Principal and Interest; Defaulted Interest....14
SECTION 2.8         Cancellation.............................................15
SECTION 2.9         Release of Collateral....................................16
SECTION 2.10        Book-Entry Notes.........................................16
SECTION 2.11        Notices to Clearing Agency...............................17
SECTION 2.12        Definitive Notes.........................................17

                                   ARTICLE III

                                    COVENANTS


SECTION 3.1         Payment of Principal and Interest........................18
SECTION 3.2         Maintenance of Office or Agency..........................18
SECTION 3.3         Money for Payments to be Held in Trust...................18
SECTION 3.4         Existence................................................20
SECTION 3.5         Protection of Trust Property.............................20
SECTION 3.6         Opinions as to Trust Property............................21
SECTION 3.7         Performance of Obligations; Servicing of Receivables.....21
SECTION 3.8         Negative Covenants.......................................22
SECTION 3.9         Annual Statement as to Compliance........................23
SECTION 3.10        Trust May Consolidate, Etc. Only on Certain Terms........23
SECTION 3.11        [Reserved]...............................................23
SECTION 3.12        No Other Business........................................23
SECTION 3.13        No Borrowing.............................................24
SECTION 3.14        Servicer's Obligations...................................24
SECTION 3.15        Guarantees, Loans, Advances and Other Liabilities........24
SECTION 3.16        Capital Expenditures.....................................24
SECTION 3.17        Compliance with Laws.....................................24
SECTION 3.18        Restricted Payments......................................24
SECTION 3.19        Notice of Events of Default..............................25
SECTION 3.20        Further Instruments and Acts.............................25
SECTION 3.21        Amendments of Sale and Servicing Agreement and Trust 
                      Agreement..............................................25
SECTION 3.22        Income Tax Characterization..............................25

                                   ARTICLE IV

                           SATISFACTION AND DISCHARGE


SECTION 4.1         Satisfaction and Discharge of Indenture..................25
SECTION 4.2         Application of Trust Money...............................26
SECTION 4.3         Repayment of Monies Held by Note Paying Agent............27

                                    ARTICLE V

                                    REMEDIES


SECTION 5.1         Events of Default........................................27
SECTION 5.2         Rights Upon Event of Default.............................29
SECTION 5.3         Collection of Indebtedness and Suits for Enforcement
                       by Indenture Trustee..................................30
SECTION 5.4         Remedies.................................................33
SECTION 5.5         Optional Preservation of the Receivables.................34
SECTION 5.6         Priorities...............................................35
SECTION 5.7         Limitation of Suits......................................36
SECTION 5.8         Unconditional Rights of Noteholders To Receive Principal
                       and Interest..........................................36
SECTION 5.9         Restoration of Rights and Remedies.......................37
SECTION 5.10        Rights and Remedies Cumulative...........................37
SECTION 5.11        Delay or Omission Not a Waiver...........................37
SECTION 5.12        Control by Noteholders...................................37
SECTION 5.13        Waiver of Past Defaults..................................38
SECTION 5.14        Undertaking for Costs....................................38
SECTION 5.15        Waiver of Stay or Extension Laws.........................38
SECTION 5.16        Action on Notes..........................................39
SECTION 5.17        Performance and Enforcement of Certain Obligations.......39
SECTION 5.18        Subrogation..............................................39
SECTION 5.19        Preference Claims........................................40

                                   ARTICLE VI

              THE INDENTURE TRUSTEE AND THE TRUST COLLATERAL AGENT


SECTION 6.1         Duties of Indenture Trustee..............................41
SECTION 6.2         Rights of Indenture Trustee and the Trust Collateral 
                       Agent.................................................43
SECTION 6.3         Individual Rights of Indenture Trustee...................44
SECTION 6.4         Indenture Trustee's Disclaimer...........................44
SECTION 6.5         Notice of Defaults.......................................45
SECTION 6.6         Reports by Indenture Trustee to Holders..................45
SECTION 6.7         Compensation and Indemnity...............................45
SECTION 6.8         Replacement of Indenture Trustee.........................46
SECTION 6.9         Successor Indenture Trustee by Merger....................47
SECTION 6.10        Appointment of Co-Indenture Trustee or Separate Indenture
                       Trustee...............................................48
SECTION 6.11        Eligibility: Disqualification............................49
SECTION 6.12        Preferential Collection of Claims Against Trust..........49
SECTION 6.13        Appointment and Powers...................................49
SECTION 6.14        Performance of Duties....................................50
SECTION 6.15        Limitation on Liability..................................50
SECTION 6.16        Reliance Upon Documents..................................51
SECTION 6.17        Successor Trust Collateral Agent.........................51
SECTION 6.18        Compensation.............................................52
SECTION 6.19        Representations and Warranties of the Indenture Trustee
                       and the Trust Collateral Agent........................52
SECTION 6.20        Waiver of Setoffs........................................53
SECTION 6.21        Control by the Controlling Party.........................51
SECTION 6.22        Compensation.............................................52


                                   ARTICLE VII

                         NOTEHOLDERS' LISTS AND REPORTS


SECTION 7.1         Trust To Furnish To Indenture Trustee Names and Addresses of
                       Noteholders............................................54
SECTION 7.2         Preservation of Information; Communications to Noteholders54
SECTION 7.3         Reports by Trust..........................................54
SECTION 7.4         Reports by Indenture Trustee..............................55

                                  ARTICLE VIII

                      ACCOUNTS, DISBURSEMENTS AND RELEASES


SECTION 8.1         Collection of Money......................................55
SECTION 8.2         Release of Collateral....................................56
SECTION 8.3         Opinion of Counsel.......................................56

                                   ARTICLE IX

                             SUPPLEMENTAL INDENTURES


SECTION 9.1         Supplemental Indentures Without Consent of Noteholders...56
SECTION 9.2         Supplemental Indentures With Consent of Noteholders......58
SECTION 9.3         Execution of Supplemental Indentures.....................59
SECTION 9.4         Effect of Supplemental Indenture.........................59
SECTION 9.5         Conformity With Trust Indenture Act......................60
SECTION 9.6         Reference in Notes to Supplemental Indentures............60

                                    ARTICLE X

                               REDEMPTION OF NOTES


SECTION 10.1        Redemption...............................................60
SECTION 10.2        Form of Redemption Notice................................61
SECTION 10.3        Notes Payable on Redemption Date.........................61

                                   ARTICLE XI

                                  MISCELLANEOUS


SECTION 11.1        Compliance Certificates and Opinions, etc................62
SECTION 11.2        Form of Documents Delivered to Indenture Trustee.........64
SECTION 11.3        Acts of Noteholders......................................64
SECTION 11.4        Notices, etc. to Indenture Trustee, Trust and 
                      Rating Agencies........................................65
SECTION 11.5        Notices to Noteholders; Waiver...........................66
SECTION 11.6        Alternate Payment and Notice Provisions..................67
SECTION 11.7        Conflict with Trust Indenture Act........................67
SECTION 11.8        Effect of Headings and Table of Contents.................67
SECTION 11.9        Successors and Assigns...................................67
SECTION 11.10       Separability.............................................67
SECTION 11.11       Benefits of Indenture....................................67
SECTION 11.12       Legal Holidays...........................................68
SECTION 11.13       Governing Law............................................68
SECTION 11.14       Counterparts.............................................68
SECTION 11.15       Recording of Indenture...................................68
SECTION 11.16       Trust Obligation.........................................68
SECTION 11.17       No Petition..............................................69
SECTION 11.18       Inspection...............................................69
SECTION 11.19       Limitation of Liability..................................69


EXHIBIT

Exhibit A -- Form of Note



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         INDENTURE dated as of December 15, 1997, between NATIONAL AUTO FINANCE
1998-1 TRUST, a Delaware business trust (the "Trust"), and HARRIS TRUST AND
SAVINGS BANK, an Illinois banking corporation, as indenture trustee (the
"Indenture Trustee") and Trust Collateral Agent.

         Each party agrees as follows for the benefit of the other party and for
the equal and ratable benefit of the Holders of the Trust's 5.88% Automobile
Receivables-Backed Notes (the "Notes"):

         As security for the payment and performance by the Trust of its
obligations under this Indenture and the Notes, the Trust has agreed to assign
the Collateral (as defined below) to the Trust Collateral Agent for the benefit
of the Indenture Trustee on behalf of the Noteholders.

         Financial Security Assurance Inc. (the "Insurer") has issued and
delivered a financial guaranty insurance policy, dated the Closing Date (with
endorsements, the "Note Policy"), pursuant to which the Insurer guarantees
Scheduled Payments, as defined in the Note Policy (the "Scheduled Payments").

         As an inducement to the Insurer to issue and deliver the Note Policy,
the Trust and the Insurer have executed and delivered the Insurance and
Indemnity Agreement, dated as of January 20, 1998 (as amended, supplemented,
restated or otherwise modified from time to time, the "Insurance Agreement"),
among the Insurer, the Trust, National Auto Finance Company, Inc. ("NAFI") and
National Financial Auto Funding Trust.

         As an additional inducement to the Insurer to issue the Note Policy,
and as security for the performance by the Trust of the Insurer Trust Secured
Obligations and as security for the performance by the Trust of the Trustee
Trust Secured Obligations, the Trust has agreed to assign the Collateral (as
defined below) to the Trust Collateral Agent for the benefit of the Trust
Secured Parties, as their respective interests may appear.


                                 GRANTING CLAUSE

         The Trust hereby Grants to the Trust Collateral Agent at the Closing
Date, for the benefit of the Trust Secured Parties all of the Trust's right,
title and interest in and to (a) the Receivables and all monies received thereon
on or after the applicable Cut-off Date (including amounts due on or before the
applicable Cut-off Date but received by NAFI, the Seller or the Issuer on or
after the applicable Cut-off Date); (b) any proceeds and the right to receive
proceeds with respect to the Receivables from claims on any physical damage,
credit life or disability insurance policies or other insurance policies
covering Financed Vehicles or Obligors, including rebates of insurance premiums
relating to the Receivables and any proceeds from the liquidation of the
Receivables; (c) all rights against Dealers pursuant to Dealer Agreements or
against Originators pursuant to Originator Agreements; (d) the related
Receivables Files and any and all other documents that NAFI keeps on file in
<PAGE>

accordance with its customary procedures relating to the Receivables, the
Obligors or the Financed Vehicles; (e) property (including the right to receive
future Liquidation Proceeds) that secures a Receivable and that has been
acquired by or on behalf of the Trust pursuant to liquidation of such
Receivable; (f) all funds on deposit from time to time in the Trust Accounts
(less all investments and proceeds thereof), and all rights of the Issuer
therein; (g) the rights and benefits, but none of its obligations or burdens,
under the Conveyance Agreements, including the delivery requirements,
representations and warranties and the cure and repurchase obligations of NAFI
under the Purchase Agreement; and (h) the proceeds of any and all of the
foregoing.

         The foregoing Grant is made in trust to the Trust Collateral Agent, for
the benefit first, of the Indenture Trustee on behalf of the Holders of the
Notes, and second, for the benefit of the Insurer. The Trust Collateral Agent
hereby acknowledges such Grant, accepts the trusts under this Indenture.

                                    ARTICLE I

                   DEFINITIONS AND INCORPORATION BY REFERENCE

         SECTION 1.1 Definitions. Except as otherwise specified herein, the
following terms have the respective meanings set forth below for all purposes of
this Indenture. Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to them in the Sale and Servicing Agreement.

         Act:  As defined in Section 11.3(a) hereof.

         Affiliate: With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing. A Person shall not be
deemed to be an Affiliate of any person solely because such other Person has the
contractual right or obligation to manage such Person unless such other Person
controls such Person through equity ownership or otherwise.

         Authorized Officer: With respect to the Trust and the Servicer, any
officer or agent acting pursuant to a power of attorney of the Owner Trustee or
the Servicer, as applicable, who is authorized to act for the Owner Trustee or
the Servicer, as applicable, in matters relating to the Trust and who is
identified on the list of Authorized Officers delivered by each of the Owner
Trustee and the Servicer to the Indenture Trustee on the Closing Date (as such
list may be modified or supplemented from time to time thereafter).

         Book Entry Notes: A beneficial interest in the Notes, ownership and
transfers of which shall be made through book entries by a Clearing Agency as
described in Section 2.10 hereof.

         Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a
day on which commercial banks in Florida, Illinois, Delaware or the state of New
York are authorized or obligated by law, executive order or governmental decree
to be closed.

         Certificate of Trust: The certificate of trust of the Trust
substantially in the form of Exhibit B to the Trust Agreement.

                                       2
<PAGE>

         Clearing Agency: An organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act.

         Clearing Agency Participant: A broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.

         Closing Date:  January 20, 1998.

         Collateral:  As defined in the Granting Clause hereof.

         Controlling Party: The Insurer, so long as no Insurer Default shall
have occurred and be continuing, and the Indenture Trustee, for so long as an
Insurer Default shall have occurred and be continuing.

         Conveyance Agreements: The Sale and Servicing Agreement, the Sale
Agreement, the Assignment Agreement and the Purchase and Contribution Agreement.

         Corporate Trust Office: The principal office of the Indenture Trustee,
at which at any particular time its corporate trust business shall be
administered, which office at date of the execution of this Agreement is located
at 311 West Monroe Street, 12th Floor, Chicago, Illinois 60606, Attention:
Indenture Trust Division or at such other address as the Indenture Trustee may
designate from time to time by notice to the Noteholders, the Insurer, the
Servicer and the Trust, or the principal corporate trust office of any successor
Indenture Trustee (the address of which the successor Indenture Trustee will
notify the Noteholders and the Trust).

         Default: Any occurrence that is, or with notice or the lapse of time or
both would become, an Event of Default.

         Definitive Notes:  As defined in Section 2.10 hereof.

         Event of Default:  As defined in Section 5.1 hereof.

         Exchange Act:  The Securities Exchange Act of 1934, as amended.

         Final Scheduled Distribution Date: The Distribution Date occurring in
May, 2004.

         Grant: Means mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create, grant a lien upon and a
security interest in and right of set-off against, deposit, set over and confirm
pursuant to this Indenture. A Grant of the Collateral or of any other agreement
or instrument shall include all rights, powers and options (but none of the
obligations) of the Granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments in respect of the Collateral and all other monies payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
proceedings in the name of the Granting party or otherwise and generally to do
and receive anything that the Granting party is or may be entitled to do or
receive thereunder or with respect thereto.

                                       3
<PAGE>

         Holder or Noteholder: The Person in whose name a Note is registered on
the Note Register.

         Indebtedness: With respect to any Person at any time, (a) indebtedness
or liability of such Person for borrowed money whether or not evidenced by
bonds, debentures, notes or other instruments, or for the deferred purchase
price of property or services (including trade obligations); (b) obligations of
such Person as lessee under leases which should have been or should be, in
accordance with generally accepted accounting principles, recorded as capital
leases; (c) current liabilities of such Person in respect of unfunded vested
benefits under plans covered by Title IV of ERISA; (d) obligations issued for or
liabilities incurred on the account of such Person; (e) obligations or
liabilities of such Person arising under acceptance facilities; (f) obligations
of such Person under any guarantees, endorsements (other than for collection or
deposit in the ordinary course of business) and other contingent obligations to
purchase, to provide funds for payment, to supply funds to invest in any Person
or otherwise to assure a creditor against loss; (g) obligations of such Person
secured by any lien on property or assets of such Person, whether or not the
obligations have been assumed by such Person; or (h) obligations of such Person
under any interest rate or currency exchange agreement.

         Indenture: This Indenture as amended and supplemented from time to
time.

         Indenture Trustee: Harris Trust and Savings Bank, an Illinois banking
corporation, not in its individual capacity but as indenture trustee under this
Indenture, or any successor indenture trustee under this Indenture.

         Independent: When used with respect to any specified Person, that the
person (a) is in fact independent of the Trust, any other obligor upon the
Notes, the Seller and any Affiliate of any of the foregoing persons, (b) does
not have any direct financial interest or any material in direct financial
interest in the Trust, any such other obligor, the Seller or any Affiliate of
any of the foregoing Persons and (c) is not connected with the Trust, any such
other obligor, the Seller or any Affiliate of any of the foregoing Persons as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions.

         Independent Certificate: A certificate or opinion to be delivered to
the Trust Collateral Agent and the Indenture Trustee under the circumstances
described in, and otherwise complying with, the applicable requirements of
Section 11.1 hereof, prepared by an Independent appraiser or other expert
appointed pursuant to a Trust Order and approved by the Trust Collateral Agent
in the exercise of reasonable care, and such opinion or certificate shall state
that the signer has read the definition of "Independent" in this Indenture and
that the signer is Independent within the meaning thereof.

         Initial Cut-off Date:  December 15, 1997.

         Insurance Agreement Indenture Cross Default: As defined in the
Insurance Agreement.
                                       4

<PAGE>

         Insurer Trust Secured Obligations: All amounts and obligations which
the Trust may at any time owe to or on behalf of the Insurer under this
Indenture, the Insurance Agreement or any other Transaction Document.

         Interest Rate: 5.88% per annum, computed on the basis of a 360-day year
consisting of twelve 30-day months.

         Internal Revenue Code: The Internal Revenue Code of 1986, as amended
from time to time, and Treasury Regulations promulgated thereunder.

         Note or Notes: The 5.88% Automobile Receivables-Backed Notes,
substantially in the form of Exhibit A.

         Note Owner: With respect to a Book-Entry Note, the person who is the
owner of such Book-Entry Note, as reflected on the books of the Clearing Agency,
or on the books of a Person maintaining an account with such Clearing Agency
(directly as a Clearing Agency Participant or as an indirect participant, in
each case in accordance with the rules of such Clearing Agency).

         Note Paying Agent: The Indenture Trustee or any other Person that meets
the eligibility standards for the Indenture Trustee specified in Section 6.11
and is authorized by the Trust to make payments to and distributions from the
Collection Account and the Note Distribution Account, including payment of
principal of or interest on the Notes on behalf of the Trust.

         Note Policy: The insurance policy issued by the Insurer with respect to
the Notes, including any endorsements thereto.

         Note Prepayment Amount: As of the Distribution Date on or immediately
following the last day of the Pre-Funding Period, after giving effect to any
transfer of Additional Receivables on such date, an amount equal to the
remaining Pre-Funded Amount in the Pre-Funding Account on the Mandatory
Redemption Date.

         Note Register and Note Registrar:  As defined in Section 2.4 hereof.

         Officer's Certificate: A certificate signed by any Authorized Officer
of the Trust, under the circumstances described in, and otherwise complying
with, the applicable requirements of Section 11.1 and TIA ss.314, and delivered
to the Indenture Trustee. Unless otherwise specified, any reference in this
Indenture to an Officer's Certificate shall be to an Officer's Certificate of
any Authorized Officer of the Trust. Each certificate with respect to compliance
with a condition or covenant provided for in this Agreement shall include (1) a
statement that the Authorized Officer signing the certificate has read such
covenant or condition; (2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements contained in such
certificate are based; (3) a statement that in the opinion of such person, he
has made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition has
been complied with; and (4) a statement as to whether or not, in the opinion of
such person, such condition or covenant has been complied with.

                                       5
<PAGE>

         Opinion of Counsel: One or more opinions of counsel who may, except as
otherwise expressly provided in this Indenture, be employees of or counsel to
the Trust and, if addressed to the Insurer, satisfactory to the Insurer, and
which shall comply with any applicable requirements of Section 11.1, and if
addressed to the Insurer, satisfactory to the Insurer.

         Outstanding: As of the date of determination, all Notes theretofore
authenticated and delivered under this Indenture except:

                  (i)  Notes  theretofore  canceled by the Note  Registrar or 
         delivered to the Note Registrar for cancellation;

                  (ii) Notes or portions thereof the payment for which money in
         the necessary amount has been theretofore deposited with the Indenture
         Trustee or any Note Paying Agent in trust for the Holders of such Notes
         (provided, however, that if such Notes are to be redeemed, notice of
         such redemption has been duly given pursuant to this Indenture or
         provision therefor, satisfactory to the Indenture Trustee); and

                  (iii) Notes in exchange for or in lieu of other Notes which
         have been authenticated and delivered pursuant to this Indenture unless
         proof satisfactory to the Indenture Trustee is presented that any such
         Notes are held by a bona fide purchaser;

provided, however, that Notes which have been paid with proceeds of the Note
Policy shall continue to remain Outstanding for purposes of this Indenture until
the Insurer has been paid as subrogee hereunder or reimbursed pursuant to the
Insurance Agreement as evidenced by a written notice from the Insurer delivered
to the Indenture Trustee, and the Insurer shall be deemed to be the Holder
thereof to the extent of any payments thereon made by the Insurer; provided,
further, that in determining whether the Holders of the requisite Outstanding
Amount of the Notes have given any request, demand, authorization, direction,
notice, consent or waiver hereunder or under any Transaction Document, Notes
owned by the Trust, any other obligor upon the Notes, the Seller or any
Affiliate of any of the foregoing Persons shall be disregarded and deemed not to
be Outstanding, except that, in determining whether the Indenture Trustee shall
be protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Notes that a Responsible Officer of the
Indenture Trustee either actually knows to be so owned or has received written
notice thereof shall be so disregarded. Notes so owned that have been pledged in
good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Indenture Trustee the pledgees right so to act with respect
to such Notes and that the pledgee is not the Trust, any other obligor upon the
Notes, the Seller or any Affiliate of any of the foregoing Persons.

         Outstanding Amount: The aggregate principal amount of all Notes
Outstanding at the date of determination.

         Predecessor Note: With respect to any particular Note, every previous
Note evidencing all or a portion of the same debt as that evidenced by such
particular Note; and, for the purpose of this definition, any Note authenticated

                                       6
<PAGE>

and delivered under Section 2.5 in lieu of a mutilated, lost, destroyed or
stolen Note shall be deemed to evidence the same debt as the mutilated, lost,
destroyed or stolen Note.

         Preference Claim:  As defined in Section 5.19(b) hereof.

         Proceeding: Any suit in equity, action at law or other judicial or
administrative proceeding.

         Rating Agency: Each of Moody's and Standard & Poor's, so long as such
Persons maintain a rating on the Notes; and if either Moody's or Standard &
Poor's no longer maintains a rating on the Notes, such other nationally
recognized statistical rating organization selected by the Seller and, so long
as an Insurer Default shall not have occurred and be continuing, acceptable to
the Insurer.

         Rating Agency Condition: With respect to any action, that each Rating
Agency shall have been given 10 days' (or such shorter period as shall be
acceptable to each Rating Agency) prior notice thereof and that each of the
Rating Agencies shall have notified the Seller, the Servicer, the Insurer, the
Indenture Trustee, the Owner Trustee and the Trust in writing that such action
will not result in a reduction or withdrawal of the then current rating of the
Notes.

         Record Date: With respect to a Distribution Date or Redemption Date,
the close of business on the Business Day immediately preceding such
Distribution Date or Redemption Date.

         Redemption Date: In the case of a redemption of the Notes pursuant to
Section 10.1(a) or a payment to Noteholders pursuant to Section 10.1(b), the
Distribution Date specified by the Servicer or the Trust pursuant to Section
10.1(a) or (b) as applicable.

