Document:

<PAGE>   1
                                                                     EXHIBIT 4.4

                  RECEIVABLES PURCHASE AGREEMENT AND ASSIGNMENT

                                     between

                        ARCADIA RECEIVABLES FINANCE CORP.
                                    Purchaser

                                       and

                             ARCADIA FINANCIAL LTD.
                                     Seller

                                   dated as of

                                  June 1, 2000

<PAGE>   2

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                               Page
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<S>                                                                                                            <C>
ARTICLE I         DEFINITIONS.....................................................................................1
         SECTION 1.1.          General............................................................................1
         SECTION 1.2.          Specific Terms.....................................................................1
         SECTION 1.3.          Usage of Terms.....................................................................3
         SECTION 1.4.          Certain References.................................................................3
         SECTION 1.5.          No Recourse........................................................................3
         SECTION 1.6.          Action by or Consent of Noteholders................................................3

ARTICLE II        CONVEYANCE OF THE RECEIVABLES AND THE
                  OTHER CONVEYED PROPERTY.........................................................................4
         SECTION 2.1.          Conveyance of the Receivables and the Other Conveyed Property......................4
         SECTION 2.2.          Purchase Price of Receivables......................................................4

ARTICLE III       REPRESENTATIONS AND WARRANTIES..................................................................4
         SECTION 3.1.          Representations and Warranties of AFL..............................................4
         SECTION 3.2.          Representations and Warranties of ARFC.............................................6

ARTICLE IV        COVENANTS OF AFL................................................................................8
         SECTION 4.1.          Protection of Title of ARFC and the Trust..........................................8
         SECTION 4.2.          Other Liens or Interests...........................................................9
         SECTION 4.3.          Costs and Expenses.................................................................9
         SECTION 4.4.          Indemnification....................................................................9

ARTICLE V         REPURCHASES....................................................................................11
         SECTION 5.1.          Repurchase of Receivables Upon Breach of Warranty.................................11
         SECTION 5.2.          Reassignment of Purchased Receivables.............................................11
         SECTION 5.3.          Waivers...........................................................................12

ARTICLE VI        MISCELLANEOUS..................................................................................12
         SECTION 6.1.          Liability of AFL..................................................................12
         SECTION 6.2.          Merger or Consolidation of AFL or ARFC............................................12
         SECTION 6.3.          Limitation on Liability of AFL and Others.........................................13
         SECTION 6.4.          AFL May Own Notes.................................................................13
         SECTION 6.5.          Amendment.........................................................................13
         SECTION 6.6.          Notices...........................................................................14
         SECTION 6.7.          Merger and Integration............................................................14
         SECTION 6.8.          Severability of Provisions........................................................14
         SECTION 6.9.          Intention of the Parties..........................................................14
         SECTION 6.10.         Governing Law.....................................................................14
</TABLE>

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<TABLE>
<S>                                                                                                            <C>
         SECTION 6.11.         Counterparts......................................................................15
         SECTION 6.12.         Conveyance of the Receivables and the Other Conveyed
                               Property to the Trust.............................................................15
         SECTION 6.13.         Nonpetition Covenant..............................................................15
</TABLE>

                                    SCHEDULES

Schedule A       --      Schedule of Receivables

Schedule B       --      Representations and Warranties of AFL

                                     - ii -
<PAGE>   4

                  RECEIVABLES PURCHASE AGREEMENT AND ASSIGNMENT

                  THIS RECEIVABLES PURCHASE AGREEMENT AND ASSIGNMENT, dated as
of June 1, 2000, executed between Arcadia Receivables Finance Corp., a Delaware
corporation, as purchaser ("ARFC"), and Arcadia Financial Ltd., a Minnesota
corporation, as seller ("AFL").

                                   WITNESSETH:

                  WHEREAS, ARFC has agreed to purchase from AFL and AFL,
pursuant to this Agreement, has agreed to transfer to ARFC the Receivables and
Other Conveyed Property.

                  NOW, THEREFORE, in consideration of the premises and the
mutual agreements hereinafter contained, and for other good and valuable
consideration, the receipt of which is acknowledged, ARFC and AFL, intending to
be legally bound, hereby agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

                  SECTION 1.1. General. The specific terms defined in this
Article include the plural as well as the singular. The words "herein," "hereof"
and "hereunder" and other words of similar import refer to this Agreement as a
whole and not to any particular Article, Section or other subdivision, and
Article, Section, Schedule and Exhibit references, unless otherwise specified,
refer to Articles and Sections of and Schedules and Exhibits to this Agreement.
Capitalized terms used herein without definition shall have the respective
meanings assigned to such terms in the Sale and Servicing Agreement, dated as of
June 1, 2000, by and among Arcadia Receivables Finance Corp. (as Seller),
Arcadia Financial Ltd. (in its individual capacity and as Servicer) and
Associates Automobile Receivables Trust 2000-1 (as Issuer) (the "Trust").

                  SECTION 1.2. Specific Terms. Whenever used in this Agreement,
the following words and phrases, unless the context otherwise requires, shall
have the following meanings:

                  "Agreement" shall mean this Receivables Purchase Agreement and
Assignment and all amendments hereof and supplements hereto.

                  "Closing Date" means June 22, 2000.

                  "Indenture Trustee" means Bank One, National Association, a
national banking association, as trustee under the Indenture, dated as of June
1, 2000, between the Trust and the Indenture Trustee.

                  "Other Conveyed Property" means all monies at any time paid or
payable on the Receivables or in respect thereof after the Cutoff Date
(including amounts due on or before the Cutoff Date but received by AFL after
the Cutoff Date), an assignment of security interests in the Financed

<PAGE>   5

Vehicles, the Collection Account (including all Eligible Investments therein and
all proceeds therefrom), the Insurance Policies and any proceeds from any
Insurance Policies relating to the Receivables, the Obligors or the related
Financed Vehicles, including rebates of premiums, rights under any Collateral
Insurance relating to the Receivables, an assignment of the rights of AFL
against Dealers with respect to the Receivables under the Dealer Agreements and
the Dealer Assignments, all items contained in the Receivable Files relating to
the Receivables, any and all other documents or electronic records that AFL
keeps on file in accordance with its customary procedures relating to the
Receivables, the Obligors or the related Financed Vehicles, 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, and all proceeds of the foregoing.

                  "Owner Trustee" means Wilmington Trust Company, a Delaware
corporation, not in its individual capacity but solely as trustee of the Trust,
and any successor trustee appointed and acting pursuant to the Trust Agreement.

                  "Receivables" means the Receivables listed on the Schedule of
Receivables attached hereto as Schedule A.

                  "Related Documents" means the Trust Agreement, the Indenture,
the Notes, the Certificates, the Sale and Servicing Agreement, the
Administration Agreement, the Custodian Agreement, the Lockbox Agreement, the
Depository Agreement, the letter agreement between Associates Corporation of
North America and the underwriters of the Notes and the Underwriting Agreement
among AFL, ARFC and the underwriters of the Notes. The Related Documents
executed by any party are referred to herein as "such party's Related
Documents," "its Related Documents" or by a similar expression.

                  "Repurchase Event" means the occurrence of a breach of any of
AFL's representations and warranties hereunder or any other event which requires
the repurchase of a Receivable by AFL under the Sale and Servicing Agreement.

                  "Sale and Servicing Agreement" means the Sale and Servicing
Agreement, dated as of June 1, 2000, executed and delivered by ARFC, as Seller,
AFL, in its individual capacity as Servicer, and Associates Automobile
Receivables Trust 2000-1, as Issuer.

                  "Schedule of Receivables" means the schedule of all retail
installment sales contracts and promissory notes sold and transferred pursuant
to this Agreement which is attached hereto as Schedule A.

                  "Schedule of Representations" means the Representations and
Warranties of AFL attached hereto as Schedule B.

                  "Trust" means the trust created by the Trust Agreement, the
estate of which consists of the Trust Property.

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<PAGE>   6

                  "Trust Property" means the property and proceeds of every
description conveyed pursuant to Section 2.5 of the Trust Agreement, Section 2.1
of the Sale and Servicing Agreement and Section 2.1 hereof, together with the
Trust Accounts (including all Eligible Investments therein and all proceeds
therefrom).

                  SECTION 1.3. Usage of Terms. With respect to all terms used in
this Agreement, the singular includes the plural and the plural the singular;
words importing any gender include the other gender; references to "writing"
include printing, typing, lithography, and other means of reproducing words in a
visible form; references to agreements and other contractual instruments include
all subsequent amendments thereto or changes therein entered into in accordance
with their respective terms and not prohibited by this Agreement or the Sale and
Servicing Agreement; references to Persons include their permitted successors
and assigns; and the terms "include" or "including" mean "include without
limitation" or "including without limitation."

                  SECTION 1.4. Certain References. All references to the
Principal Balance of a Receivable as of an Accounting Date shall refer to the
close of business on such day, or as of the first day of a Monthly Period shall
refer to the opening of business on such day. All references to the last day of
a Monthly Period shall refer to the close of business on such day.

                  SECTION 1.5. No Recourse. Without limiting the obligations of
AFL hereunder, no recourse may be taken, directly or indirectly, under this
Agreement or any certificate or other writing delivered in connection herewith
or therewith, against any stockholder, officer or director, as such, of AFL, or
of any predecessor or successor of AFL.

                  SECTION 1.6. 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 Noteholders 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
the Seller, AFL or any Affiliate thereof shall be deemed not to be outstanding,
and the related Outstanding Amount (as defined in the Indenture), evidenced
thereby shall not be taken into account in determining whether the requisite
Outstanding Amount necessary to effect any such action or consent has been
obtained; provided, however, that, solely for the purpose of determining whether
the Indenture Trustee is entitled to rely upon any such action or consent, only
Notes which the Indenture Trustee knows to be so owned shall be so disregarded.

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                                   ARTICLE II
                          CONVEYANCE OF THE RECEIVABLES
                         AND THE OTHER CONVEYED PROPERTY

                  SECTION 2.1. Conveyance of the Receivables and the Other
Conveyed Property. Subject to the terms and conditions of this Agreement, AFL
hereby sells, transfers, assigns, and otherwise conveys to ARFC without recourse
(but without limitation of its obligations in this Agreement), and ARFC hereby
purchases, all right, title and interest of AFL in and to the Receivables and
the Other Conveyed Property. It is the intention of AFL and ARFC that the
transfer and assignment contemplated by this Agreement shall constitute a sale
of the Receivables and the Other Conveyed Property from AFL to ARFC, conveying
good title thereto free and clear of any Liens, and the Receivables and the
Other Conveyed Property shall not be part of AFL's estate in the event of the
filing of a bankruptcy petition by or against AFL under any bankruptcy or
similar law.

                  SECTION 2.2. Purchase Price of Receivables. Simultaneously
with the conveyance of the Receivables and the Other Conveyed Property to ARFC,
ARFC has paid or caused to be paid to or upon the order of AFL approximately
$743,967,757.00 by wire transfer of immediately available funds (representing
the proceeds to ARFC from the sale of the Receivables to the Trust after
depositing $4,166,738.00 in the Reserve Account).

                                   ARTICLE III
                         REPRESENTATIONS AND WARRANTIES

                  SECTION 3.1. Representations and Warranties of AFL. AFL makes
the following representations and warranties, on which ARFC relies in purchasing
the Receivables and the Other Conveyed Property and in transferring the
Receivables and the Other Conveyed Property to the Trust under the Sale and
Servicing Agreement. Such representations are made as of the execution and
delivery of this Agreement, but shall survive the sale, transfer and assignment
of the Receivables and the Other Conveyed Property hereunder and the sale,
transfer and assignment thereof by ARFC to the Trust under the Sale and
Servicing Agreement. AFL and ARFC agree that ARFC will assign to the Trust all
of ARFC's rights under this Agreement and that the Trust will thereafter be
entitled to enforce this Agreement against AFL in the Trust's own name.

                  (a) Schedule of Representations. The representations and
         warranties set forth on the Schedule of Representations are true and
         correct.

                  (b) Organization and Good Standing. AFL has been duly
         organized and is validly existing as a corporation in good standing
         under the laws of the State of Minnesota, with power and authority to
         own its properties and to conduct its business as such properties are
         currently owned and such business is currently conducted, and had at
         all relevant times, and now has, power, authority and legal right to
         acquire, own and sell the Receivables and the Other Conveyed Property
         transferred to ARFC.

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                  (c) Due Qualification. AFL is duly qualified to do business as
         a foreign corporation in good standing, and has obtained all necessary
         licenses and approvals, in all jurisdictions in which the ownership or
         lease of its property or the conduct of its business requires such
         qualification and in which the failure so to qualify would have a
         material adverse effect on (a) its business, properties, assets or
         condition (financial or other) or (b) its performance of its
         obligations under this Agreement and its Related Documents.

                  (d) Power and Authority. AFL has the power and authority to
         execute and deliver this Agreement and its Related Documents and to
         carry out its terms and their terms, respectively; AFL has full power
         and authority to sell and assign the Receivables and the Other Conveyed
         Property to be sold and assigned to and deposited with ARFC hereunder
         and has duly authorized such sale and assignment to ARFC by all
         necessary corporate action; and the execution, delivery and performance
         of this Agreement and AFL's Related Documents have been duly authorized
         by AFL by all necessary corporate action.

                  (e) Binding Obligations. This Agreement and AFL's Related
         Documents have been duly executed and delivered and constitute legal,
         valid and binding obligations of AFL enforceable in accordance with
         their respective terms, except as enforceability may be limited by
         bankruptcy, insolvency, reorganization or other similar laws affecting
         the enforcement of creditors' rights generally and by equitable
         limitations on the availability of specific remedies, regardless of
         whether such enforceability is considered in a proceeding in equity or
         at law.

                  (f) No Violation. The consummation of the transactions
         contemplated by this Agreement and the Related Documents and the
         fulfillment of the terms of this Agreement and the Related Documents
         shall not conflict with, result in any breach of any of the terms and
         provisions of or constitute (with or without notice, lapse of time or
         both) a default under, the articles of incorporation or bylaws of AFL,
         or any indenture, agreement, mortgage, deed of trust or other
         instrument to which AFL is a party or by which it is bound, or result
         in the creation or imposition of any Lien upon any of its properties
         pursuant to the terms of any such indenture, agreement, mortgage, deed
         of trust or other instrument, other than this Agreement and the Sale
         and Servicing Agreement, or violate any law, order, rule or regulation
         applicable to AFL of any court or of any federal or state regulatory
         body, administrative agency or other governmental instrumentality
         having jurisdiction over AFL or any of its properties.

