Document:

<PAGE>   1
                                                                     EXHIBIT 4.2

                 ASSOCIATES AUTOMOBILE RECEIVABLES TRUST 2000-1

              6.854% Class A-1 Automobile Receivables-Backed Notes
               7.15% Class A-2 Automobile Receivables-Backed Notes
               7.30% Class A-3 Automobile Receivables-Backed Notes
               7.51% Class M Automobile Receivables-Backed Notes
               7.83% Class B Automobile Receivables-Backed Notes

                                    INDENTURE

                            Dated as of June 1, 2000

                         BANK ONE, NATIONAL ASSOCIATION
                                     Trustee

<PAGE>   2

                              CROSS REFERENCE TABLE

<TABLE>
<CAPTION>
  TIA                                                                                                   Indenture
                                                                                                        ---------
Section                                                                                                  Section
-------                                                                                                 ---------
<S>                                                                                                  <C>
310(a)(1)........................................................................................          6.11
   (a)(2)........................................................................................          6.11
   (a)(3)........................................................................................          6.10
   (a)(4)........................................................................................       N.A.(2)
   (a)(5)........................................................................................          6.11
      (b)........................................................................................    6.08; 6.11
      (c)........................................................................................          N.A.
311(a)   ........................................................................................          6.12
      (b)........................................................................................          6.12
      (c)........................................................................................          N.A.
312(a)   ........................................................................................          7.01
      (b)........................................................................................          7.02
      (c)........................................................................................          7.02
313(a)   ........................................................................................          7.04
   (b)(1)........................................................................................          7.04
   (b)(2)........................................................................................          7.04
      (c)........................................................................................         11.05
      (d)........................................................................................          7.04
314(a)   ........................................................................................          7.03
      (b)........................................................................................   3.06; 11.15
   (c)(1)........................................................................................         11.01
   (c)(2)........................................................................................         11.01
   (c)(3)........................................................................................         11.01
      (d)........................................................................................         11.01
      (e)........................................................................................         11.01
      (f)........................................................................................         11.01
315(a)   ........................................................................................          6.01
      (b)........................................................................................   6.05; 11.05
      (c)........................................................................................          6.01
      (d)........................................................................................          6.01
      (e)........................................................................................          5.14
316(a)(last sentence)............................................................................          1.01
(a)(1)(A)........................................................................................          5.12
(a)(1)(B)........................................................................................          5.13
   (a)(2)........................................................................................          N.A.
      (b)........................................................................................          5.08
      (c)........................................................................................          N.A.
317(a)(1)........................................................................................          5.03
   (a)(2)........................................................................................          5.03
      (b)........................................................................................          3.03
318(a)   ........................................................................................         11.07
</TABLE>

1        Note: This Cross Reference Table shall not, for any purpose, be deemed
         to be part of this Indenture.

2        N.A. means Not Applicable.

<PAGE>   3

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                          Page

<S>                                                                                       <C>
ARTICLE I     DEFINITIONS AND INCORPORATION BY REFERENCE.....................................2
     SECTION 1.01.     Definitions...........................................................2
     SECTION 1.02.     Incorporation by Reference of Trust Indenture Act....................11
     SECTION 1.03.     Rules of Construction................................................11

ARTICLE II    THE NOTES.....................................................................12
     SECTION 2.01.     Form.................................................................12
     SECTION 2.02.     Execution, Authentication and Delivery...............................12
     SECTION 2.03.     Temporary Notes......................................................13
     SECTION 2.04.     Registration; Registration of Transfer and Exchange..................13
     SECTION 2.05.     Mutilated, Destroyed, Lost or Stolen Notes...........................15
     SECTION 2.06.     Person Deemed Owner..................................................16
     SECTION 2.07.     Payment of Principal and Interest....................................16
     SECTION 2.08.     Cancellation.........................................................17
     SECTION 2.09.     Book-Entry Notes.....................................................17
     SECTION 2.10.     Notices to Depository................................................18
     SECTION 2.11.     Definitive Notes.....................................................18

ARTICLE III   COVENANTS.....................................................................18
     SECTION 3.01.     Payment of Principal and Interest....................................18
     SECTION 3.02.     Maintenance of Office or Agency......................................19
     SECTION 3.03.     Money for Payments To Be Held in Trust...............................19
     SECTION 3.04.     Existence............................................................20
     SECTION 3.05.     Protection of Trust Estate...........................................21
     SECTION 3.06.     Opinions as to Trust Estate..........................................21
     SECTION 3.07.     Performance of Obligations; Servicing of Receivables.................22
     SECTION 3.08.     Negative Covenants...................................................24
     SECTION 3.09.     Annual Statement as to Compliance....................................25
     SECTION 3.10.     Issuer May Consolidate, etc. Only on Certain Terms...................25
     SECTION 3.11.     Successor or Transferee..............................................27
     SECTION 3.12.     No Other Business....................................................28
     SECTION 3.13.     No Borrowing.........................................................28
     SECTION 3.14.     Servicer's Obligations...............................................28
     SECTION 3.15.     Guarantees, Loans, Advances and Other Liabilities....................28
     SECTION 3.16.     Capital Expenditures.................................................28
     SECTION 3.17.     Restricted Payments..................................................28
     SECTION 3.18.     Notice of Events of Default..........................................29
</TABLE>

                                      - i -
<PAGE>   4

<TABLE>
<S>                                                                                       <C>
     SECTION 3.19.     Further Instruments and Acts.........................................29
     SECTION 3.20.     Compliance with Laws.................................................29
     SECTION 3.21.     Amendments of Sale and Servicing Agreement and
                       Trust Agreement......................................................29
     SECTION 3.22.     Removal of Administrator.............................................29
     SECTION 3.23.     Income Tax Characterization..........................................29

ARTICLE IV    SATISFACTION AND DISCHARGE....................................................29
     SECTION 4.01.     Satisfaction and Discharge of Indenture..............................29
     SECTION 4.02.     Application of Trust Money...........................................31
     SECTION 4.03.     Repayment of Moneys Held by Paying Agent.............................31
     SECTION 4.04.     Release of Trust Estate..............................................31

ARTICLE V     REMEDIES......................................................................31
     SECTION 5.01.     Events of Default....................................................31
     SECTION 5.02.     Rights upon Event of Default.........................................33
     SECTION 5.03.     Collection of Indebtedness and Suits for Enforcement
                       by Trustee; Authority of Trustee.....................................33
     SECTION 5.04.     Remedies.............................................................36
     SECTION 5.05.     Optional Preservation of the Receivables.............................37
     SECTION 5.06.     Priorities...........................................................38
     SECTION 5.07.     Limitation of Suits..................................................40
     SECTION 5.08.     Unconditional Rights of Noteholders To Receive Principal
                       and Interest.........................................................41
     SECTION 5.09.     Restoration of Rights and Remedies...................................41
     SECTION 5.10.     Rights and Remedies Cumulative.......................................41
     SECTION 5.11.     Delay or Omission Not a Waiver.......................................42
     SECTION 5.12.     Control by Controlling Noteholders...................................42
     SECTION 5.13      Waiver of Past Defaults..............................................42
     SECTION 5.14.     Undertaking for Costs................................................43
     SECTION 5.15.     Waiver of Stay or Extension Laws.....................................43
     SECTION 5.16.     Action on Notes......................................................43
     SECTION 5.17.     Performance and Enforcement of Certain Obligations...................43

ARTICLE VI    THE TRUSTEE...................................................................45
     SECTION 6.01.     Duties of Trustee....................................................45
     SECTION 6.02.     Rights of Trustee....................................................47
     SECTION 6.03.     Individual Rights of Trustee.........................................48
     SECTION 6.04.     Trustee's Disclaimer.................................................49
     SECTION 6.05.     Notice of Defaults...................................................49
     SECTION 6.06.     Reports by Trustee to Holders........................................49
     SECTION 6.07.     Compensation and Indemnity...........................................49
</TABLE>

                                     - ii -
<PAGE>   5

<TABLE>
<S>                                                                                       <C>
     SECTION 6.08.     Replacement of Trustee...............................................50
     SECTION 6.09.     Successor Trustee by Merger..........................................51
     SECTION 6.10.     Appointment of Co-Trustee or Separate Trustee........................51
     SECTION 6.11.     Eligibility; Disqualification........................................53
     SECTION 6.12.     Preferential Collection of Claims Against Issuer.....................53

ARTICLE VII   NOTEHOLDERS' LISTS AND REPORTS................................................53
     SECTION 7.01.     Issuer To Furnish Trustee Names and Addresses to
                       Noteholders..........................................................53
     SECTION 7.02.     Preservation of Information; Communications to Noteholders...........53
     SECTION 7.03.     Reports by Issuer....................................................54
     SECTION 7.04.     Reports by Trustee...................................................54

ARTICLE VIII  ACCOUNTS, DISBURSEMENTS AND RELEASES..........................................55
     SECTION 8.01.     Collection of Money..................................................55
     SECTION 8.02.     Trust Accounts.......................................................55
     SECTION 8.03.     General Provisions Regarding Accounts................................56

ARTICLE IX    SUPPLEMENTAL INDENTURES.......................................................57
     SECTION 9.01.     Supplemental Indentures Without Consent of Noteholders...............57
     SECTION 9.02.     Supplemental Indentures With Consent of Noteholders..................58
     SECTION 9.03.     Execution of Supplemental Indentures.................................60
     SECTION 9.04.     Effect of Supplemental Indenture.....................................60
     SECTION 9.05.     Conformity With Trust Indenture Act..................................60
     SECTION 9.06.     Reference in Notes to Supplemental Indentures........................60

ARTICLE X     REDEMPTION OF NOTES...........................................................61
     SECTION 10.01.    Redemption.  ........................................................61
     SECTION 10.02.    Form of Redemption Notice............................................61
     SECTION 10.03.    Notes Payable on Redemption Date.....................................62

ARTICLE XI    MISCELLANEOUS.................................................................62
     SECTION 11.01.    Compliance Certificates and Opinions, etc............................62
     SECTION 11.02.    Form of Documents Delivered to Trustee...............................64
     SECTION 11.03.    Acts of Noteholders..................................................65
     SECTION 11.04.    Notices, etc., to Trustee, Issuer and Rating Agencies................65
     SECTION 11.05     Notices to Noteholders; Waiver.......................................66
     SECTION 11.06.    Alternate Payment and Notice Provisions..............................66
     SECTION 11.07.    Conflict with Trust Indenture Act....................................67
     SECTION 11.08.    Effect of Headings and Table of Contents.............................67
</TABLE>

                                     - iii -
<PAGE>   6

<TABLE>
<S>                                                                                       <C>
     SECTION 11.09.    Successors and Assigns...............................................67
     SECTION 11.10.    Severability.........................................................67
     SECTION 11.11.    Benefits of Indenture................................................67
     SECTION 11.12.    Legal Holidays.......................................................67
     SECTION 11.13.    Governing Law........................................................67
     SECTION 11.14.    Counterparts.........................................................68
     SECTION 11.15.    Recording of Indenture...............................................68
     SECTION 11.16.    Trust Obligation.....................................................68
     SECTION 11.17.    No Petition..........................................................68
     SECTION 11.18.    Inspection...........................................................68
     SECTION 11.19.    Limitation of Liability..............................................69
     SECTION 11.20.    No Substantive Review of Compliance Documents........................69
</TABLE>

<TABLE>
<S>                <C>     <C>
Exhibit A          --      Schedule of Receivables
Exhibit B          --      Form of Depository Agreement
Exhibit C-1        --      Form of Class A-1 Note
Exhibit C-2        --      Form of Class A-2 Note
Exhibit C-3        --      Form of Class A-3 Note
Exhibit C-4        --      Form of Class M Note
Exhibit C-5        --      Form of Class B Note
Exhibit D          --      Letter Agreement Between AFL and the Trustee
</TABLE>

                                     - iv -
<PAGE>   7

                  INDENTURE, dated as of June 1, 2000, between ASSOCIATES
AUTOMOBILE RECEIVABLES TRUST 2000-1, a Delaware business trust (the "Issuer"),
and BANK ONE, NATIONAL ASSOCIATION, as trustee (the "Trustee") and not in its
individual capacity.

                  Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the Issuer's
6.854% Class A-1 Automobile Receivables-Backed Notes (the "Class A-1 Notes"),
7.15% Class A-2 Automobile Receivables-Backed Notes (the "Class A-2 Notes"),
7.30% Class A-3 Automobile Receivables-Backed Notes (the "Class A-3 Notes"),
7.51% Class M Automobile Receivables-Backed Notes (the "Class M Notes") and
7.83% Class B Automobile Receivables-Backed Notes (the "Class B Notes" and,
together with the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and
the Class M Notes, the "Notes"):

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

                                 GRANTING CLAUSE

                  The Issuer hereby Grants to the Trustee at the Closing Date,
on behalf of and for the benefit of the Noteholders to secure the performance of
the Secured Obligations, all of the Issuer's right, title and interest now owned
or hereafter acquired in and to (a) the Receivables and all moneys paid or
payable thereon or in respect thereof after the Cutoff Date (including amounts
due on or before the Cutoff Date but received by AFL, the Seller or the Issuer
after the Cutoff Date); (b) an assignment of the security interests of AFL in
the Financed Vehicles; (c) the Insurance Policies and any proceeds from any
Insurance Policies relating to the Receivables, the Obligors or the Financed
Vehicles, including rebates of premiums and all Collateral Insurance relating to
the Receivables; (d) an assignment of the rights of AFL or the Seller against
Dealers with respect to the Receivables under the Dealer Agreements and the
Dealer Assignments, (e) all items contained in the Receivable Files and any and
all other documents that AFL keeps on file in accordance with its customary
procedures relating to the Receivables, the Obligors or the Financed Vehicles,
(f) an assignment of the rights of the Seller under the Purchase Agreement, (g)
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, (h) the Trust Accounts and all funds
on deposit therein from time to time, and in all investments and proceeds
thereof (including all income thereon), (i) the Purchase Agreement, including
the right assigned to the Issuer to cause AFL to repurchase Receivables from the
Seller under certain circumstances, (j) the Sale and Servicing Agreement
(including all rights of the Seller under the Purchase Agreement assigned to the
Issuer pursuant to the Sale and Servicing Agreement), and (k) all present and
future claims, demands, causes and choses in action in respect of any or all of
the foregoing and all payments on or under and all proceeds of every kind and
nature whatsoever in respect of any or all of the foregoing, including all
proceeds of the conversion, voluntary or involuntary, into cash or other

<PAGE>   8

liquid property, all cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, insurance
proceeds, condemnation awards, rights to payment of any and every kind and other
forms of obligations and receivables, instruments and other property which at
any time constitute all or part of or are included in the proceeds of any of the
foregoing (collectively, the "Collateral").

                  The Trustee on behalf of the Holders of the Notes acknowledges
such Grant. The Trustee on behalf of the Holders of the Notes accepts the trusts
under this Indenture in accordance with the provisions of this Indenture and
agrees to perform its duties required in this Indenture and the Related
Documents to which it is a party in accordance with their terms to the best of
its ability to the end that the interests of the Holders of the Notes may be
adequately and effectively protected.

                                    ARTICLE I

                   DEFINITIONS AND INCORPORATION BY REFERENCE

                  SECTION 1.01. Definitions.

                  (a) Except as otherwise specified herein or as the context may
otherwise require, the following terms have the respective meanings set forth
below for all purposes of this Indenture.

                  "Act" has the meaning specified in Section 11.03(a).

                  "Administrator" has the meaning specified therefor in the
Trust Agreement.

                  "Affiliate" means, with respect to any specified Person, any
other Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, "control" when used with
respect to any specified Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.

                  "Authorized Officer" means, with respect to the Issuer, any
officer or authorized signatory of the Owner Trustee who is authorized to act
for the Owner Trustee in matters relating to the Issuer and who is identified on
the list of Authorized Officers delivered by the Owner Trustee to the Trustee on
the Closing Date (as such list may be modified or supplemented from time to time
thereafter).

                  "Book-Entry Note" means any Note registered in the name of the
Depository or its nominee, ownership of which is reflected on the books of the
Depository or on the books of a person

                                      - 2 -
<PAGE>   9

maintaining an account with such Depository (directly or as an indirect
participant in accordance with the rules of such Depository).

                  "Business Day" means any day other than a Saturday, Sunday,
legal holiday or other day on which commercial banking institutions in Dallas,
Texas; Chicago, Illinois; New York, New York; Wilmington, Delaware or any other
location of any successor Servicer, successor Owner Trustee or successor Trustee
are authorized or obligated by law, executive order or governmental decree to
remain closed.

                  "Certificate of Trust" means the Certificate of Trust of the
Issuer substantially in the form of Exhibit A to the Trust Agreement.

                  "Class A-1 Interest Rate" means 6.854% per annum (computed on
the basis of actual days elapsed in a year of 360 days).

                  "Class A-2 Interest Rate" means 7.15% per annum (computed on
the basis of a 360-day year of twelve 30-day months).

                  "Class A-3 Interest Rate" means 7.30% per annum (computed on
the basis of a 360-day year of twelve 30-day months).

                  "Class M Interest Rate" means 7.51% per annum (computed on the
basis of a 360-day year of twelve 30-day months).

                  "Class B Interest Rate" means 7.83% per annum (computed on the
basis of a 360-day year of twelve 30-day months).

                  "Class A-1 Notes" means the 6.854% Class A-1 Automobile
Receivables-Backed Notes substantially in the form of Exhibit C-1.

                  "Class A-2 Notes" means the 7.15% Class A-2 Automobile
Receivables-Backed Notes substantially in the form of Exhibit C-2.

                  "Class A-3 Notes" means the 7.30% Class A-3 Automobile
Receivables-Backed Notes substantially in the form of Exhibit C-3.

                  "Class M Notes" means the 7.51% Class M Automobile
Receivables-Backed Notes substantially in the form of Exhibit C-4.

                                      - 3 -
<PAGE>   10
                  "Class B Notes" means the 7.83% Class B Automobile
Receivables-Backed Notes substantially in the form of Exhibit C-5.

                  "Closing Date" means June 22, 2000.

                  "Code" means the Internal Revenue Code of 1986, as amended
from time to time, and Treasury Regulations promulgated thereunder.

                  "Collateral" has the meaning specified in the Granting Clause
of this Indenture.

                  "Controlling Noteholders" means the holders of (i) a majority
in outstanding principal amount of Class A Notes, or (ii) if all of the Class A
Notes have been paid in full, a majority in outstanding principal amount of the
Class M Notes, or (iii) if all of the Class A Notes and Class M Notes have been
paid in full, a majority in outstanding principal amount of the Class B Notes.

                  "Corporate Trust Office" means the principal office of the
Trustee at which at any particular time its corporate trust business shall be
administered which office at date of the execution of this Agreement is located
at 1 Bank One Plaza, Suite IL1-0126, Chicago, Illinois 60670-0126, Attn: Global
Corporate Trust Services, except that for purposes of Section 3.02 hereof such
office is located at 14 Wall Street, 8th Floor, New York, New York 10005; or at
such other address as the Trustee may designate from time to time by notice to
the Noteholders and the Issuer, or the principal corporate trust office of any
successor Trustee (the address of which the successor Trustee will notify the
Noteholders, the Security Insurer and the Issuer).

                  "Default" means any occurrence that is, or with notice or the
lapse of time or both would become, an Event of Default.

                  "Definitive Notes" has the meaning specified in Section 2.09.

                  "Depository" means the initial Depository, The Depository
Trust Company, the nominee of which is Cede & Co., as the registered Holder of
$207,000,000 in aggregate principal amount of the Class A-1 Notes, $92,000,000
aggregate principal amount of the Class A-2 Notes, $301,000,000 in aggregate
principal amount of the Class A-3 Notes, $64,583,000 in aggregate principal
amount of the Class M Notes and $85,417,000 in aggregate principal amount of the
Class B Notes as of the Closing Date, and any permitted successor depository.
The Depository shall at all times be a "clearing corporation" as defined in
Section 8-102(3) of the New York UCC.

                  "Depository Agreement" means the agreement among the Issuer,
the Trustee and The Depository Trust Company, as the initial Depository, dated
as of the Closing Date, relating to the Notes substantially in the form of
Exhibit B.

                                      - 4 -
<PAGE>   11

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

                  "Event of Default" has the meaning specified in Section 5.01.

                  "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

                  "Executive Officer" means, with respect to any corporation,
the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer,
President, Executive Vice President, any Vice President, any Responsible
Officer, the Secretary or the Treasurer of such corporation; and with respect to
any partnership, any general partner thereof.

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

                  "Holder" or "Noteholder" means the Person in whose name a Note
is registered on the Note Register.

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

                                      - 5 -
<PAGE>   12

                  "Indenture" means this Indenture as amended or supplemented
from time to time.

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

                  "Independent Certificate" means a certificate or opinion to be
delivered to the Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01, made by an
Independent appraiser or other expert appointed by an Issuer Order and approved
by the Trustee in the exercise of reasonable care, and such opinion or
certificate shall state that the signer has read the definition of "Independent"
in this Indenture and that the signer is Independent within the meaning thereof.

                  "Interest Rate" means the Class A-1 Interest Rate, the Class
A-2 Interest Rate, the Class A-3 Interest Rate, the Class M Interest Rate and
the Class B Interest Rate, as applicable.

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

                  "Issuer Order" and "Issuer Request" means a written order or
request signed in the name of the Issuer by any one of its Authorized Officers
and delivered to the Trustee.

                  "Letter Agreement" has the meaning specified in Section 6.07.

                  "Note" means a Class A-1 Note, Class A-2 Note, Class A-3 Note,
Class M Note or Class B Note, as applicable.

                  "Note Owner" means, with respect to a Book-Entry Note, the
Person who is the owner of such Book-Entry Note, as reflected on the books of
the Depository, or on the books of a Person maintaining an account with such
Depository (directly as a Depository participant or as an indirect participant,
in each case in accordance with the rules of such Depository) and with respect
to any Definitive Notes, the Holder.

                  "Note Register" and "Note Registrar" have the respective
meanings specified in Section 2.04.

                                      - 6 -
<PAGE>   13

                  "Officer's Certificate" means a certificate signed by any
Authorized Officer of the Issuer, under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.01, and
delivered to, the Trustee. Unless otherwise specified, any reference in this
Indenture to an Officer's Certificate shall be to an Officer's Certificate of
any Authorized Officer of the Issuer.

                  "Opinion of Counsel" means one or more written opinions of
counsel who may, except as otherwise expressly provided in this Indenture, be
employees of or counsel to the Issuer and who shall be satisfactory to the
Trustee and which shall comply with any applicable requirements of Section
11.01, and shall be in form and substance satisfactory to the Trustee. Such
Opinion of Counsel shall not be at the expense of the Trustee.

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

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

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

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

                  "Outstanding Amount" means the aggregate principal amount of
all Notes, or class of Notes, as applicable, Outstanding at the date of
determination.

                  "Owner Trustee" means Wilmington Trust Company, not in its
individual capacity but solely as Owner Trustee under the Trust Agreement, or
any successor trustee under the Trust Agreement.

                  "Paying Agent" shall initially mean the Trustee or, with
respect to any successor to the Trustee, any other Person that meets the
eligibility standards for the Trustee specified in Section 6.11 and is
authorized by the Issuer to make the distributions from the Note Interest
Distribution Account and the Principal Distribution Account, including payment
of principal of or interest on the Notes on behalf of the Issuer.

                                      - 7 -
<PAGE>   14

                  "Payment Date" means a Distribution Date.

                  "Person" means any individual, corporation, estate,
partnership, joint venture, association, joint stock company, trust (including
any beneficiary thereof), unincorporated organization or government or any
agency or political subdivision thereof.

                  "Predecessor Note" means, with respect to any particular Note,
every previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note; and, for the purpose of this definition, any
Note authenticated and delivered under Section 2.05 in lieu of a mutilated,
lost, destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.

                  "Proceeding" means any suit in equity, action at law or other
judicial or administrative proceeding.

                  "Rating Agency" means each of Moody's and Standard & Poor's,
so long as such Persons maintain a rating on the Notes; and if either Moody's or
Standard & Poor's no longer maintains a rating on the Notes, such other
nationally recognized statistical rating organization selected by the Seller.

                  "Rating Agency Condition" means, with respect to any action,
that each Rating Agency shall have been given 10 days' prior notice thereof and
that each of the Rating Agencies shall have notified the Seller, the Servicer,
the Trustee, the Owner Trustee and the Issuer in writing that such action will
not result in a reduction or withdrawal of the then current rating of the Notes.

                  "Record Date" means, with respect to a Payment Date or
Redemption Date, the close of business on the last Business Day immediately
preceding such Payment Date or Redemption Date.

                  "Redemption Date" means, with respect to a redemption of the
Notes pursuant to Section 10.01, the Payment Date specified by the Servicer or
the Issuer pursuant to Section 10.01.

                  "Redemption Price" means in the case of a redemption of the
Notes pursuant to Section 10.01, an amount equal to the principal amount of the
Notes redeemed plus accrued and unpaid interest on the principal amount of each
class of Notes at the respective Interest Rate for each such class of Notes
being so redeemed to but excluding the Redemption Date.

                  "Registered Holder" means the Person in whose name a Note is
registered on the Note Register on the applicable Record Date.

                                      - 8 -
<PAGE>   15

                  "Related Documents" means the Trust Agreement, the Notes, the
Certificates, the Purchase Agreement, 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 the Seller, AFL 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.

                  "Responsible Officer" means, with respect to the Trustee, any
officer assigned to the Corporate Trust Office (or any successor thereto),
including any Vice President, Assistant Vice President, Trust Officer, any
Assistant Secretary, any trust officer or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and having direct responsibility for the administration of
the this Indenture and Related Documents, and any other officer to whom a matter
may be referred arising hereunder. When used with respect to any other Person
that is not an individual, the President, any Vice President or Assistant Vice
President or the Controller of such Person, or any other officer or employee
having similar functions.

                  "Sale and Servicing Agreement" means the Sale and Servicing
Agreement, dated as of June 1, 2000, among the Issuer, the Seller and the
Servicer.

                  "Schedule of Receivables" means the listing of the Receivables
set forth in Exhibit A.

                  "Secured Obligations" means all amounts and obligations which
the Issuer may at any time owe to or on behalf of the Trustee for the benefit of
the Noteholders under this Indenture or the Notes.

                  "State" means any one of the 50 states of the United States of
America or the District of Columbia.

                  "Termination Date" means the date on which the Trustee shall
have received payment and performance of all Secured Obligations.

                  "Trust Estate" means all money, instruments, rights and other
property that are subject or intended to be subject to the Lien and security
interest of this Indenture for the benefit of the Noteholders, including all
proceeds thereof.

                  "Trust Indenture Act" or "TIA" means the Trust Indenture Act
of 1939, as amended, as in force on the date hereof, unless otherwise
specifically provided. The term "TIA" shall specifically include any amendments
or revisions to the Trust Indenture Act of 1939 which may be enacted from time
to time.

                                      - 9 -
<PAGE>   16

                  "Trustee" means Bank One, National Association, a national
banking association, as Trustee under this Indenture, or any successor Trustee
under this Indenture.

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

                  (b) Except as otherwise specified herein or as the context may
otherwise require, the following terms have the respective meanings set forth in
the Sale and Servicing Agreement as in effect on the Closing Date for all
purposes of this Indenture, and the definitions of such terms are equally
applicable both to the singular and plural forms of such terms:

<TABLE>
<CAPTION>
                                                                                      Section of Sale and
Term                                                                                  Servicing Agreement
----                                                                                  -------------------

<S>                                                                                   <C>
AFL...............................................................................        Section 1.1
Aggregate Principal Balance.......................................................        Section 1.1
APR...............................................................................        Section 1.1
Available Funds...................................................................        Section 1.1
Class A-1 Final Scheduled Distribution Date.......................................        Section 1.1
Class A-2 Final Scheduled Distribution Date.......................................        Section 1.1
Class A-3 Final Scheduled Distribution Date.......................................        Section 1.1
Class M Final Scheduled Distribution Date.........................................        Section 1.1
Class B Final Scheduled Distribution Date.........................................        Section 1.1
Collateral Agent..................................................................        Section 1.1
Collateral Insurance..............................................................        Section 1.1
Collection Account................................................................        Section 1.1
Controlling Noteholders...........................................................        Section 1.1
Custodian.........................................................................        Section 1.1
Dealer............................................................................        Section 1.1
Dealer Agreement..................................................................        Section 1.1
Dealer Assignment.................................................................        Section 1.1
Distribution Date.................................................................        Section 1.1
Draw Date.........................................................................        Section 1.1
Eligible Account..................................................................        Section 1.1
Eligible Investments..............................................................        Section 1.1
Financed Vehicle..................................................................        Section 1.1
Liquidation Proceeds..............................................................        Section 1.1
Lockbox Bank......................................................................        Section 1.1
Monthly Period....................................................................        Section 1.1
Moody's...........................................................................        Section 1.1
</TABLE>

                                     - 10 -
<PAGE>   17

<TABLE>
<S>                                                                                               <C>
Note Interest Distribution Account................................................        Section 1.1
Obligor...........................................................................        Section 1.1
Principal Distribution Account....................................................        Section 1.1
Purchase Agreement................................................................        Section 1.1
Purchased Receivable..............................................................        Section 1.1
Receivable........................................................................        Section 1.1
Reserve Account...................................................................        Section 1.1
Seller............................................................................        Section 1.1
Servicer..........................................................................        Section 1.1
Servicer Termination Event........................................................        Section 1.1
Standard & Poor's.................................................................        Section 1.1
Trust Accounts....................................................................        Section 1.1
Trust Agreement...................................................................        Section 1.1
</TABLE>

                  SECTION 1.02. Incorporation by Reference of Trust Indenture
Act. Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:

         "Commission" means the Securities and Exchange Commission.

         "indenture securities" means the Notes.

         "indenture security holder" means a Noteholder.

         "indenture to be qualified" means this Indenture.

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

         "obligor" on the indenture securities means the Issuer and any other
         obligor on the indenture securities.

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

                  SECTION 1.03. Rules of Construction. Unless otherwise
         specified:

                  (i) a term has the meaning assigned to it;

                                     - 11 -
<PAGE>   18

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

                  (iii) "or" is not exclusive;

                  (iv) "including" means including without limitation;

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

                  (vi) references to Sections, Subsections, Schedules and
Exhibits shall refer to such portions of this Indenture.

                                   ARTICLE II

                                    THE NOTES

                  SECTION 2.01. Form. The Class A-1 Notes, the Class A-2 Notes,
the Class A-3 Notes, the Class M Notes and the Class B Notes in each case
together with the Trustee's certificate of authentication, shall be in
substantially the forms set forth in Exhibits C-1, C-2, C-3, C-4 and C-5,
respectively, with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistently herewith, be determined by the
officers executing such Notes, as evidenced by their execution of the Notes. Any
portion of the text of any Note may be set forth on the reverse thereof, with an
appropriate reference thereto on the face of the Note.

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

                  Each Note shall be dated the date of its authentication. The
terms of the Notes set forth in Exhibits C-1, C-2, C-3, C-4 and C-5, are part of
the terms of this Indenture.

                  SECTION 2.02. Execution, Authentication and Delivery. The
Notes shall be executed on behalf of the Issuer by any of its Authorized
Officers. The signature of any such Authorized Officer on the Notes may be
manual or facsimile.

                  Notes bearing the manual or facsimile signature of individuals
who were at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of

                                     - 12 -
<PAGE>   19
them have ceased to hold such offices prior to the authentication and delivery
of such Notes or did not hold such offices at the date of such Notes.

                  The Trustee shall upon receipt of the Issuer Order
authenticate and deliver Class A-1 Notes for original issue in an aggregate
principal amount of $207,000,000 Class A-2 Notes for original issue in an
aggregate principal amount of $92,000,000, Class A-3 Notes for original issue in
an aggregate principal amount of $301,000,000, Class M Notes for original issue
in an aggregate principal amount of $64,583,000 and Class B Notes for original
issue in an aggregate principal amount of $85,417,000. The aggregate principal
amount of the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, Class M
Notes and Class B Notes outstanding at any time may not exceed that amount
except as provided in Section 2.05.

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

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

                  SECTION 2.03. Temporary Notes. Pending the preparation of
permanent Notes, the Issuer may execute, and upon receipt of an Issuer Order the
Trustee shall authenticate and deliver, temporary Notes which are printed,
lithographed, typewritten, mimeographed or otherwise produced, of the tenor of
the permanent Notes in lieu of which they are issued and with such variations
not inconsistent with the terms of this Indenture as the officers executing such
Notes may determine, as evidenced by their execution of such Notes.

                  If temporary Notes are issued, the Issuer will cause permanent
Notes to be prepared without unreasonable delay. After the preparation of
permanent Notes, the temporary Notes shall be exchangeable for permanent Notes
upon surrender of the temporary Notes at the office or agency of the Issuer to
be maintained as provided in Section 3.02, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Notes, the Issuer shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
like principal amount of permanent Notes of authorized denominations. Until so
exchanged, the temporary Notes shall in all respects be entitled to the same
benefits under this Indenture as permanent Notes.

                  SECTION 2.04. Registration; Registration of Transfer and
Exchange. The Issuer shall cause to be kept a register (the "Note Register") in
which, subject to such reasonable regulations as it may prescribe, the Issuer
shall provide for the registration of Notes and the registration of transfers of

                                     - 13 -
<PAGE>   20
Notes. The Trustee shall be "Note Registrar" for the purpose of registering
Notes and transfers of Notes as herein provided. Upon any resignation of any
Note Registrar, the Issuer shall promptly appoint a successor or, if it elects
not to make such an appointment, assume the duties of Note Registrar.

                  If a Person other than the Trustee is appointed by the Issuer
as Note Registrar, the Issuer will give the Trustee prompt written notice of the
appointment of such Note Registrar and of the location, and any change in the
location, of the Note Register, and the Trustee shall have the right to inspect
the Note Register at all reasonable times and to obtain copies thereof, and the
Trustee shall have the right to rely upon a certificate executed on behalf of
the Note Registrar by an Executive Officer thereof as to the names and addresses
of the Holders of the Notes and the principal amounts and number of such Notes.

                  Upon surrender for registration of transfer of any Note at the
office or agency of the Issuer to be maintained as provided in Section 3.02, the
Issuer shall execute, and the Trustee shall authenticate and the Noteholder
shall obtain from the Trustee, in the name of the designated transferee or
transferees, one or more new Notes in any authorized denominations, of a like
aggregate principal amount.

                  At the option of the Holder, Notes may be exchanged for other
Notes in any authorized denominations, of a like aggregate principal amount,
upon surrender of the Notes to be exchanged at such office or agency. Whenever
any Notes are so surrendered for exchange, the Issuer shall execute, and the
Trustee shall authenticate and the Noteholder shall obtain from the Trustee, the
Notes which the Noteholder making the exchange is entitled to receive.