         Redemption Price: (a) In the case of a redemption of the Notes pursuant
to Section 10.1(a), an amount equal to the unpaid principal amount of the then
outstanding principal amount of each class of Notes being redeemed plus accrued
and unpaid interest thereon to but excluding the Redemption Date, or (b) in the
case of a payment made to Noteholders pursuant to Section 10.1(b), the amount on
deposit in the Note Distribution Account, but not in excess of the amount
specified in clause (a) above.

         Responsible Officer: With respect to the Indenture Trustee, the Trust
Collateral Agent or the Owner Trustee (as defined in the Trust Agreement), any
officer within the Corporate Trust Office of the Indenture Trustee or the Owner
Trustee, as the case may be, including any Managing Director, Vice President,
Assistant Vice President, Assistant Treasurer, Assistant Secretary or any other
officer of the Indenture Trustee or the Owner Trustee, as the case may be,
customarily performing functions similar to those performed by any of the above
designated officers, and also, with respect to a particular matter, any other
officer to whom such matter is referred because of such officer's knowledge of
and familiarity with the particular subject.

         Sale and Servicing Agreement: The Sale and Servicing Agreement dated as
of December 15, 1997, among National Financial Auto Funding Trust, as Seller,
National Auto Finance Company, Inc., as Servicer, the Trust and the Trust
Collateral Agent, as the same may be amended, supplemented, restated or
otherwise modified from time to time in accordance with the terms thereof.

                                       7
<PAGE>


         Scheduled Payments:  As defined in the Note Policy.

         Service Contract: With respect to a Financed Vehicle, the agreement, if
any, financed under the related Receivable that provides for the repair of such
Financed Vehicle.

         State: Any one of the 50 states of the United States of America or the
District of Columbia.

         Transaction Documents:  As defined in the Insurance Agreement.

         Termination Date: The latest of (i) the expiration of the Note Policy
and the return of the Note Policy to the Insurer for cancellation, (ii) the date
on which the Insurer shall have received payment and performance of all Insurer
Trust Secured obligations, and (iii) the date on which the Indenture Trustee
shall have received payment and performance of all Trustee Trust Secured
Obligations.

         Trust: The party named as such in this Indenture until a successor
replaces it and, thereafter, means the successor and, for purposes of any
provision contained herein and required by the TIA, each other obligor on the
Notes.

         Trust Collateral Agent: Initially, Harris Trust and Savings Bank, in
its capacity as trust collateral agent on behalf of the Trust Secured Parties,
including its successors in interest, until and unless a successor Person shall
have become the Trust Collateral Agent pursuant to Section 6.17 hereof, and
thereafter "Trust Collateral Agent" shall mean such successor Person.

         Trust Indenture Act or TIA: The Trust Indenture Act of 1939, as amended
and as in force on the date hereof, unless otherwise specifically provided.

         Trust Order and Trust Request: A written order or request signed in the
name of the Trust by any one of its Authorized Officers and delivered to the
Indenture Trustee.

         Trust Property: All money, instruments, rights and other property that
are subject or intended to be subject to the lien and security interest of this
Indenture for the benefit of the Noteholders (including all property and
interests Granted to the Trust Collateral Agent), including all proceeds
thereof, as more fully set forth in the Granting Clause hereof.

         Trust Secured Obligations: The Insurer Trust Secured Obligations and
the Trustee Trust Secured Obligations.

         Trust Secured Parties: Each of the Indenture Trustee in respect of the
Trustee Trust Secured Obligations and the Insurer in respect of the Insurer
Trust Secured Obligations.

                                       8
<PAGE>

         Trustee Trust Secured Obligations: All amounts and obligations which
the Trust may at any time owe to or on behalf of the Indenture Trustee for the
benefit of the Noteholders under this Indenture or the Notes.

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

         SECTION 1.2 Incorporation by Reference of the Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:

         "Commission" means the Securities and Exchange Commission.

         "indenture securities" means the Notes.

         "indenture security holder" means a Noteholder.

         "indenture to be qualified" means this Indenture.

         "indenture trustee" or "institutional trustee" means the Indenture
Trustee.

         "obligor" on the indenture securities means the Trust.

         All other TIA terms used in this Indenture that are defined by the TIA,
or defined by Commission rule have the meaning assigned to them by such
definitions.

         SECTION 1.3 Rules of Construction. Unless the context otherwise
requires:
                         (i) a term has the meaning assigned to it;

                         (ii) an accounting term not otherwise defined has the
                    meaning assigned to it in accordance with generally accepted
                    accounting principles as in effect from time to time;

                         (iii) "or" is not exclusive;

                         (iv) "including" means including without limitation;
                    and

                         (v) words in the singular include the plural and words
                    in the plural include the singular.

         SECTION 1.4 Action by or Consent of Noteholders. Whenever any provision
of this Agreement refers to action to be taken, or consented to, by Noteholders,
such provision shall be deemed to refer to the Noteholder of record as of the
Record Date immediately preceding the date on which such action is to be taken,
or consent given, by Noteholders. Solely for the purposes of any action to be
taken, or consented to, by Noteholders, any Note registered in the name of

                                       9

<PAGE>



National Financial Auto Funding Trust or any Affiliate thereof shall be deemed
not to be outstanding; provided, however, that, solely for the purpose of
determining whether the Indenture Trustee or the Trust Collateral Agent is
entitled to rely upon any such action or consent, only Notes which the Owner
Trustee, the Indenture Trustee or the Trust Collateral Agent, respectively,
knows to be so owned shall be so disregarded.

         SECTION 1.5 Matieral Adverse Effect. Whenever a determination is to be
made under this Agreement as to whether a given event, action, course of conduct
or set of facts or circumstances could or would have a material adverse effect
on the Noteholders (or any similar or analogous determination), such
determination shall be made without taking into account the funds available from
claims under the Policy.

         SECTION 1.6 Conflict with TIA. If any provision hereof limits,
qualifies or conflicts with a provision of the TIA that is required under the
TIA to be part of and govern this Indenture, the latter provision shall control.
If any provision of this Indenture modifies or excludes any provision of the TIA
that may be so modified or excluded, the latter provisions shall be deemed to
apply to this Indenture as so modified or to be excluded, as the case may be.

                                   ARTICLE II

                                    THE NOTES

         SECTION 2.1 Form. The Notes, together with the Indenture Trustee's
certificate of authentication, shall be in substantially the form set forth in
Exhibit A, with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistently herewith, be determined by the
officers executing such Notes, as evidenced by their execution of the Notes. Any
portion of the text of any Note may be set forth on the reverse thereof, with an
appropriate reference thereto on the face of the Note.

         The Definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods (with or without steel
engraved borders), all as determined by the officers executing such Notes, as
evidenced by their execution of such Notes.

         Each Note shall be dated the date of its authentication. The terms of
the Note set forth in Exhibit A are part of the terms of this Indenture.

         SECTION 2.2 Execution, Authentication and Delivery. The Notes shall be
executed on behalf of the Trust by any of its Authorized Officers. The signature
of any such Authorized Officer on the Notes may be original or facsimile.

         Notes bearing the original or facsimile signature of individuals who
were at any time Authorized Officers of the Trust shall bind the Trust,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.

                                       10

<PAGE>

         The Indenture Trustee shall upon receipt of the Note Policy and Trust
Order for authentication and delivery, authenticate and deliver the Notes for
original issue in an aggregate principal amount of $85,200,000. The Notes
outstanding at any time may not exceed such amount except as provided in Section
2.5.

         Each Note shall be dated the date of its authentication. The Notes
shall be issuable as registered Notes in the minimum denomination of $20,000 and
in integral multiples of $1,000 in excess thereof.

         No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears attached to such Note
a certificate of authentication substantially in the form provided for herein
executed by the Indenture Trustee by the manual signature of one of its
authorized signatories, and such certificate attached to any Note shall be
conclusive evidence, and the only evidence, that such Note has been duly
authenticated and delivered hereunder.

         SECTION 2.3. Temporary Notes. Pending the preparation of Definitive
Notes, the Trust may execute, and upon receipt of a Trust Order the Indenture
Trustee shall authenticate and deliver, temporary Notes which are printed,
lithographed, typewritten, mimeographed or otherwise produced, of the tenor of
the Definitive Notes in lieu of which they are issued and with such variations
not inconsistent with the terms of this Indenture as the officers executing such
Notes may determine, as evidenced by their execution of such Notes.

         If temporary Notes are issued, the Trust will cause Definitive Notes to
be prepared without unreasonable delay. After the preparation of Definitive
Notes, the temporary Notes shall be exchangeable for Definitive Notes upon
surrender of the temporary Notes at the office or agency of the Trust to be
maintained as provided in Section 3.2, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Notes, the Trust shall
execute and the Indenture Trustee shall authenticate and deliver in exchange
therefor a like principal amount of Definitive Notes of authorized
denominations. Until so exchanged, the temporary Notes shall in all respects be
entitled to the same benefits under this Indenture as Definitive Notes.

         SECTION 2.4. Registration; Registration of Transfer and Exchange. The
Trust shall cause to be kept a register (the "Note Register") in which, subject
to such reasonable regulations as it may prescribe, the Trust shall provide for
the registration of Notes and the registration of transfers of Notes. The
Indenture Trustee shall be "Note Registrar" for the purpose of registering Notes
and transfers of Notes as herein provided. Upon any resignation of any Note
Registrar, the Trust shall promptly appoint a successor or, if it elects not to
make such an appointment, assume the duties of Note Registrar.

         If a Person other than the Indenture Trustee is appointed by the Trust
as Note Registrar, the Trust will give the Indenture Trustee prompt written
notice of the appointment of such Note Registrar and of the location, and any
change in the location, of the Note Register, and the Indenture Trustee shall
have the right to inspect the Note Register at all reasonable times and to

                                       11
<PAGE>


obtain copies thereof. The Indenture Trustee shall have the right to rely
conclusively upon a certificate executed on behalf of the Note Registrar by an
Authorized Officer thereof as to the names and addresses of the Holders of the
Notes and the principal amounts and number of such Notes.

         Upon surrender for registration or transfer of any Note at the office
or agency of the Trust to be maintained as provided in Section 3.2, and if the
requirements of Section 8-401(1) of the UCC are met, the Trust shall execute or
cause the Indenture Trustee to authenticate one or more new Notes, in any
authorized denominations and for the same aggregate principal amount. A
Noteholder may also obtain from the Indenture Trustee, in the name of the
designated transferee or transferees, one or more new Notes in any authorized
denominations and for the same aggregate principal amount. Such requirements
shall not be deemed to create a duty in the Indenture Trustee to monitor the
compliance by the Trust with Section 8-401 of the UCC.

         At the option of the Holder, Notes may be exchanged for other Notes in
any authorized denominations and for the same aggregate principal amount, upon
surrender of the Notes to be exchanged at such office or agency. Whenever any
Notes are so surrendered for exchange, and if the requirements of Section
8-401(1) of the UCC are met, the Trust shall execute and upon its request the
Indenture Trustee shall authenticate the Notes which the Noteholder making the
exchange is entitled to receive. Such requirements shall not be deemed to create
a duty in the Indenture Trustee to monitor the compliance by the Trust with
Section 8-401 of the UCC.

         All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Trust, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.

         Every Note presented or surrendered for registration of transfer or
exchange shall be (i) duly endorsed by, or be accompanied by a written
instrument of transfer in the form attached to Exhibit A, duly executed by the
Holder thereof or such Holder's attorney duly authorized in writing, with such
signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar which requirements include membership or
participation in Securities Transfer Agents Medallion Program ("Stamp") or such
other "signature guarantee program" as may be determined by the Note Registrar
in addition to, or in substitution for, Stamp, all in accordance with the
Exchange Act, and (ii) accompanied by such other documents as the Note Registrar
may require.

         The Notes may not be transferred, directly or indirectly, to any Person
that is (i) an employee benefit plan (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), which is subject
to the provisions of Title I of ERISA, (ii) a plan described in section 4975
(e)(1) of the Internal Revenue Code of 1986, as amended, or (iii) an entity
whose underlying assets are deemed to be assets of a plan described in (i) or
(ii) above by reason of such plan's investment in the entity (any such entity
described in clauses (i) through (iii) , a "Benefit Plan") unless the
acquisition and holding of the Notes by such Benefit Plan is covered by a
Department of Labor Prohibited Transactions Class Exemption ("PTCE"). By
accepting and holding a Note, the Holder thereof shall be deemed to have
represented and warranted that either it is not a Benefit Plan or its
acquisition and holding of the Note is covered by a PTCE.

                                       12
<PAGE>

         No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Note Registrar may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 2.3 or 9.6 not involving any transfer.

         Notwithstanding, the preceding provisions of this section, the Trust
shall not be required to make, and the Note Registrar shall not register,
transfers or exchanges of Notes selected for redemption for a period of 15 days
preceding the Distribution Date.

         SECTION 2.5 Mutilated, Destroyed, Lost or Stolen Notes. If (i) any
mutilated Note is surrendered to the Indenture Trustee, or the Indenture Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Note, and (ii) there is delivered to the Indenture Trustee and the Insurer
(unless an Insurer Default shall have occurred and be continuing) such security
or indemnity as may be required by it to hold the Trust, the Indenture Trustee
and the Insurer harmless, then, in the absence of notice to the Trust, the Note
Registrar or the Indenture Trustee that such Note has been acquired by a bona
fide purchaser, and provided that the requirements of Section 8-405 of the UCC
are met, the Trust shall execute and upon its request the Indenture Trustee
shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Note, a replacement Note (such requirement
shall not be deemed to create a duty in the Indenture Trustee to monitor the
compliance by the Trust with Section 8-405); provided, however, that if any such
destroyed, lost or stolen Note, but not a mutilated Note, shall have become or
within seven days shall be due and payable, or shall have been called for
redemption, the Trust may, instead of issuing a replacement Note, direct the
Indenture Trustee, in writing, to pay such destroyed, lost or stolen Note when
so due or payable or upon the Redemption Date without surrender thereof. If,
after the delivery of such replacement Note or payment of a destroyed, lost or
stolen Note pursuant to the proviso to the preceding sentence, a bona fide
purchaser of the original Note in lieu of which such replacement Note was issued
presents for payment such original Note, the Trust, the Indenture Trustee and
the Insurer shall be entitled to recover such replacement Note (or such payment)
from the Person to whom it was delivered or any Person taking such replacement
Note from such Person to whom such replacement Note was delivered or any
assignee of such Person, except a bona fide purchaser, and shall be entitled to
recover upon the security or indemnity provided therefor to the extent of any
loss, damage, cost or expense incurred by the Trust or the Indenture Trustee in
connection therewith.

         Upon the issuance of any replacement Note under this Section, the Trust
may require the payment by the Holder of such Note of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other reasonable expenses (including the fees and expenses of the Indenture
Trustee) connected therewith.

         Every replacement Note issued pursuant to this Section in replacement
of any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Trust, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.


                                       13
<PAGE>


         The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.

         SECTION 2.6 Persons Deemed Owner. Prior to due presentment for
registration of transfer of any Note, the Trust, the Insurer, the Indenture
Trustee and any agent of the Trust or the Indenture Trustee may treat the Person
in whose name any Note is registered (as of the Record Date) as the owner of
such Note for the purpose of receiving payments of principal of and interest, if
any, on such Note and for all other purposes whatsoever, whether or not such
Note be overdue, and none of the Trust, the Insurer, the Indenture Trustee nor
any agent of the Trust or the Indenture Trustee shall be affected by notice to
the contrary.

         SECTION 2.7 Payment of Principal and Interest; Defaulted Interest. (a)
The Notes shall accrue interest as provided in the Form of Note set forth in
Exhibit A and such interest shall be payable on each Distribution Date as
specified therein. Any installment of interest or principal, if any, payable on
any Note which is punctually paid or duly provided for by the Trust on the
applicable Distribution Date shall be paid to the Person in whose name such Note
(or one or more Predecessor Notes) is registered on the Record Date, by check
mailed first-class, postage prepaid, to such Person's address as it appears on
the Note Register on such Record Date, except that, unless Definitive Notes have
been issued pursuant to Section 2.12, with respect to Notes registered on the
Record Date in the name of the nominee of the Clearing Agency (initially, such
nominee to be Cede & Co.), payment will be made by wire transfer in immediately
available funds to the account designated by such nominee and except for the
final installment of principal payable with respect to such Note on a
Distribution Date or on the Final Scheduled Distribution Date (and except for
the Redemption Price for any Note called for redemption pursuant to Section
10.1(a)) which shall be payable as provided below. The funds represented by any
such checks returned undelivered shall be held in accordance with Section 3.3.

            (b)  The principal of the Notes shall be payable in installments on
each Distribution Date as provided in the Form of Note set forth in Exhibit A.
Notwithstanding the foregoing, and subject to Section 5.4, the entire unpaid
principal amount of the Notes shall be due and payable, if not previously paid,
on the date on which an Event of Default shall have occurred and be continuing
and an Insurer Default shall have occurred and be continuing, if the Indenture
Trustee or the Holders of the Notes representing not less than a majority of the
Outstanding Amount of the Notes have declared the Notes to be immediately due
and payable in the manner provided in Section 5.2. Upon written notice from the
Trust, the Indenture Trustee shall notify the Person in whose name a Note is
registered at the close of business on the Record Date preceding the
Distribution Date on which the Trust expects that the final installment of
principal of and interest on such Note will be paid. Such notice shall be mailed
or transmitted by facsimile prior to such final Distribution Date and shall
specify that such final installment will be payable only upon presentation and
surrender of such Note and shall specify the place where such Note may be
presented and surrendered for payment of such installment. Notices in connection
with redemptions of Notes shall be mailed to Noteholders as provided in Section
10.2.

            (c) If the Trust defaults in a payment of interest on the Notes, the
Trust shall pay defaulted interest (plus interest on such defaulted interest to

                                       14
<PAGE>


the extent lawful) at the applicable Interest Rate to the extent lawful. The
Trust may pay such defaulted interest to the Persons who are Noteholders on a
subsequent special record date, which date shall be at least five Business Days
prior to the payment date. The Trust shall fix or cause to be fixed any such
special record date and payment date, and, at least 15 days before any such
special record date, the Trust shall mail to each Noteholder and the Indenture
Trustee a notice that states the special record date, the payment date and the
amount of defaulted interest to be paid.

            (d) Promptly following the date on which all principal of and 
interest on the Notes has been paid in full and the Notes have been surrendered
to the Indenture Trustee, the Indenture Trustee shall, upon written notice from
the Servicer of the amounts, if any, that the Insurer has paid in respect of the
Notes under the Note Policy or otherwise which has not been reimbursed to it,
deliver such surrendered Notes to the Insurer to the extent not previously
canceled or destroyed.

         SECTION 2.8 Cancellation. Subject to Section 2.7(d), all Notes
surrendered for payment, registration of transfer, exchange or redemption shall,
if surrendered to any Person other than the Indenture Trustee, be delivered to
the Indenture Trustee and shall be promptly canceled by the Indenture Trustee.
Subject to Section 2.7(d), the Trust may at any time deliver to the Indenture
Trustee for cancellation any Notes previously authenticated and delivered
hereunder which the Trust may have acquired in any manner whatsoever, and all
Notes so delivered shall be promptly canceled by the Indenture Trustee. No Notes
shall be authenticated in lieu of or in exchange for any Notes canceled as
provided in this Section, except as expressly permitted by this Indenture.
Subject to Section 2.7(d), all canceled Notes maybe held or disposed of by the
Indenture Trustee in accordance with its standard retention or disposal policy
as in effect at the time unless the Trust shall direct by a Trust Order that
they be destroyed or returned to it; provided that such Trust Order is timely
and the Notes have not been previously disposed of by the Indenture Trustee.

         SECTION 2.9 Release of Collateral. The Trust Collateral Agent shall, on
or after the Termination Date, release any remaining portion of the Trust
Property from the lien created by this Indenture and deposit in the Collection
Account any funds then on deposit in any other Trust Account. The Trust
Collateral Agent shall release property from the lien created by this Indenture
pursuant to this Section 2.9 only upon receipt of a Trust Request by it and the
Indenture Trustee accompanied by an Officer's Certificate, an Opinion of Counsel
and (if required by the TIA) Independent Certificates in accordance with TIA
ss.ss. 314(c) and 314(d)(1) meeting the applicable requirements of Section 11.1.

         SECTION 2.10 Book-Entry Notes. The Notes, upon original issuance, will
be issued in the form of typewritten Notes representing the Book-Entry Notes, to
be delivered to the Indenture Trustee, as custodian for The Depository Trust
Company, the initial Clearing Agency, by, or on behalf of, the Trust. Such Notes
shall initially be registered on the Note Register in the name of Cede & Co.,
the nominee of the initial Clearing Agency, and no Note Owner will receive a
Definitive Note representing such Note Owner's interest in such Note, except as
provided in Section 2.12. Unless and until definitive, fully registered Notes
(the "Definitive Notes") have been issued to Note Owners pursuant to Section
2.12:

                                       15
<PAGE>


                         (i) the provisions of this Section shall be in full
                    force and effect;

                         (ii) the Note Registrar and the Indenture Trustee shall
                    be entitled to deal with the Clearing Agency for all
                    purposes of this Indenture (including the payment of
                    principal of and interest on the Notes and the giving of
                    instructions or directions hereunder) as the sole Holder of
                    the Notes, and shall have no obligation to the Note Owners;

                         (iii) to the extent that the provisions of this Section
                    conflict with any other provisions of this Indenture, the
                    provisions of this Section shall control;

                         (iv) the rights of Note Owners shall be exercised only
                    through the Clearing Agency and shall be limited to those
                    established by law and agreements between such Note Owners
                    and the Clearing Agency and/or the Clearing Agency
                    Participants. Unless and until Definitive Notes are issued
                    pursuant to Section 2.12, the initial Clearing Agency will
                    make book-entry transfers among the Clearing Agency
                    Participants and receive and transmit payments of principal
                    of and interest on the Notes to such Clearing Agency
                    Participants;

                         (v) whenever this Indenture requires or permits actions
                    to be taken based upon instructions or directions of Holders
                    of Notes evidencing a specified percentage of the
                    Outstanding Amount of the Notes, the Clearing Agency shall
                    be deemed to represent such percentage only to the extent
                    that it has received instructions to such effect from Note
                    Owners and/or Clearing Agency Participants owning or
                    representing, respectively, such required percentage of the
                    beneficial interest in the Notes and has delivered such
                    instructions to the Indenture Trustee; and

                         (vi) Note Owners may receive copies of any reports sent
                    to Noteholders pursuant to this Indenture, upon written
                    request, together with a certification that they are Note
                    Owners and payment of reproduction and postage expenses
                    associated with the distribution of such reports, from the
                    Indenture Trustee at the Corporate Trust Office.

         SECTION 2.11 Notices to Clearing Agency. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to Note Owners pursuant to Section
2.12, the Indenture Trustee shall give all such notices and communications
specified herein to be given to Holders of the Notes to the Clearing Agency, and
shall have no obligation to the Note Owners.