                  (g) No Proceedings. There are no proceedings or investigations
         pending or, to AFL's knowledge, threatened against AFL, before any
         court, regulatory body, administrative agency or other tribunal or
         governmental instrumentality having jurisdiction over AFL or its
         properties (i) asserting the invalidity of this Agreement or any of the
         Related Documents, (ii) seeking to prevent the issuance of the Notes or
         the Certificates or the consummation of any of the transactions
         contemplated by this Agreement or any of the Related Documents, (iii)
         seeking any determination or ruling that might materially and adversely
         affect the performance by AFL of its obligations under, or the validity
         or enforceability of, this Agreement or any of the Related Documents or
         (iv) seeking to affect adversely the federal income tax or

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<PAGE>   9

         other federal, state or local tax attributes of, or seeking to impose
         any excise, franchise, transfer or similar tax upon, the transfer and
         acquisition of the Receivables and the Other Conveyed Property
         hereunder or under the Sale and Servicing Agreement.

                  (h) Chief Executive Office. The chief executive office of AFL
         is located at 2001 Beach Street, Suite 300, Fort Worth, Texas 76103.

                  SECTION 3.2. Representations and Warranties of ARFC. ARFC
makes the following representations and warranties, on which AFL relies in
selling, assigning, transferring and conveying the Receivables and the Other
Conveyed Property to ARFC hereunder. Such representations are made as of the
execution and delivery of this Agreement, but shall survive the
sale, transfer and assignment of the Receivables and the Other Conveyed Property
hereunder and the sale, transfer and assignment thereof by ARFC to the Trust
under the Sale and Servicing Agreement.

                  (a) Organization and Good Standing. ARFC has been duly
         organized and is validly existing and in good standing as a corporation
         under the laws of the State of Delaware, with the power and authority
         to own its properties and to conduct its business as such properties
         are currently owned and such business is currently conducted, and had
         at all relevant times, and has, full power, authority and legal right
         to acquire and own the Receivables and the Other Conveyed Property and
         to transfer the Receivables and the Other Conveyed Property to the
         Trust pursuant to the Sale and Servicing Agreement.

                  (b) Due Qualification. ARFC is duly qualified to do business
         as a foreign corporation in good standing, and has obtained all
         necessary licenses and approvals in all jurisdictions where the failure
         to do so would materially and adversely affect (i) ARFC's ability to
         acquire the Receivables or the Other Conveyed Property, (ii) the
         validity or enforceability of the Receivables and the Other Conveyed
         Property or (iii) ARFC's ability to perform its obligations hereunder
         and under the Related Documents.

                  (c) Power and Authority. ARFC has the power, authority and
         legal right to execute and deliver this Agreement and its Related
         Documents and to carry out the terms hereof and thereof and to acquire
         the Receivables and the Other Conveyed Property hereunder; and the
         execution, delivery and performance of this Agreement and its Related
         Documents and all of the documents required pursuant hereto or thereto
         have been duly authorized by ARFC by all necessary action.

                  (d) No Consent Required. ARFC is not required to obtain the
         consent of any other Person, or any consent, license, approval or
         authorization or registration or declaration with, any governmental
         authority, bureau or agency in connection with the execution, delivery
         or performance of this Agreement and the Related Documents, except for
         such as have been obtained, effected or made.

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<PAGE>   10

                  (e) Binding Obligation. This Agreement and each of its Related
         Documents constitutes a legal, valid and binding obligation of ARFC,
         enforceable against ARFC in accordance with its terms, subject, as to
         enforceability, to applicable bankruptcy, insolvency, reorganization,
         conservatorship, receivership, liquidation and other similar laws and
         to general equitable principles.

                  (f) No Violation. The execution, delivery and performance by
         ARFC of this Agreement, the consummation of the transactions
         contemplated by this Agreement and the Related Documents and the
         fulfillment of the terms of this Agreement and the Related Documents do
         not and will not conflict with, result in any breach of any of the
         terms and provisions of or constitute (with or without notice or lapse
         of time) a default under the certificate of incorporation or bylaws of
         ARFC, or conflict with or breach any of the terms or provisions of, or
         constitute (with or without notice or lapse of time) a default under,
         any indenture, agreement, mortgage, deed of trust or other instrument
         to which ARFC is a party or by which ARFC is bound or to which any of
         its properties are subject, or result in the creation or imposition of
         any Lien upon any of its properties pursuant to the terms of any such
         indenture, agreement, mortgage, deed of trust or other instrument
         (other than the Sale and Servicing Agreement and the Indenture), or
         violate any law, order, rule or regulation, applicable to ARFC or its
         properties, of any federal or state regulatory body or any court,
         administrative agency, or other governmental instrumentality having
         jurisdiction over ARFC or any of its properties.

                  (g) No Proceedings. There are no proceedings or investigations
         pending, or, to the knowledge of ARFC, threatened against ARFC, before
         any court, regulatory body, administrative agency, or other tribunal or
         governmental instrumentality having jurisdiction over ARFC or its
         properties: (i) asserting the invalidity of this Agreement or any of
         the Related Documents, (ii) seeking to prevent the consummation of any
         of the transactions contemplated by this Agreement or any of the
         Related Documents, (iii) seeking any determination or ruling that might
         materially and adversely affect the performance by ARFC of its
         obligations under, or the validity or enforceability of, this Agreement
         or any of the Related Documents or (iv) that may adversely affect the
         federal or state income tax attributes of, or seeking to impose any
         excise, franchise, transfer or similar tax upon, the transfer and
         acquisition of the Receivables and the Other Conveyed Property
         hereunder or the transfer of the Receivables and the Other Conveyed
         Property to the Trust pursuant to the Sale and Servicing Agreement.

In the event of any breach of a representation and warranty made by ARFC
hereunder, AFL covenants and agrees that it will not take any action to pursue
any remedy that it may have hereunder, in law, in equity or otherwise, until a
year and a day have passed since the later of (i) the date on which all
pass-through certificates or other similar securities issued by the Trust, or a
trust or similar vehicle formed by ARFC, have been paid in full, or (ii) all
Notes or other similar securities issued by the Trust, or a trust or similar
vehicle formed by ARFC, have been paid in full. AFL and ARFC agree that damages
will not be an adequate remedy for such breach and that this covenant may be
specifically enforced by ARFC or by the Owner Trustee on behalf of the Trust.

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                                   ARTICLE IV
                                COVENANTS OF AFL

                  SECTION 4.1. Protection of Title of ARFC and the Trust.

                  (a) At or prior to the Closing Date, AFL shall have filed or
caused to be filed a UCC-1 financing statement, executed by AFL as seller or
debtor, naming ARFC as purchaser or secured party and describing the Receivables
and the Other Conveyed Property being sold by it to ARFC as collateral, with the
office of the Secretary of State of the State of Texas and in such other
locations as ARFC shall have required. From time to time thereafter, AFL shall
execute and file such financing statements and cause to be executed and filed
such continuation statements, all in such manner and in such places as may be
required by law fully to preserve, maintain and protect the interest of ARFC
under this Agreement and of the Trust under the Sale and Servicing Agreement in
the Receivables and the Other Conveyed Property and in the proceeds thereof. AFL
shall deliver (or cause to be delivered) to ARFC, the Owner Trustee and the
Indenture Trustee file-stamped copies of, or filing receipts for, any document
filed as provided above, as soon as available following such filing. In the
event that AFL fails to perform its obligations under this subsection, ARFC or
the Owner Trustee may do so at the expense of AFL.

                  (b) AFL shall not change its name, identity, or corporate
structure in any manner that would, could or might make any financing statement
or continuation statement filed by AFL (or by ARFC or the Owner Trustee on
behalf of AFL) in accordance with paragraph (a) above seriously misleading
within the meaning of Section 9-402(7) of the UCC, unless it shall have given
ARFC and the Owner Trustee at least 60 days' prior written notice thereof, and
shall promptly file appropriate amendments to all previously filed financing
statements and continuation statements.

                  (c) AFL shall give ARFC, the Indenture Trustee and the Owner
Trustee at least 60 days' prior written notice of any relocation of its
principal executive office if, as a result of such relocation, the applicable
provisions of the UCC would require the filing of any amendment of any
previously filed financing or continuation statement or of any new financing
statement. AFL shall at all times maintain each office from which it services
Receivables and its principal executive office within the United States of
America.

                  (d) AFL shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Receivables to ARFC, and the
conveyance of the Receivables by ARFC to the Trust, AFL's master computer
records (including archives) that shall refer to a Receivable, indicate clearly
that such Receivable has been sold to ARFC and has been conveyed by ARFC to the
Trust. Indication of the Trust's ownership of a Receivable shall be deleted from
or modified on AFL's computer systems when, and only when, the Receivable shall
become a Purchased Receivable or shall have been paid in full.

                                     - 8 -
<PAGE>   12

                  (e) If at any time AFL shall propose to sell, grant a security
interest in, or otherwise transfer any interest in motor vehicle receivables to
any prospective purchaser, lender or other transferee, AFL shall give to such
prospective purchaser, lender, or other transferee computer tapes, records, or
print-outs (including any restored from archives) that, if they shall refer in
any manner whatsoever to any Receivable, shall indicate clearly that such
Receivable has been sold to ARFC and is owned by the Trust.

                  SECTION 4.2. Other Liens or Interests. Except for the
conveyances hereunder, AFL will not sell, pledge, assign or transfer to any
other Person, or grant, create, incur, assume or suffer to exist any Lien on the
Receivables or the Other Conveyed Property, or any interest therein, and AFL
shall defend the right, title, and interest of ARFC and the Trust in and to the
Receivables and the Other Conveyed Property against all claims of third parties
claiming through or under AFL.

                  SECTION 4.3. Costs and Expenses. AFL shall pay all reasonable
costs and disbursements in connection with the performance of its obligations
hereunder and under the Related Documents.

                  SECTION 4.4. Indemnification.

                  (a) AFL shall defend, indemnify and hold harmless ARFC, the
Trust, the Owner Trustee, the Indenture Trustee and the Noteholders from and
against any and all costs, expenses, losses, damages, claims, and liabilities,
arising out of or resulting from any breach of any of AFL's representations and
warranties contained herein.

                  (b) AFL shall defend, indemnify and hold harmless ARFC, the
Trust, the Owner Trustee, the Indenture Trustee and the Noteholders from and
against any and all costs, expenses, losses, damages, claims, and liabilities,
arising out of or resulting from the use, ownership or operation by AFL or any
Affiliate thereof of a Financed Vehicle.

                  (c) AFL shall defend and indemnify ARFC, the Trust, the Owner
Trustee, the Indenture Trustee and the Noteholders against any and all costs,
expenses, losses, damages, claims and liabilities arising out of or resulting
from any action taken, or failed to be taken, by it in respect of any portion of
the Trust Property other than in accordance with this Agreement or the Sale and
Servicing Agreement.

                  (d) AFL agrees to pay, and shall defend, indemnify and hold
harmless ARFC, the Trust, the Owner Trustee, the Indenture Trustee and the
Noteholders from and against any taxes that may at any time be asserted against
ARFC, the Owner Trustee, the Indenture Trustee and the Noteholders with respect
to the transactions contemplated in this Agreement, including, without
limitation, any sales, gross receipts, general corporation, tangible or
intangible personal property, privilege, or license taxes (but not including any
taxes asserted with respect to, and as of the date of, the sale, transfer and
assignment of the Receivables and the Other Conveyed Property to ARFC and of the
Trust Property to the Trust or the issuance and original sale of the Notes, or
asserted with respect to

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<PAGE>   13

ownership of the Receivables and Other Conveyed Property or the Receivables or
Other Conveyed Property or the Trust Property which shall be indemnified by AFL
pursuant to clause (e) below, or federal, state or other income taxes, arising
out of distributions on the Notes or transfer taxes arising in connection with
the transfer of the Notes) and costs and expenses in defending against the same,
arising by reason of the acts to be performed by AFL under this Agreement or
imposed against such Persons.

                  (e) AFL agrees to pay, and to indemnify, defend and hold
harmless ARFC, the Trust, the Owner Trustee, the Indenture Trustee and the
Noteholders from, any taxes which may at any time be asserted against such
Persons with respect to, and as of the date of, the conveyance or ownership of
the Receivables or the Other Conveyed Property hereunder and the conveyance or
ownership of the Trust Property under the Sale and Servicing Agreement or the
issuance and original sale of the Notes, including, without limitation, any
sales, gross receipts, personal property, tangible or intangible personal
property, privilege or license taxes (but not including any federal or other
income taxes, including franchise taxes, arising out of the transactions
contemplated hereby or transfer taxes arising in connection with the transfer of
Notes) and costs and expenses in defending against the same, arising by reason
of the acts to be performed by AFL under this Agreement or imposed against such
Persons.

                  (f) AFL shall defend, indemnify, and hold harmless ARFC, the
Owner Trustee, the Indenture Trustee, the Trust and the Noteholders from and
against any and all costs, expenses, losses, claims, damages, and liabilities to
the extent that such cost, expense, loss, claim, damage, or liability arose out
of, or was imposed upon ARFC, the Trust, the Indenture Trustee and the
Noteholders through the negligence, willful misfeasance, or bad faith of AFL in
the performance of its duties under this Agreement or by reason of reckless
disregard of AFL's obligations and duties under this Agreement.

                  (g) AFL shall indemnify, defend and hold harmless ARFC, the
Owner Trustee, the Indenture Trustee, the Trust and the Noteholders from and
against any loss, liability or expense incurred by reason of the violation by
AFL of federal or state securities laws in connection with the registration or
the sale of the Notes.

                  (h) AFL shall indemnify, defend and hold harmless ARFC, the
Owner Trustee, the Indenture Trustee, the Trust and the Noteholders from and
against any loss, liability or expense imposed upon, or incurred by, ARFC, the
Owner Trustee, the Indenture Trustee, the Trust or the Noteholders as a result
of the failure of any Receivable, or the sale of the related Financed Vehicle,
to comply with all requirements of applicable law.