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

                  Every Note presented or surrendered for registration of
transfer or exchange shall be duly endorsed by, or be accompanied by a written
instrument of transfer in form satisfactory to the Trustee duly executed by, the
Holder thereof or such Holder's attorney duly authorized in writing, with such
signature guaranteed by a commercial bank or trust company located, or having a
correspondent located, in The City of New York or the city in which the
Corporate Trust Office is located, or by a member firm of a national securities
exchange, and such other documents as the Trustee may require.

                  No service charge shall be made to a Holder for any
registration of transfer or exchange of Notes, but the Issuer or the Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Notes, other than exchanges pursuant to Section 2.03 or 9.06 not
involving any transfer.

                                     - 14 -
<PAGE>   21

                  The preceding provisions of this Section 2.04 notwithstanding,
the Issuer shall not be required to make and the Note Registrar need not
register transfers or exchanges of Notes selected for redemption or of any Note
for a period of 15 days preceding the due date for any payment with respect to
the Note.

                  SECTION 2.05. Mutilated, Destroyed, Lost or Stolen Notes. If
(i) any mutilated Note is surrendered to the Trustee, or the Trustee receives
evidence to its satisfaction of the destruction, loss or theft of any Note, and
(ii) there is delivered to the Trustee such security or indemnity as may be
required by them to hold the Issuer and the Trustee harmless, then, in the
absence of notice to the Issuer, the Note Registrar or the Trustee that such
Note has been acquired by a bona fide purchaser, the Issuer shall execute and
upon its request the Trustee shall authenticate and deliver, in exchange for or
in lieu of any such mutilated, destroyed, lost or stolen Note, a replacement
Note; provided, however, that if any such destroyed, lost or stolen Note, but
not a mutilated Note, shall have become or within seven days shall be due and
payable, or shall have been called for redemption, instead of issuing a
replacement Note, the Issuer may pay such destroyed, lost or stolen Note when so
due or payable or upon the Redemption Date without surrender thereof. If, after
the delivery of such replacement Note or payment of a destroyed, lost or stolen
Note pursuant to the proviso to the preceding sentence, a bona fide purchaser of
the original Note in lieu of which such replacement Note was issued presents for
payment such original Note, the Issuer and the Trustee shall be entitled to
recover such replacement Note (or such payment) from the Person to whom it was
delivered or any Person taking such replacement Note from such Person to whom
such replacement Note was delivered or any assignee of such Person, except a
bona fide purchaser, and shall be entitled to recover upon the security or
indemnity provided therefor to the extent of any loss, damage, cost or expense
incurred by the Issuer or the Trustee in connection therewith.

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

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

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

                                     - 15 -
<PAGE>   22

                  SECTION 2.06. Person Deemed Owner. Prior to due presentment
for registration of transfer of any Note, the Issuer, the Trustee and any agent
of the Issuer or the Trustee may treat the Person in whose name any Note is
registered (as of the day of determination) as the owner of such Note for the
purpose of receiving payments of principal of and interest, if any, on such Note
and for all other purposes whatsoever, whether or not such Note be overdue, and
none of the Issuer, the Trustee nor any agent of the Issuer or the Trustee shall
be affected by notice to the contrary.

                  SECTION 2.07.  Payment of Principal and Interest

                  (a) The Notes shall accrue interest as provided in the forms
of the Class A-1 Note, the Class A-2 Note, the Class A-3 Note, the Class M Note
and the Class B Note set forth in Exhibits C-1, C-2, C-3, C-4 and C-5,
respectively, and such interest shall be payable on each Payment Date as
specified therein, subject to Section 3.01. Any installment of interest or
principal, if any, payable on any Note which is punctually paid or duly provided
for by the Issuer on the applicable Payment Date shall be paid to the Person in
whose name such Note (or one or more Predecessor Notes) is registered on the
Record Date, by check mailed first-class, postage prepaid to such Person's
address as it appears on the Note Register on such Record Date, except that,
unless Definitive Notes have been issued pursuant to Section 2.11, with respect
to Notes registered on the Record Date in the name of the nominee of the
Depository, payment will be made by wire transfer in immediately available funds
to the account designated by such nominee and except for (i) the final
installment of principal payable with respect to such Note on a Payment Date and
(ii) the Redemption Price for any Note called for redemption pursuant to Section
10.01, which shall be payable as provided below. The funds represented by any
such checks returned undelivered shall be held in accordance with Section 3.03.

                  (b) The principal of each Note shall be payable in
installments on each Payment Date as provided in the forms of the Class A-1
Note, the Class A-2 Note, the Class A-3 Note, the Class M Note and the Class B
Note set forth in Exhibits C-1, C-2, C-3, C-4 and C-5, respectively.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
shall be due and payable, if not previously paid, on the date on which an Event
of Default shall have occurred and be continuing if the Trustee or the
Controlling Noteholders have declared the Notes to be immediately due and
payable in the manner described in Section 5.02 hereof. All principal payments
on a class of Notes shall be made pro rata to the Noteholders of such class
entitled thereto. The Trustee shall notify the Person in whose name a Note is
registered at the close of business on the Record Date preceding the Payment
Date for which the Trustee has received notice from the Issuer that the Issuer
expects that the final installment of principal of and interest on such Note
will be paid. Such notice shall be mailed no later than five days prior to such
final Payment Date and shall specify that such final installment will be payable
only upon presentation and surrender of such Note and shall specify the place
where such Note may be presented and surrendered for payment of such
installment. Notices in connection with redemptions of Notes shall be mailed to
Noteholders as provided in Section 10.02.

                                     - 16 -
<PAGE>   23

                  SECTION 2.08. Cancellation. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee and shall be promptly
canceled by the Trustee. The Issuer may at any time deliver to the Trustee for
cancellation any Notes previously authenticated and delivered hereunder which
the Issuer may have acquired in any manner whatsoever, and all Notes so
delivered shall be promptly canceled by the Trustee. No Notes shall be
authenticated in lieu of or in exchange for any Notes canceled as provided in
this Section, except as expressly permitted by this Indenture. All canceled
Notes may be held or disposed of by the Trustee in accordance with its standard
retention or disposal policy as in effect at the time unless the Issuer shall
direct by an Issuer Order that they be destroyed or returned to it, provided
that such Issuer Order is timely and the Notes have not been previously disposed
of by the Trustee.

                  SECTION 2.09. Book-Entry Notes. The Notes, upon original
issuance, will be issued in the form of a typewritten Note or Notes representing
the Book-Entry Notes, to be delivered to The Depository Trust Company, the
initial Depository, by, or on behalf of, the Issuer. Such Note shall initially
be registered on the Note Register in the name of Cede & Co., the nominee of the
initial Depository, and no Note Owner will receive a Definitive Note
representing such Note Owner's interest in such Note, except as provided in
Section 2.11. Unless and until definitive, fully registered Notes (the
"Definitive Notes") have been issued to Note Owners pursuant to Section 2.11:

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

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

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

                  (iv) the rights of Note Owners shall be exercised only through
         the Depository and shall be limited to those established by law and
         agreements between such Note Owners and the Depository and/or the
         Depository Participants. Pursuant to the Depository Agreement, unless
         and until Definitive Notes are issued pursuant to Section 2.11, the
         initial Depository will make book-entry transfers among the Depository
         Participants and receive and transmit payments of principal of and
         interest on the Notes to such Depository Participants;

                  (v) whenever this Indenture requires or permits actions to be
         taken based upon instructions or directions of Holders of Notes
         evidencing a specified percentage of the Outstanding Amount of the
         Notes, the Depository shall be deemed to represent such

                                     - 17 -
<PAGE>   24

         percentage only to the extent that it has received instructions to such
         effect from Note Owners and/or Depository Participants owning or
         representing, respectively, such required percentage of the beneficial
         interest in the Notes and has delivered such instructions to the
         Trustee; and

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

                  SECTION 2.10. Notices to Depository. Whenever a notice or
other communication to the Noteholders is required under this Indenture, unless
and until Definitive Notes shall have been issued to Note Owners pursuant to
Section 2.11, the Trustee shall give all such notices and communications
specified herein to be given to Holders of the Notes to the Depository and shall
have no obligation to the Note Owners.

                  SECTION 2.11. Definitive Notes. If (i) the Administrator
advises the Trustee in writing that the Depository is no longer willing or able
properly to discharge its responsibilities with respect to the Notes, and the
Administrator is unable to locate a qualified successor, (ii) the Administrator
at its option advises the Trustee in writing that it elects to terminate the
book-entry system through the Depository or (iii) after the occurrence of an
Event of Default, the Controlling Noteholders advise the Depository in writing
that the continuation of a book-entry system through the Depository is no longer
in the best interests of the Note Owners, then the Depository shall notify all
Note Owners and the Trustee of the occurrence of any such event and of the
availability of Definitive Notes to Note Owners requesting the same. Upon
surrender to the Trustee of the Note or Notes representing the Book-Entry Notes
by the Depository, accompanied by registration instructions, the Issuer shall
execute and the Trustee shall authenticate the Definitive Notes in accordance
with the instructions of the Depository. None of the Issuer, the Note Registrar
or the Trustee shall be liable for any delay in delivery of such instructions
and may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of Definitive Notes, the Trustee shall recognize
the Holders of the Definitive Notes as Noteholders.

                                   ARTICLE III

                                    COVENANTS

                  SECTION 3.01. Payment of Principal and Interest. The Issuer
will duly and punctually pay the principal and interest, on the Notes in
accordance with the terms of the Notes and this Indenture. Without limiting the
foregoing, the Issuer will cause to be distributed all amounts on deposit in the
Note Interest Distribution Account and the Principal Distribution Account on a
Payment Date in accordance with Sections 8.02(b) and 8.02(c). Amounts properly
withheld under the Code by

                                     - 18 -
<PAGE>   25
any Person from a payment to any Noteholder of interest and/or principal shall
be considered as having been paid by the Issuer to such Noteholder for all
purposes of this Indenture.

                  SECTION 3.02. Maintenance of Office or Agency. The Issuer will
maintain in the City of New York, an office or agency where Notes may be
surrendered for registration of transfer or exchange, and where notices and
demands to or upon the Issuer in respect of the Notes and this Indenture may be
served. The Issuer hereby initially appoints the Trustee to serve as its agent
for the foregoing purposes. The Issuer will give prompt written notice to the
Trustee of the location, and of any change in the location, of any such office
or agency. If at any time the Issuer shall fail to maintain any such office or
agency or shall fail to furnish the Trustee with the address thereof, such
surrenders, notices and demands may be made or served at the Corporate Trust
Office, and the Issuer hereby appoints the Trustee as its agent to receive all
such surrenders, notices and demands.

                  SECTION 3.03. Money for Payments To Be Held in Trust. As
provided in Section 8.02, all payments of amounts due and payable with respect
to any Notes that are to be made from amounts withdrawn from the Note Interest
Distribution Account and the Principal Distribution Account pursuant to Sections
8.02(b) and 8.02(c) shall be made on behalf of the Issuer by the Trustee or by
another Paying Agent in accordance with written instructions from the Issuer
upon which the Trustee may rely, and no amounts so withdrawn from the Note
Interest Distribution Account and the Principal Distribution Account for
payments of Notes shall be paid over to the Issuer.

                  On or before each Payment Date and Redemption Date, the Issuer
shall deposit or cause to be deposited in the Note Interest Distribution Account
and the Principal Distribution Account an aggregate sum sufficient to pay the
amounts then becoming due, such sum to be held in trust for the benefit of the
Persons entitled thereto and (unless the Paying Agent is the Trustee) shall
promptly notify the Trustee in writing of its action or failure so to act.

                  The Issuer will cause each Paying Agent other than the Trustee
to execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee (and if the Trustee acts as Paying Agent, it hereby
so agrees), subject to the provisions of this Section, that such Paying Agent
will:

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

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

                                     - 19 -
<PAGE>   26

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

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

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

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

                  Subject to applicable laws with respect to escheat of funds,
any money held by the Trustee or any Paying Agent in trust for the payment of
any amount due with respect to any Note and remaining unclaimed for two years
after such amount has become due and payable shall be discharged from such trust
and upon Issuer Request shall be deposited by the Trustee in the Collection
Account; and the Holder of such Note shall thereafter, as an unsecured general
creditor, look only to the Issuer for payment thereof, and all liability of the
Trustee or such Paying Agent with respect to such trust money shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Issuer cause to
be published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in The City of New
York, notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication,
any unclaimed balance of such money then remaining will be repaid to or for the
account of the Issuer. The Trustee may also adopt and employ, at the expense of
the Issuer, any other reasonable means of notification of such repayment
(including, but not limited to, mailing notice of such repayment to Holders
whose Notes have been called but have not been surrendered for redemption or
whose right to or interest in moneys due and payable but not claimed is
determinable from the records of the Trustee or of any Paying Agent, at the last
address of record for each such Holder).

                  SECTION 3.04. Existence. The Issuer will keep in full effect
its existence, rights and franchises as a business trust under the laws of the
State of Delaware (unless it becomes, or any successor Issuer hereunder is or
becomes, organized under the laws of any other state or of the United States of
America, in which case the Issuer will keep in full effect its existence, rights
and franchises

                                     - 20 -
<PAGE>   27
under the laws of such other jurisdiction) and will obtain and preserve its
qualification to do business in each jurisdiction in which such qualification is
or shall be necessary to protect the validity and enforceability of this
Indenture, the Notes, the Collateral and each other instrument or agreement
included in the Trust Estate.

                  SECTION 3.05. Protection of Trust Estate. The Issuer intends
the security interest Granted pursuant to this Indenture in favor of the
Noteholders to be prior to all other liens in respect of the Trust Estate, and
the Issuer shall take all actions necessary to obtain and maintain, in favor of
the Trustee, for the benefit of the Noteholders, a first Lien on and a first
priority, perfected security interest in the Trust Estate. The Issuer will from
time to time execute and deliver all such supplements and amendments hereto and
all such financing statements, continuation statements, instruments of further
assurance and other instruments, all as prepared by the Servicer and delivered
to the Issuer, and will take such other action necessary or advisable to:

                  (i) grant more effectively all or any portion of the Trust
         Estate;

                  (ii) maintain or preserve the Lien and security interest (and
         the priority thereof) in favor of the Trustee for the benefit of the
         Noteholders created by this Indenture or carry out more effectively the
         purposes hereof;

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

                  (iv) enforce any of the Collateral;

                  (v) preserve and defend title to the Trust Estate and the
         rights of the Trustee in such Trust Estate against the claims of all
         persons and parties; or

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

The Issuer hereby designates the Trustee its agent and attorney-in-fact to
execute any financing statement, continuation statement or other instrument
required by the Trustee pursuant to this Section; provided, however, that the
Servicer shall be responsible for preparing and filing any such financing
statement, continuation statement or other instrument.

                  SECTION 3.06. Opinions as to Trust Estate.

                  (a) On the Closing Date, the Issuer shall furnish to the
Trustee an Opinion of Counsel either stating that, in the opinion of such
counsel, such action has been taken with respect to

                                     - 21 -
<PAGE>   28
the recording and filing of this Indenture, any indentures supplemental hereto,
and any other requisite documents, and with respect to the execution and filing
of any financing statements and continuation statements, as are necessary to
perfect and make effective the first priority lien and security interest in
favor of the Trustee, for the benefit of the Noteholders, created by this
Indenture and reciting the details of such action, or stating that, in the
opinion of such counsel, no such action is necessary to make such lien and
security interest effective.

                  (b) On or before April 30 in each calendar year, beginning in
2001, the Issuer shall furnish to the Trustee an Opinion of Counsel with respect
to each jurisdiction in which a Uniform Commercial Code financing statement has
been filed by the Issuer either stating that, in the opinion of such counsel,
such action has been taken with respect to the recording, filing, re-recording
and refiling of this Indenture, any indentures supplemental hereto and any other
requisite documents and with respect to the execution and filing of any
financing statements and continuation statements as is necessary to maintain the
first priority Lien and security interest created by this Indenture and reciting
the details of such action or stating that in the opinion of such counsel no
such action is necessary to maintain such Lien and security interest. Such
Opinion of Counsel shall also describe the recording, filing, re-recording and
refiling of this Indenture, any indentures supplemental hereto and any other
requisite documents and the execution and filing of any financing statements and
continuation statements that will, in the opinion of such counsel, be required
to maintain the Lien and security interest of this Indenture until April 30 in
the following calendar year.

                  SECTION 3.07. Performance of Obligations; Servicing of
Receivables.

                  (a) The Issuer will not take any action and will use its best
efforts not to permit any action to be taken by others that would release any
Person from any of such Person's material covenants or obligations under any
instrument or agreement included in the Trust Estate or that would result in the
amendment, hypothecation, subordination, termination or discharge of, or impair
the validity or effectiveness of, any such instrument or agreement, except as
expressly provided in this Indenture, the Sale and Servicing Agreement or such
other instrument or agreement.

                  (b) The Issuer may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such duties
by a Person identified to the Trustee in an Officer's Certificate of the Issuer
shall be deemed to be action taken by the Issuer. Initially, the Issuer has
contracted with the Servicer and the Administrator to assist the Issuer in
performing its duties under this Indenture. The Owner Trustee shall not be
responsible for the action or inaction of the Servicer or the Administrator.

                  (c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Related Documents
and in the instruments and agreements included in the Trust Estate, including
but not limited to filing or causing to be filed all UCC financing

                                     - 22 -
<PAGE>   29
statements and continuation statements required to be filed by the terms of this
Indenture and the Sale and Servicing Agreement in accordance with and within the
time periods provided for herein and therein.

                  (d) If the Issuer shall have knowledge of the occurrence of a
Servicer Termination Event under the Sale and Servicing Agreement, the Issuer
shall promptly notify in writing the Trustee and the Rating Agencies thereof,
and shall specify in such notice the action, if any, the Issuer is taking with
respect of such Servicer Termination Event. If a Servicer Termination Event
shall arise from the failure of the Servicer to perform any of its duties or
obligations under the Sale and Servicing Agreement with respect to the
Receivables, the Issuer shall take all reasonable steps available to it to
remedy such failure.

                  (e) If the Issuer has given notice of termination to the
Servicer of the Servicer's rights and powers pursuant to Section 8.2 of the Sale
and Servicing Agreement, as promptly as possible thereafter, the Issuer shall
appoint a successor servicer in accordance with Section 8.3 of the Sale and
Servicing Agreement.

                  (f) Upon any termination of the Servicer's rights and powers
pursuant to the Sale and Servicing Agreement, the Issuer shall promptly notify
the Trustee. As soon as a successor Servicer is appointed, the Issuer shall
notify the Trustee of such appointment, specifying in such notice the name and
address of such successor Servicer.

                  (g) The Issuer agrees that it will not waive timely
performance or observance by the Servicer, the Seller or AFL of their respective
duties under the Related Documents if the effect thereof would adversely affect
the Holders of the Notes.

                  (h) As promptly as possible after the giving of notice of
termination to the Servicer of the Servicer's rights and powers pursuant to
Section 8.1 of the Sale and Servicing Agreement, the Issuer shall appoint a
successor servicer (the "Successor Servicer"), and such Successor Servicer shall
accept its appointment by a written assumption in a form acceptable to the
Trustee. In the event that a Successor Servicer has not been appointed and
accepted its appointment at the time when the Servicer ceases to act as
Servicer, the Trustee without further action shall automatically be appointed
the Successor Servicer in accordance with Section 8.2 of the Sale and Servicing
Agreement. The Trustee may resign as the Servicer by giving written notice of
such resignation to the Issuer and in such event will be released from such
duties and obligations, such release not to be effective until the date a new
servicer enters into a servicing agreement with the Issuer as provided below.
Upon delivery of any such notice to the Issuer, the Issuer shall obtain a new
servicer as the Successor Servicer under the Sale and Servicing Agreement. Any
Successor Servicer other than the Trustee shall (i) be an Eligible Servicer and
(ii) enter into a servicing agreement with the Issuer having substantially the
same provisions as the provisions of the Sale and Servicing Agreement applicable
to the Servicer. If within 30 days

                                     - 23 -
<PAGE>   30
after the delivery of the notice referred to above, the Issuer shall not have
obtained such a new servicer, the Trustee may appoint, or may petition a court
of competent jurisdiction to appoint, a Successor Servicer. In connection with
any such appointment, the Trustee may make such arrangements for the
compensation of such successor as it and such successor shall agree, subject to
the limitations set forth below and in the S4ale and Servicing Agreement, and in
accordance with Section 8.2 of the Sale and Servicing Agreement, the Issuer
shall enter into an agreement with such successor for the servicing of the
Receivables (such agreement to be in form and substance satisfactory to the
Trustee). If the Trustee shall succeed to the Servicer's duties as servicer of
the Receivables as provided herein, it shall do so in its individual capacity
and not in its capacity as Trustee and accordingly, the provisions of Article VI
hereof shall be inapplicable to the Trustee in its duties as the successor to
the Servicer and the servicing of the Receivables. In case the Trustee shall
become successor to the Servicer under the Sale and Servicing Agreement, the
Trustee shall be entitled to appoint as Servicer any one of its Affiliates, or
delegate any of its responsibilities as Servicer to any Affiliate or agents,
subject to the terms of the Sale and Servicing Agreement, provided that such
appointment or delegation shall not affect or alter in any way the liability of
the Trustee as successor for the performance of the duties and obligations of
the Servicer in accordance with the terms hereof.

                  (i) Without derogating from the absolute nature of the
assignment granted to the Trustee under this Indenture or the rights of the
Trustee hereunder, the Issuer agrees that, unless such action is specifically
permitted hereunder or under the Related Documents, it will not, without the
prior written consent of the Trustee or the Controlling Noteholders, amend,
modify, waive, supplement, terminate or surrender, or agree to any amendment,
modification, supplement, termination, waiver or surrender of, the terms of any
Collateral or the Related Documents, or waive timely performance or observance
by the Servicer or the Seller under the Sale and Servicing Agreement; provided,
however, that no such amendment shall (i) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, distributions that are required
to be made for the benefit of the Noteholders, or (ii) reduce the aforesaid
percentage of the Notes which are required to consent to any such amendment,
without the consent of the Holders of all the Outstanding Notes. If any such
amendment, modification, supplement or waiver shall be so consented to by the
Trustee or such Holders, the Issuer agrees, promptly following a request by the
Trustee to do so, to execute and deliver, in its own name and at its own
expense, such agreements, instruments, consents and other documents as the
Trustee may deem necessary or appropriate in the circumstances.

                  SECTION 3.08. Negative Covenants. Until the Termination Date,
the Issuer shall not:

                  (i) except as expressly permitted by this Indenture, the
         Purchase Agreement or the Sale and Servicing Agreement, sell, transfer,
         exchange or otherwise dispose of any of the properties or assets of the
         Issuer, including those included in the Trust Estate, unless directed
         to do so by the Controlling Noteholders;

                                     - 24 -
<PAGE>   31

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

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

                  SECTION 3.09. Annual Statement as to Compliance. The Issuer
will deliver to the Trustee, within 120 days after the end of each fiscal year
of the Issuer (commencing with the fiscal year ending December 31, 2000), an
Officer's Certificate stating, as to the Authorized Officer signing such
Officer's Certificate, that

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

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

                  SECTION 3.10. Issuer May Consolidate, etc. Only on Certain
Terms.

                  (a) The Issuer shall not consolidate or merge with or into any
other Person, unless:

                  (i) the Person (if other than the Issuer) formed by or
         surviving such consolidation or merger shall be a Person organized and
         existing under the laws of the United States of

                                     - 25 -
<PAGE>   32
         America or any State and shall expressly assume, by an indenture
         supplemental hereto, executed and delivered to the Trustee, in form and
         substance satisfactory to the Trustee, the due and punctual payment of
         the principal of and interest on all Notes and the performance or
         observance of every agreement and covenant of this Indenture and each
         other Related Document on the part of the Issuer to be performed or
         observed, all as provided herein;

                  (ii) immediately after giving effect to such transaction, no
         Default or Event of Default shall have occurred and be continuing;

                  (iii) the Rating Agency Condition shall have been satisfied
         with respect to such transaction;

                  (iv) the Issuer, at its own expense, shall have received an
         Opinion of Counsel which shall be delivered to and shall be
         satisfactory to the Trustee to the effect that such transaction will
         not have any material adverse tax consequence to the Trust, or any
         Noteholder;

                  (v) any action as is necessary to maintain the Lien and
         security interest created in favor of the Trustee by this Indenture
         shall have been taken;

                  (vi) the Issuer, at its own expense, shall have delivered to
         the Trustee an Officer's Certificate and an Opinion of Counsel (which
         shall describe the actions taken as required by clause (a)(v) of this
         Section 3.10 or that no such actions will be taken) each stating that
         such consolidation or merger and such supplemental indenture comply
         with this Article III and that all conditions precedent herein provided
         for relating to such transaction have been compiled with (including any
         filing required by the Exchange Act); and

                  (vii) the Issuer or the Person (if other than the Issuer)
         formed by or surviving such consolidation or merger has a net worth,
         immediately after such consolidation or merger, that is (a) greater
         than zero and (b) not less than the net worth of the Issuer immediately
         prior to giving effect to such consolidation or merger.

                  (b) The Issuer shall not convey or transfer all or
substantially all of its properties or assets, including those included in the
Trust Estate, to any Person (except as expressly permitted by the Indenture, the
Purchase Agreement or the Sale and Servicing Agreement), unless:

                  (i) the Person that acquires by conveyance or transfer the
         properties and assets of the Issuer shall (A) be a United States
         citizen or a Person organized and existing under the laws of the United
         States of America or any State, (B) expressly assume, by an indenture
         supplemental hereto, executed and delivered to the Trustee, in form and
         substance satisfactory to the Trustee, the due and punctual payment of
         the principal of and interest on all Notes and

                                     - 26 -
<PAGE>   33
         the performance or observance of every agreement and covenant of this
         Indenture and each Related Document on the part of the Issuer to be
         performed or observed, all as provided herein, (C) expressly agree by
         means of such supplemental indenture that all right, title and interest
         so conveyed or transferred shall be subject and subordinate to the
         rights of Holders of the Notes, (D) unless otherwise provided in such
         supplemental indenture, expressly agree to indemnify, defend and hold
         harmless the Issuer against and from any loss, liability or expense
         arising under or related to this Indenture and the Notes and (E)
         expressly agree by means of such supplemental indenture that such
         Person (or if a group of Persons, then one specified Person) shall make
         all filings with the Commission (and any other appropriate Person)
         required by the Exchange Act in connection with the Notes;

                  (ii) immediately after giving effect to such transaction, no
         Default or Event of Default shall have occurred and be continuing;

                  (iii) the Rating Agency Condition shall have been satisfied
         with respect to such transaction;

                  (iv) the Issuer shall have received an Opinion of Counsel
         which shall be delivered to and shall be satisfactory to the Trustee to
         the effect that such transaction will not have any material adverse tax
         consequence to the Trust or any Noteholder;

                  (v) any action as is necessary to maintain the Lien and
         security interest created in favor of the Trustee by this Indenture
         shall have been taken;

                  (vi) the Issuer shall have delivered to the Trustee an
         Officer's Certificate and an Opinion of Counsel (which shall describe
         the actions taken as required by clause (b)(v) of this Section 3.10 or
         that no such actions will be taken) each stating that such conveyance
         or transfer and such supplemental indenture comply with this Article
         III and that all conditions precedent herein provided for relating to
         such transaction have been complied with (including any filing required
         by the Exchange Act); and

                  (vii) the Person acquiring by conveyance or transfer the
         properties or assets of the Issuer has a net worth, immediately after
         such conveyance or transfer, that is (a) greater than zero and (b) not
         less than the net worth of the Issuer immediately prior to giving
         effect to such conveyance or transfer.

                  SECTION 3.11. Successor or Transferee.

                  (a) Upon any consolidation or merger of the Issuer in
accordance with Section 3.10(a), the Person formed by or surviving such
consolidation or merger (if other than the Issuer) shall

                                     - 27 -
<PAGE>   34

succeed to, and be substituted for, and may exercise every right and power of,
the Issuer under this Indenture with the same effect as if such Person had been
named as the Issuer herein.

                  (b) Upon a conveyance or transfer of all the assets and
properties of the Issuer pursuant to Section 3.10(b), Associates Automobile
Receivables Trust 2000-1 will be released from every covenant and agreement of
this Indenture to be observed or performed on the part of the Issuer with
respect to the Notes immediately upon the delivery of written notice to the
Trustee stating that Associates Automobile Receivables Trust 2000-1 is to be so
released.

                  SECTION 3.12. No Other Business. The Issuer shall not engage
in any business other than financing, purchasing, owning, selling and managing
the Receivables in the manner contemplated by this Indenture and the Related
Documents and activities incidental thereto. After the Closing Date, the Issuer
shall not fund the purchase of any new Receivables.

                  SECTION 3.13. No Borrowing. The Issuer shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for any
Indebtedness except for (i) the Notes and (ii) any other Indebtedness permitted
by or arising under the Related Documents. The proceeds of the Notes shall be
used exclusively to fund the Issuer's purchase of the Receivables and the other
assets specified in the Sale and Servicing Agreement, to fund the Reserve
Account and to pay the Issuer's organizational, transactional and start-up
expenses.

                  SECTION 3.14. Servicer's Obligations. The Issuer shall cause
the Servicer to comply with Sections 3.9, 3.10, 3.11 and 4.8(a) of the Sale and
Servicing Agreement.

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

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

                  SECTION 3.17. Restricted Payments. Except as expressly
permitted by this Indenture or the Sale and Servicing Agreement, the Issuer
shall not, directly or indirectly, (i) make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or

                                     - 28 -
<PAGE>   35
otherwise with respect to any ownership or equity interest or security in or of
the Issuer or to the Servicer, (ii) redeem, purchase, retire or otherwise
acquire for value any such ownership or equity interest or security or (iii) set
aside or otherwise segregate any amounts for any such purpose. The Issuer will
not, directly or indirectly, make payments to or distributions from the
Collection Account except in accordance with this Indenture and the Related
Documents.

                  SECTION 3.18. Notice of Events of Default. The Issuer agrees
to give the Trustee and the Rating Agencies prompt written notice of each Event
of Default hereunder, each default on the part of the Servicer or the Seller of
its obligations under the Sale and Servicing Agreement and each default on the
part of AFL of its obligations under the Purchase Agreement.

                  SECTION 3.19. Further Instruments and Acts. Upon request of
the Trustee, the Issuer will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.

                  SECTION 3.20. Compliance with Laws. The Issuer shall comply
with the requirements of all applicable laws, the non-compliance with which
would, individually or in the aggregate, materially and adversely affect the
ability of the Issuer to perform its obligations under the Notes, this Indenture
or any Related Document.

                  SECTION 3.21. Amendments of Sale and Servicing Agreement and
Trust Agreement. The Issuer shall not agree to any amendment to Section 10.1 of
the Sale and Servicing Agreement or Section 11.1 of the Trust Agreement to
eliminate the requirements thereunder that the Trustee or the Holders of the
Notes consent to amendments thereto as provided therein.

                  SECTION 3.22. Removal of Administrator. So long as any Notes
are issued and outstanding, the Issuer shall not remove the Administrator
without cause unless the Rating Agency Condition shall have been satisfied in
connection with such removal.

                  SECTION 3.23. Income Tax Characterization. For purposes of
federal income, state and local income and franchise and any other income taxes,
the Issuer will treat the Notes as indebtedness.

                                   ARTICLE IV

                           SATISFACTION AND DISCHARGE

                  SECTION 4.01. Satisfaction and Discharge of Indenture. This
Indenture shall cease to be of further effect with respect to the Notes except
as to (i) rights of registration of transfer and exchange, (ii) substitution of
mutilated, destroyed, lost or stolen Notes, (iii) rights of Noteholders to

                                     - 29 -
<PAGE>   36

receive payments of principal, interest and premium, if any, thereon, (iv)
Sections 3.03, 3.04, 3.05, 3.07, 3.08, 3.10, 3.12, 3.13, 3.20, 3.21 and 3.23,
(v) the rights, obligations and immunities of the Trustee hereunder (including
the rights of the Trustee under Section 6.07 and the obligations of the Trustee
under Section 4.02) and (vi) the rights of Noteholders as beneficiaries hereof
with respect to the property so deposited with the Trustee payable to all or any
of them, and the Trustee, on demand of and at the expense of the Issuer, shall
execute proper instruments acknowledging satisfaction and discharge of this
Indenture with respect to the Notes, when

                  (A) either

                           (1) all Notes theretofore authenticated and
         delivered, other than (i) Notes that have been destroyed, lost or
         stolen and that have been replaced or paid as provided in Section 2.05
         and (ii) Notes for whose payment money has theretofore been deposited
         in trust or segregated and held in trust by the Issuer and thereafter
         repaid to the Issuer or discharged from such trust, as provided in
         Section 3.03, have been delivered to the Trustee for cancellation; or

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

                                    (i) have become due and payable, or

                                    (ii) will become due and payable at the
                  Final Scheduled Distribution Date within one year, or

                                    (iii) are to be called for redemption within
                  one year under arrangements satisfactory to the Trustee for
                  the giving of notice of redemption by the Trustee in the name,
                  and at the expense, of the Issuer,

         and the Issuer, in the case of (i), (ii) or (iii) above, has
         irrevocably deposited or caused to be irrevocably deposited with the
         Trustee as part of the Trust Estate cash or direct obligations of or
         obligations guaranteed by the United States of America (which will
         mature prior to the date such amounts are payable), in trust in an
         Eligible Account in the name of the Trustee for such purpose, in an
         amount sufficient to pay and discharge the entire indebtedness on such
         Notes not theretofore delivered to the Trustee for cancellation when
         due on the Final Scheduled Distribution Date or Redemption Date (if
         Notes shall have been called for redemption pursuant to Section 10.01),
         as the case may be;

                  (B) the Issuer has paid or caused to be paid all Secured
         Obligations; and

                                     - 30 -
<PAGE>   37

                  (C) the Issuer has delivered to the Trustee an Officer's
         Certificate, an Opinion of Counsel and (if required by the TIA and the
         Trustee an Independent Certificate from a firm of certified public
         accountants, each meeting the applicable requirements of Section
         11.01(a) and each stating that all conditions precedent herein provided
         for relating to the satisfaction and discharge of this Indenture have
         been complied with and the Rating Agency Condition has been satisfied.

                  SECTION 4.02. Application of Trust Money. All moneys deposited
with the Trustee pursuant to Section 4.01 hereof shall be held in trust and
applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent, as the
Trustee may determine, to the Holders of the particular Notes for the payment or
redemption of which such moneys have been deposited with the Trustee, of all
sums due and to become due thereon for principal and interest; but such moneys
need not be segregated from other funds except to the extent required herein or
in the Sale and Servicing Agreement or required by law.

                  SECTION 4.03. Repayment of Moneys Held by Paying Agent. In
connection with the satisfaction and discharge of this Indenture with respect to
the Notes, all moneys then held by any Paying Agent other than the Trustee under
the provisions of this Indenture with respect to such Notes shall, upon written
demand of the Issuer, be paid to the Trustee to be held and applied according to
Section 3.03 and thereupon such Paying Agent shall be released from all further
liability with respect to such moneys.