         SECTION 2.12 Definitive Notes. If (i) the Servicer advises the
Indenture Trustee in writing that the Clearing Agency is no longer willing or
able to properly discharge its responsibilities with respect to the Notes, and
the Servicer is unable to locate a qualified successor, (ii) the Servicer at its
option advises the Indenture Trustee in writing that it elects to terminate the
book-entry system through the Clearing Agency, or (iii) after the occurrence of
an Event of Default, Note Owners representing beneficial interests aggregating
at least a majority of the Outstanding Amount of the Notes advise the Indenture

                                       16
<PAGE>


Trustee through the Clearing Agency in writing that the continuation of a book
entry system through the Clearing Agency is no longer in the best interests of
the Note Owners, then the Clearing Agency shall notify all Note Owners and the
Indenture Trustee of the occurrence of any such event and of the availability of
Definitive Notes to Note Owners requesting the same. Upon surrender to the
Indenture Trustee of the typewritten Note or Notes representing the Book-Entry
Notes by the Clearing Agency, accompanied by registration instructions, the
Trust shall execute and the Indenture Trustee shall authenticate the Definitive
Notes in accordance with the instructions of the Clearing Agency. None of the
Trust, the Note Registrar or the Indenture Trustee shall be liable for any delay
in delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Notes, the Indenture Trustee shall recognize the Holders of the Definitive Notes
as Noteholders.

                                   ARTICLE III

                                    COVENANTS

         Section 3.1 Payment of Principal and Interst. The Trust will duly and
punctually pay the principal of and interest on the Notes in accordance with the
terms of the Notes and this Indenture. Without limiting the foregoing, the Trust
will cause to be distributed all amounts on deposit in the Note Distribution
Account on a Distribution Date deposited therein pursuant to the Sale and
Servicing Agreement for the benefit of the Noteholders. Amounts properly
withheld under the Code by any Person from a payment to any Noteholder of
interest and/or principal shall be considered as having been paid by the Trust
to such Noteholder for all purposes of this Indenture.

         SECTION 3.2 Maintenance of Office or Agency. The Trust will maintain in
New York, an office or agency where Notes may be surrendered for registration,
transfer or exchange of the Notes, and where notices and demands to or upon the
Trust in respect of the Notes and this Indenture may be served. The Trust hereby
initially appoints the Indenture Trustee to serve as its agent for the foregoing
purposes. The Trust will give prompt written notice to the Indenture Trustee of
the location, and of any change in the location, of any such office or agency.
If at any time the Trust shall fail to maintain any such office or agency or
shall fail to furnish the Indenture Trustee with the address thereof, such
surrenders, notices and demands may be made or served at the Corporate Trust
Office, and the Trust hereby appoints the Indenture Trustee as its agent to
receive all such surrenders, notices and demands.

         SECTION 3.3 Money for Payments to be Held in Trust. On or before each
Distribution Date and Redemption Date, the Trust shall deposit or cause to be
deposited in the Note Distribution Account from the Collection Account an
aggregate sum sufficient to pay the amounts then becoming due under the Notes,
such sum to be held in trust for the benefit of the Persons entitled thereto and
(unless the Note Paying Agent is the Indenture Trustee) shall promptly notify
the Indenture Trustee of its action or failure so to act.

         The Trust will cause each Note Paying Agent other than the Indenture
Trustee to execute and deliver to the Indenture Trustee and the Insurer an
instrument in which such Note Paying Agent shall agree with the Indenture

                                       17
<PAGE>


Trustee (and if the Indenture Trustee acts as Note Paying Agent, it hereby so
agrees), subject to the provisions of this Section, that such Note Paying Agent
will:

                         (i) hold all sums held by it for the payment of amounts
                    due with respect to the Notes in trust for the benefit of
                    the Persons entitled thereto until such sums shall be paid
                    to such Persons or otherwise disposed of as herein provided
                    and pay such sums to such Persons as herein provided;

                         (ii) give the Indenture Trustee written notice of any
                    default by the Trust of which it has actual knowledge (or
                    any other obligor upon the Notes) in the making of any
                    payment required to be made with respect to the Notes;

                         (iii) at any time during the continuance of any such
                    default, upon the written request of the Indenture Trustee,
                    forthwith pay to the Indenture Trustee all sums so held in
                    trust by such Note Paying Agent;

                         (iv) immediately resign as a Note Paying Agent and
                    forthwith pay to the Indenture Trustee all sums held by it
                    in trust for the payment of Notes if at any time it ceases
                    to meet the standards required to be met by a Note Paying
                    Agent at the time of its appointment; and

                         (v) comply with all requirements of the Code with
                    respect to the withholding from any payments made by it on
                    any Notes of any applicable withholding taxes imposed
                    thereon and with respect to any applicable reporting
                    requirements in connection therewith.

         The Trust may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Trust
Order direct any Note Paying Agent to pay to the Indenture Trustee all sums held
in trust by such Note Paying Agent, such sums to be held by the Indenture
Trustee upon the same trusts as those upon which the sums were held by such Note
Paying Agent; and upon such a payment by any Note Paying Agent to the Indenture
Trustee, such Note Paying Agent shall be released from all further liability
with respect to such money.

         Subject to applicable laws with respect to the escheat of funds, any
money held by the Indenture Trustee or any Note Paying Agent in trust for the
payment of any amount due with respect to any Note and remaining unclaimed for
two years after such amount has become due and payable shall be discharged from
such trust and be paid to the Trust on Trust Request, with the consent of the
Insurer (unless an Insurer Default shall have occurred and be continuing) and
shall be deposited by the Indenture Trustee in the Collection Account; and the
Holder of such Note shall thereafter, as an unsecured general creditor, look
only to the Trust for payment thereof (but only to the extent of the amounts so
paid to the Trust), and all liability of the Indenture Trustee or such Note
Paying Agent with respect to such trust money shall thereupon cease; provided,
however, that if such money or any portion thereof had been previously deposited
by the Insurer or the Trust Collateral Agent with the Indenture Trustee for the
payment of principal or interest on the Notes, to the extent any amounts are
owing to the Insurer, such amounts shall be paid promptly to the Insurer upon

                                       18
<PAGE>

receipt of a written request by the Insurer to such effect; and provided,
further, that the Indenture Trustee or such Note Paying Agent, before being
required to make any such repayment, shall at the expense of the Trust cause to
be published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in The City of New
York, notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication,
any unclaimed balance of such money then remaining will be repaid to the Trust.
The Indenture Trustee shall also adopt and employ, at the expense of the Trust,
any other reasonable means of notification of such repayment (including, but not
limited to, mailing notice of such repayment to Holders whose Notes have been
called but have not been surrendered for redemption or whose right to or
interest in monies due and payable but not claimed is determinable from the
records of the Indenture Trustee or of any Note Paying Agent, at the last
address of record for each such Holder).

         SECTION 3.4  Existence. Except as otherwise permitted by the provisions
of Section 3.10, the Trust will keep in full effect its existence, rights and
franchises as a business trust under the laws of the State of Delaware (unless
it becomes, or any successor Trust hereunder is or becomes, organized under the
laws of any other state or of the United States of America, in which case the
Trust will keep in full effect its existence, rights and franchises under the
laws of such other jurisdiction) and will obtain and preserve its qualification
to do business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Indenture, the
Notes, the Collateral and each other instrument or agreement included in the
Trust Property.

         SECTION 3.5  Protection of Trust Property. The Trust intends the
security interest Granted pursuant to this Indenture in favor of the Trust
Secured Parties to be prior to all other liens in respect of the Trust Property,
and the Trust shall take all actions necessary to obtain and maintain, in favor
of the Trust Collateral Agent, for the benefit of the Trust Secured Parties, a
first lien on and a first priority, perfected security interest in the Trust
Property. The Trust will from time to time prepare (or shall cause to be
prepared), execute and deliver all such supplements and amendments hereto and
all such financing statements, continuation statements, instruments of further
assurance and other instruments, and will take such other action necessary or
advisable to:

                         (i) Grant more effectively all or any portion of the
                    Trust Property;

                         (ii) maintain or preserve the lien and security
                    interest (and the priority thereof) in favor of the Trust
                    Collateral Agent for the benefit of the Trust Secured
                    Parties created by this Indenture or carry out more
                    effectively the purposes hereof;

                         (iii) perfect, publish notice of or protect the
                    validity of any Grant made or to be made by this Indenture;

                         (iv) enforce any of the Collateral;

                         (v) preserve and defend title to the Trust Property and
                    the rights of the Trust Collateral Agent in such Trust
                    Property against the claims of all persons and parties; and

                                       19
<PAGE>


                         (vi) pay all taxes or assessments levied or assessed
                    upon the Trust Property when due.

         The Trust hereby designates the Trust Collateral Agent as its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required by the Trust Collateral Agent pursuant to this
Section; provided that, such designation shall not be deemed to create a duty in
the Indenture Trustee or the Trust Collateral Agent to monitor the compliance of
the Trust with respect to its duties under this Section 3.5 or the adequacy of
any financing statement, continuation statement or other instrument prepared by
the Trust.

         SECTION 3.6  Opinions as to Trust Property. (a) On the Closing Date,
the Trust shall furnish to the Indenture Trustee, the Trust Collateral Agent and
the Insurer an Opinion of Counsel either stating that, in the opinion of such
counsel, such action has been taken with respect to the recording and filing of
this Indenture, any indentures supplemental hereto, and any other requisite
documents, and with respect to the execution and filing of any financing
statements and continuation statements, as are necessary to perfect and make
effective the first priority lien and security interest in favor of the Trust
Collateral Agent, for the benefit of the Trust Secured Parties, created by this
Indenture and reciting the details of such action, or stating that, in the
opinion of such counsel, no such action is necessary to make such lien and
security interest effective.

            (b)    Within 90 days after the beginning of each calendar year,
beginning with the first calendar year beginning more than six months after the
Closing Date, the Trust shall furnish to the Indenture Trustee, Trust Collateral
Agent and the Insurer, an Opinion of Counsel either stating that, in the opinion
of such counsel, such action has been taken with respect to the recording,
filing, re-recording and refiling of this Indenture, any indentures supplemental
hereto and any other requisite documents and with respect to the execution and
filing of any financing statements and continuation statements as are necessary
to maintain the lien and security interest created by this Indenture and
reciting the details of such action or stating that in the opinion of such
counsel no such action is necessary to maintain such lien and security interest.
Such Opinion of Counsel shall also describe the recording, filing, re-recording
and refiling of this Indenture, any indentures supplemental hereto and any other
requisite documents and the execution and filing of any financing statements and
continuation statements that will, in the opinion of such counsel, be required
to maintain the lien and security interest of this Indenture.

         SECTION 3.7  Performance of Obligations; Servicing of Receivables. 
(a) The Trust will not take any action and will use its best efforts not to
permit any action to be taken by others that would release any Person from any
of such Person's material covenants or obligations under any instrument or
agreement included in the Trust Property or that would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or agreement, except as
ordered by any bankruptcy or other court or as expressly provided in this
Indenture, the Transaction Documents or such other instrument or agreement.

            (b) The Trust may contract with other Persons acceptable to the
Insurer (so long as no Insurer Default shall have occurred and be continuing) to

                                       20
<PAGE>

assist it in performing its duties under this Indenture, and any performance of
such duties by a Person identified to the Indenture Trustee and the Insurer in
an Officer's Certificate of the Trust shall be deemed to be action taken by the
Trust. Initially, the Trust has contracted with the Servicer to assist the Trust
in performing its duties under this Indenture.

            (c) The Trust will punctually perform and observe all of its 
obligations and agreements contained in this Indenture, the Transaction
Documents and in the instruments and agreements included in the Trust Property,
including, but not limited, to preparing (or causing to prepared) and filing (or
causing to be filed) all UCC financing statements and continuation statements
required to be filed by the terms of this Indenture and the Sale and Servicing
Agreement in accordance with and within the time periods provided for herein and
therein. Except as otherwise expressly provided therein, the Trust shall not
waive, amend, modify, supplement or terminate any Transaction Document or any
provision thereof without the consent of the Indenture Trustee, the Insurer or
the Holders of at least a majority of the Outstanding Amount of the Notes.

            (d) If a Responsible Officer of the Owner Trustee shall have actual
knowledge of the occurrence of a Servicer Termination Event under the Sale and
Servicing Agreement, the Trust shall promptly notify the Indenture Trustee, the
Trust Collateral Agent, the Insurer and the Rating Agencies thereof in
accordance with Section 11.4, and shall specify in such notice, the action, if
any, the Trust is taking in respect of such default. If a Servicer Termination
Event shall arise from the failure of the Servicer to perform any of its duties
or obligations under the Sale and Servicing Agreement with respect to the
Receivables, the Trust shall take all reasonable steps available to it to remedy
such failure.

            (e) The Trust agrees that it will not waive timely performance or
observance by the Servicer or the Seller of their respective duties under the
Transaction Documents (x) without the prior consent of the Insurer (unless an
Insurer Default shall have occurred and be controlling) or (y) if the effect
thereof would adversely affect the Holders of the Notes.

         SECTION 3.8  Negative Convenants. So long as any Notes are Outstanding,
the Trust shall not:

                         (i) except as expressly permitted by this Indenture or
                    the Transaction Documents, sell, transfer, exchange or
                    otherwise dispose of any of the properties or assets of the
                    Trust, including those included in the Trust Property,
                    unless directed to do so by the Controlling Party;

                         (ii) claim any credit on, or make any deduction from
                    the principal or interest payable in respect of, the Notes
                    (other than amounts properly withheld from such payments
                    under the Code) or assert any claim against any present or
                    former Noteholder by reason of the payment of the taxes
                    levied or assessed upon any part of the Trust Property; or

                         (iii) (A) permit the validity or effectiveness of this
                    Indenture to be impaired, or permit the lien in favor of the
                    Trust Collateral Agent created by this Indenture to be

                                       21

<PAGE>

                    amended, hypothecated, subordinated, terminated or
                    discharged, or permit any Person to be released from any
                    covenants or obligations with respect to the Notes under
                    this Indenture except as may be expressly permitted hereby,
                    (B) permit any lien, charge, excise, claim, security
                    interest, mortgage or other encumbrance (other than the lien
                    of this Indenture) to be created on or extend to or
                    otherwise arise upon or burden the Trust Property or any
                    part thereof or any interest therein or the proceeds thereof
                    (other than tax liens, mechanics' liens and other liens that
                    arise by operation of law, in each case on a Financed
                    Vehicle and arising solely as a result of an action or
                    omission of the related Obligor), (C) permit the lien of
                    this Indenture not to constitute a valid first priority
                    (other than with respect to any such tax, mechanics' or
                    other lien) security interest in the Trust Property or (D)
                    amend, modify or fail to comply with the provisions of the
                    Transaction Documents without the prior written consent of
                    the Controlling Party.

         SECTION 3.9 Annual Statement as to Compliance. The Trust will deliver 
to the Indenture Trustee and the Insurer, within 90 days after the end of each
fiscal year of the Trust (commencing with the fiscal year ended December 31,
1997), and otherwise in compliance with the requirements of TIA ss.314(a)(4) an
Officer's Certificate stating, as to the Authorized Officer signing such
Officer's Certificate, that

                         (i) a review of the activities of the Trust during such
                    year and of performance under this Indenture has been made
                    under such Authorized Officer's supervision; and

                         (ii) to the best of such Authorized Officer's
                    knowledge, based on such review, the Trust has complied with
                    all conditions and covenants under this Indenture throughout
                    such year, or, if there has been a default in the compliance
                    of any such condition or covenant, specifying each such
                    default known to such Authorized Officer and the nature and
                    status thereof.

         SECTION 3.10 Trust May Consolidate, Etc. Only on Certain Terms.  
(a) The Trust shall not consolidate or merge with or into any other Person.

            (b) The Trust shall not convey or transfer all or substantially
all of its properties or assets, including those included in the Trust Property,
to any Person.

         SECTION 3.11 [Reserved].

         SECTION 3.12 No Other Business. The Trust shall not engage in any 
business other than financing, purchasing, owning, selling and managing the
Receivables in the manner contemplated by this Indenture and the Transaction
Documents and activities incidental thereto. After the Pre-Funding Period, the
Trust shall not fund the purchase of any Additional Receivables.

         SECTION 3.13  No Borrowing. The Trust shall not issue, incur, assume, 
guarantee or otherwise become liable, directly or indirectly, for any
Indebtedness except for (i) the Notes, (ii) obligations owing from time to time
to the Insurer under the Insurance Agreement and (iii) any other Indebtedness

                                       22
<PAGE>


permitted by or arising under the Transaction Documents. The proceeds of the
Notes shall be used exclusively to fund the Trust's purchase of the Receivables
and the other assets specified in the Sale and Servicing Agreement, to fund the
Pre-Funding Account and the Spread Account and to pay the Trust's
organizational, transactional and start-up expenses.

         SECTION 3.14 Servicer's Obligations. The Trust shall cause the Servicer
to comply with Sections 4.11, 4.12 and 4.13 of the Sale and Servicing Agreement.

         SECTION 3.15 Guarantees, Loans, Advances and Other Liabilities. Except
as contemplated by the Sale and Servicing Agreement or this Indenture, the Trust
shall not make any loan or advance or credit to, or guarantee (directly or
indirectly or by an instrument having the effect of assuring another's payment
or performance on any obligation or capability of so doing or otherwise),
endorse or otherwise become contingently liable, directly or indirectly, in
connection with the obligations, stocks or dividends of, or own, purchase,
repurchase or acquire (or agree contingently to do so) any stock, obligations,
assets or securities of, or any other interest in, or make any capital
contribution to, any other Person.

         SECTION 3.16 Capital Expenditures. The Trust shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).

         SECTION 3.17. Compliance with Laws. The Trust shall comply with the
requirements of all applicable laws, the non-compliance with which would,
individually or in the aggregate, materially and adversely affect the ability of
the Trust to perform its obligations under the Notes, this Indenture or any
Transaction Document.

         SECTION 3.18 Restricted Payments. The Trust shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the Trust
or otherwise with respect to any ownership or equity interest or security in or
of the Trust or to the Servicer, (ii) redeem, purchase, retire or otherwise
acquire for value any such ownership or equity interest or security or (iii) set
aside or otherwise segregate any amounts for any such purpose; provided,
however, that the Trust may make, or cause to be made, distributions to the
Servicer, the Owner Trustee, the Indenture Trustee and the Certificateholders as
permitted by, and to the extent funds are available for such purpose under, the
Sale and Servicing Agreement or Trust Agreement. The Trust will not, directly or
indirectly, make payments to or distributions from the Collection Account except
in accordance with this Indenture and the Transaction Documents.

         SECTION 3.19 Notice of Events of Default. Upon a Responsible Officer of
the Owner Trustee having actual knowledge thereof, the Trust agrees to give the
Indenture Trustee, the Insurer and the Rating Agencies prompt written notice of
each Event of Default hereunder and each default on the part of the Servicer or
the Seller of its obligations under the Sale and Servicing Agreement.

         SECTION 3.20 Further Instruments and Acts. Upon request of the
Indenture Trustee or the Insurer, the Trust will execute and deliver such

                                       23
<PAGE>

further instruments and do such further acts as may be reasonably necessary or
proper to carry out more effectively the purpose of this Indenture.

         SECTION 3.21 Amendments of Sale and Servicing Agreement and Trust
Agreement. The Trust shall not agree to any amendment to Section 13.1 of the
Sale and Servicing Agreement or Section 13.1 of the Trust Agreement to eliminate
the requirements thereunder that the Indenture Trustee or the Holders of the
Notes consent to amendments thereto as provided therein.

         SECTION 3.22 Income Tax Characterization. For purposes of federal
income, state and local income and franchise and any other income taxes, the
Trust will treat the Notes as indebtedness of the Trust and hereby instructs the
Indenture Trustee to treat the Notes as indebtedness of the Trust for federal
and state tax reporting purposes.

                                   ARTICLE IV

                           SATISFACTION AND DISCHARGE

         SECTION 4.1 Satisfaction and Discharge of Indenture. This Indenture
shall cease to be of further effect with respect to the Notes except as to (i)
rights of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal thereof and interest thereon, (iv) Sections 3.3, 3.4, 3.5, 3.8,
3.10, 3.12, 3.13, 3.20, 3.21 and 3.22, (v) the rights, obligations and
immunities of the Indenture Trustee hereunder (including the rights of the
Indenture Trustee under Section 6.7 and the obligations of the Indenture Trustee
under Section 4.2) and (vi) the rights of Noteholders as beneficiaries hereof
with respect to the property so deposited with the Indenture Trustee payable to
all or any of them, and the Indenture Trustee, on demand of and at the expense
of the Trust, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture with respect to the Notes, when

            (A)      either

                    (1) all Notes theretofore authenticated and delivered 
(other than (i) Notes that have been destroyed, lost or stolen and that have
been replaced or paid as provided in Section 2.5 and (ii) Notes for whose
payment money has theretofore been deposited in trust or segregated and held in
trust by the Trust and thereafter repaid to the Trust or discharged from such
trust, as provided in Section 3.3) have been delivered to the Indenture Trustee
for cancellation and the Note Policy has expired and been returned to the
Insurer for cancellation; or

                   (2) all Notes not theretofore delivered to the Indenture
Trustee for cancellation

                       (i) have become due and payable,

                      (ii) will become due and payable on the Final Scheduled 
           Distribution Date, or

                                    24
<PAGE>

                   (iii)  are to be called for redemption within one year under
          arrangements satisfactory to the Indenture Trustee for the giving of
          notice of redemption by the Indenture Trustee in the name, and at the
          expense, of the Trust, and the Trust, in the case of (i), (ii) or
          (iii) above, has irrevocably deposited or caused to be irrevocably
          deposited with the Trust Collateral Agent cash or direct obligations
          of or obligations guaranteed by the United States of America (which
          will mature prior to the date such amounts are payable), in trust for
          such purpose, in an amount sufficient to pay and discharge the entire
          indebtedness on such Notes not theretofore delivered to the Indenture
          Trustee for cancellation when due on the Final Scheduled Distribution
          Date or Redemption Date (if Notes shall have been called for
          redemption pursuant to Section 10.1(a)), as the case may be;

            (B) the Trust has paid or caused to be paid all Insurer Trust 
Secured Obligations and all Trustee Trust Secured Obligations; and

            (C) the Trust has delivered to the Indenture Trustee, the Trust 
Collateral Agent and the Insurer an Officer's Certificate, an Opinion of Counsel
and if required by the TIA, to the Indenture Trustee, the Trust Collateral Agent
or the Insurer (so long as an Insurer Default shall not have occurred and be
continuing) an Independent Certificate from a firm of certified public
accountants, each meeting the applicable requirements of Section 11.1(a) and
each stating that all conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture have been complied with. Upon such
satisfaction and discharge, the Indenture Trustee shall give prompt written
notice thereof to each Rating Agency.

         SECTION 4.2 Application of Trust Money. All monies deposited with the
Indenture Trustee pursuant to Section 4.1 hereof shall be held in trust and
applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Note Paying Agent, as
the Indenture Trustee may determine, to the Holders of the particular Notes for
the payment or redemption of which such monies have been deposited with the
Indenture Trustee, of all sums due and to become due thereon for principal and
interest; but such monies need not be segregated from other funds except to the
extent required herein or in the Sale and Servicing Agreement or required by
law.