                  (i) AFL shall defend, indemnify, and hold harmless ARFC from
and against all costs, expenses, losses, claims, damages, and liabilities
arising out of or incurred in connection with the acceptance or performance of
AFL's trusts and duties as Servicer under the Sale and Servicing Agreement,
except to the extent that such cost, expense, loss, claim, damage, or liability
shall be due to the willful misfeasance, bad faith, or negligence (except for
errors in judgment) of ARFC.

                                     - 10 -
<PAGE>   14

                  (j) AFL shall indemnify, defend and hold harmless ARFC, the
Owner Trustee, the Indenture Trustee, the Trust and the Noteholders from and
against any loss, liability or expense imposed upon, or incurred by, ARFC, the
Owner Trustee and the Indenture Trustee, the Trust and the Noteholders as a
result of AFL's or ARFC's use of the name "Arcadia."

                  Indemnification under this Section 4.4 shall include
reasonable fees and expenses of counsel and expenses of litigation and shall
survive termination of the Trust. The indemnity obligations hereunder shall be
in addition to any obligation that AFL may otherwise have.

                                    ARTICLE V
                                   REPURCHASES

                  SECTION 5.1. Repurchase of Receivables Upon Breach of
Warranty. Upon the occurrence of a Repurchase Event, AFL shall, unless such
breach shall have been cured in all material respects, repurchase such
Receivable from the Trust and, on or before the related Draw Date, AFL shall pay
the Purchase Amount to the Trust pursuant to Section 4.5 of the Sale and
Servicing Agreement. It is understood and agreed that, except as set forth in
Section 6.1, the obligation of AFL to repurchase any Receivable as to which a
breach has occurred and is continuing shall, if such obligation is fulfilled,
constitute the sole remedy against AFL for such breach available to ARFC, the
Noteholders or the Indenture Trustee on behalf of the Noteholders. The
provisions of this Section 5.1 are intended to grant the Owner Trustee and the
Indenture Trustee a direct right against AFL to demand performance hereunder,
and in connection therewith, AFL waives any requirement of prior demand against
ARFC with respect to such repurchase obligation. Any such purchase shall take
place in the manner specified in Section 2.5 of the Sale and Servicing
Agreement. Notwithstanding any other provision of this Agreement or the Sale and
Servicing Agreement to the contrary, the obligation of AFL under this Section
shall not terminate upon a termination of AFL as Servicer under the Sale and
Servicing Agreement and shall be performed in accordance with the terms hereof
notwithstanding the failure of the Servicer or ARFC to perform any of their
respective obligations with respect to such Receivable under the Sale and
Servicing Agreement.

                  SECTION 5.2. Reassignment of Purchased Receivables. Upon
deposit in the Collection Account of the Purchase Amount of any Receivable
repurchased by AFL under Section 5.1, ARFC and the Owner Trustee shall take such
steps as may be reasonably requested by AFL in order to assign to AFL all of
ARFC's and the Trust's right, title and interest in and to such Receivable and
all security and documents and all Other Conveyed Property conveyed to ARFC and
the Trust directly relating thereto, without recourse, representation or
warranty, except as to the absence of liens, charges or encumbrances created by
or arising as a result of actions of ARFC or the Owner Trustee. Such assignment
shall be a sale and assignment outright, and not for security. If, following the
reassignment of a Purchased Receivable, in any enforcement suit or legal
proceeding, it is held that AFL may not enforce any such Receivable on the
ground that it shall not be a real party in interest or a holder entitled to
enforce the Receivable, ARFC and the Owner Trustee shall, at the expense of AFL,
take such steps as AFL deems reasonably necessary to enforce the Receivable,
including bringing suit in ARFC's or the Owner Trustee's name.

                                     - 11 -
<PAGE>   15

                  SECTION 5.3. Waivers. No failure or delay on the part of ARFC,
or the Owner Trustee as assignee of ARFC, in exercising any power, right or
remedy under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power, right or remedy preclude any other
or future exercise thereof or the exercise of any other power, right or remedy.

                                   ARTICLE VI
                                  MISCELLANEOUS

                  SECTION 6.1. Liability of AFL. AFL shall be liable in
accordance herewith only to the extent of the obligations in this Agreement
specifically undertaken by AFL and the representations and warranties of AFL.

                  SECTION 6.2. Merger or Consolidation of AFL or ARFC. Any
corporation or other entity (i) into which AFL or ARFC may be merged or
consolidated, (ii) resulting from any merger or consolidation to which AFL or
ARFC is a party or (iii) succeeding to the business of AFL or ARFC, in the case
of ARFC, which corporation has a certificate of incorporation containing
provisions relating to limitations on business and other matters substantively
identical to those contained in ARFC's certificate of incorporation, provided
that in any of the foregoing cases such corporation shall execute an agreement
of assumption to perform every obligation of AFL or ARFC, as the case may be,
under this Agreement and, whether or not such assumption agreement is executed,
shall be the successor to AFL or ARFC, as the case may be, hereunder (without
relieving AFL or ARFC of its responsibilities hereunder, if it survives such
merger or consolidation) without the execution or filing of any document or any
further act by any of the parties to this Agreement. AFL or ARFC shall promptly
inform the other party, the Owner Trustee and the Indenture Trustee of such
merger, consolidation or purchase and assumption. Notwithstanding the foregoing,
as a condition to the consummation of the transactions referred to in clauses
(i), (ii) and (iii) above, (x) immediately after giving effect to such
transaction, no representation or warranty made pursuant to Sections 3.1 and 3.2
of this Agreement shall have been breached (for purposes hereof, such
representations and warranties shall speak as of the date of the consummation of
such transaction), (y) AFL or ARFC, as applicable, shall have delivered written
notice of such consolidation, merger or purchase and assumption to the Rating
Agencies prior to the consummation of such transaction and shall have delivered
to the Owner Trustee and the Indenture Trustee an Officer's Certificate and an
Opinion of Counsel each stating that such consolidation, merger or succession
and such agreement of assumption comply with this Section 6.2 and that all
conditions precedent, if any, provided for in this Agreement relating to such
transaction have been complied with and none of the Rating Agencies shall have
indicated that the transaction will result in a downgrade of any Notes, and (z)
AFL or ARFC, as applicable, shall have delivered to the Owner Trustee and the
Indenture Trustee an Opinion of Counsel, stating that, in the opinion of such
counsel, either (A) all financing statements and continuation statements and
amendments thereto have been executed and filed that are necessary to preserve
and protect the interest of the Owner Trustee in the Trust Property and reciting
the details of the filings or (B) no such action shall be necessary to preserve
and protect such interest.

                                     - 12 -
<PAGE>   16

                  SECTION 6.3. Limitation on Liability of AFL and Others. AFL
and any director, officer, employee or agent may rely in good faith on the
advice of counsel or on any document of any kind prima facie properly executed
and submitted by any Person respecting any matters arising under this Agreement.
AFL shall not be under any obligation to appear in, prosecute or defend any
legal action that is not incidental to its obligations under this Agreement or
its Related Documents and that in its opinion may involve it in any expense or
liability.

                  SECTION 6.4. AFL May Own Notes. Subject to the provisions of
the Sale and Servicing Agreement, AFL and any Affiliate of AFL may in its
individual or any other capacity become the owner or pledgee of Notes or
Certificates with the same rights as it would have if it were not AFL or an
Affiliate thereof.

                  SECTION 6.5. Amendment.

                  (a) This Agreement may be amended by AFL and ARFC without the
consent of the Owner Trustee, the Indenture Trustee or any of the Noteholders
(A) to cure any ambiguity or (B) to correct any provisions in this Agreement;
provided, however, that such action shall not, as evidenced by an Opinion of
Counsel delivered to the Owner Trustee and the Indenture Trustee, adversely
affect in any material respect the interests of any Noteholder.

                  (b) This Agreement may also be amended from time to time by
AFL and ARFC, with the prior written consent of the Owner Trustee, the Indenture
Trustee and a Note Majority, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement,
or of modifying in any manner the rights of the Noteholders; provided, however,
that no such amendment shall (i) increase or reduce in any manner the amount of,
or accelerate or delay the timing of, collections of payments on Receivables,
distributions that shall be required to be made on any Note or the Note Interest
Rate or (ii) reduce the aforesaid percentage required to consent to any such
amendment or any waiver hereunder, without the consent of the Holders of all
Notes then outstanding.

                  (c) Prior to the execution of any such amendment or consent,
AFL shall have furnished written notification of the substance of such amendment
or consent to each Rating Agency.

                  (d) Promptly after the execution of any such amendment or
consent, the Owner Trustee or the Indenture Trustee, as applicable, shall
furnish written notification of the substance of such amendment or consent to
each Noteholder.

                  (e) It shall not be necessary for the consent of Noteholders
pursuant to this Section to approve the particular form of any proposed
amendment or consent, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Noteholders shall be subject to
such reasonable requirements as the Owner Trustee or the Indenture Trustee, as
applicable, may prescribe, including the establishment of record dates. The
consent of any Holder of a Note given pursuant to this Section or pursuant to
any other provision of this Agreement shall be conclusive and binding on such
Holder and

                                     - 13 -
<PAGE>   17

on all future Holders of such Note and of any Note issued upon the transfer
thereof or in exchange thereof or in lieu thereof whether or not notation of
such consent is made upon the Note.

                  SECTION 6.6. Notices. All demands, notices and communications
to AFL or ARFC hereunder shall be in writing, personally delivered, or sent by
telecopier (subsequently confirmed in writing), reputable overnight courier or
mailed by certified mail, return receipt requested, and shall be deemed to have
been given upon receipt (a) in the case of AFL, to Arcadia Financial Ltd., 2001
Beach Street, Suite 300, Fort Worth, Texas 76103, Attention: President, with a
copy to Associates Corporation of North America, 250 East Carpenter Freeway,
Irving, Texas 75062, Attention: Senior Vice President - Capital Markets, or such
other address as shall be designated by AFL in a written notice delivered to the
other party or to the Owner Trustee or the Indenture Trustee, as applicable, or
(b) in case of ARFC, to Arcadia Receivables Finance Corp., 290 East Carpenter
Freeway, 7 Decker, Irving, Texas 75062, Attention: Assistant General Counsel,
with a copy to Associates Corporation of North America, 250 East Carpenter
Freeway, Irving, Texas 75062, Attention: Senior Vice President - Capital
Markets.

                  SECTION 6.7. Merger and Integration. Except as specifically
stated otherwise herein, this Agreement and the Related Documents set forth the
entire understanding of the parties relating to the subject matter hereof, and
all prior understandings, written or oral, are superseded by this Agreement and
the Related Documents. This Agreement may not be modified, amended, waived or
supplemented except as provided herein.

                  SECTION 6.8. Severability of Provisions. If any one or more of
the covenants, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, provisions or terms shall be
deemed severable from the remaining covenants, provisions or terms of this
Agreement and shall in no way affect the validity or enforceability of the other
provisions of this Agreement.

                  SECTION 6.9. Intention of the Parties. The execution and
delivery of this Agreement shall constitute an acknowledgment by AFL and ARFC
that they intend that each assignment and transfer herein and therein
contemplated constitute a sale and assignment outright, and not for security, of
the Receivables and the Other Conveyed Property, conveying good title thereto
free and clear of any Liens, from AFL to ARFC, and that the Receivables and the
Other Conveyed Property shall not be a part of AFL's estate in the event of the
bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding,
or other proceeding under any federal or state bankruptcy or similar law, or the
occurrence of another similar event, of, or with respect to, AFL. In the event
that such conveyance is determined to be made as security for a loan made by
ARFC, the Trust or the Noteholders to AFL, the parties intend that AFL shall
have granted to ARFC a security interest in all of AFL's right, title and
interest in and to the Receivables and the Other Conveyed Property conveyed
pursuant to Section 2.1 hereof, and that this Agreement shall constitute a
security agreement under applicable law.

                  SECTION 6.10. Governing Law. This Agreement shall be construed
in accordance with, the laws of the State of New York without regard to the
principles of conflicts of laws thereof,

                                     - 14 -
<PAGE>   18

and the obligations, rights and remedies of the parties under this Agreement
shall be determined in accordance with such laws.

                  SECTION 6.11. Counterparts. For the purpose of facilitating
the execution of this Agreement and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.

                  SECTION 6.12. Conveyance of the Receivables and the Other
Conveyed Property to the Trust. AFL acknowledges that ARFC intends, pursuant to
the Sale and Servicing Agreement, to convey the Receivables and the Other
Conveyed Property, together with its rights under this Agreement, to the Trust
on the date hereof. AFL acknowledges and consents to such conveyance and waives
any further notice thereof and covenants and agrees that the representations and
warranties of AFL contained in this Agreement and the rights of ARFC hereunder
are intended to benefit the Owner Trustee, the Indenture Trustee, the Trust and
the Noteholders. In furtherance of the foregoing, AFL covenants and agrees to
perform its duties and obligations hereunder, in accordance with the terms
hereof for the benefit of the Owner Trustee, the Indenture Trustee, the Trust
and the Noteholders and that, notwithstanding anything to the contrary in this
Agreement, AFL shall be directly liable to the Owner Trustee and the Trust
(notwithstanding any failure by the Servicer or ARFC to perform its duties and
obligations hereunder or under the Sale and Servicing Agreement) and that the
Owner Trustee may enforce the duties and obligations of AFL under this Agreement
against AFL for the benefit of the Trust and the Noteholders.

                  SECTION 6.13. Nonpetition Covenant. Neither ARFC nor AFL shall
petition or otherwise invoke the process of any court or government authority
for the purpose of commencing or sustaining a case against the Trust (or, in the
case of AFL, against ARFC) under any federal or state bankruptcy, insolvency or
similar law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Trust (or ARFC) or any substantial
part of its property, or ordering the winding up or liquidation of the affairs
of the Trust (or ARFC).

                                     - 15 -
<PAGE>   19

                  IN WITNESS WHEREOF, the parties have caused this Receivables
Purchase Agreement and Assignment to be duly executed by their respective
officers as of the day and year first above written.