                  SECTION 4.04. Release of Trust Estate. The Trustee shall, on
or after the Termination Date, release any remaining portion of the Trust Estate
from the Lien created by this Indenture and deposit in the Collection Account
any funds then on deposit in any other Trust Account. The Trustee shall release
property from the Lien created by this Indenture pursuant to this Section 4.04
only upon receipt of an Issuer Request accompanied by an Officer's Certificate,
an Opinion of Counsel and (if required by the TIA) Independent Certificates in
accordance with TIA Sections 314(c) and 314(d)(1) meeting the applicable
requirements of Section 11.01.

                                    ARTICLE V

                                    REMEDIES

                  SECTION 5.01. Events of Default. "Event of Default," wherever
used herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):

                                     - 31 -
<PAGE>   38

                  (i) default in the payment of any interest on any Class A Note
         when the same becomes due and payable, and such default shall continue
         for a period of five days (so long as any Class A Notes are
         Outstanding, each Holder of any Class M and Class B Notes or the Owner
         of any such note by such Holder's acceptance of such Note or beneficial
         interest therein, as the case may be, shall be deemed to have consented
         to the delay in payment of interest on such class of Notes and to have
         waived its right to institute suit for enforcement of any such
         payment); or

                  (ii) after the Class A Notes have been paid in full, default
         in the payment on payment of interest on any Class M Note when the same
         becomes due and payable, and such default shall continue for a period
         of five days (so long as the Class M Notes are outstanding, each Holder
         of any Class B Note or the Owner of any such note by such Holder's
         acceptance of such note or beneficial interest therein, as the case may
         be, shall be deemed to have consented to the delay in payment of
         interest on such class of Notes and to have waived its right to
         institute suit for enforcement of any such payment); or

                  (iii) after the Class M Notes have been paid in full, default
         in the payment of any interest on any Class B Note when the same
         becomes due and payable, and such default shall continue for a period
         of five days (so long as the Class B Notes are outstanding); or

                  (iv) default in the payment of the principal of or any
         installment of the principal of any Note when the same becomes due and
         payable; or

                  (v) default in the observance or performance of any covenant
         or agreement of the Issuer made in this Indenture (other than a
         covenant or agreement, a default in the observance or performance of
         which is elsewhere in this Section specifically dealt with), or any
         representation or warranty of the Issuer made in this Indenture or in
         any certificate or other writing delivered pursuant hereto or in
         connection herewith proving to have been incorrect in any material
         respect as of the time when the same shall have been made, and such
         default shall continue or not be cured, or the circumstance or
         condition in respect of which such misrepresentation or warranty was
         incorrect shall not have been eliminated or otherwise cured, for a
         period of 30 days after there shall have been given, by registered,
         express or certified mail, to the Issuer by the Trustee or to the
         Issuer and the Trustee by the Holders of at least 25% of the
         Outstanding Amount of the Notes, a written notice specifying such
         default or incorrect representation or warranty and requiring it to be
         remedied and stating that such notice is a "Notice of Default"
         hereunder; or

                  (vi) the commencement of an involuntary case against the
         Issuer under any applicable Federal or state bankruptcy, insolvency or
         other similar law now or hereafter in effect, and such case is not
         dismissed within 60 days; or

                                     - 32 -
<PAGE>   39

                  (vii) (A) the commencement by the Issuer of a voluntary case
         under any applicable Federal or state bankruptcy, insolvency or other
         similar law now or hereafter in effect, (B) the entry of an order for
         relief in an involuntary case against the Issuer under any such law,
         (C) the consent by the Issuer to the entry of any such order for
         relief, (D) the consent by the Issuer to the appointment or taking
         possession by a receiver, liquidator, assignee, custodian, trustee,
         sequestrator or similar official of the Issuer or for any substantial
         part of the Trust Estate, (E) the making by the Issuer of any general
         assignment for the benefit of creditors, (F) the failure by the Issuer
         generally to pay its debts as such debts become due, or (G) the taking
         of action by the Issuer in furtherance of any of the foregoing.

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

                  SECTION 5.02.  Rights upon Event of Default.

                  (a) If an Event of Default shall have occurred and be
continuing, the Notes shall become immediately due and payable at par, together
with accrued interest thereon. If an Event of Default shall have occurred and be
continuing, the Trustee may exercise any of the remedies specified in Section
5.04(a).

                  (b) If an Event of Default shall have occurred and be
continuing, the Trustee in its discretion may, or if so requested in writing by
the Controlling Noteholders shall, upon prior written notice to the Rating
Agencies, declare by written notice to the Issuer that the Notes become,
whereupon they shall become, immediately due and payable at par, together with
accrued interest thereon. Notwithstanding anything to the contrary in this
paragraph (b), if an Event of Default specified in Section 5.01(vi) or (vii)
shall occur and be continuing, the Notes shall become immediately due and
payable at par, together with accrued interest thereon.

                  SECTION 5.03. Collection of Indebtedness and Suits for
Enforcement by Trustee; Authority of Trustee.

                  (a) The Issuer covenants that if any Notes are accelerated
following the occurrence of an Event of Default, the Issuer will, upon demand of
the Trustee, pay to it, for the benefit of the Holders of such Notes, the whole
amount then due and payable on such Notes for principal and interest, with
interest upon the overdue principal, and, to the extent payment at such rate of
interest shall be legally enforceable, upon overdue installments of interest, at
the applicable Interest Rate and in addition thereto such further amount as
shall be sufficient to cover the costs and expenses of collection,

                                     - 33 -
<PAGE>   40

including the reasonable compensation, expenses, disbursements, indemnified
amounts and advances of the Trustee and its agents and counsel.

                  (b) If an Event of Default occurs and is continuing, the
Trustee may in its discretion, proceed to protect and enforce its rights and the
rights of the Noteholders, by such appropriate Proceedings as the Trustee shall
deem most effective to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid of
the exercise of any power granted herein, or to enforce any other proper remedy
or legal or equitable right vested in the Trustee by this Indenture or by law.

                  (c) Notwithstanding anything to the contrary contained in this
Indenture (including without limitation Sections 5.04(a), 5.12, 5.13 and 5.17)
if the Issuer fails to perform its obligations under Section 10.01 hereof when
and as due, the Trustee may in its discretion proceed to protect and enforce its
rights and the rights of the Noteholders by such appropriate Proceedings as the
Trustee shall deem most effective to protect and enforce any such rights,
whether for specific performance of any covenant or agreement in this Indenture
or in aid of the exercise of any power granted herein, or to enforce any other
proper remedy or legal or equitable right vested in the Trustee by this
Indenture or by law.

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

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

                                     - 34 -
<PAGE>   41

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

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

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

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

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

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

                  (g) In any Proceedings brought by the Trustee (including any
Proceedings involving the interpretation of any provision of this Indenture),
the Trustee shall be held to represent all the Holders of the Notes, and it
shall not be necessary to make any Noteholder a party to any such Proceedings.

                                     - 35 -
<PAGE>   42
                  SECTION 5.04. Remedies.

                  (a) If an Event of Default under Section 5.01(i), (ii), (iii),
(iv), (vi) or (vii) shall have occurred and be continuing which results in the
acceleration of the Notes (whether or not the Trust Estate is sold in one or
more public or private sales as provided in Section 5.04(d)(iv)), the Trustee
shall make payments on the Notes as provided in Section 5.06(a).

                  (b) If an Event of Default under Section 5.01(v) shall have
occurred and be continuing which results in the acceleration of the Notes
(whether or not the Trust Estate is sold in one or more public or private sales
as provided in Section 5.04(d)(iv)), the Trustee will make payments on the Notes
as provided in Section 5.06(b).

                  (c) If the Trustee, in compliance with Section 5.04(a) or (b),
is deemed to have a conflict of interest under the TIA and is required to resign
as Trustee hereunder, the Trustee, pursuant to Section 6.10, may appoint one or
more trustees to act separately hereunder for each class of Notes (in the case
of the Class A Notes, such trustee shall act for all Class A Notes as if they
comprised a single class). In the event separate trustees are appointed for one
or more classes of Notes:

                  (i) so long as any amounts remain unpaid with respect to the
         Class A Notes, only the Trustee for the Class A Noteholders shall be
         entitled to waive any Event of Default or Servicer Termination Event or
         exercise any remedies under this Indenture;

                  (ii) after the Class A Notes have been paid in full, only the
         Trustee for the Class M Noteholders shall be entitled to waive any
         Event of Default or Servicer Termination Event or exercise any remedies
         under this Indenture; and

                  (iii) after the Class M Notes have been paid in full, the
         Trustee for the Class B Noteholders shall be entitled to waive any
         Event of Default or Servicer Termination Event or exercise any remedies
         under this Indenture.

                  (d) If an Event of Default shall have occurred and be
continuing, the Trustee may (subject to Section 5.05):

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

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

                                     - 36 -
<PAGE>   43

                  (iii) exercise any remedies of a secured party under the UCC
         and any other remedy available to the Trustee and take any other
         appropriate action to protect and enforce the rights and remedies of
         the Noteholders; and

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

                           (A) the Trustee may not sell or otherwise liquidate
                  the Trust Estate following an Event of Default unless

                                    (I) such Event of Default is of the type
                           described in Section 5.01(i), (ii), (iii) or (iv), or

                                    (II) either

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

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

                                             (z) the Trustee determines that the
                                    Trust Estate will not continue to provide
                                    sufficient funds for the payment of
                                    principal of and interest on the Notes as
                                    they would have become due if the Notes had
                                    not been declared due and payable, and the
                                    Trustee provides prior written notice to the
                                    Rating Agencies and obtains the consent of
                                    the Controlling Noteholders.

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

                  SECTION 5.05. Optional Preservation of the Receivables. If any
Notes have been declared to be due and payable under Section 5.02 following an
Event of Default and such declaration and its consequences have not been
rescinded and annulled, the Trustee may, but need not, elect to maintain
possession of the Trust Estate. It is the desire of the parties hereto and the
Noteholders that there be at all times sufficient funds for the payment of
principal of and interest on the Notes, and the

                                     - 37 -
<PAGE>   44
Trustee shall take such desire into account when determining whether or not to
maintain possession of the Trust Estate. In determining whether to maintain
possession of the Trust Estate, the Trustee may, but need not, obtain and rely
upon an opinion of an Independent investment banking or accounting firm of
national reputation as to the feasibility of such proposed action and as to the
sufficiency of the Trust Estate for such purpose.

                  SECTION 5.06. Priorities.

                  (a) If the Trustee collects any money or property pursuant to
this Article V (including amounts on deposit in the Note Interest Distribution
Account and the Principal Distribution Account) following an Event of Default
described in Section 5.01(i), (ii), (iii), (iv), (vi) or (vii) and an
acceleration of the Notes pursuant to Section 5.02, the Trustee shall pay as
promptly as practicable out the money or property in the following order:

                  FIRST: amounts due and owing and required to be distributed by
         the Trust to the Servicer, the Owner Trustee, the Administrator, the
         Trustee, the Lockbox Bank and the Custodian, respectively, pursuant to
         priorities (i), (ii) and (iii) of Section 4.6 of the Sale and Servicing
         Agreement and not previously distributed, in the order of such
         priorities and without preference or priority of any kind within such
         priorities;

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

                  THIRD: to Class A-1 Noteholders for amounts due and unpaid on
         the Class A-1 Notes for principal, ratably, without preference or
         priority of any kind, according to the amounts due and payable on the
         Class A-1 Notes for principal;

                  FOURTH: to Class A-2 Noteholders and Class A-3 Noteholders for
         amounts due and unpaid on the Class A-2 Notes and Class A-3 Notes for
         principal, ratably, without preference or priority of any kind,
         according to the amounts due and payable on the Class A-2 Notes and
         Class A-3 Notes for principal;

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

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

                                     - 38 -
<PAGE>   45

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

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

                  (b) If the Trustee collects any money or property pursuant to
this Article V (including amounts on deposit in the Note Interest Distribution
Account and the Principal Distribution Account) following an Event of Default
described in Section 5.01(v) and an acceleration of the Notes pursuant to
Section 5.02, the Trustee shall pay as promptly as practicable out the money or
property in the following order:

                  FIRST: amounts due and owing and required to be distributed to
         the Servicer, the Owner Trustee, the Administrator, the Trustee, the
         Lockbox Bank, and the Custodian, respectively, pursuant to priorities
         (a), (b) and (c) of Section 4.6 of the Sale and Servicing Agreement and
         not previously distributed, in the order of such priorities and without
         preference or priority of any kind within such priorities;

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

                  THIRD: to the Class A Noteholders (sequentially, commencing
         with the Class A-1 Noteholders), the First Priority Principal
         Distribution Amount (as defined in the Sale and Servicing Agreement),
         if any;

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

                  FIFTH: to the Class A Noteholders (sequentially, commencing
         with the Class A-1 Noteholders) until the Outstanding Amount of the
         Class A Notes is reduced to zero and then to the Class M Noteholders,
         the Second Priority Principal Distribution Amount (as defined in the
         Sale and Servicing Agreement), if any;

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

                                     - 39 -
<PAGE>   46

                  SEVENTH: to Class A Noteholders (sequentially, commencing with
         the Class A-1 Noteholders) for amounts due and unpaid on the Class A
         Notes for principal, ratably, without preference or priority of any
         kind, according to the amounts due and payable on the Class A Notes for
         principal;

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

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

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

                  SECTION 5.07. Limitation of Suits. No Holder of any Note shall
have any right to institute any Proceeding, judicial or otherwise, with respect
to this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless:

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

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

                  (iii) such Holder or Holders have offered to the Trustee
         reasonable indemnity against the costs, expenses and liabilities to be
         incurred in complying with such request;

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

                  (v) no direction inconsistent with such written request has
         been given to the Trustee during such 60-day period by the Controlling
         Noteholders;

it being understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or

                                     - 40 -
<PAGE>   47

prejudice the rights of any other Holders of Notes or to obtain or to seek to
obtain priority or preference over any other Holders or to enforce any right
under this Indenture, except in the manner herein provided.

                  In the event the Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of Notes,
neither representing the Controlling Noteholders, the Trustee in its sole
discretion may determine what action, if any, shall be taken, notwithstanding
any other provisions of this Indenture.

                  SECTION 5.08. Unconditional Rights of Noteholders To Receive
Principal and Interest. Notwithstanding any other provisions in this Indenture,
the Holder of any Note shall have the right, which is absolute and
unconditional, to receive payment of the principal of and interest on such Note
on or after the respective due dates thereof expressed in such Note or in this
Indenture (or, in the case of redemption, on or after the Redemption Date) and
to institute suit for the enforcement of any such payment, and such right shall
not be impaired without the consent of such Holder; provided, that the Holder or
Owner of a Class M Note will be deemed to have consented to any delay in payment
thereto of any interest due thereon that is in accordance with the payment of
interest pursuant to Section 4.6 of the Sale and Servicing Agreement and to have
waived its right to institute suit for enforcement of any such payment for so
long as any Class A Note is Outstanding, and each Holder or Owner of a Class B
Note will be deemed to have consented to any delay in the payment thereto of any
interest due thereon that is in accordance with payments of amounts pursuant to
Section 4.6 of the Sale and Servicing Agreement and to have waived its right to
institute suit for enforcement of any such payment for so long as any Class M
Note is Outstanding.

                  SECTION 5.09. Restoration of Rights and Remedies. If any
Noteholder has instituted any Proceeding to enforce any right or remedy under
this Indenture and such Proceeding has been discontinued or abandoned for any
reason or has been determined adversely to the Trustee or to such Noteholder,
then and in every such case the Issuer, the Trustee and the Noteholders shall,
subject to any determination in such Proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Trustee and the Noteholders shall continue as though no such
Proceeding had been instituted.

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

                                     - 41 -
<PAGE>   48

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

                  SECTION 5.12. Control by Controlling Noteholders. The
Controlling Noteholders shall have the right to direct the time, method and
place of conducting any Proceeding for any remedy available to the Trustee with
respect to the Notes or exercising any trust or power conferred on the Trustee;
provided that

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

                  (ii) subject to the express terms of Section 5.04, any
         direction to the Trustee to sell or liquidate all or any portion of the
         Trust Estate shall be by the Holders of Notes representing not less
         than 100% of the Outstanding Amount of the Notes;

                  (iii) if the conditions set forth in Section 5.05 have been
         satisfied and the Trustee elects to retain the Trust Estate pursuant to
         such Section, then any direction to the Trustee by Holders of Notes
         representing less than 100% of the Outstanding Amount of the Notes to
         sell or liquidate all or any portion of the Trust Estate shall be of no
         force and effect; and

                  (iv) the Trustee may take any other action deemed proper by
         the Trustee that is not inconsistent with such direction; provided,
         however, that, subject to Section 6.01, the Trustee need not take any
         action that it determines might involve it in liability or might
         materially and adversely affect the rights of any Noteholders not
         consenting to such action.

                  SECTION 5.13. Waiver of Past Defaults.

                  The Controlling Noteholders may waive any past Default or
Event of Default and its consequences except a Default (a) in payment of
principal of or interest on any of the Notes or (b) in respect of a covenant or
provision hereof which cannot be modified or amended without the consent of the
Holder of each Note. In the case of any such waiver, the Issuer, the Trustee and
the Holders of the Notes shall be restored to their former positions and rights
hereunder, respectively; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereto.

                  Upon any such waiver, such Default shall cease to exist and be
deemed to have been cured and not to have occurred, and any Event of Default
arising therefrom shall be deemed to have

                                     - 42 -
<PAGE>   49
been cured and not to have occurred, for every purpose of this Indenture; but no
such waiver shall extend to any subsequent or other Default or Event of Default
or impair any right consequent thereto.

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

                  SECTION 5.15. Waiver of Stay or Extension Laws. The Issuer
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead or in any manner whatsoever, claim or take the
benefit or advantage of, any stay or extension law wherever enacted, now or at
any time hereafter in force, that may affect the covenants or the performance of
this Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantages of any such law, and covenants that
it will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.

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

                  SECTION 5.17. Performance and Enforcement of Certain
Obligations.

                  (a) Promptly following a request from the Trustee to do so and
at the Seller's expense, the Issuer agrees to take all such lawful action as the
Trustee may request to compel or secure the performance and observance by the
Seller, the Servicer and AFL, as applicable, of each of their obligations to the
Issuer under or in connection with the Sale and Servicing Agreement or to the
Seller under or in connection with the Purchase Agreement in accordance with the
terms thereof, and to

                                     - 43 -
<PAGE>   50
exercise any and all rights, remedies, powers and privileges lawfully available
to the Issuer under or in connection with the Sale and Servicing Agreement to
the extent and in the manner directed by the Trustee, including the transmission
of notices of default on the part of the Seller or the Servicer thereunder and
the institution of legal or administrative actions or proceedings to compel or
secure performance by the Seller or the Servicer of each of their obligations
under the Sale and Servicing Agreement.

                  (b) If an Event of Default has occurred and is continuing, the
Trustee may, and at the direction (which direction shall be in writing,
including facsimile) of the Controlling Noteholders shall, upon the receipt of
such indemnity as the Trustee may reasonably request, exercise all rights,
remedies, powers, privileges and claims of the Issuer against the Seller or the
Servicer under or in connection with the Sale and Servicing Agreement, including
the right or power to take any action to compel or secure performance or
observance by the Seller or the Servicer of each of their obligations to the
Issuer thereunder and to give any consent, request, notice, direction, approval,
extension or waiver under the Sale and Servicing Agreement, and any right of the
Issuer to take such action shall be suspended.

                  (c) Promptly following a request from the Trustee to do so and
at the Seller's expense, the Issuer agrees to take all such lawful action as the
Trustee may request to compel or secure the performance and observance by AFL of
each of its obligations to the Seller under or in connection with the Purchase
Agreement in accordance with the terms thereof, and to exercise any and all
rights, remedies, powers and privileges lawfully available to the Issuer under
or in connection with the Purchase Agreement to the extent and in the manner
directed by the Trustee, including the transmission of notices of default on the
part of the Seller thereunder and the institution of legal or administrative
actions or proceedings to compel or secure performance by AFL of each of its
obligations under the Purchase Agreement.

                  (d) If an Event of Default has occurred and is continuing the
Trustee may, and at the direction (which direction shall be in writing,
including facsimile) of the Controlling Noteholders shall, upon the receipt of
such indemnity as the Trustee may reasonably request, exercise all rights,
remedies, powers, privileges and claims of the Seller against AFL under or in
connection with the Purchase Agreement, including the right or power to take any
action to compel or secure performance or observance by AFL of each of its
obligations to the Seller hereunder and to give any consent, request, notice,
direction, approval, extension or waiver under the Purchase Agreement, and any
right of the Seller to take such action shall be suspended.

                                     - 44 -
<PAGE>   51
                                   ARTICLE VI

                                   THE TRUSTEE

                  SECTION 6.01. Duties of Trustee.

                  (a) If an Event of Default of which a Responsible Officer of
the Trustee shall have actual knowledge has occurred and is continuing, the
Trustee shall exercise the rights and powers vested in it by this Indenture and
in the same degree of care and skill in their exercise as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.

                  (b) Except during the continuance of an Event of Default of
which a Responsible Officer of the Trustee shall have actual knowledge:

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

                  (ii) prior to the occurrence of a Event of Default of which a
         Responsible Officer of the Trustee shall have actual knowledge, and
         after the curing or waiver of all such Events of Default which may have
         occurred, (A) the duties and obligations of the Trustee shall be
         determined solely by the express provisions of this Indenture, (B) the
         Trustee shall not be liable except for the performance of such duties
         and obligations as are specifically set forth in this Indenture, (C) no
         implied covenants or obligations shall be read into this Indenture
         against the Trustee and (D) in the absence of bad faith on its part,
         the Trustee may conclusively rely, as to the truth of the statements
         and the correctness of the opinions expressed therein, upon all
         resolutions, statements, reports, documents, orders, certificates or
         opinions furnished to the Trustee and conforming to the requirements of
         this Indenture; provided, however, that the Trustee shall examine the
         certificates and opinions to determine whether or not they conform to
         the requirements of this Indenture and the Trustee's other Related
         Documents. If any such instrument is found not to conform in any
         material respect to the requirements of this Indenture or any
         applicable Related Document, the Trustee shall notify the Noteholders
         of such instrument in the event the Trustee, after so requesting, does
         not receive a satisfactorily corrected document.

                  (c) The Trustee may not be relieved from liability in its
individual capacity from liability to the Noteholders for its willful
misconduct, negligence or bad faith in connection with the distribution of
amounts from the Note Interest Distribution Account or the Principal
Distribution Account in accordance with the terms hereof, or for its willful
misconduct, negligence or bad faith in the performance of its duties as Trustee
hereunder, except that:

                                     - 45 -
<PAGE>   52

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

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

                  (iii) the Trustee shall not be liable with respect to any
         action it takes or omits to take in good faith in accordance with a
         direction received by it pursuant to Section 5.12 or relating to the
         time, method and place of conducting any proceeding for any remedy
         available to the Trustee, or executing or omitting to execute any power
         conferred upon the Trustee, under this Agreement.

                  (d) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.

                  (e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Issuer.

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

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

                  (h) Every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.

                  (i) In no event shall the Trustee be required to perform, or
be responsible for the manner of performance of, any of the obligations of the
Servicer, or any other party, under the Sale and Servicing Agreement, except
during such time, if any, as the Trustee shall be the successor to, and be
vested with the rights, powers, duties and privileges of the Servicer in
accordance with the terms of, the Sale and Servicing Agreement.

                  (j) The Trustee shall, and hereby agrees that it will, perform
all of the obligations and duties required of it under the Sale and Servicing
Agreement.

                                     - 46 -
<PAGE>   53

                  (k) Without limiting the generality of this Section 6.01, the
Trustee shall have no duty (i) to see to any recording, filing or depositing of
this Indenture or any agreement referred to herein or any financing statement
evidencing a security interest in the Financed Vehicles, or to see to the
maintenance of any such recording or filing or depositing or to any recording,
refiling or redepositing of any thereof, (ii) to see to any insurance of the
Financed Vehicles or Obligors or to effect or maintain any such insurance, (iii)
to see to the payment or discharge of any tax, assessment or other governmental
charge or any Lien or encumbrance of any kind owing with respect to, assessed or
levied against any part of the Trust, (iv) to confirm or verify the contents of
any reports or certificates delivered to the Trustee pursuant to this Indenture
or the Sale and Servicing Agreement believed by the Trustee to be genuine and to
have been signed or presented by the proper party or parties, or (v) to inspect
the Financed Vehicles at any time or ascertain or inquire as to the performance
of observance of any of the Issuer's, the Seller's or the Servicer's
representations, warranties or covenants or the Servicer's duties and
obligations as Servicer and as custodian of the Receivable Files under the
Agreement.

                  (l) The Trustee shall not be required to take notice or be
deemed to have notice or knowledge of an Event of Default or any other default
under this Indenture unless a Responsible Officer of the Trustee shall have
received written notice thereof. In the absence of receipt of such notice, the
Trustee may conclusively assume that there is no Event of Default or other such
default.

                  SECTION 6.02. Rights of Trustee.

                  (a) The Trustee may rely and shall be protected in acting or
refraining from acting upon any document believed by it to be genuine and to
have been signed or presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document.

                  (b) Before the Trustee acts or refrains from acting, it may
require an Officer's Certificate (with respect to factual matters) or an Opinion
of Counsel, as applicable, which shall not be at the expense of the Trustee. The
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on the Officer's Certificate or Opinion of Counsel, as
applicable, or as directed by the requisite amount of Note Owners as provided
herein.

                  (c) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian or nominee, and the Trustee shall not be
responsible for any misconduct or negligence on the part of, or for the
supervision of, any such agent, attorney, custodian or nominee appointed with
due care by it hereunder.

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

                                     - 47 -
<PAGE>   54

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

                  (f) The Trustee shall be under no obligation to institute,
conduct or defend any litigation under this Indenture or the Related Documents
or in relation to this Indenture, at the request, order or direction of any of
the Holders of Notes, pursuant to the provisions of this Indenture, unless such
Holders of Notes shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities that may be incurred
therein or thereby; provided, however, that the Trustee shall, upon the
occurrence of an Event of Default (that has not been cured or waived), exercise
the rights and powers vested in it by this Indenture with reasonable care and
skill.

                  (g) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond or
other paper or document, unless requested in writing to do so by the Holders of
Notes evidencing not less than 25% of the Outstanding Amount thereof; provided,
however, that if the payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured to the
Trustee by the security afforded to it by the terms of this Indenture or the
Sale and Servicing Agreement, the Trustee may require reasonable indemnity
against such cost, expense or liability as a condition to so proceeding; the
reasonable expense of every such examination shall be paid by the Person making
such request, or, if paid by the Trustee, shall be reimbursed by the Person
making such request upon demand.

                  (h) The right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the Trustee
shall not be answerable for other than its negligence or willful misconduct in
the performance of such act.

                  (i) The Trustee shall not be required to give any bond or
surety in respect of the execution of the Trust or the Trust Estate created
hereby or the powers granted hereunder.

                  SECTION 6.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Notes and
may otherwise deal with the Issuer or its Affiliates with the same rights it
would have if it were not Trustee. Any Paying Agent, Note Registrar,
co-registrar or co-paying agent may do the same with like rights. However, the
Trustee is required to comply with Sections 6.11 and 6.12.

                                     - 48 -
<PAGE>   55

                  SECTION 6.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture, the Related Documents, the Trust Estate or the Notes, it shall
not be accountable for the Issuer's use of the proceeds from the Notes, and it
shall not be responsible for any statement of the Issuer in the Indenture or in
any document issued in connection with the sale of the Notes or in the Notes
other than the Trustee's certificate of authentication.

                  SECTION 6.05. Notice of Defaults. If a Default occurs and is
continuing and if it is known to a Responsible Officer of the Trustee, the
Trustee shall mail to each Noteholder notice of the Default within 90 days after
it occurs. Except in the case of a Default in payment of principal of or
interest on any Note (including payments pursuant to the mandatory redemption
provisions of such Note), the Trustee may withhold the notice if and so long as
a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of Noteholders.

                  SECTION 6.06. Reports by Trustee to Holders. The Trustee shall
deliver to each Noteholder such information as may be required to enable such
holder to prepare its federal and state income tax returns.

                  SECTION 6.07.  Compensation and Indemnity.

                  (a) AFL in a separate letter agreement (the "Letter
Agreement") has covenanted and agreed to pay to the Trustee, and the Trustee
shall be entitled to, certain fees, which shall not be limited by any law on
compensation of a trustee of an express trust. In the Letter Agreement, AFL has
also agreed to reimburse the Trustee for all reasonable out-of-pocket expenses
incurred or made by it, including costs of collection, in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the Trustee's agents,
counsel, accountants and experts. AFL has also agreed to indemnify the Trustee
and any director, officer, employee or agent of the Trustee against any and all
loss, liability or expense (including attorneys' fees) incurred by it in
connection with the administration of this trust and the performance of its
duties hereunder.

                  (b) If notwithstanding the provisions of the Letter Agreement,
AFL fails to pay any fee, expense or indemnified amount due to the Trustee
pursuant to the terms of the Letter Agreement, the Trustee shall be entitled to
a distribution in respect of such amount pursuant of Section 4.6(ii) of the Sale
and Servicing Agreement. The Issuer's payment obligations to the Trustee
pursuant to this Section shall survive the discharge of this Indenture and the
removal or resignation of the Trustee. When the Trustee incurs expenses after
the occurrence of a Default specified in Section 5.01(vi) or (vii) with respect
to the Issuer, the expenses are intended to constitute expenses of
administration under Title 11 of the United States Code or any other applicable
Federal or state bankruptcy, insolvency or similar law. Notwithstanding anything
else set forth in this Indenture or the Related Documents, the Trustee

                                     - 49 -
<PAGE>   56
agrees that the obligations of the Issuer (but not AFL) to the Trustee hereunder
and under the Related Documents shall be recourse to the Trust Estate only. In
addition, the Trustee agrees that its recourse to the Issuer, the Trust Estate
and the Seller shall be limited to the right to receive the distributions
referred to in the first two sentences of this Section 6.07(b).

                  SECTION 6.08. Replacement of Trustee. The Trustee may resign
at any time by so notifying the Issuer. The Issuer may remove the Trustee if:

                  (i) the Trustee fails to comply with Section 6.11;

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

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

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

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

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

                  If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), the Issuer shall promptly appoint a
successor Trustee.

                                     - 50 -
<PAGE>   57
                  A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuer. Thereupon the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its succession to
Noteholders. The retiring Trustee shall promptly transfer all property held by
it as Trustee to the successor Trustee.

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

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

                  Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor Trustee
pursuant to this Section and payment of all fees and expenses owed to the
outgoing Trustee. Notwithstanding the replacement of the Trustee pursuant to
this Section, the retiring Trustee shall be entitled to payment or reimbursement
of such amounts as such Person is entitled pursuant to Section 6.07.

                  SECTION 6.09. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee. The Trustee shall provide the Rating
Agencies prompt notice of any such transaction.

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

                  SECTION 6.10. Appointment of Co-Trustee or Separate Trustee.

                  (a) Notwithstanding any other provisions of this Indenture, at
any time, for the purpose of meeting any legal requirement of any jurisdiction
in which any part of the Trust may at the

                                     - 51 -
<PAGE>   58
time be located, the Trustee, shall have the power and may execute and deliver
all instruments to appoint one or more Persons to act as a co-trustee or
co-trustees, or separate trustee or separate trustees, of all or any part of the
Trust, and to vest in such Person or Persons, in such capacity and for the
benefit of the Noteholders, such title to the Trust, or any part hereof, and,
subject to the other provisions of this Section, such powers, duties,
obligations, rights and trusts as the Trustee may consider necessary or
desirable. No co-trustee or separate trustee hereunder shall be required to meet
the terms of eligibility as a successor Trustee under Section 6.11 and no notice
to Noteholders of the appointment of any co-trustee or separate trustee shall be
required under Section 6.08 hereof.

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

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

                  (ii) no trustee hereunder shall be personally liable by reason
         of any act or omission of any other trustee hereunder; and

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

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

                  (d) Any separate trustee or co-trustee may at any time
constitute the Trustee, its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any

                                     - 52 -
<PAGE>   59
lawful act under or in respect of this Agreement on its behalf and in its name.
If any separate trustee or co-trustee shall die, become incapable of acting,
resign or be removed, all of its estates, properties, rights, remedies and
trusts shall vest in and be exercised by the Trustee, to the extent permitted by
law, without the appointment of a new or successor trustee.

                  SECTION 6.11. Eligibility; Disqualification. The Trustee shall
at all times satisfy the requirements of TIA Section 310(a). The Trustee shall
have a combined capital and surplus of at least $50,000,000 as set forth in its
most recent published annual report of condition. The Trustee shall comply with
TIA Section 310(b), including the optional provision permitted by the second
sentence of TIA Section 310(b)(9); provided, however, that there shall be
excluded from the operation of TIA Section 310(b)(1) any indenture or indentures
under which other securities of the Issuer are outstanding if the requirements
for such exclusion set forth in TIA Section 310(b)(1) are met.

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

                                   ARTICLE VII

                         NOTEHOLDERS' LISTS AND REPORTS

                  SECTION 7.01. Issuer To Furnish Trustee Names and Addresses to
Noteholders. The Issuer will furnish or cause to be furnished to the Trustee (a)
not more than five days after the earlier of (i) each Record Date and (ii) three
months after the last Record Date, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Holders of Notes as of
such Record Date, and (b) at such other times as the Trustee may request in
writing, within 30 days after receipt by the Issuer of any such request, a list
of similar form and content as of a date not more than 10 days prior to the time
such list is furnished; provided, however, that so long as the Trustee is the
Note Registrar, no such list shall be required to be furnished.

                  SECTION 7.02. Preservation of Information; Communications to
Noteholders.

                  (a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders of Notes
contained in the most recent list furnished to the Trustee as provided in
Section 7.01 and the names and addresses of Holders of Notes received by the
Trustee in its capacity as Note Registrar. The Trustee may destroy any list
furnished to it as provided in such Section 7.01 upon receipt of a new list so
furnished.

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

                                     - 53 -
<PAGE>   60
                  (c) The Issuer, the Trustee and the Note Registrar shall have
the protection of TIA Section 312(c).

                  SECTION 7.03. Reports by Issuer.

                  (a) The Issuer shall:

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

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

                  (iii) supply to the Trustee (and the Trustee shall transmit by
         mail to all Noteholders described in TIA Section 313(c)) such summaries
         of any information, documents and reports required to be filed by the
         Issuer pursuant to clauses (i) and (ii) of this Section 7.03(a) as may
         be required by rules and regulations prescribed from time to time by
         the Commission.

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

                  SECTION 7.04. Reports by Trustee. If required by TIA Section
313(a), within 60 days after each March 31, beginning with March 31, 2001, the
Trustee shall mail to each Noteholder as required by TIA Section 313(c) a brief
report dated as of such date that complies with TIA Section 313(a). The Trustee
also shall comply with TIA Section 313(b).