         SECTION 4.3 Repayment of Monies Held by Note Paying Agent. In
connection with the satisfaction and discharge of this Indenture with respect to
the Notes, all monies then held by any Note Paying Agent other than the
Indenture Trustee under the provisions of this Indenture with respect to such
Notes shall, upon demand of the Trust, be paid to the Indenture Trustee to be
held and applied according to Section 3.3 and thereupon such Note Paying Agent
shall be released from all further liability with respect to such monies.

                                    ARTICLE V

                                    REMEDIES

         SECTION 5.1 Events of Default. "Event of Default", wherever used
herein, means any one of the following events (whatever the reason for such

                                       25
<PAGE>

Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):

                         (i) default in the payment of any interest on any Note
                    when the same becomes due and payable, and such default
                    shall continue for a period of five days (solely for
                    purposes of this clause, a payment on the Notes funded by
                    the Insurer or the Collateral Agent pursuant to the Spread
                    Account Agreement shall be deemed to be a payment made by
                    the Trust); or

                         (ii) default in the payment of the principal of or any
                    installment of the principal of any Note when the same
                    becomes due and payable and such default shall continue for
                    a period of five days (solely for purposes of this clause, a
                    payment on the Notes funded by the Insurer or the Collateral
                    Agent pursuant to the Spread Account Agreement, shall be
                    deemed to be a payment made by the Trust); or

                         (iii) so long as an Insurer Default shall not have
                    occurred and be continuing, an Insurance Agreement Indenture
                    Cross Default shall have occurred; provided, however, that
                    the occurrence of an Insurance Agreement Indenture Cross
                    Default may not form the basis of an Event of Default unless
                    the Insurer shall, upon prior written notice to the Rating
                    Agencies, have delivered to the Trust and the Indenture
                    Trustee, and not rescinded, a written notice specifying that
                    such Insurance Agreement Indenture Cross Default constitutes
                    an Event of Default under this Indenture; or

                         (iv) default in the observance or performance of any
                    covenant or agreement of the Trust made in this Indenture
                    (other than a covenant or agreement, a default in the
                    observance or performance of which is elsewhere in this
                    Section specifically dealt with) or in any certificate or
                    other writing delivered in connection herewith, or any
                    representation or warranty of the Trust made in this
                    Indenture or in any certificate or other writing delivered
                    pursuant hereto proving to have been incorrect in any
                    material respect as of the time when the same shall have
                    been made, and such default shall continue or not be cured,
                    or the circumstance or condition in respect of which such
                    misrepresentation or warranty was incorrect shall not have
                    been eliminated or otherwise cured, for a period of 30 days
                    after there shall have been given, by registered or
                    certified mail, to the Trust by the Insurer or the Indenture
                    Trustee or to the Trust, the Indenture Trustee and the
                    Insurer by the Holders of at least 25% of the Outstanding
                    Amount of the Notes, a written notice specifying such
                    default or incorrect representation or warranty and
                    requiring it to be remedied and stating that such notice is
                    a "Notice of Default" hereunder; provided, however, so long
                    as an Insurer Default shall not have occurred and be
                    continuing, the occurrence of any such event described in
                    this clause (iv) may not form the basis of an Event of
                    Default unless the Insurer shall, upon prior written notice
                    to the Rating Agencies, have delivered to the Trust and the
                    Indenture Trustee, and not rescinded, a written notice
                    specifying that any such event constitutes an Event of
                    Default under this Indenture; or

                         (v) the filing of a decree or order for relief by a
                    court having jurisdiction in the premises in respect of the

                                       26
<PAGE>

                    Trust or any substantial part of the Collateral in an
                    involuntary case under any applicable Federal or state
                    bankruptcy, insolvency or other similar law now or hereafter
                    in effect, or appointing a receiver, liquidator, assignee,
                    custodian, trustee, sequestrator or similar official of the
                    Trust or for any substantial part of the Collateral, or
                    ordering the winding-up or liquidation of the Trust's
                    affairs, and such decree or order shall remain unstayed and
                    in effect for a period of 60 consecutive days; provided,
                    however, so long as an Insurer Default shall not have
                    occurred and be continuing, the occurrence of any such event
                    described in this clause (v) may not form the basis of an
                    Event of Default unless the Insurer shall, upon prior
                    written notice to the Rating Agencies, have delivered to the
                    Trust and the Indenture Trustee, and not rescinded, a
                    written notice specifying that any such event constitutes an
                    Event of Default under this Indenture; or

                         (vi) the commencement by the Trust of a voluntary case
                    under any applicable Federal or state bankruptcy, insolvency
                    or other similar law now or hereafter in effect, or the
                    consent by the Trust to the entry of an order for relief in
                    an involuntary case under any such law, or the consent by
                    the Trust to the appointment or taking possession by a
                    receiver, liquidator, assignee, custodian, trustee,
                    sequestrator or similar official of the Trust or for any
                    substantial part of the Collateral, or the making by the
                    Trust of any general assignment for the benefit of
                    creditors, or the failure by the Trust generally to pay its
                    debts as such debts become due, or the taking of action by
                    the Trust in furtherance of any of the foregoing; provided,
                    however, so long as an Insurer Default shall not have
                    occurred and be continuing, the occurrence of any such event
                    described in this clause (vi) may not form the basis of an
                    Event of Default unless the Insurer shall, upon prior
                    written notice to the Rating Agencies, have delivered to the
                    Trust and the Indenture Trustee, and not rescinded, a
                    written notice specifying that any such event constitutes an
                    Event of Default under this Indenture.

         The Trust shall deliver to the Indenture Trustee, the Owner Trustee,
the Insurer and each Rating Agency, within five days after the occurrence
thereof, written notice in the form of an Officer's Certificate of any event
which with the giving of notice and the lapse of time would become an Event of
Default under clause (iii), its status and what action the Trust is taking or
proposes to take with respect thereto.

         SECTION 5.2 Rights Upon Event of Default. (a) If an Insurer Default 
shall not have occurred and be continuing and an Event of Default shall have
occurred and be continuing, the Notes shall become immediately due and payable
at par, together with accrued interest thereon. If an Event of Default shall
have occurred and be continuing, the Controlling Party may exercise any of the
remedies specified in Section 5.4(a). In the event of any acceleration of any
Notes by operation of this Section 5.2, the Indenture Trustee shall continue to
be entitled to make claims under the Note Policy pursuant to the Sale and
Servicing Agreement for Scheduled Payments on the Notes. Payments under the Note
Policy following acceleration of any Notes shall be applied by the Indenture
Trustee:

                           FIRST:  to  Noteholders  for  amounts  due and unpaid
                  on the Notes for interest,  ratably,  without  preference or 

                                       27
<PAGE>

                  priority of any kind, according to the amounts due and 
                  payable on the Notes for interest; and

                           SECOND:  to  Noteholders  for  amounts due and unpaid
                  on the Notes for principal,  ratably,  without preference or 
                  priority of any kind, according to the  amounts due and
                  payable on the Notes for principal.

            (b)  In the event any Notes are accelerated due to an Event of
Default, the Insurer shall have the right (in addition to its obligation to pay
Scheduled Payments on the Notes in accordance with the Note Policy), but not the
obligation, to make payments under the Note Policy or otherwise of interest and
principal due on such Notes, in whole or in part, on any date or dates following
such acceleration as the Insurer, in its sole discretion, shall elect.

            (c)  If an Insurer Default shall have occurred and be continuing and
an Event of Default shall have occurred and be continuing, the Indenture Trustee
in its discretion may, or if so requested in writing by Holders holding Notes
representing not less than a majority of the Outstanding Amount of the Notes,
shall, subject to Section 6.2(f), declare by written notice to the Trust that
the Notes shall become immediately due and payable at par, together with accrued
interest thereon.

            (d) If an Insurer Default shall have occurred and be continuing,
then at any time after such declaration of acceleration of maturity has been
made and before a judgment or decree for payment of the money due has been
obtained by the Indenture Trustee as hereinafter in this Article V provided, the
Holders of Notes representing a majority of the Outstanding Amount of the Notes,
by written notice to the Trust and the Indenture Trustee, may rescind and annul
such declaration and its consequences if:

                        (i) the Trust has paid or deposited with the Indenture
                   Trustee a sum sufficient to pay

                         (A) all payments of principal of and interest on all
Notes and all other amounts that would then be due hereunder or upon such Notes
if the Event of Default giving rise to such acceleration had not occurred; and

                         (B) all sums paid or advanced by the Indenture Trustee
hereunder and the reasonable compensation, expenses, disbursements and advances
of the Indenture Trustee and its agents and counsel; and

                         (ii) all Events of Default, other than the nonpayment
                    of the principal of the Notes that has become due solely by
                    such acceleration, have been cured or waived as provided in
                    Section 5.12.

         No such rescission shall affect any subsequent default or impair any
right consequent thereto.

                                       28
<PAGE>

         SECTION 5.3 Collection of Indebtness and Suits for Enforcement by
Indenture Trustee. (a) The Trust covenants that if (i) default is made in the
payment of any interest on any Note when the same becomes due and payable
(solely for purposes of this clause, a payment on the Notes funded by the
Insurer pursuant to the Note Policy or the Collateral Agent pursuant to the
Spread Account shall be deemed to be payment made by the Trust), and such
default continues for a period of five days, or (ii) default is made in the
payment of the principal of or any installment of the principal of any Note when
the same becomes due and payable (solely for purposes of this clause, a payment
on the Notes funded by the Insurer pursuant to the Note Policy or the Collateral
Agent pursuant to the Spread Account shall be deemed to be payment made by the
Trust), and such default continues for a period of five days, the Trust will,
upon demand of the Indenture Trustee, pay to it, for the benefit of the Holders
of the Notes, the whole amount then due and payable on such Notes for principal
and interest, with interest upon the overdue principal, and, to the extent
payment at such rate of interest shall be legally enforceable, upon overdue
installments of interest, at the applicable Interest Rate and in addition
thereto such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee and its agents and counsel.

            (b) Each Trust Secured Party hereby irrevocably and unconditionally
appoints the Controlling Party as the true and lawful attorney-in-fact of such
Trust Secured Party for so long as such Trust Secured Party is not the
Controlling Party, with full power of substitution, to execute, acknowledge and
deliver any notice, document, certificate, paper, pleading or instrument and to
do in the name of the Controlling Party as well as in the name, place and stead
of such Trust Secured Party such acts, things and deeds for or on behalf of and
in the name of such Trust Secured Party under this Indenture (including
specifically under Section 5.4) and under the Transaction Documents which such
Trust Secured Party could or might do or which may be necessary, desirable or
convenient in such Controlling Party's sole discretion to effect the purposes
contemplated hereunder and under the Transaction Documents and, without
limitation, following the occurrence of an Event of Default, exercise full
right, power and authority to take, or defer from taking, any and all acts with
respect to the administration, maintenance or disposition of the Trust Property.

            (c) If an Event of Default occurs and is continuing, the Indenture
Trustee may in its discretion but with the consent of the Controlling Party and
shall, at the direction of the Controlling Party (except as provided in Section
5.3(d) below), proceed to protect and enforce its rights and the rights of the
Noteholders by such appropriate Proceedings as the Indenture Trustee or the
Controlling Party shall deem most effective to protect and enforce any such
rights, whether for the specific enforcement of any covenant or agreement in
this Indenture or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy or legal or equitable right vested in the
Indenture Trustee by this Indenture or by law.

            (d) Notwithstanding anything to the contrary contained in this
Indenture (including, without limitation, Sections 5.4(a), 5.12, 5.13 and 5.17)
and regardless of whether an Insurer Default shall have occurred and be
continuing, if the Trust fails to perform its obligations under Section 10.1(b)
hereof when and as due, the Indenture Trustee may in its discretion (and without

                                       29

<PAGE>

the consent of the Controlling Party) proceed to protect and enforce its rights
and the rights of the Noteholders by such appropriate proceedings as the
Indenture Trustee shall deem most effective to protect and enforce any such
rights, whether for specific performance of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy or legal or equitable right vested in the Indenture
Trustee by this Indenture or by law; provided that the Indenture Trustee shall
only be entitled to take any such actions without the consent of the Controlling
Party to the extent such actions (x) are taken only to enforce the Trust's
obligations to redeem the principal amount of Notes and (y) are taken only
against the portion of the Collateral, if any, consisting of the Pre-Funding
Account, any investments therein and any proceeds thereof.

            (e) In case there shall be pending, relative to the Trust or any
other obligor upon the Notes or any Person having or claiming an ownership
interest in the Trust Property, proceedings under Title 11 of the United States
Code or any other applicable Federal or state bankruptcy, insolvency or other
similar law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Trust or its property or such other
obligor or Person, or in case of any other comparable judicial proceedings
relative to the Trust or other obligor upon the Notes, or to the creditors or
property of the Trust or such other obligor, the Indenture Trustee, irrespective
of whether the principal of any Notes shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the
Indenture Trustee shall have made any demand pursuant to the provisions of this
Section, shall be entitled and empowered, by intervention in such proceedings or
otherwise:

                         (i) to file and prove a claim or claims for the whole
                    amount of principal and interest owing and unpaid in respect
                    of the Notes and to file such other papers or documents as
                    may be necessary or advisable in order to have the claims of
                    the Indenture Trustee (including any claim for reasonable
                    compensation to the Indenture Trustee and each predecessor
                    Indenture Trustee, and their respective agents, attorneys
                    and counsel, and for reimbursement of all expenses and
                    liabilities incurred, and all advances made, by the
                    Indenture Trustee and each predecessor Indenture Trustee,
                    except as a result of negligence, bad faith or willful
                    misconduct) and of the Noteholders allowed in such
                    proceedings;

                         (ii) unless prohibited by applicable law and
                    regulations, to vote on behalf of the Holders of Notes in
                    any election of a trustee, a standby trustee or person
                    performing similar functions in any such proceedings;

                         (iii) to collect and receive any monies or other
                    property payable or deliverable on any such claims and to
                    distribute all amounts received with respect to the claims
                    of the Noteholders and of the Indenture Trustee on their
                    behalf; and

                         (iv) to file such proofs of claim and other papers or
                    documents as may be necessary or advisable in order to have
                    the claims of the Indenture Trustee or the Holders of Notes
                    allowed in any judicial proceedings relative to the Trust,
                    its creditors and its property;

                                       30
<PAGE>

and any trustee, receiver, liquidator, custodian or other similar official in
any such proceeding is hereby authorized by each of such Noteholders to make
payments to the Indenture Trustee, and, in the event that the Indenture Trustee
shall consent to the making of payments directly to such Noteholders, to pay to
the Indenture Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Indenture Trustee, each predecessor Indenture Trustee and
their respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Indenture Trustee and each
predecessor Indenture Trustee except as a result of negligence or bad faith.

            (f) Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or vote for or accept or adopt on
behalf of any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any
Noteholder in any such proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar person.

            (g) All rights of action and of asserting claims under this
Indenture, the Spread Account Agreement or under any of the Notes, may be
enforced by the Indenture Trustee without the possession of any of the Notes or
the production thereof in any trial or other proceedings relative thereto, and
any such action or proceedings instituted by the Indenture Trustee shall be
brought in its own name as trustee of an express trust, and any recovery of
judgment, subject to the payment of the expenses, disbursements and compensation
of the Indenture Trustee, each predecessor Indenture Trustee and their
respective agents and attorneys, shall be for the ratable benefit of the Holders
of the Notes.

            (h) In any proceedings brought by the Indenture Trustee (and also
any proceedings involving the interpretation of any provision of this Indenture
or the Spread Account Agreement), the Indenture Trustee shall be held to
represent all the Holders of the Notes, and it shall not be necessary to make
any Noteholder a party to any such proceedings.

         SECTION 5.4 Remedies. (a) If an Event of Default shall have occurred
and be continuing, the Controlling Party may do one or more of the following
(subject to Section 5.5):

                         (i) institute Proceedings in its own name and as
                    trustee of an express trust for the collection of all
                    amounts then payable on the Notes or under this Indenture
                    with respect thereto, whether by declaration or otherwise,
                    enforce any judgment obtained, and collect from the Trust
                    and any other obligor upon such Notes monies adjudged due;

                         (ii) institute Proceedings from time to time for the
                    complete or partial foreclosure of this Indenture with
                    respect to the Trust Property;

                         (iii) exercise any remedies of a secured party under
                    the UCC and take any other appropriate action to protect and
                    enforce the rights and remedies of the Trust Secured
                    Parties; and

                                       31
<PAGE>

                         (iv) direct the Trust Collateral Agent in writing to
                    sell the Trust Property or any portion thereof or rights or
                    interest therein, at one or more public or private sales
                    called and conducted in any manner permitted by law;
                    provided, however, that

                         (A) if the Insurer is the Controlling Party, the
Insurer may not sell or otherwise liquidate the Trust Property following an
Insurance Agreement Indenture Cross Default unless

                         (I) such Insurance Agreement Indenture Cross Default
                    arises from a claim being made on the Note Policy or from
                    the insolvency of the Trust or the Seller, or

                         (II) the proceeds of such sale or liquidation
                    distributable to the Noteholders are sufficient to discharge
                    in full all amounts then due and unpaid upon such Notes for
                    principal and interest; or

                         (B) if the Indenture Trustee is the Controlling Party,
the Indenture Trustee may not sell or otherwise liquidate the Trust Property
following an Event of Default unless

                         (I) such Event of Default is of the type described in
                   Section 5.1(i) or (ii), or

                         (II) either

                                         (x) the  Holders  of 100% of the
                   Outstanding  Amount of the Notes consent thereto,

                                         (y) the  proceeds of such sale or 
                   liquidation distributable to the  Noteholders are sufficient 
                   to discharge in full all amounts then due and unpaid upon
                   such Notes for principal and interest, or

                                        (z) the  Indenture Trustee determines
                   that the Trust Property will not continue to provide
                   sufficient funds for the payment of principal of and
                   interest on the Notes as they would have become due if the
                   Notes had not been declared due and payable, and the
                   Indenture Trustee provides prior written notice to the
                   Rating Agencies and obtains the consent of Holders of
                   66-2/3% of the Outstanding Amount of the Notes.

         In determining such sufficiency or insufficiency with respect to clause
(y) and (z), the Indenture Trustee may, but need not, obtain and rely
conclusively upon an opinion of an Independent investment banking or accounting
firm of national reputation as to the feasibility of such proposed action and as
to the sufficiency of the Trust Property for such purpose.

         SECTION 5.5 Optional Preservation of the Receivables.  If the Indenture
Trustee is the Controlling Party and if the Notes have been declared to be due

                                       32
<PAGE>

and payable under Section 5.2 following an Event of Default and such declaration
and its consequences have not been rescinded and annulled, the Indenture Trustee
may, but need not, elect to direct the Trust Collateral Agent to maintain
possession of the Trust Property. It is the desire of the parties hereto and the
Noteholders that there be at all times sufficient funds for the payment of
principal of and interest on the Notes, and the Indenture Trustee shall take
such desire into account when determining whether or not to direct the Trust
Collateral Agent to maintain possession of the Trust Property. In determining
whether to direct the Trust Collateral Agent to maintain possession of the Trust
Property, the Indenture Trustee may, but need not, obtain and rely conclusively
upon an opinion of an Independent investment banking or accounting firm of
national reputation as to the feasibility of such proposed action and as to the
sufficiency of the Trust Property for such purpose which opinion shall be at the
expense of the Trust.

         SECTION 5.6 Priorities

            (a) Following (1) the acceleration of the Notes pursuant to Section
5.2 or (2) if an Insurer Default shall have occurred and be continuing, the
occurrence of an Event of Default pursuant to Section 5.1(i), 5.1(ii), 5.1(iii),
5.1(v) or 5.1(vi) of the Indenture or (3) the receipt of Insolvency Proceeds
pursuant to Section 11.1(b) of the Sale and Servicing Agreement, the
Distribution Amount, including any money or property collected pursuant to
Section 5.4 of the Indenture and any such Insolvency Proceeds, shall be applied
by the Trust Collateral Agent on the related Distribution Date in the following
order of priority:

                  FIRST: amounts due and owing and required to be distributed to
                  the Servicer, the Owner Trustee, the Indenture Trustee, the
                  Collateral Agent and the Trust Collateral Agent, respectively,
                  pursuant to priorities (i) and (ii) of Section 5.7(b) of the
                  Sale and Servicing Agreement and to the Indenture Trustee and
                  Trust Collateral Agent pursuant to Section 6.7 hereof, and not
                  previously distributed, in the order of such priorities and
                  without preference or priority of any kind within such
                  priorities;

                  SECOND: to Noteholders for amounts due and unpaid on the Notes
                  for interest, ratably, without preference or priority of any
                  kind, according to the amounts due and payable on the Notes
                  for interest;

                  THIRD: to Noteholders for amounts due and unpaid on the Notes
                  for principal, ratably, without preference or priority of any
                  kind, according to the amounts due and payable on the Notes
                  for principal;

                  FOURTH: to the Insurer, to the extent of any amounts owing to
                  the Insurer under the Insurance Agreement and not paid; and

                  FIFTH: to the Collateral Agent to be applied as provided in
                  the Spread Account Agreement; and

                                       33
<PAGE>

provided that any amounts collected from the Pre-Funding Account shall be paid,
first, for amounts due and unpaid on the Notes for principal and interest, if
any, for distribution to Noteholders in accordance with Section 10.1(b) and,
second, in accordance with priorities FIRST through FIFTH above.

            (b) The Indenture Trustee may fix a record date and payment date for
any payment to Noteholders pursuant to this Section. At least 15 days before
such record date the Trust shall mail to each Noteholder and the Indenture
Trustee a notice that states the record date, the payment date and the amount to
be paid.

         SECTION 5.7 Limitation of Suits. No Holder of any Note shall have any
right to institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:

                         (i) such Holder has previously given written notice to
                    the Indenture Trustee of a continuing Event of Default;

                         (ii) the Holders of not less than 25% of the
                    Outstanding Amount of the Notes have made written request to
                    the Indenture Trustee to institute such proceeding in
                    respect of such Event of Default in its own name as
                    Indenture Trustee hereunder;

                         (iii) such Holder or Holders have offered to the
                    Indenture Trustee indemnity reasonably satisfactory to it
                    against the costs, expenses (including legal fees and
                    expenses) and liabilities to be incurred in complying with
                    such request;

                         (iv) the Indenture Trustee for 60 days after its
                    receipt of such notice, request and offer of indemnity has
                    failed to institute such proceedings;

                         (v) no direction inconsistent with such written request
                    has been given to the Indenture Trustee during such 60-day
                    period by the Holders of a majority of the Outstanding
                    Amount of the Notes; and

                         (vi) an Insurer Default shall have occurred and be
                    continuing;

it being understood and intended that no Holders of Notes shall have any right
in any manner whatsoever by virtue of, or by availing of, any provision of this
Indenture to affect, disturb or prejudice the rights of any other Holders of
Notes or to obtain or to seek to obtain priority or preference over any other
Holders or to enforce any right under this Indenture, except in the manner
herein provided.