                                       ARCADIA RECEIVABLES FINANCE CORP.,
                                         as Purchaser

                                       By /s/ Scott W. McCarthy
                                         ----------------------------
                                       Name: Scott W. McCarthy
                                         Title: Senior Vice President

                                       ARCADIA FINANCIAL LTD., as Seller

                                       By /s/ Scott W. McCarthy
                                         ----------------------------
                                       Name: Scott W. McCarthy
                                         Title: Senior Vice President

                                     - 16 -
<PAGE>   20

                                   SCHEDULE A

                             SCHEDULE OF RECEIVABLES

                       [Available in transactional files.]

                                       A-1
<PAGE>   21

                                   SCHEDULE B

                      REPRESENTATIONS AND WARRANTIES OF AFL

                  1. Characteristics of Receivables. Each Receivable (A) was
originated by a Dealer for the retail sale of a Financed Vehicle in the ordinary
course of such Dealer's business and such Dealer had all necessary licenses and
permits to originate Receivables in the state where such Dealer was located, was
fully and properly executed by the parties thereto, was purchased by AFL from
such Dealer under an existing Dealer Agreement with AFL and was validly assigned
by such Dealer to AFL, (B) contains customary and enforceable provisions such as
to render the rights and remedies of the holder thereof adequate for realization
against the collateral security, and (C) is fully amortizing and provides for
level monthly payments (provided that the payment in the first Monthly Period
and the final Monthly Period of the life of the Receivable may be minimally
different from the level payment) which, if made when due, shall fully amortize
the Amount Financed over the original term.

                  2. No Fraud or Misrepresentation. Each Receivable was
originated by a Dealer and was sold by the Dealer to AFL without any fraud or
misrepresentation on the part of such Dealer in either case.

                  3. Compliance with Law. All requirements of applicable
federal, state and local laws, and regulations thereunder (including, without
limitation, usury laws, the Federal Truth-in-Lending Act, the Equal Credit
Opportunity Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, the
Fair Debt Collection Practices Act, the Federal Trade Commission Act, the
Magnuson-Moss Warranty Act, the Federal Reserve Board's Regulations "B" and "Z",
the Soldiers' and Sailors' Civil Relief Act of 1940, the Minnesota Motor Vehicle
Retail Installment Sales Act, and state adaptations of the National Consumer Act
and of the Uniform Consumer Credit Code and other consumer credit laws and equal
credit opportunity and disclosure laws) in respect of all of the Receivables and
each and every sale of Financed Vehicles, have been complied with in all
material respects, and each Receivable and the sale of the Financed Vehicle
evidenced by each Receivable complied at the time it was originated or made and
now complies in all material respects with all applicable legal requirements.

                  4. Origination. Each Receivable was originated in the United
States.

                  5. Binding Obligation. Each Receivable represents the genuine,
legal, valid and binding payment obligation of the Obligor thereon, enforceable
by the holder thereof in accordance with its terms, except (A) as enforceability
may be limited by bankruptcy, insolvency, reorganization or similar laws
affecting the enforcement of creditors' rights generally and by equitable
limitations on the availability of specific remedies, regardless of whether such
enforceability is considered in a proceeding in equity or at law and (B) as such
Receivable may be modified by the application after the Cutoff Date of the
Soldiers' and Sailors' Civil Relief Act of 1940, as amended; and all parties to
each Receivable

                                       B-1
<PAGE>   22

had full legal capacity to execute and deliver such Receivable and all other
documents related thereto and to grant the security interest purported to be
granted thereby.

                  6. No Government Obligor. No Obligor is the United States of
America or any State or any agency, department, subdivision or instrumentality
thereof.

                  7. Obligor Bankruptcy. At the Cutoff Date no Obligor had been
identified on the records of AFL as being the subject of a current bankruptcy
proceeding.

                  8. Schedule of Receivables. The information set forth in the
Schedule of Receivables has been produced from the Electronic Ledger and was
true and correct in all material respects as of the close of business on the
Cutoff Date.

                  9. Marking Records. By the Closing Date AFL will have caused
the portions of the Electronic Ledger relating to the Receivables to be clearly
and unambiguously marked to show that the Receivables constitute part of the
Trust Property and are owned by the Trust in accordance with the terms of the
Sale and Servicing Agreement.

                  10. Computer Tape. The Computer Tape made available by AFL to
ARFC, the Owner Trustee and the Indenture Trustee on the Closing Date was
complete and accurate as of the Cutoff Date and includes a description of the
same Receivables that are described in the Schedule of Receivables.

                  11. Adverse Selection. No selection procedures adverse to the
Noteholders were utilized in selecting the Receivables from those receivables
owned by AFL which met the selection criteria contained in the Sale and
Servicing Agreement.

                  12. Chattel Paper. The Receivables constitute chattel paper
within the meaning of the UCC as in effect in the States of Minnesota, Texas and
New York.

                  13. One Original. There is only one original executed copy of
each Receivable.

                  14. Receivable Files Complete. There exists a Receivable File
pertaining to each Receivable, and such Receivable File contains (a) a fully
executed original of the Receivable, (b) a certificate of insurance, application
form for insurance signed by the Obligor or a signed representation letter from
the Obligor named in the Receivable pursuant to which the Obligor has agreed to
obtain physical damage insurance for the Financed Vehicle, or microfiche or
computer scanned copies thereof, (c) the original Lien Certificate or
application therefor and (d) a credit application signed by the Obligor, or a
microfiche or computer scanned copy thereof. Each of such documents which is
required to be signed by the Obligor has been signed by the Obligor in the
appropriate spaces. All blanks on any form have been properly filled in and each
form has otherwise been correctly prepared. The complete file for each
Receivable currently is in the possession of the Custodian.

                                      B-2
<PAGE>   23

                  15. Receivables in Force. No Receivable has been satisfied,
subordinated or rescinded, and the Financed Vehicle securing each such
Receivable has not been released from the lien of the related Receivable in
whole or in part. No provisions of any Receivable have been waived, altered or
modified in any respect since its origination, except by instruments or
documents identified in the Receivable File. No Receivable has been modified as
a result of application of the Soldiers' and Sailors' Civil Relief Act of 1940,
as amended.

                  16. Lawful Assignment. No Receivable was originated in, or is
subject to the laws of, any jurisdiction the laws of which would make unlawful,
void or voidable the sale, transfer and assignment of such Receivable under this
Agreement or pursuant to transfers of the Notes.

                  17. Good Title. No Receivable has been sold, transferred,
assigned or pledged by AFL to any Person other than ARFC; immediately prior to
the conveyance of the Receivables to ARFC pursuant to this Agreement, ARFC or
AFL had good and indefeasible title thereto, free and clear of any Lien, and
immediately upon the transfer thereof, ARFC shall have good and indefeasible
title to and will be the sole owner of each Receivable, free of any Lien. No
Dealer has a participation in, or other right to receive, proceeds of any
Receivable. AFL has not taken any action to convey any right to any Person that
would result in such Person having a right to payments received under the
related Insurance Policies or the related Dealer Agreements or Dealer
Assignments or to payments due under such Receivables.

                  18. Security Interest in Financed Vehicle. Each Receivable
created or shall create a valid, binding and enforceable first priority security
interest in favor of AFL in the Financed Vehicle. The Lien Certificate and
original certificate of title for each Financed Vehicle show, or if a new or
replacement Lien Certificate is being applied for with respect to such Financed
Vehicle, the Lien Certificate will be received within 180 days of the Closing
Date and will show, AFL named as the original secured party under each
Receivable as the holder of a first priority security interest in such Financed
Vehicle. With respect to each Receivable for which the Lien Certificate has not
yet been returned from the Registrar of Titles, AFL has received written
evidence from the related Dealer that such Lien Certificate showing AFL as first
lienholder has been applied for. AFL's security interest has been validly
assigned by AFL to ARFC pursuant to this Agreement. Immediately after the sale,
transfer and assignment thereof by ARFC to the Trust, each Receivable will be
secured by an enforceable and perfected first priority security interest in the
Financed Vehicle in favor of the Trust as secured party, which security interest
is prior to all other Liens upon and security interests in such Financed Vehicle
which now exist or may hereafter arise or be created (except, as to priority,
for any lien for taxes, labor or materials affecting a Financed Vehicle). As of
the Cutoff Date there were no Liens or claims for taxes, work, labor or
materials affecting a Financed Vehicle which are or may be Liens prior or equal
to the lien of the related Receivable.

                  19. All Filings Made. All filings (including, without
limitation, UCC filings) required to be made by any Person and actions required
to be taken or performed by any Person in any jurisdiction to give the Trust a
first priority perfected lien on, or ownership interest in, the Receivables and
the Other Conveyed Property have been made, taken or performed.

                                      B-3
<PAGE>   24

                  20. No Impairment. AFL has not done anything to convey any
right to any Person that would result in such Person having a right to payments
due under a Receivable or otherwise to impair the rights of ARFC, the Trust, the
Indenture Trustee and the Noteholders in any Receivable or the proceeds thereof.

                  21. Receivable Not Assumable. No Receivable is assumable by
another Person in a manner which would release the Obligor thereof from such
Obligor's obligations to AFL with respect to such Receivable.

                  22. No Defenses. No Receivable is subject to any right of
rescission, setoff, counterclaim or defense and no such right has been asserted
or threatened with respect to any Receivable.

                  23. No Default. There has been no default, breach, violation
or event permitting acceleration under the terms of any Receivable (other than
payment delinquencies of not more than 30 days), and no condition exists or
event has occurred and is continuing that with notice, the lapse of time or both
would constitute a default, breach, violation or event permitting acceleration
under the terms of any Receivable, and there has been no waiver of any of the
foregoing. As of the Cutoff Date, no Financed Vehicle had been repossessed.

                  24. Insurance. As of the date hereof, each Financed Vehicle is
covered by a comprehensive and collision insurance policy (i) in an amount at
least equal to the lesser of (a) its maximum insurable value or (b) the
principal amount due from the Obligor under the relate Receivable, (ii) naming
AFL as loss payee and (iii) insuring against loss and damage due to fire, theft,
transportation, collision and other risks generally covered by comprehensive and
collision coverage. Each Receivable requires the Obligor to maintain physical
loss and damage insurance, naming AFL and its successors and assigns as
additional insured parties, and each Receivable permits the holder thereof to
obtain physical loss and damage insurance at the expense of the Obligor if the
Obligor fails to do so. No Financed Vehicle was or had previously been insured
under a policy of Force-Placed Insurance on the Cutoff Date.

                  25. Past Due. At the Cutoff Date no Receivable was more than
30 days past due.

                  26. Remaining Principal Balance. At the Cutoff Date each
Receivable had a remaining principal balance equal to or greater than $500.00
and the Principal Balance of each Receivable set forth in the Schedule of
Receivables is true and accurate in all material respects.

                  27. Final Scheduled Maturity Date. No Receivable has a final
maturity later than February 28, 2007.

                  28. Certain Characteristics. (A) Each Receivable had a
remaining maturity, as of the Cutoff Date, of at least 3 months but not more
than 84 months; (B) each Receivable had an original maturity of at least 12
months but not more than 84 months; (C) each Receivable had an original

                                      B-4
<PAGE>   25

principal balance of at least $4,124 and not more than $56,431; (D) each
Receivable had a remaining Principal Balance as of the Cutoff Date of at least
$500 and not more than $56,431; (E) each Receivable has an Annual Percentage
Rate of at least 7.75% and not more than 26.99%; (F) no Receivable was more than
30 days past due as of the Cutoff Date; (G) no funds have been advanced by the
Seller, the Servicer, any Dealer, or anyone acting on behalf of any of them in
order to cause any Receivable to qualify under clause (F) above; (H) no
Receivable has a final scheduled payment date on or before May 29, 2000; (I) the
Principal Balance of each Receivable set forth in Schedule of Receivables is
true and accurate in all material respects as of the Cutoff Date; and (J) 11.43%
of the Receivables, by principal balance as of the Cutoff Date, was attributable
to loans for the purchase of new Financed Vehicles and 88.57% of the Receivables
was attributable to loans for the purchase of used Financed Vehicles.

                                      B-5<PAGE>

                                AGREEMENT OF SALE

                                     BETWEEN

                     THE PARTIES LISTED ON EXHIBIT E HERETO

                           (COLLECTIVELY, AS "SELLER")

                                       AND

                                KLAK GOLF, L.L.C.
                                (AS "PURCHASER")

                              DATED: AUGUST 1, 2000

                                   Relating to

Sale and Acquisition of Certain Improved Properties located in the States of
Florida, Massachusetts, New Jersey, New York, Pennsylvania, Texas, Washington
and Wisconsin and the Sale and Acquisition of Certain Lease Rights relating to
the Leasehold Interests located in the States of Arizona, California, Florida,
Maryland, New Jersey, New York, Oregon, Pennsylvania, South Carolina, Texas and
Washington.