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

                                     - 54 -
<PAGE>   61

                                  ARTICLE VIII

                      ACCOUNTS, DISBURSEMENTS AND RELEASES

                  SECTION 8.01. Collection of Money. Except as otherwise
expressly provided herein, the Trustee may demand payment or delivery of, and
shall receive and collect, directly and without intervention or assistance of
any fiscal agent or other intermediary, all money and other property payable to
or receivable by the Trustee pursuant to this Indenture as instructed in writing
by the Servicer. The Trustee shall apply all such money received by it as
provided in this Indenture. Except as otherwise expressly provided in this
Indenture, if any default occurs in the making of any payment or performance
under any agreement or instrument that is part of this Indenture or the Notes,
the Trustee may take such action as may be appropriate to enforce such payment
or performance, including the institution and prosecution of appropriate
Proceedings. Any such action shall be without prejudice to any right to claim a
Default or Event of Default under this Indenture and any right to proceed
thereafter as provided in Article V.

                  SECTION 8.02. Trust Accounts.

                  (a) On or prior to the Closing Date, the Issuer shall cause
the Servicer to establish and maintain, in the name of the Trustee, for the
benefit of the Noteholders, the Trust Accounts as provided in Section 4.1 of the
Sale and Servicing Agreement.

                  (b) On each Payment Date and Redemption Date except following
an Event of Default and an acceleration of the Notes pursuant to Section 5.02,
the Trustee shall distribute all amounts on deposit in the Note Interest
Distribution Account to Noteholders in respect of the Notes to pay all accrued
and unpaid interest on the Notes in the following amounts and in the following
order of priority as directed in writing by the Servicer:

                  (i) accrued and unpaid interest on the Class A Notes, provided
         that if funds in the Note Interest Distribution Account are not
         sufficient to pay the entire amount of accrued but unpaid interest on
         each class of Class A Notes, the amount in the Note Interest
         Distribution Account shall be applied to the payment of such interest
         on each class of Class A Notes pro rata on the basis of the amount of
         accrued and unpaid interest on each class of Class A Notes;

                  (ii) accrued and unpaid interest on the Class M Notes; and

                  (iii) accrued and unpaid interest on the Class B Notes;

                  (c) On each Payment Date and Redemption Date except following
an Event of Default and an acceleration of the Notes pursuant to Section 5.02,
the Trustee shall distribute all

                                     - 55 -
<PAGE>   62
amounts in the Principal Distribution Account in the following amounts and in
the following order of priority as directed in writing by the Servicer:

                  (i) to the Holders of the Class A-1 Notes in reduction of the
         Outstanding Amount of the Class A-1 Notes until the Outstanding Amount
         of the Class A-1 Notes is reduced to zero;

                  (ii) to the Holders of the Class A-2 Notes in reduction of the
         Outstanding Amount of the Class A-2 Notes until the Outstanding Amount
         of the Class A-2 Notes is reduced to zero;

                  (iii) to the Holders of the Class A-3 Notes in reduction of
         the Outstanding Amount of the Class A-3 Notes until the Outstanding
         Amount of the Class A-3 Notes is reduced to zero;

                  (iv) to the Holders of the Class M Notes in reduction of the
         Outstanding Amount of the Class M Notes until the Outstanding Amount of
         the Class M Notes is reduced to zero; and

                  (v) to the Holders of the Class B Notes in reduction of the
         Outstanding Amount of the Class B Notes until the Outstanding Amount of
         the Class B Notes is reduced to zero;

                  (vi) to the Certificate Distribution Account for distribution
         to the Certificateholder.

                  SECTION 8.03. General Provisions Regarding Accounts.

                  (a) So long as no Default or Event of Default shall have
occurred and be continuing, all or a portion of the funds in the Trust Accounts
shall be invested and reinvested in Eligible Investments in accordance with the
provisions of Section 4.1(f) of the Sale and Servicing Agreement. All income or
other gain from investments of monies deposited in the Trust Accounts, net of
losses, shall be deposited (or caused to be deposited) by the Trustee in the
Collection Account; provided, however, that all income or other gain from
investments of monies deposited in the Reserve Account, net of losses, shall be
deposited in the Reserve Account. The Issuer will not direct the Trustee to make
any investment of any funds or to sell any investment held in any of the Trust
Accounts unless the security interest granted and perfected in such accounts
will continue to be perfected in such investment or the proceeds of such sale,
in either case without any further action by any Person, and, in connection with
any direction to the Trustee to make any such investment or sale, if requested
by the Trustee, the Issuer shall deliver to the Trustee an Opinion of Counsel,
acceptable to the Trustee, to such effect.

                  (b) If (i) the Issuer shall have failed to give investment
directions for any funds on deposit in the Trust Accounts to the Trustee by
11:00 a.m. Eastern Time (or such other time as may be

                                     - 56 -
<PAGE>   63
agreed by the Issuer and Trustee) on any Business Day; or (ii) a Default or
Event of Default shall have occurred and be continuing with respect to the Notes
but the Notes shall not have been declared due and payable pursuant to Section
5.02, or (iii) if such Notes shall have been declared due and payable following
an Event of Default but amounts collected or receivable from the Trust Estate
are being applied in accordance with Section 5.06 as if there had not been such
a declaration; then the Trustee shall, to the fullest extent practicable, invest
and reinvest funds in the Trust Accounts in one or more investments under clause
(f) of the definition of Eligible Investments.

                  (c) Subject to Section 6.01(c), the Trustee shall not in any
way be held liable by reason of any insufficiency in any of the Trust Accounts
resulting from any loss on any Eligible Investment included therein except for
losses attributable to the Trustee's failure to make payments on such Eligible
Investments issued by the Trustee, in its commercial capacity as principal
obligor and not as Trustee, in accordance with their terms.

                                   ARTICLE IX

                             SUPPLEMENTAL INDENTURES

                  SECTION 9.01. Supplemental Indentures Without Consent of
Noteholders.

                  (a) Without the consent of the Holders of any Notes and with
prior notice to the Rating Agencies, the Issuer and the Trustee, when authorized
by an Issuer Order, at any time and from time to time, may enter into one or
more indentures supplemental hereto (which shall conform to the provisions of
the Trust Indenture Act as in force at the date of the execution thereof), in
form satisfactory to the Trustee, for any of the following purposes:

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

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

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

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

                                     - 57 -
<PAGE>   64

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

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

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

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

                  (b) The Issuer and the Trustee, when authorized by an Issuer
Order, may, also without the consent of any of the Holders of the Notes and with
prior notice to the Rating Agencies, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to, or changing in
any manner or eliminating any of the provisions of, this Indenture or of
modifying in any manner the rights of the Holders of the Notes under this
Indenture; provided, however, that such action shall not, as evidenced by an
Opinion of Counsel, adversely affect in any material respect the interests of
any Noteholder; and provided, further, that any amendment within the scope of
Section 9.02(i)-(vii) below shall be deemed to materially and adversely affect
the interests of the Noteholders.

                  SECTION 9.02. Supplemental Indentures With Consent of
Noteholders. The Issuer and the Trustee, when authorized by an Issuer Order,
also may, with prior notice to the Rating Agencies, and with the consent of the
Holders of not less than a majority of the Outstanding Amount of each class of
Notes, by Act of such Holders delivered to the Issuer and the Trustee, enter
into an indenture or indentures supplemental hereto for the purpose of adding
any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture or of modifying in any manner the rights of the
Holders of the Notes under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Note affected thereby:

                  (i) change the date of payment of any installment of principal
         of or interest on any Note, or reduce the principal amount thereof, the
         interest rate thereon or the Redemption Price

                                     - 58 -
<PAGE>   65
         with respect thereto, change the provision of this Indenture relating
         to the application of collections on, or the proceeds of the sale of,
         the Trust Estate to payment of principal of or interest on the Notes,
         or change any place of payment where, or the coin or currency in which,
         any Note or the interest thereon is payable, or impair the right to
         institute suit for the enforcement of the provisions of this Indenture
         requiring the application of funds available therefor, as provided in
         Article V, to the payment of any such amount due on the Notes on or
         after the respective due dates thereof (or, in the case of redemption,
         on or after the Redemption Date);

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

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

                  (iv) reduce the percentage of the Outstanding Amount of the
         Notes required to direct the Trustee to direct the Issuer to sell or
         liquidate the Trust Estate pursuant to Section 5.04;

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

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

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

                  The Trustee may in its discretion determine whether or not any
Notes would be affected by any supplemental indenture, and any such
determination shall be conclusive upon the

                                     - 59 -
<PAGE>   66
Holders of all Notes, whether theretofore or thereafter authenticated and
delivered hereunder. The Trustee shall not be liable for any such determination
made in good faith.

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

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

                  SECTION 9.03. Execution of Supplemental Indentures. In
executing, or permitting the additional trusts created by, any supplemental
indenture permitted by this Article IX or the modifications thereby of the
trusts created by this Indenture, the Trustee shall be entitled to receive, and
subject to Sections 6.01 and 6.02 shall be fully protected in relying upon, an
Opinion of Counsel (which shall not be at the expense of the Trustee) stating
that the execution of such supplemental indenture is authorized or permitted by
this Indenture. The Trustee may, but shall not be obligated to, enter into any
such supplemental indenture that affects the Trustee's own rights, duties,
liabilities or immunities under this Indenture or otherwise.

                  SECTION 9.04. Effect of Supplemental Indenture. Upon the
execution of any supplemental indenture pursuant to the provisions hereof, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith with respect to the Notes affected thereby, and the respective rights,
limitations of rights, obligations, duties, liabilities and immunities under
this Indenture of the Trustee, the Issuer and the Holders of the Notes shall
thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.

                  SECTION 9.05. Conformity With Trust Indenture Act. Every
amendment of this Indenture and every supplemental indenture executed pursuant
to this Article IX shall conform to the requirements of the Trust Indenture Act
as then in effect so long as this Indenture shall then be qualified under the
Trust Indenture Act.

                  SECTION 9.06. Reference in Notes to Supplemental Indentures.
Notes authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article IX may, and if required by the Trustee shall,
bear a notation in form approved by the Trustee as to any matter provided for in
such supplemental indenture. If the Issuer or the Trustee shall so determine,
new

                                     - 60 -
<PAGE>   67
notes so modified as to conform, in the opinion of the Trustee and the Issuer,
to any such supplemental indenture may be prepared and executed by the Issuer
and authenticated and delivered by the Trustee in exchange for Outstanding
Notes.

                                    ARTICLE X

                               REDEMPTION OF NOTES

                  SECTION 10.01. Redemption. In the event that the Servicer
pursuant to Section 9.1(a) of the Sale and Servicing Agreement purchases the
corpus of the Trust, the Notes are subject to redemption in whole, but not in
part, on the Payment Date on which such repurchase occurs, for a purchase price
equal to the Redemption Price; provided, however, that the Issuer has available
funds sufficient to pay the Redemption Price. The Seller, the Servicer or the
Issuer shall furnish the Trustee, Owner Trustee and the Rating Agencies with
written notice of such redemption. If the Notes are to be redeemed pursuant to
this Section 10.01, the Servicer or the Issuer shall furnish notice of such
election to the Trustee not later than 25 days prior to the Redemption Date, and
the Issuer shall deposit with the Trustee in the Note Interest Distribution
Account and the Principal Distribution Account the Redemption Price of the Notes
to be redeemed, whereupon all such Notes shall be due and payable on the
Redemption Date upon the furnishing of a notice complying with Section 10.02 to
each Holder of the Notes.

                  SECTION 10.02. Form of Redemption Notice. Notice of redemption
under Section 10.01 shall be given by the Trustee by first-class mail, postage
prepaid, mailed not less than five days prior to the applicable Redemption Date
to each Holder of Notes, as of the close of business on the Record Date with
respect to the Payment Date immediately preceding the applicable Redemption
Date, at such Holder's address appearing in the Note Register.

                  All notices of redemption shall state:

                  (i) the Redemption Date;

                  (ii) the Redemption Price; and

                  (iii) the place where such Notes are to be surrendered for
         payment of the Redemption Price (which shall be the office or agency of
         the Issuer to be maintained as provided in Section 3.02).

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

                                     - 61 -
<PAGE>   68

                  SECTION 10.03. Notes Payable on Redemption Date. The Notes or
portions thereof to be redeemed shall, following notice of redemption (if any)
as required by Section 10.02, on the Redemption Date become due and payable at
the Redemption Price and (unless the Issuer shall default in the payment of the
Redemption Price) no interest shall accrue on the Redemption Price for any
period after the date to which accrued interest is calculated for purposes of
calculating the Redemption Price.

                                   ARTICLE XI

                                  MISCELLANEOUS

                  SECTION 11.01. Compliance Certificates and Opinions, etc.

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

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

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

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

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

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

                                     - 62 -
<PAGE>   69

                  (b) (i) Prior to the deposit of any Collateral or other
         property or securities with the Trustee that is to be made the basis
         for the release of any property subject to the Lien created by this
         Indenture, the Issuer shall, in addition to any obligation imposed in
         Section 11.01(a) or elsewhere in this Indenture, furnish to the Trustee
         an Officer's Certificate certifying or stating the opinion of each
         person signing such certificate as to the fair value (within 90 days of
         such deposit) to the Issuer of the Collateral or other property or
         securities to be so deposited.

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

                  (iii) Other than with respect to any release described in
         clause (A) or (B) of Section 11.01(b)(v), whenever any property or
         securities are to be released from the Lien created by this Indenture,
         the Issuer shall also furnish to the Trustee an Officer's Certificate
         certifying or stating the opinion of each person signing such
         certificate as to the fair value (within 90 days of such release) of
         the property or securities proposed to be released and stating that in
         the opinion of such person the proposed release will not impair the
         security created by this Indenture in contravention of the provisions
         hereof.

                  (iv) Whenever the Issuer is required to furnish to the Trustee
         an Officer's Certificate certifying or stating the opinion of any
         signer thereof as to the matters described in clause (iii) above, the
         Issuer shall also furnish to the Trustee an Independent Certificate as
         to the same matters if the fair value of the property or securities and
         of all other property or securities (other than property described in
         clauses (A) or (B) of Section 11.01(b)(v)) released from the lien
         created by this Indenture since the commencement of the then current
         fiscal year, as set forth in the certificates required by clause (iii)
         above and this clause (iv), equals 10% or more of the Outstanding
         Amount of the Notes, but such certificate need not be furnished in the
         case of any release of property or securities if the fair value thereof
         as set forth in the related Officer's Certificate is less than $25,000
         or less than one percent of the then Outstanding Amount of the Notes.

                  (v) Notwithstanding any other provision of this Section, the
         Issuer may, without compliance with the other provisions of this
         Section (A) collect, liquidate, sell or otherwise

                                     - 63 -
<PAGE>   70
         dispose of Receivables as and to the extent permitted or required by
         the Related Documents (including as provided in Section 3.1 of the Sale
         and Servicing Agreement) and (B) make cash payments out of the Trust
         Accounts as and to the extent permitted or required by the Related
         Documents.

                  SECTION 11.02. Form of Documents Delivered to Trustee. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.

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

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

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

                                     - 64 -
<PAGE>   71
                  SECTION 11.03. Acts of Noteholders.

                  (a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents
duly appointed in writing; and except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Trustee, and, where it is hereby expressly required, to the
Issuer. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the
Noteholders signing such instrument or instruments.

Proof of execution of any such instrument or of a writing appointing any such
agent shall be sufficient for any purpose of this Indenture and (subject to
Section 6.01) conclusive in favor of the Trustee and the Issuer, if made in the
manner provided in this Section.

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

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

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

                  SECTION 11.04. Notices, etc., to Trustee, Issuer and Rating
Agencies. Any request, demand, authorization, direction, notice, consent, waiver
or Act of Noteholders or other documents provided or permitted by this Indenture
to be made upon, given or furnished to or filed with:

                  (a) the Trustee by any Noteholder or by the Issuer shall be
         sufficient for every purpose hereunder if made, given, furnished or
         filed in writing to or with the Trustee at its Corporate Trust Office,

                  (b) the Issuer by the Trustee or by any Noteholder shall be
         sufficient for every purpose hereunder if in writing and mailed,
         first-class, postage prepaid, to the Issuer addressed to: Associates
         Automobile Receivables Trust 2000-1, in care of Wilmington Trust
         Company, as Owner Trustee, Rodney Square North, 1100 North Market
         Street, Wilmington, Delaware 19890, Attention: Corporate Trust
         Administration, or at any other address previously furnished in writing
         to the Trustee by Issuer. The Issuer shall promptly transmit any notice
         received by it from the Noteholders to the Trustee.

                                     - 65 -
<PAGE>   72

                  Notices required to be given to the Rating Agencies by the
         Issuer, the Trustee or the Owner Trustee shall be in writing,
         personally delivered or mailed by certified mail, return receipt
         requested to (i) in the case of Moody's, at the following address:
         Moody's Investors Service, Inc., ABS Monitoring Department, 99 Church
         Street, New York, New York 10007 and (ii) in the case of Standard &
         Poor's, at the following address: Standard & Poor's Ratings Services,
         55 Water Street, New York, New York 10041, Attention: Asset Backed
         Surveillance Department; or as to each of the foregoing, at such other
         address as shall be designated by written notice to the other parties.

                  SECTION 11.05 Notices to Noteholders; Waiver. Where this
Indenture provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his or her address as it appears on the Note Register, not later than
the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.

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

                  In case, by reason of the suspension of regular mail service
as a result of a strike, work stoppage or similar activity, it shall be
impractical to mail notice of any event of Noteholders when such notice is
required to be given pursuant to any provision of this Indenture, then any
manner of giving such notice as shall be satisfactory to the Trustee shall be
deemed to be a sufficient giving of such notice.

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

                  SECTION 11.06. Alternate Payment and Notice Provisions.
Notwithstanding any provision of this Indenture or any of the Notes to the
contrary, the Issuer may enter into any agreement with any Holder of a Note
providing for a method of payment, or notice by the Trustee or any Paying Agent
to such Holder, that is different from the methods provided for in this
Indenture for such

                                     - 66 -
<PAGE>   73
payments or notices. The Issuer will furnish to the Trustee a copy of each such
agreement and the Trustee will cause payments to be made and notices to be given
in accordance with such agreements.

                  SECTION 11.07. Conflict with Trust Indenture Act. If any
provision hereof limits, qualifies or conflicts with another provision hereof
that is required to be included in this indenture by any of the provisions of
the Trust Indenture Act, such required provision shall control.

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

                  SECTION 11.08. Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.

                  SECTION 11.09. Successors and Assigns. All covenants and
agreements in this Indenture and the Notes by the Issuer shall bind its
successors and assigns, whether so expressed or not. All agreements of the
Trustee in this Indenture shall bind its successors.

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

                  SECTION 11.11. Benefits of Indenture. Nothing in this
Indenture or in the Notes, express or implied, shall give to any Person, other
than the parties hereto and their successors hereunder, and the Noteholders, and
any other party secured hereunder, and any other Person with an ownership
interest in any part of the Trust Estate, any benefit or any legal or equitable
right, remedy or claim under this Indenture.

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

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

                                     - 67 -
<PAGE>   74

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

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

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

                  SECTION 11.17. No Petition. The Trustee, by entering into this
Indenture, and each Noteholder, by accepting a Note, hereby covenant and agree
that they will not at any time institute against the Seller or the Issuer, or
join in any institution against the Seller or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States Federal or state bankruptcy or similar law
in connection with any obligations relating to the Notes, this Indenture or any
of the Related Documents.

                  SECTION 11.18. Inspection. The Issuer agrees that, on
reasonable prior notice, it will permit any representative of the Trustee,
during the Issuer's normal business hours, to examine all the books of account,
records, reports, and other papers of the Issuer, to make copies and extracts
therefrom, to cause such books to be audited by independent certified public
accountants, and to discuss the Issuer's affairs, finances and accounts with the
Issuer's officers, employees, and independent certified public accountants, all
at such reasonable times and as often as may be reasonably requested. The
Trustee shall and shall cause its representatives to hold in confidence all

                                     - 68 -
<PAGE>   75
such information except to the extent disclosure may be required by law (and all
reasonable applications for confidential treatment are unavailing) and except to
the extent that the Trustee may reasonably determine that such disclosure is
consistent with its obligations hereunder.

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

                  SECTION 11.20. No Substantive Review of Compliance Documents.
Other than as set forth in this Agreement, any reports, information or other
documents provided to the Trustee are for purposes only of enabling the sending
party to comply with its document delivery requirements hereunder, and such
party's receipt of any such information shall not constitute actual or
constructive notice of any information contained therein or determinable from
any information contained therein, including the Issuer's, the Seller's or the
Servicer's compliance with any of its covenants, representations or warranties
hereunder.

                                     - 69 -
<PAGE>   76

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

                           ASSOCIATES AUTOMOBILE RECEIVABLES
                              TRUST 2000-1

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

                           By:  /s/ Anita Dallago
                              ---------------------------
                              Name: Anita Dallago
                              Title: Financial Services Officer

                           BANK ONE, NATIONAL ASSOCIATION
                              not in its individual capacity but solely as
                              Trustee

                           By:  /s/ Barbara G. Grosse
                              ---------------------------
                              Name: Barbara G. Grosse
                              Title: Vice President and Assistant Secretary<PAGE>   1
                                                                     EXHIBIT 4.3

                          SALE AND SERVICING AGREEMENT

                            Dated as of June 1, 2000

                                      among

                 ASSOCIATES AUTOMOBILE RECEIVABLES TRUST 2000-1
                                     Issuer

                        ARCADIA RECEIVABLES FINANCE CORP.
                                     Seller

                                       and

                             ARCADIA FINANCIAL LTD.
                   In its individual capacity and as Servicer

<PAGE>   2

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>                                                                                                            <C>
ARTICLE I           DEFINITIONS...................................................................................1
         SECTION 1.1.          Definitions........................................................................1
         SECTION 1.2.          Usage of Terms....................................................................17
         SECTION 1.3.          Calculations......................................................................18
         SECTION 1.4.          Section References................................................................18
         SECTION 1.5.          No Recourse.......................................................................18

ARTICLE II          CONVEYANCE OF RECEIVABLES....................................................................18
         SECTION 2.1.          Conveyance of Receivables.........................................................18
         SECTION 2.2.          Custody of Receivable Files.......................................................19
         SECTION 2.3.          Conditions to Acceptance by Owner Trustee.........................................20
         SECTION 2.4.          Representations and Warranties of Seller..........................................20
         SECTION 2.5.          Repurchase of Receivables Upon Breach of Warranty.................................22
         SECTION 2.6.          Nonpetition Covenant..............................................................23
         SECTION 2.7.          Collecting Lien Certificates Not Delivered on the Closing Date....................23
         SECTION 2.8.          Trust's Assignment of Administrative Receivables and
                               Warranty Receivables..............................................................23

ARTICLE III         ADMINISTRATION AND SERVICING OF RECEIVABLES..................................................24
         SECTION 3.1.          Duties of the Servicer............................................................24
         SECTION 3.2.          Collection of Receivable Payments; Modifications of
                               Receivables; Lockbox Agreements...................................................25
         SECTION 3.3.          Realization Upon Receivables......................................................27
         SECTION 3.4.          Insurance.........................................................................28
         SECTION 3.5.          Maintenance of Security Interests in Vehicles.....................................29
         SECTION 3.6.          Covenants, Representations, and Warranties of Servicer............................29
         SECTION 3.7.          Purchase of Receivables Upon Breach of Covenant...................................32
         SECTION 3.8.          Total Servicing Fee; Payment of Certain Expenses by Servicer......................32
         SECTION 3.9.          Servicer's Certificate............................................................33
         SECTION 3.10.         Annual Statement as to Compliance; Notice of Servicer
                               Termination Event.................................................................33
         SECTION 3.11.         Annual Independent Accountants' Report............................................34
         SECTION 3.12.         Access to Certain Documentation and Information
                               Regarding Receivables.............................................................34
         SECTION 3.13.         Monthly Tape......................................................................35
         SECTION 3.14.         Duties of the Servicer under the Indenture........................................35
         SECTION 3.15.         Certain Duties of the Servicer under the Trust Agreement..........................36
         SECTION 3.16.         Fidelity Bond.....................................................................36
</TABLE>

                                       -i-

<PAGE>   3

<TABLE>
<S>                                                                                                            <C>
ARTICLE IV          DISTRIBUTIONS; STATEMENTS TO NOTEHOLDERS.....................................................37
         SECTION 4.1.          Trust Accounts....................................................................37
         SECTION 4.2.          Collections.......................................................................40
         SECTION 4.3.          Application of Collections........................................................41
         SECTION 4.4.          Monthly Advances..................................................................42
         SECTION 4.5.          Additional Deposits...............................................................43
         SECTION 4.6.          Distributions.....................................................................43
         SECTION 4.7.          Net Deposits......................................................................44
         SECTION 4.8.          Statements to Noteholders.........................................................44
         SECTION 4.9.          Indenture Trustee as Agent........................................................45
         SECTION 4.10.         Eligible Accounts.................................................................45

ARTICLE V           THE RESERVE ACCOUNT..........................................................................46
         SECTION 5.1.          Withdrawals from the Reserve Account..............................................46

ARTICLE VI          THE SELLER...................................................................................46
         SECTION 6.1.          Liability of Seller...............................................................46
         SECTION 6.2.          Merger or Consolidation of, or Assumption of the
                               Obligations of, Seller............................................................46
         SECTION 6.3.          Limitation on Liability of Seller and Others......................................47
         SECTION 6.4.          Seller May Own Notes..............................................................47
         SECTION 6.5.          Corporate Existence...............................................................47

ARTICLE VII         THE SERVICER.................................................................................48
         SECTION 7.1.          Liability of Servicer; Indemnities................................................48
         SECTION 7.2.          Merger or Consolidation of, or Assumption of the
                               Obligations of, the Servicer......................................................50
         SECTION 7.3.          Limitation on Liability of Servicer and Others....................................50
         SECTION 7.4.          Delegation of Duties..............................................................51
         SECTION 7.5.          Servicer Not to Resign............................................................51

ARTICLE VIII        SERVICER TERMINATION EVENTS..................................................................51
         SECTION 8.1.          Servicer Termination Event........................................................51
         SECTION 8.2.          Consequences of a Servicer Termination Event......................................52
         SECTION 8.3.          Appointment of Successor..........................................................53
         SECTION 8.4.          Notification to Noteholders.......................................................54
         SECTION 8.5.          Waiver of Past Defaults...........................................................54

ARTICLE IX          TERMINATION..................................................................................54
         SECTION 9.1.          Optional Purchase of All Receivables; Liquidation of Trust Estate.................54

ARTICLE X           MISCELLANEOUS PROVISIONS.....................................................................55
         SECTION 10.1.         Amendment.........................................................................55
         SECTION 10.2.         Protection of Title to Trust Property.............................................56
</TABLE>

                                      -ii-

<PAGE>   4

<TABLE>
<S>                                                                                                            <C>
         SECTION 10.3.         Governing Law.....................................................................58
         SECTION 10.4.         Severability of Provisions........................................................58
         SECTION 10.5.         Assignment........................................................................58
         SECTION 10.6.         Limitations on Rights of Others...................................................58
         SECTION 10.7.         Counterparts......................................................................58
         SECTION 10.8.         Intention of Parties..............................................................58
         SECTION 10.9.         Notices...........................................................................59
         SECTION 10.10.        Limitation of Liability...........................................................59
         SECTION 10.11.        Nonpetition Covenant..............................................................59
</TABLE>

<TABLE>
<CAPTION>
                                    SCHEDULES
<S>                       <C>
Schedule A       --       Representations and Warranties of Seller and AFL

<CAPTION>

                                    EXHIBITS
<S>                       <C>

Exhibit A        --       Schedule of Receivables

Exhibit B        --       Form of Custodian Agreement (AFL)

Exhibit C        --       Form of Servicer's Certificate
</TABLE>

                                     -iii-

<PAGE>   5

                  THIS SALE AND SERVICING AGREEMENT, dated as of June 1, 2000,
is made among Associates Automobile Receivables Trust 2000-1 (the "Issuer"),
Arcadia Receivables Finance Corp., a Delaware corporation, as Seller (the
"Seller"), and Arcadia Financial Ltd., a Minnesota corporation, in its
individual capacity and as Servicer (in its individual capacity, "AFL"; in its
capacity as Servicer, the "Servicer").

                  In consideration of the mutual agreements herein contained,
and of other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

                  SECTION 1.1. Definitions. All terms defined in the Indenture
or the Trust Agreement (each as defined below) shall have the same meaning in
this Agreement. Whenever capitalized and used in this Agreement, the following
words and phrases, unless the context otherwise requires, shall have the
following meanings:

                  Accountants' Report: The report of a firm of nationally
recognized independent accountants described in Section 3.11.

                  Accounting Date: With respect to a Distribution Date, the last
day of the Monthly Period immediately preceding such Distribution Date.

                  Actual Funds: With respect to a Distribution Date, the sum of
(i) Available Funds for such Distribution Date, plus (ii) the portion of the
amounts on deposit in the Reserve Account, if any, deposited pursuant to Section
5.1 into the Collection Account with respect to such Distribution Date.

                  Administrative Receivable: With respect to any Monthly Period,
a Receivable which the Servicer is required to purchase pursuant to Section 3.7.

                  Affiliate: With respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.

                  AFL: Arcadia Financial Ltd., a Minnesota corporation, in its
individual capacity.

                  Agreement or "this Agreement": This Sale and Servicing
Agreement, all amendments and supplements thereto and all exhibits and schedules
to any of the foregoing.

<PAGE>   6

                  Amount Financed: With respect to a Receivable, the aggregate
amount advanced under such Receivable toward the purchase price of the Financed
Vehicle and related costs, including amounts advanced in respect of accessories,
insurance premiums, service and warranty contracts, other items customarily
financed as part of retail automobile installment sale contracts or promissory
notes, and related costs.

                  Annual Percentage Rate or APR: With respect to a Receivable,
the rate per annum of finance charges stated in such Receivable as the "annual
percentage rate" (within the meaning of the Federal Truth-in-Lending Act). If
after the Closing Date, the rate per annum with respect to a Receivable as of
the Closing Date is reduced as a result of (i) an insolvency proceeding
involving the Obligor or (ii) pursuant to the Soldiers' and Sailors' Civil
Relief Act of 1940, Annual Percentage Rate or APR shall refer to such reduced
rate.

                  Available Funds: With respect to any Determination Date, the
sum of (i) the Collected Funds for such Determination Date, (ii) all Purchase
Amounts deposited in the Collection Account as of the related Determination
Date, (iii) all Monthly Advances made by the Servicer as of the related
Determination Date, and (iv) all net income from investments of funds in the
Trust Accounts (other than the Reserve Account) during the related Monthly
Period.

                  Basic Servicing Fee: With respect to any Monthly Period, the
fee payable to the Servicer for services rendered during such Monthly Period,
which shall be equal to one-twelfth of the Basic Servicing Fee Rate multiplied
by the Pool Balance as of the Determination Date falling in such Monthly Period.

                  Basic Servicing Fee Rate: 1.25% per annum.

                  Business Day: Any day other than a Saturday, Sunday, legal
holiday or other day on which commercial banking institutions in Dallas, Texas,
New York, New York, Wilmington, Delaware or any other location of any successor
Servicer, successor Owner Trustee, or successor Indenture Trustee are authorized
or obligated by law, executive order or governmental decree to be closed.

                  Certificate: The Certificates issued pursuant to the Trust
Agreement.

                  Certificate Distribution Account: The meaning assigned to such
term in the Trust Agreement.

                  Certificate Majority: Holders of Certificates representing
more than 50% of the interest of the Certificates as a whole.

                  Certificateholder: A Person in whose name a Certificate is
registered pursuant to the Trust Agreement.

                                      -2-
<PAGE>   7

                  Class A Interest Distributable Amount: The sum of the Class
A-1 Interest Distributable Amount, the Class A-2 Interest Distributable Amount
and the Class A-3 Interest Distributable Amount.

                  Class A-1 Final Scheduled Distribution Date: The June 2001
Distribution Date.

                  Class A-1 Interest Carryover Shortfall: With respect to any
Distribution Date, the excess of the Class A-1 Interest Distributable Amount for
the preceding Distribution Date over the amount in respect of interest on the
Class A-1 Notes that was actually deposited in the Note Interest Distribution
Account on such preceding Distribution Date, plus interest on the amount of
interest due but not paid to Class A-1 Noteholders on the preceding Distribution
Date, to the extent permitted by law, at the Class A-1 Interest Rate from such
preceding Distribution Date to but excluding the current Distribution Date.

                  Class A-1 Interest Distributable Amount: With respect to any
Distribution Date, the sum of the Class A-1 Monthly Interest Distributable
Amount for such Distribution Date and the Class A-1 Interest Carryover Shortfall
for such Distribution Date.

                  Class A-1 Interest Rate: 6.854% per annum.

                  Class A-1 Monthly Interest Distributable Amount: With respect
to any Distribution Date, the product of (x) the Class A-1 Interest Rate, (y) a
fraction, the numerator of which is the number of days elapsed (on the basis of
a 360-day year) from and including the most recent date to which interest has
been paid to but excluding such Distribution Date (or, in the case of the first
Distribution Date, 25) and the denominator of which is 360 and (z) the
outstanding principal balance of the Class A-1 Notes on the immediately
preceding Distribution Date (or, in the case of the first Distribution Date, on
the Closing Date), after giving effect to all payments of principal to Class A-1
Noteholders on or prior to such immediately preceding Distribution Date (or, in
the case of the first Distribution Date, on the Closing Date).

                  Class A-2 Final Scheduled Distribution Date: The March 2003
Distribution Date.

                  Class A-2 Interest Carryover Shortfall: With respect to any
Distribution Date, the excess of the Class A-2 Interest Distributable Amount for
the preceding Distribution Date, over the amount in respect of interest on the
Class A-2 Notes that was actually deposited in the Note Interest Distribution
Account on such preceding Distribution Date, plus interest on the amount of
interest due but not paid to Class A-2 Noteholders on the preceding Distribution
Date, to the extent permitted by law, at the Class A-2 Interest Rate from such
preceding Distribution Date to but excluding the current Distribution Date.

                  Class A-2 Interest Distributable Amount: With respect to any
Distribution Date, the sum of the Class A-2 Monthly Interest Distributable
Amount for such Distribution Date and the Class A-2 Interest Carryover Shortfall
for such Distribution Date.

                                      -3-
<PAGE>   8

                  Class A-2 Interest Rate: 7.15% per annum.

                  Class A-2 Monthly Interest Distributable Amount: With respect
to any Distribution Date, 30 days of interest (or, in the case of the first
Distribution Date, 23 days of interest) at the Class A-2 Interest Rate on the
outstanding principal balance of the Class A-2 Notes on the immediately
preceding Distribution Date (or, in the case of the first Distribution Date, on
the Closing Date), after giving effect to all payments of principal to Class A-2
Noteholders on or prior to such immediately preceding Distribution Date (or, in
the case of the first Distribution Date, on the Closing Date).