         In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of Notes,
each representing less than a majority of the Outstanding Amount of the Notes,
the Indenture Trustee in its sole discretion may determine what action, if any,
shall be taken, notwithstanding any other provisions of this Indenture.

         SECTION 5.8  Unconditional Rights of Noteholders To Receive Principal 
and Interest. Notwithstanding any other provisions in this Indenture, the Holder
of any Note shall have the right, which is absolute and unconditional, to
receive payment of the principal of and interest, if any, on such Note on or

                                       34
<PAGE>

after the respective due dates thereof expressed in such Note or in this
Indenture (or, in the case of redemption, on or after the Redemption Date) and
to institute suit for the enforcement of any such payment, and such right shall
not be impaired without the consent of such Holder.

         SECTION 5.9 Restoration of Rights and Remedies. If the Controlling
Party or any Noteholder has instituted any proceeding to enforce any right or
remedy under this Indenture and such proceeding has been discontinued or
abandoned for any reason, then and in every such case the Trust, the Indenture
Trustee and the Noteholders shall, subject to any determination in such
Proceeding, be restored severally and respectively to their former positions
hereunder, and thereafter all rights and remedies of the Indenture Trustee and
the Noteholders shall continue as though no such proceeding had been instituted.

         SECTION 5.10 Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Controlling Party or to the Noteholders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.

         SECTION 5.11 Delay or Omission Not a Waiver. No delay or omission of
the Controlling Party or any Holder of any Note to exercise any right or remedy
accruing upon any Default or Event of Default shall impair any such right or
remedy or constitute a waiver of any such Default or Event of Default or an
acquiescence therein. Every right and remedy given by this Article V or by law
to the Indenture Trustee or to the Noteholders may be exercised from time to
time, and as often as may be deemed expedient, by the Indenture Trustee or by
the Noteholders, as the case may be.

         SECTION 5.12 Control by Noteholders. If the Indenture Trustee is the
Controlling Party, the Holders of a majority of the Outstanding Amount of the
Notes shall have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Indenture Trustee with respect to
the Notes or exercising any trust or power conferred on the Indenture Trustee;
provided that

                         (i) such direction shall not be in conflict with any
                    rule of law or with this Indenture;

                         (ii) subject to the express terms of Section 5.4, any
                    direction to the Indenture Trustee to sell or liquidate the
                    Trust Property shall be by the Holders of Notes representing
                    not less than 100% of the Outstanding Amount of the Notes;

                         (iii) the Noteholders shall provide indemnity
                    satisfactory to the Indenture Trustee against any and all
                    loss, liability or expense incurred by it in connection with
                    its performance of its duties under this Section 5.12;

                                       35
<PAGE>


                         (iv) if the conditions set forth in Section 5.5 have
                    been satisfied and the Indenture Trustee elects to retain
                    the Trust Property pursuant to such Section, then any
                    direction to the Indenture Trustee by Holders of Notes
                    representing less than 100% of the Outstanding Amount of the
                    Notes to sell or liquidate the Trust Property shall be of no
                    force and effect; and

                         (v) the Indenture Trustee may take any other action
                    deemed proper by the Indenture Trustee that is not
                    inconsistent with such direction;

provided, however, that, subject to Section 6.1, the Indenture Trustee need not
take any action that it determines might involve it in liability or might
materially adversely affect the rights of any Noteholders not consenting to such
action.

         SECTION 5.13 Waiver of Past Defaults. If an Insurer Default shall have
occurred and be continuing, prior to the declaration of the acceleration of the
maturity of the Notes as provided in Section 5.4, the Holders of Notes of not
less than a majority of the Outstanding Amount of the Notes may waive any past
Default or Event of Default and its consequences except a Default (a) in payment
of principal of or interest on any of the Notes or (b) in respect of a covenant
or provision hereof which cannot be modified or amended without the consent of
the Holder of each Note. In the case of any such waiver, the Trust, the
Indenture Trustee and the Holders of the Notes shall be restored to their former
positions and rights hereunder, respectively; but no such waiver shall extend to
any subsequent or other Default or impair any right consequent thereto.

         Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereto.

         SECTION 5.14 Undertaking for Costs. All parties to this Indenture
agree, and each Holder of any Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to (a) any suit instituted by the
Indenture Trustee, (b) any suit instituted by any Noteholder, or group of
Noteholders, in each case holding in the aggregate more than 10% of the
Outstanding Amount of the Notes or (c) any suit instituted by any Noteholder for
the enforcement of the payment of principal of or interest on any Note on or
after the respective due dates expressed in such Note and in this Indenture (or,
in the case of redemption, on or after the Redemption Date).

         SECTION 5.15 Waiver of Stay or Extension Laws. The Trust covenants (to
the extent that it may lawfully do so) that it will not at anytime insist upon,
or plead or in any manner whatsoever, claim or take the benefit or advantage of,

                                       36
<PAGE>

any stay or extension law wherever enacted, now or at any time hereafter in
force, that may affect the covenants or the performance of this Indenture; and
the Trust (to the extent that it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Indenture
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.

         SECTION 5.16 Action on Notes. The Indenture Trustee's right to seek and
recover judgment on the Notes or under this Indenture shall not be affected by
the seeking, obtaining or application of any other relief under or with respect
to this Indenture. Neither the lien of this Indenture nor any rights or remedies
of the Indenture Trustee or the Noteholders shall be impaired by the recovery of
any judgment by the Indenture Trustee against the Trust or by the levy of any
execution under such judgment upon any portion of the Trust Property or upon any
of the assets of the Trust.

         SECTION 5.17 Performance and Enforcement of Certain Obligations. (a)
Promptly following a request from the Indenture Trustee to do so and at the
Servicer's expense, the Trust agrees to take all such lawful action as the
Indenture Trustee may request to compel or secure the performance and observance
by the Seller and the Servicer, as applicable, of each of their obligations to
the Trust under or in connection with the Sale and Servicing Agreement in
accordance with the terms thereof, and to exercise any and all rights, remedies,
powers and privileges lawfully available to the Trust under or in connection
with the Sale and Servicing Agreement to the extent and in the manner directed
by the Indenture Trustee, including the transmission of notices of default on
the part of the Seller or the Servicer thereunder and the institution of legal
or administrative actions or proceedings to compel or secure performance by the
Seller or the Servicer of each of their obligations under the Sale and Servicing
Agreement.

            (b)   If the Indenture Trustee is a Controlling Party and if an
Event of Default has occurred and is continuing, the Indenture Trustee may, and,
at the written direction of the Holders of 66-2/3% of the Outstanding Amount of
the Notes shall, exercise all rights, remedies, powers, privileges and claims of
the Trust against the Seller or the Servicer under or in connection with the
Sale and Servicing Agreement, including the right or power to take any action to
compel or secure performance or observance by the Seller or the Servicer of each
of their obligations to the Trust thereunder and to give any consent, request,
notice, direction, approval, extension or waiver under the Sale and Servicing
Agreement, and any right of the Trust to take such action shall be suspended.

         SECTION 5.18 Subrogation. The Trust Collateral Agent shall (i) receive
as attorney-in-fact of each Noteholder any Note Policy Claim Amount from the
Insurer and (ii) deposit the same in the Note Distribution Account for
distribution to Noteholders. Any and all Note Policy Claim Amounts disbursed by
the Indenture Trustee from claims made under the Note Policy shall not be
considered payment by the Trust or from the Spread Account with respect to such
Notes, and shall not discharge the obligations of the Trust with respect

                                       37
<PAGE>

thereto. The Insurer shall, to the extent it makes any payment with respect to
the Notes, become subrogated to the rights of the recipient of such payments to
the extent of such payments. Subject to and conditioned upon any payment with
respect to the Notes by or on behalf of the Insurer, the Indenture Trustee shall
assign to the Insurer all rights to the payment of interest or principal with
respect to the Notes which are then due for payment to the extent of all
payments made by the Insurer, and the Insurer may exercise any option, vote
right, power or the like with respect to the Notes to the extent that it has
made payment pursuant to the Note Policy. To evidence such subrogation, the Note
Registrar shall note the Insurer's rights as subrogee upon the register of
Noteholders upon receipt from the Insurer of proof of payment by the Insurer of
any Noteholders' Interest Distributable Amount or Noteholders' Principal
Distributable Amount. The foregoing subrogation shall in all cases be subject to
the rights of the Noteholders to receive all Scheduled Payments in respect of
the Notes.

         SECTION 5.19 Preference Claims

            (a) In the event that the Indenture Trustee has received a certified
copy of an order of the appropriate court that any Scheduled Payment (as defined
in the Note Policy) paid on a Note has been avoided in whole or in part as a
preference payment under applicable bankruptcy law, the Indenture Trustee shall
so notify the Insurer, shall comply with the provisions of the Note Policy to
obtain payment by the Insurer of such avoided payment, and shall, at the time it
provides notice to the Insurer, notify Holders of the Notes by mail that, in the
event that any Noteholder's payment is so recoverable, such Noteholder will be
entitled to payment pursuant to the terms of the Note Policy. The Indenture
Trustee shall furnish to the Insurer at its written request, the requested
records it holds in its possession evidencing the payments of principal of and
interest on Notes, if any, which have been made by the Indenture Trustee and
subsequently recovered from Noteholders, and the dates on which such payments
were made. Pursuant to the terms of the Note Policy, the Insurer will make such
payment on behalf of the Noteholder to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Order (as defined in
the Note Policy) and not to the Indenture Trustee or any Noteholder directly
(unless a Noteholder has previously paid such payment to the receiver,
conservator, debtor-in-possession or trustee in bankruptcy, in which case the
Insurer will make such payment to the Indenture Trustee for distribution to such
Noteholder upon proof of such payment reasonably satisfactory to the Insurer).

            (b) The Indenture Trustee shall promptly notify the Insurer of any
proceeding or the institution of any action (of which the Indenture Trustee has
actual knowledge) seeking the avoidance as a preferential transfer under
applicable bankruptcy, insolvency, receivership, rehabilitation or similar law
(a "Preference Claim") of any distribution made with respect to the Notes. Each
Holder, by its purchase of Notes, and the Indenture Trustee hereby agree that so
long as an Insurer Default shall not have occurred and be continuing, the
Insurer may at any time during the continuation of any proceeding relating to a
Preference Claim direct all matters relating to such Preference Claim including,
without limitation, (i) the direction of any appeal of any order relating to any

                                       38
<PAGE>

Preference Claim and (ii) the posting of any surety, supersede as or performance
bond pending any such appeal at the expense of the Insurer, but subject to
reimbursement as provided in the Insurance Agreement. In addition, and without
limitation of the foregoing, as set forth in Section 5.18, the Insurer shall be
subrogated to, and each Noteholder and the Indenture Trustee hereby delegate and
assign, to the fullest extent permitted by law, the rights of the Indenture
Trustee and each Noteholder in the conduct of any proceeding with respect to a
Preference Claim, including, without limitation, all rights of any party to an
adversary proceeding action with respect to any court order issued in connection
with any such Preference Claim.

                                   ARTICLE VI

              THE INDENTURE TRUSTEE AND THE TRUST COLLATERAL AGENT

         SECTION 6.1 Duties of Indenture Trustee. (a) If an Event of Default
has occurred and is continuing, of which a Responsible Officer of the Indenture
Trustee and the Trust Collateral Agent, as the case may be, has actual
knowledge, then the Indenture Trustee or the Trust Collateral Agent, as the case
may be, shall exercise the rights and powers vested in it by this Indenture and
the Transaction Documents and use the same degree of care and skill in its
exercise as a prudent person would exercise or use under the circumstances in
the conduct of such person's own affairs.

            (b)     Except during the continuance of an above-mentioned Event of
Default:

                         (i) each of the Indenture Trustee and the Trust
                    Collateral Agent undertakes to perform such duties and only
                    such duties as are specifically set forth in this Indenture
                    and no implied covenants or obligations shall be read into
                    this Indenture against the Indenture Trustee and the Trust
                    Collateral Agent, respectively; and

                         (ii) in the absence of bad faith on its part, each of
                    the Indenture Trustee and the Trust Collateral Agent may
                    conclusively rely, as to the truth of the statements and the
                    correctness of the opinions expressed therein, upon
                    certificates or opinions furnished to the Indenture Trustee
                    or the Trust Collateral Agent, as the case may be and
                    conforming to the requirements of this Indenture; however,
                    the Indenture Trustee and the Trust Collateral Agent shall
                    examine the certificates and opinions to determine whether
                    or not they conform on their face to the requirements of
                    this Indenture.

            (c) Each of the Indenture Trustee and the Trust Collateral Agent may
not be relieved from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct, except that:

                         (i) this paragraph does not limit the effect of
                    paragraph (b) of this Section;

                         (ii) each of the Indenture Trustee and the Trust
                    Collateral Agent shall not be liable for any error of
                    judgment made in good faith by a Responsible Officer unless
                    it is proved that the Indenture Trustee or the Trust
                    Collateral Agent was negligent in ascertaining the pertinent
                    facts; and

                         (iii) each of the Indenture Trustee and the Trust
                    Collateral Agent shall not be liable with respect to any
                    action it takes or omits to take in good faith in accordance
                    with a direction received by it pursuant to Section 5.12.

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<PAGE>

            (d) The Indenture Trustee and the Trust Collateral Agent shall not
be liable for interest on any money received by it except as the Indenture
Trustee may agree in writing with the Trust.

            (e) Money held in trust by the Indenture Trustee or the Trust
Collateral Agent need not be segregated from other funds except to the extent
required by law or the terms of this Indenture or the Sale and Servicing
Agreement.

            (f) No provision of this Indenture shall require the Indenture
Trustee or the Trust Collateral Agent to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder or in the exercise of any of its rights or powers, if it shall have
reasonable grounds to believe that repayment of such funds or indemnity
reasonably satisfactory to it against such risk or liability is not reasonably
assured to it.

            (g) Every provision of this Indenture relating to the conductor
affecting the liability of or affording protection to the Indenture Trustee or
the Trust Collateral Agent shall be subject to the provisions of this Section
and to the provisions of the TIA.

            (h) The Indenture Trustee or the Trust Collateral Agent shall, upon
two Business Days' prior written notice to the Indenture Trustee or the Trust
Collateral Agent, as the case may be, permit any representative of the Insurer,
during the Indenture Trustee's or the Trust Collateral Agent, as the case may
be, normal business hours, to examine all books of account, records, reports and
other papers of the Indenture Trustee or the Trust Collateral Agent, as the case
may be, relating to the Notes, to make copies and extracts therefrom and to
discuss the Indenture Trustee's or the Trust Collateral Agent's affairs and
actions, as such affairs and actions relate to the Indenture Trustee's or the
Trust Collateral Agent's duties with respect to the Notes, with the Indenture
Trustee's or the Trust Collateral Agent's officers and employees responsible for
carrying out the Indenture Trustee's or the Trust Collateral Agent's duties with
respect to the Notes at the sole cost and expense of the Trust.

            (i) The Indenture Trustee shall, and hereby agrees that it will,
hold the Note Policy in trust, and will hold any proceeds of any claim on the
Note Policy in trust solely for the use and benefit of the Noteholders.

            (j) Without limiting the generality of this Section 6.1, the
Indenture Trustee shall have no duty (i) to see to any recording, filing or
depositing of this Indenture or any agreement referred to herein or any
financing statement evidencing a security interest in the Financed Vehicles, or
to see to the maintenance of any such recording or filing or depositing or to
any recording, refiling or redepositing of any thereof, (ii) to see to any
insurance of the Financed Vehicles or Obligors or to effect or maintain any such
insurance, (iii) to see to the payment or discharge of any tax, assessment or
other governmental charge or any Lien or encumbrance of any kind owing with
respect to, assessed or levied against any part of the Trust, (iv) to confirm or

                                       40
<PAGE>

verify the contents of any reports or certificates delivered to the Indenture
Trustee pursuant to this Indenture or the Sale and Servicing Agreement believed
by the Indenture Trustee to be genuine and to have been signed or presented by
the proper party or parties, or (v) to inspect the Financed Vehicles at any time
or ascertain or inquire as to the performance of observance of any of the
Trust's, the Seller's or the Servicer's representations, warranties or covenants
or the Servicer's duties and obligations as Servicer and as custodian of the
Receivable Files under the Sale and Servicing Agreement.

            (k) In no event shall Harris Trust and Savings Bank, in any of its
capacities hereunder, be deemed to have assumed any duties of the Owner Trustee
under the Delaware Business Trust Statute, common law, or the Trust Agreement.

         SECTION 6.2 Rights of Indenture Trustee and the Trust Collateral Agent.
(a) The Indenture Trustee and the Trust Collateral Agent may rely conclusively
on any document believed by it to be genuine and to have been signed or
presented by the proper person. The Indenture Trustee and the Trust Collateral
Agent need not investigate any fact or matter stated in the document.

            (b) Before the Indenture Trustee or the Trust Collateral Agent acts
or refrains from acting, it may require an Officer's Certificate or an Opinion
of Counsel. The Indenture Trustee shall not be liable for any action it takes or
omits to take in good faith in reliance on such Officer's Certificate or Opinion
of Counsel.

            (c) The Indenture Trustee or the Trust Collateral Agent may execute
any of the trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys or a custodian or nominee, and the
Indenture Trustee or the Trust Collateral Agent shall not be responsible for any
misconduct or negligence on the part of, or for the supervision of, NAFI,
including in its capacity as Servicer, or any other such agent, attorney,
custodian or nominee appointed with due care by it hereunder.

            (d) The Indenture Trustee or the Trust Collateral Agent shall not be
liable for any action it takes or omits to take in good faith which it believes
to be authorized or within its rights or powers; provided, however, that the
Indenture Trustee's or the Trust Collateral Agent's conduct does not constitute
willful misconduct, negligence or bad faith.

            (e) The Indenture Trustee and the Trust Collateral Agent may consult
with counsel, and the advice or opinion of counsel with respect to legal matters
relating to this Indenture and the Notes shall be full and complete
authorization and protection from liability in respect to any action taken,
omitted or suffered by it hereunder in good faith and in accordance with the
advice or opinion of such counsel.

            (f) The Indenture Trustee and the Trust Collateral Agent shall be
under no obligation to institute, conduct, defend any litigation or take any
action under this Indenture or in relation to this Indenture, at the request,
order or direction of any of the Holders of Notes or the Controlling Party,
pursuant to the provisions of this Indenture, unless such Holders of Notes or
the Controlling Party shall have offered to the Indenture Trustee and the Trust
Collateral Agent reasonable security or indemnity against the costs, expenses
and liabilities that may be incurred therein or thereby; provided, however that

                                       41
<PAGE>

the Indenture Trustee and the Trust Collateral Agent shall, upon the occurrence
of an Event of Default (that has not been cured), exercise the rights and powers
vested in it by this Indenture and the Transaction Documents and use the same
degree of care and skill in its exercise as a prudent person would exercise or
use under the circumstances in the conduct of such person's own affairs.

            (g) The Indenture Trustee and the Trust Collateral Agent shall not
be bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond or other paper or document, unless
requested in writing to do so by the Insurer (so long as no Insurer Default
shall have occurred and be continuing) or (if an Insurer Default shall have
occurred and be continuing) by the Holders of Notes evidencing not less than 25%
of the Outstanding Amount thereof; provided, however, that if the payment within
a reasonable time to the Indenture Trustee and the Trust Collateral Agent of the
costs, expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Indenture Trustee or the Trust
Collateral Agent, not reasonably assured to the Indenture Trustee or the Trust
Collateral Agent by the security afforded to it by the terms of this Indenture
or the Sale and Servicing Agreement, the Indenture Trustee or the Trust
Collateral Agent may require indemnity reasonably satisfactory to it against
such cost, expense (including legal fees and expenses) or liability as a
condition to such proceeding; the reasonable expense of every such examination
shall be paid by the Person making such request, or, if paid by the Indenture
Trustee or the Trust Collateral Agent, shall be reimbursed by the Person making
such request upon demand.

         SECTION 6.3 Individual Rights of Indenture Trustee. The Indenture
Trustee in its individual or any other capacity may become the owner or pledgee
of Notes and may otherwise deal with the Trust or its Affiliates with the same
rights it would have if it were not Indenture Trustee. Any Note Paying Agent,
Note Registrar, co-registrar or co-paying agent may do the same with like
rights. However, the Indenture Trustee must comply with Sections 6.11 and 6.12.

         SECTION 6.4 Indenture Trustee's Disclaimer. Each of the Indenture
Trustee and the Trust Collateral Agent shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture, the Trust
Property or the Notes, it shall not be accountable for the Trust's use of the
proceeds from the Notes, and it shall not be responsible for any statement of
the Trust in the Indenture or in any document issued in connection with the sale
of the Notes or in the Notes other than the Indenture Trustee's certificate of
authentication.

         SECTION 6.5 Notice of Defaults. If an Event of Default occurs and is
continuing and if it is either actually known by, or written notice of the
existence thereof has been delivered to, a Responsible Officer of the Indenture
Trustee, the Indenture Trustee shall mail to each Noteholder notice of the
Default within 90 days after such knowledge or notice occurs. Except in the case
of a Default in payment of principal of or interest on any Note (including
payments pursuant to the mandatory redemption provisions of such Note), the
Indenture Trustee may withhold the notice if and so long as a Responsible
Officer in good faith determines that withholding the notice is in the interests
of Noteholders.

         SECTION 6.6 Reports by Indenture Trustee to Holders. Upon written
request, the Note Paying Agent or the Servicer shall on behalf of the Trust
deliver to each Noteholder such information as may be reasonably required to
enable such Holder to prepare its Federal and state income tax returns required
by law.

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<PAGE>

         SECTION 6.7 Compensation and Indemnity. (a) Pursuant to Section
5.7(b) of the Sale and Servicing Agreement and subject to Section 6.18 herein,
the Trust shall, or shall cause the Servicer to, pay to the Indenture Trustee
and the Trust Collateral Agent from time to time compensation for its services.
The Indenture Trustee's and the Trust Collateral Agent's compensation shall not
be limited by any law on compensation of a trustee of an express trust. The
Trust shall or shall cause the Servicer to reimburse the Indenture Trustee and
the Trust Collateral Agent for all reasonable out-of-pocket expenses incurred or
made by it, including costs of collection, in addition to the compensation for
its services. Such expenses shall include the reasonable compensation and
expenses, disbursements and advances of the Indenture Trustee's and the Trust
Collateral Agent's agents, counsel, accountants and experts. The Trust shall or
shall cause the Servicer to indemnify the Indenture Trustee, the Trust
Collateral Agent and their respective officers, directors, employees and agents
against any and all loss, liability or expense (including attorneys' fees and
expenses) incurred by each of them in connection with the acceptance or the
administration of this trust and the performance of its duties hereunder. The
Indenture Trustee or the Trust Collateral Agent shall notify the Trust and the
Servicer promptly of any claim for which it may seek indemnity. Failure by the
Indenture Trustee or the Trust Collateral Agent to so notify the Trust and the
Servicer shall not relieve the Trust of its obligations hereunder or the
Servicer of its obligations under Article XII of the Sale and Servicing
Agreement. The Trust shall or shall cause the Servicer to defend the claim, the
Indenture Trustee or the Trust Collateral Agent may have separate counsel and
the Trust shall or shall cause the Servicer to pay the fees and expenses of such
counsel. Neither the Trust nor the Servicer need reimburse any expense or
indemnify against any loss, liability or expense incurred by the Indenture
Trustee or the Trust Collateral Agent through the Indenture Trustee's or the
Trust Collateral Agent's own willful misconduct, negligence or bad faith.