<PAGE>

                                TABLE OF CONTENTS
                                -----------------

ARTICLE 1...................................................................4
   Section 1.1 Agreement to Sell and Purchase...............................4
   Section 1.2Purchase Price................................................5
   Section 1.3Escrow Deposit................................................6
ARTICLE 2...................................................................6
   Section 2.1 Delivery of Information by Seller............................6
   Section 2.2 Objections...................................................8
   Section 2.3 Review and Inspection by Purchaser...........................9
   Section 2.4 Seller's Right to Cure Objections............................9
ARTICLE 3...................................................................9
   Section 3.1Representations and Warranties of Seller......................9
   Section 3.2 Operations Pending Closing..................................11
ARTICLE 4..................................................................12
   Section 4.1 Conditions to Purchaser's Obligations.......................12
ARTICLE 5..................................................................14
   Section 5.1 The Closing Date............................................14
   Section 5.2 Seller's Obligations at the Closing.........................14
   Section 5.3 Purchaser's Obligations at the Closing......................15
   Section 5.4 Closing Costs: Prepayment Fees..............................15
   Section 5.5 Possession..................................................15
ARTICLE 6..................................................................16
   Section 6.1 Damage......................................................16
   Section 6.2 Condemnation................................................16
   Section 6.3 Application to Mortgage.....................................16
ARTICLE 7..................................................................16
   Section 7.1 Default by Seller...........................................16
   Section 7.2 Default by Purchaser........................................17
ARTICLE 8..................................................................17
   Section 8.1 Overbid Procedures..........................................17
   Section 8.2 Seller's Termination in favor of an Alternate Transaction...18
ARTICLE 9..................................................................18
   Section 9.1 Lease Assignment Election...................................18
   Section 9.2 Costs and Expenses..........................................19
   Section 9.3 Communications..............................................19
   Section 9.4 Conditions to Assignment....................................20
   Section 9.5 Sale of Leases..............................................20
ARTICLE 10.................................................................20
   Section 10.1 Notices....................................................20
   Section 10.2 Brokeragc Fees and Commissions.............................21
   Section 10.3 Entire Agreement...........................................21
   Section 10.4 Modification...............................................21
   Section 10.5 Applicable Law and Jurisdiction............................21
   Section 10.6 Headings...................................................22
   Section 10.7 Binding Effect.............................................22
   Section 10.8 Assignment.................................................22

<PAGE>

   Section 10.9 Survival of Provisions.....................................22
   Section 10.11 Invalid Provision.........................................22
   Section 10.12 Attorneys'Fees............................................22
   Section 10.13 Multiple Counterparts.....................................22
   Section 10.14 Facsimile Signatures......................................22

<PAGE>

                                AGREEMENT OF SALE

         This Agreement of Sale (this "Agreement") is entered into as of August
1, 2000, between the parties listed on Exhibit E hereto which are debtors and
debtors-in-possession in the jointly administered Chapter 11 cases under Title
11 of the United States Code, 11 U.S.C. Sections 101-1330 (the "Bankruptcy
Code") in the United States Bankruptcy Court for the Southern District of New
York Case Nos. 00 B 41065 through 00 B 41196 (SMB) (the "Bankruptcy Case")
(collectively hereinafter "Seller"), and KLAK GOLF, L.L.C., a Delaware limited
liability company ("Purchaser").

                                    ARTICLE 1
                                     GENERAL

         Section 1.1 Agreement to Sell and Purchase. Seller hereby agrees to
sell, assign and convey to Purchaser, and Purchaser hereby agrees to purchase
and accept from Seller, for the Purchase Price (hereinafter defined) and upon
and subject to the terms and conditions hereinafter set forth, all of Seller's
rights and interests in and to the following (collectively, the "Property"):

         (A)      those certain tracts or parcels of land (collectively, the
"LAND") lying and being situated in the states of Florida, Massachusetts, New
Jersey, New York, Pennsylvania, Texas, Washington and Wisconsin and more
particularly described on Exhibit A hereto (individually, an "Owned Property"
and collectively, the "Owned Properties"), together with the other Property
herein described at each location and all rights, ways, privileges, servitudes,
appurtenances and advantages thereto belonging or appertaining;

         (B)      the right to control the disposition of the leasehold
interests in accordance with Article 9 hereof (the "LEASE RIGHTS") pursuant to
the leases which are more particularly described on Exhibit B-1 hereto demising
those premises (as amended and modified to date, collectively, the "LEASES")
being more particularly described on Exhibit B-2 attached hereto together with
all rights, including, purchase options (the "Purchase Options"), ways,
privileges, servitudes, appurtenances and advantages thereto belonging or
appertaining;

         (C)      the buildings and related facilities owned by Seller situated
on the Land and all of Seller's interest in and to the buildings and related
improvements leased by Seller with respect to the Demised Premises and all other
improvements situated on such real property owned or leased by Seller (the
"IMPROVEMENTS");

         (D)      all of the rights and appurtenances pertaining to the Land and
the Improvements, including all right, title and interest of Seller in and to
adjacent streets, alleys, easements and rights-of-way;

         (E)      all personal property owned by Seller utilized for the
operation of the Land and Improvements, but specifically excluding (except as
provided in Section 1.2 (b) hereof) the items of personal property listed on
Exhibit C hereto which Seller agrees to remove from the Properties prior to the
Closing (or if applicable after the Closing pursuant to Section 9.2 hereof) and
Seller agrees to repair all damage reasonably caused by such removal (the
"Building Fixtures");

<PAGE>

         (F)      all right, title and interest of Seller in and to all site and
as-built plans, surveys, soil and substrata studies, environmental site
assessments, architectural renderings, plans and specifications, engineering
plans and specifications, floor plans, landscape plans and other plans, diagrams
or studies of any kind, if any, in the possession of or Seller which relate to
the Land, the Improvements or the Building Fixtures;

         (G)      All operating manuals of any kind now in the possession of
Seller relating to the continuing ownership, operation and management of the
Improvements and Building Fixtures;

         (H)      All of Seller's rights under all licenses, permits and
warranties related to the ownership, operation and management of the Land,
Improvements, Leases and Building Fixtures to the extent assignable, but
specifically excluding any rights to tradenames, service marks, trademarks or
other such intellectual property; and

         (I)      All other rights, interests and properties as may be specified
in this Agreement to be sold, transferred, assigned or conveyed by Seller to
Purchaser.

The above listed Property shall be sold, conveyed and assigned to Purchaser at
Closing (hereinafter defined) free and clear of all liens, claims, easements,
and encumbrances whatsoever except for the Permitted Encumbrances (hereinafter
defined). The term "Specific Property" means, individually, each Owned Property
or each Demised Premises. The Specific Properties listed on Exhibits F, G and H
are called the Tier 1 Properties, Tier 2 Properties and Tier 3 Properties,
respectively. Without limiting the generality of the foregoing, the Property
does not include any right, title or interest in any trademark, license or
intellectual property relating to Golden Bear.

         Section 1.2       Purchase Price.

         (a)      The aggregate purchase price (the "Purchase Price") to be paid
for the Property shall be $18,900,000, plus or minus prorations, payable in
immediately available Federal funds at the Closing (hereinafter defined).
Notwithstanding anything herein to the contrary, Purchaser and Seller
acknowledge and agree that title to the Specific Property located in Carrollton,
Texas (the "Carrollton Property") shall not be transferred to Purchaser at the
Closing, but that $500,000 of the Purchase Price shall not be disbursed to
Seller and shall be held in an escrow (the "Carrollton Escrow") with the Title
Company pursuant to escrow instructions mutually acceptable to Seller and
Purchaser. If an auction of the Carrollton Property (the "Carrollton Auction")
occurs and if Purchaser makes the winning bid at the Carrollton Auction,
Purchaser shall purchase the Carrollton Property for the purchase price bid at
the Carrollton Auction by Purchaser (the "Carrollton Purchase Price"); provided
Purchaser shall receive a credit against the Carrollton Purchase Price equal to
the funds in the Carrollton Escrow and the funds held in the Carrollton Escrow
shall be disbursed to Seller. In the event, for any reason, Purchaser does not
make the winning bid at the Carrollton Auction or the Carrollton Auction is not
held within one (1) year from the Closing, the funds held in the Carrollton
Escrow shall be immediately disbursed to Purchaser; provided, however, that
neither party shall have any obligation to the other relating to the Carrollton
Property.

<PAGE>

         (b)      Purchaser shall have the right, to be exercised at least 10
days prior to the Closing, to purchase all, but not less than all, of the
inventory held for resale at each Specific Property and the Purchase Price shall
be increased by an amount equal to 40% of the original cost to Seller of such
inventory. Purchaser and Seller shall conduct an accounting of such inventory,
the cost of which shall be split equally by Purchaser and Seller.

         Section 1.3 Escrow Deposit. Purchaser and Seller acknowledge that
Purchaser has deposited with Seller, to be deposited with a title company
mutually acceptable to Seller and Purchaser (the "TITLE COMPANY"), in escrow, a
certified check in the sum of $1,000,000, which will be invested by the Title
Company in an interest-bearing account with a financial institution approved by
Seller and Purchaser whose accounts are insured by the Federal Deposit Insurance
Corporation, and to be held and disbursed by the Title Company strictly in
accordance with the terms and provisions of this Agreement and in accordance
with the terms of the escrow agreement attached hereto as Exhibit D (the "ESCROW
AGREEMENT"). The amount of such deposit, and all accrued interest thereon, is
hereinafter referred to as the "Escrow Deposit." The Escrow Deposit shall be
increased by Purchaser to 10% of the Purchase Price by 5:00 p.m. on August 1,
2000 by wire transfer. If Purchaser terminates this Agreement in accordance with
the right of termination given to Purchaser under Section 2.2 or Article 8 of
this Agreement at any time, the Escrow Deposit shall be paid to Purchaser. Upon
the occurrence of a default by Seller or Purchaser under this Agreement, the
Escrow Deposit shall be paid in accordance with the terms of Article 7 below.

                                    ARTICLE 2

                           TITLE COMMITMENTS, SURVEYS

                            AND ENVIRONMENTAL REPORTS

         Section 2.1   Delivery of Information by Seller. Seller hereby confirms
and agrees that it has delivered to Purchaser the following:

         (A)      a copy of all title commitments for owner's and leasehold
title insurance (collectively, the "TITLE COMMITMENTS") and all surveys
(collectively, the "Surveys") in Seller's possession affecting the Specific
Properties;

         (B)      copies of the Leases relating to the Demised Premises;

         (C)      a copy of all material and written contracts of management,
maintenance, utility, service, supply or similar contracts or leases in Seller's
possession which affect any of the Property or its operation, and any
amendments, modifications or supplements thereto that create a contingent
liability continuing beyond the Closing or which would otherwise continue beyond
the Closing (the "Service Contracts");

         (D)      a copy of all "as-built" plans and specifications in Seller's
possession with respect to the Improvements;

         (E)      a copy of all material licenses and permits in Seller's
possession that are necessary for the ownership, occupancy and operation of the
Improvements, including, without limitation, certificates of occupancy, to the
extent assignable (the "OPERATING PERMITS");

<PAGE>

         (F)      a copy of any hazardous waste inspection reports and
environmental site assessments in Seller's possession with respect to the
Property (together with any updates to these reports and assessments obtained by
Purchaser or Seller, the "Environmental Reports"); and

         (G)      a copy of all guaranties and warranties, if any, pertaining
to the Building Fixtures in Seller's possession.

The documents described in Section 2.1 are herein collectively called the
"INFORMATIONAL DOCUMENTS" and the information contained in the Informational
Documents is herein collectively called the "INFORMATION").

Within 7 days after the date this Agreement is fully executed by Seller and
Purchaser, Purchaser shall give Seller written notice of any objections to
matters Purchaser determines, in its reasonable discretion, materially and
adversely affect the marketability of title to or the value of any Specific
Property as set forth in the Title Commitments and Surveys for such Specific
Property, including, without limitation, obtaining such title endorsements as
Purchaser, in its reasonable discretion, may determine are necessary. In the
event Purchaser fails to give a written notice to Seller of such objections
within the 7 day period, Purchaser shall be deemed to have waived any objections
to title and to have accepted the condition of title as reflected by the Title
Commitments and Surveys for each Specific Property. In the event Purchaser gives
a written notice to Seller of such objections within the 7 day period, Seller
shall have the right, but not the obligation, to cure Purchaser's objections in
accordance with the provisions of Section 2.4 hereof. Notwithstanding anything
herein to the contrary, Seller shall have the obligation to remove objections
which can be removed without the expenditure of money, including, without
limitation, the payment of attorneys' fees, or the posting of a bond or the
giving of an indemnity, surety, or similar guaranty. In the event Seller is
unwilling or unable to cure Purchaser's objections within the Outside Cure Date
(hereinafter defined), Purchaser shall either (1) accept title in its current
condition, in which event Purchaser's objections shall be deemed to have been
waived for all purposes, or (2) terminate this Agreement if the provisions of
Section 2.2 hereof are satisfied by written notice to Seller and the Title
Company, in which case, the Title Company shall immediately return the Escrow
Deposit to Purchaser. Any items or exceptions to title that are accepted or
waived by Purchaser or deemed to have been accepted or waived by Purchaser are
hereinafter referred to as the "PERMITTED EXCEPTIONS."

Within 7 days after the date this Agreement is fully executed by Seller and
Purchaser, Purchaser shall give Seller written notice of any objections to
matters Purchaser determines, in its reasonable discretion, materially and
adversely affect the value of any Specific Property as set forth in the
Environmental Reports and Purchaser's due diligence relating to the
accessability of water for such Specific Property. In the event Purchaser fails
to give a written notice to Seller of such objections within the 7 day period,
Purchaser shall be deemed to have waived any objections to the environmental or
water accessability condition of the Property. In the event Purchaser gives a
written notice to Seller of such objections within the 7 day period, Purchaser
shall either (1) accept such Specific Property in its current condition, in
which event Purchaser's objections shall be deemed to have been waived for all
purposes, or (2) terminate this Agreement if the provisions of Section 2.2
hereof are satisfied by written notice to Seller and the Title Company, in which
case, the Title Company shall immediately return the Escrow Deposit to
Purchaser.

<PAGE>

Within 14 days after the date this Agreement is fully executed by Seller and
Purchaser, Purchaser shall give Seller written notice of any objections to
matters Purchaser determines, in its reasonable discretion, materially and
adversely affect, for any reason, the marketability or value of the Specific
Property located in Holbrook, Massachusetts (the "Holbrook Property"). In the
event Purchaser fails to give a written notice to Seller of such objections
within the 14 day period, Purchaser shall be deemed to have waived any
objections to the Holbrook Property. In the event Purchaser gives a written
notice to Seller of such objections within the 14 day period, Purchaser shall
either (1) accept title to the Holbrook Property in its current condition, in
which event Purchaser's objections shall be deemed to have been waived for all
purposes, or (2) terminate this Agreement as to the Holbrook Property only by
written notice to Seller and the Title Company, in which case, notwithstanding
anything herein to the contrary, the Purchase Price shall be reduced by
$900,000.