                  Class A-3 Final Scheduled Distribution Date: The January 2004
Distribution Date.

                  Class A-3 Interest Carryover Shortfall: With respect to any
Distribution Date, the excess of the Class A-3 Interest Distributable Amount for
the preceding Distribution Date over the amount in respect of interest on the
Class A-3 Notes that was actually deposited in the Note Interest Distribution
Account on such preceding Distribution Date, plus interest on the amount of
interest due but not paid to Class A-3 Noteholders on the preceding Distribution
Date, to the extent permitted by law, at the Class A-3 Interest Rate from such
preceding Distribution Date to but excluding the current Distribution Date.

                  Class A-3 Interest Distributable Amount: With respect to any
Distribution Date, the sum of the Class A-3 Monthly Interest Distributable
Amount for such Distribution Date and the Class A-3 Interest Carryover Shortfall
for such Distribution Date.

                  Class A-3 Interest Rate: 7.30% per annum.

                  Class A-3 Monthly Interest Distributable Amount: With respect
to any Distribution Date, 30 days of interest (or, in the case of the first
Distribution Date, 23 days of interest) at the Class A-3 Interest Rate on the
outstanding principal balance of the Class A-3 Notes on the immediately
preceding Distribution Date (or, in the case of the first Distribution Date, on
the Closing Date), after giving effect to all payments of principal to Class A-3
Noteholders on or prior to such immediately preceding Distribution Date (or, in
the case of the first Distribution Date, on the Closing Date).

                  Class B Final Scheduled Distribution Date: The August 2007
Distribution Date.

                  Class B Interest Carryover Shortfall: With respect to any
Distribution Date, the excess of the Class B Interest Distributable Amount for
the preceding Distribution Date over the amount in respect of interest on the
Class B Notes that was actually deposited in the Note Interest Distribution
Account on such preceding Distribution Date, plus interest on the amount of
interest due but not paid to Class B Noteholders on the preceding Distribution
Date, to the extent permitted by law, at the Class B Interest Rate from such
preceding Distribution Date to but excluding the current Distribution Date.

                                      -4-
<PAGE>   9

                  Class B Interest Distributable Amount: With respect to any
Distribution Date, the sum of the Class B Monthly Interest Distributable Amount
for such Distribution Date and the Class B Interest Carryover Shortfall for such
Distribution Date.

                  Class B Interest Rate: 7.83% per annum.

                  Class B Monthly Interest Distributable Amount: With respect to
any Distribution Date, 30 days of interest (or, in the case of the first
Distribution Date, 23 days of interest) at the Class B Interest Rate on the
outstanding principal balance of the Class B Notes on the immediately preceding
Distribution Date (or, in the case of the first Distribution Date, on the
Closing Date), after giving effect to all payments of principal to Class B
Noteholders on or prior to such immediately preceding Distribution Date (or, in
the case of the first Distribution Date, on the Closing Date).

                  Class M Final Scheduled Distribution Date: The May 2005
Distribution Date.

                  Class M Interest Carryover Shortfall: With respect to any
Distribution Date, the excess of the Class M Interest Distributable Amount for
the preceding Distribution Date over the amount in respect of interest on the
Class M Notes that was actually deposited in the Note Interest Distribution
Account on such preceding Distribution Date, plus interest on the amount of
interest due but not paid to Class M Noteholders on the preceding Distribution
Date, to the extent permitted by law, at the Class M Interest Rate from such
preceding Distribution Date to but excluding the current Distribution Date.

                  Class M Interest Distributable Amount: With respect to any
Distribution Date, the sum of the Class M Monthly Interest Distributable Amount
for such Distribution Date and the Class M Interest Carryover Shortfall for such
Distribution Date.

                  Class M Interest Rate: 7.51% per annum.

                  Class M Monthly Interest Distributable Amount: With respect to
any Distribution Date, 30 days of interest (or, in the case of the first
Distribution Date, 23 days of interest) at the Class M Interest Rate on the
outstanding principal balance of the Class M Notes on the immediately preceding
Distribution Date (or, in the case of the first Distribution Date, on the
Closing Date), after giving effect to all payments of principal to Class M
Noteholders on or prior to such immediately preceding Distribution Date (or, in
the case of the first Distribution Date, on the Closing Date).

                  Closing Date:  June 22, 2000.

                  Collateral Insurance: The insurance policy maintained by the
Servicer, or indemnification obligation of the Servicer in lieu of such
insurance policy.

                  Collected Funds: With respect to any Determination Date, the
amount of funds in the Collection Account after giving effect to deposits on or
prior to the Determination Date representing collections on the Receivables
during the related Monthly Period, including all Liquidation Proceeds

                                      -5-
<PAGE>   10

collected during the related Monthly Period (but excluding any Monthly Advances
and any Purchase Amounts).

                  Collection Account: The account designated as the Collection
Account in, and which is established and maintained pursuant to, Section 4.1(a).

                  Collection Records: All manually prepared or computer
generated records relating to collection efforts or payment histories with
respect to the Receivables.

                  Computer Tape: The computer tape generated on behalf of the
Seller which provides information relating to the Receivables and which was used
by the Seller and AFL in selecting the Receivables conveyed to the Trust
hereunder.

                  Controlling Noteholders: The Holders of (i) a majority in
outstanding principal amount of the Class A Notes, or (ii) if all of the Class A
Notes have been paid in full, a majority in outstanding principal amount of the
Class M Notes, or (iii) if all of the Class A Notes and Class M Notes have been
paid in full, a majority in outstanding principal amount of the Class B Notes.

                  Corporate Trust Office: With respect to the Owner Trustee, the
principal office of the Owner Trustee at which at any particular time its
corporate trust business shall be administered, which office at the Closing Date
is located at Rodney Square North, 1100 North Market Street, Wilmington,
Delaware 19890; the telecopy number for the Corporate Trust Administration of
the Owner Trustee on the date of the execution of this Agreement is (302)
651-8882; with respect to the Indenture Trustee, the principal office of the
Indenture Trustee at which at any particular time its corporate trust business
shall be administered, which office is located at 1 Bank One Plaza, Suite
IL1-0126, Chicago, Illinois 60670-0126, Attention: Global Corporate Trust
Services; the telecopy number for the Corporate Trust Office of the Indenture
Trustee on the date of execution of this Agreement is (312) 407-1708.

                  Cram Down Loss: With respect to a Receivable, if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued an order
reducing the amount owed on a Receivable or otherwise modifying or restructuring
the Scheduled Payments to be made on a Receivable, an amount equal to the excess
of the Principal Balance of such Receivable immediately prior to such order over
the Principal Balance of such Receivable as so reduced or the net present value
(using as the discount rate the higher of the contract rate or the rate of
interest, if any, specified by the court in such order) of the Scheduled
Payments as so modified or restructured. A "Cram Down Loss" shall be deemed to
have occurred on the date of issuance of such order.

                  Custodian: AFL and any other Person named from time to time as
custodian in any Custodian Agreement acting as agent for the Trust.

                  Custodian Agreement: Any Custodian Agreement from time to time
in effect between the Custodian named therein and the Trust, substantially in
the form of Exhibit B hereto, as the same

                                      -6-
<PAGE>   11

may be amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof.

                  Cutoff Date: The close of business on May 31, 2000.

                  Cutoff Date Principal Balance:  $833,347,584.32.

                  Dealer: A seller of new or used automobiles or light trucks
that originated one or more of the Receivables and sold the respective
Receivable, directly or indirectly, to AFL under an existing agreement between
such seller and AFL.

                  Dealer Agreement: An agreement between AFL and a Dealer
relating to the sale of retail installment sale contracts and installment notes
to AFL and all documents and instruments relating thereto.

                  Dealer Assignment: With respect to a Receivable, the executed
assignment executed by a Dealer conveying such Receivable to AFL.

                  Determination Date: With respect to any Monthly Period, the
second Business Day immediately preceding the related Distribution Date.

                  Distribution Date: The 15th day of each calendar month, or if
such 15th day is not a Business Day, the next succeeding Business Day,
commencing July 17, 2000, to and including the Final Scheduled Distribution
Date.

                  Draw Date: With respect to any Distribution Date, the Business
Day immediately preceding such Distribution Date.

                  Electronic Ledger: The electronic master record of the retail
installment sales contracts or installment loans of AFL.

                  Eligible Account: (i) A segregated trust account that is
maintained with the corporate trust department of a depository institution
organized under the laws of the United States of America, or any of the states
thereof, or the District of Columbia, so long as any of the securities of such
institution have a credit rating from each Rating Agency (if then rated by such
Rating Agency) in one of its generic rating categories which signifies
investment grade, or (ii) a segregated direct deposit account maintained with a
depository institution or trust company organized under the laws of the United
States of America, or any of the States thereof, or the District of Columbia,
having a certificate of deposit, short term deposit or commercial paper rating
of at least "A-1+" by Standard & Poor's and "P-1" by Moody's and whose deposits
are insured by the Federal Deposit Insurance Corporation.

                  Eligible Investments: Any one or more of the following types
of investments:

                                      -7-
<PAGE>   12

                  (a) (i) direct interest-bearing obligations of, and
interest-bearing obligations guaranteed as to timely payment of principal and
interest by, the United States or any agency or instrumentality of the United
States, the obligations of which are backed by the full faith and credit of the
United States; and (ii) direct interest-bearing obligations of, and
interest-bearing obligations guaranteed as to timely payment of principal and
interest by, the Federal National Mortgage Association or the Federal Home Loan
Mortgage Corporation, but only if, at the time of investment, such obligations
are assigned a rating in the highest credit rating category by each Rating
Agency;

                  (b) demand or time deposits in, certificates of deposit of, or
bankers' acceptances issued by any depository institution or trust company
organized under the laws of the United States or any State and subject to
supervision and examination by federal and/or State banking authorities
(including, if applicable, the Indenture Trustee, the Owner Trustee or any
agent of either of them acting in their respective commercial capacities);
provided that the short-term unsecured debt obligations of such depository
institution or trust company at the time of such investment, or contractual
commitment providing for such investment, are assigned a rating in the highest
credit rating category by each Rating Agency;

                  (c) repurchase obligations pursuant to a written agreement (i)
with respect to any obligation described in clause (a) above, where the
Indenture Trustee has taken actual or constructive delivery of such obligation
in accordance with Section 4.1, and (ii) entered into with the corporate trust
department of a depository institution or trust company organized under the laws
of the United States or any State thereof, the deposits of which are insured by
the Federal Deposit Insurance Corporation and the short-term unsecured debt
obligations of which are rated "A-1+" by Standard & Poor's and "P-1" by Moody's
(including, if applicable, the Indenture Trustee, the Owner Trustee or any agent
of either of them acting in their respective commercial capacities);

                  (d) securities bearing interest or sold at a discount issued
by any corporation incorporated under the laws of the United States or any State
whose long-term unsecured debt obligations are assigned a rating in the highest
credit rating category by each Rating Agency at the time of such investment or
contractual commitment providing for such investment; provided, however, that
securities issued by any particular corporation will not be Eligible Investments
to the extent that an investment therein will cause the then outstanding
principal amount of securities issued by such corporation and held in the Trust
Accounts to exceed 10% of the Eligible Investments held in the Trust Accounts
(with Eligible Investments held in the Trust Accounts valued at par);

                  (e) commercial paper that (i) is payable in United States
dollars and (ii) is rated in the highest credit rating category by each Rating
Agency;

                  (f) units of money market funds rated in the highest credit
rating category by each Rating Agency; provided that all Eligible Investments
shall be held in the name of the Indenture Trustee; or

                                      -8-
<PAGE>   13

                  (g) any other demand or time deposit, obligation, security or
investment as may be acceptable to the Rating Agencies.

Eligible Investments may be purchased by or through the Indenture Trustee or any
of its Affiliates. No Eligible Investment shall have an "r" highlighter affixed
to the rating of Standard & Poor's.

                  Eligible Servicer: AFL, the Indenture Trustee or another
Person which at the time of its appointment as Servicer (i) is servicing a
portfolio of motor vehicle retail installment sales contracts and/or motor
vehicle installment loans, (ii) is legally qualified and has the capacity to
service the Receivables, (iii) has demonstrated the ability professionally and
competently to service a portfolio of motor vehicle retail installment sales
contracts and/or motor vehicle installment loans similar to the Receivables with
reasonable skill and care, and (iv) is qualified and entitled to use, pursuant
to a license or other written agreement, and agrees to maintain the
confidentiality of, the software which the Servicer uses in connection with
performing its duties and responsibilities under this Agreement or otherwise has
available software which is adequate to perform its duties and responsibilities
under this Agreement.

                  Final Scheduled Distribution Date: With respect to each class
of Notes, the Class A-1 Final Scheduled Distribution Date, the Class A-2 Final
Scheduled Distribution Date, the Class A-3 Final Scheduled Distribution Date,
the Class M Final Scheduled Distribution Date and the Class B Final Scheduled
Distribution Date, respectively.

                  Financed Vehicle: A new or used automobile or light truck,
together with all accessories thereto, securing or purporting to secure an
Obligor's indebtedness under a Receivable.

                  First Priority Principal Distribution Amount: With respect to
any Distribution Date, an amount equal to the excess, if any, of:

                  (a) the aggregate outstanding principal amount of the Class A
         Notes as of the preceding Distribution Date, after giving effect to any
         principal payments made on such preceding Distribution Date, over

                  (b) the Pool Balance at the end of the Monthly Period
         preceding such Distribution Date;

provided, however, that the First Priority Principal Distribution Amount shall
not exceed the outstanding principal amount of all of the Notes on such
Distribution Date, prior to giving effect to any principal payments made on such
Distribution Date; and provided, further, that the First Priority Principal
Distribution Amount on and after the Final Scheduled Distribution Date of each
class of Class A Notes shall not be less than the amount that is necessary to
reduce the outstanding principal amount of each such class of Class A Notes to
zero.

                                      -9-
<PAGE>   14

                  Indenture: The Indenture, dated as of June 1, 2000, between
the Trust and the Indenture Trustee, as the same may be amended and supplemented
from time to time.

                  Indenture Trustee: The Person acting as Trustee under the
Indenture, its successors in interest and any successor Trustee under the
Indenture.

                  Independent Accountants: As defined in Section 3.11(a).

                  Insolvency Event: With respect to a specified Person, (a) the
commencement of an involuntary case against such Person under the federal
bankruptcy laws, as now or hereinafter in effect, or another present or future
federal or state bankruptcy, insolvency or similar law, and such case is not
dismissed within 60 days; or (b) the filing of a decree or entry of an order for
relief by a court having jurisdiction in the premises in respect of such Person
or any substantial part of its property in an involuntary case under any
applicable Federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official for such Person or for any substantial
part of its property, or ordering the winding-up or liquidation of such Person's
affairs; or (c) the commencement by such Person of a voluntary case under any
applicable Federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect, or the consent by such Person to the entry of an order for
relief in an involuntary case under any such law, or the consent by such Person
to the appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its property, or the making by such Person of any general
assignment for the benefit of creditors, or the failure by such Person generally
to pay its debts as such debts become due, or the taking of action by such
Person in furtherance of any of the foregoing.

                  Insurance Policy: With respect to a Receivable, any insurance
policy benefitting the holder of the Receivable providing loss or physical
damage, credit life, credit disability, theft, mechanical breakdown or similar
coverage with respect to the Financed Vehicle or the Obligor.

                  Lien: Any security interest, lien, charge, pledge, preference,
equity or encumbrance of any kind, including tax liens, mechanics' liens and any
liens that attach by operation of law.

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

                  Liquidated Receivable: With respect to any Monthly Period, a
Receivable as to which (i) 91 days have elapsed since the Servicer repossessed
the related Financed Vehicle, (ii) the Servicer has determined in good faith
that all amounts it expects to recover have been received, or (iii) all or any
portion of a Scheduled Payment equal to $10 or more shall have become more than
180 days past due.

                                      -10-
<PAGE>   15

                  Liquidation Proceeds: With respect to a Liquidated Receivable,
all amounts realized with respect to such Receivable (other than amounts
withdrawn from the Reserve Account) net of (i) reasonable expenses incurred by
the Servicer in connection with the collection of such Receivable and the
repossession and disposition of the Financed Vehicle and (ii) amounts that are
required to be refunded to the Obligor on such Receivable; provided, however,
that the Liquidation Proceeds with respect to any Receivable shall in no event
be less than zero.

                  Lockbox Account: The segregated account maintained on behalf
of the Trust by the Lockbox Bank in accordance with Section 3.2(d).

                  Lockbox Agreement: The Agency Agreement, dated as of
November 13, 1992, by and among Harris Trust and Savings Bank, AFL, Shawmut
Bank, N.A., as Trustee, Saturn Financial Services, Inc. and the Program Parties
(as defined therein), taken together with the Retail Lockbox Agreement, dated as
of November 13, 1992, among such parties, and the Counterpart to Agency
Agreement and Retail Lockbox Agreement, dated as of June 22, 2000, among Harris
Trust and Savings Bank, AFL, the Trust and the Indenture Trustee, as such
agreements may be amended from time to time, unless the Indenture Trustee
hereunder shall cease to be a Program Party thereunder, or such agreement shall
be terminated in accordance with its terms, in which event "Lockbox Agreement"
shall mean such other agreement, in form and substance acceptable to the
Indenture Trustee, among the Servicer, the Trust, the Indenture Trustee and the
Lockbox Bank.

                  Lockbox Bank: A depository institution named by the Servicer
and acceptable to the Indenture Trustee.

                  Monthly Advance: The amount that the Servicer is required to
advance on any Receivable pursuant to Section 4.4(a).

                  Monthly Period: With respect to a Distribution Date, the
calendar month preceding the month in which such Distribution Date occurs (such
calendar month being referred to as the "related" Monthly Period with respect to
such Distribution Date). With respect to an Accounting Date, the calendar month
in which such Accounting Date occurs is referred to herein as the "related"
Monthly Period to such Accounting Date.

                  Monthly Records: All records and data maintained by the
Servicer with respect to the Receivables, including the following with respect
to each Receivable: the account number; the identity of the originating Dealer;
Obligor name; Obligor address; Obligor home phone number; Obligor business phone
number; original Principal Balance; original term; Annual Percentage Rate;
current Principal Balance; current remaining term; origination date; first
payment date; final scheduled payment date; next payment due date; date of most
recent payment; new/used classification; collateral description; days currently
delinquent; number of contract extensions (months) to date; amount of the
Scheduled Payment; current Insurance Policy expiration date; and past due late
charges, if any.

                  Moody's: Moody's Investors Service, Inc., or any successor
thereto.

                                      -11-
<PAGE>   16

                  Note Interest Distribution Account: The account designated as
such, established and maintained pursuant to Section 4.1(c).

                  Note Majority: As to each class of Notes, Holders of Notes
representing a majority of the outstanding principal balance of such class of
Notes.

                  Note Pool Factor: With respect to any Distribution Date and
each class of Notes, an eight-digit decimal figure equal to the outstanding
principal balance of such class of Notes as of such Distribution Date (after
giving effect to all distributions on such date) divided by the original
outstanding principal balance of such class of Notes as of the Closing Date.

                  Notes: The Class A-1 Notes, the Class A-2 Notes, the Class A-3
Notes, the Class M Notes and the Class B Notes.

                  Obligor: The purchaser or the co-purchasers of the Financed
Vehicle and any other Person or Persons who are primarily or secondarily
obligated to make payments under a Receivable.

                  Opinion of Counsel: A written opinion of counsel acceptable in
form and substance and from counsel acceptable to the Owner Trustee and, if such
opinion or a copy thereof is required to be delivered to the Indenture Trustee
to the Indenture Trustee.

                  Outstanding Monthly Advances: With respect to a Receivable and
a Determination Date, the sum of all Monthly Advances made on any Determination
Date prior to such Determination Date relating to that Receivable which have not
been reimbursed pursuant to Section 4.6(i) or Section 4.7.

                  Owner Trustee: Wilmington Trust Company, acting not
individually but solely as trustee, or its successor in interest, and any
successor Owner Trustee appointed as provided in the Trust Agreement.

                  Person: Any legal person, including any individual,
corporation, partnership, joint venture, estate, association, joint stock
company, trust, unincorporated organization or government or any agency or
political subdivision thereof, or any other entity.

                  Pool Balance: With respect to any Distribution Date, the sum
of the Principal Balances (computed as of the related Accounting Date) for all
Receivables (other than (i) any Receivable that became a Liquidated Receivable
during the related Monthly Period and (ii) any Receivable that became a
Purchased Receivable as of the immediately preceding Accounting Date).

                  Principal Balance: With respect to any Receivable, as of any
date, the Amount Financed minus (i) that portion of all amounts received on or
prior to such date and allocable to principal in accordance with the terms of
the Receivable, and (ii) any Cram Down Loss in respect of such Receivable.

                                      -12-
<PAGE>   17

                  Principal Distribution Account: The account designated as
such, established and maintained pursuant to Section 4.1(b).

                  Principal Distribution Amount: The sum of the First Priority
Principal Distribution Amount, the Second Priority Principal Distribution Amount
and the Regular Principal Distribution Amount.

                  Purchase Agreement: The Receivables Purchase Agreement and
Assignment, dated as of June 1, 2000, between AFL and the Seller.

                  Purchase Amount: With respect to a Receivable, the Principal
Balance and all accrued and unpaid interest on the Receivable (without regard to
any Monthly Advances that may have been made with respect to the Receivable) as
of the Accounting Date on which the obligation to purchase such Receivable
arises.

                  Purchased Receivable: As of any Accounting Date, any
Receivable (including any Liquidated Receivable) that became a Warranty
Receivable or Administrative Receivable as of such Accounting Date (or which AFL
or the Servicer has elected to purchase as of an earlier Accounting Date, as
permitted by Section 2.5 or Section 3.7), and as to which the Purchase Amount
has been deposited in the Collection Account by the Seller, AFL or the Servicer,
as applicable, on or before the related Determination Date.

                  Rating Agency: Each of Moody's and Standard & Poor's, so long
as such Persons maintain a rating on the Notes; and if either Moody's or
Standard & Poor's no longer maintains a rating on the Notes, such other
nationally recognized statistical rating organization selected by the Seller.

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

                  Receivable: A retail installment sale contract or promissory
note (and related security agreement) for a new or used automobile or light
truck (and all accessories thereto) that is included in the Schedule of
Receivables, and all rights and obligations under such a contract or note, but
not including (i) any Liquidated Receivable (other than for the purpose of
determining the obligations pursuant to Section 2.5 and 3.7 to purchase
Receivables), or (ii) any Purchased Receivable on or after the Accounting Date
immediately preceding the Determination Date on which payment of the Purchase
Amount is made in connection therewith pursuant to Section 4.5.

                  Receivable File: The documents, electronic entries,
instruments and writings listed in Section 2.2 pertaining to a particular
Receivable.

                                      -13-
<PAGE>   18

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

                  Regular Principal Distribution Amount: With respect to any
Distribution Date, an amount not less than zero equal to:

                  (a) the greater of:

                      (i)      the aggregate outstanding principal amount of the
                               Class A-1 Notes as of the preceding Distribution
                               Date, after giving effect to any principal
                               payments made on such preceding Distribution
                               Date, or as of the Closing Date, as the case may
                               be, and

                      (ii)     the excess, if any, of (A) the sum of the
                               aggregate outstanding principal amount of the
                               Notes as of the preceding Distribution Date,
                               after giving effect to any principal payment made
                               on such preceding Distribution Date, or as of the
                               Closing Date, as the case may be, over (B) (x)
                               the Pool Balance at the end of the Monthly
                               Period preceding such Distribution Date minus
                               (y) the Specified Overcollateralization Amount,
                               minus,

                  (b) the sum of the First Priority Principal Distribution
         Amount, if any, and the Second Priority Principal Distribution Amount,
         if any, each with respect to such Distribution Date;

provided, however, that the Regular Principal Distribution Amount shall not
exceed the outstanding principal amount of all the Notes on such Distribution
Date, after giving effect to any principal payments made on such Distribution
Date in respect of the First Priority Principal Distribution Amount, if any, and
the Second Priority Principal Distribution Amount; and provided, further, that
the Regular Principal Distribution Amount on and after the Class B Final
Scheduled Distribution Date shall not be less than the amount that is necessary
to reduce the outstanding principal amount of the Class B Notes to zero.

                  Related Documents: The Trust Agreement, the Indenture, the
Notes, the Certificates, the Purchase 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 the Seller, AFL
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 Events: The occurrence of a breach of any of AFL's,
the Seller's or the Servicer's representations and warranties in this Agreement
or in the Purchase Agreement which

                                      -14-
<PAGE>   19

requires the repurchase of a Receivable by AFL or the Seller pursuant to Section
2.5 or by the Servicer pursuant to Section 3.7.

                  Required Deposit Rating: A rating on short-term unsecured debt
obligations of "P-1" by Moody's and at least "A-1+" by Standard & Poor's (or
such other rating as may be acceptable to the Rating Agencies so as to not
affect the rating on the Notes).

                  Reserve Account: The account designated as the Reserve Account
in, and which is established and maintained pursuant to, Section 4.1(e).

                  Reserve Account Excess Amount: With respect to any
Distribution Date, means an amount equal to the excess, if any, of:

                  (a) the amount of cash or other immediately available funds in
         the Reserve Account on the Distribution Date, prior to giving effect to
         any withdrawals from the Reserve Account relating to that Distribution
         Date, over

                  (b) the Specified Reserve Balance with respect to that
         Distribution Date.

                  Responsible Officer: When used with respect to the Owner
Trustee, any officer of the Owner Trustee assigned by the Owner Trustee to
administer its corporate trust affairs relating to the Trust. When used with
respect to the Indenture Trustee, any officer assigned to the Corporate Trust
Office (or any successor thereto), including any Vice President, Assistant Vice
President, Trust Officer, any Assistant Secretary, any trust officer or any
other officer of the Indenture Trustee customarily performing functions similar
to those performed by any of the above designated officers and having direct
responsibility for the administration of the Trust and any other officer to whom
a matter arising hereunder may be referred. When used with respect to any other
Person that is not an individual, the President, any Vice-President or Assistant
Vice-President or the Controller of such Person, or any other officer or
employee having similar functions.

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

                  Schedule of Representations: The Schedule of Representations
and Warranties attached hereto as Schedule A.

                  Scheduled Payment: With respect to any Monthly Period for any
Receivable, the amount set forth in such Receivable as required to be paid by
the Obligor in such Monthly Period. If after the Closing Date, the Obligor's
obligation under a Receivable with respect to a Monthly Period has been modified
so as to differ from the amount specified in such Receivable as a result of (i)
the order of a court in an insolvency proceeding involving the Obligor, (ii)
pursuant to the Soldiers' and Sailors' Civil Relief Act of 1940 or (iii)
modifications or extensions of the Receivable permitted by

                                      -15-
<PAGE>   20

Section 3.2(b), the Scheduled Payment with respect to such Monthly Period shall
refer to the Obligor's payment obligation with respect to such Monthly Period as
so modified.

                  Second Priority Principal Distribution Amount: With respect to
any Distribution Date, an amount not less than zero equal to:

                  (a) the excess, if any, of (i) the aggregate outstanding
         principal amount of the Class A Notes and Class M Notes as of the
         preceding Distribution Date, after giving effect to any principal
         payments made on such preceding Distribution Date, over (ii) the Pool
         Balance at the end of the Monthly Period preceding such Distribution
         Date, minus

                  (b) the First Priority Principal Distribution Amount, if any,
         with respect to such Distribution Date;

provided, however, that the Second Priority Principal Distribution Amount shall
not exceed the outstanding principal amount of all the Notes on such
Distribution Date, after giving effect to any principal payments made on such
Distribution Date in respect of the First Priority Principal Distribution
Amount, if any; and provided, further, that the Second Priority Principal
Distribution Amount on and after the Class M Final Scheduled Distribution Date
shall not be less than the amount that is necessary to reduce the outstanding
principal amount of the Class M Notes to zero.

                  Seller: Arcadia Receivables Finance Corp., a Delaware
corporation, or its successor in interest pursuant to Section 6.2.

                  Servicer: Arcadia Financial Ltd., in its capacity as Servicer,
its successor in interest pursuant to Section 8.2 or, after any termination of
the Servicer upon a Servicer Termination Event, the Indenture Trustee or any
other successor Servicer.

                  Servicer Termination Event: An event described in Section 8.1.

                  Servicer's Certificate: With respect to each Determination
Date, a certificate, completed by and executed on behalf of the Servicer, in
accordance with Section 3.9, substantially in the form attached hereto as
Exhibit E.

                  Specified Credit Enhancement Amount: An amount equal to
$93,751,605.00; provided, however, that the Specified Credit Enhancement Amount
with respect to any Distribution Date shall not exceed the sum of the aggregate
outstanding principal amount of all the Notes as of the preceding Distribution
Date, after giving effect to any principal payments made on the Notes on such
preceding Distribution Date.

                  Specified Overcollateralization Amount: With respect to any
Distribution Date, the excess, if any, of (a) the Specified Credit Enhancement
Amount over (b) the Specified Reserve Balance, each with respect to such
Distribution Date.

                                      -16-
<PAGE>   21

                  Specified Reserve Balance: An amount equal to $4,166,738.

                  Standard & Poor's: Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc., or any successor thereto.

                  Supplemental Servicing Fee: With respect to any Monthly
Period, all administrative fees, expenses and charges paid by or on behalf of
Obligors, including late fees, collected on the Receivables during such Monthly
Period.

                  Total Required Payment: With respect to any Distribution Date,
the sum of the amounts distributable pursuant to clauses (i) through (viii) of
Section 4.6 without regard to the limitation of the Actual Funds for such
Distribution Date plus, on the Class B Final Scheduled Distribution Date, the
Regular Principal Distribution Amount; provided, however, that following the
occurrence and during the continuation of an Event of Default which has resulted
in an acceleration of the Notes, on any Distribution Date until the Distribution
Date on which the outstanding principal amount of all the Notes has been paid in
full, the Total Required Payment shall mean the sum of the amounts distributable
pursuant to clauses (i) through (viii) of Section 4.6 without regard to the
limitation of the Actual Funds for such Distribution Date, plus the amount
necessary to reduce the outstanding principal amount of all the Notes to zero.

                  Total Servicing Fee: The sum of the Basic Servicing Fee and
the Supplemental Servicing Fee.

                  Trust:  Associates Automobile Receivables Trust 2000-1.

                  Trust Accounts:  The meaning specified in Section 4.1(f).

                  Trust Agreement: The Trust Agreement dated as of June 1, 2000,
between the Seller and the Owner Trustee, as the same may be amended and
supplemented from time to time.

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

                  Warranty Receivable: With respect to any Monthly Period, a
Receivable which AFL has become obligated to repurchase pursuant to Section 2.5.

                  SECTION 1.2. 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; references to
Persons include their permitted successors

                                      -17-
<PAGE>   22

and assigns; and the terms "include" or "including" mean "include without
limitation" or "including without limitation."

                  SECTION 1.3. Calculations. All calculations of the amount of
interest accrued on the Notes (other than the Class A-1 Notes) and all
calculations of the amount of the Basic Servicing Fee shall be made on the basis
of a 360-day year consisting of twelve 30-day months. All references to the
Principal Balance of a Receivable as of an Accounting Date shall refer to the
close of business on such day. All calculations and the amount of interest
accrued on the Class A-1 Notes shall be made on the basis of actual days elapsed
and a 360-day year.

                  SECTION 1.4. Section References. All references to Articles,
Sections, paragraphs, subsections, exhibits and schedules shall be to such
portions of this Agreement unless otherwise specified.

                  SECTION 1.5. No Recourse. 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 the Seller, AFL, the Servicer, the Indenture Trustee or
the Owner Trustee or of any predecessor or successor of the Seller, AFL, the
Servicer, the Indenture Trustee or the Owner Trustee.

                                   ARTICLE II

                            CONVEYANCE OF RECEIVABLES

                  SECTION 2.1. Conveyance of Receivables. Subject to the terms
and conditions of this Agreement, the Seller, pursuant to the mutually agreed
upon terms contained herein, hereby sells, transfers, assigns, and otherwise
conveys to the Trust, without recourse (but without limitation of its
obligations in this Agreement), all of the right, title and interest of the
Seller in and to the Receivables, all monies at any time paid or payable thereon
or in respect thereof after the Cutoff Date (including amounts due on or before
the Cutoff Date but received by AFL or the Seller after the Cutoff Date), an
assignment of security interests of AFL in the related Financed Vehicles, 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, all Collateral Insurance relating to the Receivables, an assignment of
the rights of AFL or the Seller against Dealers with respect to the Receivables
under the Dealer Agreements and the Dealer Assignments, all items contained in
the related Receivable Files, any and all other documents that AFL keeps on file
in accordance with its customary procedures relating to the Receivables, the
Obligors or the related Financed Vehicles, an assignment of the rights of the
Seller under the Purchase Agreement, 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, all funds on deposit from time to time in the Trust Accounts and all
investments therein and proceeds thereof, and all proceeds of the foregoing. It
is the intention of the Seller that the transfer and assignment contemplated by
this Agreement shall constitute a sale of the Receivables and other Trust
Property from the Seller to the Trust and the beneficial interest in and title
to the

                                      -18-
<PAGE>   23

Receivables and the other Trust Property shall not be part of the Seller's
estate in the event of the filing of a bankruptcy petition by or against the
Seller under any bankruptcy law. In the event that, notwithstanding the intent
of the Seller, the transfer and assignment contemplated hereby is held not to be
a sale, this Agreement shall constitute a grant of a security interest to the
Trust in the property referred to in this Section 2.1.

                  SECTION 2.2. Custody of Receivable Files.

                  (a) In connection with the sale, transfer and assignment of
the Receivables and the other Trust Property to the Trust pursuant to this
Agreement, and simultaneously with the execution and delivery of this Agreement,
the Trust shall enter into the Custodian Agreement with the Custodian, dated as
of the Closing Date, pursuant to which the Owner Trustee, on behalf of the
Trust, shall revocably appoint the Custodian, and the Custodian shall accept
such appointment, to act as the agent of the Trust as Custodian of the following
documents or instruments in its possession which shall be delivered to the
Custodian as agent of the Trust on or before the Closing Date:

                           (i) The fully executed original of the Receivable
                  (together with any agreements modifying the Receivable,
                  including without limitation any extension agreements);

                           (ii) Documents evidencing or related to any Insurance
                  Policy, or copies (including but not limited to microfiche or
                  computer scanned copies) thereof;

                           (iii) The original credit application, or a
                  microfiche or computer scanned copy thereof, of each Obligor,
                  fully executed by each such Obligor on AFL's customary form,
                  or on a form approved by AFL, for such application; and

                           (iv) The original certificate of title (when
                  received) and otherwise such documents, if any, that AFL keeps
                  on file in accordance with its customary procedures indicating
                  that the Financed Vehicle is owned by the Obligor and subject
                  to the interest of AFL as first lienholder or secured party
                  (including any Lien Certificate received by AFL), or, if such
                  original certificate of title has not yet been received, a
                  copy of the application therefor, showing AFL as secured
                  party.