            (b)   The Trust's payment obligations to the Indenture Trustee
pursuant to this Section shall survive the discharge of this Indenture or the
earlier resignation or removal of the Indenture Trustee or the Trust Collateral
Agent. When the Indenture Trustee incurs expenses after the occurrence of a
Default specified in Section 5.1(iv) or (v) with respect to the Trust, the
expenses are intended to constitute expenses of administration under Title 11 of
the United States Code or any other applicable Federal or state bankruptcy,
insolvency or similar law. Notwithstanding anything else set forth in this
Indenture or the Transaction Documents, the Indenture Trustee agrees that the
obligations of the Trust (but not the Servicer) to the Indenture Trustee
hereunder and under the Transaction Documents shall be recourse to the Trust
Property only and specifically shall not be recourse to the assets of the Trust
or any Securityholder. In addition, the Indenture Trustee agrees that its
recourse to the Trust, the Trust Property, the Seller and amounts held pursuant
of the Spread Account Agreement shall be limited to the right to receive the
distributions referred to in Section 5.7(b) of the Sale and Servicing Agreement
or Section 3.03 of the Spread Account Agreement.

         SECTION 6.8 Replacement of Indenture Trustee. The Indenture Trustee
may resign at any time by so notifying the Trust and the Insurer. The Trust may
and, at the request of the Insurer (unless an Insurer Default shall have
occurred and be continuing) shall, remove the Indenture Trustee, if:

                         (i) the Indenture Trustee fails to comply with Section
                    6.11;
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<PAGE>


                         (ii) a court having jurisdiction in the premises in
                    respect of the Indenture Trustee in an involuntary case or
                    proceeding under federal or state banking or bankruptcy
                    laws, as now or hereafter constituted, or any other
                    applicable federal or state bankruptcy, insolvency or other
                    similar law, shall have entered a decree or order granting
                    relief or appointing a receiver, liquidator, assignee,
                    custodian, trustee, conservator, sequestrator (or similar
                    official) for the Indenture Trustee or for any substantial
                    part of the Indenture Trustee's property, or ordering the
                    winding-up or liquidation of the Indenture Trustee's
                    affairs;

                         (iii) an involuntary case under the federal bankruptcy
                    laws, as now or hereafter in effect, or another present or
                    future federal or state bankruptcy, insolvency or similar
                    law is commenced with respect to the Indenture Trustee and
                    such case is not dismissed within 60 days;

                         (iv) the Indenture Trustee commences a voluntary case
                    under any federal or state banking or bankruptcy laws, as
                    now or hereafter constituted, or any other applicable
                    federal or state bankruptcy, insolvency or other similar
                    law, or consents to the appointment of or taking possession
                    by a receiver, liquidator, assignee, custodian, trustee,
                    conservator, sequestrator (or other similar official) for
                    the Indenture Trustee or for any substantial part of the
                    Indenture Trustee's property, or makes any assignment for
                    the benefit of creditors or fails generally to pay its debts
                    as such debts become due or takes any corporate action in
                    furtherance of any of the foregoing;

                         (v) the Indenture Trustee otherwise becomes incapable
                    of acting; or

                         (vi) the rating assigned to the long-term unsecured
                    debt obligations of the Indenture Trustee by the Rating
                    Agencies shall be lowered below the rating of "BBB", "Baa3"
                    or equivalent rating or be withdrawn by either of the Rating
                    Agencies.

         If the Indenture Trustee resigns or is removed or if a vacancy exists
in the office of Indenture Trustee for any reason (the Indenture Trustee in such
event being referred to herein as the retiring Indenture Trustee), the Trust
shall promptly appoint a successor Indenture Trustee acceptable to the Insurer
(so long as an Insurer Default shall not have occurred and be continuing). If
the Trust fails to appoint such a successor Indenture Trustee, the Insurer may
appoint a successor Indenture Trustee.

         A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee and to the Trust. Thereupon the
resignation or removal of the retiring Indenture Trustee the Insurer (provided
that no Insurer Default shall have occurred and be continuing) shall become
effective, and the successor Indenture Trustee shall have all the rights, powers
and duties of the retiring Indenture Trustee under this Indenture subject to
satisfaction of the Rating Agency Condition. The successor Indenture Trustee
shall mail a notice of its succession to Noteholders. The retiring Indenture
Trustee shall promptly transfer all property held by it as Indenture Trustee to
the successor Indenture Trustee.

                                       44
<PAGE>

         If a successor Indenture Trustee does not take office within 60 days
after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Trust or the Holders of a majority in Outstanding Amount
of the Notes may petition any court of competent jurisdiction for the
appointment of a successor Indenture Trustee.

         If the Indenture Trustee fails to comply with Section 6.11, any
Noteholder may petition any court of competent jurisdiction for the removal of
the Indenture Trustee and the appointment of a successor Indenture Trustee.

         Any resignation or removal of the Indenture Trustee and appointment of
a successor Indenture Trustee pursuant to any of the provisions of this Section
shall not become effective until acceptance of appointment by the successor
Indenture Trustee pursuant to Section 6.8 and payment of all fees and expenses
owed to the outgoing Indenture Trustee.

         Notwithstanding the replacement of the Indenture Trustee pursuant to
this Section, the Trust's and the Servicer's obligations under Section 6.7 shall
continue for the benefit of the retiring Indenture Trustee.

         SECTION 6.9 Successor Indenture Trustee by Merger. If the Indenture
Trustee consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another corporation
or banking association, the resulting, surviving or transferee corporation
without any further act shall be the successor Indenture Trustee.

         In case at the time such successor or successors by merger, conversion
or consolidation to the Indenture Trustee shall succeed to the trusts created by
this Indenture any of the Notes shall have been authenticated but not delivered,
any such successor to the Indenture Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee; and in all such cases such certificates
shall have the full force which it is anywhere in the Notes or in this Indenture
provided that the certificate of the Indenture Trustee shall have.

         SECTION 6.10 Appointment of Co-Indenture Trustee or Separate
Indenture Trustee. (a) Notwithstanding any other provisions of this Indenture,
at any time, for the purpose of meeting any legal requirement of any
jurisdiction in which any part of the Trust may at the time be located, the
Indenture Trustee with the consent of the Insurer (so long as an Insurer Default
shall not have occurred and be continuing) shall have the power and may execute
and deliver all instruments to appoint one or more Persons to act as a
co-trustee or co-trustees, or separate trustee or separate trustees, of all or
any part of the Trust, and to vest in such Person or Persons, in such capacity
and for the benefit of the Noteholders, such title to the Trust, or any part
hereof, and, subject to the other provisions of this Section, such powers,
duties, obligations, rights and trust as the Indenture Trustee may consider
necessary or desirable. No co-trustee or separate trustee hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
6.11 and no notice to Noteholders of the appointment of any co-trustee or
separate trustee shall be required under Section 6.8 hereof.

                                       45
<PAGE>


            (b)    Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:

                         (i) all rights, powers, duties and obligations
                    conferred or imposed upon the Indenture Trustee shall be
                    conferred or imposed upon and exercised or performed by the
                    Indenture Trustee and such separate trustee or co-trustee
                    jointly (it being understood that such separate trustee or
                    co-trustee is not authorized to act separately without the
                    Indenture Trustee joining in such act), except to the extent
                    that under any law of any jurisdiction in which any
                    particular act or acts are to be performed the Indenture
                    Trustee shall be incompetent or unqualified to perform such
                    act or acts, in which event such rights, powers, duties and
                    obligations (including the holding of title to the Trust or
                    any portion thereof in any such jurisdiction) shall be
                    exercised and performed singly by such separate trustee or
                    co-trustee, but solely at the direction of the Indenture
                    Trustee;

                         (ii) no trustee hereunder shall be personally liable by
                    reason of any act or omission of any other trustee
                    hereunder, including acts or omissions of predecessor or
                    successor trustees; and

                         (iii) the Indenture Trustee may at any time accept the
                    resignation of or remove any separate trustee or co-trustee.

            (c) Any notice, request or other writing given to the Indenture
Trustee shall be deemed to have been given to each of the then separate trustees
and co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article VI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Indenture Trustee or separately, as may be provided therein, subject to all the
provisions of this Indenture, specifically including every provision of this
Indenture relating to the conduct of, affecting the liability of, or affording
protection to, the Indenture Trustee. Every such instrument shall be filed with
the Indenture Trustee.

            (d) Any separate trustee or co-trustee may at any time constitute
the Indenture Trustee, its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. If any separate trustee
or co-trustee shall die, dissolve, become insolvent, become incapable of acting,
resign or be removed, all of its estates, properties, rights, remedies and
trusts shall invest in and be exercised by the Indenture Trustee, to the extent
permitted by law, without the appointment of a new or successor trustee.

         SECTION 6.11 Eligibility: Disqualification. The Indenture Trustee shall
at all times satisfy the requirements of TIA ss.310(a). The Indenture Trustee
shall have a combined capital and surplus of at least $50,000,000 as set forth
in its most recent published annual report of condition and it shall have a long
term debt rating of Baa3 or better by the Rating Agencies. The Indenture Trustee

                                       46
<PAGE>

shall provide copies of such reports to the Insurer upon request. The Indenture
Trustee shall comply with TIA ss.310(b), including the optional provision
permitted by the second sentence of TIA ss.310(b)(9); provided, however, that
there shall be excluded from the operation of TIA ss.310(b)(1) any indenture or
indentures under which other securities of the Trust are outstanding if the
requirements for such exclusion set forth in TIA ss.310(b)(1) are met.

         SECTION 6.12 Preferential Collection of Claims Against Trust. The
Indenture Trustee shall comply with TIA ss.311(a), excluding any creditor
relationship listed in TIA ss.311(b). A Indenture Trustee who has resigned or
been removed shall be subject to TIA ss.311(a) to the extent indicated.

         SECTION 6.13 Appointment and Powers. Subject to the terms and
conditions hereof, each of the Trust Secured Parties hereby appoints Harris
Trust and Savings Bank as the Trust Collateral Agent with respect to the
Collateral, and Harris Trust and Savings Bank hereby accepts such appointment
and agrees to act as Trust Collateral Agent with respect to the Indenture
Collateral for the Trust Secured Parties, to maintain custody and possession of
such Indenture Collateral (except as otherwise provided hereunder) and to
perform the other duties of the Trust Collateral Agent in accordance with the
provisions of this Indenture and the other Transaction Documents. Each Trust
Secured Party hereby authorizes the Trust Collateral Agent to take such action
on its behalf, and to exercise such rights, remedies, powers and privileges
hereunder, as the Controlling Party may direct and as are specifically
authorized to be exercised by the Trust Collateral Agent by the terms hereof,
together with such actions, rights, remedies, powers and privileges as are
reasonably incidental thereto. The Trust Collateral Agent shall act upon and in
compliance with the written instructions of the Controlling Party delivered
pursuant to this Indenture promptly following receipt of such written
instructions; provided that the Trust Collateral Agent shall not act in
accordance with any instructions (i) which are not authorized by, or in
violation of the provisions of, this Indenture or (ii) for which the Trust
Collateral Agent has not received reasonable indemnity. Receipt of such
instructions shall not be a condition to the exercise by the Trust Collateral
Agent of its express duties hereunder, except where this Indenture provides that
the Trust Collateral Agent is permitted to act only following and in accordance
with such instructions.

         SECTION 6.14 Performance Duties. The Trust Collateral Agent shall have
no duties or responsibilities except those expressly set forth in this Indenture
and the other Transaction Documents to which the Trust Collateral Agent is a
party or as directed by the Controlling Party in accordance with this Indenture.
The Trust Collateral Agent shall not be required to take any discretionary
actions hereunder except at the written direction and with indemnification from
the Controlling Party. The Trust Collateral Agent shall, and hereby agrees that
it will, perform all of the duties and obligations required of it under the Sale
and Servicing Agreement.

         SECTION 6.15 Limitation on Liability. Neither the Trust Collateral
Agent nor any of its directors, officers, employees and agents shall be liable
for any action taken or omitted to be taken by it or them hereunder, or in
connection herewith, except that the Trust Collateral Agent shall be liable for
its negligence, bad faith or willful misconduct; nor shall the Trust Collateral
Agent be responsible for the validity, effectiveness, value, sufficiency or

                                       47
<PAGE>

enforceability against the Trust of this Indenture or any of the Indenture
Collateral (or any part thereof). Notwithstanding any term or provision of this
Indenture, the Trust Collateral Agent shall incur no liability to the Trust or
the Trust Secured Parties for any action taken or omitted by the Trust
Collateral Agent in connection with the Indenture Collateral, except for the
negligence, bad faith or willful misconduct on the part of the Trust Collateral
Agent, and, further, shall incur no liability to the Trust Secured Parties
except for negligence, bad faith or willful misconduct in carrying out its
duties to the Trust Secured Parties. Subject to Section 6.16, the Trust
Collateral Agent shall be protected and shall incur no liability to any such
party in conclusively relying upon the accuracy, acting in reliance upon the
contents, and assuming the genuineness of any notice, demand, certificate,
signature, instrument or other document reasonably believed by the Trust
Collateral Agent to be genuine and to have been duly executed by the appropriate
signatory, and (absent actual knowledge to the contrary) the Trust Collateral
Agent shall not be required to make any independent investigation with respect
thereto. The Trust Collateral Agent shall at all times be free independently to
establish to its reasonable satisfaction, but shall have no duty to
independently verify, the existence or nonexistence of facts that are a
condition to the exercise or enforcement of any right or remedy hereunder or
under any of the Transaction Documents. The Trust Collateral Agent may consult
with counsel, and shall not be liable for any action taken or omitted to be
taken by it hereunder in good faith and in accordance with the advice of such
counsel. The Trust Collateral Agent shall not be under any obligation to
exercise any of the remedial rights, obligations or powers vested in it by this
Indenture or to follow any direction from the Controlling Party unless it shall
have received security or indemnity satisfactory to the Trust Collateral Agent
against the costs, expenses and liabilities which might be incurred by it.

         SECTION 6.16 Reliance Upon Documents. In the absence of negligence, bad
faith or willful misconduct on its part, the Trust Collateral Agent shall be
entitled to rely conclusively on any communication, instrument, paper or other
document reasonably believed by it to be genuine and correct and to have been
signed or sent by the proper Person or Persons and shall have no liability in
acting, or omitting to act, where such action or omission to act is in
reasonable reliance upon any statement or opinion contained in any such document
or instrument.

         SECTION 6.17 Successor Trust Collateral Agent

            (a) Merger. Any Person into which the Trust Collateral Agent may be
converted or merged, or with which it may be consolidated, or to which it may
sell or transfer its trust business and assets as a whole or substantially as a
whole, or any Person resulting from any such conversion, merger, consolidation,
sale or transfer to which the Trust Collateral Agent is a party, shall (provided
it is otherwise qualified to serve as the Trust Collateral Agent hereunder) be
and become a successor Trust Collateral Agent hereunder and be vested with all
of the title to and interest in the Indenture Collateral and all of the trusts,
powers, discretions, immunities, privileges and other matters as was its
predecessor without the execution or filing of any instrument or any further
act, deed or conveyance on the part of any of the parties hereto, anything
herein to the contrary notwithstanding, except to the extent, if any, that any
such action is necessary to perfect, or continue the perfection of, the security
interest of the Trust Secured Parties in the Indenture Collateral; provided that
any such successor shall also be the successor Indenture Trustee under Section
6.9.

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<PAGE>

            (b) Resignation. The Trust Collateral Agent and any successor Trust
Collateral Agent may resign at any time by so notifying the Trust and the
Insurer; provided that the Trust Collateral Agent shall not so resign unless it
shall also resign as Indenture Trustee hereunder.

            (c) Removal. The Trust Collateral Agent may be removed by the
Controlling Party at any time (and should be removed at any time that the
Indenture Trustee has been removed), with or without cause, by an instrument or
concurrent instruments in writing delivered to the Trust Collateral Agent, the
other Trust Secured Party and the Trust. A temporary successor may be removed at
any time to allow a successor Trust Collateral Agent to be appointed pursuant to
subsection (d) below. Any removal pursuant to the provisions of this subsection
(c) shall take effect only upon the date which is the latest of (i) the
effective date of the appointment of a successor Trust Collateral Agent and the
acceptance in writing by such successor Trust Collateral Agent of such
appointment and of its obligation to perform its duties hereunder in accordance
with the provisions hereof, and (ii) receipt by the Controlling Party of an
Opinion of Counsel to the effect described in Section 3.6.

            (d) Acceptance by Successor. The Controlling Party shall have the
sole right to appoint each successor Trust Collateral Agent. Every temporary or
permanent successor Trust Collateral Agent appointed hereunder shall execute,
acknowledge and deliver to its predecessor and to the Indenture Trustee, each
Trust Secured Party and the Trust an instrument in writing accepting such
appointment hereunder and the relevant predecessor shall execute, acknowledge
and deliver such other documents and instruments as will effectuate the delivery
of all Indenture Collateral to the successor Trust Collateral Agent, whereupon
such successor, without any further act, deed or conveyance, shall become fully
vested with all the estates, properties, rights, powers, duties and obligations
of its predecessor. Such predecessor shall, nevertheless, on the written request
of either Trust Secured Party or the Trust, execute and deliver an instrument
transferring to such successor all the estates, properties, rights and powers of
such predecessor hereunder. In the event that any instrument in writing from the
Trust or a Trust Secured Party is reasonably required by a successor Trust
Collateral Agent to more fully and certainly vest in such successor the estates,
properties, rights, powers, duties and obligations vested or intended to be
vested hereunder in the Trust Collateral Agent, any and all such written
instruments shall, at the request of the temporary or permanent successor Trust
Collateral Agent, be forthwith executed, acknowledged and delivered by the
Indenture Trustee or the Trust, as the case may be. The designation of any
successor Trust Collateral Agent and the instrument or instruments removing any
Trust Collateral Agent and appointing a successor hereunder, together with all
other instruments provided for herein, shall be maintained with the records
relating to the Indenture Collateral and, to the extent required by applicable
law, filed or recorded by the successor Trust Collateral Agent in each place
where such filing or recording is necessary to effect the transfer of the
Indenture Collateral to the successor Trust Collateral Agent or to protect or
continue the perfection of the security interests granted hereunder.

         SECTION 6.18 Compensation. The Trust Collateral Agent shall not be
entitled to any compensation for the performance of its duties hereunder other
than the compensation it is entitled to receive in its capacity as Indenture
Trustee. Upon termination of the Indenture Trustee, the Trust Collateral Agent's
duties hereunder shall also terminate.

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<PAGE>

         SECTION 6.19 Representations and Warranties of the Indenture Trustee
and the Trust Collateral Agent.Each of the Trust Collateral Agent and the
Indenture Trustee represents and warrants to the Trust and to each Trust Secured
Party as follows:

            (a) Due Organization. The Indenture Trustee and the Trust Collateral
Agent is a New York banking corporation, duly organized, validly existing and in
good standing under the laws of New York and is duly authorized and licensed
under applicable law to conduct its business as presently conducted.

            (b) Corporate Power. The Indenture Trustee and the Trust Collateral
Agent has all requisite right, power and authority to execute and deliver this
Indenture and to perform all of its duties as the Indenture Trustee or Trust
Collateral Agent, as the case may be, hereunder.

            (c) Due Authorization. The execution and delivery by the Trust
Collateral Agent and the Indenture Trustee of this Indenture and the other
Transaction Documents to which it is a party, and the performance by the Trust
Collateral Agent and the Indenture Trustee of its duties hereunder and
thereunder, have been duly authorized by all necessary corporate proceedings,
are required for the valid execution and delivery by the Trust Collateral Agent
or the Indenture Trustee, or the performance by the Trust Collateral Agent or
the Indenture Trustee, of this Indenture and such other Transaction Documents.

            (d) Valid and Binding Indenture. Each of the Indenture Trustee and
the Trust Collateral Agent has duly executed and delivered this Indenture and
each other Transaction Document to which it is a party, and each of this
Indenture and each such other Transaction Document constitutes the legal, valid
and binding obligation of the Indenture Trustee and the Trust Collateral Agent,
enforceable against the Indenture Trustee and the Trust Collateral Agent in
accordance with its terms, except as (i) such enforceability may be limited by
bankruptcy, insolvency, reorganization and similar laws relating to or affecting
the enforcement of creditors' rights generally and (ii) the availability of
equitable remedies may be limited by equitable principles of general
applicability.

         SECTION 6.20 Waiver of Setoffs. The Indenture Trustee and the Trust
Collateral Agent hereby expressly waives any and all rights of setoff that the
Indenture Trustee or the Trust Collateral Agent may otherwise at any time have
under applicable law with respect to any Account and agrees that amounts in the
Accounts shall at all times be held and applied solely in accordance with the
provisions hereof.

         SECTION 6.21 Control by Controlling Party. The Indenture Trustee and
the Trust Collateral Agent shall comply with notices and instructions given by
the Trust only if accompanied by the written consent of the Controlling Party,
except that if any Event of Default shall have occurred and be continuing, the
Indenture Trustee and the Trust Collateral Agent shall act upon and comply with
notices and instructions given by the Controlling Party alone in the place and
stead of the Trust.

         SECTION 6.22 Compensation. The Trust Collateral Agent shall not be
entitled to any compensation for the performance of its duties hereunder other
than the compensation it is

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<PAGE>

entitled to receive in its capacity as Indenture Trustee. Upon termination of
the Indenture Trustee, the Trust Collateral Agent's duties hereunder shall also
terminate.

                                   ARTICLE VII

                         NOTEHOLDERS' LISTS AND REPORTS

         SECTION 7.1 Trust To Furnish To Indenture Trustee Names and Addresses
of Noteholders. The Trust will furnish or cause to be furnished to the Indenture
Trustee (a) not more than five days after the earlier of (i) each Record Date
and (ii) three months after the last Record Date, a list, in such form as the
Indenture Trustee may reasonably require, of the names and addresses of the
Holders as of such Record Date, (b) at such other times as the Indenture Trustee
may request in writing, within 30 days after receipt by the Trust of any such
request, a list of similar form and content as of a date not more than 10 days
prior to the time such list is furnished; provided, however, that so long as the
Indenture Trustee is the Note Registrar, no such list shall be required to be
furnished. The Indenture Trustee or, if the Indenture Trustee is not the Note
Registrar, the Trust shall furnish to the Insurer in writing upon their written
request and at such other times as the Insurer may request a copy of the list.

         SECTION 7.2 Preservation of Information; Communications to Noteholders.
(a) The Indenture Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of the Holders contained in the most recent
list furnished to the Indenture Trustee as provided in Section 7.1 and the names
and addresses of Holders received by the Indenture Trustee in its capacity as
Note Registrar. The Indenture Trustee may destroy any list furnished to it as
provided in such Section 7.1 upon receipt of a new list so furnished.