         Section 2.2   Objections. For purposes of this Article 2, a matter
which may be objected to by Purchaser hereunder (an "Objection") shall be deemed
"material" if it would adversely affect the value of a Specific Property by more
than $25,000. In the event a material Objection is raised by Purchaser which can
be cured by the expenditure of funds, Seller shall be obligated, subject to the
following sentence, to cure such Objection provided Purchaser pays the first
$10,000 of such cure amount and such cure does not require the expenditure by
Seller of more than $15,000. If the Objection would cost less than $25,000,
Seller shall either cure such Objection or pay to Purchaser or credit Purchaser
at Closing the difference between the cost to cure the Objection and $10,000. If
the Objection would cost more than $25,000 to cure ($10,000 of which shall be
Purchaser's obligation and $15,000 of which shall be Seller's obligation),
Seller shall have the option of either (i) spending such excess funds and curing
such Objection or giving Purchaser a credit at Closing equal to $15,000 and such
excess funds, in which case the Objection shall be deemed satisfied, or (ii) not
spending such excess funds and not curing such Objection, in which case the
Specific Property which was affected by such Objection shall be deemed an
"Uncured Property." In the event a material Objection is raised by Purchaser
which can not be cured by the expenditure of funds and is not otherwise cured by
Seller within the Cure Period, the Specific Property which was affected by such
Objection shall be deemed an "Uncured Property." For purposes of this Section
2.2, all Objections with respect to any Specific Property shall be aggregated
and treated as a single "Objection." Notwithstanding anything herein to the
contrary, (a) Purchaser shall have the right to terminate this Agreement if any
of the following conditions occurs: (i) two Tier 1 Properties are deemed Uncured
Properties, or (ii) any combination of Tier 1 Properties or Tier 2 Properties
greater than or equal to three are deemed Uncured Properties, (b) Purchaser
shall have the right to not purchase an Uncured Property and Purchaser shall not
receive any credit at the Closing with respect to such Uncured Property, except
that in the case of a Tier 1 Property or a Tier 2 Property, if Seller received a
qualified offer for such Uncured Property, Purchaser shall receive a credit
against the Purchase Price at the Closing equal to the highest qualified offer
"the Highest Offer") received by Seller for such Uncured Property pursuant to
the Omnibus Sales Motion filed on July 19, 2000 currently in effect relating to
the Property (i.e. the order that required bids for the Property to be submitted
to Seller on or before July 28, 2000), (c) if Purchaser does not pay its share
of the amount necessary to cure an Objection (i.e. $10,000), the Property which
is subject to such Objection shall not be deemed an Uncured Property, (d) if
Seller does not pay its share of the amount necessary to cure an Objection (i.e.
up to $15,000), the Property which is subject to such Objection shall, at
Purchaser's option, be deemed an Uncured Property, and (e) Seller shall have

<PAGE>

the right to terminate this Agreement if any combination of Tier 1 Properties or
Tier 2 Properties greater than or equal to six are deemed Uncured Properties.

         Section 2.3   Review and Inspection by Purchaser. If Purchaser desires
to inspect, examine or survey the Property or conduct such tests and studies as
Purchaser may deem reasonably necessary or appropriate after the date hereof,
Purchaser may do so until Closing, subject to the provisions of the Leases and
at Purchaser's risk. Inspection will be at Seller's reasonable discretion and
must be scheduled in advance with Seller. It is specifically understood that
Purchaser will not have access at any time to the Property except at the
convenience of Seller and in the company of a representative of Seller.
Purchaser agrees to indemnify, defend and hold Seller harmless from any against
any loss, cost, claim, damage or expense, including reasonable attorney's fees,
court costs and disbursements incurred, directly or indirectly, by Seller or to
the Property as a result of Purchaser's inspection, examination or survey of the
Property, either prior to, on, or after the date hereof. The provisions of this
Section 2.3 shall survive Closing or any termination of this Agreement.

         Section 2.4   Seller's Right to Cure Objections. If Purchaser raises a
material Objection to a Specific Property in accordance with Sections 2.1 and
2.2 hereof, Seller shall have the right (the "Cure Right"), but not the
obligation, to attempt to cure such Objection on or before October 31, 2000 (the
"Outside Cure Date"). If Seller exercises the Cure Right, such Specific Property
shall not be considered an Uncured Property and the Closing for the remaining
Property shall not be delayed, but such Specific Property shall not be
transferred to Purchaser at the Closing and an amount equal to the Highest Offer
for such Specific Property shall be withheld from the Purchase Price. If such
Objection is cured by Seller on or before the Outside Cure Date, the Closing of
such Specific Property (the "Specific Property Closing") in accordance with the
terms of this Agreement shall occur 5 business days after Purchaser receives
notice from Seller that such Objection has been cured (the "Specific Property
Closing Date") at which time Purchaser shall pay Seller as the purchase price
for such Specific Property an amount equal to the Highest Offer for such
Specific Property. Notwithstanding anything herein to the contrary, (a)
Purchaser may at any time inform Seller that it wishes to acquire such Specific
Property and waive the Objection and the Specific Property Closing shall occur
as set forth above, (b) the Closing for the remaining Property shall be delayed
until the Specific Property Closing Date if, except for Seller's exercise of the
Cure Right, Purchaser would have had the right to terminate this Agreement
pursuant to the provisions of Section 2.2 hereof, and (c) if Seller is unable or
unwilling to cure the Objection on or before the Outside Cure Date, neither
party shall have any obligation to the other relating to such Specific Property.

                                    ARTICLE 3

                          REPRESENTATIONS, WARRANTIES,

                       COVENANTS, AND AGREEMENTS OF SELLER

         Section 3.1   Representations and Warranties of Seller. To induce
Purchaser to enter into this Agreement and to consummate the sale and purchase
of the Property in accordance herewith, Seller represents and warrants to
Purchaser, as of the date hereof and as of the Closing Date

<PAGE>

(hereinafter defined), except where specific reference is made to another date
or dates, in which case the other date or dates will apply, that:

          (a)     Seller is duly organized and validly existing under the laws
of the state of its organization. Subject to the approval of the Bankruptcy
Court, Seller has the right, power, and authority to execute and deliver this
Agreement and to consummate the purchase and sale transactions provided for
herein without obtaining any further consents or approvals from, or the taking
of any other actions with respect to, any third parties. Subject to Bankruptcy
Court approval, this Agreement, when executed and delivered by Seller and
Purchaser, will constitute the valid and binding agreement of Seller,
enforceable against Seller in accordance with its terms and, subject to the
order of the Bankruptcy Court, does not violate any material agreement or
provision of or constitute a default of any material agreement or instrument to
which Seller is a party.

          (b)     Seller is not a "foreign person" as that term is defined in
Section 1445 of the Internal Revenue Code of 1954, as amended, and any
applicable regulations promulgated thereunder.

         (c)      To Seller's actual knowledge, the information previously
delivered to Purchaser in accordance with Article 2 of this Agreement, is true
and correct in all material respects.

         (d)      Seller currently has in place relating to the Property
commercially reasonable fire, casualty, liability and extended coverage
insurance.

         As used herein, the term "knowledge" or "actual knowledge", with
respect to any representation or warranty of Seller made in this Agreement or in
any of the documents or instruments to be delivered by Seller at the Closings,
shall mean the joint and several knowledge of Dominic Chang and Krishnan P.
Thampi.

EXCEPT AS SET FORTH OR PROVIDED IN THIS AGREEMENT OR ANY OF THE CLOSING
DOCUMENTS, INCLUDING, WITHOUT LIMITATION THE DEED, IT IS EXPRESSLY UNDERSTOOD
AND AGREED THAT PURCHASER IS PURCHASING THE PROPERTY AND ACCEPTING THE
ASSIGNMENT OF THE LEASES FOR THE DEMISED PREMISES "AS IS" AND "WHERE IS", AND
WITH ALL FAULTS AND DEFECTS, LATENT OR OTHERWISE, AND THAT SELLER IS MAKING NO
REPRESENTATIONS OR WARRANTIES, EITHER EXPRESS OR IMPLIED, BY OPERATION OF LAW OR
OTHERWISE, WITH RESPECT TO THE QUALITY, PHYSICAL CONDITION, EXISTENCE, LOCATION,
OR VALUE OF THE PROPERTY, THE PRESENCE OR ABSENCE OF HAZARDOUS SUBSTANCES IN,
ON, UNDER OR ABOUT THE PROPERTY, OR THE INCOME OR EXPENSES FROM OR OF THE
PROPERTY OR THE OPERATIONS OR RESULTS OF OPERATIONS OR ECONOMIC FORECASTS OR
PROJECTIONS CONCERNING EARNINGS OR PROFITS, THE COMPLETION, STATUS OF COMPLETION
OR SOUNDNESS OF ANY IMPROVEMENTS, THE USE RESTRICTIONS AFFECTING THE PROPERTY,
THE ENFORCEABILITY OF ANY CONTRACT OR OTHER AGREEMENT OR RIGHT ASSIGNED
HEREUNDER, THE COMPLIANCE OF THE PROPERTY OR ANY PART THEREOF WITH ANY LAWS,
STATUTES, RULES, ORDINANCES, DECREES OR ORDERS APPLICABLE THERETO. WITHOUT
LIMITING THE FOREGOING, EXCEPT AS

<PAGE>

SET FORTH OR PROVIDED IN THIS AGREEMENT OR ANY OF THE CLOSING DOCUMENTS,
INCLUDING, WITHOUT LIMITATION, THE DEED, IT IS UNDERSTOOD AND AGREED THAT SELLER
MAKES NO WARRANTY OF HABITABILITY, SUITABILITY, MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR ANY PURPOSE.

         Purchaser represents and warrants to Seller that Purchaser has been
duly organized and is validly existing as a Delaware limited liability company
and is in good standing in the State of Delaware. Purchaser has the full right
and authority and has obtained any and all consents required to enter into this
Agreement and to consummate or cause to be consummated the transactions
contemplated hereby. This Agreement has been authorized and properly executed
and constitutes the valid and binding obligation of Purchaser, enforceable in
accordance with its terms.

         If (1) any of Seller's or Purchaser's representations and warranties
set forth in this Section 3.1 are untrue in any material respect, or (2) at any
time at or before Closing there is any material change with respect to the
matters represented and warranted by Seller or Purchaser pursuant to this
Section 3.1, then Seller or Purchaser, as the case may be, shall give the other
party prompt written notice thereof and, as to a breach of a Seller
representation or warranty, the Specific Property affected by such breach shall,
notwithstanding anything herein to the contrary, be deemed an Uncured Property.

         Section 3.2   Operations Pending Closing. From the date hereof through
the Closing Date, Seller agrees as follows:

         (a)      Seller will manage, repair and maintain the Property in the
same manner as it did prior to the date hereof and will keep the Property in its
present state of repair subject to normal wear and tear, exercising the same
degree of care in such matters as Seller has previously exercised. Except as set
forth on Exhibit C hereof, Seller shall not remove any item of Building Fixtures
from the Property, unless the same is replaced with an item of equal quality or
is no longer necessary or useful for the customary operation of the Property and
unless any damage reasonably caused by such removal is repaired. Seller shall
deliver possession of the Property to Purchaser at the Closing.

         (b)      Seller will not enter into any voluntary renewal, extension,
modification or replacement of any existing Lease or Service Contract or enter
into any new employment, maintenance, service, supply or other agreement
relating to the Property which would create a material contingent liability
continuing beyond the Closing or which would otherwise continue beyond the
Closing without the express written permission of Purchaser; provided, however,
that Seller may enter into Service Contracts with commercially reasonable terms
that are terminable on 30 days notice.

         (c)      Seller shall not, without the prior written consent of
Purchaser, enter into any leases or occupancy agreements for space at the
Property.

<PAGE>

         (d)      Seller will keep in full force and effect all existing fire,
casualty, liability and extended coverage and other insurance policies which are
presently in effect for the Property, or any portion of the Property.

         (e)      Seller shall perform its post-petition obligations when due
pursuant to the Leases, Service Contracts and Operating Permits, including,
without limitation, any maintenance or repair of the Property to be performed by
Seller.

         (f)      Unless necessary to operate the Specific Properties prior to
Closing, but not binding after the Closing, Seller shall not enter into or
record any easement, covenant, license, permit, agreement or other instrument
against the Property or any portion thereof without Purchaser's prior consent.

         (g)      Seller shall cooperate and promptly execute all applications
and instruments required by any party or governmental authority in connection
with the transfer to Purchaser of any of the Service Contracts or Operating
Permits. Purchaser agrees to submit all applications, documentation and
information reasonably required to assist Seller in obtaining such consents and
transfers.

         (h)      Other than litigation that relates to a claim fully covered by
insurance or which relates to a pre-petition claim unless requested by
Purchaser, Seller shall give Purchaser prompt notice of the institution of any
litigation, arbitration or administrative proceeding of which it has actual
knowledge prior to the Closing Date involving the Property or Seller's ability
to consummate the transaction contemplated by this Agreement.

         (i)      Seller will advise Purchaser promptly of any notice it
receives of any change in any Legal Requirements that might materially adversely
affect the value or use of the Property by Purchaser. Immediately upon receipt,
Seller shall send Purchaser a copy of any notice which Seller may receive from
any Governmental Authority with respect to the Property having a material
adverse affect on the Property.

         (j)      Upon the expiration of Purchaser's right to terminate this
Agreement under Section 2.2, Seller will advise Purchaser in writing promptly of
any material notice or offer it receives or has received relating to the
Property, including, without limitation, any offer or proposal from a third
party to lease, sublease or purchase the Property or any portion thereof, and
shall promptly deliver to Purchaser all information Seller receives or has
received relating to such offer or proposal; provided, however, that Seller does
not have to so advise Purchaser as to any Property that is deemed, or may be
deemed if not cured by Seller, an Uncured Property until such Property is no
longer an Uncured Property.

                                    ARTICLE 4
                              CONDITIONS PRECEDENT

         Section 4.1   Conditions to Purchaser's Obligations. The following
shall be defined as "Conditions" (any of which may be waived in whole or in part
in writing by Purchaser at or prior to the Closing):

<PAGE>

         (a)      Correctness of Representations and Warranties. The
representations and warranties of Seller set forth herein shall be true and
correct in all material respects on and as of the Closing Date with the same
force and effect as if such representations and warranties had been made on and
as of the Closing Date. Seller, by having closed the sale of the Property, shall
be deemed conclusively to have certified at Closing that all such
representations and warranties were true and correct in all material respects on
and as of the Closing Date.

         (b)      Compliance by Seller. Seller shall have performed, observed,
and complied with all of the covenants, agreements, obligations and conditions
required by this Agreement to be performed, observed and complied with by them
prior to or as of the Closing the failure of which would cause a material
adverse effect.