                  In connection with the grant of the security interest in the
Trust Estate to the Indenture Trustee pursuant to the Indenture, the Trust
agrees that from and after the Closing Date through the date of release of such
security interest pursuant to the terms of the Indenture, the Custodian shall
not be acting as agent of the Trust, but rather shall be acting as agent of the
Indenture Trustee.

                  The Indenture Trustee may act as the Custodian, in which case
the Indenture Trustee shall be deemed to have assumed the obligations of the
Custodian specified in the Custodian Agreement.

                                      -19-
<PAGE>   24

                  (b) Upon payment in full on any Receivable, the Servicer will
notify the Custodian by certification of an officer of the Servicer (which
certification shall include a statement to the effect that all amounts received
in connection with such payments which are required to be deposited in the
Collection Account pursuant to Section 4.1 have been so deposited) and shall
request delivery of the Receivable and Receivable File to the Servicer. From
time to time as appropriate for servicing and enforcing any Receivable, the
Custodian shall, upon written request of an officer of the Servicer and delivery
to the Custodian of a receipt signed by such officer, cause the original
Receivable and the related Receivable File to be released to the Servicer. The
Servicer's receipt of a Receivable and/or Receivable File shall obligate the
Servicer to return the original Receivable and the related Receivable File to
the Custodian when its need by the Servicer has ceased unless the Receivable
shall be repurchased as described in Section 2.6 or 3.7.

                  SECTION 2.3. Conditions to Acceptance by Owner Trustee. As
conditions to the Owner Trustee's execution and delivery of the Notes on behalf
of the Trust on the Closing Date, the Owner Trustee shall have received the
following on or before the Closing Date:

                  (a) The Schedule of Receivables certified by a Responsible
Officer of the Seller;

                  (b) The acknowledgment of the Custodian that it holds the
Receivable File relating to each Receivable;

                  (c) Copies of resolutions of the Board of Directors of the
Seller approving the execution, delivery and performance of this Agreement, the
Related Documents and the transactions contemplated hereby and thereby,
certified by a Secretary or an Assistant Secretary of the Seller;

                  (d) Copies of resolutions of the Board of Directors of AFL
approving the execution, delivery and performance of this Agreement, the Related
Documents and the transactions contemplated hereby and thereby, certified by a
Secretary or an Assistant Secretary of AFL;

                  (e) Evidence that 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 Owner Trustee a first
priority perfected lien on, or ownership interest in, the Receivables and the
other Trust Property have been made, taken or performed; and

                  (f) Evidence of the deposit of $4,166,738.00 in the Reserve
Account.

                  SECTION 2.4. Representations and Warranties of Seller. By its
execution of this Agreement, the Seller makes the following representations and
warranties on which the Trust relies in accepting the Receivables and the other
Trust Property in trust and on which the Owner Trustee relies in executing the
Notes. Unless otherwise specified, such representations and warranties speak as
of the Closing Date, but shall survive the sale, transfer, and assignment of the
Receivables to the Trust.

                                      -20-
<PAGE>   25

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

                  (b) Organization and Good Standing. The Seller has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of Delaware, 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 property transferred to the Trust.

                  (c) Due Qualification. The Seller 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
(i) its business, properties, assets or condition (financial or other) or (ii)
its performance of its obligations under this Agreement and the Related
Documents.

                  (d) Power and Authority. The Seller 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; the Seller has full power and
authority to sell and assign the Trust Property to be sold and assigned to and
deposited with the Trust by it and has duly authorized such sale and assignment
to the Trust by all necessary corporate action; and the execution, delivery and
performance of this Agreement and the Related Documents to which the Seller is a
party have been duly authorized by the Seller by all necessary corporate action.

                  (e) Valid Sale; Binding Obligations. This Agreement is
intended to effect a valid sale, transfer and assignment of the Receivables and
the other Trust Property, enforceable against the Seller and creditors of and
purchasers from the Seller; and this Agreement and the Related Documents to
which the Seller is a party, when duly executed and delivered, shall constitute
legal, valid and binding obligations of the Seller 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 to which the Seller is
a party and the fulfillment of the terms of this Agreement and the Related
Documents to which the Seller is a party 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 certificate of incorporation
or by-laws of the Seller, or any indenture, agreement, mortgage, deed of trust
or other instrument to which the Seller 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, or violate any law, order, rule
or regulation applicable to the Seller of any court or of any

                                      -21-
<PAGE>   26

federal or state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Seller or any of its properties.

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

                  (h) Chief Executive Office. The chief executive office of the
Seller is at 290 East Carpenter Freeway, 7 Decker, Irving, Texas 75062.

                  (i) Registration Statement. No stop order suspending the
effectiveness of the Registration Statement relating to the Notes has been
issued, and no proceeding for that purpose has been instituted or is threatened
by the Securities and Exchange Commission.

                  (j) Filings. Since the effective date of the Registration
Statement relating to the Notes, there has occurred no event required to be set
forth in an amendment or supplement to the Registration Statement or Prospectus
that has not been so set forth, and there has been no document required to be
filed under the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Securities and Exchange Commission thereunder that upon such
filing would be deemed to be incorporated by reference in the Prospectus that
has not been so filed.

                  SECTION 2.5. Repurchase of Receivables Upon Breach of
Warranty. Concurrently with the execution and delivery of this Agreement, AFL
and the Seller have entered into the Purchase Agreement, the rights of the
Seller under which have been assigned by the Seller to the Trust. Under the
Purchase Agreement, AFL has made the same representations and warranties to the
Seller with respect to the Receivables as those made by Seller pursuant to the
Schedule of Representations, upon which the Owner Trustee has relied in
accepting the Trust Property in trust and executing the Notes and upon which the
Indenture Trustee has relied in authenticating the Notes. Upon discovery by any
of AFL, the Seller, the Servicer, the Indenture Trustee or the Owner Trustee of
a breach of any of the representations and warranties contained in Section 2.4
that materially and adversely affects the interests of the Noteholders or the
Trust in any Receivable (including any Liquidated Receivable), the party
discovering such breach shall give prompt written notice to the others;
provided, however, that the failure to give any such notice shall not affect any
obligation of AFL or the Seller. As of the second Accounting Date (or, at AFL's
election, the first Accounting Date) following its discovery or its receipt of
notice of any breach of the representations and warranties set forth on the
Schedule of Representations that materially and adversely affects the interests
of the Noteholders, or the Trust in any Receivable (including any Liquidated
Receivable), AFL shall, unless such breach shall have been

                                      -22-
<PAGE>   27

cured in all material respects, purchase such Receivable from the Trust and, on
or before the related Determination Date, AFL shall pay the Purchase Amount to
the Owner Trustee pursuant to Section 4.5. The obligations of the Seller with
respect to any such breach of representations and warranties shall be limited to
taking any and all actions necessary to enable the Owner Trustee to enforce
directly the obligations of AFL under the Purchase Agreement. It is understood
and agreed that, except as set forth in this Section 2.5, 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
or the Seller for such breach available to the Indenture Trustee on behalf of
the Noteholders.

                  SECTION 2.6. Nonpetition Covenant. None of the Seller, the
Servicer, the Owner Trustee (in its individual capacity or on behalf of the
Trust), 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 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 any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Trust.

                  SECTION 2.7. Collecting Lien Certificates Not Delivered on the
Closing Date. In the case of any Receivable in respect of which written evidence
from the Dealer selling the related Financed Vehicle that the Lien Certificate
for such Financed Vehicle showing AFL as first lienholder has been applied for
from the Registrar of Titles was delivered to the Custodian on the Closing Date,
in lieu of a Lien Certificate, the Servicer shall use its best efforts to
collect such Lien Certificate from the Registrar of Titles as promptly as
practicable. If such Lien Certificate showing AFL as first lienholder is not
received by the Custodian within 180 days after the Closing Date, then the
representation and warranty in Paragraph 18 of the Schedule of Representations
in respect of such Receivable shall be deemed to have been incorrect in a manner
that materially and adversely affects the Noteholders and the Trust.

                  SECTION 2.8. Trust's Assignment of Administrative Receivables
and Warranty Receivables. With respect to all Administrative Receivables and all
Warranty Receivables purchased by the Servicer, the Seller or AFL, the Owner
Trustee shall take any and all actions reasonably requested by the Seller, AFL
or Servicer, at the expense of the requesting party, to assign, without
recourse, representation or warranty, to the Seller, AFL or the Servicer, as
applicable, all the Trust's right, title and interest in and to such purchased
Receivable, all monies due thereon, the security interests in the related
Financed Vehicles, proceeds from any Insurance Policies, proceeds from recourse
against Dealers on such Receivables and the interests of the Trust in certain
rebates of premiums and other amounts relating to the Insurance Policies and any
documents relating thereto, such assignment being an assignment outright and not
for security; and the Seller, AFL or the Servicer, as applicable, shall
thereupon own such Receivable, and all such security and documents, free of any
further obligation to the Owner Trustee, the Trust, the Indenture Trustee or the
Noteholders with respect thereto.

                                      -23-
<PAGE>   28

                                   ARTICLE III

                   ADMINISTRATION AND SERVICING OF RECEIVABLES

                  SECTION 3.1. Duties of the Servicer. The Servicer is hereby
authorized to act as agent for the Trust and in such capacity shall manage,
service, administer and make collections on the Receivables, and perform the
other actions required by the Servicer under this Agreement. The Servicer agrees
that its servicing of the Receivables shall be carried out in accordance with
customary and usual procedures of institutions which service motor vehicle
retail installment sales contracts and, to the extent more exacting, the degree
of skill and attention that the Servicer exercises from time to time with
respect to all comparable motor vehicle receivables that it services for itself
or others. The Servicer's duties shall include, without limitation, collection
and posting of all payments, responding to inquiries of Obligors on the
Receivables, investigating delinquencies, sending payment coupons to Obligors,
reporting any required tax information to Obligors, policing the collateral,
complying with the terms of the Lockbox Agreement, accounting for collections
and furnishing monthly and annual statements to the Owner Trustee and the
Indenture Trustee with respect to distributions, monitoring the status of
Insurance Policies with respect to the Financed Vehicles and performing the
other duties specified herein. The Servicer shall also administer and enforce
all rights and responsibilities of the holder of the Receivables provided for in
the Dealer Agreements (and shall maintain possession of the Dealer Agreements,
to the extent it is necessary to do so), the Dealer Assignments and the
Insurance Policies, to the extent that such Dealer Agreements, Dealer
Assignments and Insurance Policies relate to the Receivables, the Financed
Vehicles or the Obligors. To the extent consistent with the standards, policies
and procedures otherwise required hereby, the Servicer shall follow its
customary standards, policies, and procedures and shall have full power and
authority, acting alone, to do any and all things in connection with such
managing, servicing, administration and collection that it may deem necessary or
desirable. Without limiting the generality of the foregoing, the Servicer
is hereby authorized and empowered by the Owner Trustee to execute and deliver,
on behalf of the Trust, any and all instruments of satisfaction or cancellation,
or of partial or full release or discharge, and all other comparable
instruments, with respect to the Receivables and with respect to the Financed
Vehicles. The Servicer is hereby authorized to commence, in its own name or in
the name of the Trust (provided the Servicer has obtained the Owner Trustee's
consent, which consent shall not be unreasonably withheld), a legal proceeding
to enforce a Receivable pursuant to Section 3.3 or to commence or participate in
any other legal proceeding (including, without limitation, a bankruptcy
proceeding) relating to or involving a Receivable, an Obligor or a Financed
Vehicle. If the Servicer commences or participates in such a legal proceeding in
its own name, the Trust shall thereupon be deemed to have automatically assigned
such Receivable to the Servicer solely for purposes of commencing or
participating in any such proceeding as a party or claimant, and the Servicer is
authorized and empowered by the Owner Trustee to execute and deliver in the
Servicer's name any notices, demands, claims, complaints, responses, affidavits
or other documents or instruments in connection with any such proceeding. The
Owner Trustee shall furnish the Servicer with any powers of attorney and other
documents which the Servicer may reasonably request and which the Servicer deems
necessary or appropriate and take any other steps which the Servicer may deem
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties under this Agreement.

                                      -24-
<PAGE>   29

                  SECTION 3.2. Collection of Receivable Payments; Modifications
of Receivables; Lockbox Agreements.

                  (a) Consistent with the standards, policies and procedures
required by this Agreement, the Servicer shall make reasonable efforts to
collect all payments called for under the terms and provisions of the
Receivables as and when the same shall become due, and shall follow such
collection procedures as it follows with respect to all comparable automobile
receivables that it services for itself or others and otherwise act with respect
to the Receivables, the Dealer Agreements, the Dealer Assignments, the Insurance
Policies and the other Trust Property in such manner as will, in the reasonable
judgment of the Servicer, maximize the amount to be received by the Trust with
respect thereto. The Servicer is authorized in its discretion to waive any
prepayment charge, late payment charge or any other similar fees that may be
collected in the ordinary course of servicing any Receivable.

                  (b) The Servicer may at any time agree to a modification,
amendment or extension of a Receivable in order to (i) change the Obligor's
regular due date to a date within the Monthly Period in which such due date
occurs, (ii) re-amortize the scheduled payments on the Receivable following a
partial prepayment of principal and (iii) subject to Section 3.2(c) below, grant
extensions on a Receivable, provided that the Servicer shall not be permitted to
extend the monthly payments on a Receivable more than two times in any
twelve-month period, and provided further that the aggregate period of all
extensions on a Receivable shall not exceed six months.

                  (c) The Servicer may grant payment extensions or deferrals on,
or other modifications or amendments to, a Receivable (in addition to those
modifications permitted by Section 3.2(b)) in accordance with its customary
procedures if the Servicer believes in good faith that such extension, deferral,
modification or amendment is necessary to avoid a default on such Receivable,
will maximize the amount to be received by the Trust with respect to such
Receivable, and is otherwise in the best interests of the Trust; provided,
however, that:

                           (i) In no event may a Receivable be extended beyond
                  the Monthly Period immediately preceding the Class B Final
                  Scheduled Distribution Date;

                           (ii) No such extension, modification or amendment
                  shall be granted if such action, when aggregated with all
                  previous extensions, modifications and amendments of
                  Receivables, would have the effect of causing any Notes to be
                  deemed to have been exchanged for other Notes within the
                  meaning of Section 1001 of the Internal Revenue Code of 1986,
                  as amended, or any proposed, temporary or final Treasury
                  Regulations issued thereunder; and

                           (iii) The Servicer may, in its discretion, waive any
                  late payment charge or any other fees that may be collected in
                  the ordinary course of servicing a Receivable. The Servicer
                  shall not voluntarily agree to any reduction of (i) the
                  original interest rate,

                                      -25-
<PAGE>   30

                  (ii) the amount of any Scheduled Payment on a Receivable, or
                  (iii) the Principal Balance of any Receivable.

                  (d) The Servicer shall use its reasonable best efforts to
cause Obligors to make all payments on the Receivables, whether by check or by
direct debit of the Obligor's bank account, to be made directly to one or more
Lockbox Banks, acting as agent for the Trust pursuant to a Lockbox Agreement.
Amounts received by a Lockbox Bank in respect of the Receivables may initially
be deposited into a demand deposit account maintained by the Lockbox Bank as
agent for the Trust and for other owners of automobile receivables serviced by
the Servicer. At any time the conditions specified in Section 4.2(a) are
satisfied, amounts received by the Lockbox Bank with respect to the Receivables
may be transferred daily to one or more accounts designated by the Servicer and
commingled with other general funds of the Servicer or its Affiliates. If at any
time the conditions specified in Section 4.2(a) are not satisfied, then the
Servicer shall use its reasonable best efforts to cause any Lockbox Bank to
deposit all payments on the Receivables in the Lockbox Account no later than the
Business Day after receipt, and to cause all amounts credited to the Lockbox
Account on account of such payments to be transferred to the Collection Account
no later than the second Business Day after receipt of such payments. The
Lockbox Account shall be a demand deposit account held by the Lockbox Bank.

                  Prior to the Closing Date the Servicer shall have notified
each Obligor that makes its payments on the Receivables by check to make such
payments thereafter directly to the Lockbox Bank (except in the case of Obligors
that have already been making such payments to the Lockbox Bank), and shall have
provided each such Obligor with a supply of mailing address labels in order to
enable such Obligors to make such payments directly to the Lockbox Bank for
deposit into the Lockbox Account, and the Servicer will continue, not less often
than every three months, to so notify those Obligors who have failed to make
payments to the Lockbox Bank. If at any time the Lockbox Bank is unable to
directly debit an Obligor's bank account that makes payment on the Receivables
by direct debit and if such inability is not cured within 15 days or cannot be
cured by execution by the Obligor of a new authorization for automatic payment,
the Servicer shall notify such Obligor that it cannot make payment by direct
debit and must thereafter make payment by check.

                  Notwithstanding any Lockbox Agreement, or any of the
provisions of this Agreement relating to the Lockbox Agreement, the Servicer
shall remain obligated and liable to the Owner Trustee, Indenture Trustee and
Noteholders for servicing and administering the Receivables and the other Trust
Property in accordance with the provisions of this Agreement without diminution
of such obligation or liability by virtue thereof.

                  In the event the Servicer shall for any reason no longer be
acting as such, the successor Servicer shall thereupon assume all of the rights
and obligations of the outgoing Servicer under the Lockbox Agreement. In such
event, the successor Servicer shall be deemed to have assumed all of the
outgoing Servicer's interest therein and to have replaced the outgoing Servicer
as a party to each such Lockbox Agreement to the same extent as if such Lockbox
Agreement had been assigned to the successor Servicer, except that the outgoing
Servicer shall not thereby be relieved of any liability or

                                      -26-
<PAGE>   31

obligations on the part of the outgoing Servicer to the Lockbox Bank under such
Lockbox Agreement. The outgoing Servicer shall, upon request of the Owner
Trustee but at the expense of the outgoing Servicer, deliver to the successor
Servicer all documents and records relating to each such Agreement and an
accounting of amounts collected and held by the Lockbox Bank and otherwise use
its best efforts to effect the orderly and efficient transfer of any Lockbox
Agreement to the successor Servicer. In the event that the Indenture Trustee
elects to change the identity of the Lockbox Bank, the outgoing Servicer, at its
expense, shall cause the Lockbox Bank to deliver, at the direction of the
Controlling Noteholders to the Owner Trustee or a successor Lockbox Bank, all
documents and records relating to the Receivables and all amounts held (or
thereafter received) by the Lockbox Bank (together with an accounting of such
amounts) and shall otherwise use its best efforts to effect the orderly and
efficient transfer of the lockbox arrangements and the Servicer shall notify the
Obligors to make payments to the Lockbox established by the successor.

                  (e) Subject to Section 4.2(a) below, the Servicer shall remit
all payments by or on behalf of the Obligors received directly by the Servicer
to the Collection Account or to the Lockbox Bank for deposit into the Collection
Account without deposit into any intervening account as soon as practicable, but
in no event later than the Business Day after receipt thereof.

                  SECTION 3.3.  Realization Upon Receivables.

                  (a) Consistent with the standards, policies and procedures
required by this Agreement, the Servicer shall use all reasonable efforts to
repossess (or otherwise comparably convert the ownership of) and liquidate any
Financed Vehicle securing a Receivable in accordance with customary practices
and procedures as it shall deem necessary or advisable, consistent with the
standard of care required by Section 3.1, which practices and procedures may
include reasonable efforts to realize upon any recourse to Dealers, the sale of
the related Financed Vehicle at public or private sale, the submission of claims
under an Insurance Policy and other actions by the Servicer in order to realize
upon such a Receivable. The foregoing is subject to the provision that, in any
case in which the Financed Vehicle shall have suffered damage, the Servicer
shall not expend funds in connection with any repair or towards the repossession
of such Financed Vehicle unless it shall determine in its discretion that such
repair and/or repossession shall increase the proceeds of liquidation of the
related Receivable by an amount greater than the amount of such expenses. All
amounts received upon liquidation of a Financed Vehicle shall be remitted by the
Servicer to the Collection Account or to the Lockbox Bank in accordance with
Section 3.2(e). The Servicer shall be entitled to recover all reasonable
expenses incurred by it in the course of repossessing and liquidating a Financed
Vehicle into cash proceeds, but only out of the cash proceeds of such Financed
Vehicle, any deficiency obtained from the Obligor or any amounts received from
the related Dealer, which amounts may be retained by the Servicer (and shall not
be required to be deposited as provided in Section 3.2(e)) to the extent of such
expenses. The Servicer shall pay on behalf of the Trust any personal property
taxes assessed on repossessed Financed Vehicles; the Servicer shall be entitled
to reimbursement of any such tax from Liquidation Proceeds with respect to such
Receivable.

                                      -27-
<PAGE>   32

                  (b) If the Servicer elects to commence a legal proceeding to
enforce a Dealer Agreement or Dealer Assignment, the act of commencement shall
be deemed to be an automatic assignment from the Trust to the Servicer of the
rights under such Dealer Agreement and Dealer Assignment for purposes of
collection only. If, however, in any enforcement suit or legal proceeding, it is
held that the Servicer may not enforce a Dealer Agreement or Dealer Assignment
on the grounds that it is not a real party in interest or a Person entitled to
enforce the Dealer Agreement or Dealer Assignment, the Owner Trustee, at the
Servicer's expense, or the Seller, at the Seller's expense, shall take such
steps as the Servicer deems necessary to enforce the Dealer Agreement or Dealer
Assignment, including bringing suit in its name or the name of the Seller or of
the Indenture Trustee for the benefit of the Noteholders. All amounts recovered
shall be remitted by the Servicer as provided in Section 3.2(e).

                  SECTION 3.4. Insurance.

                  (a) The Servicer shall require that each Financed Vehicle be
insured by the Insurance Policies referred to in Paragraph 24 of the Schedule of
Representations and Warranties and shall monitor the status of such physical
loss and damage insurance coverage thereafter, in accordance with its customary
servicing procedures. Each Receivable requires the Obligor to maintain such
physical loss and damage insurance, naming AFL and its successors and assigns as
additional insureds, and permits the holder of such Receivable to obtain
physical loss and damage insurance at the expense of the Obligor if the Obligor
fails to maintain such insurance. If the Servicer shall determine that an
Obligor has failed to obtain or maintain a physical loss and damage Insurance
Policy covering the related Financed Vehicle which satisfies the conditions set
forth in such Paragraph 24 (including, without limitation, during the
repossession of such Financed Vehicle) the Servicer shall enforce the rights of
the holder of the Receivable under the Receivable to require the Obligor to
obtain such physical loss and damage insurance.

                  (b) The Servicer shall not, if an Obligor fails to maintain a
physical loss and damage Insurance Policy, obtain insurance with respect to the
related Financed Vehicle and may not advance, on behalf of such Obligor, the
premiums for such insurance.

                  (c) The Servicer may sue to enforce or collect upon the
Insurance Policies, in its own name, if possible, or as agent of the Trust. If
the Servicer elects to commence a legal proceeding to enforce an Insurance
Policy, the act of commencement shall be deemed to be an automatic assignment of
the rights of the Trust under such Insurance Policy to the Servicer for purposes
of collection only. If, however, in any enforcement suit or legal proceeding it
is held that the Servicer may not enforce an Insurance Policy on the grounds
that it is not a real party in interest or a holder entitled to enforce the
Insurance Policy, the Owner Trustee, on behalf of the Trust, at the Servicer's
expense, or the Seller, at the Seller's expense, shall take such steps as the
Servicer deems necessary to enforce such Insurance Policy, including bringing
suit in its name or the name of the Indenture Trustee for the benefit of the
Noteholders.

                                      -28-
<PAGE>   33

                  (d) The Servicer shall maintain a vendor's single interest or
other collateral protection insurance policy with respect to all Financed
Vehicles, which policy shall by its terms insure against physical damage in the
event any Obligor fails to maintain physical loss and damage insurance with
respect to the related Financed Vehicle. Costs incurred by the Servicer in
maintaining such insurance shall be paid by the Servicer. The Servicer will
cause itself to be named as named insured and the Owner Trustee to be named a
loss payee under all such policies. The Servicer may elect not to maintain such
insurance policy but in such event will be obligated to indemnify the Trust
against any losses arising from an Obligor's failure to maintain physical loss
and damage insurance with respect to the related Financed Vehicle.

                  SECTION 3.5. Maintenance of Security Interests in Vehicles.

                  (a) Consistent with the policies and procedures required by
this Agreement, the Servicer shall take such steps as are necessary to maintain
perfection of the security interest created by each Receivable in the related
Financed Vehicle on behalf of the Trust, including but not limited to obtaining
the execution by the Obligors and the recording, registering, filing,
re-recording, re-filing, and re-registering of all security agreements,
financing statements and continuation statements as are necessary to maintain
the security interest granted by the Obligors under the respective Receivables.
The Owner Trustee hereby authorizes the Servicer, and the Servicer agrees, to
take any and all steps necessary to re-perfect such security interest on behalf
of the Trust as necessary because of the relocation of a Financed Vehicle or for
any other reason. In the event that the assignment of a Receivable to the Owner
Trustee on behalf of the Trust is insufficient, without a notation on the
related Financed Vehicle's certificate of title, or without fulfilling any
additional administrative requirements under the laws of the state in which the
Financed Vehicle is located, to perfect a security interest in the related
Financed Vehicle in favor of the Trust, the Servicer hereby agrees that the
Servicer's designation as the secured party on the certificate of title is in
its capacity as agent of the Trust.

                  (b) Upon the occurrence of a Servicer Termination Event, the
Owner Trustee and the Servicer shall take or cause to be taken such action as
may, in the opinion of counsel to the Owner Trustee, be necessary to perfect or
re-perfect the security interests in the Financed Vehicles securing the
Receivables in the name of the Trust by amending the title documents of such
Financed Vehicles or by such other reasonable means as may, in the opinion of
counsel to the Owner Trustee, be necessary or prudent. AFL hereby agrees to pay
all expenses related to such perfection or re-perfection and to take all action
necessary therefor.

                  SECTION 3.6. Covenants, Representations, and Warranties of
Servicer. By its execution and delivery of this Agreement, the Servicer makes
the following representations, warranties and covenants on which the Owner
Trustee relies in accepting the Receivables in trust and issuing the Notes on
behalf of the Trust, on which the Indenture Trustee relies in authenticating the
Notes.

                  (a)      The Servicer covenants as follows:

                                      -29-
<PAGE>   34

                           (i) Liens in Force. The Financed Vehicle securing
                           each Receivable shall not be released in whole or in
                           part from the security interest granted by the
                           Receivable, except upon payment in full of the
                           Receivable or as otherwise contemplated herein;

                           (ii) No Impairment. The Servicer shall do nothing to
                           impair the rights of the Trust, the Noteholders in
                           the Receivables, the Dealer Agreements, the Dealer
                           Assignments, the Insurance Policies or the other
                           Trust Property; and

                           (iii) No Amendments. The Servicer shall not extend or
                           otherwise amend the terms of any Receivable, except
                           in accordance with Section 3.2.

                  (b)      The Servicer represents, warrants and covenants as of
                           the Closing Date as to itself:

                           (i) Organization and Good Standing. The Servicer has
                           been duly organized and is validly existing and in
                           good standing under the laws of its jurisdiction of
                           organization, with power, authority and legal right
                           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 enter into and perform its obligations under this
                           Agreement;

                           (ii) Due Qualification. The Servicer 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 property or the conduct of
                           its business (including the servicing of the
                           Receivables as required by this Agreement) requires
                           or shall require 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 the
                           Related Documents to which the Servicer is a party;

                           (iii) Power and Authority. The Servicer has the power
                           and authority to execute and deliver this Agreement
                           and the Related Documents to which the Servicer is a
                           party and to carry out its terms and their terms,
                           respectively, and the execution, delivery and
                           performance of this Agreement and the Related
                           Documents to which the Servicer is a party have been
                           duly authorized by the Servicer by all necessary
                           corporate action;

                           (iv) Binding Obligation. This Agreement and the
                           Related Documents to which the Servicer is a party
                           shall constitute legal, valid and binding obligations
                           of the Servicer enforceable in accordance with their
                           respective terms, except as

                                      -30-
<PAGE>   35

                           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;

                           (v) No Violation. The consummation of the
                           transactions contemplated by this Agreement and the
                           Related Documents to which the Servicer is a party,
                           and the fulfillment of the terms of this Agreement
                           and the Related Documents to which the Servicer is a
                           party, shall 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 articles of incorporation or bylaws of the
                           Servicer, or any indenture, agreement, mortgage, deed
                           of trust or other instrument to which the Servicer 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, or
                           violate any law, order, rule or regulation applicable
                           to the Servicer of any court or of any federal or
                           state regulatory body, administrative agency or other
                           governmental instrumentality having jurisdiction over
                           the Servicer or any of its properties;

                           (vi) No Proceedings. There are no proceedings or
                           investigations pending or, to the Servicer's
                           knowledge, threatened against the Servicer, before
                           any court, regulatory body, administrative agency or
                           other tribunal or governmental instrumentality having
                           jurisdiction over the Servicer or its properties (A)
                           asserting the invalidity of this Agreement or any of
                           the Related Documents to which the Servicer is a
                           party, (B) seeking to prevent the issuance of the
                           Notes or the consummation of any of the transactions
                           contemplated by this Agreement or any of the Related
                           Documents to which the Servicer is a party, (C)
                           seeking any determination or ruling that might
                           materially and adversely affect the performance by
                           the Servicer of its obligations under, or the
                           validity or enforceability of, this Agreement or any
                           of the Related Documents to which the Servicer is a
                           party or (D) seeking to adversely affect the federal
                           income tax or other federal, state or local tax
                           attributes of the Notes;

                           (vii) No Consents. The Servicer is not required to
                           obtain the consent of any other party or any consent,
                           license, approval or authorization, or registration
                           or declaration with, any governmental authority,
                           bureau or agency in connection with the execution,
                           delivery, performance, validity or enforceability of
                           this Agreement; and

                           (viii) Collateral Insurance. The Collateral Insurance
                           is in full force and effect.

                                      -31-
<PAGE>   36

                           (ix) No Amendment or Waiver. No provision of any
                           Receivable has been received, altered or modified in
                           any respect, except pursuant to a document,
                           instrument or writing included in the relevant
                           Receivable File, and no such amendment, waiver,
                           alteration or modification causes such Receivable not
                           to conform to the other warranties contained in this
                           Section 3.6 or those of the Seller contained in
                           Section 2.4.

                           (x) Location of Receivable Files. The Receivable
                           Files are kept in the offices of the Seller or at
                           such other office specified in accordance with
                           Section 2.2.

                  SECTION 3.7. Purchase of Receivables Upon Breach of Covenant.
Upon discovery by any of the Servicer, the Owner Trustee or the Indenture
Trustee of a breach of any of the covenants set forth in Sections 3.5(a) or
3.6(a), the party discovering such breach shall give prompt written notice to
the others; provided, however, that the failure to give any such notice shall
not affect any obligation of the Servicer. As of the second Accounting Date
following its discovery or receipt of notice of any breach of any covenant set
forth in Sections 3.5(a) or 3.6(a) which materially and adversely affects the
interests of the Noteholders or the Trust in any Receivable (including any
Liquidated Receivable) (or, at the Servicer's election, the first Accounting
Date so following), the Servicer shall, unless it shall have cured such breach
in all material respects, purchase from the Trust the Receivable affected by
such breach and, on the related Determination Date, the Servicer shall pay the
related Purchase Amount. It is understood and agreed that the obligation of the
Servicer to purchase any Receivable (including any Liquidated Receivable) with
respect to which such a breach has occurred and is continuing shall, if such
obligation is fulfilled, constitute the sole remedy against the Servicer for
such breach available to the Noteholders or the Indenture Trustee on behalf of
Noteholders.

                  SECTION 3.8. Total Servicing Fee; Payment of Certain Expenses
by Servicer. On each Distribution Date, the Servicer shall be entitled to
receive out of the Collection Account the Basic Servicing Fee and any
Supplemental Servicing Fee for the related Monthly Period pursuant to Section
4.6(iii). The Servicer shall be required to pay all expenses incurred by it in
connection with its activities under this Agreement (including taxes imposed on
the Servicer, expenses incurred in connection with distributions and reports to
Noteholders and all other fees and expenses of the Trust, including taxes levied
or assessed against the Trust, and claims against the Trust in respect of
indemnification, unless such fees, expenses or claims in respect of
indemnification are expressly stated to be for the account of AFL or not to be
for the account of the Servicer). The Servicer shall be liable for the fees and
expenses of the Owner Trustee, the Administrator, the Indenture Trustee, the
Custodian, the Lockbox Bank (and any fees under the Lockbox Agreement) with
respect to the Trust and the Independent Accountants. Notwithstanding the
foregoing, if the Servicer shall not be AFL, a successor to AFL as Servicer
permitted by Section 7.2 or an Affiliate of any of the foregoing, such Servicer
shall not be liable for taxes levied or assessed against the Trust or claims
against the Trust in respect of indemnification.

                                      -32-
<PAGE>   37

                  SECTION 3.9. Servicer's Certificate. No later than 10:00 a.m.
New York City time on each Determination Date, the Servicer shall deliver to the
Owner Trustee, the Indenture Trustee and each Rating Agency a Servicer's
Certificate executed by a Responsible Officer of the Servicer containing, among
other things, (i) all information necessary to enable the Indenture Trustee to
make any withdrawal and deposit required by Section 5.1, to make the
distributions required by Section 4.6 and to determine the amount to which the
Servicer is entitled to be reimbursed or has been reimbursed during the related
Monthly Period for Monthly Advances pursuant to Section 4.4(c), (ii) all
information necessary to enable the Indenture Trustee to send the statements to
Noteholders required by Section 4.8, (iii) a listing of all Warranty Receivables
and Administrative Receivables purchased as of the related Determination Date,
identifying the Receivables so purchased, and (iv) all information necessary to
enable the Indenture Trustee to reconcile all deposits to, and withdrawals from,
the Collection Account for the related Monthly Period and Distribution Date,
including the accounting required by Section 4.7. Receivables purchased by the
Servicer or by the Seller or AFL on the related Determination Date and each
Receivable which became a Liquidated Receivable or which was paid in full during
the related Monthly Period shall be identified by account number (as set forth
in the Schedule of Receivables). A copy of such certificate may be obtained by
any Noteholder (or by a Note Owner, upon certification that such Person is a
Note Owner and payment of any expenses associated with the distribution thereof)
by a request in writing to the Indenture Trustee addressed to the Corporate
Trust Office. The Indenture Trustee will make such statement (and, at its
option, any additional files containing the same information in an alternative
format) available each month to Noteholders and other parties to the Related
Documents via the Indenture Trustee's internet website, which is presently
located at www.abs.bankone.com.

                  If such statement is not accessible on the Indenture Trustee's
internet website, the Indenture Trustee shall forward a hard copy of it to each
Noteholder, the Servicer, the Seller, and each Rating Agency immediately after
the Indenture Trustee becomes aware that it is not accessible by any of them via
the Indenture Trustee's internet website. Assistance in using the Indenture
Trustee's internet website may be obtained by calling the Indenture Trustee's
customer service desk at (800) 524-9472. The Indenture Trustee shall notify each
of the above in writing of any change in the address or means of access to the
internet website where such statement is accessible.