            (b) Noteholders may communicate pursuant to TIA ss.312(b) with
other Noteholders with respect to their rights under this Indenture or under the
Notes.

            (c) The Trust, the Indenture Trustee and the Note Registrar shall
have the protection of TIA ss.312(c).

         SECTION 7.3 Reports by Trust. (a) The Trust shall:

                         (i) file with the Indenture Trustee, within 15 days
                    after the Trust is required to file the same with the
                    Commission, copies of the annual reports and copies of the
                    information, documents and other reports (or copies of such
                    portions of any of the foregoing as the Commission may from
                    time to time by rules and regulations prescribe) which the
                    Trust may be required to file with the Commission pursuant
                    to Section 13 or 15(d) of the Exchange Act;

                         (ii) file with the Indenture Trustee and the Commission
                    in accordance with rules and regulations prescribed from
                    time to time by the Commission such additional information,
                    documents and reports with respect to compliance by the
                    Trust with the conditions and covenants of this Indenture as
                    may be required from time to time by such rules and
                    regulations; and

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<PAGE>

                         (iii) supply to the Indenture Trustee (and the
                    Indenture Trustee shall transmit by mail to all Noteholders
                    described in TIA ss.313(c)) such summaries of any
                    information, documents and reports required to be filed by
                    the Trust pursuant to clauses (i) and (ii) of this Section
                    7.3(a) as may be required by rules and regulations
                    prescribed from time to time by the Commission.

            (b)  Unless the Trust otherwise  determines,  the fiscal year of the
Trust shall end on December 31 of each year.

         SECTION 7.4 Reports by Indenture Trustee. If required by TIA ss.313(a),
within 60 days after each August 31, beginning with August 31, 1998, the
Indenture Trustee shall mail to each Noteholder as required by TIA ss.313(c) a
brief report dated as of such date that complies with TIA ss.313(a). The
Indenture Trustee also shall comply with TIA ss.313(b).

         A copy of each report at the time of its mailing to Noteholders shall
be filed by the Indenture Trustee with the Commission and each stock exchange,
if any, on which the Notes are listed. The Trust shall notify the Indenture
Trustee if and when the Notes are listed on any stock exchange.

                                  ARTICLE VIII

                      ACCOUNTS, DISBURSEMENTS AND RELEASES

         SECTION 8.1 Collection of Money . Except as otherwise expressly
provided herein, the Indenture Trustee may demand payment or delivery of, and
shall receive and collect, directly and without intervention or assistance of
any fiscal agent or other intermediary, all money and other property payable to
or receivable by the Trust Collateral Agent pursuant to this Indenture and the
Sale and Servicing Agreement. The Indenture Trustee shall apply all such money
received by it, or cause the Trust Collateral Agent to apply all money received
by it as provided in this Indenture and the Sale and Servicing Agreement. Except
as otherwise expressly provided in this Indenture or in the Sale and Servicing
Agreement, if any default occurs in the making of any payment or performance
under any agreement or instrument that is part of the Trust Property, the
Indenture Trustee may take such action as may be appropriate to enforce such
payment or performance, including the institution and prosecution of appropriate
proceedings. Any such action shall be without prejudice to any right to claim a
Default or Event of Default under this Indenture and any right to proceed
thereafter as provided in Article V.

         SECTION 8.2 Release of Collateral. (a) Subject to the payment of its
fees and expenses pursuant to Section 6.7, the Trust Collateral Agent may, and
when required by the Trust and the provisions of this Indenture shall, execute
instruments to release property from the lien of this Indenture, in a manner and
under circumstances that are not inconsistent with the provisions of this
Indenture. No party relying upon an instrument executed by the Trust Collateral
Agent as provided in this Article VIII shall be bound to ascertain the Trust
Collateral Agent's authority, inquire into the satisfaction of any conditions
precedent or see to the application of any monies.

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<PAGE>

            (b)   The Trust Collateral Agent shall, at such time as there are no
Notes outstanding and all sums due the Indenture Trustee pursuant to Section 6.7
have been paid, release any remaining portion of the Trust Property that secured
the Notes from the lien of this Indenture and release to the Trust or any other
Person entitled thereto any funds then on deposit in the Accounts. The Indenture
Trustee shall release property from the lien of this Indenture pursuant to this
Section 8.2(b) only upon receipt of a Trust Request accompanied by an Officer's
Certificate, an Opinion of Counsel and (if required by the TIA) Independent
Certificates in accordance with TIA ss.ss. 314(c) and 314(d)(1) meeting the
applicable requirements of Section 11.1.

         SECTION 8.3 Opinion of Counsel. The Trust Collateral Agent shall
receive at least seven days' notice when requested by the Trust to take any
action pursuant to Section 8.2(a), accompanied by copies of any instruments
involved, and the Indenture Trustee shall also require as a condition to such
action, an Opinion of Counsel in form and substance satisfactory to each of the
Insurer and the Indenture Trustee, stating the legal effect of any such action,
outlining the steps required to complete the same, and concluding that all
conditions precedent to the taking of such action have been complied with and
such action will not materially and adversely impair the security for the Notes
or the rights of the Noteholders in contravention of the provisions of this
Indenture; provided, however, that such Opinion of Counsel shall not be required
to express an opinion as to the fair value of the Trust Property. Counsel
rendering any such opinion may rely, without independent investigation, on the
accuracy and validity of any certificate or other instrument delivered to the
Indenture Trustee in connection with any such action.

                                   ARTICLE IX

                             SUPPLEMENTAL INDENTURES

         SECTION 9.1 Supplemental Indentures Without Consent of Noteholders .
(a) Without the consent of the Holders of any Notes but with the consent of the
Insurer (unless an Insurer Default shall have occurred and be continuing), as
evidenced to the Indenture Trustee, the Trust and the Indenture Trustee, when
authorized by a Trust Order, at any time and from time to time, may enter into
one or more indentures supplemental hereto (which shall conform to the
provisions of the Trust Indenture Act as in force at the date of the execution
thereof), in form satisfactory to the Indenture Trustee, for any of the
following purposes:

                         (i) to correct or amplify the description of any
                    property at any time subject to the lien of this Indenture,
                    or better to assure, convey and confirm unto the Trust
                    Collateral Agent any property subject or required to be
                    subjected to the lien of this Indenture, or to subject to
                    the lien of this Indenture additional property;

                         (ii) to evidence the succession, in compliance with the
                    applicable provisions hereof, of another person to the
                    Trust, and the assumption by any such successor of the
                    covenants of the Trust herein and in the Notes contained;

                         (iii) to add to the covenants of the Trust, for the
                    benefit of the Holders of the Notes, or to surrender any
                    right or power herein conferred upon the Trust;

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<PAGE>

                         (iv) to convey, transfer, assign, mortgage or pledge
                    any property to or with the Trust Collateral Agent;

                         (v) to cure any ambiguity, to correct or supplement any
                    provision herein or in any supplemental indenture which may
                    be inconsistent with any other provision herein or in any
                    supplemental indenture or to make any other provisions with
                    respect to matters or questions arising under this Indenture
                    or in any supplemental indenture; provided that such action
                    shall not adversely affect the interests of the Holders of
                    the Notes;

                         (vi) to evidence and provide for the acceptance of the
                    appointment hereunder by a successor trustee with respect to
                    the Notes and to add to or change any of the provisions of
                    this Indenture as shall be necessary to facilitate the
                    administration of the trusts hereunder by more than one
                    trustee, pursuant to the requirements of Article VI; or

                         (vii) to modify, eliminate or add to the provisions of
                    this Indenture to such extent as shall be necessary to
                    effect the qualification of this Indenture under the TIA or
                    under any similar federal statute hereafter enacted and to
                    add to this Indenture such other provisions as may be
                    expressly required by the TIA.

         The Indenture Trustee is hereby authorized to join in the execution of
any such supplemental indenture and to make any further appropriate agreements
and stipulations that may be therein contained.

            (b) The Trust and the Indenture Trustee, when authorized by a Trust
Order, may, also without the consent of any of the Holders of the Notes but with
prior notice to the Rating Agencies by the Trust, as evidenced to the Indenture
Trustee, enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to, or changing in any manner or eliminating
any of the provisions of, this Indenture or of modifying in any manner the
rights of the Holders of the Notes under this Indenture; provided, however, that
such action shall not, as evidenced by an Opinion of Counsel, adversely affect
in any material respect the interests of any Noteholder.

         SECTION 9.2 Supplemental Indentures With Consent of Noteholders. The
Trust and the Indenture Trustee, when authorized by a Trust Order, also may,
with prior notice to the Rating Agencies, with the consent of the Insurer
(unless an Insurer Default shall have occurred and be continuing) and with the
consent of the Holders of not less than a majority of the outstanding Amount of
the Notes, by Act of such Holders delivered to the Trust and the Indenture
Trustee, enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to, or changing in any manner or eliminating
any of the provisions of, this Indenture or of modifying in any manner the
rights of the Holders of the Notes under this Indenture; provided, however,
that, subject to the express rights of the Insurer under the Transaction
Documents, no such supplemental indenture shall, without the consent of the
Holder of each Outstanding Note affected thereby:

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<PAGE>

                         (i) change the date of payment of any installment of
                    principal of or interest on any Note, or reduce the
                    principal amount thereof, the interest rate thereon or the
                    Redemption Price with respect thereto, change the provision
                    of this Indenture relating to the application of collections
                    on, or the proceeds of the sale of, the Trust Property to
                    payment of principal of or interest on the Notes, or change
                    any place of payment where, or the coin or currency in
                    which, any Note or the interest thereon is payable;

                         (ii) impair the right to institute suit for the
                    enforcement of the provisions of this Indenture requiring
                    the application of funds available therefor, as provided in
                    Article V, to the payment of any such amount due on the
                    Notes on or after the respective due dates thereof (or, in
                    the case of redemption, on or after the Redemption Date);

                         (iii) reduce the percentage of the Outstanding Amount
                    of the Notes, the consent of the Holders of which is
                    required for any such supplemental indenture, or the consent
                    of the Holders of which is required for any waiver of
                    compliance with certain provisions of this Indenture or
                    certain defaults hereunder and their consequences provided
                    for in this Indenture;

                         (iv) modify or alter the provisions of the proviso to
                    the definition of the term "Outstanding";

                         (v) reduce the percentage of the Outstanding Amount of
                    the Notes required to direct the Indenture Trustee to direct
                    the Trust to sell or liquidate the Trust Property pursuant
                    to Section 5.4;

                         (vi) modify any provision of this Section except to
                    increase any percentage specified herein or to provide that
                    certain additional provisions of this Indenture or the
                    Transaction Documents cannot be modified or waived without
                    the consent of the Holder of each Outstanding Note affected
                    thereby;

                         (vii) modify any of the provisions of this Indenture in
                    such manner as to affect the calculation of the amount of
                    any payment of interest or principal due on any Note on any
                    Distribution Date (including the calculation of any of the
                    individual components of such calculation) or to affect the
                    rights of the Holders of Notes to the benefit of any
                    provisions for the mandatory redemption of the Notes
                    contained herein; or

                         (viii) permit the creation of any lien ranking prior to
                    or on a parity with the lien of this Indenture with respect
                    to any part of the Trust Property or, except as otherwise
                    permitted or contemplated herein or in any of the
                    Transaction Documents, terminate the lien of this Indenture
                    on any property at any time subject hereto or deprive the
                    Holder of any Note of the security provided by the lien of
                    this Indenture.

         The Indenture Trustee may determine whether or not any Notes would be
adversely affected by any supplemental indenture upon receipt of an Opinion of

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<PAGE>

Counsel to that effect and any such determination shall be conclusive upon the
Holders of all Notes, whether theretofore or thereafter authenticated and
delivered hereunder. The Indenture Trustee shall not be liable for any such
determination made in good faith.

         It shall not be necessary for any Act of Noteholders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.

         Promptly after the execution by the Trust and the Indenture Trustee of
any supplemental indenture pursuant to this Section, the Indenture Trustee shall
mail to the Holders of the Notes to which such amendment or supplemental
indenture relates a notice setting forth in general terms the substance of such
supplemental indenture. Any failure of the Indenture Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.

         SECTION 9.3 Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modifications thereby of the trusts created
by this Indenture, the Indenture Trustee shall be entitled to receive, and
subject to Sections 6.1 and 6.2, shall be fully protected in relying upon, an
Opinion of Counsel (and, if requested, an Officer's Certificate) stating that
the execution of such supplemental indenture is authorized or permitted by this
Indenture. The Indenture Trustee may, but shall not be obligated to, enter into
any such supplemental indenture that affects the Indenture Trustee's own rights,
duties, liabilities or immunities under this Indenture or otherwise.

         SECTION 9.4 Effect of Supplemental Indenture. Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be and be deemed to be modified and amended in accordance therewith with respect
to the Notes affected thereby, and the respective rights, limitations of rights,
obligations, duties, liabilities and immunities under this Indenture of the
Indenture Trustee, the Trust and the Holders of the Notes shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.

         SECTION 9.5 Conformity With Trust Indenture Act. Every amendment of
this Indenture and every supplemental indenture executed pursuant to this
Article IX shall conform to the requirements of the Trust Indenture Act as then
in effect so long as this Indenture shall then be qualified under the Trust
Indenture Act.

         SECTION 9.6 Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Indenture Trustee shall,
bear a notation in form approved by the Indenture Trustee as to any matter
provided for in such supplemental indenture. If the Trust or the Indenture
Trustee shall so determine, new Notes so modified as to conform, in the opinion
of the Indenture Trustee and the Trust, to any such supplemental indenture may
be prepared and executed by the Trust and authenticated and delivered by the
Indenture Trustee in exchange for Outstanding Notes.

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<PAGE>

                                    ARTICLE X

                               REDEMPTION OF NOTES

         SECTION 10.1 Redemption . (a) The Notes are subject to redemption in
whole, but not in part, at the direction of the Seller pursuant to Section
11.1(a) of the Sale and Servicing Agreement, on any Distribution Date on which
the Servicer or Seller exercises its option to purchase the Trust Property
pursuant to said Section 11.1(a), for a purchase price equal to the Redemption
Price. The Servicer or the Trust shall furnish the Insurer and each Rating
Agency notice of such redemption. If the Notes are to be redeemed pursuant to
this Section 10.1(a), the Servicer or the Trust shall furnish notice of such
election to the Indenture Trustee not later than 35 days prior to the Redemption
Date and the Trust shall deposit with the Indenture Trustee in the Note
Distribution Account the Redemption Price of the Notes within Five Business Days
prior to the Redemption Date whereupon all such Notes shall be due and payable
on the Redemption Date upon the furnishing of a notice complying with Section
10.2.

                  In the event that on the Distribution Date on which the
Pre-Funding Period ends (or on the Distribution Date immediately following the
last day of the Pre-Funding Period, if the Pre-Funding Period does not end on a
Distribution Date), any Pre-Funded Amount remains on deposit in the Pre-Funding
Account after giving effect to the purchase of all Additional Receivables,
including any such purchase on such Redemption Date, the Notes will be redeemed
in part and paid sequentially in an aggregate principal amount equal to the
Prepayment Amount.

            (c) In the event that the assets of the Trust are sold pursuant to
Section 9.2 of the Trust Agreement, all amounts on deposit in the Note
Distribution Account shall be paid to the Noteholders up to the Outstanding
Amount of the Notes and all accrued and unpaid interest thereon. If amounts are
to be paid to Noteholders pursuant to this Section 10.1(c), the Servicer or the
Trust shall, to the extent practicable, furnish written notice of such event to
the Indenture Trustee not later than 45 days prior to the Redemption Date
whereupon all such amounts shall be payable on the Redemption Date.

         SECTION 10.2 Form of Redemption Notice. (a) Notice of redemption
supplied to the Indenture Trustee by the Servicer under Section 10.1(a) shall be
given by the Indenture Trustee by facsimile or by first-class mail, postage
prepaid, transmitted or mailed prior to the applicable Redemption Date to each
Holder of Notes or record, as of the close of business on the date which is 5
days prior to the applicable Redemption Date, at such Holder's address appearing
in the Note Register.

         All notices of redemption shall state:

                         (i) the Redemption Date;

                         (ii) the Redemption Price;

                         (iii) that the Record Date otherwise applicable to such
                    Redemption Date is not applicable and that payments shall be
                    made only upon presentation and surrender of such Notes and

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<PAGE>

                    the place where such Notes are to be surrendered for payment
                    of the Redemption Price (which shall be the office or agency
                    of the Trust to be maintained as provided in Section 3.2);
                    and

                         (iv) that interest on the Notes shall cease to accrue
                    on the Redemption Date.

         Notice of redemption of the Notes shall be given by the Indenture
Trustee in the name and at the expense of the Trust. Failure to give notice of
redemption, or any defect therein, to any Holder of any Note shall not impair or
affect the validity of the redemption of any other Note.

            (b) Prior notice of redemption under Section 10.1(b) is not required
to be given to Noteholders.

         SECTION 10.3 Notes Payable on Redemption Date. The Notes to be redeemed
shall, following notice of redemption as required by Section 10.2 (in the case
of redemption pursuant to Section 10.1(a) or (c)), on the Redemption Date become
due and payable at the Redemption Price and (unless the Trust shall default in
the payment of the Redemption Price) no interest shall accrue on the Redemption
Price for any period after the date to which accrued interest is calculated for
purposes of calculating the Redemption Price.

                                   ARTICLE XI

                                  MISCELLANEOUS

         SECTION 11.1 Compliance Certficates and Opinions, etc. (a) Upon any
application or request by the Trust to the Indenture Trustee or the Trust
Collateral Agent to take any action under any provision of this Indenture, the
Trust shall furnish to the Indenture Trustee or the Trust Collateral Agent, as
the case may be, and to the Insurer (i) an Officer's Certificate stating that
all conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, (ii) an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any, have been
complied with and (iii) (if required by the TIA) an Independent Certificate from
a firm of certified public accountants meeting the applicable requirements of
this Section, except that, in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Indenture, no additional certificate or opinion need be furnished.

         Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:

                         (i) a statement that each signatory of such certificate
                    or opinion has read or has caused to be read such covenant
                    or condition and the definitions herein relating thereto;

                         (ii) a brief statement as to the nature and scope of
                    the examination or investigation upon which the statements
                    or opinions contained in such certificate or opinion are
                    based;


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<PAGE>
                         (iii) a statement that, in the opinion of each such
                    signatory, such signatory has made such examination or
                    investigation as is necessary to enable such signatory to
                    express an informed opinion as to whether or not such
                    covenant or condition has been complied with; and

                         (iv) a statement as to whether, in the opinion of each
                    such signatory such condition or covenant has been complied
                    with.

                         (b) (i) Prior to the deposit of any Collateral or other
                    property or securities with the Trust Collateral Agent that
                    is to be made the basis for the release of any property or
                    securities subject to the lien of this Indenture, the Trust
                    shall, in addition to any obligation imposed in Section
                    11.1(a) or elsewhere in this Indenture, furnish to the Trust
                    Collateral Agent and the Insurer an Officer's Certificate
                    certifying or stating the opinion of each person signing
                    such certificate as to the fair value (within 90 days of
                    such deposit) to the Trust of the Collateral or other
                    property or securities to be so deposited. Such certificate
                    or opinion of fair value shall satisfy the requirements of
                    Section 314 of the TIA, as amended.

                         (ii) Whenever the Trust is required to furnish to the
                    Trust Collateral Agent and the Insurer an Officer's
                    Certificate certifying or stating the opinion of any signer
                    thereof as to the matters described in clause (i) above, the
                    Trust shall also deliver to the Trust Collateral Agent and
                    the Insurer an Independent Certificate as to the same
                    matters, if the fair value to the Trust of the securities to
                    be so deposited and of all other such securities made the
                    basis of any such withdrawal or release since the
                    commencement of the then-current fiscal year of the Trust,
                    as set forth in the certificates delivered pursuant to
                    clause (i) above and this clause (ii), is 10% or more of the
                    Outstanding Amount of the Notes; provided, that such a
                    certificate need not be furnished with respect to any
                    securities so deposited, if the fair value thereof to the
                    Trust as set forth in the related Officer's Certificate is
                    less than $25,000 or less than 1% percent of the Outstanding
                    Amount of the Notes.

                         (iii) Other than with respect to the release of any
                    Purchased Receivables or Liquidated Receivables, whenever
                    any property or securities are to be released from the lien
                    of this Indenture, the Trust shall also furnish to the Trust
                    Collateral Agent and the Insurer an Officer's Certificate
                    certifying or stating the opinion of each person signing
                    such certificate as to the fair value (within 90 days of
                    such release) of the property or securities proposed to be
                    released and stating that in the opinion of such person the
                    proposed release will not impair the security under this
                    Indenture in contravention of the provisions hereof.

                         (iv) Whenever the Trust is required to furnish to the
                    Indenture Trustee and the Insurer an Officer's Certificate
                    certifying or stating the opinion of any signer thereof as
                    to the matters described in clause (iii) above, the Trust
                    shall also furnish to the Trust Collateral Agent and the
                    Insurer an Independent Certificate as to the same matters if
                    the fair value of the property or securities and of all
                    other property other than Purchased Receivables and
                    Defaulted Receivables, or securities released from the lien
                    of this Indenture since the commencement of the then current
                                       59
<PAGE>

                    calendar year, as set forth in the certificates required by
                    clause (iii) above and this clause (iv), equals 10% or more
                    of the Outstanding Amount of the Notes; provided, that such
                    certificate need not be furnished in the case of any release
                    of property or securities if the fair value thereof as set
                    forth in the related Officer's Certificate is less than
                    $25,000 or less than 1 percent of the then Outstanding
                    Amount of the Notes.

                         (v) Notwithstanding Section 2.9 or any other provision
                    of this Section, the Trust may (A) collect, liquidate, sell
                    or otherwise dispose of Receivables as and to the extent
                    permitted or required by the Transaction Documents and (B)
                    make cash payments out of the Accounts as and to the extent
                    permitted or required by the Transaction Documents.

            SECTION 11.2 Form of Documents Delivered to Indenture Trustee. In
any case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.

         Any certificate or opinion of an Authorized Officer of the Trust may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his or her certificate or opinion is
based are erroneous. Any such certificate of an Authorized Officer or Opinion of
Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of the
Servicer, the Seller or the Trust, stating that the information with respect to
such factual matters is in the possession of the Servicer, the Seller or the
Trust, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.

         Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.

         Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Trust
shall deliver any document as a condition of the granting of such application,
or as evidence of the Trust's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Trust to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to conclusively rely upon the
truth and accuracy of any statement or opinion contained in any such document as
provided in Article VI.

                                       60
<PAGE>

         SECTION 11.3 Acts of Noteholders. (a) Any request, demand, 
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Noteholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Noteholders in person or by agents duly appointed in writing; and except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Indenture Trustee, and,
where it is hereby expressly required, to the Trust. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Noteholders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 6.1) conclusive in favor of the Indenture Trustee and
the Trust, if made in the manner provided in this Section.

            (b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any customary manner of the Indenture
Trustee.

            (c) The ownership of Notes shall be proved by the Note Register.