         (c)      Bankruptcy Court Orders. The Sales Order, as defined
hereinbelow, shall have been entered by the Bankruptcy Court and shall have
become a Final Order, as defined hereinbelow. Seller shall use its best faith
efforts to obtain the approval of the Bankruptcy Court to the procedures set
forth in Articles 2 and 8 hereof, including, without limitation, Overbid
Procedures and the Overbid Fee (as such terms are hereinafter defined) and to
seek the entering of the Sales Order as contemplated and required by this
Agreement. As used herein, "Sales Order" means the order by the Bankruptcy
Court, consistent with the terms of this Agreement and reasonably satisfactory
in form and substance to Purchaser, among other things, (a) authorizing the sale
and conveyance of the Property, pursuant to Sections 105, 363, 365 and 1146 of
Title 11, United States Code (the "Bankruptcy Code"), free and clear of all
claims, liens, encumbrances and other interests in the Property, including,
without limitation, any broker's or finder's claims or liens relating to the
Property or any lease or sublease of the Property or any portion thereof (other
than Permitted Exceptions, if any), and (b) approving the right of Purchaser to
take an assignment and exercise of the Lease Rights and the Purchase Options by
Seller as debtors in possession, all pursuant to Section 365 of the Bankruptcy
Code. As used herein, "Final Order" means an order (A) ruling or judgment that
is in full force and effect and not stayed and as to which the time to appeal
has expired and is no longer subject to review, reversal, modification, or
amendment, by appeal or writ of certiorari. In the case of the Sales Order, a
Final Order shall also consist of an order as to which an appeal, notice of
appeal or motion for rehearing or new trial has been filed, but as to which
Purchaser, in its sole discretion, nonetheless elects to proceed with the
Closing. Seller shall use commercially reasonable efforts to promptly seek entry
of the Sales Order. The Sales Order shall include, among other things, a
determination that Purchaser is a good faith purchaser for purposes of Section
363(m) of the Bankruptcy Code. Notwithstanding anything herein to the contrary,
in the event the Bankruptcy Court does not approve the procedures set forth in
Articles 2 and 8 hereof and Purchaser elects, in its sole discretion, to
terminate this Agreement, neither party shall have any further liability to the
other, except for the return to Purchaser of the Escrow Deposit.

         (d)      Timing of Sales Order. The Sales Order shall have been entered
on or before August 22, 2000.

         (e)      Hart-Scott-Rodino Filing. The Hart-Scott-Rodino filing
relating to the purchase and sale of the Property has been approved by the
appropriate governmental authorities. Purchaser shall effect such filing in a
manner that will not delay the Closing.

<PAGE>

         In the event that any of the Conditions are not materially satisfied as
of the Closing Date, or in Purchaser's good faith judgment cannot be satisfied
as of the Closing Date, Purchaser shall have the right, notwithstanding anything
herein to the contrary, to deem the Specific Property affected by such failure
to satisfy any of the foregoing Conditions an Uncured Property and that
Purchaser shall not have any right to terminate this Agreement other than as
provided in Section 2.2 hereof, and Purchaser shall have the right to obtain a
credit against the Purchase Price if the conditions of Section 2.2 hereof is
satisfied. Notwithstanding the foregoing, if the Conditions set forth in
subsections (d) or (e) above are not satisfied, either party shall have the
right to terminate this Agreement.

                                    ARTICLE 5
                                   THE CLOSING

         Section 5.1   The Closing Date. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place in the offices
of Fried, Frank, Harris, Shriver, & Jacobson, One New York Plaza, New York, New
York 10004, except as set forth in Section 2.4 hereof, at 1:00 p.m., on a date
to be reasonably agreed upon by Seller and Purchaser; provided, however, that
the Closing shall in no event occur later than the 30th day after the Sales
Order is entered (the "Closing Date"). The Closing shall be through an escrow
with the Title Company in accordance with the provisions of Title Company's
standard deed and money escrow agreement modified to comply with the terms of
this Agreement. From and after the Closing, Purchaser shall be entitled to sole
and exclusive access to such parcels of Land and, all other rights and
obligations relating to such parcels of Real Estate shall incur to the benefit
of, and be binding upon, Purchaser.

         Section 5.2   Seller's Obligations at the Closing. Seller shall deliver
or cause to be delivered to Purchaser the following items at the Closing:

         (a)      Quitclaim deeds or similar deeds in the respective
jurisdictions where the Property is located (collectively, the "Deed"), executed
by Seller, conveying the Land and improvements to Purchaser subject only to the
Permitted Exceptions.

         (b)      Bills of Sale and Assignment (collectively, the "Bill of
Sale"), without warranty, executed by Seller, assigning the Building Fixtures,
Service Contracts and Operating Permits (insofar as it is assignable), and
warranties and guarantees received from suppliers and contractors.

         (c)      A certificate of nonforeign status (the "Certificate of
Nonforeign Status"), executed by Seller.

         (d)      The Sales Order.

         (e)      All executed originals or copies of the Service Contracts and
Operating Permits, if any.

         (f)      Such other documents and affidavits as may be reasonably
required by this Agreement or by the Title Company in order to consummate this
transaction and issue the Owner's Title Policy to Purchaser. A copy of each such
document and affidavit shall be delivered to Purchaser at the Closing.

<PAGE>

         Section 5.3   Purchaser's Obligations at the Closing. Purchaser shall
deliver or cause to be delivered to Seller the following items at the Closing:

         (a)      The cash Purchase Price required by Section 1.2, by wire
transfer by the Title Company to Seller;

         (b)      Such evidence of the authority of Purchaser to consummate the
Closing as the Title Company may reasonably require.

         (c)      Purchaser's agreement to indemnify, defend and hold Seller
harmless of and from all liabilities, losses, damages, costs, expenses
(including reasonable attorneys' fees) which Seller may suffer or incur by
reason of any act or cause of action occurring or accruing after the Closing
Date and arising out of any act or failure to act of Purchaser relating to this
Agreement or to the Property; provided, however, this indemnity shall not
include any liabilities, losses, damages, costs, expenses (including reasonable
attorneys' fees) arising out of any act or failure to act of Seller.

         Section 5.4       Closing Costs: Prepayment Fees, Prorations.

         (a)      Closing Costs. Purchaser shall pay the cost of (i) title
endorsements relating to the title insurance policies, (ii) the recording costs
for the Deeds, (iii) all taxes and fees relating to Purchaser's loan secured by
the Property, and (iv) the cost of any surveys. Except as otherwise provided
herein, each party shall pay its own attorneys' fees. Title insurance premiums
(exclusive of endorsements) and escrow fees shall be borne equally by Seller and
Purchaser. All transfer and stamp taxes payable on the Deed shall be paid by the
party required under local custom of the area in which each Specific Property is
located.

         (b)      Taxes and Prorations. All taxes (based upon 110% of the most
recent ascertainable taxes if current tax information is not available) relating
to the Property due and payable after the Closing which relate to periods prior
to the Closing and all costs required to cure defaults under the Leases, to the
extent required under the Bankruptcy Code in order to assume a Lease, shall be
the responsibility of Seller and shall be prorated as of the Closing. All rent
and operating expenses of the Property shall be prorated as of the date of the
Closing, utilities shall be read and any special assessments relating to the
Real Estate which were assessed at the time of the Closing shall be paid by
Seller, or at the option of Purchaser, deducted from the Purchase Price. In
addition, Purchaser shall receive at Closing a credit for prepaid lessons, punch
cards and buckets of range balls issued by Seller prior to Closing, which credit
shall be based upon Seller's and Purchaser's reasonable estimate of such items.

         Section 5.5   Possession. Purchaser or its designee shall have the
right to take possession of the Land upon Closing and Purchaser or its designee
shall have the right to take possession of the Leases at the time of their
assignment to Purchaser or its designee pursuant to the Lease Assignment Order
(hereinafter defined). Seller shall deliver the Property to Purchaser "broom
clean," free of personal property, except the Building Fixtures, and free of any
tenancy or possessory rights of any person, except for the Leases and the
Permitted Exceptions. Seller shall thereupon deliver to Purchaser copies, and
originals where available, of all documents relating to the Property and all
supplies, materials and keys relating to the Property.

<PAGE>

                                    ARTICLE 6
                   DAMAGE OR CONDEMNATION PRIOR TO THE CLOSING

         Section 6.1   Damage. If, at any time after the date hereof and on or
before the Closing Date, any Specific Property is damaged, destroyed or rendered
inoperative (collectively, the "Damage"), by fire, flood, natural elements or
other causes beyond Seller's control, then Purchaser shall close the purchase of
the Property in its condition on the Closing Date and to take an assignment of
the insurance proceeds, in which event Seller shall assign such insurance
proceeds to Purchaser, shall permit Purchaser to conduct any remaining
settlement or other negotiations with the insurer as to the amount of proceeds
payable on account of the Damage or any other damage generally to the Property
and shall give Purchaser a credit against the Purchase Price equal to the
deductible amount, if any, under Seller's insurance policy, in lieu of any other
deduction from the Purchase Price provided in this Section 6.1.

         Section 6.2   Condemnation. If, prior to the Closing Date, all or any
portion of any Specific Property is taken by, or made subject to, condemnation,
eminent domain or other governmental acquisition proceedings, or such taking,
condemnation, eminent domain or other governmental acquisition proceeding
impairs access to or from any Specific Property, adversely affects available
parking or otherwise restricts the intended use of any Specific Property (the
"Condemnation"), then Purchaser shall close and deduct from the Purchase Price
an amount equal to any sum paid to Seller for such governmental acquisition, in
which event Seller shall assign, transfer and set over to Purchaser all of
Seller's right, title and interest in and to any awards which may in the future
be made on account of such governmental acquisition.

         Section 6.3   Application to Mortgage. If part or all of the proceeds
of Seller's casualty insurance or part or all of the condemnation award, as the
case may be, are applied by the holder of a deed of trust or mortgage on the
Property prior to the Closing Date in reduction of the indebtedness by such deed
of trust or mortgage, then the Purchase Price shall also be reduced by the
amount so applied.

                                    ARTICLE 7
                                    DEFAULTS

         Section 7.1   Default by Seller. In the event Seller shall default in
its obligations under this Agreement then Purchaser may either (a) enforce
specific performance of this Agreement, and in any such action Purchaser shall
have the right to recover all out-of-pocket costs, expenses and reasonable
attorneys' fees incurred as a result of any delay in acquiring title to the
Property, or (b) terminate this Agreement by written notice to Seller and the
Title Company, and, the Escrow Deposit shall be returned to Purchaser and
Purchaser shall have the right to recover all costs, expenses and reasonable
attorneys' fees incurred as a result of such default, as well as any and all
reasonable, actual, out-of-pocket expenses incurred in conjunction with any due
diligence performed relating to the acquisition of the Property, including, but
not limited to, any costs for surveys and title commitments, and upon
Purchaser's receipt of the Escrow Deposit and such costs, expenses and fees,
neither party hereto shall have any further rights against, or obligations to,
the other under this Agreement except as set forth in Article 8 hereof, which
shall survive the termination of this Agreement.

<PAGE>

         Section 7.2   Default by Purchaser. In the event Purchaser defaults in
its obligation to purchase the Property from Seller pursuant to this Agreement,
Seller may, as its sole and exclusive remedy for such breach terminate this
Agreement by written notice to Purchaser and the Title Company, and upon any
such termination the Title Company shall immediately deliver the Escrow Deposit
to Seller, such sum being agreed upon as the amount payable by Purchaser to
Seller in consideration of Purchaser having the option to refuse to purchase the
Property without any liability on account of its refusal other than payment of
the Escrow Deposit.

                                    ARTICLE 8

                       OVERBID PROCEDURES AND OVERBID FEE

         Section 8.1   Overbid Procedures. The following procedures (the
"Overbid Procedures") shall be used by Seller in connection with the acquisition
or sale of the Property:

      (a) Any third party (an "Offeror") who desires to submit a competing offer
          (a "Competing Offer") for the Property (i) must present an offer on
          substantially the same terms and conditions as are set forth in this
          Agreement, including the requirement that such Competing Offer be for
          all of the Property; (ii) must deposit a security deposit with Seller
          in the form of a cashier's check or certified check equal to the
          Escrow Deposit, as defined in Section 1.3 of this Agreement; (iii)
          must contain an acknowledgment that if the Offeror is determined by
          Seller to have the highest and best offer, the Offeror shall be
          obligated to execute an agreement that will contain terms and
          conditions substantially similar to this Agreement; (iv) cannot
          contain any conditions inconsistent with this Agreement; (v) must be
          accompanied by proof, in a form satisfactory to Seller, of the
          Offeror's financial ability to consummate its offer for the Property;
          (vi) must contain a minimum initial bid for the Property that is 7.5%
          greater than the Purchase Price under this Agreement; (vii) must
          contain an acknowledgment that the Competing Offer shall remain open
          and irrevocable until the closing of a sale under this Agreement and
          (viii) otherwise comply with the terms and conditions of the
          Bankruptcy Court Order.

      (b) Competing Offers must be received no later than 5:00 p.m. on August
          10, 2000 (the "Competing Offer Deadline") and shall be directed to (i)
          Fried, Frank, Harris, Shriver & Jacobson, One New York Plaza, New
          York, New York 10004 (Attn: Gerald C. Bender, Esq.), (ii) Berlack,
          Israels & Liberman, LLP, 120 West 45th Street, New York, New York
          10036 (Attn: Erica M. Ryland, Esq.), (iii) Morgan, Lewis & Bockius,
          LLP, 101 Park Avenue, 40th Floor, New York, New York, 10178 (Attn:
          Scott D. Talmadge, Esq.), (iv) Keen Realty Consultants, Inc., 60
          Cutter Mill Road, Suite 407, Great Neck, New York, 11021 (Attn: Harold
          J. Borwin), (v) Klaff Realty, LP, 111 West Jackson Boulevard, Suite
          1300, Chicago, Illinois, 60604 (Attn: Hersh M. Klaff and Steven
          Greenbaum), and (vi) D'Ancona & Pflaum L.L.C., 111 E. Wacker Drive,
          Suite 2800, Chicago, Illinois, 60601 (Attn: Marc. S. Joseph).