                  SECTION 3.10. Annual Statement as to Compliance; Notice of
Servicer Termination Event.

                  (a) The Servicer shall deliver to the Owner Trustee, the
Indenture Trustee and each Rating Agency, on or before April 30 (or 120 days
after the end of the Servicer's fiscal year, if other than December 31) of each
year, beginning on April 30, 2001, an officer's certificate signed by any
Responsible Officer of the Servicer, dated as of December 31 (or other
applicable date) of the immediately preceding year, stating that (i) a review of
the activities of the Servicer during the preceding 12-month period (or such
other period as shall have elapsed from the Closing Date to the date of the
first such certificate) and of its performance under this Agreement has been
made under such officer's supervision, and (ii) to such officer's knowledge,
based on such review, the Servicer has fulfilled all its obligations under this
Agreement throughout such period, or, if there has been a default in the
fulfillment

                                      -33-
<PAGE>   38

of any such obligation, specifying each such default known to such officer and
the nature and status thereof.

                  (b) The Servicer shall deliver to the Owner Trustee, the
Indenture Trustee, and each Rating Agency, promptly after having obtained
knowledge thereof, but in no event later than two Business Days thereafter,
written notice in an officer's certificate of any event which with the giving of
notice or lapse of time, or both, would become a Servicer Termination Event
under Section 8.1(a). The Seller or the Servicer shall deliver to the Owner
Trustee, the Indenture Trustee, the Servicer or the Seller (as applicable) and
each Rating Agency promptly after having obtained knowledge thereof, but in no
event later than two Business Days thereafter, written notice in an officer's
certificate of any event which with the giving of notice or lapse of time, or
both, would become a Servicer Termination Event under any other clause of
Section 8.1.

                  SECTION 3.11. Annual Independent Accountants' Report.

                  (a) On or before April 30 of each calendar year, beginning
with April 30, 2001, the Servicer shall cause a firm of nationally recognized
independent certified public accountants, who may also render other services to
the Servicer or Seller (the "Independent Accountants"), to furnish a report to
the Owner Trustee, the Indenture Trustee, the Servicer and each Rating Agency to
the effect that they have applied certain procedures agreed upon with the
Servicer to compare the mathematical calculations of certain amounts set forth
in the Servicer's Certificates delivered pursuant to Section 3.9 during the
period covered by such report with the Servicer's computer reports that were the
source of such amounts and that on the basis of such agreed-upon procedures and
comparison, such Independent Accountants can confirm that such amounts are in
agreement, except for such exceptions as shall be set forth in such statement.
Such report shall set forth the agreed-upon procedures performed.

                  (b) The Accountants' Report shall also indicate that the firm
is independent of the Seller and the Servicer within the meaning of the Code of
Professional Ethics of the American Institute of Certified Public Accountants.

                  (c) A copy of the Accountants' Report may be obtained by any
Noteholder (or by any Note Owner, upon certification that such Person is a Note
Owner and payment of any expenses associated with the distribution thereof) by a
request in writing to the Indenture Trustee addressed to the Corporate Trust
Office.

                  SECTION 3.12. Access to Certain Documentation and Information
Regarding Receivables. The Servicer shall provide to representatives of the
Owner Trustee, and the Indenture Trustee reasonable access to the documentation
regarding the Receivables. The Servicer shall provide such access to any
Noteholder (or Note Owner) only in such cases where the Servicer is required by
applicable statutes or regulations (whether applicable to the Servicer or
to such Noteholder or Note Owner) to permit such Noteholder (or Note Owner) to
review such documentation. In each case, such access shall be afforded without
charge but only upon reasonable request and during normal business hours.
Nothing in this Section shall derogate from the obligation of the Servicer to
observe

                                      -34-
<PAGE>   39

any applicable law prohibiting disclosure of information regarding the Obligors,
and the failure of the Servicer to provide access as provided in this Section as
a result of such obligation shall not constitute a breach of this Section. Any
Noteholder (or Note Owner), by its acceptance of a Note (or by acquisition of
its beneficial interest therein), as applicable, shall be deemed to have agreed
to keep confidential and not to use for its own benefit any information obtained
by it pursuant to this Section, except as may be required by applicable law.

                  SECTION 3.13. Monthly Tape. On or before the third Business
Day, but in no event later than the fifth calendar day, of each month, the
Servicer will deliver to the Indenture Trustee a computer tape and a diskette
(or any other electronic transmission acceptable to the Indenture Trustee) in a
format acceptable to the Indenture Trustee containing the information with
respect to the Receivables as of the preceding Accounting Date necessary for
preparation of the Servicer's Certificate relating to the immediately succeeding
Determination Date and necessary to determine the application of collections as
provided in Section 4.3.

                  SECTION 3.14. Duties of the Servicer under the Indenture. The
Servicer shall, and hereby agrees that it will, perform on behalf of the Trust
and the Owner Trustee the following duties of the Trust or the Owner Trustee, as
applicable, under the Indenture (references are to the applicable Sections in
the Indenture):

                  (a) the direction to the Paying Agents, if any, to deposit
moneys with the Indenture Trustee (Section 3.03);

                  (b) the obtaining and preservation of the Issuer's
qualification to do business in each jurisdiction in which such qualification is
or shall be necessary to protect the validity and enforceability of the
Indenture, the Notes, the Collateral and each other instrument and agreement
included in the Trust Estate (Section 3.04);

                  (c) the preparation of all supplements, amendments, financing
statements, continuation statements, instruments of further assurance and other
instruments, in accordance with Section 3.05 of the Indenture, necessary to
protect the Trust Estate (Section 3.05);

                  (d) the delivery of the Opinion of Counsel on the Closing Date
and the annual delivery of Opinions of Counsel, in accordance with Section 3.06
of the Indenture, as to the Trust Estate, and the annual delivery of the
Officer's Certificate and certain other statements, in accordance with Section
3.09 of the Indenture, as to compliance with the Indenture (Sections 3.06 and
3.09);

                  (e) the preparation and obtaining of documents and instruments
required for the release of the Issuer from its obligations under the Indenture
(Section 3.10(b));

                  (f) the monitoring of the Issuer's obligations as to the
satisfaction and discharge of the Indenture and the preparation of an Officer's
Certificate and the obtaining of the Opinion of Counsel and the Independent
Certificate relating thereto (Section 4.01);

                                      -35-
<PAGE>   40

                  (g) the preparation of any written instruments required to
confirm more fully the authority of any co-trustee or separate trustee and any
written instruments necessary in connection with the resignation or removal of
any co-trustee or separate trustee (Sections 6.08 and 6.10);

                  (h) the opening of one or more accounts in the Trust's name,
the preparation of Issuer Orders, Officer's Certificates and Opinions of Counsel
and all other actions necessary with respect to investment and reinvestment of
funds in the Trust Accounts (Sections 8.02 and 8.03);

                  (i) the preparation of Trust Orders and the obtaining of
Opinions of Counsel with respect to the execution of supplemental indentures
(Sections 9.01, 9.02 and 9.03);

                  (j) the preparation of all Officer's Certificates, Opinions of
Counsel and Independent Certificates with respect to any requests by the Issuer
to the Indenture Trustee or the Indenture Collateral Agent to take any action
under the Indenture (Section 11.01(a));

                  (k) the preparation and delivery of Officer's Certificates and
the obtaining of Independent Certificates, if necessary, for the release of
property from the lien of the Indenture (Section 11.01(b)); and

                  (l) the recording of the Indenture, if applicable (Section
11.15).

In addition to the duties of the Servicer set forth above, the Servicer shall,
and hereby agrees that it will, prepare, distribute and file any reports
required by Section 313(b) of the Trust Indenture Act of 1939, as amended, as a
result of any transfer of Subsequent Receivables. Such distribution and filing
is to be effected by the Servicer's distribution and filing of the Servicer's
Certificate.

                  SECTION 3.15. Certain Duties of the Servicer under the Trust
Agreement. The Servicer shall, and hereby agrees that it will, monitor the
Trust's compliance with all applicable provisions of state and federal
securities laws, notify the Trust and the Administrator (as defined in the Trust
Agreement) of any actions to be taken by the Trust necessary for compliance with
such laws and prepare on behalf of the Trust and the Administrator all notices,
filings or other documents or instruments required to be filed under such law.

                  SECTION 3.16. Fidelity Bond. The Servicer shall maintain with
a responsible company, and at its own expense, a blanket fidelity bond and an
errors and omissions insurance policy, in an amount that is commercially
available at a cost that is not generally regarded as excessive by industry
standards, with broad coverage on all officers, employees or other persons
acting in any capacity requiring such persons to handle funds, money, documents
or papers relating to the Receivables (the "Servicer Employees"). Any such
fidelity bond and errors and omissions insurance shall protect and insure the
Servicer against losses, including losses resulting from forgery, theft,
embezzlement, fraud, errors and omissions and negligent acts of such Servicer
Employees. No provision of this Section 3.16 requiring such fidelity bond and
errors and omissions insurance shall diminish or relieve the Servicer from its
duties and obligations as set forth in this Agreement. Upon the

                                      -36-
<PAGE>   41

request of the Indenture Trustee or the Owner Trustee, the Servicer shall cause
to be delivered to the Indenture Trustee and the Owner Trustee a certified true
copy of such fidelity bond and insurance policy.

                                   ARTICLE IV

                    DISTRIBUTIONS; STATEMENTS TO NOTEHOLDERS

         SECTION 4.1. Trust Accounts.

         (a) The Servicer shall establish the Collection Account in the name of
the Indenture Trustee for the benefit of the Noteholders and Certificateholders.
The Collection Account shall be an Eligible Account and initially shall be a
segregated trust account established with the Indenture Trustee and maintained
with the Indenture Trustee.

         (b) The Servicer shall establish the Principal Distribution Account in
the name of the Indenture Trustee for the benefit of the Noteholders and
Certificateholders. The Principal Distribution Account shall be an Eligible
Account and initially shall be a segregated trust account established with the
Indenture Trustee and maintained with the Indenture Trustee.

         (c) The Servicer shall establish the Note Interest Distribution Account
in the name of the Indenture Trustee for the benefit of the Noteholders. The
Note Interest Distribution Account shall be an Eligible Account and initially
shall be a segregated trust account established with the Indenture Trustee and
maintained with the Indenture Trustee.

         (d) The Servicer shall establish and maintain the Certificate
Distribution Account in the name of the Trust for the benefit of the
Certificateholders. The Certificate Distribution Account shall be an Eligible
Account and initially shall be a segregated trust account established with the
Owner Trustee and maintained with the Owner Trustee.

         (e) The Servicer shall establish the Reserve Account in the name of the
Indenture Trustee for the benefit of the Noteholders. The Reserve Account shall
be an Eligible Account and initially shall be a segregated trust account
established with the Indenture Trustee and maintained with the Indenture
Trustee.

         (f) All amounts held in the Collection Account, the Principal
Distribution Account, the Note Interest Distribution Account and the Reserve
Account (collectively, the "Trust Accounts") and the Certificate Distribution
Account shall, to the extent permitted by applicable laws, rules and
regulations, be invested, as directed in writing by the Servicer, in Eligible
Investments that, in the case of amounts held in the Collection Account, the
Principal Distribution Account and the Note Interest Distribution Account,
mature not later than one Business Day prior to the Distribution Date for the
Monthly Period to which such amounts relate, and, in the case of amounts held
in the Reserve Account,

                                      -37-
<PAGE>   42

mature in such amounts and on such dates as the Servicer may direct in writing;
provided, however, that the amounts held in the Trust Accounts shall be held
uninvested for the period of time from the Business Day prior to the
Distribution Date or the maturity of Reserve Account investments, as applicable,
until such Distribution Date or the maturity of Reserve Account investments, as
applicable. Any such written direction shall certify that any such investment is
authorized by this Section 4.1. Investments in Eligible Investments shall be
made in the name of the Indenture Trustee on behalf of the Trust, and such
investments shall not be sold or disposed of prior to their maturity. Any
investment of funds in the Trust Accounts shall be made in Eligible Investments
held by a financial institution in accordance with the following requirements:

                  (i) all Eligible Investments shall be held in an account with
         such financial institution in the name of the Indenture Trustee;

                  (ii) all Eligible Investments held in such account shall be
         delivered to the Indenture Trustee in the following manner:

                  (A) with respect to bankers' acceptances, commercial paper,
                  negotiable certificates of deposit and other obligations that
                  constitute "instruments" within the meaning of Section
                  9-105(1)(i) of the UCC (other than certificated securities)
                  and are susceptible of physical delivery, transferred to the
                  Indenture Trustee by physical delivery to the Indenture
                  Trustee, indorsed to, or registered in the name of, the
                  Indenture Trustee or its nominee or indorsed in blank; or such
                  additional or alternative procedures as may hereafter become
                  appropriate to effect the complete transfer of ownership of
                  any such Eligible Investments to the Indenture Trustee free of
                  any adverse claims, consistent with changes in applicable law
                  or regulations or the interpretation thereof;

                           (B) with respect to a "certificated security" (as
                           defined in Section 8- 102(a)(4) of the UCC),
                           transferred:

                                    (1) by physical delivery of such
                                    certificated security to the Indenture
                                    Trustee, provided that if the certificated
                                    security is in registered form, it shall be
                                    indorsed to, or registered in the name of,
                                    the Indenture Trustee or indorsed in blank;

                                    (2) by physical delivery of such
                                    certificated security in registered form to
                                    a "securities intermediary" (as defined in
                                    Section 8-102(a)(14) of the UCC) acting on
                                    behalf of the Indenture Trustee if the
                                    certificated security has been specially
                                    indorsed to the Indenture Trustee by an
                                    effective indorsement.

                           (C) with respect to any security issued by the U.S.
                           Treasury, the Federal Home Loan Mortgage Corporation
                           or by the Federal National Mortgage Association that
                           is a book-entry security held through the Federal
                           Reserve

                                      -38-
<PAGE>   43

                           System pursuant to Federal book entry regulations,
                           the following procedures, all in accordance with
                           applicable law, including applicable federal
                           regulations and Articles 8 and 9 of the UCC:
                           book-entry registration of such property to an
                           appropriate book-entry account maintained with a
                           Federal Reserve Bank by a securities intermediary
                           which is also a "depositary" pursuant to applicable
                           federal regulations and issuance by such securities
                           intermediary of a deposit advice or other written
                           confirmation of such book-entry registration to the
                           Indenture Trustee of the purchase by the securities
                           intermediary on behalf of the Indenture Trustee of
                           such book-entry security; the making by such
                           securities intermediary of entries in its books and
                           records identifying such book-entry security held
                           through the Federal Reserve System pursuant to
                           Federal book-entry regulations as belonging to the
                           Indenture Trustee and indicating that such securities
                           intermediary holds such book-entry security solely as
                           agent for the Indenture Trustee; or such additional
                           or alternative procedures as may hereafter become
                           appropriate to effect complete transfer of ownership
                           of any such Eligible Investments to the Indenture
                           Trustee free of any adverse claims, consistent with
                           changes in applicable law or regulations or the
                           interpretation thereof;

                           (D) with respect to any "uncertificated security" (as
                           defined in Section 8- 102(a)(18) of the UCC) that is
                           not governed by clause (C) above, transferred:

                                    (1)(A) by registration to the Indenture
                                    Trustee as the registered owner thereof, on
                                    the books and records of the issuer thereof,
                                    or

                                    (B) by another Person (not a securities
                                    intermediary) either becomes the registered
                                    owner of the uncertificated security on
                                    behalf of the Indenture Trustee, or having
                                    become the registered owner acknowledges
                                    that it holds for the Indenture Trustee; or

                                    (2) by the issuer thereof having agreed that
                                    it will comply with instructions originated
                                    by the Indenture Trustee without further
                                    consent of the registered owner thereof;

                           (E) with respect to any "security entitlement" (as
                           defined in Section 8- 102(a)(17) of the UCC):

                                    (1) if a securities intermediary (A)
                                    indicates by book entry that a "financial
                                    asset" (as defined in Section 8-102(a)(9) of
                                    the UCC) has been credited to the Indenture
                                    Trustee's "securities account" (as defined
                                    in Section 8-501(a) of the UCC), (B)
                                    receives a financial asset (as so defined)
                                    from the Indenture Trustee or acquires a
                                    financial asset for the Indenture Trustee,
                                    and in either case, accepts it for credit to
                                    the

                                      -39-
<PAGE>   44

                                    Indenture Trustee's securities account (as
                                    so defined), (C) becomes obligated under
                                    other law, regulation or rule to credit a
                                    financial asset to the Indenture Trustee's
                                    securities account, or (D) has agreed that
                                    it will comply with "entitlement orders"
                                    (as defined in Section 8-102(a)(8) of the
                                    UCC) originated by the Indenture Trustee,
                                    without further consent by the "entitlement
                                    holder" (as defined in Section 8-102(a)(7)
                                    of the UCC), of a confirmation of the
                                    purchase and the making by such securities
                                    intermediary of entries on its books and
                                    records identifying as belonging to the
                                    Indenture Trustee of (I) a specific
                                    certificated security in the securities
                                    intermediary's possession, (II) a quantity
                                    of securities that constitute or are part
                                    of a fungible bulk of certificated
                                    securities in the securities intermediary's
                                    possession, or (III) a quantity of
                                    securities that constitute or are part of a
                                    fungible bulk of securities shown on the
                                    account of the securities intermediary on
                                    the books of another securities
                                    intermediary.

                           (F) in each case of delivery contemplated pursuant to
                           clauses (A) through (E) of subsection (ii) hereof,
                           the Indenture Trustee shall make appropriate
                           notations on its records, and shall cause the same to
                           be made on the records of its nominees, indicating
                           that such Eligible Investment is held in trust
                           pursuant to and as provided in this Indenture.

Any cash held by the Indenture Trustee shall not be considered a "financial
asset" for purposes of this Section 4.1(e). Subject to the other provisions
hereof, the Indenture Trustee shall have sole control over each such investment
and the income thereon, and any certificate or other instrument evidencing any
such investment, if any, shall be delivered directly to the Indenture Trustee or
its agent, together with each document of transfer, if any, necessary to
transfer title to such investment to the Indenture Trustee in a manner which
complies with this Section 4.1. All interest, dividends, gains upon sale and
other income from, or earnings on, investments of funds in the Trust Accounts
(other than the Reserve Account) shall be deposited in the Collection Account
and distributed on the next Distribution Date pursuant to Section 4.6. The
Servicer shall deposit in the applicable Trust Account an amount equal to any
net loss on such investments immediately as realized. All interest, dividends,
gains upon sale and other income from, or earnings on, investments of funds in
the Reserve Account shall be deposited in the Reserve Account.

                  SECTION 4.2. Collections.

                  (a) The Servicer shall remit directly to the Collection
Account or to the Lockbox Bank for deposit into the Collection Account, without
deposit into any other intervening account, all payments by or on behalf of the
Obligors on the Receivables and all Liquidation Proceeds received by the
Servicer, in each case, as soon as practicable, but in no event later than the
Business Day after receipt thereof. Within two days of deposit of payments into
the Lockbox Account, the Servicer shall cause the Lockbox Bank to transfer all
amounts credited to the Lockbox Account on account of such

                                      -40-
<PAGE>   45

payments to the Collection Account. Amounts in the Collection Account shall not
be invested. Notwithstanding the foregoing, the Servicer may deposit such funds
in one or more accounts designated by the Servicer and commingle such funds
with the general funds of the Servicer or its Affiliates, and remit such funds
to the Collection Account on the Draw Date with respect to the Distribution
Date, unless:

                  (1)      a Servicer Termination Event has occurred and is
                           continuing;

                  (2)      an Event of Default has occurred and is continuing;

                  (3)      Arcadia Financial is no longer the Servicer; or

                  (4)      (a)      Arcadia Financial is no longer a wholly
                                    owned direct or indirect subsidiary of
                                    Associates First Capital Corporation, or

                           (b)      the short-term senior unsecured debt of
                                    Associates Corporation of North America is
                                    not rated at least P-1 by Moody's and A-1 by
                                    S&P or any such rating is suspended or
                                    withdrawn.

Upon the occurrence the events specified above, the Servicer shall not be
permitted to deposit funds in one or more accounts established by the Servicer
or to commingle such funds with the general funds of the Servicer or its
Affiliates, and the Indenture Trustee shall notify the Lockbox Bank to deposit
such funds directly into the Collection Account.

                  (b) Notwithstanding the provisions of subsection (a) hereof,
the Servicer will be entitled to be reimbursed from amounts on deposit in the
Collection Account with respect to a Monthly Period for amounts previously
deposited in the Collection Account but later determined by the Servicer or the
Lockbox Bank to have resulted from mistaken deposits or postings or checks
returned for insufficient funds. The amount to be reimbursed hereunder shall be
paid to the Servicer on the related Distribution Date pursuant to Section
4.6(iii) upon certification by the Servicer of such amounts and the provision of
such information to the Indenture Trustee as may be necessary in the opinion of
the Indenture Trustee to verify the accuracy of such certification.

                  SECTION 4.3. Application of Collections. For the purposes of
this Agreement, all collections for a Monthly Period shall be applied by the
Servicer as follows:

                  (a) With respect to each Receivable, payments by or on behalf
of the Obligor thereof (other than of Supplemental Servicing Fees with respect
to such Receivable, to the extent collected) shall be applied to interest and
principal with respect to such Receivable in accordance with the terms of such
Receivable. With respect to each Liquidated Receivable, Liquidation Proceeds
shall be applied to interest and principal with respect to such Receivable in
accordance with the terms of such Receivable. The Servicer shall not be entitled
to any Supplemental Servicing Fees with respect to a Liquidated Receivable.

                                      -41-
<PAGE>   46

                  (b) With respect to each Receivable that has become a
Purchased Receivable on any Determination Date, the Purchase Amount shall be
applied, for purposes of this Agreement only, to interest and principal on the
Receivable in accordance with the terms of the Receivable as if the Purchase
Amount had been paid by the Obligor on the Accounting Date. The Servicer shall
not be entitled to any Supplemental Servicing Fees with respect to such a
Receivable. Nothing contained herein shall relieve any Obligor of any obligation
relating to any Receivable.

                  (c) All amounts collected that are payable to the Servicer as
Supplemental Servicing Fees hereunder shall be deposited in the Collection
Account and paid to the Servicer in accordance with Section 4.6(iii).

                  (d) All payments by or on behalf of an Obligor received with
respect to any Purchased Receivable after the Accounting Date immediately
preceding the Determination Date on which the Purchase Amount was paid by the
Seller, AFL or the Servicer shall be paid to the Seller, AFL or the Servicer,
respectively, and shall not be included in the Available Funds.

                  SECTION 4.4. Monthly Advances.

                  (a) If with respect to a Receivable, the amount deposited into
the Collection Account during a Monthly Period in respect of such Receivable and
allocable to interest (determined in accordance with Section 4.3) is less than
an amount of interest equal to interest accrued on such Receivable (for the
number of calendar days in such Monthly Period) (calculated according to the
method specified in the related retail installment sale contract or promissory
note at the APR on the Principal Balance of such Receivable as of the Accounting
Date preceding such Distribution Date), the Servicer shall make a Monthly
Advance equal to the amount of such shortfall; provided, however, that the
Servicer shall not be required to make a Monthly Advance with respect to a
Receivable extended pursuant to Section 3.2(b) for any Monthly Period during
which no Scheduled Payment is due according to the terms of such extension; and
provided further, that the Servicer shall not be required to make a Monthly
Advance with respect to a Receivable that is less than 31 days delinquent; and
provided, further, that the Servicer shall not be required to make a Monthly
Advance with respect to a Receivable if the Servicer determines, in good faith
and its sole discretion, that such Monthly Advance will not ultimately be
recoverable from collections with respect to such Receivable or other
Receivables.

                  (b) On or before each Draw Date, the Servicer shall deposit in
the Collection Account the aggregate amount of Monthly Advances required for the
related Monthly Period in immediately available funds (subject to Section 4.7).

                  (c) The Servicer shall be entitled to be reimbursed for
Outstanding Monthly Advances with respect to a Receivable pursuant to Section
4.6(i) or pursuant to Section 4.7 from the following sources with respect to
such Receivable on any day subsequent to the Distribution Date in respect of
which such Monthly Advance was made: (i) subsequent payments by or on behalf of
the Obligor with respect to such Receivable, (ii) collections of Liquidation
Proceeds with respect to such

                                      -42-
<PAGE>   47

Receivable if such Receivable becomes a Liquidated Receivable and (iii) payment
of any Purchase Amount with respect to such Receivable if such Receivable
becomes a Purchased Receivable. If any Receivable shall become a Liquidated
Receivable and the Servicer shall not have been fully reimbursed for Outstanding
Monthly Advances with respect to such Receivable from the sources of funds
previously described in this paragraph, the Servicer shall be entitled to
reimbursement from collections on Receivables other than the Receivable in
respect of which such Outstanding Monthly Advance shall have been made.

                  SECTION 4.5. Additional Deposits. On or before each Draw Date,
the Servicer or AFL shall deposit in the Collection Account the aggregate
Purchase Amounts with respect to Administrative Receivables and Warranty
Receivables, respectively. All such deposits of Purchase Amounts shall be made
in immediately available funds.

                  SECTION 4.6. Distributions. On each Distribution Date, the
Indenture Trustee shall (based on the information contained in the Servicer's
Certificate delivered on the related Determination Date) distribute the
following amounts and in the order of priority specified below.

                  (i) first, from the Actual Funds, to the Servicer, the amount
of Outstanding Monthly Advances for which the Servicer is entitled to be
reimbursed pursuant to Section 4.4(c) and for which the Servicer has not
previously been reimbursed pursuant to Section 4.7;

                  (ii) second, from the Actual Funds then remaining on deposit
in the Collection Account, to the Owner Trustee, any accrued and unpaid fees of
the Owner Trustee in accordance with the Trust Agreement and including amounts
with respect to which the Administrator is entitled to be reimbursed pursuant to
the Administration Agreement; to the Indenture Trustee, any accrued and unpaid
fees of the Indenture Trustee in accordance with the Indenture; to any Lockbox
Bank, Custodian, or Administrator (including the Owner Trustee or Indenture
Trustee if acting in any such additional capacity), any accrued and unpaid fees
(in each case, to the extent such Person has not previously received such amount
from the Servicer or AFL) due from the Trust;

                  (iii) third, from the Actual Funds then remaining on deposit
in the Collection Account, to the Servicer, the Basic Servicing Fee for the
related Monthly Period, any Supplemental Servicing Fees for the related Monthly
Period, and any amounts specified in Section 4.2(b), to the extent the Servicer
has not reimbursed itself in respect of such amounts pursuant to Section 4.7;

                  (iv) fourth, from the Actual Funds then remaining on deposit
in the Collection Account, to the Note Interest Distribution Account, the Class
A Interest Distributable Amount;

                  (v) fifth, from the Actual Funds then remaining on deposit in
the Collection Account, to the Principal Distribution Account, the First
Priority Principal Distribution Amount;

                  (vi) sixth, from the Actual Funds then remaining on deposit in
the Collection Account, to the Note Interest Distribution Account, the Class M
Interest Distributable Amount;

                                      -43-
<PAGE>   48

                  (vii) seventh, from the Actual Funds then remaining on deposit
in the Collection Account, to the Principal Distribution Account, the Second
Priority Principal Distribution Amount;

                  (viii) eighth, from the Actual Funds then remaining on deposit
in the Collection Account, to the Note Interest Distribution Account, the Class
B Interest Distributable Amount;

                  (ix) ninth, from the Actual Funds then remaining on deposit in
the Collection Account, to the Reserve Account, the amount required to reinstate
the amount on deposit in the Reserve Account up to the Specified Reserve
Balance;

                  (x) tenth, from the Actual Funds then remaining on deposit in
the Collection Account, to the Principal Distribution Account, the Regular
Principal Distribution Amount; and

                  (xi) eleventh, any remaining Actual Funds to the Certificate
Distribution Account.

                  SECTION 4.7. Net Deposits. Subject to payment by the Servicer
of amounts otherwise payable pursuant to Section 4.6(ii) and provided that no
Servicer Termination Event shall have occurred and be continuing with respect to
such Servicer, the Servicer may make the remittances to be made by it pursuant
to Sections 3.2(d), 3.2(e), 4.2, 4.4 and 4.5 net of amounts (which amounts may
be netted prior to any such remittance for a Monthly Period) to be distributed
to it pursuant to Sections 3.8, 4.2(b) and 4.6(i); provided, however, that the
Servicer shall account for all of such amounts in the related Servicer's
Certificate as if such amounts were deposited and distributed separately; and,
provided, further, that if an error is made by the Servicer in calculating the
amount to be deposited or retained by it, with the result that an amount less
than required is deposited in the Collection Account, the Servicer shall make a
payment of the deficiency to the Collection Account, immediately upon becoming
aware, or receiving notice from the Indenture Trustee, of such error.

                  SECTION 4.8. Statements to Noteholders.

                  (a) On each Distribution Date, the Indenture Trustee shall
include with each distribution to each Noteholder and to the Owner Trustee, the
Servicer's Certificate (which statement shall also have been provided to each
Rating Agency by the Servicer) delivered on the related Determination Date
pursuant to Section 3.9, setting forth for the Monthly Period relating to such
Payment Date the following information with respect to each class of Notes:

                           (i) the amount of such distribution allocable to
                  principal;

                           (ii) the amount of such distribution allocable to
                  interest;

                           (iii) the amount of such distribution payable out of
                  amounts withdrawn from the Reserve Account;

                                      -44-
<PAGE>   49

                           (iv) the outstanding principal balance of the Notes
                  (after giving effect to distributions made on such
                  Distribution Date);

                           (v) the Class A-1 Interest Carryover Shortfall, the
                  Class A-2 Interest Carryover Shortfall, the Class A-3 Interest
                  Carryover Shortfall, the Class M Interest Carryover Shortfall
                  and the Class B Interest Carryover Shortfall, if any, and the
                  change in such amounts from the preceding statement;

                           (vi) the amount of fees paid by the Trust with
                  respect to such Monthly Period;

                           (vii) the Specified Reserve Balance and the amount on
                  deposit in the Reserve Account; and

                           (viii) the Note Pool Factor with respect to each
                  class of Notes (after giving effect to distributions made on
                  such Distribution Date).

Each amount set forth pursuant to subclauses (i) through (iv) above may be
expressed as a dollar amount per $1,000 of original principal balance of a Note.

                  (b) Note Owners may obtain copies of the statements delivered
by the Indenture Trustee pursuant to subsection (a) above upon written request
to the Indenture Trustee at its Corporate Trust Office (together with a
certification that such Person is a Note Owner and payment of any expenses
associated with the distribution thereof). The Indenture Trustee will make such
statement (and, at its option, any additional files containing the same
information in an alternative format) available to Note Owners and other parties
to the Related Documents via the Indenture Trustee's internet website, which is
presently located at www.abs.bankone.com.

                  If such statement is not accessible on the Indenture Trustee's
internet website, the Indenture Trustee shall forward a hard copy of it to each
Note Owner immediately after the Indenture Trustee becomes aware that it is not
accessible by any of them via the Indenture Trustee's internet website.
Assistance in using the Indenture Trustee's internet website may be obtained by
calling the Indenture Trustee's customer service desk at (800) 524-9472. The
Indenture Trustee shall notify each of the above in writing of any change in the
address or means of access to the internet website where such statement is
accessible.

                  SECTION 4.9. Indenture Trustee as Agent. The Indenture
Trustee, in holding all funds in the Trust Accounts and in making distributions
as provided in this Agreement, shall act solely on behalf of and as agent for
the Noteholders.

                  SECTION 4.10. Eligible Accounts. Any account which is required
to be established as an Eligible Account pursuant to this Agreement and which
ceases to be an Eligible Account shall within five Business Days (or such longer
period, not to exceed 30 days, as to which each Rating

                                      -45-
<PAGE>   50

Agency may consent) be established as a new account which shall be an Eligible
Account and any cash and/or any investments shall be transferred to such new
account.

                                    ARTICLE V

                               THE RESERVE ACCOUNT

                  SECTION 5.1. Withdrawals from the Reserve Account. In the
event that the Servicer's Certificate with respect to any Determination Date
shall state that the amount of Available Funds with respect to such
Determination Date is less than the Total Required Payment for the related
Distribution Date, then on the Draw Date immediately preceding such Distribution
Date, the Indenture Trustee, in accordance with written instructions from the
Servicer, shall (i) withdraw amounts on deposit in the Reserve Account (up to
the amount by which the Total Required Payment for the related Distribution Date
exceeds the amount of Available Funds with respect to such Determination Date)
and (ii) deposit the amounts so withdrawn from the Reserve Account into the
Collection Account. In addition, the Indenture Trustee shall withdraw amounts on
deposit in the Reserve Account on any Distribution Date to the extent that such
amounts, together with the Collected Funds for such Distribution Date, would be
sufficient to pay the sum of the Servicing Fee and the Outstanding Amount of the
Notes, and deposit the Servicing Fee into the Collection Account and an amount
equal to the Outstanding Amount of the Notes into the Principal Distribution
Account. On each Distribution Date, any Reserve Account Excess Amount (after
giving effect to any withdrawals on the immediately preceding Draw Date as
described above) shall be distributed to the Certificateholders.

                                   ARTICLE VI

                                   THE SELLER

                  SECTION 6.1. Liability of Seller.

                  (a) The Seller shall be liable hereunder only to the extent of
the obligations in this Agreement specifically undertaken by the Seller and the
representations made by the Seller.

                  SECTION 6.2. Merger or Consolidation of, or Assumption of the
Obligations of, Seller. Any Person (a) into which the Seller may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Seller shall be a party or (c) which may succeed to the properties and assets of
the Seller substantially as a whole, shall be the successor to the Seller
without the execution or filing of any document or any further act by any of the
parties to this Agreement; provided, however, that the Seller hereby covenants
that it will not consummate any of the foregoing transactions except upon
satisfaction of the following: (i) the surviving Seller executes an agreement of
assumption to perform every obligation of the Seller under this Agreement, (ii)
immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 2.4 shall have been breached and no Event of
Default, and no event that, after notice of lapse of time, or both, would

                                      -46-
<PAGE>   51

become an Event of Default shall have happened and be continuing, (iii) the
Seller shall have delivered to the Owner Trustee and the 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
and that all conditions precedent, if any, provided for in this Agreement
relating to such transaction have been complied with, and that the Rating Agency
Condition shall have been satisfied with respect to such transaction, (iv) the
Surviving Seller shall have a consolidated net worth at least equal to that of
the predecessor Seller, (v) such transaction will not result in a material
adverse federal or state tax consequence to the Issuer, the Noteholders or the
Certificateholders and (vi) the Seller shall have delivered to the Owner Trustee
and the Trustee an Opinion of Counsel either (A) stating that, in the opinion of
such counsel, all financing statements and continuation statements and
amendments thereto have been executed and filed that are necessary fully to
preserve and protect the interest of the Owner Trustee and Indenture Trustee,
respectively, in the Receivables and reciting the details of such filings, or
(B) stating that, in the opinion of such counsel, no such action shall be
necessary to preserve and protect such interests.