            (d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of every
Note issued upon the registration thereof or in exchange therefor or in lieu
thereof, in respect of anything done, omitted or suffered to be done by the
Indenture Trustee or the Trust in reliance thereon, whether or not notation of
such action is made upon such Note.

         SECTION 11.4  Notices, etc. to Indenture Trustee, Trust and Rating
Agencies. Any request, demand, authorization, direction, notice, consent, waiver
or Act of Noteholders or other documents provided or permitted by this Indenture
to be made upon, given or furnished to or filed with:

            (a) The Indenture Trustee by any Noteholder or by the Trust shall be
sufficient for every purpose hereunder if personally delivered, delivered by
overnight courier or mailed first-class and shall be deemed to have been duly
given upon receipt to the Indenture Trustee at its Corporate Trust Office, or

            (b) The Trust by the Indenture Trustee or by any Noteholder shall be
sufficient for every purpose hereunder if personally delivered, delivered by
facsimile or overnight courier or mailed first class, and shall deemed to have
been duly given upon receipt to the Trust addressed to: National Auto Finance
1998-1 Trust, in care of Wilmington Trust Company, Rodney Square North, 1100
North Market Street, Wilmington, DE 19890-0001 Attention: Corporate Trust
Administration, or at any other address previously furnished in writing to the
Indenture Trustee by Trust. The Trust shall promptly transmit any notice
received by it from the Noteholders to the Indenture Trustee.

            (c) The Insurer by the Trust or the Indenture Trustee shall be
sufficient for any purpose hereunder if in writing and mailed by first-class
mail personally delivered or telexed or telecopied to the recipient as follows:

                                       61
<PAGE>

         To the Insurer:         Financial Security Assurance Inc.
                                 350 Park Avenue
                                 New York, NY  10022
                                 Attention:  Surveillance Department
                                 Re: National Auto Finance 1998-1 Trust, 5.88%
                                 Automobile Receivables-Backed Notes
                                 Telex No.:          (212) 688-3101
                                 Confirmation:       (212) 826-3518
                                 Telecopy Nos.:      (212) 339-3518 or
                                                     (212) 339-3529
(In each case in which notice or other communication to the Insurer refers to an
Event of Default, a claim on the Note Policy or with respect to which failure on
the part of the Insurer to respond shall be deemed to constitute consent or
acceptance, then a copy of such notice or other communication should also be
sent to the attention of the General Counsel and the Head--Financial Guaranty
Group "URGENT MATERIAL ENCLOSED.")

         Notices required to be given to the Rating Agencies by the Trust, the
Indenture Trustee or the Owner Trustee shall be in writing, personally
delivered, delivered by overnight courier or first class or via facsimile to (i)
in the case of Moody's, at the following address: Moody's Investors Service,
Inc., Attn: ABS Monitoring Department, 99 Church Street, New York, New York
10004, Fax No: (212) 553-0355 and (ii) in the case of S&P, at the following
address: Standard & Poor's Ratings Group, 25 Broadway (15th Floor), New York,
New York 10004, Attention: Asset Backed Surveillance Department, Fax No: (212)
412-0224; or as to each of the foregoing, at such other address as shall be
designated by written notice to the other parties.

         SECTION 11.5 Notices to Noteholder; Waiver. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.

         Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.

         In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Noteholders when such notice is required to be

                                       62
<PAGE>

given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed to
be a sufficient giving of such notice.

         Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder, and shall not under any circumstance constitute a Default or
Event of Default.

         SECTION 11.6 Alternate Payment and Notice Provisions. Notwithstanding
any provision of this Indenture or any of the Notes to the contrary, the Trust
may enter into any agreement with any Holder of a Note providing for a method of
payment, or notice by the Indenture Trustee or any Note Paying Agent to such
Holder, that is different from the methods provided for in this Indenture for
such payments or notices, provided that such methods are reasonable and
consented to by the Indenture Trustee (which consent shall not be unreasonably
withheld). The Trust will furnish to the Indenture Trustee a copy of each such
agreement and the Indenture Trustee will cause payments to be made and notices
to be given in accordance with such agreements.

         SECTION 11.7 Conflict with Trust Indenture Act. If any provision hereof
limits, qualifies or conflicts with another provision hereof that is required to
be included in this indenture by any of the provisions of the Trust Indenture
Act, such required provision shall control.

         The provisions of TIA ss.ss. 310 through 317 that impose duties on any
person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.

         SECTION 11.8 Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.

         SECTION 11.9 Successors and Assigns. All covenants and agreements in
this Indenture and the Notes by the Trust shall bind its successors and assigns,
whether so expressed or not. All agreements of the Indenture Trustee in this
Indenture shall bind its successors. All agreements of the Trust Collateral
Agent in this Indenture shall bind its successors.

         SECTION 11.10 Separability. In case any provision in this Indenture or
in the Notes shall be invalid, illegal or unenforceable, the validity, legality,
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.

         SECTION 11.11 Benefits of Indenture. The Insurer and its successors and
assigns shall be a third-party beneficiary to the provisions of this Indenture,
and shall be entitled to rely upon and directly to enforce such provisions of
this Indenture so long as no Insurer Default shall have occurred and be
continuing. Nothing in this Indenture or in the Notes, express or implied, shall
give to any Person, other than the parties hereto and their successors
hereunder, and the Noteholders, and any other party secured hereunder, and any
other person with an Ownership interest in any part of the Trust Property, any
benefit or any legal or equitable right, remedy or claim under this Indenture.
The Insurer may disclaim any of its rights

                                       63
<PAGE>
and powers under this Indenture (in which case the Indenture Trustee may
exercise such right or power hereunder), but not its duties and obligations
under the Note Policy, upon delivery of a written notice to the Indenture
Trustee.

         SECTION 11.12 Legal Holidays.case where the date on which any payment
is due shall not be a Business Day, then (notwithstanding any other provision of
the Notes or this Indenture) payment need not be made on such date, but may be
made on the next succeeding Business Day with the same force and effect as if
made on the date an which nominally due, and no interest shall accrue for the
period from and after any such nominal date.

         SECTION 11.13 GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

         SECTION 11.14 Counterparts. This Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.

         SECTION 11.15 Recording of Indenture. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Trust and at its expense accompanied by an Opinion of Counsel
(which may be counsel to the Trust or any other counsel reasonably acceptable to
the Indenture Trustee and the Insurer) to the effect that such recording is
necessary either for the protection of the Noteholders or any other person
secured hereunder or for the enforcement of any right or remedy granted to the
Indenture Trustee or the Trust Collateral Agent under this Indenture or the
Collateral Agent under the Spread Account Agreement.

         SECTION 11.16 Trust Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Trust, the Seller, the
Servicer, the Owner Trustee, the Trust Collateral Agent or the Indenture Trustee
on the Notes or under this Indenture or any certificate or other writing
delivered in connection herewith or therewith, against (i) the Seller, the
Servicer, the Trust Collateral Agent, the Indenture Trustee or the Owner Trustee
in its individual capacity, (ii) any owner of a beneficial interest in the Trust
or (iii) any partner, owner, beneficiary, agent, officer, director, employee or
agent of the Seller, the Servicer, the Trust Collateral Agent, the Indenture
Trustee or the Owner Trustee in its individual capacity, any holder of a
beneficial interest in the Trust, the Seller, the Trust Collateral Agent, the
Servicer, the Owner Trustee or the Indenture Trustee or of any successor or
assign of the Seller, the Servicer, the Trust Collateral Agent, the Indenture
Trustee or the Owner Trustee in its individual capacity, except as any such
Person may have expressly agreed (it being understood that the Indenture
Trustee, the Trust Collateral Agent and the Owner Trustee have no such
obligations in their individual capacity) and except that any such owner or
beneficiary shall be fully liable, to the extent provided by applicable law, for
any unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity. For all purposes of this
Indenture, in the performance of any duties or obligations

                                       64
<PAGE>
of the Trust hereunder, the Owner Trustee shall be subject to, and entitled to
the benefits of, the terms and provisions of Articles VI, VII and VIII of the
Trust Agreement.

         SECTION 11.7 No Petition. The Indenture Trustee and the Trust
Collateral Agent, by entering into this Indenture, and each Noteholder, by
accepting a Note, hereby covenant and agree that they will not at any time
institute against the Seller, or the Trust, or join in any institution the
Seller, or the Trust of, any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceedings, or other proceedings under any United States Federal
or state bankruptcy or similar law in connection with any obligations relating
to the Notes, this Indenture or any of the Transaction Documents.

         SECTION 11.8 Inspection. The Trust agrees that, on reasonable prior
notice, it will permit any representative of the Indenture Trustee or of the
Insurer, during the Trust's normal business hours, to examine all the books of
account, records, reports, and other papers of the Trust, to make copies and
extracts therefrom, to cause such books to be audited by independent certified
public accountants, and to discuss the Trust's affairs, finances and accounts
with the Trust's officers, employees, and independent certified public
accountants, all at such reasonable times and as often as may be reasonably
requested. The Indenture Trustee shall and shall cause its representatives to
hold in confidence all such information except to the extent disclosure may be
required by law (and all reasonable applications for confidential treatment are
unavailing) and except to the extent that the Indenture Trustee may reasonably
determine that such disclosure is consistent with its Obligations hereunder.

         SECTION 11.19 Limitation of Liability. It is expressly understood and
agreed by the parties hereto that (a) this Agreement is executed and delivered
by Wilmington Trust Company, not individually or personally but solely as Owner
Trustee of the Trust under the Trust Agreement, in the exercise of the powers
and authority conferred and vested in it, (b) each of the representations,
undertakings and agreements herein made on the part of the Trust is made and
intended not as personal representations, undertakings and agreements by
Wilmington Trust Company but is made and intended for the purpose for binding
only the Trust, (c) nothing herein contained shall be construed as creating any
liability on Wilmington Trust Company individually or personally, to perform any
covenant either expressed or implied contained herein, all such liability, if
any, being expressly waived by the parties to this Agreement and by any person
claiming by, through or under them and (d) under no circumstances shall
Wilmington Trust Company be personally liable for the payment of any
indebtedness or expenses of the Trust or be liable for the breach or failure of
any obligation, representation, warranty or covenant made or undertaking by the
Trust under this Agreement or any related documents.

                                       65

<PAGE>

         IN WITNESS WHEREOF, the Trust, the Indenture Trustee and the Trust
Collateral Agent have caused this Indenture to be duly executed by their
respective officers, hereunto duly authorized, all as of the day and year first
above written.

                                      NATIONAL AUTO FINANCE 1998-1 TRUST

                                      By: WILMINGTON TRUST COMPANY, not in its
                                          individual capacity but solely as 
                                          Owner Trustee,


                                      By:
                                            Name:
                                            Title:


                                      HARRIS TRUST AND SAVINGS BANK, not in its
                                      individual capacity but solely as
                                      Indenture Trustee and Trust Collateral
                                      Agent,


                                      By:
                                            Name:
                                            Title:


                                       66

<PAGE>
                                    EXHIBIT A

                                  FORM OF NOTE



REGISTERED $ [_________]

No. A-1

                       SEE REVERSE FOR CERTAIN DEFINITIONS

                             CUSIP NO. ____________

         Unless this Note is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer or its
agent for registration of transfer, exchange or payment, and any Note issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.

         THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANYTIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.

         NATIONAL AUTO FINANCE 1998-1 TRUST

         5.88% AUTOMOBILE RECEIVABLES-BACKED NOTES, SERIES 1998-1

         National Auto Finance 1998-1 Trust, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of EIGHTY FIVE MILLION TWO HUNDRED
THOUSAND DOLLARS ($ 85,200,000), such amount payable on each Distribution Date
in an amount equal to the aggregate amount, if any, payable from the Note
Distribution Account in respect of principal on the Notes pursuant to Section
3.1 of the Indenture; provided, however, that the entire unpaid principal amount
of this Note shall be due and payable on the May 21, 2004 Distribution Date (the
"Final Scheduled Distribution Date"). The Issuer will pay interest on this Note
at the rate per annum shown above on each Distribution Date until the principal
of this Note is paid or made available for payment, on the principal amount of
this Note outstanding on the preceding Distribution Date (after giving effect to
all payments of principal made on the preceding Distribution Date). Interest on
this Note will accrue for each Distribution Date from the most recent
Distribution Date on which interest has been paid, to, but excluding such
Distribution Date or, if no interest has yet been paid, from January 20, 1998.

                                       1
<PAGE>

Interest will be computed on the basis of a 360-day year consisting of twelve
30-day months. Such principal of and interest on this Note shall be paid in the
manner specified on the reverse hereof.

         The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.

         The Notes are entitled to the benefits of a financial guaranty
insurance policy (the "Note Policy") issued by Financial Security Assurance Inc.
(the "Insurer"), pursuant to which the Insurer has unconditionally guaranteed
the Scheduled Payments (as defined in the Note Policy) with respect to the
Notes.

         For purposes of federal income, state and local income and franchise
and any other income taxes, the Issuer will treat the Notes as indebtedness of
the Issuer and hereby instructs the Indenture Trustee to treat the Notes as
indebtedness of the Issuer for federal and state tax reporting purposes.

         Each Noteholder or Note Owner, by acceptance of this Note or, in the
case of a Note Owner, a beneficial interest in a Note, covenants and agrees that
no recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Seller, the Servicer, the Indenture
Trustee, the Trust Collateral Agent or the Owner Trustee in its individual
capacity, (ii) any owner of a beneficial interest in the Issuer or (iii) any
owner, beneficiary, agent, officer, director or employee of the Seller, the
Servicer, the Indenture Trustee, the Trust Collateral Agent or the Owner Trustee
in its individual capacity, any holder of a beneficial interest in the Issuer,
the Seller, the Servicer, the Trust Collateral Agent, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Seller, the Servicer, the
Indenture Trustee, the Trust Collateral Agent or the Owner Trustee in its
individual capacity, except as any such Person may have expressly agreed (it
being understood that the Indenture Trustee, the Trust Collateral Agent and the
Owner Trustee have no such obligations in their individual capacity) and except
that any such owner or beneficiary shall be fully liable, to the extent provided
by applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.

         Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.

         Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.


                                       2
<PAGE>


         IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer as of the date set forth
below.


                          NATIONAL AUTO FINANCE 1998-1 TRUST

                          WILMINGTON TRUST COMPANY, not in its individual 
                          capacity but solely as Owner Trustee under the Trust
                          Agreement



                          By
                               Name:
                               Title:

                                       3
<PAGE>



                     TRUSTEE'S CERTIFICATE OF AUTHENTICATION

         This is one of the Notes designated above and referred to in the
within-mentioned Indenture.

Date:               HARRIS TRUST AND SAVINGS BANK, not in its individual 
                    capacity but solely as Indenture Trustee,




                                    By
                                         Name:
                                         Title:


<PAGE>



                                 REVERSE OF NOTE

         This Note is a duly authorized Note of the Issuer, designated as its
5.88% Automobile Receivables-Backed Notes, Series 1998-1 (herein called the
"Notes"), issued under an Indenture dated as of December 15, 1997 (such
indenture, as supplemented or amended, is herein called the "Indenture"),
between the Issuer and Harris Trust and Savings Bank, as trustee (the "Indenture
Trustee", which term includes any successor Indenture Trustee under the
Indenture, and the "Trust Collateral Agent", which term includes any successor
Trust Collateral Agent under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Issuer, the Indenture
Trustee, the Trust Collateral Agent and the Holders of the Notes. The Notes are
subject to all terms of the Indenture. All terms used in this Note that are
defined in the Indenture, as supplemented or amended, shall have the meanings
assigned to them in or pursuant to the Indenture, as so supplemented or amended.

         The Notes are and will be equally and ratably secured by the Trust
Property pledged as security therefor as provided in the Indenture.

         Principal of the Notes will be payable on each Distribution Date in an
amount described on the face hereof. "Distribution Date" means the twenty-first
day of each month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing January 21, 1998.

         As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the Final Scheduled Distribution Date
and the Redemption Date, if any, pursuant to Section 10.1(a) or 10.1(c) of the
Indenture. As described above, a portion of the unpaid principal balance of this
Note shall be due and payable on the Redemption Date, if any, pursuant to
Section 10.1(b) of the Indenture. Notwithstanding the foregoing, the entire
unpaid principal amount of the Notes shall be due and payable (i) on the date on
which an Event of Default shall have occurred and be continuing so long as an
Insurer Default shall not have occurred and be continuing or (ii) if an Insurer
Default shall have occurred and be continuing, on the date on which an Event of
Default shall have occurred and be continuing and the Indenture Trustee or the
Holders of the Notes representing at least a majority of the Outstanding Amount
of the Notes have declared the Notes to be immediately due and payable in the
manner provided in Section 5.2 of the Indenture. All principal payments on the
Notes shall be made pro rata to the Noteholders entitled thereto.

         Payments of interest on this Note due and payable on each Distribution
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Holder of this Note (or one or more Predecessor Notes) on
the Note Register as of the close of business on each Record Date, except that
with respect to Notes registered on the Record Date in the name of the nominee
of the Clearing Agency (initially, such nominee to be Cede & Co.), payments will
be made by wire transfer in immediately available funds to the account
designated by such nominee. Such checks shall be mailed to the Person entitled


<PAGE>
thereto at the address of such Person as it appears on the Note Register as of
the applicable Record Date without requiring that this Note be submitted for
notation of payment. Any reduction in the principal amount of this Note (or any
one or more Predecessor Notes) effected by any payments made on any Distribution
Date shall be binding upon all future Holders of this Note and of any Note
issued upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not noted hereon. If funds are expected to be available, as
provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Distribution Date, then the Indenture
Trustee, in the name of and on behalf of the Issuer, will notify the Person who
was the Holder hereof as of the Record Date preceding such Distribution Date by
notice mailed prior to such Distribution Date and the amount then due and
payable shall be payable only upon presentation and surrender of this Note at
the Indenture Trustee's principal Corporate Trust Office or at the office of the
Indenture Trustee's agent appointed for such purposes located in The City of New
York.

         The Issuer shall pay interest on overdue installments of interest at
the Interest Rate to the extent lawful.

         As provided in the Indenture, the Notes may be redeemed (a) pursuant to
Section 10.1(a) of the Indenture, in whole, but not in part, at the option of
the Seller or the Servicer (with the consent of the Insurer under certain
circumstances), on any Distribution Date on or after the date on which the Pool
Balance is less than or equal to 10% of the Original Pool Balance, and (b)
pursuant to Section 10.1(b) of the Indenture, in part, on the Distribution Date
on or immediately following the last day of the Pre-Funding Period in the event
that any Pre-Funded Amount remains on deposit in the Pre-Funding Account after
giving effect to the purchase of all Subsequent Receivables, including any such
purchase on such Redemption Date.

         As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, (i) duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or his attorney duly
authorized in writing, with such signature guaranteed by an "eligible guarantor
institution" meeting the requirements of the Note Registrar which requirements
include membership or participation in Securities Transfer Agents Medallion


                                       2
<PAGE>

Program ("Stamp") or such other "signature guarantee program" as maybe
determined by the Note Registrar in addition to, or in substitution for, Stamp,
all in accordance with the Exchange Act, and (ii) accompanied by such other
documents as the Indenture Trustee may require, and thereupon one or more new
Notes of authorized denominations and in the same aggregate principal amount
will be issued to the designated transferee or transferees. No service charge
will be charged for any registration of transfer or exchange of this Note, but
the transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such registration
of transfer or exchange.

         Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under
the Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Seller, the Servicer, the Indenture Trustee or the
Owner Trustee in its individual capacity, (ii) any owner of a beneficial
interest in the Issuer or (iii) any owner, beneficiary, agent, officer, director
or employee of the Seller, the Servicer, the Indenture Trustee or the Owner
Trustee in its individual capacity, any holder of a beneficial interest in the
Issuer, the Seller, the Servicer, the Owner Trustee or the Indenture Trustee or
of any successor or assign of the Seller, the Servicer, the Indenture Trustee or
the Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed (it being understood that the Indenture Trustee and the Owner
Trustee have no such obligations in their individual capacity) and except that
any such owner or beneficiary shall be fully liable, to the extent provided by
applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.

         Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note covenants and agrees that by
accepting the benefits of the Indenture that such Noteholder will not at any
time institute against the Depositor, or the Issuer or join in any institution
against the Depositor, or the Issuer of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings, under
any United States Federal or state bankruptcy or similar law in connection with
any obligations relating to the Notes, the Indenture or the Transaction
Documents.

         Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Indenture Trustee and the Insurer and any agent of the Issuer,
the Indenture Trustee or the Insurer may treat the Person in whose name this
Note (as of the day of determination or as of such other date as may be
specified in the Indenture) is registered as the owner hereof for all purposes,
whether or not this Note be overdue, and neither the Issuer, the Indenture
Trustee nor any such agent shall be affected by notice to the contrary.

         The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Insurer and of the Holders of Notes
representing a majority of the Outstanding Amount of all Notes at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
Notes representing specified percentages of the Outstanding Amount of the Notes,
on behalf of the Holders of all the Notes, to waive compliance by the Issuer
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Note (or any one of more Predecessor Notes) shall be conclusive and binding
upon such Holder and upon all future Holders of this Note and of any

         Notes issued upon the registration of transfer hereof or in exchange
hereof or in lieu hereof whether or not notation of such consent or waiver is
made upon this Note. The Indenture also permits the Indenture Trustee to amend
or waive certain terms and conditions set forth in the Indenture without the
consent of Holders of the Notes issued thereunder.

         The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.

                                       3
<PAGE>

         The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Indenture Trustee and the
Holders of Notes under the Indenture.

         The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.

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

         No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.

         Anything herein to the contrary notwithstanding, except as expressly
provided in the Indenture or the Transaction Documents, neither Wilmington Trust
Company in its individual capacity, any owner of a beneficial interest in the
Issuer, nor any of their respective beneficiaries, agents, officers, directors,
employees or successors or assigns shall be personally liable for, nor shall
recourse be had to any of them for, the payment of principal of or interest on,
or performance of, or omission to perform, any of the covenants, obligations or
indemnifications contained in this Note or the Indenture, it being expressly
understood that said covenants, obligations and indemnifications have been made
by the Issuer for the sole purposes of binding the interests of the Issuer in
the assets of the Issuer. The Holder of this Note by the acceptance hereof
agrees that except as expressly provided in the Indenture or the Transaction
Documents, in the case of an Event of Default under the Indenture, the Holder
shall have no claim against any of the foregoing for any deficiency, loss or
claim therefrom; provided, however, that nothing contained herein shall be taken
to prevent recourse to, and enforcement against, the assets of the Issuer for
any and all liabilities, obligations and undertakings contained in the Indenture
or in this Note.

                                       4


<PAGE>
                                   ASSIGNMENT

        Social Security or taxpayer I.D. or other identifying number of assignee

        FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________________________________ the within Note
and (name and address of assignee) all rights thereunder, and hereby irrevocably
constitutes and appoints, attorney, to transfer said Note on the books kept for
registration thereof, with full power of substitution in the premises.




Dated:______________                       ____________________________*
                                                    Signature Guaranteed:








--------
*    NOTE: The signature to this assignment must correspond with the name of the
     registered owner as it appears on the face of the within Note in every
     particular, without alteration, enlargement or any change whatsoever.