<PAGE>

      (c) If any Competing Offers are received by the Competing Offer Deadline,
          an auction (the "Auction") shall be conducted at the adjourned hearing
          in connection with Seller's motion seeking authorization for the sale
          of the Property, before the Honorable Stuart M. Bernstein, United
          States Bankruptcy Judge, United States Bankruptcy Court, Room 723
          Alexander Hamilton Custom House, One Bowling Green, New York, New York
          10004-1408. Only Purchaser and any bidder that has complied with the
          bidding procedures contained herein shall be eligible to participate
          in such Auction. At such Auction, the initial bid shall be the highest
          Competing Offer. Bidding will continue, in increments of at least
          $25,000, until such time as, in the sole discretion of Seller (subject
          to the approval of the Court), the highest and best bid is received.
          Following such Auction, the person or entity submitting the highest
          and best bid (the "Successful Bidder") shall execute an agreement (or
          if the Successful Bidder is Purchaser, an amendment to the Agreement)
          reflecting the outcome of the Auction, which agreement (or amendment
          of the Agreement) shall be presented to the Bankruptcy Court, for
          approval and authorization. In the event that a Successful Bidder
          (other than Purchaser) does not consummate the purchase of the
          Property by the Closing Date, Seller shall promptly notify Purchaser
          of such failure and Purchaser shall have the right, exercisable within
          seven (7) days of Purchaser's receipt of such notice, to elect to
          purchase the Property for the Purchase Price, and upon such election,
          the sale of the Property shall close in accordance with the terms of
          this Agreement.

      (d) At the closing of a sale to a Competing Offeror other than Purchaser,
          Purchaser shall receive a fee (the "Overbid Fee") equal to three
          percent (3%) of the Purchase Price from the gross proceeds of the
          sale; provided, however, that such Overbid Fee shall be payable if and
          upon consummation of a sale to a Competing Offeror.

         Section 8.2 Seller's Termination in favor of an Alternative
Transaction. Seller may terminate this Agreement by consummation of a Competing
Offer (including payment of the Overbid Fee to Purchaser by a Successful Bidder
or Seller) with a Successful Bidder (assuming the Successful Bidder is not
Purchaser), in which event the Title Company shall immediately return the Escrow
Deposit to Purchaser, and upon Purchaser's receipt thereof, neither party hereto
shall have any further rights against or obligations to, the other under this
Agreement except as set forth in this Article 8 hereof which shall survive the
termination of this Agreement.

                                    ARTICLE 9

                                     LEASES

         9.1      Lease Assignment Election. Purchaser shall have the right to
designate by written notice from time to time commencing on the date of this
Agreement and ending on October 9, 2000 (hereinafter, the "Election Period")
which of the Leases it desires to acquire or to cause its designee to acquire
(subject to the Court's issuance of a Lease Assignment Order) or reject. Upon
Seller's receipt of any such written designation other than a designation to
reject, Seller shall promptly seek an order of the Court, inter alia,
authorizing and approving Seller's assumption and

<PAGE>

assignment to Purchaser or its designee of the designated Lease(s) (an "Assigned
Lease" and, such order shall be in form and substance reasonably satisfactory to
Purchaser, a "Lease Assignment Order"). For any Lease that is to be rejected (a
"Rejected Lease"), Purchaser shall designate the date as of which such Lease is
deemed to be rejected by it (the "Deemed Rejection Date") and Seller may, within
ten (10) days of Purchaser's notice, move the Bankruptcy Court for an order
approving the rejection of such Lease. If Seller fails to act within the time
frames set forth herein for the assumption of any Lease, Purchaser shall have
the right to seek such assumption in Court on behalf of Seller and Seller shall
be liable to Purchaser for all claims, liabilities, damages, costs and expenses
incurred by Purchaser relating to such Lease, including, without limitation,
reasonable attorneys' fees. Any claims resulting from the rejection of any Lease
shall be the obligation of Seller and Purchaser shall have no liability of any
kind or nature with respect thereto, except claims relating to the acts of
Purchaser (other than Purchaser's request to reject the Lease). Purchaser shall
have the right to contact and negotiate with the landlords of the Leases and
other parties associated with the Leases and enter into agreements and
settlements with such landlords and other parties regarding, among other things,
the Leases. Notwithstanding the foregoing, in the event Purchaser directs Seller
to reject any Lease and Seller desires not to reject such Lease, Seller need not
do so and Purchaser shall have no obligations relating to such Lease. If
Purchaser shall fail to direct Seller to assume or reject a Lease on or before
the end of the Election Period, Purchaser shall be deemed to have accepted such
Lease.

         9.2      Costs and Expenses. With respect to each Lease, Purchaser
shall be liable for all of Seller's costs and obligations solely incident to
such Lease (including rent and real estate taxes) from and after Closing (the
"Cost Commencement Date") up to and including (i) in the case of an Assigned
Lease, the date of the related Lease Assignment Order and (ii) in the case of a
Rejected Lease, the earlier of (x) the date that Seller is relieved of liability
under such Lease or (y) the Deemed Rejection Date, but not later than ten days
from the date Purchaser gives a designation that it wishes such Lease to be a
Rejected Lease under Section 9.1. Seller shall bear all such charges prior to
the Cost Commencement Date and all claims by landlord under the Leases,
including, without limitation, any Section 502(b)(6) claims. Purchaser may, in
its sole discretion, make any payment required by this Section 9.2 directly to a
third party vendor; provided such payment is made in a timely manner. Nothing
shall be deemed to require Purchaser or any affiliate to make any material
repairs or capital expenditures with respect to any Improvements subject to any
Lease. Notwithstanding anything herein or in Section 3.2 to the contrary, from
and after the entering of the Sales Order, Seller shall have the option of
operating the Specific Properties, unless the Lease affecting a Specific
Property contains a continuous operation provision, in which case Seller shall
operate such Specific Property in the manner in which it was previously being
conducted; provided, however, from and after the Closing, Purchaser, upon
reasonable advance notice to Seller, shall have the right to conduct operations
at the Specific Properties in the manner in which it was previously being
conducted.

         9.3      Communications. Until the earlier of the Deemed Rejection Date
with respect to any Lease or the date of issuance of the Lease Assignment Order
with respect to any Lease (1) Seller shall not, without the prior written
consent of Purchaser, which consent may be withheld by Purchaser in its sole and
absolute discretion, and shall, if and to the extent directed by Purchaser, (a)
renew or amend such Lease, (b) encumber, sub-lease or otherwise grant any rights
with respect to such Lease, or (c) communicate with the lessor under such Lease
with respect to this Agreement or the matters referred to herein, (2) Seller
shall refer any communications relating to the Leases

<PAGE>

from any such lessor, any prospective tenant or other third party to Purchaser
promptly after receipt thereof and (3) Seller shall not negotiate or communicate
with any third party with respect to any such Lease.

         9.4      Conditions to Assignment. It shall be a condition to
assignment of any Assigned Lease that Seller pay or cause to be paid any and all
amounts required to be paid under Section 365 of the Bankruptcy Code with
respect to such Lease.

         9.5      Sale of Leases. Purchaser shall have the right to market the
Leases in the manner which Purchaser deems appropriate notwithstanding the terms
of any such Lease that purports to restrict such activities, including, without
limitation, with respect to the erection of visible signs on the Demised
Premises and access to the Demised Premises for the purpose of showing the
Property, but consistent with the Bankruptcy Code and the Sale Order.

                                   ARTICLE 10
                                  MISCELLANEOUS

         Section 10.1  Notices. Any notice to be given or to be served upon any
party hereto in connection with this Agreement must be in writing, and may be
given by regular mail, certified or registered mail, facsimile transmission over
the telephone, and delivery by courier or by other means. If given by certified
or registered mail, the notice shall be deemed to have been given and received
72 hours after a certified or registered letter, containing such notice,
properly addressed with postage prepaid, is deposited in the United States mail;
and if given otherwise than by certified or registered mail, the notice shall be
deemed to have been given when delivered to and received by the party to whom it
is addressed. Such notices shall be given to the parties hereto at the following
addresses or, if given by facsimile transmission over the telephone, at the
following FAX numbers:

         If to Seller, to:       Family Golf Centers, Inc.
                                 538 Broadhollow Road
                                 Melville, New York 11747
                                 Attn: Dominic Chang and Pamela Charles
                                 FAX: 631-694-1935

         With a copy to:         Fried, Frank, Harris, Shriver & Jacobson
                                 One New York Plaza
                                 New York, New York 10004
                                 Attn: Gerald C. Bender
                                 FAX: 212-859-4000

         If to Purchaser, to:    c/o Klaff Realty, L.P.
                                 111 West Jackson Boulevard
                                 Suite 1300
                                 Chicago, IL 60604
                                 Attn: Hersch M. Klaff and Steven Greenbaum
                                 FAX: (312) 360-0606

<PAGE>

          With a copy to:        D'Ancona & Pflaum L.L.C.
                                 111 E. Wacker Drive
                                 Suite 2800
                                 Chicago, IL 60601
                                 Attn: Marc S. Joseph
                                 FAX: (312) 602-3000

Any party hereto may, at any time by giving five days written notice to the
other party hereto, designate any other address or FAX number in substitution of
the foregoing address to which such notice shall be given.

         Section 10.2  Brokerage Fees and Commissions. Neither Seller nor
Purchaser has contracted with any real estate broker, agent, finder or similar
person in connection with the negotiation and execution of this Agreement, the
transactions contemplated hereby or the sale and purchase of the Property,
except that Seller acknowledges that it utilized the services of Keen Realty
("Keen") and agrees to pay any fee due Keen. It is agreed that if any claim for
any brokerage fees are ever made against Seller or Purchaser in connection with
the transactions contemplated by this Agreement, all such claims shall be paid
by the party whose commitments form the basis of such claims. Seller and
Purchaser each agree to indemnify and hold harmless the other from and against
any and all liabilities, claims, demands or actions for or with respect to any
brokerage fees asserted by any person, firm or corporation in connection with
this Agreement or the transactions contemplated hereby, and any court costs,
attorneys' fees or other costs and expenses arising therefrom, insofar as any
such liabilities, claims, demands or actions are based upon a contract or
commitment of the indemnifying party.

         Section 10.3  Entire Agreement. This Agreement embodies and constitutes
the entire understanding between the parties hereto with respect to the actions
contemplated herein, and all prior or contemporaneous agreements,
understandings, representations and statements, oral or written, are merged into
this Agreement.

         Section 10.4  Modification. Neither this Agreement nor any provision
hereof may be waived, modified, amended, discharged or terminated except as
provided herein or by an instrument in writing signed by the party against which
the enforcement of such waiver, modification, amendment, discharge or
termination is sought, and then only to the extent set forth in such instrument.

         Section 10.5  Applicable Law and Jurisdiction. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, EXCEPT WITH RESPECT TO LOCAL REAL ESTATE MATTERS, WHICH SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATES WHERE THE
PARTICULAR PORTIONS OF THE PROPERTY ARE LOCATED. EXCLUSIVE JURISDICTION OF ANY
ISSUES RELATED TO THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, ANY ISSUES
RELATING TO ARTICLE 2, WILL REMAIN WITH THE BANKRUPTCY COURT.

<PAGE>

         Section 10.6  Headings. Descriptive headings are used in this Agreement
for convenience only and shall not control, limit, amplify or otherwise modify
or affect the meaning or construction of any provision of this Agreement.

         Section 10.7  Binding Effect. Upon approval by the Bankruptcy Court,
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and its respective permitted successors and assigns.

         Section 10.8  Assignment. Purchaser shall have the right to assign its
rights or any portion thereof under this Agreement in whole or in part to an
unrelated third party(s) at the Closing or at any time to an affiliate(s) of
Purchaser without the prior written consent of Seller; provided, however, any
such assignment(s) shall not release Purchaser from its obligations hereunder.

         Section 10.9  Survival of Provisions. The covenants, agreements, terms
and provisions contained in Article 9 hereof shall survive the Closing and shall
not be deemed to have merged with or into the Deed or any of the other closing
documents and Article 8 shall survive the termination of this Agreement.

         Section 10.10 Time of Essence. Time is of the essence of this Agreement
and of each covenant and agreement that is to be performed at a particular time
or within a particular period of time. However, if the final date of any period
which is set out in any provision of this Agreement or the Closing Date falls on
a Saturday, Sunday or legal holiday under the laws of the United States or the
State of New York, then the time of such period or the Closing Date, as the case
may be, shall be extended to the next date which is not a Saturday, Sunday or
legal holiday.

         Section 10.11 Invalid Provision. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under present or future laws, such
provision shall be fully severable; this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part of this Agreement; and the remaining provisions of this
Agreement shall remain in fall force and effect and shall not be affected by
such illegal, invalid or unenforceable provision or by its severance from this
Agreement.

         Section 10.12 Attorneys' Fees. If either party defaults in its
obligations hereunder, the non-prevailing party in any final judgement shall pay
the reasonable attorneys' fees incurred by the other party in connection with
the enforcement of such rights hereunder.

         Section 10.13 Multiple Counterparts. This Agreement may be executed in
a number of identical counterparts, each of which for all purposes is deemed an
original, and all of which constitute collectively one agreement; but in making
proof of this Agreement, it shall not be necessary to produce or account for
more than one such counterpart.

         Section 10.14 Facsimile Signatures. Any signatures to this Agreement
produced via facsimile is deemed an original signature and is binding upon the
parties hereto.

<PAGE>

         IN WITNESS WHEREOF, Seller and Purchaser have executed this Agreement
on the dates indicated below. For the purposes hereof, "the date of this
Agreement"' or "the date hereof"' shall be the date on which both Seller and
Purchaser have executed this Agreement.

                                   SELLER:

                                   See Exhibit E hereof for Seller's signatures

                                   PURCHASER:

                                   KLAK GOLF, L.L.C., a Delaware limited
                                   liability company

                                   By:
                                      --------------------------------------
                                   Name:
                                        ------------------------------------
                                   Title:
                                         -----------------------------------
                                   Date of Execution:                 , 2000
                                                     -----------------

         The undersigned joins in this Agreement as the Title Company for the
purpose of agreeing to its obligations hereunder as the Title Company.

                                   TITLE COMPANY:

                                   -----------------------------------------

                                   By:
                                      --------------------------------------
                                   Name:
                                        ------------------------------------
                                   Title:
                                         -----------------------------------

         By executing above, Title Company acknowledges receipt of the fully
executed Agreement on the      day of                    , 2000.
                         ------      --------------------

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