                  SECTION 6.3. Limitation on Liability of Seller and Others. The
Seller and any director or officer or employee or agent of the Seller 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. The Seller shall not be under any obligation to
appear in, prosecute or defend any legal action that is not incidental to its
obligations as Seller of the Receivables under this Agreement and that in its
opinion may involve it in any expense or liability.

                  SECTION 6.4. Seller May Own Notes. Each of the Seller and any
Affiliate of the Seller may in its individual or any other capacity become the
owner or pledgee of Notes with the same rights as it would have if it were not
the Seller or an Affiliate thereof except as otherwise specifically provided
herein or in the Related Documents. Notes so owned by or pledged to the Seller
or such Affiliate shall have an equal and proportionate benefit under the
provisions of this Agreement or any Related Document, without preference,
priority, or distinction as among all of the Notes, provided that any Notes
owned by the Seller or any Affiliate thereof, during the time such Notes are
owned by them, shall be without voting rights for any purpose set forth in this
Agreement or any Related Document. The Seller shall notify the Owner Trustee and
the Indenture Trustee promptly after it or any of its Affiliates become the
owner or pledgee of a Note.

                  SECTION 6.5. Corporate Existence.

                  (a) During the term of this Agreement, the Seller will keep in
full force and effect its existence, rights and franchises as a corporation
under the laws of the jurisdiction of its incorporation and will obtain and
preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the Related Documents and each other
instrument or agreement necessary or appropriate to the proper administration of
this Agreement and the transactions contemplated hereby.

                                      -47-
<PAGE>   52

                  (b) During the term of this Agreement, the Seller shall
observe the applicable legal requirements for the recognition of the Seller as a
legal entity separate and apart from its affiliates, including as follows:

                  (i) the Seller shall maintain corporate records and books of
account separate from those of its affiliates;

                  (ii) except as otherwise provided in this Agreement, the
Seller shall not commingle its assets and funds with those of its affiliates;

                  (iii) the Seller shall hold such appropriate meetings of its
Board of Directors as are necessary to authorize all the Seller's corporate
actions required by law to be authorized by the Board of Directors, shall keep
minutes of such meetings and of meetings of its stockholder(s) and observe all
other customary corporate formalities (and any successor Seller not a
corporation shall observe similar procedures in accordance with its governing
documents and applicable law);

                  (iv) the Seller shall at all times hold itself out to the
public under the Seller's own name as a legal entity separate and distinct from
its affiliates; and

                  (v) all transactions and dealings between the Seller and its
affiliates will be conducted on an arm's-length basis.

                  SECTION 6.6. Security Interest. During the term of this
Agreement, the Seller will not take any action to assign the security interest
in any Financed Vehicles other than pursuant to the Related Documents.

                                   ARTICLE VII

                                  THE SERVICER

                  SECTION 7.1. Liability of Servicer; Indemnities.

                  (a) The Servicer (in its capacity as such and, in the case of
AFL, without limitation of its obligations under the Purchase Agreement) shall
be liable hereunder only to the extent of the obligations in this Agreement
specifically undertaken by the Servicer and the representations made by the
Servicer.

                  (b) The Servicer shall defend, indemnify and hold harmless the
Trust, the Owner Trustee, the Indenture Trustee, their respective officers,
directors, agents and employees, and the Noteholders from and against any and
all costs, expenses, losses, damages, claims and liabilities, including
reasonable fees and expenses of counsel and expenses of litigation arising out
of or resulting from the use, ownership or operation by the Servicer or any
Affiliate thereof of any Financed Vehicle.

                                      -48-
<PAGE>   53

                  (c) The Servicer shall indemnify, defend and hold harmless the
Trust, the Owner Trustee, the Indenture Trustee, their respective officers,
directors, agents and employees and the Noteholders from and against any taxes
that may at any time be asserted against the Trust, the Owner Trustee, the
Indenture Trustee, or the Noteholders with respect to the transactions
contemplated in this Agreement, including, without limitation, any sales, gross
receipts, withholding, general corporation, tangible personal property,
privilege or license taxes (but not including (i) income taxes on fees and
expenses payable to the Owner Trustee or the Indenture Trustee, (ii) income
taxes arising out of distributions on the Notes or (iii) transfer taxes arising
in connection with transfers of Notes).

                  (d) The Servicer shall indemnify, defend and hold harmless the
Trust, the Owner Trustee, the Indenture Trustee, their respective officers,
directors, agents and employees 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 the Trust, the Owner Trustee, the Indenture Trustee, or the
Noteholders through the breach of this Agreement, the negligence, willful
misfeasance, or bad faith of the Servicer in the performance of its duties under
this Agreement or by reason of reckless disregard of its obligations and duties
under this Agreement.

                  (e) The Servicer shall indemnify, defend, and hold harmless
the Owner Trustee and the Indenture Trustee, in their individual capacities,
their officers, directors, agents and employees, from and against all costs,
taxes (other than income taxes on fees and expenses payable to the Owner Trustee
and the Indenture Trustee), expenses, losses, claims, damages and liabilities
arising out of or incurred in connection with the acceptance or performance of
the trusts and duties contained in the Trust Agreement and the Related
Documents, except to the extent that such cost, taxes (other than income taxes),
expense, loss, claim, damage or liability (A) is due to the willful misfeasance
or gross negligence of the Owner Trustee, or (B) arises from the Owner Trustee's
breach of any of its representations or warranties set forth in Section 7.3 of
the Trust Agreement; provided, however, that amounts payable under this
paragraph shall be increased by the amount of income taxes actually paid by the
Owner Trustee in respect of any indemnity payment unless the Owner Trustee
received or can reasonably be expected to receive a tax deduction for the
related loss or cost.

                  (f) Indemnification under this Article shall include, without
limitation, reasonable fees and expenses of counsel and expenses of litigation.
If the Servicer has made any indemnity payments pursuant to this Article and the
recipient thereafter collects any of such amounts from others, the recipient
shall promptly repay such amounts collected to the Servicer, without interest.

                  (g) AFL, in its individual capacity, hereby acknowledges that
the indemnification provisions in the Purchase Agreement benefitting the Trust,
the Owner Trustee and the Indenture Trustee are enforceable by each hereunder.

                                      -49-
<PAGE>   54

                  SECTION 7.2. Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer. The Servicer shall not merge or consolidate with
any other person, convey, transfer or lease substantially all its assets as an
entirety to another Person, or permit any other Person to become the successor
to the Servicer's business unless, after the merger, consolidation, conveyance,
transfer, lease or succession, the successor or surviving entity shall be an
Eligible Servicer and shall be capable of fulfilling the duties of the Servicer
contained in this Agreement. Any corporation (i) into which the Servicer may be
merged or consolidated, (ii) resulting from any merger or consolidation to which
the Servicer shall be a party, (iii) which acquires by conveyance, transfer, or
lease substantially all of the assets of the Servicer, or (iv) succeeding to the
business of the Servicer, in any of the foregoing cases shall execute an
agreement of assumption to perform every obligation of the Servicer under this
Agreement and, whether or not such assumption agreement is executed, shall be
the successor to the Servicer under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties to this
Agreement, anything in this Agreement to the contrary notwithstanding; provided,
however, that nothing contained herein shall be deemed to release the Servicer
from any obligation. The Servicer shall provide notice of any merger,
consolidation or succession pursuant to this Section 7.2 to the Owner Trustee,
the Indenture Trustee, and each Rating Agency. Notwithstanding the foregoing,
the Servicer shall not merge or consolidate with any other Person or permit any
other Person to become a successor to the Servicer's business, unless (x)
immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 3.6 shall have been breached (for purposes
hereof, such representations and warranties shall speak as of the date of the
consummation of such transaction), (y) the Servicer 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 7.2 and that all conditions
precedent, if any, provided for in this Agreement relating to such transaction
have been complied with, and (z) the Servicer 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.

                  SECTION 7.3. Limitation on Liability of Servicer and Others.
Neither the Servicer nor any of the directors or officers or employees or agents
of the Servicer shall be under any liability to the Trust, or the Noteholders,
except as provided in this Agreement, for any action taken or for refraining
from the taking of any action pursuant to this Agreement; provided, however,
that this provision shall not protect the Servicer or any such person against
any liability that would otherwise be imposed by reason of a breach of this
Agreement or willful misfeasance, bad faith or negligence (excluding errors in
judgment) in the performance of duties, by reason of reckless disregard of
obligations and duties under this Agreement or any violation of law by the
Servicer or such person, as the case may be; provided further, that this
provision shall not affect any liability to indemnify the Owner Trustee and the
Indenture Trustee for costs, taxes, expenses, claims, liabilities, losses or
damages paid by the Owner Trustee or the Indenture Trustee, each in its
individual capacity. The Servicer and any director, officer, employee or agent
of the Servicer may rely in good faith on the advice of counsel or

                                      -50-
<PAGE>   55

on any document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising under this Agreement.

                  SECTION 7.4. Delegation of Duties. The Servicer may delegate
duties under this Agreement to an Affiliate of AFL with the prior written
consent of the Indenture Trustee and the Owner Trustee. The Servicer also may at
any time perform the specific duties hereunder through sub- contractors who are
in the business of servicing automotive receivables; provided, however, that no
such delegation or sub-contracting duties by the Servicer shall relieve the
Servicer of its responsibility with respect to such duties.

                  SECTION 7.5. Servicer Not to Resign. Subject to the provisions
of Section 7.2, the Servicer shall not resign from the obligations and duties
imposed on it by this Agreement as Servicer except upon a determination that by
reason of a change in legal requirements the performance of its duties under
this Agreement would cause it to be in violation of such legal requirements in a
manner which would have a material adverse effect on the Servicer and the
Controlling Noteholders do not elect to waive the obligations of the Servicer to
perform the duties which render it legally unable to act or to delegate those
duties to another Person. Any such determination permitting the resignation of
the Servicer shall be evidenced by an Opinion of Counsel to such effect
delivered and reasonably acceptable to the Owner Trustee and the Indenture
Trustee. No resignation of the Servicer shall become effective until a successor
Servicer that is an Eligible Servicer shall have assumed the responsibilities
and obligations of the Servicer.

                                  ARTICLE VIII

                           SERVICER TERMINATION EVENTS

                  SECTION 8.1. Servicer Termination Event. For purposes of this
Agreement, each of the following shall constitute a "Servicer Termination
Event":

                  (a) Any failure by the Servicer to deliver to the Indenture
Trustee for distribution to Noteholders any proceeds or payment required to be
so delivered under the terms of this Agreement (or, if AFL is the Servicer, the
Purchase Agreement) that continues unremedied for a period of two Business Days
(one Business Day with respect to payment of Purchase Amounts) after written
notice is received by the Servicer from the Indenture Trustee; or

                  (b) Failure by the Servicer to deliver to the Indenture
Trustee and the Owner Trustee, the Servicer's Certificate by the Distribution
Date, or failure on the part of the Servicer to observe its covenants and
agreements set forth in Section 7.2; or

                  (c) Failure on the part of the Servicer duly to observe or
perform in any material respect any other covenants or agreements of the
Servicer set forth in this Agreement (or, if AFL is the Servicer, the Purchase
Agreement), which failure (i) materially and adversely affects the rights of
Noteholders, and (ii) continues unremedied for a period of 30 days after the
date on which written

                                      -51-
<PAGE>   56

notice of such failure, requiring the same to be remedied, shall have been given
to the Servicer by the Owner Trustee, the Indenture Trustee or any Noteholder;
or

                  (d) (i) The commencement of an involuntary case under the
federal bankruptcy laws, as now or hereinafter in effect, or another present or
future federal or state bankruptcy, insolvency or similar law and such case is
not dismissed within 60 days; or (ii) the entry of a decree or order for relief
by a court or regulatory authority having jurisdiction in respect of the
Servicer or the Seller in an involuntary case under the federal bankruptcy laws,
as now or hereafter in effect, or another present or future, federal or state,
bankruptcy, insolvency or similar law, or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Servicer or the Seller or of any substantial part of their respective properties
or ordering the winding up or liquidation of the affairs of the Servicer or the
Seller; or

                  (e) The commencement by the Servicer or the Seller of a
voluntary case under the federal bankruptcy laws, as now or hereafter in effect,
or any other present or future, federal or state, bankruptcy, insolvency or
similar law, or the consent by the Servicer or the Seller to the appointment of
or taking possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Servicer or the Seller or of any
substantial part of its property or the making by the Servicer or the Seller of
an assignment for the benefit of creditors or the failure by the Servicer or the
Seller generally to pay its debts as such debts become due or the taking of
corporate action by the Servicer or the Seller in furtherance of any of the
foregoing; or

                  (f) Any representation, warranty or statement of the Servicer
or the Seller made in this Agreement or any certificate, report or other writing
delivered pursuant hereto shall prove to be incorrect in any material respect as
of the time when the same shall have been made (excluding, however, any
representation or warranty set forth in Section 2.4(a)), and the incorrectness
of such representation, warranty or statement has a material adverse effect on
the Trust and, within 30 days after written notice thereof shall have been given
to the Servicer or the Seller by the Owner Trustee, the Indenture Trustee or a
Noteholder), the circumstances or condition in respect of which such
representation, warranty or statement was incorrect shall not have been
eliminated or otherwise cured.

                  SECTION 8.2. Consequences of a Servicer Termination Event. If
a Servicer Termination Event shall occur and be continuing, the Indenture
Trustee, the Owner Trustee, or the Controlling Noteholders, by notice given in
writing to the Servicer (and to the Indenture Trustee, and the Owner Trustee if
given by the Noteholders) may terminate all of the rights and obligations of the
Servicer under this Agreement. On or after the receipt by the Servicer of such
written notice, all authority, power, obligations and responsibilities of the
Servicer under this Agreement, whether with respect to the Notes or the Trust
Property or otherwise, shall be terminated and automatically shall pass to, be
vested in and become obligations and responsibilities of the Indenture Trustee
(or such other successor Servicer appointed pursuant to Section 8.3(b);
provided, however, that the successor Servicer shall have no liability with
respect to any obligation which was required to be performed by the terminated
Servicer prior to the date that the successor Servicer becomes the Servicer or
any claim of a third party based on any alleged action or inaction of the
terminated Servicer. The successor Servicer

                                      -52-
<PAGE>   57

is authorized and empowered by this Agreement to execute and deliver, on behalf
of the terminated Servicer, as attorney-in-fact or otherwise, any and all
documents and other instruments and to do or accomplish all other acts or things
necessary or appropriate to effect the purposes of such notice of termination,
whether to complete the transfer and endorsement of the Receivables and the
other Trust Property and related documents to show the Owner Trustee as
lienholder or secured party on the related Lien Certificates, or otherwise. The
terminated Servicer agrees to cooperate with the successor Servicer in effecting
the termination of the responsibilities and rights of the terminated Servicer
under this Agreement, including, without limitation, the transfer to the
successor Servicer for administration by it of all cash amounts that shall at
the time be held by the terminated Servicer for deposit, or have been deposited
by the terminated Servicer, in the Collection Account or thereafter received
with respect to the Receivables and the delivery to the successor Servicer of
all Receivable Files, Monthly Records and Collection Records and a computer tape
in readable form as of the most recent Business Day containing all information
necessary to enable the successor Servicer or a successor Servicer to service
the Receivables and the other Trust Property. In addition to any other amounts
that are then payable to the terminated Servicer under this Agreement, the
terminated Servicer shall then be entitled to receive out of Available Funds
reimbursements for any Outstanding Monthly Advances (in accordance with Section
4.4(c)) made during the period prior to the notice pursuant to this Section 8.2
which terminates the obligation and rights of the terminated Servicer under this
Agreement. The Owner Trustee, the Indenture Trustee and the successor Servicer
may set off and deduct any amounts owed by the terminated Servicer from any
amounts payable to the terminated Servicer pursuant to the preceding sentence.
The terminated Servicer shall grant the Owner Trustee, the Indenture Trustee and
the successor Servicer reasonable access to the terminated Servicer's premises
at the terminated Servicer's expense.

                  SECTION 8.3. Appointment of Successor.

                  (a) On and after (i) the time the Servicer receives a notice
of termination pursuant to Section 8.2, or (ii) the resignation of the Servicer
pursuant to Section 7.5, the Indenture Trustee shall be the successor in all
respects to the Servicer in its capacity as servicer under this Agreement and
the transactions set forth or provided for in this Agreement, and shall be
subject to all the responsibilities, restrictions, duties, liabilities and
termination provisions relating thereto placed on the Servicer by the terms and
provisions of this Agreement. The Owner Trustee and such successor shall take
such action, consistent with this Agreement, as shall be necessary to effectuate
any such succession. If a successor Servicer is acting as Servicer hereunder, it
shall be subject to termination under Section 8.2 upon the occurrence of any
Servicer Termination Event applicable to it as Servicer.

                  (b) Notwithstanding the above, if the Indenture Trustee shall
be legally unable or unwilling to act as Servicer, the Indenture Trustee, the
Controlling Noteholders or the Owner Trustee may petition a court of competent
jurisdiction to appoint any Eligible Servicer as the successor to the Servicer.
Pending appointment pursuant to the preceding sentence, the Indenture Trustee
shall act as successor Servicer unless it is legally unable to do so, in which
event the outgoing Servicer shall continue to act as Servicer until a successor
has been appointed and accepted such appointment. Subject to Section 7.5, no
provision of this Agreement shall be construed as relieving the Indenture

                                      -53-
<PAGE>   58

Trustee of its obligation to succeed as successor Servicer upon the termination
of the Servicer pursuant to Section 8.2 or the resignation of the Servicer
pursuant to Section 7.5.

                  (c) Any successor Servicer shall be entitled to such
compensation (whether payable out of the Collection Account or otherwise) as the
Servicer would have been entitled to under the Agreement if the Servicer had not
resigned or been terminated hereunder.

                  SECTION 8.4. Notification to Noteholders. Upon any termination
of, or appointment of a successor to, the Servicer pursuant to this Article
VIII, the Indenture Trustee shall give prompt written notice thereof to
Noteholders at their respective addresses appearing in the Note Register.

                  SECTION 8.5. Waiver of Past Defaults. The Controlling
Noteholders may, on behalf of all Holders of Notes, waive any default by the
Servicer in the performance of its obligations hereunder and its consequences.
Upon any such waiver of a past default, such default shall cease to exist, and
any Servicer Termination Event arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereon. Nothing in
this Section 8.5 shall preclude the Controlling Noteholders from waiving any
default for a period of time or subject to any contingency or from waiving some
but not all of the consequences of such default.

                                   ARTICLE IX

                                   TERMINATION

                  SECTION 9.1. Optional Purchase of All Receivables; Liquidation
of Trust Estate.

                  (a) On each Determination Date as of which the Pool Balance is
less than 10% of the Original Pool Balance, the Servicer shall have the option
to purchase the corpus of the Trust; provided, however, that the amount to be
paid for such purchase (as set forth in the following sentence) shall be
sufficient to pay the full amount of principal and interest then due and payable
on the Notes. To exercise such option, the Servicer or the Seller, as the case
may be, shall pay the aggregate Purchase Amounts for the Receivables, plus the
appraised value of any other property (including the right to receive any future
recoveries) held as part of the Trust, such appraisal to be conducted by an
appraiser mutually agreed upon by the Servicer and the Indenture Trustee, and
shall succeed to all interests in and to the Trust Property. The fees and
expenses related to such appraisal shall be paid by the Servicer. The Servicer
shall deposit the aggregate Purchase Amounts for the Receivables and the amount
of the appraised value of any other property held as part of the Trust into the
Collection Account, and the Indenture Trustee shall distribute the amounts so
deposited in accordance with Section 4.6.

                  (b) Notice of any termination of the Trust shall be given by
the Servicer to the Owner Trustee and the Indenture Trustee as soon as
practicable after the Servicer has received notice thereof.

                                      -54-
<PAGE>   59

                                    ARTICLE X

                            MISCELLANEOUS PROVISIONS

                  SECTION 10.1. Amendment.

                  (a) This Agreement may be amended by the Seller, the Servicer
and the Trust, with the prior written consent of the Indenture Trustee but
without the consent of any of the Noteholders, (i) to cure any ambiguity, (ii)
to correct or supplement any provisions in this Agreement or (iii) for the
purpose of adding any provision to or changing in any manner or eliminating any
provision of this Agreement or of modifying in any manner the rights of the
Noteholders; provided, however, that such provisions or revisions: (A) only
amend items that are administrative in nature, (B) cannot change the substantive
provisions affecting the terms of the Trust, collecting cash proceeds from
assets held, reinvesting proceeds from collections, otherwise servicing the
assets and distribution proceeds to the Noteholders and (C) cannot be contrary
to powers that are allowed for GAAP sales treatment under existing accounting
literature; and that such action shall not, as evidenced by an Opinion of
Counsel, adversely affect in any material respect the interests of the
Noteholders.

                  (b) This Agreement may also be amended from time to time by
the Seller, the Servicer and the Trust with the prior written consent of the
Indenture Trustee and with the consent of a majority of each class of
Noteholders (which 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 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) 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
Holders of Notes; provided, however, that, no such amendment shall (a) increase
or reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on Receivables or distributions required to be made on
any Note or the Class A-1 Interest Rate, Class A-2 Interest Rate, Class A-3
Interest Rate, Class M Interest Rate or Class B Interest Rate, (b) amend any
provisions of Section 4.6 in such a manner as to affect the priority of payment
of interest or principal to Noteholders, or (c) 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 amendment or consent, the
Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Rating Agency.

                  (d) Promptly after the execution of any amendment or consent,
the Owner Trustee shall furnish a copy of such amendment or consent to the
Indenture Trustee.

                  (e) It shall not be necessary for the consent of Noteholders
pursuant to Section 10.1(b) 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 any

                                      -55-
<PAGE>   60

other consents of Noteholders provided for in this Agreement) and of evidencing
the authorization of the execution thereof by Noteholders shall be subject to
such reasonable requirements as the Indenture Trustee may prescribe, including
the establishment of record dates.

                  (f) Prior to the execution of, or consent to, any amendment to
this Agreement, the Owner Trustee and the Indenture Trustee shall be entitled to
receive and rely upon an Opinion of Counsel stating that the execution of such
amendment is authorized or permitted by this Agreement, in addition to the
Opinion of Counsel referred to in Section 10.2(i). The Owner Trustee and the
Indenture Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Owner Trustee's or the Indenture Trustee's own
rights, duties or immunities under this Agreement or otherwise.

                  SECTION 10.2. Protection of Title to Trust Property.

                  (a) The Servicer shall execute and file such financing
statements and cause to be executed and filed such continuation and other
statements, all in such manner and in such places as may be required by law
fully to preserve, maintain and protect the interest of the Trust, the Owner
Trustee and the Indenture Trustee in the Trust Property and in the proceeds
thereof. The Servicer shall deliver (or cause to be delivered) to the Owner
Trustee, the Indenture Trustee and the Security Insurer file- stamped copies of,
or filing receipts for, any document filed as provided above, as soon as
available following such filing.

                  (b) Neither the Seller, the Servicer, the Owner Trustee nor
the Trust shall change its name, identity or corporate structure in any manner
that would, could or might make any financing statement or continuation
statement filed by the Seller in accordance with paragraph (a) above seriously
misleading within the meaning of Section 9-402(7) of the UCC, unless it shall
have given the Owner Trustee and the Indenture 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) Each of the Seller, the Servicer and the Trust shall give
the Owner Trustee and the Indenture 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. The Servicer shall at all times maintain each
office from which it services Receivables and its principal executive office
within the United States of America.

                  (d) The Servicer shall maintain accounts and records as to
each Receivable accurately and in sufficient detail to permit (i) the reader
thereof to know at any time the status of such Receivable, including payments
and recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Collection Account
in respect of such Receivable.

                                      -56-
<PAGE>   61

                  (e) The Servicer shall maintain its computer systems so that,
from and after the time of sale under this Agreement of the Receivables to the
Trust, the Servicer's master computer records (including any backup archives)
that refer to any Receivable indicate clearly (with reference to the particular
trust) that the Receivable is owned by the Trust. Indication of the Trust's
ownership of a Receivable shall be deleted from or modified on the Servicer's
computer systems when, and only when, the Receivable has been paid in full or
repurchased by the Seller or Servicer.

                  (f) If at any time the Seller or the Servicer proposes to
sell, grant a security interest in, or otherwise transfer any interest in
automotive receivables to any prospective purchaser, lender or other transferee,
the Servicer shall give to such prospective purchaser, lender or other
transferee computer tapes, records or print-outs (including any restored from
backup archives) that, if they refer in any manner whatsoever to any Receivable,
indicate clearly that such Receivable has been sold and is owned by the Trust
unless such Receivable has been paid in full or repurchased by the Seller or
Servicer.

                  (g) The Servicer shall permit the Owner Trustee and the
Indenture Trustee and their respective agents, at any time to inspect, audit and
make copies of and abstracts from the Servicer's records regarding any
Receivables or any other portion of the Trust Property.

                  (h) The Servicer shall furnish to the Owner Trustee and the
Indenture Trustee at any time upon request a list of all Receivables then held
as part of the Trust, together with a reconciliation of such list to the
Schedule of Receivables and to each of the Servicer's Certificates furnished
before such request indicating removal of Receivables from the Trust. Upon
request, the Servicer shall furnish a copy of any list to the Seller. The Owner
Trustee shall hold any such list and Schedule of Receivables for examination by
interested parties during normal business hours at the Corporate Trust Office
upon reasonable notice by such Persons of their desire to conduct an
examination.

                  (i) The Seller and the Servicer shall deliver to the Owner
Trustee and the Indenture Trustee simultaneously with the execution and delivery
of this Agreement and of each amendment thereto and upon the occurrence of the
events giving rise to an obligation to give notice pursuant to Section 10.2(b)
or (c), an Opinion of Counsel either (a) stating that, in the opinion of such
counsel, all financing statements and continuation statements have been executed
and filed that are necessary fully to preserve and protect the interest of the
Owner Trustee and the Indenture Trustee in the Receivables and the other Trust
Property, and reciting the details of such filings or referring to prior
Opinions of Counsel in which such details are given, or (b) stating that, in the
opinion of such counsel, no such action is necessary to preserve and protect
such interest.

                  (j) The Servicer shall deliver to the Owner Trustee and the
Indenture Trustee, within 120 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months after
the Closing Date, an Opinion of Counsel, either (a) stating that, in the opinion
of such counsel, all financing statements and continuation statements have been
executed and filed that are necessary fully to preserve and protect the interest
of the Trust and the Indenture

                                      -57-
<PAGE>   62

Trustee in the Receivables, and reciting the details of such filings or
referring to prior Opinions of Counsel in which such details are given, or (b)
stating that, in the opinion of such counsel, no action shall be necessary to
preserve and protect such interest.

                  SECTION 10.3. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York without
regard to the principles of conflicts of laws thereof and the obligations,
rights and remedies of the parties under this Agreement shall be determined in
accordance with such laws.

                  SECTION 10.4. Severability of Provisions. If any one or more
of the covenants, agreements, provisions or terms of this Agreement shall be for
any reason whatsoever held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Notes or the
rights of the Holders thereof.

                  SECTION 10.5. Assignment. Notwithstanding anything to the
contrary contained in this Agreement, except as provided in Section 7.2 or
Section 8.2 (and as provided in the provisions of the Agreement concerning the
resignation of the Servicer), this Agreement may not be assigned by the Seller
or the Servicer without the prior written consent of the Owner Trustee, the
Indenture Trustee and the Controlling Noteholders.

                  SECTION 10.6. Limitations on Rights of Others. This Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Nothing in this Agreement, express
or implied, shall give to any Person, other than the parties hereto and their
successors hereunder, any benefit or any legal or equitable right, remedy or
claim under this Agreement.

                  SECTION 10.7. Counterparts. For the purpose of facilitating
its execution 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 10.8. Intention of Parties. The execution and delivery
of this Agreement shall constitute an acknowledgment by the Seller, that it is
intended that the assignment and transfer herein contemplated constitute a sale
and assignment outright, and not for security, of the Receivables and the other
Trust Property, conveying good title thereto free and clear of any Liens, from
the Seller to the Trust, and that the Receivables and the other Trust Property
shall not be a part of the Seller's estate in the event of the insolvency,
receivership, conservatorship or the occurrence of another similar event, of, or
with respect to, the Seller. In the event that such conveyance is determined to
be made as security for a loan made by the Trust to the Seller, the Seller
intends that it shall have granted to the Owner Trustee a first priority
security interest in all of the Seller's right, title and interest in and to the

                                      -58-
<PAGE>   63

Trust Property conveyed to the Trust pursuant to Section 2.1 of this Agreement,
and that this Agreement shall constitute a security agreement under applicable
law.

                  SECTION 10.9. Notices. All demands, notices and communications
under this Agreement shall be in writing, personally delivered, sent by
facsimile or mailed by certified mail-return receipt requested, and shall be
deemed to have been duly given upon receipt (a) in the case of AFL, the Seller
or the Servicer, at the following address: Arcadia Financial Ltd., 2001 Beach
Street, Suite 300, Fort Worth, Texas 76103, with copies to: Associates
Corporation of North America, 250 East Carpenter Freeway, Irving, Texas 75062,
Attention: Senior Vice President - Capital Markets, (b) in the case of the Owner
Trustee, Rodney Square North, 1100 North Market Street, Wilmington, Delaware
19890, Attention: Corporate Trust Administration, (c) in the case of the
Indenture Trustee, to the Corporate Trust Office, at 1 Bank One Plaza, Suite
IL1-0126, Chicago, Illinois 60670-0126, Attention: Global Corporate Trust
Services, (d) in the case of each Rating Agency, 99 Church Street, New York, New
York 10007 (for Moody's) and 55 Water Street, New York, New York 10041 (for
Standard & Poor's), Attention: Asset-Backed Surveillance, or at such other
address as shall be designated by any such party in a written notice to the
other parties. Any notice required or permitted to be mailed to a Noteholder
shall be given by first class mail, postage prepaid, at the address of such
Holder as shown in the Note Register, and any notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given, whether or not the Noteholder receives such notice.

                  SECTION 10.10. Limitation of Liability. It is expressly
understood and agreed by the parties hereto that (a) this Agreement is executed
and delivered by Wilmington Trust Company, not individually or personally but
solely as Owner Trustee of the Trust under the Trust Agreement, in the exercise
of the powers and authority conferred and vested in it, (b) each of the
representations, undertakings and agreements herein made on the part of the
Trust is made and intended not as personal representations, undertakings and
agreements by Wilmington Trust Company but is made and intended for the purpose
for binding only the Trust, (c) nothing herein contained shall be construed as
creating any liability on Wilmington Trust Company, individually or personally,
to perform any covenant either expressed or implied contained herein, all such
liability, if any, being expressly waived by the parties to this Agreement and
by any person claiming by, through or under them and (d) under no circumstances
shall Wilmington Trust Company be personally liable for the payment of any
indebtedness or expenses of the Trust or be liable for the breach or failure of
any obligation, representation, warranty or covenant made or undertaken by the
Trust under this Agreement or any related documents.

                  SECTION 10.11. Nonpetition Covenant. Notwithstanding any prior
termination of this Agreement, the Servicer and the Seller shall not, prior to
the date which is one year and one day after the termination of this Agreement
with respect to the Issuer, acquiesce, petition or otherwise invoke or cause the
Issuer to invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Issuer 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 Issuer or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Issuer.

                                      -59-
<PAGE>   64

                            [SIGNATURE PAGE FOLLOWS]

                                      -60-
<PAGE>   65

                  IN WITNESS WHEREOF, the Issuer, the Seller, AFL and the
Servicer have caused this Sale and Servicing Agreement to be duly executed by
their respective officers as of the day and year first above written.

                                    ISSUER:
                                    ASSOCIATES AUTOMOBILE RECEIVABLES
                                        TRUST 2000-1

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

                                    By:         /s/ Anita Dallago
                                        -------------------------
                                        Name: Anita Dallago
                                        Title: Financial Services Officer

                                    SELLER:
                                    ARCADIA RECEIVABLES FINANCE CORP.

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

                                    ARCADIA FINANCIAL LTD.
                                    In its individual capacity and as Servicer

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

Acknowledged and Accepted:

BANK ONE, NATIONAL
ASSOCIATION, not in its
individual capacity but as
Indenture Trustee

By:       /s/ Barbara G. Grosse
     --------------------------
     Name: Barbara G. Grosse
     Title: Vice President and Assistant Secretary

<PAGE>   66

                                   SCHEDULE A

                REPRESENTATIONS AND WARRANTIES OF SELLER AND 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 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.

                                     S-A-1
<PAGE>   67

                  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, the Seller 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 Agreement.

                  10. Computer Tape. The Computer Tape made available by the
Seller to the Owner 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, New York
and Texas.

                  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 related financial 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 Receivable File for
each Receivable currently is in the possession of the Custodian.

                  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

                                     S-A-2
<PAGE>   68

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. Neither AFL nor the Seller has
entered into any agreement with any account debtor that prohibits, restricts or
conditions the assignment of all or any portion of such Receivable.

                  17. Good Title. No Receivable has been sold, transferred,
assigned or pledged by AFL to any Person other than the Seller or by the Seller
to any Person other than the Trust; immediately prior to the conveyance of the
Receivables pursuant to the Purchase Agreement, AFL was the sole owner of and
had good and indefeasible title thereto, free and clear of any Lien; immediately
prior to the conveyance of the Receivables to the Trust pursuant to this
Agreement, the Seller was the sole owner thereof and had good and indefeasible
title thereto, free of any Lien and, upon execution and delivery of this
Agreement, by the Seller, the Trust shall have good and indefeasible title to
and will be the sole owner of such Receivables, free of any Lien. No Dealer has
a participation in, or other right to receive, proceeds of any Receivable.
Neither AFL nor the Seller has 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 the Seller and by the Seller to the Owner Trustee pursuant to this Agreement.
Immediately after the sale, transfer and assignment thereof 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

                                     S-A-3
<PAGE>   69

jurisdiction to give the Trust a first priority perfected lien on, or ownership
interest in, the Receivables and the proceeds thereof and the other Trust
Property have been made, taken or performed.

                  20. No Impairment. Neither AFL nor the Seller has done
anything to convey any right to any Person that would result in such Person
having a right to payments due under the Receivable or otherwise to impair the
rights of the Trust, the Indenture Trustee and the Noteholders and
Certificateholders 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 the Seller 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 Closing Date, 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 related 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
scheduled maturity later than February 28, 2007.

                                     S-A-4
<PAGE>   70

                  28. No Amendment. No Receivable has been amended, except as
permitted by Section 3.1 and as reflected in the Receivable File.

                  29. No Repossessions. As of the Cutoff Date, no Financed
Vehicle securing any Receivable is in repossession status.

                  30. 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
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.

                                     S-A-5

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